PrawfsBlawg

Is Libel Dead? (Not So Fast.)

I recently cut twenty pages from the defamation chapter of my Mass Media Law casebook.  Maybe I should have cut more.  A story by John Koblin in The New York Observer reports that the number of libel cases against media defendants has dropped so dramatically that the Media Law Resource Center is going to report on them on a  bi-annual rather than an annual basis.  George Freeman, VP and assistant general counsel for the New York Times Company reports that there currently "are no active domestic libel suits" against any publications owned by the company.  In the past, he said, the norm was ten to fifteen libel cases per year.

The story in the Observer is titled "The End of Libel?," and it suggests a number of theories to explain the drop in the number of libel cases.  For example, there is a suggestion that plaintiffs are finally beginning to understand the legal obstacles that make recovery for libel unlikely.  There is a suggestion that there are fewer libel cases because there is less investigative journalism.   There is a suggestion that there are fewer libel cases because "the Web has allowed for quick corrections, heading lawsuits off before they are even filed."  There is even a suggestion that there is so much information out there that it makes any one negative statement less damaging.  Finally, there is a suggestion that media are more willing to "correct" a story upon receipt of an angry phone call.  The article concludes that regardless of the cause "when it comes to the old-fashioned libel case, lawyers and subjects might finally be calling it a day." 

Not so fast.  We shouldn't be too hasty in declaring "the end of  libel."  While plaintiffs may be bringing fewer suits against the mainstream media, I would like to see accurate statistics about whether there has been a reduction in the number of libel suits brought against what once would have been called "non-media" defendants, that is, defendants who aren't part of the institutional media.  I don't have empirical data to back up this assumption, but it certainly doesn't seem like these suits are on the decline.

Even for mainstream media, the threat of foreign libel suits seems to be growing as the threat of domestic suits declines.  Although the New York Times Company isn't facing any domestic libel suits currently, it is facing five active libel cases abroad.  Perhaps, then, sophisticated libel plaintiffs suing large media corporations are becoming libel tourists, bringing their suits in England or Germany or some other jurisdiction that has weaker legal protections for journalists than we do here in the U.S. [In this regard, it is worth noting that several U.S. states, including New York, Florida, and Illinois, have adopted legislation to protect U.S. citizens from "libel tourism."  New York's Libel Terrorism Protection Act, N.Y. CP.L.R. Sec. 5304 provides that foreign judgments will not be recognized if "rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law."  The Act also provides that  "defamation judgments obtained in a jurisdiction outside the United States" will not be recognized unless a New York court determines that the defamation law applied provides at least as much protection for free speech and press as would be accorded by New York courts.  Finally, the Act modifies another provision of New York law (CPLR Sec. 302) to give New York courts personal jurisdiction "over any person who obtains a judgment in a defamation proceeding outside the United States against any person who is a resident of New York or is a person or entity amenable to jurisdiction in New York who has assets in New York or may have to take actions in New York to comply with the judgment."  Florida's new law is identical to New York's.  See Fla. Stat. Sec. 55.605 (2) (h) (2009), and Illinois' is similar.  735 Ill. Comp. Stat. 5/12-621(b)(7) (2009).]

And thanks to Cory Andrews for tipping me off to the Observer story!

Reasonableness and Community

A few years ago, while looking for cases to recast as hypotheticals for my Torts students, I came across an interesting example of juror confusion about the application of a reasonableness standard in People v. Calitina, 2002 WL 31820336 (Cal.App. 1 Dist. Dec 17, 2002) (NO. A093378).  Calitina is a criminal case where the defendant, Calitina, was out cruising with friends and got into a confrontation with people in another car.  There was a bit of a chase and Calitina shot at the other car apparently believing that it was occupied by armed men who had previously threatened him.  It turned out that the car was occupied by unarmed females, one of whom Calitina shot in the shoulder.  Calitina argued self-defense.

The full accounting of the jury deliberations is complicated, but in short Juror No. 9 had difficulty interpreting the jury instructions about the difference between reasonable and unreasonable self-defense.  The jury sent out a written question asking for the definition of a reasonable person and Juror No. 9 was ultimately brought into court and asked to describe her concerns:

Juror No. 9 asked for a definition of a reasonable person. The trial court recalled that she had asked how the law would apply as it relates to cultures and communities-it asked her to explain what she meant by this question. She asked if a reasonable person was one who reflected all the cultures of the country, if it meant what she would do, or if she should consider what people generally would consider reasonable in a specific situation. She found it difficult to determine what she, as a reasonable person, would do in a particular situation. She asked if she would be innocent if she did something that she thought was reasonable. She also asked if someone else would be guilty if they did something that appeared to them to be reasonable but would not be reasonable to her. She was uncertain what she might have done in the situation before the defendants-perhaps, she might have done the same thing that was done in this case, she told the trial court.

Juror No. 9 said that the jury had engaged in “a lot of discussing” on this issue and the others told her to “follow the law.” She told the trial court that she was trying to follow the law, but she was not certain what the law is. . . . She again requested a definition of what constituted a reasonable person. . . .

Juror No. 9 denied that her philosophy prevented her from following the law. She admitted having difficulty interpreting a particular phrase of the law to her satisfaction. The prosecutor asked her whether she would be prevented from continuing deliberations if the trial court could not provide her with more information. She replied that the question was not one of the charges in the case. Having thought about the underlying issue, she told the trial court that it was “almost as though [she had] to make [her] own interpretation of those words.” She thought that the standard to be applied should be one that reflected all communities, not just hers. Juror No. 9 stated that she was “not really sure” because it was a tough issue to resolve.

The court also questioned other jurors about the state of deliberations: 

Juror No. 7 opined that Juror No. 9's personal experiences were getting in the way of her ability to make a decision in the case. Juror No. 7 reported that Juror No. 9 said she was unsure what went on in a defendant's culture and in his life to make him believe that his action was reasonable or not. Juror No. 7 believed that Juror No. 9 was unable to decide this issue because she thinks this reasoning is biased or prejudiced.

Ultimately, the trial judge removed Juror No. 9 and Calitina was convicted – his claim of self-defense failed.  The Court of Appeal then held that discharge and replacement of Juror No. 9 during deliberations did not deprive Calitina of due process and a fair trial. 

I’m curious to hear what others think about the questions that Juror No. 9 raised about how to assess whether conduct is reasonable.  Does Juror No. 9’s confusion go beyond the difference between an objective and subjective standard and touch on more difficult questions about how to understand the “community” for purposes of assessing the reasonableness of conduct? 

I come at this from the perspective of how Tort law defines the reasonable person standard.  In Tort, the reasonable person is required to evaluate interests in accordance with the valuation placed upon them by the community sentiment crystallized into law; the reasonable person standard encompasses the values of the community and an individual’s idiosyncratic values (based on upbringing, etc.) are irrelevant.  Juror No. 9’s questions can, however, be interpreted to ask a deeper question – which community defines the standard?  (Perhaps criminal law provides a different or clearer answer?)   It seems like Juror No. 9 sensed that her “community” was different from that of Calitina’s.  Perhaps in Calitina’s neighborhood, the described car chase could support a reasonably apparent need for self defense while in Juror No. 9’s neighborhood it would not.

The Restatement of Torts, in discussing the reasonable person standard, references at different points the “community in which . . . conduct occurs” and what the “reasonable man at that time and place would know.”  This suggests that the relevant neighborhood/community is Calitina’s.  Although, by definition, isn’t a juror (peer) deemed part of the same community as the litigants?  Or perhaps the location is simply a circumstance to be considered in assessing the conduct of a reasonable and prudent person “in like or similar circumstances”?

I welcome thoughts about Juror No. 9’s (and my own) musings.

The Fair Report Privilege in NJ: "Misappropriate" = "Steal"?

In Salzano v. North Jersey Media Group, 2010 WL 1849852 (May 11, 2010), the New Jersey Supreme Court addressed important issues regarding the scope and application of its fair report privilege.  First, the court held that defendants may receive the benefit of the privilege when repeating allegedly defamatory allegations taken from “initial pleadings,” such as a filed complaint in a civil case.  Second, the court held, albeit by an equally divided vote, that defendants’ reporting regarding a civil complaint filed in bankruptcy court was fair and accurate even though it described the complaint as alleging that the plaintiff had “stolen” funds from a bankrupt corporation when the complaint actually stated that the plaintiff had misappropriated funds.   The split on the second issue reflects a division amongst the judges on whether the dictionary definition of “misappropriate,” or its arguably less pejorative “street” definition, is the relevant benchmark for judging its rough equivalence with “steal.”

For those not familiar with the fair report privilege, some background is in order.  The fair report privilege provides vital protection against defamation suits for journalists reporting on government affairs.  The fair report privilege stems from common law or sometimes from statute, and it protects journalists or others who repeat “defamatory matter concerning another in a report of an official action or proceeding or of a meeting open to the public that deals with a matter of public concern.” Restatement (Second) of Torts Sec. 611.  However, the privilege is only available if “the report [of the official action or proceeding or meeting] is accurate and complete or a fair abridgement of the occurrence that is recounted.”  Id.      

Three rationales underpin the fair report privilege.   The narrowest rationale for the fair report privilege is the “agency” rationale.  Since any member of the public has a right to attend a public meeting or obtain access to “open” government documents, the press is privileged to repeat accurately information from these sources because it is acting as an “agent” for the public in doing so.  A second rationale is the “public supervision” rationale, which recognizes the checking function of the press in scrutinizing government conduct and providing the public information about what their government officials are doing.  A closely related but potentially broader rationale is the “public information” rationale, which posits that the press should not be held liable for informing the public about matters of public interest, because such information is essential to intelligent voting and the formation of enlightened public opinion. 

The scope of the privileges varies from jurisdiction to jurisdiction, depending in part on which rationale is applied.  For example, some jurisdictions permit a defendant to invoke the privilege when the defendant reports information obtained from a “leaked” government document, but some deny the privilege because the defendant cannot claim to be acting as an agent in reporting on a document to which the public had no access.  Likewise, some jurisdictions permit a defendant to invoke the privilege even if there is no attribution to the government source; some don’t, because the public cannot evaluate government performance if they do not know the source of the information.

In Salzano, the New Jersey Supreme Court concluded that all three rationales—agency, public information, and public supervision—supported application of the privilege to fair and accurate reports of initial pleadings in a civil case.  In New Jersey, civil complaints are “public documents to which the citizens . . . have free access.”  The court concluded, therefore, that the media must be protected when they act as surrogates for the public in reporting “on every aspect of the administration of justice,” including the filing of a complaint.  In reaching this conclusion, the court rejected the argument that extension of the privilege to reports on filed complaints would promote the filing of frivolous lawsuits designed solely to put defamatory falsehoods into circulation.  If such abuses occur, the court said, they can be remedied with sanctions on attorneys and parties as well as suits for malicious prosecution or malicious use of process.  The court expressed faith that citizens have a “sophisticated understanding of the court system and [are] capable of evaluating information gleaned from a complaint;” therefore, pleadings do not need to be “sanitized” or “filtered through a veracity lens” before publication.  Clearly one can question both the court’s faith in the sophistication of the citizenry and the efficacy of remedies against the filing of complaints filled with defamatory falsehoods.  Moreover, one can certainly question whether extending the privilege to cover filed pleadings upon which a government official has not yet acted furthers public scrutiny of the administration of justice.  Regardless, the extension of the fair report privilege to “initial pleadings” provides an important shield against defamation liability for anyone reporting on the court system and the Salzano decision places New Jersey in the modern trend toward giving the privilege broad scope. 

Equally important is the leeway the New Jersey Supreme Court gave the media defendants in evaluating the fairness and accuracy of their reports on the complaint filed by the bankruptcy trustee.  The complaint stated that plaintiff “unlawfully diverted, converted and misappropriated [the bankrupt corporation’s] funds” by using two checks from the corporation to purchase his residence and by using the corporation’s credit card for over $200,000 in personal expenses.  The defendants published a story about the allegations in the complaint under the headline “Man accused of stealing $ 500,000 for high living” and asserted in the body of the story that the bankruptcy trustee’s complaint accused plaintiff of stealing.  In evaluating whether the published stories involved “full, fair and accurate account of the official proceeding,” the court focused on whether the defamatory “sting” of the defendants’ reports was “essentially the same as that of the complaint.”  With regard to the language regarding plaintiff’s “stealing” of funds, the court noted that the headline had to be read in the context of the whole article, which clearly indicated that the allegations of the complaint had not yet been adjudicated.  The court then looked to the dictionary definitions of “misappropriation” and “steal” to reach the conclusion that “it is clear that the fair and natural meaning of the word ‘steal’ given by reasonable person of ordinary intelligence is ‘misappropriate.’”

What is fascinating about this conclusion is that the justices on the New Jersey Supreme Court were equally divided on the question whether an allegation in a civil case that the “white-collar” plaintiff “misappropriated” funds had as much of a defamatory “sting” as an allegation that he stole them.    Justice Hoen’s concurring and dissenting opinion notes that the word “steal” “has the same meaning as misappropriate, but much stronger negative connotations.”  According to Justice Hoen, the word “steal” “carries with it the clear connotation of a crime, together with its attendant evil-minded mens rea. None of that is faithful to the actual allegations made in the Bankruptcy Court by the Trustee.”   Although the divide among the justice about the denotation and connotation of “misappropriate” seems purely semantic, the opinions in Salzano provide an interesting prism into contemporary attitudes about the culpability of white-collar “misappropriation” (in a civil case) as opposed to the simple “street crime” of theft.

Acting Like a Reasonable Woman

I’m going to (ab)use(?) my stint on PrawfsBlawg to air something that niggles at me every time I make my way through the reasonable personal standard in my Torts course.

The reasonable person standard (previously, the reasonable man standard) indexes liability to whether an individual acted in the manner of a reasonable and prudent person under the same or similar circumstances.  In making this determination, fact finders may consider an actor’s physical disability and any special knowledge or skill possessed by the actor (i.e., use the conduct of a reasonable person with the physical disability or knowledge/skill of the actor as the standard), but may not consider emotional or mental disability (including, for example, stupidity). 

The reasonable person standard was previously the reasonable man standard.  “The reasonably prudent man was invariably described rather vaguely, but always in male terms….In America, the definition – perhaps the most startling of all – was given by courts and commentators as ‘the man who takes the magazines at home and in the evening pushes the lawn mower in his short sleeves.’…In any event, all these people whose attributes seem, in Europe and America, to define reasonableness are unmistakably male….”  Guido Calabresi, Ideals, Beliefs, Attitudes, and the Law 23, 26 (1985). 

A number of scholars have explored the gender implications of the reasonable person standard.  Ellen Bublick observes that , as applied to the contributory negligence of female rape victims in premises liability cases, the reasonable person standard has been interpreted to require that women greatly circumscribe their behavior to avoid attack (for example, by finding them negligent for going out alone after dark).   Ellen M. Bublick, Citizen No-Duty Rules: Rape Victims and Comparative Fault, 99 Colum. L. Rev. 1413 (1999).  Margo Schlanger uses old tort cases involving women to compare a universal tort standard to a reasonable woman standard (for a primer on exploring these issues in a Torts course, see her article Gender Matters: Teaching a Reasonable Woman Standard in Personal Injury Law, 45 ST. LOUIS U. L.J. 769 (2001)) and, in doing so, elucidates “a central question for legal feminist theory . . . whether women's equality and welfare is best fostered by insisting on adherence to universal legal standards or on recognition and even privileging of women's difference from men.”  Id.  See also Margo Schlanger, Injured Women Before Common Law Courts, 1860–1930, 21 HARV. WOMEN’S L.J 79 (1998).

My aforementioned niggle relates to the practical application of the universal reasonable person standard.   Imagine that I slip on a poorly maintained step while lifting my suitcase down the stairs to the subway and break my leg.  In my suit against the MTA, the MTA claims that it was negligent for me to attempt to carry the (20 lb.) suitcase down the stairs.  So, to assess my alleged contributory negligence, the fact finder will need to decide whether the act of carrying the suitcase accords with the conduct of a reasonable person, in like or similar circumstances. 

Does my gender (female) affect the outcome of this assessment?  (By way of warning, I’m now going to engage in a bit of speculation -- permitted, I think, in this blog context.)  Since the physical capability of the lifter seems relevant to resolution of this question (and there are both perceived and actual (average) differences in upper body strength between men and women), it seems to me that it well might. Further, it seems likely to me that presumptions about the relative strength (or weakness) of women would make it harder for a woman to show that she was reasonable in carrying the suitcase.  There are, of course, many women who are much stronger (and more agile, better at balancing, etc.) than many men and likely exceed the presumptive strength that might be assigned on the basis of gender alone.  If I am right about the foregoing (largely and admittedly speculative – notably, Calabresi dismisses the above concern by observing that, with respect to physical attributes, the standard “is a fairly individualized one and hence rarely sexist or racist,” Ideals, Beliefs, Attitudes, and the Law 27), this suggests a few issues. 

Does the way that the reasonable person standard is applied punish superwomen?  Are women who make reasonable decisions to engage in conduct on the basis of their actual strength and capabilities found to be negligent because fact finders apply gendered presumptions of capability?  (Or, more realistically, are settlement figures affected based on a forecast of jury application of these gender presumptions?)  If so, should this trouble us?  There is, for example, probably a general sense of how much weight a man can reasonably carry down stairs and men who are more physically capable are in the same situation as superwomen – act in accordance with your own capabilities at your own risk.   

When a woman (in particular one who departs from an attribute likely to be presumed on the basis of gender, such as a “strong” woman) is accused of negligence, should (or do?) counsel anticipate and specifically rebut such gender presumptions (for example, by offering evidence of agility, strength, etc.)?  Should/do we train counsel to recognize when gender presumptions are likely to come into play and how to rebut them?

The above example uses upper body strength as the basis for the gendered presumption.  The average man does, in fact, have greater upper body strength than the average woman (albeit, as noted above, this average difference may not hold with respect to individuals).  However, it seems likely to me that there are other presumptions that fact finders are likely to make about the capacity of a woman based on her gender that are incorrect both as a general matter and as applied to an individual woman.  Are there other and potentially more pernicious gender presumptions relevant to application of the reasonable person standard?

Finally, many note that the reasonable person standard may, as applied, frequently boil down to a question of what is customary in a community.   The potential gender issues of this can perhaps be elucidated by switching the hypothetical.  What if, instead of carrying a suitcase, I was carrying my 20+ lb. son down the steps?  (Yes, customary and reasonable!)  Or a 20 lb.toolbox?   (Hmmm...) Gendered application of the reasonable person standard seems, if anything, more pronounced and potentially troubling viewed in this way.

