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Tuesday, March 18, 2008

Retributive Damages

Two weeks ago, I finally posted the abstract of my latest piece, Retributive Damages, here. You can now get the whole article, in draft form, up on SSRN. Were I content simply to promote the article, I might just stop there. But in fact I'm curious to get the feedback of various people here, and so I will blog excerpts of the paper over the next few days. Today, I'll begin with the introduction. Please send any feedback or reactions via email to me. Many thanks. I should also note that the draft that's up on SSRN is still preliminary, and I'm still working on incorporating much of the useful feedback I have received so far. Nonetheless, it's somewhere between a shitty first draft and a final draft...so here it is.

People and the entities they form sometimes commit wrongs against other people and the entities they form. By allowing plaintiffs to seek punitive damages against defendants, our society has, for centuries, deployed not only criminal law but also tort law, among other regulatory devices, to help punish this misconduct.[1] Punitive damages, however, can serve a range of purposes beyond imposition of punishment.[2] Thus it is more accurate to label them extra-compensatory damages.

Despite the variety of purposes capable of being ascribed to extra-compensatory damages, in recent decades, the Supreme Court has come to see them as fulfilling two particular purposes: to impose retributive justice against wrongdoers and to deter future misconduct by the defendant and others.[3] Imposing retribution triggers its own deterrent or preventive effect, of course, but in recent years, much of the scholarship has been largely driven by law and economics scholars seeking to tweak extra-compensatory damages law to advance the goal of optimal deterrence, or cost-internalization.[4]

Unlike theories that try to calibrate a penalty in part based on the guilty state of mind (mens rea) associated with a defendant’s misconduct, theories embracing cost-internalization need not inquire into the putative reprehensibility of a defendant’s actions. The underlying goal of cost internalization is simply, albeit crudely, “pay for the mess you made, but you can continue to make that mess, so long as you pay for it.”[5] In its recent decision on punitive damages, Philip Morris USA v. Williams,[6] the Supreme Court imposed impediments to the quest for cost-internalization through extra-compensatory damages. By precluding juries from awarding extra-compensatory damages that consider the amount of harm the defendant caused to nonparties, the Court’s holding in Philip Morris necessitates much more litigation to ensure successful cost-internalization.[7]

Consequently, the Philip Morris court subtly directs our attention to the question of the “punitive” aspect of extra-compensatory damages. Oddly enough, that question has received spare and insufficient attention.[8] Though a voluminous literature on punitive damages exists,[9] absent from that literature, as Professor Cass Sunstein and his co-authors lamented ten years ago, is “a full normative account of the relationship between retributive goals and punitive damages.”[10]

In this Article, I try to fill that void by providing a defense of what I call “retributive damages. While retributive damages constitute just one aspect of extra-compensatory damages that warrant attention,[11] it is the aspect I focus on here. Specifically, my goal is to describe and defend a structure for retributive damages as an intermediate sanction – between compensatory damages and criminal punishment. The retributive damages proposal incentivizes plaintiffs and their lawyers in the tort system to help the state obtain a form of fines and other relevant relief against defendants on account of their having proven, under appropriate procedural safeguards, that the defendant committed culpable misconduct. Thus, rather than focusing on a private plaintiff’s vindictive interest against the defendant for aggravated injuries to the victim’s dignity,[12] or the economist’s goal of cost-internalization, this account focuses on the normative public interest in retributive justice.

While the account here promises to makes sense of the Court’s holding in Philip Morris,[13] the goal of this project is not to interpret punitive damages doctrine as it is, but to re-imagine what the law should be. Hence, the regime of retributive damages I endorse is consistent with the constitutional landscape but not a mere reflection of it.

It bears emphasis that retributive theory not only offers a motivation for reconfiguring punitive damages. It also establishes a set of constraints. After all, retributive justice, properly understood, is conceptually tethered to concerns for equality, modesty, accuracy, proportionality, impartiality, and the rule of law—aspects that are largely missing not only from current common law punitive damages practices but also, to varying degrees, from the accounts of those scholars emphasizing punitive damages as vehicles for vindicating a private plaintiff’s interest in “poetic justice” or revenge or a jury’s interest in ventilating its outrage.[14]across the realm of similarly situated defendants; in other respects it means ensuring safeguards to achieve accuracy, impartiality, and proportionality in a particular case. In some respects this means ensuring modest and fair sanctions

This Article unfolds in five Parts. Part I describes some of the familiar features and constitutional requirements associated with contemporary American punitive damages practice. Importantly, the Supreme Court, in developing its rules, has left them under-theorized. Though these rules gesture in the direction of some basic values of fair notice and proportionality, the Court has not extensively articulated how these rules intersect with goals often ascribed to punitive damages by scholars endorsing victim-vindication, cost-internalization, or retributive justice.

