The NAM and other associations on June 1, 2012, urged the California Supreme Court to review a decision involving the application of punitive damages. In this asbestos personal injury case, the lower court approved a punitive damages award of $4.5 million against a company with a net worth of negative $1.023 billion. The company argues on appeal that the damages are excessive in light of its net worth, and that the punitive damages are unconstitutional because they are far in excess of comparable civil or criminal penalties for similar conduct.
The NAM supported review of both issues, requesting that the court provide a more sophisticated approach where a company has a negative net worth, to prevent harm to preexisting creditors. Those creditors are the ones who effectively end up paying the punitive damages. Moreover, the court should step in to ensure that punitive damages are assessed at a level that is comparable to statutory penalties for similar misconduct. The lower court called consideration of this factor irrelevant, despite its approval by the U.S. Supreme Court.
On 7/11/12, the court declined to review this appeal.