I have not found the time to adequately research this can of worms and recognize that the issues raised intersect with equality and critical tort scholarship with which I am largely unfamiliar.  So I thank those more learned in these matters in advance for offering thoughts and/or direction to the relevant scholarship.

Shooting Fish in a Barrel? The Economic Loss Rule

British Petroleum's oil spill in the Gulf certainly provides ample opportunities to teach or, at this point in the semester, to test the Economic Loss Rule.  In fact, it is such a great candidate for an exam hypothetical, it is like shooting fish in a barrel, if you'll pardon the expression.  Essentially, the BP oil spill is the Testbank case times a hundred, with the specter of unlimited liability looming large, and it will be interesting to see if this very dramatic case results in some expansion of the Economic Loss Rule to allow more injured parties--parties without physical injury or property damage--to recover. 

I'll be teaching the Economic Loss Rule in Advanced Torts this summer at the University of Montpellier, but I'm very curious how many Torts professors out there teach it in the first-year Torts class.  I have taught the Economic Loss Rule to 1L students before, but in a four-hour class something had to give, and it seemed natural to give up one of the most complicated and confused doctrines in all of Torts.  Now I'm wondering if that was the right choice.  What do you think?  

Geistfeld on Polsky and Markel's Taxing Punitive Damages

Over at the TortsProf Blog, NYU Prawf, Mark Geistfeld, just posted an interesting set of reactions to the draft of Taxing Punitive Damages that Gregg Polsky and I have posted on SSRN. Thankfully, these reactions appeared prior to publication (go SSRN!!) and so, with some luck and the indulgence of our editors, Gregg and I will have the chance to consider and respond to Mark's comments over the next few weeks as we tweak our draft. (Naturally, we invite others to share their thoughts with us too, either online or offline, prior to publication. And if you'd rather hold your fire until after the piece is out, Virginia Law Review runs "In Brief," an online companion that it will use to host responses to our piece, and our eventual reply.)  

Mark's comments appear below: 

As the academic year winds down, I usually rearrange the piles on my desk in an effort to mark the onset of another summer full of promise and unrealistic expectations. While rearranging the pile “tort-related things I’d like to read when I get a chance,” I came across the article by Gregg D. Polsky & Dan Markel, “Taxing Punitive Damages” (2010) (forthcoming Virginia Law Review).  Earlier this semester I had downloaded the manuscript and dutifully placed the printout in the appropriate pile. Since then, I’ve seen passing reference in the media to the apparent absurdity of federal tax rules that permit the deductibility of punitive damage awards—a deduction targeted for elimination in President Obama’s 2011 fiscal year budget.  How could punishment plausibly deserve a tax break?  The issue is more interesting than I had initially recognized, so I paused to peruse more closely the offerings of Polsky & Markel on the matter. 

They make the nice point that if punitive damages are not deductible, then plaintiffs and defendants have an incentive to “disguise punitive damages as compensatory damages in pre-trial settlements.” Doing so decreases the (after tax) cost of settlement for defendants, creating a gain that can then be shared by the settling parties.  By way of extended analysis, Polsky and Markel go on to conclude that the best way to solve the “under-punishment problem” created by deductibility is not to eliminate the tax break, as everyone had previously concluded, but instead to apprise juries of the deductibility issue so that they will “gross up” the punitive award to offset the tax break. 

Largely missing from the analysis, however, is discussion of how liability insurance affects the incidence of tort liability. Once this dimension of the problem has been recognized, it becomes apparent that there is a much stronger case against the deductibility of punitive damages.

Consider a world (largely like our own) in which every defendant worth suing has liability insurance covering at least a portion of a tort judgment (or any other form of civil liability that permits the award of punitive damages).  Suppose our insured defendant has incurred punitive damages liability. Perhaps surprisingly, this form of liability is not expressly excluded from coverage under the standard-form liability-insurance contracts.  Whether the defendant can actually collect on the insurance, however, depends on whether the jurisdiction permits the insurability of punitive damages as a matter of public policy.

Nine or so jurisdictions, including California and New York, prohibit the insurance of punitive damages.  In these jurisdictions, any settlement between an insured defendant and the tort plaintiff presumably will allocate the appropriate amount to punitive damages. Regardless of how the defendant and plaintiff would otherwise like to characterize the proportion of compensatory and punitive damages covered by the settlement, the insurer is obligated to indemnify only the former category and accordingly will seek to maximize the portion of the settlement attributable to punitive damages (and excluded from coverage).  The insurer usually can police the terms of the settlement directly (the insurance contract gives the liability insurer the right to settle the case).  But if the insurer does not fully participate in the settlement, the terms of the settlement would not have preclusive effect in a subsequent coverage dispute with the tort defendant/policyholder regarding the amount of the settlement that is covered by the policy and properly allocable to compensatory damages.  The liability insurer, therefore, presumably will monitor the portion of the settlement allocable to punitive damages, effectively precluding plaintiffs and defendants from otherwise manipulating settlements in a manner that would thwart efforts to restore the full “sting” of punitive damages by making them nondeductible.

The argument against deductibility then largely generalizes to the remaining jurisdictions that permit the insurability of punitive damages.  The standard-form liability-insurance contracts do not cover liabilities for “expected or intended harms.”  In these cases, the insurer can deny coverage altogether—for both compensatory and punitive damages—and so it will not monitor the portion of any settlement properly allocable to punitive damages.  In light of the settlement problem identified by Polsky and Markel, the best approach would be to deny deductibility for the entire liability.  These instances of intentional wrongdoing clearly implicate the retributive concerns that would create a problem of “under punishment” in the event that the punitive award receives a tax break.  Rather than let the litigants manipulate settlements for tax reasons, why not eliminate the tax break altogether for liabilities of this type?  Why should these intentional wrongdoers be able to deduct any of their liabilities as a cost of doing business?

Regardless of how one answers this question, the case for nondeductibility remains intact.  The public policy concerns implicated by the insurability issue are substantively identical to those posed by the deductibility issue: each allows the tort defendant to distribute the cost of the punitive award to a wider group (other policyholders; other taxpayers).  In deciding to permit the insurance of punitive damages, a jurisdiction has concluded that the redistribution afforded by liability insurance does not create any public policy problem of “under punishment.” So, too, in these jurisdictions the redistribution afforded by the deductibility of punitive damages does not create any public policy problem of “under punishment.” Consequently, even if a tax rule of nondeductibility could be largely circumvented by the settling parties as Polsky and Markel conclude, there is no “under-punishment problem” created by the de facto deductibility of punitive damages.  This does not mean that the deductibility issue is largely irrelevant.  The tax rule against deductibility is still desirable as a federal matter because it furthers the public policy of those states that reject the insurability of punitive damages on the ground that wrongdoers should not be able to redistribute their punishment to others.

Admittedly, I live in a state where punitive damages are not insurable, and the analysis of Polsky and Markel has much more to offer than I have indicated.  They artfully unravel the surprising complexity of what appears to be a rather straightforward issue—whether bad behavior deserves a tax break.  Clearly, I should have put this article into my “read right away” pile (although that pile, of course, also ends up getting shuffled around at the close of the academic year).

 

- Mark Geistfeld

Sheila Lubetsky Birnbaum Professor of Civil Litigation

New York University School of Law

Punitive Damages and Private Ordering Fetishism

In two recent response essays by distinguished torts scholars, Professors David Owen and Michael Krauss, I was charged with "aggravating punitive damages" and instigating the "death of private ordering." 

Who, me?

In seriousness, I have a somewhat more considered and elaborated answer, and I've got a draft of that reply in a new essay up on SSRN by the title of Punitive Damages and Private Ordering Fetishism.  I'd be grateful if you could share with me any thoughts or reactions; it weighs in at just under 10,000 words. Here's the abstract, with links to the full conversation after the jump.

This essay is a reply to two recent responses that appeared in the U. Penn Law Review's online companion, PENNumbra by Professors Michael Krauss and David Owen. The essay's principal goal is to clarify some areas where I think Professors Krauss and Owen misunderstood some aspects of my proposed framework for restructuring punitive damages, a framework I developed in two recent articles. Those clarifications address issues including but not limited to how punitive damages law ought to address the wealth or financial condition of the defendant, the defendant’s status as a corporation, settlement dynamics and insurance. Before I answer Professor Krauss’s and Professor Owen’s challenges in those particular domains, however, I begin the essay with some more general observations about what role tort law could and should serve. My hope is that these initial remarks will provide some context for the nature and significance of the particular policy disputes we have with respect to punitive damages law.

You can find the articles Professor Krauss and Owen respond to here:

Markel, Retributive Damages: A Theory of Punitive Damages as Intermediate Sanction, 94 Cornell L. Rev. 239-340 (2009) (available at http://ssrn.com/abstract=991865 )

Markel, How Should Punitive Damages Work?, 157 University of Pennsylvania Law Review 1383 (2009) (available at http://ssrn.com/abstract=1260019

You can find Professor Krauss's Response here:
Michael I. Krauss, Response, “Retributive Damages” and the Death of Private Ordering, 158 U. Pa. L. Rev. PENNumbra 167 (2010), http://www.pennumbra.com/responses/02-2010/Krauss.pdf

You can find Professor Owen's Response here:
David G. Owen, Response, Aggravating Punitive Damages, 158 U. Pa. L. Rev. PENNumbra 181 (2010), http://www.pennumbra.com/responses/02-2010/Owen.pdf

"Hot News" Misappropriation: Implications for Bloggers? for Bloomberg News?

What happens when the interests of newsgatherers and news aggregators collide?  That was the issue before District Court Judge Denise Cote last month in Barclays Capital Inc. v. Theflyonthewall.com (S.D.N.Y., 3/18/10), and the opinion in the case arguably has negative (dare I say ominous?) implications for bloggers and for anyone who republishes truthful information about a matter of public concern, even if that information has already leaked into the public domain.

The plaintiffs in the case were the financial services firms Barclays Capital, Merrill Lynch, and Morgan Stanley.  They sued Theflyonthewall.com (Fly) for misappropriation and copyright infringement for redistributing their stock analysts' investment recommendations "through unauthorized channels of electronic distribution."  Fly is an Internet subscription service that aggregates and distributes "relevant, market-moving financial news and information."  Fly often obtained research reports and recommendations via leaks from plaintiffs' employees or clients.  Fly would then quickly distribute the recommendations before the New York Stock Exchange opened, thereby undercutting the plaintiffs' abilities to profit from their reports.

After a bench trial, District Judge Cote entered judgment against Fly for copyright infringement, and awarded statutory damages, a permanent injunction against direct copying and republication of the reports, and attorneys' fees for the portion of the litigation expenses associated with pursuing the copyright infringement claim.  She also held that Fly had engaged in "hot-news misappropriation" when it redistributed the recommendations from the plaintiffs firms' investment reports before the opening of the New York Stock Exchange and crafted a "time-delay" injunction requiring Fly to delay future distributions for a specified period after the firms released their reports to remedy the problem.[Full details below.]

The theory of "hot news" misappropriation stems from International News Service v. Associated Press, 248 U.S. 215 (1918), in which the Supreme Court held, under federal common law, that "hot" news is "quasi-property."  That case involved a claim by the Associated Press against a competing news service that was obtaining and then redistributing on the West Coast AP battlefront news releases during World War I.  The Court's decision reflects the notion that "time is property", or as my colleague Michael Wolf puts it, the decision protects the "money value of time" as opposed to the "time value of money."  It also protects the "labor value" that AP invested in newsgathering, at least for a limited time.  The "hot news" misappropriation doctrine was criticized by no lesser lights than Justice Brandeis and later Judge Learned Hand. In fact, Justice Brandeis wrote in dissent in INS v. AP that "the general rule of law is that the noblest of human productions--knowledge, truths ascertained, conceptions,and ideas--become, after voluntary communication to others, free as the air to common use."  Despite the pedigree of its critics, the hot news misappropriation tort nonetheless caught on.

Indeed, Judge Cote relied on a Second Circuit decision, National Basketball Ass'n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), to define the contours of the tort.  There, the NBA sued the maker of a hand-held pager that provided real-time information about basketball games.  The Second Circuit held that a "narrow" hot news misappropriation claim could survive preemption by the federal Copyright Act when "extra elements" were present.  The extra elements are:  "(i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendants use of the information constitutes free riding on plaintiff's efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened."

Applying this test, Judge Cote held that Fly had misappropriated the research reports of the financial services firms when it distributed them to its subscribers before the opening of the New York Stock Exchange.  Judge Cote wrote:  "Fly's core business is its free-riding off the sustained, costly efforts by the Firms and other investment institutions to generate equity research that is highly valued by investors.  Fly does no equity research of its own, nor does it undertake any original reporting or analysis . . . [Fly's] only cost is the cost of locating and lifting the Recommendations and then entering a few keystrokes into its newsfeed software. Although Fly does attribute each of the Recommendations to its originating firm, if anything, the attributions underscore its pilfering." 

Alarmingly, Judge Cote absolutely rejected the argument that Fly had a right to redistribute truthful information that had already made its way into the public domain.  "[I]t is not a defense to misappropriation that a Recommendation is already in the public domain by the time Fly reports it."  The judge found it of no moment that the "actors in the marketplace repeat news of Recommendations to their friends and colleagues, such that the word inevitably gets out.  Rather, it is that Fly is exploiting its self-described 'hefty relationships with people in the know' to gather information from the rumor mill and run a profitable business dedicated, in large part, to systematically gathering and selling the Firms' Recommendations to investors."  

Judge Cote also found that the plaintiffs were in direct competition with Fly even though they were not themselves in the news business.  As to the final factor of the NBA test--whether the plaintiffs would have a reduced incentive to invest in research--Judge Cote found that the plaintiffs' investments in research had diminished because Fly and other news services had published their leaked recommendations.  Significantly, and quite interestingly, Judge Cote found that the "unauthorized redistribution of [analyst] Recommendations"  was a "major contributor to the decline in resources that each Firm devotes to equity research."  (emphasis mine) To be fair, the judge did concede that there were other factors in play during this time that might have affected analyst staff and budgets.  She observes, for example, that "[s]ince 2008, the world has experienced an economic cataclysm."  Still, it is richly ironic that these firms are concerned about protecting the "integrity" of their equity research.

In crafting a remedy for Fly's misappropriation, Judge Cote took into account "public policy considerations" but made no mention of the First Amendment.  Specifically, she observed that the production of equity research "is a valuable social good" that will be "underproduced unless the Firms can achieve an economic return on their investment."  She also noted that there is an "important" public interest in "'unrestrained access to information', particularly when the information is heavily fact-based."  She therefore enjoined Fly from unauthorized redistribution of Plaintiffs' research recommendations released when the market is closed "until one half-hour after the opening of the New York Stock Exchange or 10 a.m., whichever is later."  She enjoined Fly from publishing recommendations issued when the market is open until two hours after their release by the Plaintiffs. 

From a media lawyer's perspective, there are compelling interests on both sides of the case.  On one hand,the newsgatherers and content generators wish to turn a profit (and stay in business), and their ability to do so is threatened by online news aggregators.  On the other, this case involves a prior restraint preventing republication of newsworthy information, even if that information has already entered the public domain.  It also involves the imposition of tort liability for the publication of lawfully obtained truthful information.  Given this conflict, surely the district judge should have at least considered how to reconcile her decision with First Amendment cases like Near v. Minnesota, Florida Star v BJF, and Bartnicki v. Vopper.  Fly evidently plans to appeal the district court decision, so perhaps the appellate court will do a better job of reconciling the conflicts present in this case. 

Homosexuality as Defamation: When Will It End?

My previous post on cyberbullying involved, among other things, a claim by the plaintiff that his reputation was injured by being called gay.  Just last month, a district court judge decided that a reasonable jury might determine that it is defamatory to call someone gay. Robinson v. Radio One, 2010 Westlaw 606683, (N.D. Texas, Feb. 19, 2010)  I find cases like this fascinating because they expose the public policy choices that underlie the decision whether to treat a statement as defamatory or not.

Thirteen years ago, I lamented in print that  "[c]ourts have been slow to embrace a progressive view by declaring that an allegation of homosexuality cannot be libelous.  The courts act as if they are not in a position to pick and choose but must accept social prejudices as they find them."  I wrote then, and I still believe, that the defamation cases involving a false attribution of homosexuality are comparable to the pre-1960s cases finding it defamatory to call a white person black, and I concluded by expressing the "hope that one day the modern homosexuality cases will seem as anachronistic as the pre-1960s race cases."  I hold this view despite the fact that I understand that being falsely labelled homosexual can result in real harm.  And I am sure some will contend that ignoring the reality of homophobia won't make it go away but will instead leave a plaintiff who has been falsely labeled homosexual without compensation for  harm caused by a wrong-doer.  However, I would contend that defamation's symbolic function is as vital as its instrumental one.  Courts can, have, and should continue to declare the values of certain groups as too antisocial to be validated by law.    

Fortunately, some courts are beginning to share this view.  The U.S. District Court for the Southern District of New York rejected the claim that being called gay is defamatory, see  Stern v. Cosby, Case 1:07-cv-08536-DC, as did a federal district judge in Massachusetts in Albright v. Morton, 321 F.Supp. 2d 130 (D. Mass. 2004).  Indeed, the Massachusetts district judge wrote a ringing repudiation of the notion that homosexuality can be defamatory in the eyes of a “substantial and respectable community.”  In Albright, one of Madonna’s former bodyguards sued for defamation and other torts, claiming that a photo caption in a book about the singer misidentified Madonna’s companion as the plaintiff when in fact it was a gay man. The district judge dismissed the plaintiff’s defamation action, holding that a statement imputing homosexuality to an individual not only is not defamation per se, but is incapable of a defamatory meaning. “‘[D]efamation per se’ should be reserved for statements linking an individual to the category of persons ‘deserving of social approbation’ like a ‘thief, murderer, prostitute, etc.’ . . .  To suggest that homosexuals should be put into this classification is nothing short of outrageous.”  The judge further observed:

  "[I]f Albright claimed that he was a white person wrongfully labeled African-American, the statement would not be defamation per se, even if segments of the community still held profoundly racist attitudes.  In the 1900’s, such statements were regularly deemed defamatory in a number of decisions that seem anachronistic, if not offensive, to modern eyes.  For example, in Bowen v. Independent Publishing Co., 230 S.C. 509, 96 S.E.2d 564 (1957), the Supreme Court of South Carolina found that it was libelous per se to include a white person’s name in connection with a news item under the heading “Negro News,” because of the continued existence of social prejudice against African Americans. Citing cases stretching back to 1791, the Court concluded that neither the abolition of slavery, nor changes in the “legal and political status of the colored race” warranted a departure from South Carolina precedent.  Id. at 565.  What the Court was doing, in effect, as one commentator noted, was “assuming without question that the plaintiff’s community was a ‘considerable and respectable’ one whose values are worthy of the law’s attention, respect, and support,” and in doing so, “validate[d] racist views.”  Lyrissa Barnett Lidsky, Defamation, Reputation, and the Myth of Community, 71 Wash. L.Rev. 1, 30 (1996).  Recent opinions expressly reject the premises of the earlier law.  See  Thomason v. Times-Journal, Inc., 190 Ga.App. 601, 379 S.E.2d 551, 16 Med. L. Rptr. 2200 (1989)(refusing to concede that plaintiff may have suffered from social prejudice of others where plaintiff sued over the publication of a false obituary that gave a funeral home listing that catered to a primarily “black clientel [sic]”)."

