When you’re dealing with a company that has wronged you, you may wonder, “Why are punitive damages so important?”
Well, here are two reasons.
1.) To punish the defendant.
A company has to mess up pretty badly for them to receive punitive damages.
When they mess up, these damages come in to tell the company, “You’ve done something wrong, and since this has happened, we’re going to punish you.”
It could be a case of fraud, or reckless conduct, etc.
Regardless of what it is, the defendant needs to be punished.
If the defendant only had to compensate for their wrongs, then they could break it down into a simple accounting function and choose to say, “Well, we do have to pay money to compensate for what we do, but in the long run we make more money.”
You may remember or have heard about the Ford Pinto fiasco — Ford made cars it knew would catch on fire if hit from behind. It could have fixed the problem but it calculated the cost of a recall against the cost of settling cases where people were burned horribly and even died. The numbers favored not fixing the problem. So punitive damages change the calculations to better protect the community.
Punitive damages actually punish the defendant, which means trouble for them when they’re looking at their options.
2.) To discourage the defendant, as well as other companies, from treating consumers poorly.
The reason it discourages bad conduct is because it helps them remember why they should follow the law, instead of breaking it.
We want them to remember and say, “Last time we broke the law in Alabama, we were hit with X amount of punitive damages. There’s no way we’re going to do that again.”
When we use punitive damages, it shows other companies that are in the same industry that there are consequences for breaking the law.
The underlying reason for punitive damages is to protect the community you live in.
We want to take a stand against these companies that are hurting our community, and make it safe for our neighbors.
In Alabama, as well as other states, we want companies to be honest.
We want these companies to not harm us in any way.
Some people will say that punitive damages only really benefit one person.
While it is true that these damages will go to the injured person and their attorney, we use these damages to protect our community from future wrongs that companies that may want to hurt us.
We want these companies to think before they act wrongfully towards us.
When it’s appropriate, punitive damages are very powerful.
If you have any questions, feel free to call us at 1-205-879-2447.
Have a great day!