In high school debate class, I once proposed changing the system so that punitive damages went to the government. The irrational part of punitive damages - my thinking went - is not that they are taken, but that they are then given to the client.
Of course, unintended consequences abound (exercise for the reader).
1: in a few states they are. I was stunned in law school to learn that wasn't universally true. Seems like a no brainer.
Seems like a no brainer.
Well, for one thing, if you take punitives seriously as a tool to enable private parties to deter bad behavior, then you want an incentive for people to seek them. Requiring that the proceeds go to the state takes away a good part of that incentive.
In qui tam lawsuits, doesn't a portion of the money go to the whistleblower, and portion to the government? That seems like a fair compromise in terms of giving an incentive for individuals to bother to bring a case, and yet not allowing them to reap the entire profit if they win.
In Oregon -- home of the extensive Philip Morris litigation of punitive damages -- punitives are split between the government and the plaintiff.
4: Yeah. Why should I fight harder for a few zillion I know I'm never going to see?
5: yes, but the idea there is to enable a "private attorney general" to essentially enforce a fine that the government could have gone after itself. Outsourcing the suit. Not to say it couldn't be a more general model, but it's significantly different than the government taking a cut from the proceeds of a purely private dispute.
I don't think there's a simple answer. As long as the plaintiff is getting a share of the punitives, there's an incentive to 'abuse' if that's what worries you. If, on the other hand, you're not worried about abuse, I'm not sure what's gained by giving the govt a portion of the proceeds?
A friend of mine was working as an extra on the Tom Cruise Stauffenberg movie in Berlin last summer and got injured when the side fell off a truck and threw a bunch of guys off. German-speaking American lawyers showed up at his hospital room wanting to represent him in a suit against the studio. He thought it was the weirdest thing ever.
4 and 7: Even accepting that damages need to be high to encourage people to sue (not sure how I feel about that), I think lawyers would easily find a way to up compensatory damages in compensation for the loss of punitive. (Pain and suffering, etc.)
10: I'm not saying damages need to be high to get people to sue, I'm saying that if you think that punitives are a useful way of punishing people or deterring similar behavior above and beyond having to compensate the individual plaintiff for the actual direct harms (which is really the only reason to have them, unless you think windfalls are a good thing), you probably need to pay people to pursue them.
And why wouldn't lawyers already be pushing compensatories as hard as they could? You think they're currently lowballing for the hell of it, when they could 'easily' be going for much more? I guess maybe juries might be willing to find higher compensatories if they couldn't get to the total they wanted to award by adding punitives, but that doesn't seem like any kind of improvement if what you're worried about is out-of-control jury awards.
The answer isn't tricky--you still have fees related to the punitive damages paid to the lawyer, but the balalance goes to the gov't, not the plaintiff. (You have to then mentally divide the compensatory and puntive portions into two separate claims--almost as if the lawyer is working for two separate clients in the same case--the plaintiff and the gov't. So, for example, a defendany can't offer a client $1M more in compensatory damages in order to escape $100M liability on the punitives. That portion of the claim isn't the client's, and the client can't decide to settle it. But it dosn't make sense that we treat this as the client's claim now anyway--it's not compensation to them, and it's not even really related to anything about them--it's about bad acts in which the company has engages, likely over some protracted period.)
Punitive damages also barely exist in the United States. They take up a fair amount of the Supreme Court's docket, but the actual costs to businesses of punitive damage judgments are pretty much nothing at all. see, for example.
Almost all cases settle, and it is always more advantageous to describe a settlement as compensatory, not punitive, for tax reasons. beyond that, juries don't generally award punitives against defendants who can afford to pay, and when they do, the awards usually get thrown out by the Court or on appeal. Almost every bizarro jury verdict in the news was drastically reduced or never paid.
However, compensatory damages tend to get higher awards in the U.S. than elsewhere. Also contingent fee litigation opens the Courts to injured people who don't have much money, a large class.
12: that addresses the concern that punitives are a windfall for the plaintiff, but it doesn't do anything about the potential for abuse if that's the concern (about which 13 is absolutely right, but it seems to be a big part of what gets people worked up).