Despite the district judge’s willingness to leverage the symbolic function of defamation law, the First Circuit ended up affirming the dismissal on narrower grounds, holding that the photo was not reasonably susceptible of a defamatory meaning, because readers who realized the man in the picture was homosexual would also realize that the man was not the plaintiff.  Moreover, the caption, which identified plaintiff as Madonna’s secret lover, and accompanying text made it clear that the plaintiff was heterosexual.  Therefore, the First Circuit concluded, “given the [district] court’s correct finding that the photograph and its caption make no imputation of homosexuality, we need not decide whether such an imputation constitutes defamation per se in Massachusetts.”  Amrak Production, Inc. v. Morton, 410 F.3d 69 (1^st Cir. 2005). 

New Cyberbullying Case: D.C. v. R.R.

Here's a new cyberbullying case with truly atrocious facts.  It is called D.C. v. RR and was decided by a California Court of Appeal.  It involves a 15-year-old who received harassing comments on a website he maintained to promote his entertainment career.  The defendant filed a motion to strike, contending the action was a SLAPP suit.  The court affirmed the denial of the motion because the defendant did not demonstrate that his message was made in connection with a "public issue."  One part of the court's reasoning in this regard is troubling because the court rejects the argument that comments responding to a website promoting a celebrity's entertainment career are a matter of public interest, but any broad language in the case can probably be attributed to its admittedly egregious facts.  This facet of the opinion, and more, are worthy of further exploration in a subsequent post.  For now, however, I'd like to point out a fascinating, and somewhat chilling, feature of the case.  I find it especially chilling because I'm the mother of three young sons, one of whom is just entering puberty.  The defendant, R.R., explains his motive for posting a hateful comment as follows:

―. . . That afternoon, I was in a playful mood and I decided to add my own message to the Internet graffiti contest that was apparently going on. I posted a message which stated: ‗Hey [D.C.], I want to rip out your fucking heart and feed it to you. I heard your song while driving my kid to school and from that moment on I‘ve . . . wanted to kill you. If I ever see you I‘m . . . going to pound your head in with an ice pick. Fuck you, you dick-riding penis lover. I hope you burn in hell.‘
―. . . My motivations in sending this email had nothing to do with any perception of [D.C.‘s] sexual orientation, and certainly did not reflect an intention to do him physical harm. As set forth above, I had no personal knowledge or belief about [D.C.‘s] sexual orientation. No one ever told me he was gay, and I had no thoughts on the subject matter. My message is fanciful, hyperbolic, jocular, and taunting and was motivated by [D.C.‘s] pompous, self aggrandizing, and narcissistic website — not his sexual orientation. My only other motivation, a bit more pathological, was to win the one-upmanship contest that was tacitly taking place between the message posters. Everything about the message is fanciful. I assumed that any rational person would understand that I was just inarticulately and offensively saying, ‗I am repulsed by your self promotional style.‘ I certainly did not think anyone would believe that they could eat their own heart after it was taken from their body. I assumed that a 10 year old child would understand that you would be dead if your heart was removed. I obviously didn‘t have school age children and I had never listened to any of [D.C.‘s] songs. Paradoxically, my message states that my motivation was a hatred of [D.C.‘s] song, not his sexual orientation, i.e., my message itself . . . belies the allegation in the complaint.
―. . . The complaint alleges that my motivation was my perception that [D.C.‘s] sexual orientation was gay. As set forth above, I had no opinion regarding [D.C.‘s] sexual orientation. More importantly, I wouldn‘t care less if he was gay. I have no animosity towards gays, and . . . even if I thought [D.C.] was gay, it couldn‘t be a basis for any hatred or threat. . . . [O]ne of my favorite relatives is openly homosexual and I have been quite vociferous in defending this relative from fundamentalist views that characterize homosexuality as a disease. In fact, one [of] my good friends at school is a member of the Gay-Straight Alliance. I have made my views clear that I think this student‘s involvement is ‗cool.‘ Likewise, I have walked side by side with gay couples in the AIDS walk, supporting their position, and I have worked through a church at a soup kitchen for AIDS patients, many of whom are gay. . . . I am not homophobic and the basis of my conduct was childishness and some repulsion to [D.C.‘s] grandiose style — not his sexual orientation.
―. . . The next day after the offensive postings, at school, I heard students talking about the posts. The students expressed the view that the posts were a funny gag. No one took the posts seriously as a death threat or an accusation of homosexuality. The posts were treated as a goof. I did not participate in these conversations because I was ashamed of my participation. In retrospect, my conduct felt infantile, immature, and was beneath me. I felt ashamed that I would allow the desire for peer approval, ‗peer pressure,‘ to induce me into acting like an idiot.

Defamation, or Just Masturbation?

Here's the link to a news article describing an interesting lawsuit brought by former model Irina Krupnik in Manhattan Supreme Court against NBC Universal and Universal Pictures Co.  Ms. Krupnik is disgruntled, and understandably so, because a bikini-clad photo of her was used as a masturbation aid by a "purposely unattractive male" character (played by Jon Favreau) in the movie Couples Retreat.  Although Ms. Krupnik had signed a release allowing use of her photos by stock photo agencies, her lawyer contends that "[i]n no way at all did she even remotely expect the [photos] to turn up in some raunchy movie scene."  According to some news reports, Ms. Krupnik also sued for defamation and invasion of privacy.  She contends that being associated with the movie scene marred her "wholesome image." 

This case reminds me a bit of Braun v. Flynt, a 1984 case in which an entertainer who had an act with a swimming pig sued a pornographic magazine called Chic when it used her photo in a sexually suggestive manner.  Braun lost on her libel claim but won on a false light theory; however, Ms. Krupnik can't use this theory because New York courts don't recognize the false light tort.   See Howell v. New York Post Co., 21 Media L. Rep. 1273 (N.Y. 1993).   Moreover, Chic's use of Braun's photo created an implication that Braun consented to or was complicit in its use.  Arguably, the use of Krupnik's photo as the "inspiration" for the character in Couples Retreat does not create the same negative implication about Ms. Krupnik's complicity. 

Toyota Class Actions: let the games begin

The National Law Journal reports on the several class actions that have been brought against Toyota in the wake of the gas pedal problems and recalls.  The lawsuits are consumer class actions that seek damages for economic losses stemming from reduced value of cars subject to this problem.

It looks like the lawsuits are being filed state by state with the expectation that they will then be consolidated as an MDL.  The lead plaintiffs in the lawsuits appear to be persons whose cars actually experienced the gas pedal issues.  Although these plaintiffs have not alleged personal injury, there will be some serious typicality issues given the very broad class definition that the attorneys are seeking.

While the plaintiffs face some challenges in terms of class certification and causation, there is no question that multiple billion dollar lawsuits will pose a major litigation challenge to Toyota going forward. 

What will be interesting to watch is the delicate balance between the remedies that Toyota has already offered, the recalls and other actions by NHTSA, and the machinery of private remedies writ large over a vast number of car owners.

Cyberbullying/Cyberboorishness

If you’re a hammer, everything looks like a nail.  If you’re a law professor, every social problem seems to call for a legal solution.  “Cyberbullying” is this decade’s hate speech.  Like “hate speech,” "cyberbullying" is a label, not a legal definition.  The inherently pejorative label carries the implication that “cyberbullying” is a new and serious problem that the law should address.  Of course, the law already does address “cyberbullying.”  Online threats, stalking, and hacking are crimes.  Online defamation  is libel, and intentional infliction of emotional distress is tortious whether it takes place online or off.   

But what, you might ask, can be done about cyberbullies whose bad conduct isn’t proscribed by existing law?  For example, what should be done about law students who make sexist or racist or demeaning remarks about their classmates online, gaining the courage to speak from the cloak of anonymity?  Perhaps they should be denied admission to the bar on the grounds that they lack the character and fitness necessary to be lawyers.  This is the topic for debate by an AALS panel sponsored by the Section on Women in Legal Education and the Section on Defamation and Privacy.  The title of the panel is "The First Amendment Meets Cyber-Stalking Meets Character and Fitness," and it will be held on Saturday morning at 8:30.  Full disclosure:  I'm on the panel, cast in the role of defending cyberboorishness against legal sanction.  It should be fun.

Taxing Punitive Damages, etc.

Update 8/16: We've now got a first shitty draft available for private circulation; if there are tax or torts mavens who wish to read it, please email me asap. Thanks.

It's about four days until my wife is "due." During this pre-baby period, one of my projects has been an effort with my friend and co-author, Gregg Polsky, to finish our "shitty first draft" of Taxing Punitive Damages. I'm happy to say we're almost there. This paper is actually the fourth paper on punitive damages I've been involved with the last few years. The first two came out this past spring (here and here) and I was initially planning on turning to work further on and submit the third one, Punitive Damages and Complex Litigation, later this summer.  But for a cluster of reasons, that piece is now on the back burner and has swapped places with the fourth piece -- the one with Gregg on the intersection of taxation and punitive damages. 

Unlike the earlier co-authoring work I did (and am doing still) with Ethan and Jennifer, where we had overlapping areas of expertise as well as separate ones, this piece with Gregg presents a collaboration where there's really no overlap of expertise. He's the tax guy and I'm, well, the guy who does whatever it is that I do. While I'm definitely not the tax guy -- I never took tax in law school, to my regret, so I've been trying to learn a few things while writing this paper up -- I confess I've had fun learning about all this new legal mumbo jumbo. Tax is fun.  Yeah, I said it.*

Over the next week or so and in the course of a few posts, I'll try to share some parts of the paper's main ideas. There's a rough stab at an abstract after the jump. But keep in mind that all this is tentative, so if you think we're off-base, please let us know.  By the way, we expect to have a circulable draft in the next week or two. If you're a tax person and/or interested in federalism (Brian G? Rick H?), we hope you'll be among the first to read it.

Taxing Punitive Damages
In this article, we address the important but astonishingly under-examined issues associated with the taxation law and policy related to punitive damages. For the most part, the tax consequences of punitive damages are not on anyone’s minds, and as a result of this blind spot, plaintiffs and their lawyers are likely leaving enormous amounts of money on the table in every case involving punitive damages against defendants whose torts occurred in the context of business operations. Of course, even if we assumed that decision-makers regarding punitive damages were aware of the relevant tax effects, there are still a number of other important issues affecting whether a jurisdiction should make punitive damages a) deductible from defendants’ gross income or non-deductible, and b) taxable gains to the plaintiff.  This Article examines those issues, and by doing so, spotlights the policy difficulties associated with trying to use tax law to help achieve the goals of current punitive damages law.  Contrary to a number of scholars who have flatly endorsed the move to a non-deductibility rule to simply increase the putative “sting” of punitive damages, we explain what that change in taxation would augur for a broad array of policy concerns including federalism, settlement incentives, collusion against third parties, and administrative oversight. Because we think a lot of the difficulties associated with the taxation of punitive damages cannot be readily fixed simply by tweaking tax law, we sketch out a vision for what a more attractive punitive damages regime would look like, and how the tax rules would correspond appropriately. 

*Btw, I associated the "Yeah, I said it" line with Chris Rock and his famous joke about who can and cannot be First Lady, but it seems Wanda Sykes may have laid claim to it more prominently by her book title.

Sheila B. Scheuerman on Markel's "Retributive Damages"

Somewhat randomly, I just stumbled across this new essay on the Legal Workshop by Professor Sheila Scheuerman that takes my "Retributive Damages" piece in Cornell to task for a) conjuring a scheme that does not resemble punitive damages, and at the same time b) ostensibly suffers from due process questions arising from the SCT's punitive damages jurisprudence.  Hmmm.  

After the jump, I've reprinted her critique. I'll try to work up a response and share it next week. Though I guess the title of her response suggests something like I'm Alice in Wonderland, I'm nonetheless very grateful to Prof. Scheuerman for the attention she's paid to my work. I hope it withstands her scrutiny, at least when viewed in conjunction with the second piece in the series, How Should Punitive Damages Work?, which came out in final form a couple months ago. If you've read my piece(s), feel free to weigh in on the matter in the comments. Have a good weekend!

And Frank Easterbrook Thought the "Law of the Horse" Wasn't Fascinating?

Okay, campers.  Somebody please explain this one to me.

I decided I wanted to take at least one horseback riding lesson, because, well, I just want to.  We'll see where it goes from there.  I went up to the Bay Harbor Equestrian Club, where horses seem to live in nicer condos than most people, and I'm due to mount up this Thursday on "Nick," who is supposedly gentle on aging, "City Slicker" wannabe, never-been-on-a-horse-except-the-merry-go-round, where's the kickstand and the ignition key, what was that bubbeh said about Cossacks, rookie.

There is a big sign mounted just before you enter the riding ring (and it appears on the contract as well) that says:  Under the Michigan equine activity liability act, an equine professional is not liable for an injury to or the death of a participant in an equine activity resulting from an inherent risk of the equine activity.  Well, that's not off-putting to me, because I'm tough (I taught an upper level bar course - business associations - as a visiting prof in the fall of 2006 to returning 2Ls at Tulane who had just undergone the post-Katrina 1L year in which they stuffed an entire year into the spring and summer terms, and I lived to tell about it).  But as a sometime participant in the dialogue about corporate governance, I kind of wondered why riding instructors got a free pass when there's so much debate about the business judgment rule and good faith and all that stuff as it applies to directors (who also supposedly get a free pass).  So I looked up the statute.

The statute expressly provides that the sign and contract must contain exactly that warning.  MCLA §691.1666(3).  And, I suppose it's literally true.  But this looks like an instance in which the exception subsumes the rule.  Yup, Section 3 says "Except as otherwise provided in section 5, an equine activity sponsor, an equine professional, or another person is not liable for an injury to or the death of a participant or property damage resulting from an inherent risk of an equine activity."  MCLA §691.1663.  But when we get to §5, we see (in relevant part) that the equine professional is nevertheless liable for (a) providing faulty equipment or tack if it is the proximate cause of the injury, (b) providing a horse and failing to make sure that the participant's ability fits that particular horse, and (c), the biggest catch-all, "commit[ting] a negligent act or omission that constitutes a proximate cause of the injury, death, or damage." 

So as I read this, there's a safe harbor against liability for anything arising out of the inherent risk of the activity, which, by the definition, includes about what you would expect:  ornery animals, animals that run into each other, and how animals react when they hear loud noises.  Nevertheless, that doesn't cover all the duties of reasonable care that you'd expect the professional to have even if there were no law at all.  What else is there?  Equine law experts, what gives?  Is this somehow merely burden shifting?  What am I missing?

A Casual Casebook: The Canon of American Common Law

This summer I am planning to put together a casebook that is for leisurely reading, rather than a law-school course. My tentative title is "The Canon of American Common Law." 

It is an idea of mine that started with the thought that it would be exciting to give a special award to the first-year law student with the highest combined grade-point average in the three common law courses: Contracts, Property, and Torts. A good name would be the Holmes Award. But what would be a suitable prize? A perfect token, I thought, would be a book of the classic common-law cases. I think such a book would also be nice to have available for casual students of the law – people who would like to do some exploring in the law – but who are not looking for three years of law school.

Below is my very-rough draft table of contents, along with a list of “on the bubble” cases that are deserving, but that I might leave out to keep the size of the book manageable. I would be very grateful for your comments. Do any of the cases fail to qualify as classics? Am I grievously leaving something out? Am I close to closing in on a canonical list? Or am I way off?

Contracts:

Wood v. Boynton

Webb v. McGowin

Raffles v. Wichelhaus (The Peerless Case)

Hamer v. Sidway

Lucy v. Zehmer

Wood v. Lucy, Lady Duff-Gordon

Hawkins v. McGee

Peevyhouse v. Garland Coal & Mining Co.

Hadley v. Baxendale

Property:

Ghen v. Rich

Pierson v. Post

Brown v. Voss

Hannah v. Peel

Moore v. Regents of the University of California

Vanna White v. Samsung Electronics America, Inc.

State v. Shack

Boomer v. Atlantic Cement Co.

Torts:

Vosburg v. Putney

Garratt v. Dailey

Fisher v. Carrousel Motor Hotel, Inc.

Ploof v. Putnam

Katko v. Briney

Vincent v. Lake Erie Transportation Co. 

Byrne v. Boadle

Palsgraf v. Long Island R.R. Co.

Summers v. Tice

Tarasoff v. Regents of University of California

U.S. v. Carroll Towing Co.

Vaughan v. Menlove

Rylands v. Fletcher

Escola v. Coca-Cola Bottling Co. of Fresno

On the bubble:

Dougherty v. Salt

Taylor v. Caldwell

Brown v. Kendall

I de S et ux. v. W de S

Indiana Harbor Belt. R. Co. v. American Cyanamid Co.

Lumley v. Gye

MacPherson v. Buick Motor Co.

Stone v. Bolton

You’ll notice there are a few English cases in the mix, but they are ones that, I think, are nonetheless, classics of American common law, generally because of their entrenchment in the American 1L curriculum.

Also, you’ll notice I have not included any U.S. Supreme Court cases. That’s another casual-casebook project – but a worthy one. I plan to take that up separately.

Creeping consequentialism, part IV

My stint as a blogger is drawing to a close, so I ask readers' indulgence as I inflict one further set of thoughts concerning the danger of unreflective consequentialist (especially utilitarian) thinking, in both morality and law.

3.  Even when consequences matter, maximizing the net value of consequences is not always the best moral or legal approach.

