Abstract
Had British Petroleum Oil known that courts in the USA would likely award punitive damages that would seriously harm BP’s financial position, perhaps BP would have taken the necessary steps to prevent the latest disaster. Instead, big companies like BP have no fear of big damages due to the Supreme Court’s guidelines that connect punitive damages to compensatory damages rather than to punishment and deterrence. Yet, punishment and deterrence are the reasons why punitive damages exist. This article looks back 20 years to examine how the US Supreme Court addressed issues related to assessing punitive damage amounts. Next, the article examines the implications of the Supreme Court’s decisions. The article then presents examples of current lower court decisions impacted by the Supreme Court. After analysing the most influential factor currently used to assign punitive damages and the ratio of compensatory to punitive damages, the article proposes an adjustment of the guidelines to factor in a defendant’s wealth when assigning damages so that courts serve the purpose of punishment and deterrence.
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