Updating our Indiana Law Blog entries from May 15th (titled "California to Follow Indiana's Lead?") and May 20th on Governor Schwarzenegger's punitive damages proposal, the NY Times tomorrow will run an Adam Liptak article headlined "Schwarzenegger Sees Money for State in Punitive Damages." Some quotes:
Gov. Arnold Schwarzenegger's new budget aims to raise almost half a billion dollars by taking 75 percent of the punitive damages that juries in California award to plaintiffs. In the process, he proposes to limit the fees lawyers can charge their clients and to protect defendants from multiple punitive awards for similar conduct.As discussed in the May 15th Indiana Law Blog entry linked above, Indiana's law limits the plaintiff to 25% of punitive damages, and the attorney's share, as confirmed by our Indiana Supreme Court, comes out of the 25%.Critics say the proposal is a Trojan horse. Though the governor presented it as a budget measure meant to raise revenue, it is, they say, a comprehensive revision of the rules governing punitive awards in injury cases - not a tax but tort reform in disguise.
At hearings in Sacramento this week, lawmakers are to hear from scholars, consumer advocates and business groups, many of whom say they find aspects of the proposal dangerously flawed. * * *
Eight states already have so-called split-recovery laws, which allocate part of punitive awards to state treasuries generally or to specific programs. Several have survived court challenges, though the Colorado Supreme Court struck down a ninth law as an unconstitutional taking of private property. Other states, including Florida, Kansas and New York, have repealed split-recovery laws or allowed them to expire. * * *
Most states with split-recovery laws allow lawyers to take their contingency fee, generally 25 to 40 percent, from the total award. California, by contrast, would allow lawyers to take a contingency fee from only the quarter of the award that would go to the plaintiff. And even that fee would be subject to a judge's determination of what is reasonable. * * *
"Limiting an attorney to a share of only 25 percent amounts to a taking," Mr. Peck said, referring to the constitutional prohibition on the confiscation of property by the government without compensation. "It forces the attorney to work for free."
[Update] This graphic that accompanies the NY Times story shows how Indiana's legislation compares with the currently 7 other states insofar as the state's share.
Posted by Marcia Oddi at May 29, 2004 07:04 PM