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Friday, March 28, 2008

Retributive Damages: Some Constitutional Analysis

In earlier posts gathered here, I laid out the Introduction and some relevant background regarding
punitive damages law, recent scholarship, and retributive justice. Subsequent posts addressed: which misconduct should be the subject of retributive damages and whether non-victims of wrongdoing should be empowered to bring claims for retributive damages (and if so, under what restrictions); how to bring rationality and fairness to determining the amount of retributive damages; and how to allocate the retributive damages among the state, lawyer and plaintiff. Yesterday's post focused on the case for developing an intermediate sanction of retributive damages that follows the structure described earlier.

In today's post, after the jump, I discuss the constitutional questions my proposal may raise and the discussion also includes a retributivist critique of the Supreme Court's recent decisions in Gore and State Farm that link punitive damages to a multiplier of compensatory damages. (Judges, lawyers, and clerks may be particularly interested in this discussion.) I also offer a brief conclusion. The next and last post in the series captures most of the policy prescriptions in this project in capsule quasi-jury instructions.

The material below appears in unfootnoted and unformatted form, but you can read a draft of the whole article with apparatus on SSRN here. Feel free to send me your thoughts via email.


There are a variety of constitutional questions that might arise in response to re-tributive damages. Some of these questions I answer in the next installment of this project, where I address in greater detail the procedural safeguards for defendants. That said, I want to address constitutional issues that may arise regarding the structure of retributive dam-ages scheme described in Part III.

First, if a state chose to adopt a structure of retributive damages like the one de-fended here, that structure and the awards of retributive damages arising under it would be entitled, I believe, to far more deference from the Supreme Court than is normally extended to awards of punitive damages in common law jurisdictions. After all, the retributive dam-ages structure extends far more granular attention to the concerns of even-handedness, pre-dictability, impartiality, accuracy, and proportionality than does the common law method used in many jurisdictions; in so doing, the retributive damages scheme is more solicitous of the values informing interpretation of both procedural and substantive due process.  Even if the Court refused to credit a careful legislative scheme of retributive damages with sub-stantial deference, in most cases, the outcomes from the retributive damages scheme I’ve described are sure to be compatible with the Court’s procedural due process cases and are very likely to be compatible with the Supreme Court’s excessiveness review under sub-stantive due process or even under the Eighth Amendment’s Excessive Fines Clause. 

With respect to procedural due process, the structure of retributive damages is fully compatible with judicial and appellate review (per Honda), de novo review of retributive damages in federal courts (per Cooper Industries), and a prohibition on punishing a defen-dant based on harms to strangers to the litigation (per Philip Morris).

As to excessiveness review, the Court places primary importance on the degree of reprehensibility of the defendant’s misconduct. As described in Part III.B, reprehensibil-ity is the driving force behind the amount of retributive damages also. But the Court, after State Farm, also requires consideration of the “disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award”; presumes that double digit ratios between punitive damages and compensatory damages are incompatible with due process; and states that the courts consider “the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.”

  The most salient problem that comes to mind regards the potential for the retribu-tive damages scheme to result in very high amounts of retributive damages awarded against very wealthy persons or entities who commit reprehensible conduct of the sort that might trigger a ten percent penalty. An award of retributive damages against Bill Gates, for instance, raises the possibility of multibillion dollar retributive damages. In a case where compensatory damages to the plaintiff are relatively low, such a result might be viewed as constitutionally suspect because of the supposed “disparity” between the “actual or poten-tial harm suffered by the plaintiff and the punitive damages award.” In other words, the multi-billion dollar award, when framed as a dollar amount, rather than as a percentage of net wealth, could, after BMW v. Gore, raise the proverbial judicial eyebrow.

One response to this problem is to note that those situations simply won’t occur too often, and if they do, these results should not be viewed as controversial compared to the various cases in which courts have upheld punitive damages awards that constitute a far higher percentage of net wealth or value than what I’ve suggested under retributive dam-ages. Moreover, because the legislature has passed a retributive damages scheme, sub-stantial deference should be extended to outcomes like these.  Another and less palatable option is to acquiesce to judicial application of the State Farm “disparity” test, and accept reduced retributive damages awards in those unusual cases. A reduction of retributive damages in a given case on “disparity” grounds does not call into question the entire struc-ture itself even if one could reasonably complain that such reductions undermine commit-ments to equality since wealthy persons would benefit from unjustified downward adjust-ments.

A more intellectually serious response however would take issue with the Court’s “disparity” criterion altogether. In State Farm, a majority of the Court declared an affinity for the presumptive use of single-digit multipliers of compensatory damages. This pre-sumption, as applied to retributive damages, is highly problematic.

Since the reprehensibility analysis drives retributive damages and constitutional due process review, the real constitutional problem for the retributive damages regime is the disparity criterion, which asks whether there’s a reasonable relationship between the amount of harm or potential harm and the penalty imposed. Stated at that level of general-ity, and in conjunction with the Court’s emphasis on reprehensibility, there is likely to be little friction between the Court’s punitive damages jurisprudence and the retributive dam-ages scheme defended here.

But two problems come to mind: first, courts often uncritically conflate the harm or potential harm to the plaintiff with the compensatory damages actually paid. Second, after State Farm, a “reasonable relationship” has morphed into a judicial presumption against punitive damages awards that are ten times or higher than the compensatory dam-ages award. In what follows, I explain why both compensatory damages anchors and the presumptive single-digit multiplier are often misguided.

