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When you may not be able to collect punitive damages

After fighting for his life and the life of his children, a man got some even worse news. The family had been trapped inside their Dodge Caravan when it caught on fire and burned all of them. They managed to escape and wanted to hold the maker of the car legally responsible in the form of a products liability lawsuit.

According to reports, the man was pulled over on the side of the road when the fuel system started leaking. The car quickly caught on fire. After they escaped, the family suffered burns and other injuries. When they went to seek punitive damages for these injuries, however, they discovered that they could not.

The car company, Chrysler, was protected from punitive damage claims stemming from manufacturing defects on certain cars under the terms of a federal bankruptcy law. The company was able to create a clause in their bankruptcy sale to another company in 2009 which allows them to escape financial responsibility for products liability cases. A judge approved the terms that protected them from paying out any punitive damage claims.

Punitive damages are important to pursue in many cases because they hold a reckless or negligent company accountable for the safety of their products. Monetary penalties are imposed on the company and the proceeds go to those who were affected by the wrongdoing.

However, it can be very important to speak with an attorney prior to seeking these types of damages. On the one hand, it may not be possible due to a company's immunity, as was the case with Chrysler. On the other hand, punitive damages can be awarded in excess of actual losses in order to send a message and prevent future wrongdoing by the company.

As disheartened as the family was to learn that they could not seek punitive damages resulting from the accident, they are pursuing compensatory damages. A knowledgeable attorney will be able to advise victims of dangerous or defective products how they can best seek financial compensation for any injuries or deaths.

Source: Wall Street Journal, "Chrysler Got Legal Shield in Chapter 11," Mike Spector, April 4, 2012

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