How Should Punitive Damages Work?

Update 8/31: I'm moving this up to save having to write a new post. I just wanted to share the exciting news that I've just accepted an offer to publish this piece in the University of Pennsylvania Law Review in volume 157 (spring 2009 sometime). Interestingly, the piece didn't get picked up through an expedite, which should hearten those authors who wonder whether and how much "law review strategery" is necessary.  I owe a giant thanks especially to Jason Solomon and the attendees at Prawfsfest! at Hofstra, who helped me see the need to restructure the piece entirely in the last month. Once I get some more revisions on that death penalty paper done in the next few days, I will blog about this paper some more.

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I'm very excited to announce that I've recently uploaded to SSRN a working draft of my new paper, How Should Punitive Damages Work? You can download it here. It's still a work in progress but I hope to have solved a few policy and constitutional issues in it. As the sequel to my Retributive Damages piece coming out this January in Cornell LR, it tries to lay out in more careful detail how to build a better punitive damages regime. This particular piece focuses on issues common to all kinds of punitive damages cases.*

After providing some background, I explain that there are three normative goals that punitive damages can and should achieve:
1) the public interest in retributive justice, which is vindicated through what I call "retributive damages."
2)  empowering victims with a mode of recourse that permits but does not obligate the victim to vindicate the injury to his/her dignity interest, an interest that is not otherwise compensated under traditional compensatory damages, and which I, following some Commonwealth jurisdictions, call "aggravated damages."
3) the pursuit of cost-internalization or "optimal deterrence" the extent to which it is permitted after Philip Morris. These are called "deterrence damages."

To make punitive damages work well, I argue that we have to separate retributive damages from damages meant to achieve deterrence or to vindicate the victim's dignity and autonomy interests. Because these purposes are distinct, a jurisdiction that conflates them risks both under- and over-protection of various defendants. Once we correctly understand these distinct purposes, our institutional design for civil damages should map these values appropriately.

The Article begins that task, first by explaining why and how defendants should enjoy certain procedural protections depending on which purpose the damages vindicate, and second, by addressing the critical implementation issues associated with this pluralistic scheme of extra-compensatory damages: insurance, settlement, and taxation.

The argument is largely a prescriptive one: that is, if you agree with these rationales, which have been separately defended in the literature, then here's how to build an attractive pluralistic damages regime. However, I also want to ensure that this pluralistic extra-compensatory damages regime is in fact  consistent with the Supreme Court's various cases, so there's an element of doctrinal analysis too.

Indeed, there are a number of constitutional arguments I make that counter, on the one hand, arguments by those like Tom Colby, who thinks that "retributive damages" would require the panoply of criminal procedural safeguards, and on the other hand, arguments by those like Marc Galanter and David Luban, who think the fact of privately initiated lawsuits for punitive damages means that relatively nothing in the way of procedural safeguards are constitutionally required or normatively justified.

My own view is that both of these positions are wrong.  I explain why after the jump.

In short, pace Colby, retributive damages are not criminal fines because they don't entail criminal convictions or trigger the cluster of collateral consequences that typically attach to all sorts of convictions. But they are, contra Galanter and Luban, nonetheless a rebuke of the defendant that involves elements of both public censure and punishment, albeit of a civil, not criminal, kind. Thus, for reasons I elaborate in Part III of the paper, retributive damages are best understood as an intermediate civil sanction that require (constitutionally and normatively) an intermediate level of procedural safeguards, that is, a level falling roughly between what is due defendants facing on the one end, compensatory damages, and on the other, criminal fines.  Where there is no obvious "intermediate" level, some analysis of how the safeguard works to advance the reduction of Type I or Type II errors is required. Along the way, I also explain which procedural safeguards would be appropriate to implement "deterrence damages" and "aggravated damages."

I note that this version of my paper includes a bunch of claims that critique Tom Colby's SSRN draft (from June 27th, 2008) of his forthcoming Yale LJ piece. I shared my draft with Tom yesterday (8/27) to make sure he was comfortable with the way I was characterizing his arguments, and after reading it, he informed me that in the non-public version he's currently editing, he had already made some changes in light of some earlier comments I sent him, and that, in light of the draft I sent him yesterday 8/27), he is now planning on making a few more changes that are responsive to my points. I mention this chiefly to signal that I will revise my draft a bit later on to make sure it addresses the changes Tom plans on making to his final draft.  But as of now, the version of my article on SSRN addresses the June27th version, which is available here. His SSRN link is here in case you want to see subsequent drafts. Once his final paper comes out, I'll be sure to post a revised version of mine that avoids any confusion. I confess that the moving target aspect of some of this exchange is a bit cumbersome, but I guess when SSRN gets you tomorrow's research today, you have to accept the consequences! 

* I hope to finish the series of articles this spring by writing something tentatively called, Punitive Damages and Complex Litigation, which addresses the specific questions associated with misconduct by entities and misconduct that affects multiple parties within and across jurisdictional lines. I'm planning on putting the three pieces together into a book, tentatively called The Punitive Damages Mess: How To Fix It.