From the obvious fact that we often do and often should consider the negative and positive consequences of a possible course of action, it is easy to conclude that maximizing the positive consequences relative to the negative ones is what actors typically do, and should do.  Both conclusions are false.  Raz gives the example of someone deciding whether to move to a new location for an attractive new job, even though this will make it more difficult to keep up old friendships.  It is tempting to analyze this as: "The actor puts a price on friendship, and at a certain price, he will give up the friendship for personal gain.  He will and should maximize the net value of personal gain and friendship."  But that need not be the way the actor thinks about the balance of considerations, and it certainly is not a morally attractive way to analyze the tradeoff.  For example, the actor might owe his friends some minimum of concern, even if this causes him enormous inconvenience.

In many legal contexts, "maximizing good consequences" is an especially dubious criterion.  Even if prosecuting victims of sexual assault for dressing provocatively would be an effective way to prevent such assaults, principles of just deserts, and of liberty of movement and expression, militate strongly against this solution.

4.  The supposed comparative advantage of consequentialism over nonconsequentialism is sometimes based on the false assumption that all nonconsequentialists are absolutists who never balance one set of considerations against another.

True, some retributivists, corrective justice advocates, and other nonconsequentialists offer absolutist views and deny that consequences ever matter.  Some even deny that countervailing reasons counter the absolutist force of their principles.  (Kant might have held such a view of criminal punishment, and Ernest Weinrib seems to hold such a view of corrective justice.)  But there are many, many counterexamples.

5.  The supposed "empirical" advantages of consequentialist approaches--that they are more empirically grounded and more testable than nonconsequentialist approaches--are often overstated.

True, the consequentialist is more likely than the nonconsequentialist to make testable predictions about whether a moral or legal rule is "better" than an alternative.  But we often forget that these predictions are testable only after the theory has make a controversial value judgment about which consequences matter, and how much they matter.  In criminal law, is it more important to prevent armed robbery than to prevent a rape that does not involve the use of force?  More important to prevent three premeditated murders than to prevent four negligent accidental killings?  (Or to prevent ten premature deaths by providing better health care?)

Also, nonconsequentialists do care about the empirical world, in two ways.

(a) Often they do care about consequences; but they decline to give consequences an exclusive role in justifyiing or prohibiting a course of action.

(b) The necessary conditions of a nonconsequentialist theory do consider empirical facts.  A liberal retributivist believes that criminal defendants are less to blame if they faced social conditions that made it especially difficult to avoid crime.  Most retributivists believe that some mental disorders render defendants substantially incapable of moral responsibility.

I do admit, though, that nonconsequentialists too often defend relatively abstract principles, as if the empirical facts about human psychology, genetics, and social circumstances have no bearing on moral and legal obligations.  Fortunately, some of the new work in neuroethics and in empirical law and philosophy is beginning to remedy this problem.

Creeping consequentialism and insidious economics, part III

Thanks again to commentators for offering thoughtful responses to my last post.  Some reactions:

1. JP doubts the coherence of the distinction between consequentialism and nonconsequentialism.  And Aaron Williams suggests that calling something intrinsically wrong is "just dogma."

These are familiar and understandable concerns.  To skeptics, nonconsequentialist arguments are either ipsi dixit, and less rigorous or less fully justified than consequentialist arguments; or else disguised consequentialist arguments. 

For example, when a court says that it is unfair for a negligent victim to obtain full tort recovery, doesn’t it really mean that the negative social consequences of allowing full recovery here outweigh the positive ones?

Not necessarily.  The court might share my doubts that a legal rule limiting the recovery of negligent victims will affect their future behavior. (A jaywalking pedestrian is already ignoring a risk of self-injury; will her incentive to take care really be greater if she now also knows that, if she is run over by a tortious driver with substantial insurance, the damages she would obtain will be less?)  Yet the court might believe that it is unjust to require the injurer to pay full damages.

But doesn't "injustice" here translate into "creates (net) bad consequences"?  I don't see how it does.  To be sure, the court cares about "consequences" in a minimal sense: a legal rule permitting negligent victims full recovery is a "consequence" that the court wishes to avoid.  But that is a trivial type of consequence for our purposes: the real question is whether the justification for a rule of diminished recovery is based on consequentialist reasoning (such as utilitarian or economic analysis), or instead on other grounds.

True, specifying what is "unfair" about a victim's obtaining full recovery, or about an injurer creating unreasonable risks to others without having to pay for them, is a complex matter.  But that does not mean that the underlying justification really must be consequentialist. 

(Here is one useful overview of nonconsequentialist, and specifically deontological, analysis, clarifying how it differs from consequentialism.  And here is a useful overview of consequentialism, indicating some ways that it might accommodate deontological objections.)

But there is a wrinkle in this example, and in all cases where we evaluate whether a person's conduct is unreasonably risky.  It is especially easy to fall into the trap of assuming that any evaluation of risky conduct must be consequentialist in the deep sense, simply because we must consider the expected harms and benefits that might flow as a consequence of taking the risk.  But that assumption is unwarranted.  Shooting a gun in the direction of another person is often unjustified conduct because of the risk that it might kill, or wound, or frighten the victim.  But the reason it is unjustified could be because it is socially inefficient behavior (warranting legal sanction on a consequentialist account) or because it shows flagrant disrespect for the rights of the victim (perhaps warranting punishment, on a just deserts or retributive account; or warranting a duty to compensate if harm results, on a corrective justice or fairness account).

Put differently, the fact that possible or probable consequences of one's action are morally and legally relevant to its permissibility does not mean that permissibility is just a question of maximizing good consequences.  Another example: most agree that a right of self-defense depends on the actor's believing that an aggressor is confronting him with some threshold level of risk of harm (i.e., some probability of a bad consequence), and yet most accounts of why we have a right to self-defense are not consequentialist in the deep sense.  E.g., a nonconsequentialist account could rely on the defender's right of autonomy, or the attacker's forfeiture of his right to life.  (I have given a fuller account of this argument here.)

2.  JSD points out that "reasons" can refer either to the agent's actual motivating reasons for action, or to the normative reasons that, we might say, should have motivated the actor.  JSD says that only normative reasons explain the permissibility of an action.  Maybe.  On the other hand, among criminal law theorists there is a raging debate over whether subjective reasons affect permissibility.  If A shoots B, not knowing that B was about to attack him, is A's conduct justifiable?  Or is it only justifiable if he was subjectively acting for the right reason (self-defense) or at least with an honest belief (that B was about to attack him)?  T.M. Scanlon's new book also explores this issue from the perspective of moral philosophy.  (E.g., does the permissibility of a bombing raid that kills civilians depend on the purposes of the bomber, or of the person who planned the bombing?  Or does permissibility turn only on the objective reasons supporting the raid?)

3.  Thanks to Patrick O'Donnell for his reminder of how widely these debates over how to justify moral and legal norms extend--not only to tort law and criminal law, but also to health law, and indeed, I would say, to every moral and legal issue.  And I share his admiration for the work of Robert Goodin, who endorses a nuanced form of consequentialism for public policy decisions.

4. Is a sadistic pleasure (from driving into a crowd, say) really irrelevant to permissibility, or is it simply outweighed by other reasons?  A good question.  But many utilitarians are willing to "launder" or exclude sadistic, malicious, racist, and some other preferences, giving them no weight in their calculus.  Usually it will not matter whether we launder such preferences; for they will normally be outweighed by the bad consequences they are associated with.  But on the margin, such preferences, if not laundered, could make a difference to permissibility.  We do not permit teenage thrill-seekers to drive faster on public roads than other drivers who get no special thrill from driving fast; but shouldn't a thorough (nonlaundering) utilitarian permit the teenager to drive a bit faster, assuming that all other factors in the utilitarian calculus are the same for both sets of drivers?  To be sure, it would be impossible to accurately detect who genuinely obtained that special thrill; but quite apart from this practical problem, I believe that in principle we should, in this context, judge the thrill of speeding irrelevant to permissibility.

4.  Ohwilleke comments: If juries are given a Learned Hand instruction, in a form that asks them to apply expected costs and benefits in a utilitarian way, they are likely to ignore the instruction, and rely on their gut.  This does not surprise me.  Part of the reason for this is that most ordinary people are not straightforward utilitarians.  Their "gut" feelings of fairness often reflect nonconsequentialist principles of justice.  (But it is also true that their "gut" sometimes reflects unconscious psychological framing effects, hindsight bias, or an unrealistic assumption that if an activity or product is risky, the risk must be unjustifiable.)

Creeping consequentialism and insidious economics, part II

Thanks to those who posted thoughtful comments on my earlier post.  There are many reasons why the methodology that I critiqued, a comprehensive balancing of positive and negative consequences, is problematic.  And the comments pick up on a number of these.

First, not all consequences should matter (either on the question of the permissibility of primary conduct or on the question of the desirability of a legal rule).  Second, not all reasons should matter.  Third, even when consequences or reasons matter, maximizing the net value of consequences or reasons is not always the best moral or legal approach.  Fourth, the supposed comparative advantage of consequentialism over nonconsequentialism is sometimes based on the false assumption that nonconsequentialists are absolutists who never balance one set of considerations against another.  Fifth, the supposed "empirical" advantages of consequentialist approaches--that they are more empirically grounded and more testable than nonconsequentialist approaches--are sometimes overstated.

That's quite a list!  But let me get started...

1.  Not all consequences should matter.  Any plausible consequentialist approach must make value judgments.

Obviously it is not permissible for Joe to drive home at 90 m.p.h. in order to obtain the gun he needs for a bank robbery.  Bringing about an independently immoral consequence is never (or almost never?) a permissible reason for creating a risk.

Nor may Sarah drive that fast just because she wants to see the start of Obama's inauguration live on TV.  Here, though, I would not say that the consequence should not matter at all.  That beneficial consequence could justify her driving home at a safe speed rather than walking home, even though safe driving creates much greater risks than walking.  The important point: what consequences matter, and how much they matter, is itself a contestable question.  Sarah's very strong preference to see the inauguration might have very little social value.  Utilitarians differ greatly in how they define utility (as preference satisfaction, objective good, etc.), and consequentialists differ in how they define and value the relevant consequences (states of affairs? levels of welfare? promotion or nonviolation of rights, too?).  Thus, one supposed comparative advantage of consequentialism over nonconsequentialism, that it does not require difficult value choices, is, at the very least, exaggerated.

Consequences are sometimes irrelevant, and always need normative specification, not just when determining the permissibility of primary conduct, but also when determining what legal rule is desirable.

Of course, even if we embrace a thoroughly consequentialist framework, it does not follow that the legal rule should exactly mimic the utilitarian standard of primary conduct.  For example, even if the law should try to induce actors to engage in primary conduct that satisfies a utilitarian standard ("take a risk only if this maximizes the expected benefits over the expected costs"), legal liability for negligence (defined this way) sometimes will not be worth it--in light of the administrative and error costs of implementing the legal rule.  Strict liability and no liability are sometimes better means to the end.

But the deeper problems with looking only at, and at all, consequences, recur at the level of desirable legal rule, too.  For example: a rule reducing or eliminating recovery for personal injuries when victims act negligently might have no beneficial incentive effects on victims.  Yet there is a plausible nonconsequentialist reason for limiting their recovery: it is unfair to require injurers to pay full damages when victims are also at fault and causally contribute to their own harm.   And: we might conclude that certain consequences matter very little to the desirability of legal rules.  If we are trying to decide whether to require therapists to warn potential victims of serious threats made by their patients, perhaps we should ignore the harm that this rule will do to the prestige of the profession of therapy, while we should weigh heavily the risk that the rule will discourage violent patients from seeking help.

2.  Not all reasons should matter.

I agree with John Oberdiek's comment: the "just balance the competing consequences" approach seems attractive in part because this approach is easily confused with a far more compelling "just balancing the competing considerations or reasons" approach.  Why the confusion?  Perhaps the ambiguous notion of the "purpose" or "point" of a standard or rule is to blame.  Every moral standard or legal rule indeed must have a justifiable rationale.  But this does not mean that the "point" or rationale must be to bring about good consequences.  For example, some conduct might be intrinsically wrong, and some legal rules have an expressive "point".  (Why should South Carolina not fly the Confederate flag at the statehouse?  Because the state should not associate itself with its racist past.)  When we ask what the "purpose" of a moral standard or legal rule is, sometimes we fall into the unwarranted assumption that "bringing about good consequences" is the only eligible answer.

Nevertheless, not all reasons (even reasons other than achieving good consequences) should matter.  Perhaps the (actual) reason D speeds near a crowd of pedestrians is that he derives great enjoyment from seeing their horrified and fearful reactions.  That reason should be irrelevant to the moral and legal permissibility of his risky conduct.

(Some might call this reason a "consequence" of D's risky conduct, but this seems to collapse the distinction between consequentialist and nonconsequentialist approaches.  It need not be the case that D instrumentally selected speeding as an effective means to produce sadistic pleasure; rather, D might simply have been motivated by sadism, a motive that is part of why his risky conduct is impermissible.)

Put differently: everything depends on what counts as "a reason" or "a good reason" for an action.  Clearly the actor's actual reasons don't always have as much weight as she thinks they should.   Sometimes they should not count at all.  (To be continued...)

Creeping consequentialism and insidious economics, part I

OK, the title is hyperbolic.  But here is what troubles me.

You are teaching or analyzing legal rule A.  Suppose rule A seems to express an underlying standard of undesirable or impermissible conduct C.  For example, the legal rule is: "D must pay compensatory damages to P when D's unreasonably risky conduct harms P."  The underlined phrase expresses a norm of impermissible conduct.

Unthinking consequentialism can creep in at both levels of this analysis--in your analysis of what counts as creating an unreasonable risk to others, and in your analysis of whether a legal rule expressing this standard of conduct is normatively desirable.  This danger is especially pronounced in analyzing tort doctrine, but it arises elsewhere, too.

Consider first the standard of conduct.  How do we decide what risks are unreasonable?  (For example, whether it is unreasonable for D to speed to the hospital to obtain care for his sick child.)  Here is an answer, and one that appears so self-evidently correct that any alternative analysis seems irrational.

1.  Consider all the bad consequences of D's taking the risk.

2.  Consider all the good consequences of D's taking the risk.

3.  If the good outweighs the bad, it is permissible to take the risk.  If not, not.

(The famous Learned Hand test is often viewed as expressing this approach: you are negligent if but only if the burden of taking a precaution against the risk is less than the benefits of taking the precaution, in the form of reduced risks of harm to those exposed to the risk.)

If you don't like this approach, what is wrong with you?  Don't you care about consequences? Don't you prefer good to bad?  (Or, under marginal versions of this approach, don't you prefer more good to less good, and less bad to more bad?)  Are you fanatically opposed to balancing?  Even though, in your own life, you routinely balance the advantages and disadvantages when deciding between option A and option B?

Consider next the desirability of the corresponding legal rule: if an actor fails to act as specified by this standard of reasonable conduct, he must pay compensatory damages to the victim.  How do we decide the desirability of this rule?  Why, in exactly the same manner.  This is a matter of basic rationality, after all.

1.  Consider all the bad consequences of enforcing this legal rule of negligence liability.

2.  Consider all the good consequences of enforcing the rule.

3.  If the good outweighs the bad, this is a desirable legal rule.  If not, not.

Again, the logic appears to be inexorable.

This approach is enormously attractive for a number of reasons.  It appears to be thorough, empirically grounded, pragmatic, rational, and focused on human welfare.  It gives us a rigorous method, quite unlike the fuzzy soft-headed intuitions of those who defend rights-based and other nonconsequentialist approaches.  (A colleague in the philosophy department recently remarked to me that many of her undergraduates, when first introduced to philosophy, are seduced by the simplicity and apparent inevitability of utilitarian thinking.)

I do believe that economic and utilitarian analysis have value, both descriptively and normatively.  But the account I have just given greatly understates the difficulties with these forms of analysis, and overstates their ability to describe the world accurately and to prescribe norms that we should live by.  (To be continued...)

Beyond the Traditional Syllabus: Using Narrative to Teach Torts

Last week, I wrote about one of the ways (using a Navajo court opinion and a Canadian case) that I have tried to expand my syllabus beyond the traditional slate of federal and state appellate opinions.

Yesterday, I had a tremendously energetic class based on a case reading that wasn't a judicial opinion at all.

Our reading was a personal-injury attorney's first-person narrative of Howard v. Collins & Aikman Corp. (N.C. Super. Ct. 1990), a wrongful death suit brought by a four-year-old boy after an overworked tractor-trailer driver crossed into oncoming traffic, jackknifed his rig, and crawled up on top of the passenger car carrying the boy’s mother and father.

The author, of course, is John Edwards. Before he was a meteorically rising and falling presidential candidate, he was a multi-multi-multi-million-dollar success as a tort lawyer. We have his political ambition to thank for the valuable residue left over in the form of his autobiographical collection of plaintiff-side war stories, Four Trials.

I'm using each one of the four chapters this year to replace an appellate opinion on my syllabus. Each chapter discusses one case, and in so doing, does what a good appellate opinion should for a law-school class: It presents facts, applies law, and serves as a basis for classroom dialog. But these narratives go so much further, exposing the tactical, strategic, and human side of lawyering that lies beyond the sightlines of the appellate bench. The facts are richer, and the real-world context for the legal doctrine is more clear. Best of all, the text is gripping and imminently readable. These stories make marvelous teaching tools, and I urge you to try them. USA Today published an excerpt you can assign without using the book itself. But if you want more than one, the paperback only adds a relatively guilt-free $13 to students' bookstore bills.

Here's a list of chapters, corresponding doctrinal topics, and specific page assignments (so you can skip the campaign-preening interludes):

Sawyer v. St. Joseph's Hospital (Chapter 1 "E.G.")
- medical malpractice
- settlement dynamics
- professional standard of care
portion directly concerning the case: pp. 17-48

Campbell v. Pitt County Memorial Hospital (Chapter 2 "Jennifer")
- medical malpractice
- informed consent
- remittitur
portion of chapter directly concerning the case: pp. 51-113

Howard v. Collins & Aikman Corp. (Chapter 3 "Josh")
- breach of duty
- compensatory damages
- punitive damages
portion directly concerning the case: pp. 131 (at section start) to 159

Lakey v. Sta-Rite Industries (Chapter 4 "Valerie")
- products liability
portion of chapter directly concerning the case: pp. 178 (at section start) to 230

Note: The above information is keyed to the paperback edition, published in 2004 by Simon & Schuster, ISBN-10: 0743272048, ISBN-13: 978-0743272049.

Beyond the Traditional Syllabus: Tribal and Canadian Cases

There are many assumptions to challenge about the case method of teaching. But even if we accept that we should teach from cases, when it comes to common-law subjects, why should we limit ourselves to the opinions of state and federal courts with the occasional ancient English case thrown in?