As constitutional interpretation, that minimalism may be a desideratum. But in terms of giving guidance to states on matters of grave importance, it is opaque. Moreover, as a brief survey shows, prior scholarly accounts have not adequately explained both how and why states should pursue retributive justice through punitive damages. This article tries to do just that, and in order to do so, some familiarity with the demands and limits of retributive justice is necessary.

Part II provides that familiarity by sketching what I have elsewhere called the confrontational conception of retributivism (or the CCR).[15] The virtue of this account is its ability to explain both the internal intelligibility of retributive justice within a liberal democracy and the limits that may reasonably be placed on that social practice to help distinguish it from naked revenge. Significantly, this account explains the need for reducing two kinds of errors: Type I errors in which people are mistakenly punished or excessively punished relative to comparable offenders, and Type II errors in which offenders escape their punishment altogether or receive too lenient a punishment relative to comparable offenders. Accounts of both retributive justice and retributive damages ought to demonstrate the need for sustained reflection on both kinds of errors. Part II concludes by establishing how the values and constraints of the CCR are helpful in thinking about what structure retributive damages should take, and under what conditions and guidelines they should be awarded to reduce both Type I and Type II errors feasibly.

Part III then begins the hard work of moving from abstraction to policy by devising a structure for retributive damages that reflects retributive justice values. Section A begins with a framework for thinking about which misconduct ought to be eligible for retributive damages as an intermediate sanction. More provocatively, I suggest that non-victims for wrongs that don’t necessarily materialize in harms should be able to bring actions for retributive damages under certain conditions. This would look something like contemporary qui tam statutes. Section B then turns to structuring the amount of retributive damages. Here I argue that legislatures should rationalize jury deliberations by scaling the amount of retributive damages to the culpable wrongdoing via a guidelines approach that fines individual defendants based on a percentage of their net wealth and entities based on a percentage of their net value. The sanction should also include gain-stripping amounts, if any, in excess of compensatory damages, as well as lawyers’ fees and a modest and fixed award for the plaintiff for bringing the matter to the public’s attention. I then explain why and how lawyers and plaintiffs should be rewarded for their efforts by the state and why the state should receive the bulk of retributive damages. These payments together (to the state, the plaintiff, and the lawyer) constitute a sensible way to structure retributive damages in light of the values and limits of retributive justice discussed in Part II.

Drawing upon some of the materials embedded in the social justice accounts of tort law,[16] Part IV clarifies why creating an intermediate retributive sanction under the right safeguards to the tort system is a superior way of punishing and preventing misconduct than strictly relying on compensatory damages, class actions for compensatory damages, extra-compensatory damages for victim-vindication, the criminal justice system as we know it, or even a privately enforced criminal justice system. Part V explains how a retributive damages framework surmounts the constitutional questions raised by punitive damages generally.

This Article lays the foundations for retributive damages. In two subsequent articles, I will grapple with questions regarding the implementation of the retributive damages framework in simple and complex litigation contexts.[17] Thus, by the end of the project, one can discern how retributive damages might co-exist alongside extra-compensatory damages designed to pursue other goals, including cost-internalization. A glimpse of this aspiration to disaggregate and realize the purposes of extra-compensatory damages can be seen with a review of the appendix to this article, which captures most of the main policy ideas as they would affect the development of jury instructions

[1] David. G. Owen, Punitive Damages in Products Liability Litigation, 74 Mich. L. Rev. 1257, 1278 (1976) (observing “strong historical and functional nexus between tort and crime” and viewing punitive damages “as a particularly flexible tool in the overall administration of justice”).

[2] Dorsey D. Ellis, Jr., Fairness and Efficiency in the Law of Punitive Damages, 56 S. Cal. L. Rev. 1, 3 (1982) (noting “at least seven purposes for imposing punitive damages … (1) punishing the defendant; (2) deterring the defendant from repeating the offense; (3) deterring others from committing an offense; (4) preserving the peace; (5) inducing private law enforcement; (6) compensating victims for otherwise uncompensable losses; and (7) paying the plaintiff's attorneys' fees”).

