Punitive Damages

[Manuel47]

‘Why companies were blamed for the actions of people who sucked smoke into their lungs - obviously an unhealthful habit’ wonders Tony Benitez. For him the $17.3 billion settlement between the tobacco industry and the state of Texas for health-care costs is absurd and ridiculous.
"I should smoke for that kind of money, but I know it's not good for me," he said, describing the settlements as one example of a judicial system that is off course. "There is way too much money paid out for ridiculous reasons."
One reform passed this year - and supported by Texans for Lawsuit Reform - was a bill that added checks and balances to approving contingency fees in state contracts.
The legislation was inspired by former Texas Attorney General Dan Morales' approval of multibillion-dollar fees for five lawyers handling the tobacco litigation, which alleged companies committed fraud by concealing tobacco-health dangers.
Future reforms the group plans to advocate include a bill that would allocate punitive damages to the state instead of the plaintiff. The plaintiff would still receive compensatory damages for lost wages, medical bills and emotional distress.
Many people like Leo E. Linbeck, Jr., Richard J. Trabulsi, Jr., Allan Shiversare involved in Texas Lawsuit Reform (TLR), Dick Weekley is the Co-Founder, Chairman and CEO of Texans for Lawsuit Reform.

[WDecraene]

huh ????

[zelda_pinwheel]

where did all those singing vikings come from ???

[WDecraene]

I think Manuel is being deliberately rude here. There are limits, even in the lounge section. Well, I can do that too !!

In many countries, laws or contractual terms require employers to make minimum funding payments for their pension or other employee benefit plans. This enhances the security of the retirement benefit promise made to members of an employee benefit plan.
Normally, such statutory or contractual funding requirements would not affect the measurement of the defined benefit asset or liability. This is because the contributions, once paid, become plan assets and the additional net liability would be nil. However, paragraph 58 of IAS 19 Employee Benefits limits the measurement of the defined benefit asset to the 'present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.' IFRIC 14 addresses the interaction between a minimum funding requirement and the limit placed by paragraph 58 of IAS 19 on the measurement of the defined benefit asset or liability.

When determining the limit on a defined benefit asset in accordance with IAS 19.58, under IFRIC 14 entities are required to measure any economic benefits available to them in the form of refunds or reductions in future contributions at the maximum amount that is consistent with the terms and conditions of the plan and any statutory requirements in the jurisdiction of the plan. The entity's intentions on how to use a surplus (for instance, whether the entity intends to improve benefits rather than reduce contributions or get a refund) must be disregarded.

Such economic benefits are regarded as available to an entity if the entity has an unconditional right to realise them at some point during the life of the plan or when the plan is settled, even if they are not realisable immediately at the balance sheet date. Such an unconditional right would not exist when the availability of the refund or the reduction in future contribution would be contingent upon factors beyond the entity's control (for example, approval by third parties such as plan trustees). To the extent the right is contingent, no asset would be recognised.

Economic benefits available as a refund

If an entity has an unconditional right to a refund

(a) during the life of the plan, without assuming that the plan liabilities must be settled in order to obtain the refund, or
(b) assuming the gradual settlement of the plan liabilities over time until all members have left the plan, or
(c) assuming the full settlement of the plan liabilities in a single event (i.e. as a plan wind-up),
it shall recognise an asset measured as the amount of the surplus at the balance sheet date that it has a right to receive as a refund. This is the fair value of the plan assets less the present value of the defined benefit obligation, less any associated costs, such as taxes.
If the refund is determined as the full amount or a proportion of the surplus, rather than a fixed amount, the amount shall be calculated without further adjustment for the time value of money, even if the refund is realisable only at a future date, as both the defined benefit obligation and the fair value of plan assets are already measured on a present value basis.

Economic benefits available as a reduction in contributions

In the absence of a minimum funding requirement, IFRIC 14 requires entities to determine economic benefits available as a reduction in future contributions as:

the present value of the future service cost to the entity (excluding costs borne by employees) over:
the shorter of the expected life of the plan; and
the expected life of the entity;
determined using assumptions consistent with those used to determine the defined benefit obligation (including the discount rate); and
based on conditions that exist at the balance sheet date.
This means, an entity shall assume

no change to the benefits provided by a plan in the future until the plan is amended, and
a stable workforce unless it is demonstrably committed at the balance sheet date to make a reduction in the number of employees covered by the plan.
IFRIC 14 contains illustrative examples that outline the accounting treatments under a number of different scenarios.

Effective date and transition

IFRIC 14 is effective for annual periods beginning on or after 1 January 2008. Earlier application is permitted.

The Interpretation is to be applied from the beginning of the first period presented in the financial statements for annual periods beginning on or after the effective date. The IFRIC had initially proposed full retrospective application, but decided to amend the transitional provisions reflecting concerns from constituents.

[HarryT]

Why was a 15 year old riding a motorcycle? Is that legal in the US?

[WDecraene]

Originally Posted by HarryT

Why was a 15 year old riding a motorcycle? Is that legal in the US?

Yeah. Firing an AK47 at cows I can understand. Riding a motorcycle though ...

[pshrynk]

Lovely Spam! Wonderful Spam!

Bloody Vikings!

[montsnmags]

Originally Posted by pshrynk

Lovely Spam! Wonderful Spam!

Bloody Vikings!

(Shh, dear, don't cause a fuss)

What he said:

http://www.google.com.au/search?q=%2...s=OIE&filter=0

(in a separate search there was at least one other forum - other than the above - that also had this posted by a name-and-two-numbers user. In a couple of them, the link at Google goes to a no-longer-existent thread)

Cheers,
Marc

[zelda_pinwheel]

Originally Posted by pshrynk

Lovely Spam! Wonderful Spam!

