The Portland, Oregon jury awarded $1.4 million dollars in the Boy Scouts child molestation case. But the trial is not over. Next, the jury considers punitive damages. This post discusses what happens to the money if the jury awards punitive damages, which is a timely topic, in light of the looming April 15 tax deadline.
First, what did the victim need to prove to win punitive damages? In Oregon, the person must prove, by clear and convincing evidence, that defendant "has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety and welfare of others." From news reports, the jury made that determination.
Next, the lawyers will present evidence and argue about how much money the jury should award. For purposes of this post, let's say the jury awards $1 million in punitive damages. Who gets the money?
The State of Oregon takes 60% off the top. $600,000 would go into a fund managed by Oregon's Department of Justice for the benefit of crime victims. Basically, it is a tax that is earmarked for crime victims. The money cannot be used for schools, jails, police, or anything else. It is for crime victims.
Next, 20% goes to the attorney. So, the attorney would gross $200,000. Of that, the federal government would likely take 35% ($70,000), and the State of Oregon could take 11% in income tax, which is $22,000.
The final 20% goes to the victim, who will probably suffer the same tax consequences.
So, for the final tally if the jury awards $1 million in punitive damages:
• State of Oregon: $644,000.
• U.S. Government: $70,000
• Victim's Attorney: $108,000
• Victim: $108,000 or 10.8% of the award.
In law school, we were told that purpose for punitive damages is to punish bad behavior and deter others from behaving similarly. However, when a person does the math, punitive damages also serves to raise revenue for the state and federal governments. Now you know why the Oregon Flag flies over this post.
Jeff Merrick, Oregon Trial Attorney
503-665-4234