This year, I’ve decided to look further afield for cases that, while still teaching us tort doctrine, would give us exposure to other courts and other systems of common law. So this semester I’m including one case from the Navajo Nation and one case from Canada. I see no down side to the slight detour. With ABA-accredited law schools teaching to all 50 states, we work with a generalized version of the common law anyway.

So in our study of duty of care in negligence this semester, we read Dobson v. Dobson, a case from the Supreme Court of Canada that considers whether a pregnant woman owes a duty to her unborn fetus. Having been injured in utero in a car accident, the infant sued the mother to obtain an insurance recovery to help pay for treatment of life-long disabilities. The case fired up class discussion as well as anything could have. And the court’s opinion even helpfully surveyed how American state courts have dealt with the question to boot. I’m following Dobson with a slide show I put together to provide an introduction to the Canadian courts.

For a discussion of wrongful death, we’ll be reading Benally v. Navajo Nation, an opinion that not only works through the doctrine, but also contains wonderful philosophical/jurisprudential content that, I hope, will lead to fruitful discussion about the meaning and nature of the common law itself. I plan to follow up discussion of the case with a guest lecturer, my colleague Keith Richotte, who will talk about tribal courts and law.

Not being well versed in either Navajo or Canadian law, I needed help finding suitable cases to teach, so I’m very grateful to Justice Raymond D. Austin at the University of Arizona for suggesting Benally and Jennifer L. Schulz at the University of Manitoba for suggesting Dobson.

If you would like to use Benally or Dobson in your Torts class, I can e-mail you the slide show if you’d like it, and the links to pdf versions of the cases are above. I’d appreciate it if you’d drop me a line ([email protected]) and let me know if you’re using either or both – I hope a few of you out there might find them as worthwhile as I do.

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.

***

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.

New Version of Retributive Damages up on SSRN

Just a note to highlight that there's a revised draft of my article, Retributive Damages, up on the funky new SSRN over here. The article, which sets out a normative theory defending punitive damages as an intermediate sanction from a retributivist perspective, is coming out in January 2009 in the Cornell Law Review. I just sent this new draft to the folks at Cornell.  I also recently sent the draft to a bunch of the people whose work I cite, use or criticize to make sure they are happy with the way I've characterized their work. I probably left out some people, so if you find yourself in the paper or  not in the paper but think you should be, I'd be most grateful for any suggestions to improve it.

As I think I've said here before, this paper is the first in a series on "retributive damages." I'm presenting the second one, Implementing Retributive Damages, tomorrow at 130pm at a SEALS panel I put together on trends in punishment and privatization. Also on the panel will be Prawfs' Jason Solomon, and Kenworthey Bilz (Northwestern), and Ric Simmons (Ohio State). Kenworthey will be discussing developments flowing from her work on the puzzle of delegated revenge, Ric will discuss themes from his work on "private criminal justice," and Jason will be talking about new developments in his revenge against the USNews rankings work in the civil recourse theory of tort law. Should be very exciting.

I should add parenthetically that it looks like, after the feedback I received at Prawfstra, I will probably be spinning off a short piece from the current version of Implementing Retributive Damages. The current working title of the spin-off is Pluralism and Punitive Damages after Philip Morris. Depending on dates, etc., I will be happy and grateful for the opportunity to come talk about any of these projects this coming year if you're looking to round out your faculty workshop series.

Revisiting Cost Internalization and Punitive Damages after Philip Morris

More than a year ago, the Supreme Court handed down its decision in the Philip Morris case. I blogged about it at least a couple times. It's on my mind again, since I'm spending this month, among other things, revising my  Retributive Damages article (coming soon to a Cornell L. Rev. near you), and trying to finish drafting the successor article in the trilogy, Implementing Retributive Damages.

What I want to provoke here is some discussion about whether what Tom Colby (GW) and others call "total-harm" damages  extra-compensatory damages are permissible after Philip Morris if they are characterized simply as augmented damages for the purposes of cost-internalization or optimal deterrence (let's run those two notions together here, shall we?).  In Tom's latest work on punitive damages, which is forthcoming in Yale LJ, and is available in draft here (SSRN version of June 27, 2008), he argues that cost-internalization damages would and should be an available option (constitutionally speaking) so long as state legislatures or courts said they were not engaged in awarding "punitive damages," which is to say, so long as language of condemnation or language of punishment is not explicitly used.

My own view is that Colby's reading of the implications of Philip Morris for augmented or "total-harm" damages could logically be correct. But it seems a weird and ultimately, to my mind, wrong way to read what the litigants and the majority of the Court thought they were up to in the Philip Morris dispute and in this opinion. My extended thoughts are after the jump, and basically excerpted from my rough IRD draft. I invite your thoughts about the future of optimal deterrence/cost-internalization in the comments. (Btw, I will probably have more to say on Tom's article in other posts or perhaps in a response I might draft.)

Update: I made the mistake of conflating Tom's conception of "total-harm" damages with cost-internalization. As Tom kindly reminded me, his notion of "total-harm" damages, as used in his 2003 article, included a retributive component in addition to a deterrence signal.

To my mind, the proponents of the cost-internalization approach now face substantial difficulties on account of the Supreme Court’s recent decision in Philip Morris USA v. Williams. Implicitly repudiating the language of its TXO decision, which permitted punitive damages awards to consider the harm or potential harm from the conduct “as a whole,”[i] the Court reversed course. Writing for a 5-4 majority, Justice Breyer held that the Due Process Clause forbids punishing a defendant for harms to nonparties to the instant litigation because the defendant would not have the ability to “defend against the charge,” depriving the defendant of notice and imposing a substantial degree of arbitrariness and uncertainty in punishment.[ii] Thus, in assessing the putative excessiveness of punitive damages in a given case, a court must scrutinize whether a jury is punishing a defendant an amount of punitive damages that considers the harms actually suffered by strangers to the litigation.

By restricting the permissible scope of harm and potential harm, the Philip Morris decision now raises questions about whether full cost internalization is forbidden when establishing the amount of punitive damages. The ambiguity is subtle and has been brought to my attention by Professor Tom Colby’s forthcoming article on the subject.[iii] Professor Colby argues that states could constitutionally pursue “total harm” damages meant only to achieve cost-internalization so long as the state said there was nothing “punitive” to this cost-internalization approach. That would leave punitive damages, in his view, to pursue only the goals associated with what I have been calling "victim vindication" or "aggravated" damages.[iv]

The problem with Colby's narrow reading of Williams is that it reads the Court’s holding into, effectively, a nullity, giving with one hand a right that defendants would want and have fought repeatedly for and then stripping away the value of that right with the other hand. It’s hard to believe that the Court and litigants would be divided so sharply on an issue with such apparent lack of consequence--by letting total harm damages erupt without any procedural or substantive safeguards so long as the courts or legislatures say they're not punishing, they're just regulating. And unlike United States v. Booker -- which did recognize a defendant’s right only before demolishing its significance -- there aren’t separate opinions in Philip Morris regarding the “merits” and the “remedy.” Philip Morris is just one opinion and therefore susceptible to less plausible charges of schizophrenic reasoning.

To my mind, the better reading of the case undermines the feasibility of a cost-internalization agenda, but for two reasons, it does not destroy the agenda in one fell swoop.

First, the goal of achieving cost internalization remains feasible to the extent that jurisdictions make available class action or other aggregative litigation strategies that protect the rights of defendants; once a class is certified, at that point, nonparties become parties to the litigation. That said, more class actions will only permit the consideration of actual litigants, not the “quasi-parties” on whose behalf Professor Sharkey also advocated.

Second, the prospect of obtaining augmented damages outside the class action also continues to survive Philip Morris to the extent the defendant caused potential harm to the plaintiff(s). In other words, under my proposed reading of the case, the operative question (for purposes of cost-internalization) is now: what harm or potential harm did the defendant cause this particular plaintiff (rather than what harm or potential harm of this sort did the defendant cause)? The potential harm to the plaintiff, which the Court still permits as a consideration, plausibly encompasses the likelihood that the defendant would escape compensating this particular plaintiff. And to those that worry that Philip Morris eviscerates optimal deterrence, consider cases like those presented in the Supreme Court’s TXO decision, where an augmented damages award could be justified based on potential harm to the particular plaintiff on account of the tortfeasor’s concealment or deceit. If we assume a situation where a plaintiff faced a 1/3 chance of discovering that it was this defendant who caused the harm to the plaintiff, then that should, in theory, allow a jury pursuing cost internalization to impose augmented damages that are double the compensatory damages. (Per Polinsky and Shavell, “the total damages imposed on an injurer should equal the harm multiplied by the reciprocal of the probability that the injurer will be found liable when he ought to be.”[v] Thus, if a harm of 10 is caused and there is 1/3 chance the D will be held liable, then augmented damages should be 20 in addition to the 10 in compensatory damages, for a total of 30, or 3 times the harm.)

In sum, under my reading of Philip Morris, if a multiplier were based solely on the likelihood that the harm or potential harm to the plaintiff would be detected and compensated, it would pass constitutional muster, as suggested in Justice Breyer’s concurring opinion in BMW v. Gore.[vi] But Professor Colby is correct to emphasize that augmented damages need no finding of reprehensibility to warrant their award, and in such a situation, they should not logically be thought of as part of the punitive damages constitutional analysis.[vii] Instead, they involve a fact-finding determination, much like the amount of compensatory damages. And because augmented damages are essentially a regulatory tool to facilitate cost-internalization, states should be permitted to pursue different regulatory strategies, with tort law as one of several instruments to pursue that goal. A jury verdict form that reflects this ambition simply has to limit the jury’s consideration appropriately. The Appendix to [the IRD and RD articles] makes such an effort though it does so based on my reading of Philip Morris’s implications for cost-internalization, not on what I think would be logically required on a blank slate.

I should add that I don’t particularly have a dog in the fight; if it turns out Colby’s reading of cost-internalization after Philip Morris is regarded as correct, then I’d be happy to have the jury instructions I offer in the Appendix to my article -- the ones dealing with cost-internalization -- adjusted accordingly.

Standard of Review for Augmented Damages

 

What’s important about this decoupling of purposes (separating out the retributive purpose from the cost-internalization perspective) is that it logically calls for a different standard of review on appeal. In Cooper Industries, the Supreme Court announced that in federal cases the amount of punitive damages should be reviewed de novo, and that decision was predicated in part on the claim that determinations of punitive damages involve a moral component that has to be weighed against a defendant’s due process rights. That holding is only true for the retributive (and arguably the complete, not optimal, deterrence) part of extra-compensatory damages; by their nature,  augmented damages for the sake of cost-internalization involve only matters of empirical estimation (ie, what’s the likelihood the defendant would escape having to compensate this plaintiff), and thus are no different than compensatory damages (which ask, among other things, what kind of pain and suffering did the defendant’s action cause?), and thus determinations of augmented [total-harm] damages deserve greater deference when reviewed on appeal.

---

[i] Gore, 517 U.S. at 584 (indicating punitive damages award may reflect harm caused to all in-state purchasers);

[ii] Philip Morris, 127 S.Ct. at 1063 (slip op. at 6).

[iii] Thomas B. Colby, Clearing the Smoke from Philip Morris v. Williams: The Past, Present, and Future of Punitive Damages, 118 Yale L.J. (forthcoming 2009; manuscript on SSRN).

[iv] Professor Colby thinks, based on his understanding of the constitutional issues, that a public interest in retributive justice cannot be pursued outside the criminal law because of the absence of procedural safeguards. In this respect, he seems to agree with the view articulated by Redish, Emory L.J. But this perspective, to my mind, requires a finding that an intermediate sanction cannot be imposed even if it is accompanied by intermediate levels of procedural safeguards. My view is that with some basic safeguards, we can tolerate and embrace the use of intermediate sanctions. And given what the Supreme Court has repeatedly said in the last thirty years about the “quasi-criminal” purposes of punitive damages, there’s no reason to suspect that a space for an intermediate sanction cannot be carved out.

[v] See Polinsky & Shavell, supra note, at 889.

[vi] BMW of N. Am. Inc. v. Gore, 517

U.S.

559, 562 (1996) (Breyer, J., concurring).

[vii]

While the Court has in the past referred to deterrence as a goal of punitive damages, cost-internalization is about optimal or efficient deterrence, whereas what’s probably being adverted to by the Court is the goal of complete deterrence. The goal of complete deterrence signals that the conduct is prohibited whereas the goal of cost-internalization suggests that the defendant’s conduct is “priced.” Because cost-internalization refers to a different kind of deterrence (optimal) than the one (of complete deterrence) probably subsumed under the Court’s pronouncements in the constitutional analysis, Colby’s conclusion is highly plausible as a matter of theory and logic; but for the reasons I mentioned in the text, I doubt this conclusion is what the Court meant in Philip Morris.

 

Should Statutes of Limitation for Child Sexual Abuse be Eliminated?

Cardozo Law Professor Marci Hamilton--author of God vs. the Gavel: Religion and the Rule of Law (Cambridge U. Press 2005)--has a new book. In Justice Denied: What America Must Do to Protect Its Children (Cambridge U. Press 2008), Hamilton argues forcefully that statutes of limitation for child sexual abuse should be abolished. Such a move would serve, she suggests, four policy goals. First, it would place the interests of childhood sexual abuse survivors above the legal rights of offenders. Second, it would help to identify sexual predators. Third, it would facilitate the identification of other survivors of the same predator once a single survivor has come forward. Fourth, it would discourage insitutions from hiding sexual abuse. The abolition of statues of limitation in the context of clergy sexual abuse has been a hotly contested issue in state legislatures throughout the country. Hamilton's book is timely and a must read for those interested in this issue.

The Roots of Canada's Recent Apology to Native Peoples in U.S. Tort Claims

The NYT reported last week that "The government of Canada formally apologized...to Native Canadians for forcing about 150,000 native children into government-financed residential schools where many suffered physical and sexual abuse." (Click here for full story.) All but a few of the 130 residential schools involved were operated under contract by religious denominations, including the Catholic, Anglican, and Presbyterian Churches.

This historic apology is part of a larger story of clergy sexual abuse in government-funded and church-operated residential institutions throughout Canada. Public concern in Canada over sexual abuse by clergy in residential schools became widespread with explosive revelations in 1989 of sexual abuse at the Mount Cashel orphanage operated by the Christian Brothers' religous order in Newfoundland. Concurrent church and government investigative commissions heard testimony from dozens of victims who described physical and sexual abuse at the hands of the superintendent, staff, and other residents over the course of more than two decades. The commissions also found evidence of collusion among church officials, law enforcement, and the press to cover-up abuse allegations in the late 1970s and 1980s. Subsequent government inquiries, criminal investigations, and civil lawsuits in the 1990s and 2000s uncovered similar abuse and cover-up at dozens of residential institutions for children throughout Canada.

Even before the revelations at Mount Cashel, however, the Canadian news media carried stories of U.S. litigation for clergy sexual abuse, notably claims in 1984 and 1985 against the Catholic Church for the sexual molestation of dozens of boys by Father Gilbert Gauthe in Louisianna. In response to this U.S. litigation, the Canadian Conference of Catholic Bishops first adopted guidelines for responding to abuse allegations in 1987. The Canadian public, exposed to media coverage of clergy sexual abuse litigation in the U.S. in the mid-1980s was more willing to believe the claims against Canadian clergy that began with the Mount Cashel affair. While it might be overstating the case to suggest that U.S. tort litigation played an essential role in Canada's coming to terms with clergy sexual abuse, it certainly primed the Canadian public and prompted Canadian Churches to begin addressing the problem.

I offer a fuller analysis of the influence of U.S. tort litigation on Canada's attempts to confront clergy sexual abuse in residential institutions (as well as similar attempts in Ireland), in Holding Bishops Accountable: How Lawsuits Helped the Catholic Church Confront Clergy Sexual Abuse (Harvard, 2008).

Priest Convicted of Sexual Abuse Seeks New Trial Based on "Junk Science" of Repressed Memory Evidence

The Boston Globe recently reported that former priest Paul Shanley, currently serving a 12-15-year sentence for sexually abusing a boy in the 1980s, appeared in court last Thursday to argue for a new trial. In 2004, the Boston archdiocese settled a lawsuit arising out of allegations of sexual abuse by Shanley for $1.4 million. The following year he was convicted in a criminal case in which key testimony was based on recovered memories of the abuse.  The psycological theory of recovered memory asserts that memories of a traumatic event may be repressed and later recovered in therapy or as the result of some event that triggers the memory. The reliability of memories that were allegedly repressed at the time of abuse and recovered many years later is a source of ongoing professional and public controversy. Shanley's lawyer has called recovered memory "junk science" and is demanding a retrial.

Regardless of how the court ultimately rules on Shanley's request, one should careful not to overstate the role of recovered memory in the context of clergy sexual abuse allegations. First, since claiming recovered memory is one way to overcome statute of limitations problems, clergy sexual abuse litigation makes the frequency of recovered memory among victims appear to be greater than it actually is. Second, most plaintiffs seeking to avoid dismissal of their claims under the statute of limitations do not allege recovered memory but rather delayed discovery of injury--claming that, although they never forgot the abuse, they did not identify the damage that it caused or they did not attribute that damage to the abuse. Third, most lawsuits and prosecutions for clergy sexual abuse are supported by independent evidence of guilt.

I discuss recovered memory and clergy sexual abuse allegations in more detail in Holding Bishops Accountable: How Lawsuits Helped the Catholic Church Confront Clergy Sexual Abuse (Harvard U. Press, 2008)

Damages for Loss of Stormtrooping

It must be the season for imperial stormtrooper-related litigation.  On the boot-heels of the copyright dispute over the Stormtrooper uniform, an Illinois jury has apparently awarded hedonic damages to a plaintiff who claimed an auto accident cost him his ability to march with his fellow Stormtroopers. 

The plaintiff in Pekin v. Parise, Case No. 06L-2287 (tried in Cook County Law Division Feb. 5-6, 2008), claimed that the defendant had run a red light and T-boned his vehicle.  As a result, the plaintiff suffered a right tibial plateau fracture, which led to appx. $10K in medical expenses and raised a 15-20% possibility that the plaintiff would need a knee replacement in twenty years.  According to the Jury Verdict Report, Plaintiff,

an avid "Star Wars" fan, claimed loss of normal life for his inability to "Troop" as vigorously as he had in the past, including inability to march as a "Star Wars" Stormtrooper in the Rose Bowl . . . .

Plaintiff was awarded $119,672.