[3] See, e.g., Philip Morris USA v. Williams, 127 S.Ct. 1057 (2007); State Farm Mut. Auto. Ins. Co. v. Campbell, 538


408, 409 (2003); Linda L. Schlueter & Kenneth R. Redden, Punitive Damages § 2.2(A)(1) (4th ed. 2000) (“The most frequently stated purpose of punitive damages is to punish the defendant for his wrongdoing and to deter him and others from similar misconduct.”).

[4] Under an optimal deterrence (or efficient deterrence) framework, defendants internalize the costs of their activities so that they face accurate “marginal cost curves,” which facilitates correct pricing of their activity. Thus punitive damages (qua cost internalization) are best calibrated in reference to a defendant’s likelihood of evading detection from paying compensatory damages: the higher the likelihood of not compensating other similarly situated victims, then the higher the augmented damages should be. See A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 Harv. L. Rev. 869, 906 (1998) (“That a defendant's conduct can be described as reprehensible is in itself irrelevant. Rather, the focus in determining punitive damages should be on the injurer's chance of escaping liability.”). See alsoPunitive Damages for Deterrence: When and How Much?, 40 Ala. L. Rev. 1143 (1989). One paper in this genre has extended the cost-internalization paradigm by urging that punitive damages be configured to provide for “societal damages,” that is, to compensate society, through split-recovery schemes, for harms the defendant externalized onto society independent of the harms suffered by particular plaintiffs in the litigation. Catherine M. Sharkey, Punitive Damages as Societal Damages, 113 Yale L.J. 347, 391 (2004). Sharkey views her theory as providing a “‘nonpunitive’ rationale” for punitive damages that focuses on compensation, and implicitly on cost-internalization. See id. at 389-90. Robert D. Cooter,

[5] See Polinsky & Shavell, supra note 4. Professor Sharkey’s account, supra note 4, does in fact require fact-finders to make a predicate finding of malice or recklessness, but this aspect of her account is inconsistent with the overall goal of cost-internalization. See Thomas C. Galligan, Jr., Augmented Awards: The Efficient Evolution of Punitive Damages, 51 La. L. Rev. 3, 62-63 (1990) (“focus on the evil defendant is … not consistent with the deterrence justification for augmented awards. [I]n augmented damages cases the court should not focus on the reprehensibility of the defendant's conduct, but on whether compensatory damages are too low.”).

[6] See Philip Morris, 127 S.Ct. 1057 (prohibiting factfinders from imposing punitive damage awards based on the amount of harm caused by the defendant to nonparties to the litigation).

[7] Cost-internalization is still possible after Philip Morris when a defendant’s misconduct affects only the plaintiffs to the litigation. But for torts that sweep more broadly, it will be considerably harder to achieve cost-internalization through piecemeal litigation because not all injured victims bring suit and because not all harms have identifiable victims.

[8] Anthony J. Sebok, What Did Punitive Damages Do? Why Misunderstanding the History of Punitive Damages Matters Today, 78 Chi.-Kent L. Rev. 163, 163 (2003) (“The more basic question—what are the purposes or rationales for punitive damages—has not played as great a role as one might think.”).

[9] For challenges raised about punitive damages’ constitutionality, see, e.g., Thomas B. Colby, Beyond the Multiple Punishment Problem: Punitive Damages as Punishment for Individual, Private Wrongs, 87 Minn. L. Rev. 583 (2003); Martin H. Redish & Andrew L. Mathews, Why Punitive Damages Are Unconstitutional, 53 Emory L.J. 1 (2004); John Calvin Jeffries, Jr., A Comment on the Constitutionality of Punitive DamagesVa. L. Rev. 139 (1986). For overviews of empirical studies of punitive damages, see, e.g., Anthony J. Sebok, Punitive Damages: From Myth to Theory, 92


L. Rev. 957, 961 (2007) (analyzing recent empirical studies puncturing various overblown claims about the dangers of extant punitive damages litigation); Brief for Neil Vidmar et al. as Amici Curiae Supporting Respondents, Philip Morris, 127 S.Ct. 1057 (No. 05-1256) [hereinafter Vidmar Amicus Brief]; Theodore Eisenberg et al., Juries, Judges, and Punitive Damages: An Empirical Study, 87 Cornell L. Rev. 743 (2002); see also W. Kip Viscusi, The Challenge of Punitive Damages Mathematics, 30 J. Legal Stud. 313 (2001); Cass R. Sunstein et al., Assessing Punitive Damages (with Notes on Cognition and Valuation in Law), 107 Yale L.J. 2071, 2085 (1998) [hereinafter Sunstein et al., Assessing Punitive Damages]. 72

[10] Sunstein et al., Assessing Punitive Damages, supra note 9, at 2085. In truth, however, there have been some valuable efforts in this direction. See sources cited infra note 12. But these accounts have shortcomings described in Part I.B and II.D.

