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July 28, 2006
Legal Briefs

Philip Morris v. Williams

by Tim Lynch

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In this brief, co-authored by noted economists Steven Shavell and A. Mitchell Polinksy, Cato weighs in on the due process limits that the Fourteenth Amendment imposes on excessive, bet-the-company punitive damages. While trial lawyers often argue that the logic of deterrence requires large companies to pay more punitive damages than smaller companies, Cato’s brief demonstrates that the size and wealth of a company shouldn’t factor into the size of a punitive damages judgment. Because companies make judgments based on profits, large companies and small companies generally have every incentive to take precautions necessary to avoid harm to others when damages are equal to the harm they cause. Adjusting the damages upward because a company is large or wealthy does little to deter, spawning excessive litigation and creating a tax on corporate success.

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