JACKSON - The Mississippi House may take a second look at a bill that would cap punitive damages at 10 percent of the net worth for all businesses in the state.
The House passed the bill 90-29 Wednesday. It was held over on a procedural motion that could lead to more debate today.
A House committee, headed by Rep. Percy Watson, D-Hattiesburg, had sought to place the 10 percent cap only against small businesses. The bill includes an escape clause for criminal intent to cause serious physical injury.
The committee's version would cap damages for companies with up to $20 million in annual revenue or one with 25 workers or less. The House adopted an amendment by Rep. Ed Blackmon Jr., D-Canton, to limit damages for businesses with annual sales of $100 million and delete the reference to employees.
State Rep. May Whittington, D-Schlater, voted in favor of the bill, and and Willie Perkins Sr., D-Greenwood, voted against it.
Lawmakers minutes later voted 66-50 to scrap that language and apply the 10 percent damage limits on the net worth of all companies, regardless of size. Net worth is simply the total value of what you own minus what you owe.
Under the bill, for example, a company with a net worth of $50 million would be under a punitive damage cap of $5 million.
Whittington and Perkins both voted against the amendment.
The amendment's author, Rep. Carmel Wells-Smith, R-Pascagoula, agreed with critics that her proposal protected multibillion-dollar companies such as WorldCom, General Motors or Enron.
"That is so," said Wells-Smith. "But this is also for the Hancock Fabrics, Sanderson Farms … if 10 percent is punitive on the small companies then 10 percent is punitive on the large companies. If it's fair for one, it's fair for the other."
Watson said larger companies could better afford punitive damage verdicts.
"With this, we are giving protection to people we don't even know," he said.
"Our purpose was to protect the small companies - our neighbors, our friends who are not going to necessarily engage in this kind of conduct. We're trying to look out for the little guy who could suffer a damage award he could not pay."
Punitive damages are awarded in addition to compensation for injuries to punish defendants in a lawsuit - either individuals or corporations - that juries consider especially negligent or a threat to public interest.
Ron Aldridge, state director of the National Federation of Independent Businesses, described the bill "as a great step" toward improving the state's legal climate.
He said the business community was pleased with adoption of an amendment by Rep. Tommy Reynolds, D-Charleston, that would not cap punitive damages against people in positions of trust.
"It gives more than reasonable protection for the concerns of many regarding the Enron and the WorldCom situations out there by allowing those accountants and corporate officers who may have committed some grievous wrongdoing to be punished beyond the limits of the bill," Aldridge said.
Sen. Tommy Roberston, R-Moss Point, said senators would study whatever proposal the House sent to them.
Copyright 2002, Associated Press. This material may not be published, broadcast, rewritten, or redistributed.
