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This paper addresses the modern grounds for punitive damages reform. It focuses on particular problems relating to punitive damages verdicts in Alabama, but the issue extends substantially beyond the Alabama case. Punitive damages verdicts are relatively infrequent in many jurisdictions. From time to time, however, an occasional jury can render an enormous punitive damages verdict even in a jurisdiction where punitive damages awards are infrequent. Oftentimes, the trial or an appellate court will remit such a verdict, and the pattern of punitive damages infrequency will be restored. There is reason to believe, however, that in recent years the Alabama experience has been substantially different. As I shall describe in more detail below, beginning in the early 1990s, punitive damages verdicts increased in Alabama both in frequency and magnitude. While some of these verdicts were remitted in part on appeal, there was no clear signal from the Alabama Supreme Court or any court of appeal as to what limits there might be to continued punitive damages awards. Perhaps as a consequence, the frequency and magnitude of punitive damages awards continued to escalate and to dramatically affect the entire civil dispute process. As a consequence, punitive damages claims and awards have become a routine feature of the Alabama civil liability regime.
This paper addresses the Alabama phenomenon. While the Alabama experience, to my knowledge, is unique—there are no studies showing civil jury verdicts of this magnitude in any other American jurisdiction—there is no reason to believe that the phenomenon is unique to Alabama jurisprudence. Indeed, oddly enough, the procedures for trial and appellate review of punitive damages verdicts had been developed in the caselaw more completely for Alabama than for any other United States jurisdiction. Instead, the recent Alabama experience seems reflective, more generally, of the consequences of permissive appellate review of jury trial punitive damages verdicts. As suggested by the Alabama experience, punitive damages verdicts can begin to snowball. As citizens see large punitive damages verdicts awarded in increasing numbers of cases, expectations and understandings begin to change. The large punitive damages verdict becomes the norm, rather than the exception. This paper documents that experience in Alabama and discusses the effects of such judgments on deterrence and on the welfare of consumers.
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