[11] Thus, as the Appendix shows, juries are encouraged to disaggregate the purposes of extra-compensatory damages and segregate the amounts needed to achieve cost-internalization or victim-vindication from retributive justice.

[12] Some scholars have, in the course of interpreting our current punitive damages law, emphasized the plaintiff’s putative personal right to be vindictive, see Benjamin Zipursky, A Theory of Punitive Damages, 84 Tex. L. Rev. 105 (2005), or a plaintiff’s putative right to “state-sanctioned revenge,” see Anthony J. Sebok, Punitive Damages: From Myth to Theory, 92


L. Rev. 957, 961 (2007). The interpretive aim of these victim vindication accounts differs from my normative account. Cf. John Finnis, Natural Law: The Classical Tradition, in The Oxford Handbook of Jurisprudence and Philosophy of Law 55-58 (2002) (arguing that recourse theorists like Zipursky fail to engage in “full-blooded normative justification”). Moreover, my own account, which I develop in Parts II-III, is not predicated on vindicating the victim’s interest in autonomy or dignity as much as it’s focused on the relationship of obligation between the state and the wrongdoer. Another piece worth substantial mention here is Marc Galanter & David Luban, Poetic Justice: Punitive Damages and Legal Pluralism, 42 Am. U. L. Rev. 1393 (1993). The Galanter and Luban article is more self-consciously normative, and putatively concerned with retributive justice in various respects, but I view most of its rationale and recommendations as indicative of victim-vindication. See Parts I.B and II.D.

[13] Some accounts stressing victim-vindication may also be viewed as consistent with the Philip MorrisSee, e.g., Sebok, supra note 12. But compare Galanter and Luban, supra note 12 (viewing victim-vindication as compatible with making defendant pay for harms to non-parties to the litigation). holding.

[14] See, e.g., Galanter & Luban, supra note 12; Sebok, supra note 12, David A. Hoffman & Kaimipono D. Wenger, Nullificatory Juries, 2003 Wis. L. Rev. 1115, 1119 (defending the role of juries in “protect[ing] us from rule by legal economists” through “relatively unconstrained punitive awards”).

[15] Prior works of mine have addressed how this theory applies to other policy issues (such as alternative sanctions, the death penalty, transitional justice in recovering states, and executive discretion): see, e.g., Dan Markel, Are Shaming Punishments Beautifully Retributive? Retributivism and the Implications for the Alternative Sanctions Debate, 54 Vand. L. Rev. 2157 (2001) [hereinafter Markel, Shaming Punishments]; Dan Markel

, State, Be Not Proud: A Retributivist Defense of the Commutation of Death Row and the Abolition of the Death Penalty, 40 Harv. C.R.-C.L. L. Rev. 407 (2005) [hereinafter Markel, Be Not Proud]; Dan Markel, The Justice of Amnesty? Towards a Theory of Retributivism in Recovering States, 49 U. Toronto L.J. 389 (1999); Dan Markel, Against Mercy, 88 Minn. L. Rev. 1421 (2004) [hereinafter Markel, Against Mercy].

[16] See Thomas H. Koenig & Michael L. Rustad, In Defense of Tort Law (2001) (a paradigmatic account of the social justice theory of tort law); sources cited infra note 55.

[17] See Dan Markel, Implementing Retributive Damages; Dan Markel, Retributive Damages and Complex Litigation. In those works, I address various interesting questions given little to no attention here: e.g., are retributive damages schemes compatible with vicarious liability and the punishment of entities? Which procedural safeguards should defendants and plaintiffs have and why? How should retributive damages be taxed? Should an insurance market for retributive damages be permitted? What are the dynamic effects a retributive damages scheme might trigger with respect to criminal prosecutions?


Posted by Administrators on March 18, 2008 at 04:29 PM in Article Spotlight, Criminal Law, Dan Markel, Retributive Damages, Torts | Permalink


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