Using compensatory damages as an anchor for the disparity inquiry lacks sufficient justification, at least in cases involving or risking physical injury. In those situations, as explained in Part III.B.4, using compensatory damages as a benchmark for measuring re-tributive damages would create a signal of inequality of human worth since compensatory damages are often keyed to one’s economic status in life, not one’s political status wherein one bears the privileges and burdens of equal citizenship. It’s possible that compensatory damages are a useful baseline in cases involving only financial losses by plaintiffs who were not targeted on account of their lack of resources, but that’s a position that needs ar-gumentation, not conclusion by assumption.

The principal justifications for anchoring disparity inquiries off the shoals of com-pensatory damages are its administrability and the sense of finitude it provides. But both these factors underdetermine the doctrine because it would be equally administrable to al-ways award a billion dollars or zero dollars in extra-compensatory damages regardless of the tort or to impose a flat limit of $500 for punitive damages. Once we’re in the business of reasoning out extra-compensatory damages to reach a non-absurd result, we should be able to offer relevant reasons for our decisions. The current doctrine is substantially lacking one, especially because the cost-internalization proponents also criticize the use of com-pensatory damages anchors. Notwithstanding the fact that there is little justification for insisting on a relationship between compensatory damages and retribution or deterrence, some courts have uncritically fastened to it.

On top of the problematic use of compensatory damages, the disparity analysis is undermined by the Court’s preference for a presumption of a single digit multiplier, which may lead courts to apply the single digit multiplier even in cases where the rationales for retribution, victim-vindication, or cost internalization require more, either separately or in combination. Indeed, the preliminary evidence supports this concern.

Like the compensatory damages anchor, a presumptive single digit multiplier is re-puted to help achieve administrability and some degree of notice about the bounds of one’s liability. But even after State Farm, the pretense to such predictability is overstated. In-deed one might wonder just how much notice is afforded when juries can basically choose virtually any multiplier less than 10.

Importantly, administrability and notice are at least as well satisfied by the retribu-tive damages scheme. A guidelines-based reprehensibility scale is not substantially more difficult to apply than the determination currently made by juries, which judges subse-quently review in an hoc manner. More importantly, the retributive damages structure provides far more particular notice to defendants about their potential liability than is pro-vided for by the current regime of punitive damages regulation, wherein most assessments of punitive damages will receive a pass on scrutiny as long as it is nine times or less than the amount of compensatory damages.

Thus, especially in light of the Court’s stated aversion to regulating extraordinary criminal punishments against defendants, there would be little basis for objecting to civil penalties that would ensure the defendant did not profit from his action and that removed no more than (say) 10% of his wealth and would do so only in a manner where the defen-dant enjoyed the benefit of various procedural safeguards. Recall that retributive dam-ages also abide by an intent requirement by which a defendant should be given the oppor-tunity to internalize the values of retributive justice. Thus, if retributive damages were set so high as to economically destroy or bankrupt a defendant, that would go too far – at least from the perspective that views retributive damages’ purpose as an intermediate sanction, rather than one that results from a full-fledged criminal prosecution.

In sum, it is doubtful that the retributive damages structure is constitutionally in-firm. At worst, and assuming the Court extended no special deference to this intricate scheme of intermediate sanctions, it may mean that in certain cases, the jury’s award of an amount of punitive damages is deemed excessive, a determination that applies now in ju-risdictions that apply a whole range of structures and procedures, but which offer far less in the way of notice and even-handedness than the structure I’ve advocated. And, as I inti-mated earlier, a jurisdiction that took pains to structure the distribution of punitive damages in the careful manner advocated here would have, by my lights, done at least what is neces-sary to survive constitutional scrutiny under the Due Process Clause.

Indeed, in light of the fact that the Court has in the past allowed horrifically long sentences to be imposed on those whose misconduct is far less egregious than, say, Philip Morris’ conduct was, the structure of retributive damages—which would involve steep but relatively difficult to obtain awards of retributive damages—is a decent way of addressing the perverse approach the Court has adopted when portioning punishment over the last fif-teen years: i.e., with substantial excessiveness review of punitive damages and very limited review of excessiveness in the imposition of prison incarceration.

The last point about constitutional law worth mentioning here focuses on the de-fendant’s wealth. Recall from Part III that the reprehensibility of the defendant’s miscon-duct will in turn track a percentage of the defendant’s wealth (or net value, in the case of entities). Various jurisdictions around the country currently inform juries that they may consider the defendant’s wealth in trying to figure an amount of punitive damages that will adequately punish and deter the defendant. The Supreme Court has not held that a de-fendant’s wealth cannot be factored into the amount of punitive damages. Rather, what the Court has said is that wealthy defendants are just as entitled to fair notice as “impecunious individuals.” The structure of retributive damages discussed in Part III provides constitu-tionally adequate notice designed to communicate that sanctions for reckless or malicious wrongdoing won’t be mere luxury taxes on the rich.


Structured properly, retributive damages awards are a pragmatic form of redress against anti-social misconduct, especially when undertaken by wealthy and powerful enti-ties. In this respect, there’s a real synergy between retributive damages and the work of “social justice” tort theorists. On the other hand, a dose of retributive damages is strong medicine, and it needs to be distributed far more sensitively to the values of equality, pre-dictability, and modesty than the careless way punitive damages are currently awarded and reviewed by courts.

This Article, the first of a trilogy, has tried to extend substantial consideration to these and other relevant concerns. Providing a framework to translate the values and limits of retributive justice into a practical scheme of retributive damages, the Article has identi-fied what sorts of conduct should warrant this intermediate sanction, what factors should inform the amount of retributive damages, and who should receive retributive damages and in what relevant proportions. While this Article provides the foundations of retributive damages, in truth, more needs to be said about their contours: specifically about how to implement retributive damages in simple and complex litigation contexts. In the com-panion articles to this one, I take up that challenge.

Posted by Administrators on March 28, 2008 at 12:26 AM in Article Spotlight, Dan Markel, Retributive Damages | Permalink


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