I don't say this to diminish the value of human life, because there certainly is no amount of money in the world that can bring back a murdered loved one, but I'm wondering how they come up with the value of $7 billion? I mean that will certainly get the attention of service providers, I'm just surprised at the amount.
Our peers are bad at math or have no conceptual grasp of money in the millions or billions? Maybe juries know a judge will reduce the amount so it's some kind of game theory to ensure they don't low-ball the victim. I'm not certain.
An even better example is BMW, Inc. v Gore where a man sued because the brand new car he purchased had been partially repainted to cover damage caused while it was being shipped to the dealer. The jury awarded him $4 million in punitive damages. BMW appealed and the supreme court agreed it was ridiculous.
Only guessing here... but maybe they wanted a sum that would actually hurt Charter. Not some paltry few million bucks that they can just write off as an expense.
That seems a bit excessive. I understand there is some emotional damage due to the stolen checks and the billed amount going to collections, but $7 billion? The lady who was killed was over the average life expectancy!
Just like taxes, companies don't pay or feel them, they either reduce expenses (example by paying their employees less) or increase revenue (example increase prices to consumers). In the end, consumers and employees are the ones suffering the punitive damages.
Waiting for it to happen isn’t necessary for it to be priced in. In many cases companies probably anticipate these costs like any other. If you do something that risks a fine it’s because you think the reward is worth it. In cases where there is a fine, the goal is the same as any other expense: to pass costs onto either consumers or employees in order to protect shareholders. In cases where a penalty is surprising and/or severe, they might not be able to fully pass on costs to those people, profitability suffers, and the shareholders pay via investment losses or at least reduced gains. Corporate leadership could get forced out if they piss off shareholders too much, otherwise the only cost for them to pay is reduced pay from equity based compensation or performance bonuses…and only if the fines are in excess of the gains made by breaking the law in the first place.
That’s what I don’t understand about passing on costs to customers: The idea that a company can just pass additional costs on to the customer implies that the market is willing to bear that passed-on cost. But if the market is already willing to bear it, why wouldn’t the company just charge more today, regardless of whether they have additional costs?
The goal isn't for the company per se to care. The goal is for the leadership of the company to care, since such large fines hurt the profitability, may lead to them forfeiting certain bonus compensation tied to maintaining certain profitability levels. It also can negatively impact the stock price, which means leaderships stock options are worth less, etc.
The idea being that once it becomes clear to the leadership that allowing such things to continue will hurt them personally, they will put a bunch of effort into making sure the company does not do whatever caused the enormous fines again in the future.
I don't think this is an especially efficient way of accomplishing this. Holding company leadership directly accountable, and having the courts deny the leadership some or all of their compensation, or in especially egregious cases, removing them from controlling the company entirely would be a more direct way of ensuring the companies make good faith efforts to comply with the law (or avoid torts, as the case may be). But we don't generally go that way.
Biggest problem I see with the current system is that it’s only a deterrent if the fines are large enough. If they are too small they have the opposite effect and actually encourage criminal behavior because the reward will be worth the risk statistically.
On the other hand, defaulting to go after corporate leadership directly does create an opportunity for shareholders to mostly get away with things they supported behind the scenes.
Very complicated issue overall and I haven’t really decided anything on it yet other than “we can probably do better”.
That is the confusing part. I don't know if that is the case here, but with lawsuits similar, the amounts seem really high and the reporting doesn't fully explain why, which I wish would change. Some people will get rewarded at face value handsomely. But in reality, it isn't the case since in some cases most of what is being "rewarded" might just be going to attorney fees and other costs of the litigation itself.
This isn't actually that steep if you compare it to a human being getting convicted of manslaughter. The fraction of a person's life and income taken away by damages fines and incarceration are much larger than what charter will (not actually) lose.
I personally believe that the value of a human life is priceless (in a subjective sense). However in an objective sense you can use a heuristic to figure out damages a company should payout. I would love to know how the jury came up with that number.
Specially when in this case the victim was 83 year old... Objectively there isn't much life time earnings left there or even qualitative years. So I don't know what objective metric could get it to that level.
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[ 2.7 ms ] story [ 74.2 ms ] threadA judge will always reduce this amount to a more reasonable level.
An even better example is BMW, Inc. v Gore where a man sued because the brand new car he purchased had been partially repainted to cover damage caused while it was being shipped to the dealer. The jury awarded him $4 million in punitive damages. BMW appealed and the supreme court agreed it was ridiculous.
If you don't set it in the billions, Charter wouldn't even notice it. Their yearly profits are in the billions.
$7 billion is very possibly less than the profit made between the murder of the woman (2019) and the verdict (now).
If they could profitably pay employees less, why wouldn’t they just do that and not wait for a judgment?
> increase prices to consumers
Same: If they could just do that any time, why wouldn’t they, if it would result in more profit? Why wait for a big expense like a judgment?
The idea being that once it becomes clear to the leadership that allowing such things to continue will hurt them personally, they will put a bunch of effort into making sure the company does not do whatever caused the enormous fines again in the future.
I don't think this is an especially efficient way of accomplishing this. Holding company leadership directly accountable, and having the courts deny the leadership some or all of their compensation, or in especially egregious cases, removing them from controlling the company entirely would be a more direct way of ensuring the companies make good faith efforts to comply with the law (or avoid torts, as the case may be). But we don't generally go that way.
On the other hand, defaulting to go after corporate leadership directly does create an opportunity for shareholders to mostly get away with things they supported behind the scenes.
Very complicated issue overall and I haven’t really decided anything on it yet other than “we can probably do better”.
Those sound really really high...