Bloody Vikings!

so you've got them too hey ?

[RickyMaveety]

Originally Posted by pshrynk

Lovely Spam! Wonderful Spam!

Bloody Vikings!

This parrott is no more! He has ceased to be! 'E's expired and gone to meet 'is maker! 'E's a stiff! Bereft of life, 'e rests in peace! If you hadn't nailed 'im to the perch 'e'd be pushing up the daisies! 'Is metabolic processes are now 'istory! 'E's off the twig! 'E's kicked the bucket, 'e's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisibile!! THIS IS AN EX-PARROTT!!

Yeah, I know, I'm being positively heartless ... but someone had to say it.

[Mindy]

In Scotland we have delict, a subset of which is the principle of duty of care.
All about a wee woman in a Glasgow cafe who found a dead snail in her ginger beer bottle (after she finished it). Case is called Donoghue v. Stevenson. Funny story if you can ever be bothered to read it.

[bbusybookworm]

Originally Posted by Mindy

In Scotland we have delict, a subset of which is the principle of duty of care.
All about a wee woman in a Glasgow cafe who found a dead snail in her ginger beer bottle (after she finished it). Case is called Donoghue v. Stevenson. Funny story if you can ever be bothered to read it.

It is, especially if you have a professor with a sense of humar, and a sharp wit.

Our Prof had us is stitches with the way he described it.

On a more serious note, while the duty of care does allow some amount of damages, it has to be show that that the defendent was neglient and that the outcome was foreseeable.

That then brings in the remotness of damage rules. I.e how likely was the outcome. If the manufacturer had used a reasonable degree of care, then it would probably be considered too remote. After all statistically, anything is possible, and it would be unreasonable and prohibitive to hold someone accountable for an event that while being foreseeable, was very unlikely and the company had taken all reasonable steps

Unfortunately, the US Legal systems, and especially a lay jury's defination of reasonableness will probably be very different from one over here.

[Xenophon]

Nearly all American legal experts agree that liability law in the US is totally broken. What they don't agree on is which aspects are broken and how to fix them.

On the one hand, you really don't want the rich and powerful to be effectively immune to consequences from negligence and other misbehavior. On the other hand, you also don't want ordinary reasonable engineering to lead to massive legal liability.

If you want a fascinating read, do a search for the lawn mower case (although there were many such). On the one hand, power lawn mowers could be made safer through the addition of very simple safety features with little-to-no impact on cost. Examples include tilt switches, dead-man switches, etc. Indeed, these features were added to mowers in the 1970s.

On the other hand, in one case my wife studied back when we were in college, the plaintiff:

• deliberately disabled the tilt switch (because his lawn was too steeply sloped, so the tilt switch kept shutting down the lawn mower).
• deliberately disabled the dead-man switch because it was too difficult to hold it closed while mowing the steep hillside
• then, when the mower clogged, he turned it upside down and reached in to remove the clog -- without bothering to turn off the mower.

For some strange reason, the mower destroyed his hand.

He won a million-dollar judgement against the mower's manufacturer because he "should not have been able to disable the safety features."

If I had been on that jury, I'd have been asking the judge if it was possible to vote "too stupid to live!"


Or, for another example, until recently aircraft manufacturers were considered to be liable for design defects in their planes -- even when the "defect" in question was far beyond the state of the art at the time when the aircraft was designed and built. That's right -- they could be considered liable for a design defect in, say, a DC-3 (designed in the early 1930s)! Even though no one in the world understood fluid dynamics well enough to avoid the defect in question until the 1980s (a real example -- ). This one changed when congress passed a "statute of repose" limiting such liability to 40 years, IIRC. (I may have that number wrong. Any expert care to correct me?)

Before the change more than 50% of the cost of a light aircraft went to purchase liability insurance for the manufacturer. After the change, this dropped to about 5%. I wonder why...

Please note that in all the above examples, I have not distinguished liability for consequential damages from punitive damages. I'm simply after the question of whether the manufacturer (or the PE who signed off on the design, for that matter) should be liable at all.

Lest you think this problem is easy, however, remember that many a company has refused to take any action whatsoever to improve product safety until prodded by a combination of regulation and liability lawsuits. It seems clear to me that US product liability law currently errs in the direction of too much liability for the folks with the deep pockets, and not enough responsibility for the individual consumer. I'm not at all clear, however, on what specific fix one could make that would provide overall benefit rather than making things still worse.

Suggestions, anyone?

Xenophon

[RickyMaveety]

Originally Posted by Xenophon

then, when the mower clogged, he turned it upside down and reached in to remove the clog -- without bothering to turn off the mower.

Xenophon

I really need to consider putting on my reading glasses before I venture into this site. On first read, I could have sworn it said that the guy "reached in to remove the dog" ... and I was wondering what sort of lunatic runs over his poor doggie with a freaking lawn mower.

Maybe I should just go to be really early tonight. Ya think??

[spooky69]

I'm okay with imposing financial penalties against for-profit organizations under the following conditions:

-The damages are scaled to the size of the company (big enough to affect change, small enough to be payable without sending them into bankruptcy)
-Awarded only if there was some sort of demonstrable negligence/maliciousness that "needs" to be punished (failure to do proper safety testing, targeting cigarettes at children)

I know this isn't the issue, but in the class of people who hates the lasseiz faire model of business specifically because history has proven that there needs to be a financial (or otherwise) motivation for getting people to do "beneficial" things that they wouldn't otherwise do. That usually takes the form of rewards for following the rules or penalties for not doing so. I'm sure that many aspects of liability law in America are out of control and need to be fixed, but getting your ass sued off is a pretty good motivator for not doing a bunch of lazy/greedy/evil stuff.