Essentially this. To quote the movie Fight Club: A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car cr

Essentially this. To quote the movie Fight Club: A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one. Punitive Damages are intended to prevent X from becoming too small.