Caps off for Obama? Med Mal and the '08 Election

Here is a legal/policy question that is not yet a big election issue but will surely soon become one: Should punitive and other tort damages be capped by the feds?

McCain urges such caps for medical malpractice damages as part of his health care reform plan. By contrast, in 2005, Obama has rejected caps on med mal damages, instead co-sponsoring (with Hilary Clinton) S. 1784, a bill to protect physicians from liability if they disclose their past medical errors and enter into settlement negotiations.

Who is correct, and why?

One reason to oppose such caps is federalism: Tort law is a traditional area of state concern, and attitudes towards punitives vary based on region, with some regions dominated by a populist, anti-corporate attitude reminiscent of Andy Jackson (e.g., Oklahoma, the southern Midwest, East Texas, Alabama). Why not let different regions go their different ways and not impose the ideals of ATRA on the nation as a whole?

The obvious response is that, when juries in East Texas impose liability on corporations in Michigan, they externalize costs on outsiders in a way that is undemocratic and inefficient.

But does this traditional “avoid externalities” argument apply to medical malpractice? The choice of law rules for med mal are unusually well-settled: The law of the place of performance of the services applies. So any potential defendant can avoid the costs of a pro-plaintiff state’s tort law simply by not providing services in that state. In other words, unwilling defendants do not get dragged into unfriendly jurisdictions against their will in med mal. States thereby internalize the costs of their tort regimes: Pro-plaintiff states have higher malpractice insurance premiums and fewer doctors.

Given the clarity of the choice-of-law regime in med mal, isn’t this an especially inappropriate area for federalization? If the answer is “yes,” then are not both Obama and McCain wrong to suggest the federalization of much of this area of law? To be sure, Obama avoids caps on damages. But why impose any federal limits on med mal liability? Why can’t the states handle this area?

Speaking of punitive damages...

Yes, I know I've lately been a bit of a one-track retributive damages "promoter" -- the word "pimp" seems more appropriate but the last time one of us used it, well, that's another story -- but I just noticed that Adam Liptak's got a new article in the Times about the "American Exception" of punitive damages. Adam writes:

Most of the rest of the world views the idea of punitive damages with alarm. As [an] Italian court explained, private lawsuits brought by injured people should have only one goal — compensation for a loss. Allowing separate awards meant to punish the defendant, foreign courts say, is a terrible idea.

Punishments, they say, should be meted out only by the criminal justice system, with its elaborate due process protections and disinterested prosecutors. It is not fair, they add, to give plaintiffs a windfall beyond what they have lost. And the ad hoc opinions of a jury, they say, are a poor substitute for the considered judgments of government safety regulators.

Some common-law countries do allow punitive damages, though in limited circumstances and modest amounts. In the United States, by contrast, enormous punitive awards are relatively common, although they are often reduced or eliminated on appeal. Last month, for instance, the United States Supreme Court heard arguments in the Exxon Valdez case, where a jury’s initial award of $5 billion was later reduced to $2.5 billion. Still, such awards terrify foreign courts.

As I read Adam's piece, I couldn't help but think that if more American jurisdictions adopted my proposal of casting punitive damages as an intermediate sanction, there'd be far fewer problems in getting these judgments enforced against foreign defendants, not to mention there'd be much less risk of being found at odds with the Court's substantive and procedural due process analysis of punitive damages. At the very least, I hope the constitutional analysis at the end of my piece will prove somewhat useful to courts both here and abroad that are contemplating the problematic relationship between punitive damages and compensatory damages. (More on that in this coming Friday's post.)

Retributive Damages: Some Recent Normative Scholarship

Earlier posts on the topic of Retributive Damages can be found here. The whole article can be found here.

Recent Normative Scholarship

 

Unsurprisingly, the complexity, significance, and rapidly evolving nature of punitive damages law has attracted the attention of many scholars. Some legal economists, like Professors Polinsky and Shavell, think extra-compensatory damages should focus on advancing the goal of cost-internalization. As I explained earlier, under this economic framework, a defendant’s culpability or state of mind is immaterial to her obligation to pay for the harms that she causes.[1] Instead, what matters is whether there was any likelihood the defendant would evade paying compensation for the harms she caused. If there is such a possibility, then the amount of punitive damages should be calibrated to the likelihood of her evading compensation.[2] This particular economic approach, however, is clearly at odds with the existing doctrine, which, as we saw in the previous Section, generally requires there to be some finding of malice or recklessness before punitive damages can be awarded.

As a matter of policy prescription, the economic approach’s inconsistency with extant doctrine is obviously not a knock against it. Generally speaking, individuals and entities should have to pay for the mess they make; if they can exploit enforcement gaps by private and public parties, there will be an incentive to take insufficient care, which will also run the risk of under-deterrence.[3] But the cost-internalization approach, which is conceptually unconcerned with mens rea or culpability, is better thought of as pursuing “augmented” damages, rather than “punitive” damages.[4] This allows us to contrast augmented damages from other extra-compensatory damages.

Other scholars have provided an alternative to the cost-internalization rationale for punitive damages by instead discussing punitive damages awards in terms of how they vindicate a victim’s dignity and autonomy interests, which have been injured by the defendant’s misconduct.[5] In some common law jurisdictions, these extra-compensatory damages are more precisely labeled as “aggravated” damages—and they would go to plaintiffs for the injury to their dignity.[6] Some supporters of these non-economic accounts have defended large parts of extant common law punitive damages law on the grounds that these practices serve as vehicles by which victims or their allies can take measures to persuade juries to avenge the victim’s interests through ad hoc, and therefore unpredictable, awards of money damages to victims.[7] Indeed, for some social justice tort theorists, common law jury-driven punitive damages practice serves as a way for an ordinary person to fight malfeasant entities and their lobbyists seeking business-friendly “tort reform.”[8] Some scholars, such as Galanter and Luban, drawing on the work of Jean Hampton’s victim-vindication justification for punishment, even view themselves as committed to the goals or values of retributive justice.

But as shown in the insightful interpretive accounts of tort law and punitive damages by Benjamin Zipursky and Anthony Sebok,[9] the tort system conventionally empowers victims to either pursue punitive damages or forbear from pursuing such damages. That’s important because it shows that no one forces punitive damages on the victim in the common law approach; rather leaving the decision to seek recourse to the victim is said to vindicate the victim’s autonomy. The same may be said for allowing victims to have almost unfettered control over settlements with the defendants.

These two practices reveal some space between victim-vindication accounts and the interests underlying a retributivist account. Retributivists, as I will explain shortly, give more weight to the reduction of both Type I false positive errors — in which people are mistakenly punished (or excessively punished relative to comparable offenders) — and Type II false negative errors — in which wrongdoers escape their punishment altogether (or receive too lenient a punishment compared to other similar offenders in the jurisdiction). Importantly, the accounts defending punitive damages as vehicles for victim-vindication or jury expressions of outrage say little about the need for building a system that tries to reduce both Type I and II errors. Indeed, to the extent these accounts are interested in invoking retributive justice values to bolster their accounts, this silence is a real weakness.[10] After all, failing to defend procedural safeguards or to create any real guidelines for cabining jury discretion and judicial review is a recipe for Type I error creation. Moreover, giving only victims the right to pursue retributive damages or giving all victim plaintiffs the unfettered authority to settle a case involving allegations of reckless or malicious misconduct writes a blank check for Type II errors.

If we want a retributive scheme of punitive damages, it has to reflect some concern for reducing both types of errors. Of course, a pluralistic scheme of extra-compensatory damages could be designed to provide space for the pursuit of both cost-internalization and victim vindication. These two goals have received generous and shrewd coverage in the scholarly literature,[11] and thus, in this paper, I don’t spend much time analyzing them here. But what’s really missing is a better understanding of what a public retributive justice theory entails for punitive damages. And in the Parts that follow in this Article, I shall focus on the achievement of retributive justice through the context of “retributive damages.” For that to happen, we must first have an account of retributive justice. To that task I now turn.

 

---

[1] See supra note 4.

[2]

Id.

[3] See Thomas C. Galligan, Jr., The Risks of and Reactions to Underdeterrence in Torts, 70 Mo. L. Rev. 691 (2005).

[4]See Thomas C. Galligan, Jr., Augmented Awards: The Efficient Evolution of Punitive Damages, 51 La. L. Rev. 3 (1990)

[5] See, e.g., Sebok, supra note 12; Zipursky, supra note 12.

[6] See Bruce Chapman & Michael Trebilcock, Punitive Damages: Divergence In Search of a Rationale, 40 Ala. L. Rev. 741 (1989).

[7] At times, the work of Marc Galanter and David Luban, as well as David Hoffman and Kaimipono Wenger, speak in this register. See sources supra note 12 and 14. For example, Galanter and Luban endorse imposing punitive damages in a single case against a defendant for all the harm the defendant’s misconduct caused in similar situations even if the defendant may have had viable defenses against those other parties. See, e.g., Galanter & Luban, supra note 12, at 1436-38 (providing examples of “expressive defeat” of defendant through punitive damages). They also think judges should extend “great deference” to juries’ determinations because of their special competence in sending “the community’s message through the medium of damages.”

Id.

The view I take circumscribes jury decision-making considerably more.

[8] E.g., Michael L. Rustad, The Closing of Punitive Damages’ Iron Cage, 38 Loy. LA L. Rev. 1297, 1301 (2005) (tort reform of punitive damages is “special legislation to help corporate

America

”); see generally Koenig & Rustad, supra note 16; Richard L. Abel, Questioning the Counter-Majoritarian Thesis: The Case of Torts, 49 DePaul L. Rev. 533 (1999).

[9] See sources supra note 12.

[10] To its credit, Professor Sebok’s state-sanctioned revenge account is consistent with a desire to reduce “piling on” (or Type I over-punishment) errors that occur through introducing evidence apart from that which injured the plaintiff. See Sebok, supra note 12. But he doesn’t address the state’s interest in reducing Type II errors of either sort, or the procedural safeguards necessary to prevent Type I errors of the mistaken punishment sort.

[11] See sources cited supra note 4 (scholars urging punitive damages to pursue cost internalization) and note 12 (scholars urging punitive damages to allow for victim-vindication).

Retributive Damages: A quick overview of American Punitive Damages Law

Yesterday I posted the introduction to Retributive Damages. Today I provide some background on the law of American punitive damages and tomorrow I do a quick survey of recent normative scholarship on punitive damages. (You can find the whole article here.)

  Punitive damages have a long history.[1] According to the conventional understanding, early Anglo-American courts awarded “exemplary” damages for a range of purposes, in some cases as compensation to a plaintiff for suffering “intangible wrongs” such as insults that caused dignitary harms and in other cases as punishment of “the defendant for his misconduct.”[2] As the scope of compensatory damages in recent years expanded to include “mental anguish, wounded feelings, indignity and embarrassment,” however, the need to use punitive damages to compensate such harms may have diminished.[3] Indeed, many of the “intangible harms” initially uncompensated are now covered.[4]

Consequently, the Supreme Court has cast its doubts on the compensatory rationale of punitive damages, explaining that today punitive damages should be understood as “quasi-criminal” “private fines” designed to punish and deter the misconduct at issue.[5] Interestingly, although courts frequently view punitive damages as serving both and primarily retribution and deterrence,[6] analysis of these purposes and their implications is often scant. As such, courts rarely instruct juries to consider decoupling these functions by determining the amount of money necessary to serve as the punishment of the defendant and the amount necessary to achieve deterrence.[7] Indeed, the courts rarely bother to distinguish between optimal deterrence (aiming at cost-internalization) and complete deterrence (aiming at stopping the misconduct’s commission in the future).

Today, notwithstanding the public nature of the retributive and deterrent values the Court associates with extra-compensatory damages, only a small number of states have adopted split-recovery schemes through which the state shares in the award of punitive damages.[8] Consequently, in most states, if extra-compensatory damages are awarded, the plaintiff (and her lawyers) will receive most, if not all, of the amount awarded.[9]

Despite the variations in who recovers punitive damages, certain practices are well-entrenched. For example, in every jurisdiction where punitive damages are allowed, the fact-finder must make a predicate finding about the defendant’s culpable state of mind, i.e., did the defendant’s action evince something like “wanton, willful, malicious, or reckless conduct that shows an indifference to the rights of others?”[10] Moreover, most American jurisdictions have in recent decades required that punitive damages be awarded only if the plaintiff has proven the defendant’s culpable state of mind with “clear and convincing evidence,” rather than the traditional, “preponderance of the evidence” standard.[11]

Additionally, the Supreme Court has, in the last fifteen years, begun to establish a constitutional framework for regulating punitive damages. These rules are designed to ameliorate “the basic unfairness of depriving citizens of life, liberty, or property, through the application, not of law and legal processes, but of arbitrary coercion.”[12] The Court’s requirements can be summed up in six rules.

First, when courts review the reasonableness of punitive damages awards, the most important factor they must consider is the degree of reprehensibility of the defendant’s misconduct.[13] Second, reviewing courts must also consider whether the “disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award” is constitutionally excessive.[14] More controversially, in State Farm, the Court established a presumption that “in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.”[15]

Third, reviewing courts should consider “the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.”[16] Fourth, reviewing courts, under the Supreme Court’s new Philip Morris decision, must ensure that the jury is instructed not to punish defendants an amount that figures in the harms to nonparties to the litigation.[17] One might see this as related, though not essential, to the Court’s stated interest in ensuring that one state not try to punish defendants for conduct lawfully performed in another state.[18] Fifth, judicial review of a jury’s award of punitive damages must be available at both the trial and appellate levels.[19] Finally, appellate review of punitive damages must adopt a “de novo” standard of review of the jury’s award, at least when the action is a federal case.[20]

Importantly, although the Court developed these rules to improve fair notice and proportionality to defendants facing these sanctions,[21] the Court has not extended to defendants the protections normally applicable in the criminal law context. Indeed, defendants in punitive damages actions have no right to bifurcated proceedings between liability and punitive damages, no right against vicarious liability,[22] no double jeopardy rights,[23] no right to counsel, no right to standards of proof requiring proof beyond a reasonable doubt, and no right to avoid testifying on the grounds that such testimony might lead to punitive damages liability. Moreover, the Court has not stepped in to prohibit vicarious liability for punitive damages,[24] or multiple awards of punitive damages for the same underlying tortious conduct, such as in a mass torts case.[25] Nor has the Court insisted that the trial court specify its reasons for upholding or remitting the amount of punitive damages.[26]

The Court’s efforts to regulate punitive damages coincide with, and are responsive to, corporate-funded tort reform movements pushing states to place caps that limit a defendant’s exposure to punitive damages payments.[27] Looking at the landscape as a whole, one might be tempted to view the Court’s jurisprudence here as arcing in the direction of retributive justice’s requirements for procedurally fair, proportionate, and even-handed punishment.

But its jurisprudence is decidedly not yet there. For example, as elaborated in Part V, there is no retributivist justification for the

State Farm Court

’s presumption that a single-digit multiplier of compensatory damages is the appropriate measure. Nor is there much justification for the ongoing common law practice of denying defendants the safeguards necessary for the just imposition of even an intermediate sanction.[28] Moreover, to the extent the Court’s jurisprudence can be said to avoid gross disproportionality and unfair surprise, then those are values that Benthamite utilitarians might embrace too—for reasons separate from any retributive leanings to try to reduce Type II errors as well.[29]

As a matter of interpreting the Constitution, the Court should refrain from embracing a particular theory of punitive damages as it goes about delineating the rights of defendants in tort actions. That under-theorized position will permit experimentation among the states. Indeed, that strategy leaves a range of constitutionally available policy options: a state could decide, in furtherance of retributive justice goals, to provide more substantive and procedural protections to punitive damages defendants (and plaintiffs) than it does currently. Alternatively, a state could decide it wanted to rely exclusively on criminal law institutions to pursue retributive justice and instead use extra-compensatory damages simply to pursue, within constitutional limits, goals such as victim-vindication or cost-internalization.[30] More radically, a state could abolish all extra-compensatory damages. The array of punitive damages laws we have now, however, fails to evince much awareness of which goal(s) it is pursuing let alone the goals it ought to be pursuing.

 

---

[1] E.g., Wilkes v. Woods, (1763) 98

Eng.

Rep. 489 (K.B.); Huckle v. Money, (1763) 95

Eng.

Rep. 768 (K.B). See also Pac. Mut. Life Ins. Co. v. Haslip, 499

U.S.

1, 24 (1991) (Scalia, J., concurring) (furnishing a brief history of punitive damages).

[2] Redish & Mathews, supra note 9, at 13-16 (discussing early English cases where plaintiff showed dignitary harm that would otherwise remain uncompensated in the absence of exemplary damages).

[3] Schlueter & Redden, supra note 3, at § 1.4(B). But see Sebok, supra note 12, at 204-05 (“If punitive damages served a compensatory function [in early cases], it would have been for a category of injury that is still not considered compensable by contemporary tort law, namely the injury of insult that wounds or dishonors.”).

[4] For example, in Philip Morris USA v. Williams, the jury awarded the decedent’s wife $21,000 in economic compensatory damages and $800,000 in non-economic compensatory damages. Additionally, the jury awarded $79.5 million in punitive damages. 127 S.Ct. 1057, 1060-61 (2007). Recently, the Supreme Court of Oregon upheld the jury verdict. See Williams v. Philips Morris Inc., 2008 WL 256614 (Or. Jan. 31, 2008).

[5] Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532

U.S.

424, 432 (2001); Gertz v. Robert Welch, Inc., 418

U.S.

323, 350 (1974).

[6] See, e.g., cases cited supra note 22.

[7] Schlueter & Redden, supra note 3, at § 2.2(A)(1); Restatement (Second) of Torts § 908(1) (1979).

[8] See Sharkey, supra note 4, at 375-80. Compare Ind. Code. Ann. §34-51-3-6(d) (“The office of the attorney general may negotiate and compromise [its portion of] a punitive damage award”) and Ga. Code Ann. § 51-12-5.1(e)(2) (“Upon issuance of judgment [for punitive damages], the state shall have all rights due a judgment creditor until such judgment is satisfied and shall stand on equal footing with the plaintiff of the original case in securing a recovery after payment to the plaintiff of damages awarded other than as punitive damages.”).

[9] See Schlueter & Redden, supra note 3, at § 20.1 (providing state summaries).

[10] Ronald W. Eades, Jury Instructions on Damages in Tort Actions §§ 2-6, 2-7, 2-8 (4th ed. 1998). Some variety exists regarding the level of the defendant’s culpability. For example,

Ohio

requires a finding of actual malice. Rice v. Certainteed Corp. 704 N.E.2d 1217, 1220-21 (

Ohio

1999).

