THINKING CRITICALLY ABOUT RELEVANT LEGAL ISSUES

In 2004, at Governor Schwarzenegger's

urging, California adopted a budget measure that involved taxing punitive damages awards 75 percent. What this measure did was to take a punitive damages award in a civil suit, give 25 percent of the award to the plaintiff, and then put the other 75 percent of the award in a state fund to be used for state needs. California was right to enact this legislation, and other states would be wise to do so as well. Governor Schwarzenegger has been an innovative leader, and even though he did not sign the bill to renew the legislation in 2006, he said that the idea was still good, but the legislation needed work before he would renew the law. Following the governor's lead, other states should enact similar legislation to help meet state budgetary needs.  

The idea of taxing punitive damages and giving a large percentage of the money to the state is useful because so many parties benefit from the arrangement. The plaintiff still receives some of the punitive damages, the tortfeasor is still punished for the wrongdoing that sparked the civil suit, and the taxpayers benefit from the state's having more money to spend on its citizens. Besides, the purpose of punitive damages is to punish the tortfeasor, not to benefit the plaintiff, and California's law still allows tortfeasors to be punished for their egregious behavior. The punitive element is still there, but what is different is that more people benefit from the tortfeasor's wrongdoing, not just the one party that brought suit against the tortfeasor. The plaintiff is still compensated through compensatory damages, so she is not losing money she is owed.  

Rather, she no longer is awarded a windfall that was meant as punishment for another, not as reward for her injury.  

Some critics argue that the tax is a bad idea because juries will be more likely to award higher punitive damages in order to bring in more tax revenue for the state. Higher damages, however, would help to further punish wrongdoers, as well as aid the state's needs. Also, the critics fail to account for the fact that the vast majority of punitive damage awards are greatly reduced on appeal; thus, any initial raise in the damages assessed would probably be reduced on appeal, essentially making no difference in the final amount of punitive damages against the tortfeasor. The policy should make no significant change in the amount of damages awarded but will instead benefit more people, which should be the goal of any good state policy.  

1. What are the issue and conclusion of this essay?  

2. Is significant information missing from the preceding argument? Clue: What pieces of information would better aid you in deciding whether you agree with the author?