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In a civil litigation generally a person versus a company, when a person wins against a big company we often see a huge sum of punitive damages being imposed on the company and that sum goes to the person. In my understanding the total figure of the punitive damages is based loosely on the revenue of the company, and not the loss of the person so as to punish the company for its unethical practices. That sum may grossly exceed the losses incurred by that party. This might cause people to file frivolous lawsuits against companies.

If instead the government collected the punitive damages, it would serve as a deterrent for the company to pursue unethical practices, the litigator would be compensated as per his loss incurred, and it would also prevent frivolous cases from being filed just for greedy motives.

Why can't punitive damages be awarded to the government instead?

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    Trial lawyers give very generously to political parties. They would obviously oppose a system like loser pays, or no punitive damages, etc. That would affect their bottom line. – user1873 Jul 27 '14 at 4:25
  • But then trial lawyers cannot match the payments of big corporations who would seek to end such a system? – qstack Jul 27 '14 at 8:10
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Punitive damages are not awarded to the government, because they would be unconstitutional under the 8th Amendment.

The Supreme Court decided that punitive damages were not unconstitutional under the 8th Amendment when the USA government is not a party.

The first major case in which the Supreme Court ruled on the constitutionality of punitive damages was in 1989, in Browning-Ferris v. Kelco. In that case, the Court held that the Eighth Amendment of the Constitution (which is most commonly known for its Cruel and Unusual Punishment Clause, but which also contains a clause prohibiting “excessive fines”) does not apply to punitive damages awards in civil lawsuits to which the United States is not a party.

Clearly, if you allow the government to collect the punitive damages instead of the private party, the 8th Amendment protection against "excessive fines" would apply and would no longer act as a deterrent for companies performing unethical practices.

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