Texas

allows punitive damages for “gross negligence” but its definition approximates what is elsewhere called malice or recklessness. See Gen. Motors Corp. v. Sanchez, 997 S.W.2d 584, 595 (

Tex.

1999).

[11] See Schlueter & Redden, supra note 3, at § 5.3(H). But cf. Priest, in Cass R. Sunstein et al., Punitive Damages: How Juries Decide 12 n.14 (2002) (indicating skepticism toward the suggestion that these different standards are treated differently by jurors).

[12] BMW of N. Am. Inc. v. Gore, 517

U.S.

559, 562 (1996) (Breyer, J., concurring).

[13] State Farm Mut. Auto. Ins. Co. v. Campbell, 538

U.S.

408, 419 (2003). This analysis proceeds by looking at factors including “whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident.” Gore, 517

U.S.

at 576-77. The “existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect.” State Farm, 538

U.S.

at 419.

[14] State Farm, 538

U.S.

at 418.

[15]

Id.

at 425.

[16]

Id.

at 428.

[17] Philip Morris

USA

v. Williams, 127 S.Ct. 1057, 1063 (2007). Members of the Court have in the past also expressed some thoughts that if punitive damages were captured in part by the state, that structure might trigger review under the Eighth Amendment’s Excessive Fines Clause. See Browning-Ferris Indus. v. Kelco Disposal, 492

U.S.

257 (1989). However, the statutes in

Utah

and

Oregon

under consideration in State Farm and Philip Morris respectively involved a split-recovery scheme and the Court did not address that issue in either case.

[18] State Farm, 538

U.S.

at 421.

[19] Honda Motor Co., Ltd. v. Oberg, 512

U.S.

415, 432 (1994).

[20] Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532

U.S.

424, 436 (2001).

[21]

See

State

Farm, 538

U.S.

at 416-17.

[22] See

Pac.

Mut. Life Ins. Co. v. Haslip, 499

U.S.

1, 13-15 (1991)

[23] In Hudson v. United States, the Supreme Court stated that it has “long recognized that the Double Jeopardy Clause does not prohibit the imposition of all additional sanctions that could… be described as punishment. The Clause protects only against the imposition of multiple criminal punishments for the same offense.” 522

U.S.

93, 98-99 (1997) (citation omitted).

[24] Haslip, 499

U.S.

at 13-14.

[25] Some federal courts have rejected the “overkill” argument that fundamental fairness precludes allowing a defendant to face limitless multiple punishments. E.g., Cathey v. Johns-Manville Sales Corp.,

776 F

.2d 1565, 1571 (6th Cir. 1985). However, “the vast majority of courts that have addressed the issue have declined to strike punitive damages awards merely because they constituted repetitive punishment for the same conduct.” Dunn v. Hovic,

1 F

.3d 1371, 1385 (3d Cir. 1993). Nothing in the Court’s Philip Morris decision changes this outcome. Thus a tobacco company could easily face punitive damages in separate actions for the same misrepresentations it made about its product’s health effects.

[26] See, e.g., TXO Prod. Corp. v. Alliance Res. Corp., 509

U.S.

443, 464-65 (affirming the trial court’s unelaborated ruling that the large punitive damages award was acceptable).

[27] The variety of reforms can be sensed by glancing at BMW of N. Am. Inc. v. Gore, 517 U.S. 559, 614 (1996) (Ginsburg, J. dissenting) (appendix listing various state reforms).

[28] Haslip, 499

U.S.

at 42 (O’Connor, J., dissenting) (“Punitive damages are a powerful weapon. Imposed wisely and with restraint, they have the potential to advance legitimate state interests. Imposed indiscriminately, however, they have a devastating potential for harm. Regrettably, common-law procedures for awarding punitive damages fall into the latter category.”).

[29] Jeremy Bentham, An Introduction to the Principles of Morals and Legislation 86-88 (John Bowring ed., 1843) (“The punishment should be adjusted in such manner to each particular offence, that for every part of the mischief there may be a motive to restrain the offender from giving birth to it.”).

[30] Justice Breyer’s opinion in Philip Morris suggests that augmenting damages based on optimal deterrence would only be permissible if the penalty were based on potential harm to the particular plaintiff, rather than other potential victims who are nonparties to the litigation. Philip Morris USA v. Williams, 127 S. Ct. 1057, 1063 (2007) (in discussing appropriateness to consider the potential harm by defendant, “we have made clear that the potential harm at issue was harm potentially caused the plaintiff”) (emphasis in original). See also supra note 7.

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

U.S.

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

Iowa

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

Iowa

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?

 

My Favorite Case That is Not in the Casebooks: April Enterprises v. KTTV

Here is a gem of a case that could be of use to you in Contracts, Torts, or Entertainment Law. I would put it in a casebook if I were authoring one. It is April Enterprises, Inc. v. KTTV, 147 Cal. App. 3d 805 (1983).

Paul Winchell, a ventriloquist who is perhaps best known as the voice of Tigger the Tiger, did a children’s television show in the 1960s called “Winchell-Mahoney Time.” It featured puppets such as Knucklehead Smiff, among others.

Winchell, through his company April Enterprises, contracted with television station KTTV to produce the shows. The contract contained provisions for sharing profits in the event the old shows entered syndication.

In the years following the live production and broadcast of the show, Winchell worked to secure a syndication deal. But KTTV erased the tapes. Videotape being re-usable, the station simply deleted the entire library of “Winchell-Mahoney Time.”

Winchell sued and appealed on two grounds: breach of the covenant of good faith and fair dealing, and breach of fiduciary duty. The opinion reveals a court that is sympathetic to Winchell, and, one guesses, melancholy about the loss of a beloved relic of childhood. Stretching the law in several directions, the court upholds both causes of action. In particular, the court’s finding of a joint venture to serve as the basis for fiduciary duty is striking. The panel held that Winchell’s expended labor, even without financial investment, counted as “sharing in losses” sufficient for the formation of a joint venture. This holding of April plagues California corporate defense attorneys (and delights plaintiffs) to this very day.

Please feel free to distribute my edit of the opinion to your students and use it in your class. But if you do, will you drop me a line to let me know it was useful?

A post-script: Winchell won a $17.8-million jury verdict on remand.

Retributive Damages: The Abstract

So, as threatened, I've finally got a serviceable draft of Retributive Damages ready. Once I've finished blogging about and through the Punishing Family Status article, I will return to blogging about this project but since I've just sent it off to the law reviews and am basking in the utter sense of possibility(ha!), I thought I'd share the abstract, which is a bit different than the one up on SSRN.

Not long ago, Professor Cass Sunstein and his co-authors lamented that our legal culture lacks “a full normative account of the relationship between retributive goals and punitive damages.” This Article offers that full normative account — through a theory of “retributive damages.”

Under the retributive damages framework, when people defy legal obligations the state has imposed to protect the rights and interests of others, the state may either seek to punish them through traditional criminal law or make available the sanction of retributive damages, which would be credited against any further criminal sanctions imposed by the state for the same misconduct. Retributive damages statutes would empower private parties to act on behalf of the state to seek the imposition of what is in effect a fine determined largely by the reprehensibility of the defendant’s misconduct. The base amount of the fine would assess a percentage of the defendant’s wealth (or net value for entities) that increases with the reprehensibility of the defendant’s misconduct, an assessment informed by guidelines and commentary provided by the state. The total retributive damages award 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. These payments together (to the state, the plaintiff, and the lawyer) constitute the best way to structure punitive damages to advance the goals of retributive justice.

After offering some background on punitive damages and how retributive justice differs from other rationales for punitive damages such as optimal deterrence or victim-vindication, the Article describes the structure of retributive damages and clarifies the comparative advantages of retributive damages vis-à-vis other remedies and mechanisms. Finally, the Article defends the retributive damages framework against possible constitutional objections. Importantly, the account here not only answers Professor Sunstein’s challenge, but also promises to makes sense of the Supreme Court’s recent and somewhat puzzling holding in Philip Morris USA v. Williams, i.e., that juries may not calculate punitive damages by considering the amount of harm caused to strangers to the litigation.

For a Good Time Call 555-0123: Liability-Free Phone Numbers for the Entertainment Media

A legislative proposal: Congress should set aside, or direct telephone companies to set aside, certain phone numbers that can be used in films and on television without fear of liability.

As you have no doubt noticed, when a line of dialog includes a phone number, the character on screen, often with intense earnestness, spits out a phone number with a “555” prefix. For example:

“Damnit! Get President Palmer on the phone! His direct, private cell phone number is 202-555-4248!”

Fearful that if they use a real phone number they will get complaints or even lawsuits, studios have taken to using the 555 numbers because they are reserved by the phone companies and never assigned to customers.¹ Thus, they will not be unwittingly subjecting hapless folks to scores of midnight crank calls.

The problem? When you are engrossed in the make-believe world created by the film, hearing the fake “555” phone number brings you instantly back to reality – reminding you that you are watching an actor in a film, not, for instance, a heroic government agent trying to disarm a bomb. And if you are a lawyer, hearing the “555” phone number reminds you of the law, which means you are being reminded of your job while watching TV. It’s not good for anyone.

Therefore, I call on Congress, and, while I’m at it, the United Nations and the telecommunications companies of the world, to set aside a large enough slate of random-sounding numbers that movie-goers will not be subjected to instantly recognizable fakes.

The tough question that immediately confronts us: How do we get a slate of numbers that is safe for entertainment usage without screwing over the real customers currently using them. I have two proposals. The first is a bit silly, I admit.²

==More after the jump ...

My first plan would be to provide immunity for certain seven-digit phone numbers where an administrative rule-making body declares such phone numbers to have already been so tarnished through their use in media, that customers have little or no expectation of privacy with regard to them. The most obvious candidate? Why, of course: 867-5309. Those of you who remember the 80s (or have at least seen them on cable TV) will recall that that is Jenny’s number, from Tommy Tutone’s 1982 hit song, “867-5309/Jenny.”³

In fact, I’d say there is a good argument that any producer including 867-5309 in a movie or television show should be availed of an estoppel- or laches-type defense. And, for an analogy to property law, when new phone customers get 867-5309, it’s a lot like coming to the nuisance. Of course, the problem with clearing 867-5309 for producers is that the number is so engrained in pop-culture consciousness, using it in a movie is likely more jarring than using a 555 number.⁴

My second plan is a three-step approach: (1) Use computerized algorithms to comb seven-digit phone numbers to find those that are used by the fewest businesses and that are used in the fewest area codes. Put these phone numbers on a “Level I” list, then freeze the list, prohibiting phone companies from assigning these numbers to new customers. (2) Provide immunity for producers who use Level I phone numbers, so long as they use such numbers only in combination with an area code that does not correspond to a real telephone number. (3) Allow the Level I list to undergo attrition; that is, allow the seven-digit numbers to become progressively cleaner and cleaner as users in different area codes naturally give up those numbers as they move or otherwise discontinue phone service. When a seven-digit number is no longer used in any area code, or when it reaches a certain threshold of disuse, place that number on a “Level II” list. Provide immunity to producers who use seven-digit numbers, sans area code, on the Level II list.⁵

If you agree with my proposals, comment below. If you disagree, please call 867-5309.

NOTES:

FN1: I don’t know if customers with phone numbers featured in films have sued producers, much less been successful in a lawsuit. But it is clear that the fear of such lawsuits, or at least complaints and associated ill will, have held studio standards-and-practices folks to the practice of using the 555 numbers.

FN2: This whole post is a bit silly, since, as you may have noticed, it uses footnotes.

FN3: Snopes.com reviews the real-life ramifications of 867-5309 here.

FN4: But here’s an example of an intermediate case: 362-4350. That’s the number to call for the hit-woman personified by Joan Jett in her re-make of AC/DC’s “Dirty Deeds Done Dirt Cheap.” I’d have to say, though, I doubt 362-4350 has been exploited heavily enough for number holders to be fairly divested.

FN5: This proposal might fairly be called a “seven-point plan,” but I think that’s too many points. Better to keep it to three. Three-point plans are always better. And when you get down to three, for some reason I don’t entirely understand, it is plausible to call it a “three-step plan,” making it sound even easier. (I think part of the problem with saying “seven-step plan” is that if you have too many steps, then you are getting into the realm of dieting and addiction recovery, and that’s not where I’m going with this.)

Crimtorts Symposium

Widener is going to host an interesting symposium on February 25 about the intersection of criminal law and torts.  The symposium seeks to address the assimilation of criminal-law concepts of punishment and deterrence into tort law, and the effect of that assimilation on the tort system.
The line-up of speakers is quite good, and I'm looking forward to moderating one of the panels.  My colleague Chris Robinette is organizing it; contact him if you have questions.
I find the subject particularly interesting because I encountered some of the symposium's themes in constructing casebook chapters on tort and criminal liability arising out of sporting events.  The distinctions between assumed risks of sports and tortious acts, and between tortious acts and criminal ones are extremely vague, and the panels should give me some ideas about how to approach those issues. 
All those interested in criminal law or torts should find something useful at the symposium; please take the time to say hello if you're able to make it.

Punitive Damages Symposium

On September 7, 2007, the upstart Charleston School of Law is hosting a one-day symposium on the topic of Punitive Damages, Due Process and Deterrence after Philip Morris.  It's hard to imagine a more enjoyable American city than Charleston, SC, so I do envy those prawfs who will be propounding their views that day, including, among others, Tony Sebok, Keith Hylton, Neil Vidmar, and Cathy Sharkey.  Sadly, I won't be able to go to hear them, but now that the summer conference circuit is over and I've had the chance to workshop aspects of Retributive Damages in a few places, I'm looking forward to sharing my tentative thoughts here on Prawfs about many of the issues that will come up on the Charleston agenda. 

Constructing a Syllabus: Torts

Please post your specific comments about the syllabus for Torts here.  Please email me if you wish to share a syllabus as an example.  Here is the initial post on constructing a syllabus.

What are punitive damages for?

Thanks to Tony Sebok, I recently came across this interesting article in the Tampa Tribune about a plaintiff who, after being awarded $7.5 million in compensatory damages in a wrongful death suit, decided to forego further pursuit of punitive damages against the defendant, whose carwash killed the plaintiff's wife.

To Mac Brown, his lawsuit against the carwash responsible for his wife's death was never about the money. After being awarded more than $7.5 million in compensatory damages, Brown stunned a Hillsborough County courtroom Friday by turning his back on even more - possibly tens of millions of dollars in punitive damages. "The jury has spoken and justice has been done," attorney Steve Yerrid announced to jurors and spectators. "Mr. Brown believes forgiveness is a virtue. … He believes enough pain has been inflicted." With that, he said, Brown was withdrawing his claim for punitive damages. Had he decided to pursue the claim, Brown could have received much more, according to juror Jennifer Townsend. "We were starting to talk about" how much to award Brown, she said. "It would have been substantial - tens of millions of dollars."

Mac Brown's act of "forgiveness" seems to vindicate, in an unusual way, one of the claims that Tony advances in his forthcoming article, Punitive Damages: From Myth to Theory. In that paper, Tony argues that a plaintiff's unilateral power to choose not to pursue punitive damages is evidence of an interpretation of punitive damages as a vehicle for state-sanctioned private revenge. It also illuminates the idea of tort law as civil recourse that Tony, John Goldberg, and Ben Zipursky have been adumbrating in their collective work interpreting the structure of tort law.

That said, a subsequent email exchange among a handful of damages scholars revealed that the case might be more complicated than the newspaper article reveals.

It might well be that this case presented facts that would not sustain appellate scrutiny of punitive damages at all, notwithstanding some jurors' willingness to award more. The facts of the story in the article indicate that the case may have lacked sufficient reprehensibility on the part of the defendant. If that's true, then Mac Brown's forgiveness might have been prudent as well as benignly motivated. As Tom Baker noted, in a world where punitive damages are not insured and where the defendant might not have especially deep pockets, it might have been strategic for a plaintiff's lawyers to say, "Ladies and Gentlemen of the Jury, we are not seeking vengeance here, and so we will forgo our punitive damages claims, but please make sure every penny of the compensatory damages is awarded." (I'm not saying this is what happened in Brown's case though; in fact, if the story is correct, it did not happen here, since the jury made its award of compensatory damages prior to Brown's decision to forego punitive damages.)

To return to whether this case is a good indicator of the civil recourse theory, I think that Tony is correct as a descriptive matter. I have little doubt that Tony, John and Ben have invaluably improved our understanding of the structure of tort law through their descriptive theory of civil recourse. But the interpretive theory they offer need not be accepted as a prescriptive theory, and to my mind, we should not confuse the familiar with the necessary. Let me briefly elaborate on this in the context of punitive damages in particular.

The fact that a plaintiff like Mac Brown decided not to pursue punitive damages is not a dispositive reason for the claim of punitive damages to wither and die. After a plaintiff receives a compensatory damages amount, the state could decide to pursue what I call "retributive damages" against a wrongdoer, assuming there's a trigger of reprehensibility. Alternatively, or in addition, the state or its agent could seek what Cathy Sharkey calls social compensation, or what economists call optimal deterrence from the defendant--all independent of the plaintiff's choice to be satisfied with compensatory damages. Of course, tort law could be structured so that the plaintiff does participate in (and reap some benefit from) pursuing these extracompensatory damages goals, but there's no reason he has to and there is no personal right to punitive damages at all--as a few states have abolished them altogether. These are some of the lines of inquiry I'm pursuing in my Retributive Damages trilogy of articles, the first of which I'll be sharing more of in this space later this month.

Update: Ted Frank, from Overlawyered, has a more critical analysis of the case worth looking at.

The Face (Mask) of the Future?

On a recent trip to Asia, I came face to face with the SARS epidemic of 2003.  As soon as I landed at the airport in Hong Kong, I observed many people wearing those face masks made famous by SARS.  The immigration officials wore them, the customs staff wore them, and the taxi driver wore one.  Now it is true that not everyone wore one.  Indeed, the majority of people in Hong Kong did not, but given the recency of the SARS crisis and the timing of my visit during cold and flu season, a noticeable minority of people did.  I began to wonder if I should protect my health by wearing one too.  An expat in Hong Kong soon explained to me that I misunderstood.  Wearing the mask in Hong Kong is not about protecting yourself from the germs of others, but rather it is about protecting others from your own germs when you are suffering from a cold or a cough.  It is a matter of respiratory etiquette that residents of Hong Kong now take very seriously post-SARS. 

