Buffalo Creek and the question of punitive v. compensatory damages
Damages are a fundamental principle in the American legal system. However, a number of recent cases in the United States have sparked a debate on the issue, the most famous one being the “hot coffee lawsuit”1. In 1994, Stella Liebeck bought coffee at a McDonald’s restaurant, spilt it, and was severely burnt. She sued the McDonald’s company, received $160,000 in compensatory damages, and $2.9 million in punitive damages. A judge then reduced the punitive damages to $480,000. The final out-of-court settlement was of approximately $500,000. For many, this case is frivolous (meaning that the plaintiff’s prospects of being successful were low or inexistent), but it really highlights the question of excessive punitive damages compared to the damage suffered and its causes.
Damages in the United States include two categories. Compensatory damages are intended to compensate for the plaintiff’s loss. Punitive damages, on the contrary, are meant to punish the defendant .The punitive damages exceed the plaintiff’s loss, to dissuade the defendant from any further wrongdoings. For instance, having a company pay significant punitive damages may encourage it to greater caution. Another difference between the two categories is the money involved. If the damages are compensatory, the money usually goes entirely to the plaintiff, but if they are punitive, part of the money goes to the law firm and part to the plaintiff.
One may however ask the following questions. How are punitive damages actually allocated? And what is the current trend in the United States and in France in this area?
In order to answer these questions, we will first see how American lawyer Gerald M. Stern managed to get the Pittston Coal Company to pay punitive damages to Buffalo Creek disaster survivors. We will then look at current trends in American and French law on punitive damages.
I-The example of the Buffalo Creek Disaster
In February 1972, a dam which had been built in 1968 and which belonged to the Pittston Coal Company collapsed in Middle Fork Hollow, West Virginia. The dam was a coal-waste refuse pile which, along with two others, was intended to filter black waste water from a coal-cleaning plant before the water flowed down to the valley. The pile collapsed and the water rushed into the valley, destroying anything it crossed. Over 125 people were killed, thousands of others were injured, and homes and possessions were destroyed. 200 to 600 survivors decided to sue the Pittston Coal Company, and were represented by an Arnold & Porter law firm lawyer, Gerald Stern, who tells about the lawsuit in his book The Buffalo Creek Disaster. Gerald Stern explained how the plaintiffs received punitive damages from the coal company. Gerald Stern relied on West Virginia cases in order to find the “punitive damages” standard. He found that two elements were needed in order to recover punitive damages: the coal company’s...