SARS has changed Hong Kong in more ways than one.  Should we Americans also learn from SARS?  Right now, the US is also in the middle of its flu and cold season and yet I have not seen one person in New York City wearing a face mask, to protect others or even to protect themselves.  In the US, the most I see are posters urging all of us to wash our hands more frequently and increased sales of Purell liquid gel.  In some waiting rooms of hospitals and doctors' offices in the US, sick people are being required to wear face masks, but they are the only ones.  Posters and Purell . .  . I have to ask, "are we being foolish here?" 

Given the very real threat we face as a global community from contagious epidemics such as SARS or avian flu, shouldn't the wearing of masks rely not on etiquette but instead rely on the law?  How about using tort law, if not criminal law, to impose a duty upon those of us who have respiratory illnesses to stay at home, or to wear a mask if they go out amongst the rest of us.  The concept may sound far-fetched, but consider that states have already criminalized the sexual relations of people with AIDS who fail to give notice to their intimate partners.  In Illinois and Georgia, such behavior is considered a felony.  Other states have allowed unknowing intimate partners to sue AIDS-infected defendants for the infliction of emotional distress.  Perhaps our country will need to experience a SARS-like crisis itself before such strong legal measures are taken.  SARS infected 1,755 people in Hong Kong and killed 300 of them.  With such social harm at stake, can we afford to wait?

A Dog Named Chattel?

The AP has news of an interesting case out of Vermont involving damages available for tortious destruction of another person's dog. The legal status of animals has been a subject of some previous posts on this blog; see here, here, and here. The Vermont case involves a couple who, after learning they were unable to have children,

got two dogs instead. They fed them human food, brushed their teeth and put coats on them when it rained.

But then one day, along with their dog Shadow,

they drove from their home . . . to Vermont to watch [an] aunt and uncle renew their wedding vows. They planned to leave the dogs in their truck during the service. They got to the church early, so they let the dogs loose, a violation of the leash law in Northfield . . . . The dogs wandered into Lewis Dustin's yard. Dustin, 74, who had been squirrel hunting that day, had a combination BB and pellet gun at the ready. . . . Shadow didn't menace Dustin. But Dustin fired a pellet at Shadow in hopes of scaring him off. Instead, the shot penetrated the dog's chest and severed an aorta. Shadow died en route to a veterinarian's office.

Should the couple be able to recover damages to compensate them for lost companionship or emotional distress? Or should their damages be limited to the value of the personal property that was converted / trespassed against? Namely, the replacement costs for a dog of Shadow's breed (plus applicable vet bills for spaying, neutering, shots, etc.).

Leaving aside whether killing a "trespassing" dog is legally justified, or whether the plaintiffs' contribution to the dog's demise should limit their recovery, I'm not sure whether I would support allowing recovery of emotional damages here.

One can't recover for loss consortium in connection with injuries to one's domestic partner or even best friend. It would seem a bit incongruous to allow one to recover for even the wrongful death of a friend of the furry kind.

Moreover, existing tort remedies may be adequate to provide some form of compensation. Where a defendant's actions are directed towards shattering a plaintiff's emotional health, and where a defendant's conduct is "outrageous," intentional infliction of emotional distress would be available. Moreover, punitive damages are available for trespass to chattels and conversion where the typical requirements for punitive damages (aggravation or malic) are present; a punitive damage award within the constitutional limits could easily rise to $5000-$10000 in the case of a pure-bred dog.

The Lawyer Goes to Borat

Like many of you, I recently emerged, astounded and outraged-in-a-good-way from the hilarious film Borat: Cultural Learnings of America...   Part of my joy was wondering how in heaven's name they don't get sued.

(Actually, they just did get sued, by the town of Glod, Romania - here's the story and a great I'm-not-supposed-to-laugh-at-this photo of the one-armed man from the movie.)

Slate ran an excellent little piece addressing what I'm sure must have been on the minds of other legal viewers of the film: the legal releases.  If you haven't seen the film, suffice to say that real people are humiliated, mocked, and made to look like buffoons, racists, and a whole range of shocking (and often disturbing) fools.  That's the point of the film -- the genre of which now has to be invented; "nonfiction mockumentary" maybe -- and it's the genius of it.  But it's not so funny if you're the guy who now looks like a racist in America's #1 film.

Slate's piece actually includes the release itself, which is an excellent job of overlawyering, although Slate's  reporter did wonder whether some people could claim they signed the release under false pretenses, especially as they were signed before the filming.

What I'm curious about is whether there's ever going to be a backlash against fine-print itself.  Everyone knows that no one reads warning labels, disclaimers, privacy policies, and the like.  Here, I'd certainly argue that a reasonable person would carefully read the Borat release, since after all you're about to be on film -- but the insults are so extreme (albeit, often, self-inflicted) that I wonder if it might set rolling a kind of anti-fine-print reaction.  A lot of my work around legalism and anti-legalism discusses how deeply Americans loathe this kind of law and legalism, and that they do so for curiously religious reasons (finding it "mechanistic" or "soulless," for example).  Here it feels like the regime of releases is being pushed to an extreme.

Torts and releases therefrom isn't my area of law - I wonder if someone has some more thoughts on this.  Has there been any plausible alternative to legal glossolalia?

Incidentally, Sacha Baron Cohen is a good friend of a friend of mine, and apparently there is indeed a huge pile of Borat and Ali G outtake material that they couldn't get releases for.   Personally, I'm still wondering how they could possibly get away with the "bear in the ice cream truck" scene...

Defamation, French-Style

In what is arguably the most abysmal defamation case in the democratic world in recent decades, a French trial court ruled in favor of France 2 television, television reporter Charles Enderlin and news director Arlette Charbot in a defamation suit against Philippe Karsenty, founder of the French online media watchdog, Media Ratings.  (For reports, see here, here and here).

In shades of a "the greater the truth, the greater the libel" doctrine, the court found defamation not because Karsenty's story was false, but rather because Karsenty's proof of the accuracy of his report did not include an official government of Israel statement backing up Karsenty's report.

The suit concerned Karsenty's claim that France 2's broadcast of September 30, 2000 accusing Israeli troops of killing 12 year old Palestinian Mohammed al Dura was fraudulent and calling on Charbot and Enderlin to resign their positions for apparently covering covering up the forgery.  (See Karsenty's original claims here).

The court apparently ruled in Enderlin et al's favor because Enderlin successfully asserted that his reputation was hurt and Karsenty was not able to "prove" that the Sep. 30 report was a forgery.  Although the circumstantial evidence seems exceptionally strong that the incident caught on tape was staged and that Enderlin's report was not only false but in reckless disregard of the truth, the court found Karsenty's evidence lacking because the government of Israel had not stated that France 2's report was false.

Interestingly, the plaintiffs never brought any witnesses at all (how did they prove the harm to their reputation?) and the public prosecutor (the French official representing the state in the civil action) recommended dismissing the action as Karsenty appeared to have carried out a "thorough investigation of the France 2 report and had presented substantial evidence to support his case."  (See here)

Apparently, all that is needed for the cause of action to succeed in France is that the plaintiff claim that a story "strikes at the honor" of the plaintiff.  The defendant can apparently get off the hook only by proving the truth of the report, and the standard of proof is apparently very high for the defendant for this defense.

The al Dura fraud itself is a stunning story, and it is a wonder that Enderlin has any positive reputation left at all after this debacle.

It's worth looking at these two short documentaries (this and this) and a reasonably good Wikipedia entry.  The Wikipedia entry has links to many of the relevant stories on the controversy.  The documentaries are put together by Richard Landes who is the subject of a similar libel claim by Enderlin, et al (see Landes' New Republic story here).

As far as I can tell, France 2 broadcast roughly a minute out of nearly a half-hour of footage put together by an independent Palestinian cameraman.  The overwhelming majority of the footage consisted of Palestinians faking scenes of injuries and deaths (in some cases, the "dead" victims in earlier scenes took part alive in later scenes).  The footage of al Dura appears to include a shot of al Dura rolling on his side and peeking at the camera after being "shot dead."  Enderlin's narrative was apparently based on Enderlin's faith in the cameraman's truthfulness (unshaken by Enderlin's seeing the rest of the footage) and, by Enderlin's admission, his general views about Palestinian-Israeli fighting rather than any specific or personal knowledge of the event.

Whither Punitive Damages?

I've been on the road a lot the last ten days and will continue to be moving this week thru next, shuffling among 3 weddings, 3 talks, and two conferences. But I didn't want to let today pass without some mention about punitive damages. That's because this morning, the Supreme Court will hear arguments in Philip Morris v. Williams. The Times has its obligatory editorial here. And in today's SSRN email from Adler and Bix, there is mention not only of Criminal Justice and the Challenge of Family Ties (finally, the SSRN backlog is clearing!), but also Brooklyn Law's Tony Sebok's latest piece, Punitive Damages: From Myth to Theory.

This semester at the University of Miami (and next semester, back at FSU), I'm teaching a seminar on punitive damages. It's been a great class, to my mind. We read the relatively short constitutional history of the Court's regulation of punitive damages, along with leading theoretical accounts of punitive damages and other interesting (non-SCOTUS) punis cases. Additionally, the students in the seminar have also prepared for today's arguments by reading the briefs on both sides as well as various amicus briefs lodged (chiefly the ones by academics). Next week, we'll review the transcripts of oral arguments from today. This is all very useful for me, as I've been working on a large manuscript for the last while, entitled Retributive Damages. This paper provides a retributivist account of punitive damages consistent with the work on retributivism I've done in other papers.

The issues before the Court today are twofold and they are among the most important questions the Court has yet to face in its adventure in tort regulation: first, whether the extreme reprehensibility of Philip Morris' actions can trump the two other parts of the SCT's 3 guideposts for constraining the amount of punitive damages (PD); and whether juries can consider the wrong done to non-parties in determining the amount of PD.

I plan on having some more posts on PD, but for now I wanted to flag the fact that the Court is hearing arguments on this important and perplexing topic today, and I invite readers to weigh in with their preliminary thoughts.

Strange tort case of the week

My nominee for strange tort case of the week - Israel's Supreme Court struck down a damages award that included reimbursement for future weekly visits with a prostitute.  The tort victim had been injured in a traffic accident and his sexual function had been impaired; the Tel Aviv district court accepted his claim that, after the accident, he could only perform with prostitutes.  The district court had therefore ruled that - in addition to receiving compensation for lost earnings - the plaintiff was entitled to compensation for continuing "medical care," including the aforementioned visits to prostitutes and calls to escort services.  The Supreme Court decision cites a number of other cases from Tel Aviv and Haifa that had apparently awarded similar compensation.

The practice, however, has ended.  Henceforth, per Justice Rivlin, Israeli courts should limit their rulings to compensating for services that can be legally obtained; thus, no compensation for visits to prostitutes.  The Court left open the question of whether sexual surrogate services can be compensated.

For readers of Hebrew, the judgment is here.

The Influence of Tort Law

I will get back, as promised, to what I see as troubling signs out of the Roberts court, but I'm quite pleased that the Court yesterday decided a case,  Anza v. Ideal Steel, involving an issue I write about -- on my first day of blogging no less! -- the influence and operation of tort-law principles outside the common law of torts. In Anza, the Court ruled that a business that claimed harm by a competitor's refusal to pay sales taxes, and therefore ability to charge lower prices, did not meet the "proximate cause" requirement for civil RICO standing, a requirement drawn from tort law. Other posts about Anza can be found at SCOTUSblog here and here, and at White Collar Crime Prof Blog here.

This "proximate cause" requirement was imported into the civil RICO statute in a 1992 case called  Holmes v. SIPC, because the civil RICO statute was based on the antitrust laws, which had in turn been read to have incorporated the common-law tort principle of proximate cause. But as Justice Scalia's concurrence in Holmes pointed out, even if you think that some type of policy-based limitation should be part of RICO standing, it's not at all clear that tort law or antitrust law is the source of that requirement.

Scalia seems to think that the requirement comes from some general background principles of the common law, but how exactly do we read that into a federal statute? I'm not sure, but see Caleb Nelson's recent, interesting piece called "The Persistence of General Law" on the topic.

Another oddity of this line of cases is that the proximate cause requirement is primarily a feature of negligence law, but in civil RICO, you're generally talking intentionally caused injuries, not carelessly caused harm. And the equivalent limitation in common law fraud -- the underlying intentional-tort claim on which the RICO claim was based -- is actually the reliance requirement, the issue which the Court had actually granted cert. on in Anza, but declined to address.  This “statutory standing” issue addressed in Anza may be better thought of as an issue of "substantive standing" in tort law, to use Ben Zipursky's term -- a rule that the defendant's act not just be a wrong, but a wrong to the plaintiff herself.

So far, I've written about this Anza-related theme of the influence of tort-law principles outside tort law in the context of  (1) harmless-error determinations in criminal appeals, which I reframe as a but-for causation problem in constitutional torts, and (2) workers' compensation cases, where common-law defenses like contributory negligence and assumption of risk -- that the injury was the worker's fault in some sense -- continue to preclude claims even though these defenses were explicitly dealt out of the workers' compensation "bargain" that replaced tort law for workplace injuries.

Besides these specific examples, I think it's interesting that tort-law principles continue to be influential in a variety of domains, at a time when the tort system itself is under attack from all sides. Not sure yet what accounts for this apparent paradox, and would welcome thoughts.

Price Gouging: Back By Popular Request

Commentators at the Conglomerate are engaged in a great debate about the wisdom (or, perhaps, sad inadequacy) of a recent of mine post here on the rationality of anti-price gouging regulations ("PGRs"). 

Surprisingly, some seem to think PGRs are straight-forward "price controls" like those prevailing in the mercifully defunct "Soviet" system.  Not quite.  Instead, most PGRs have four distinctive characteristics: (1) a time-limited "emergency" must be declared; (2) the selling price must "grossly" or "unconscionably" exceed the reference (normal) price; (3) the change in price must be unjustified by supply cost changes; and (4) the remedy is a later court determination that the differential violated the standard.  See, e.g., Florida, Georgia, Pennsylvania (through its little-FTC act), and a summary here.  In short, PGRs are short-term, dynamic, market-based standards that are applied retroactively.

Taking these limitations seriously makes us realize that PGRs look a great deal like antitrust regulations - having their bite when local suppliers suddenly have the ability (through no innate ability, foresight, or skill) to raise prices without fear of new competition coming in (because of the civil emergency.)  Joshua Wright observes here that the "[t]he increase in price is not a function of the elimination of competition such that there is now a seller of necessary goods with monopoly power. The increase is due to a change in supply conditions faced by all competing sellers."  But that seems wrong, at least with respect to those increases in price that PGRs will actually punish.  The reason that suppliers get punished is that they raise their prices beyond that needed by required by the condition; the reason that they can do this must be because the market is distorted in some way.  All of which is to say that I think it best to see PGRs as acting to reduce artificial and evanescent monopolies.  Compare this article which finds that price decreases following emergencies are slower than we would predict with this article collecting stories of post-September 11 price increases apparently unrelated to supply problems.

In any event, I originally claimed that PGRs ought to have similar effects as high prices on consumers (encouraging lower demand) while being "more satisfactory" than price gouging.  Why is this?  Here, I think we need to discard the classic gas station model and turn to alternative stories of price gouging.  (The gas station story is a hard case for PGRs: (1) multiple suppliers; (2) demand can be somewhat elastic; (3) real supply interruptions.)

How about the hotel problem?  Recall the story: there is one hotel in town; individuals can't or won't travel elsewhere (perhaps due to closing of borders between towns); the hotel's costs have gone up slightly (fuel/transportation of food); citizens who do not leave their homes are likely to face severe inconvenience (power loss, etc.) as well as threat of serious bodily harm. 

Now, the hotel increases costs between two and three times the reference price.

I just can't see how marketeers get over the wealth effects problem that accompanies the anti-PGRs solution to this particular example. The only response that I've seen is that government ought to (instead of enforcing PGRs) distribute subsidies to the poor. PGRs, by contrast, tend to force suppliers of shelter to distribute it on a first-come, first-served basis.  When PGRs are implemented (recall: the state must declare an emergency), individuals are surely  informed of the relevant supply/demand imbalance.  So, we would predict that PGRs result in the shelter being given to the folks who call the hotel first, instead of those who can pay the most.  Sounds good to me.

I reject the argument that I need empirical evidence to raise these issues, or that lack of evidence makes my arguments "fantasies" or "counter-intuitive, counter-theoretical, and counter- common-knowledge claims."   First, I agree with Scott Moss:

[I]t is an unanswered empirical question whether, in the peculiar circumstances of any particular emergency, (a) the dis-incentive effect of price controls outweighs (b) the positives of limiting inefficiently high prices. (As to (b): prices would come down eventually, without controls, if they truly were "inefficiently high" -- but "eventually" may not be good enough in an emergency situation.) In short, I'm dubious that we can rely solely on first principles to answer the question, "should there be price controls in this particular local emergency situation?"

Moreover, I think that given the distributive consequences of recalling PGRs, the first question about the world we should be asking is directed toward those who advocate reform.  That question is: has any state ever changed its tax and transfer system to ameliorate the wealth effects that accompany repealing PGRs?  I have found no examples. 

As Brad DeLong notes, a second benefit of PGRs is psychological: it satisfied our need to believe in the inherent fairness of the market economy.  This fits nicely with the BLE model of price gouging (discussed in this well-known paper.) Improved faith in the fairness of legal economic exchanges redounds to the economy's benefit in the long run. 

This brings to mind a third type of reason why PGRs are more satisfactory than allowing high prices: PGRs protect suppliers from their own short-term thinking.

For those that believe that corporate managers sometimes  make irrational decisions, there is a story here about the hotel managers deciding to engross every cent possible (a certain present gain) instead of the uncertain future gain that would accompany keeping the good will of the local community.  For more on this, read Jeffrey J. Rachlinski, Gains, Losses, and the Psychology of Litigation, 70 S. CAL. L. REV. 113 (1996).   Assuming this is true: why doesn't price gouging happen all the time? Perhaps it is the shadow of PGRs that help managers to confront the irrationality of price gouging by making them consider if their price increases are "unconscionable" or "grossly disproportionate".  For many managers, no doubt, such deliberations will lead to the following question: "How will the community judge me in a month?"  The outcome of this deliberation is good for the manager, and, for different reasons, good for his poorer customers.  (I acknowledge that thinking of PGRs as a helping potential price gougers is somewhat odd.)

This  insight - for what it is worth - leads to a testable prediction: retail gas stations in states with PGRs ought to be rewarded by higher customer goodwill and loyalty. 

Perhaps an inspired commentator will step up with the data.