Maybe worth adding that abuse of the system isn't, at least nominally, what's behind the evolving constitutional restraints on punitives, it's a due process concern: punitives, in the view of some, allow a jury to deprive the defendant of property without any real constraint (and this view cuts across ideological lines: the votes in BMW v. Gore are interesting, with Scalia, Thomas, Rehnquist, and Ginsburg in the minority, against substantive limits). Split-recovery arrangements aren't going to address that concern, if you share it.
Given a choice between punitive damages and increased government regulation of business and their ability to punish offenders, I think I would choose the latter but the trend the article alludes to of courts moving away from awarding damages without increased regulation to take its place is troublesome.
The same is true of the tradeoff between compensatory damages and a decent social safety net, and the attacks on the former without any compensating increase in the latter. If a major injury didn't imply such a high risk of personal bankruptcy, injured people would have as much need to sue.
The entire lawsuit system is screwed up, and punitive damages are about the *only* incentive for someone to go through the massive pain-in-the-assness of filing a suit. That or you've been injured so very badly that you really cannot pay your own medical expenses (and even then, the doctor's bills have to be much, much greater than any potential lawyer's fees).
Not to mention that a system that's run on after-the-fact lawsuits rather than pre-emptive regulation is kind of predicated on acceptiing a lot of people getting hurt.
But people are generally too stupid to realize how evil it is to bitch and moaning about "trial lawyers" in the absence of any plans to replace lawsuits with pre-emptive regulation.
allow a jury to deprive the defendant of property without any real constraint
That's a bizarre empirical claim. Punitive awards are reduced on appeal every day, always have been. FWIW I can't think of a more egregious case of "activist judges legislating from the bench" than the Roberts court deciding, with no statutory basis whatsoever, to arbitrarily define what constitutes an "acceptable" ratio of punitive to compensatory damages.
The law & economics types are hoisted on their own petard on this one: if you want the law to facilitate pareto-optimal outcomes, then punitive damages need to be high enough to outweigh the benefits of negligent behavior divided by the odds of getting caught. The law & economics solution is agnostic about the ratio of punitive to compensatory damages.
A little girl here just died from one of those swimming-pool accidents that Edwards was ridiculed for winning. She was in the hospital for more than six months before dying.
The people opposed to trial lawyers and punitive damages are the same people who are are opposed to government regulation, but they tend to support gun ownership and vigilante justice. They'd probably be more supportive if the families of the dead kid showed self-reliance and used shotguns to blew away the individuals held responsible.
Except that free-marketers also always support entrepreneurs and producers over consumers and flesh and blood people, who are worthless except for the entrepreneurs.
17: while I'm completely with you on the substance, I'll just note that punitive awards are reduced every day on appeal largely because the supreme court has issued guidance as to their acceptable limits. And that these SCOTUS decisions on acceptable punitive:compensatory ratios long pre-date the Roberts court.
Punitive awards are reduced on appeal every day
I'm not sure how that's evidence against the claim that jury awards of punitives are unconstrained in due process terms. Which is not to say that I agree with BMW and Phillip Morris (note, though, that attributing this principle to the Roberts court is off, chronologically and ideologically: BMW was a Stevens opinion, with Souter and Breyer in the majority (and Scalia, Thomas and Rehnquist dissenting).
I'm not sure how that's evidence against the claim that jury awards of punitives are unconstrained in due process terms.
A judicial appeal is not a form of due process?
I acknowledge my ignorance of the chronology of punitive damages jurisprudence.
I like to think of punitive damages as the equivalent of the death penalty for juridical persons, only without the humanitarian concerns. Some torts are so "heinous, attrocious or cruel" that driving the company into bankruptcy is a just outcome: to satisfy society's desire for retribution, to protect the public against the malefactor offending again, and to deter future misconduct.
I will also boldly assert that the deterrent effect of the punitive awards is measurably higher than that of capital punishment, because the rational actor assumption is much more plausible in the case of corporations.
I'm not sold on the regulation of business vs. punitive damage dichotomy. The right to seek punitive damages is often statutory, in which case punitives are basically one component in a larger regulatory scheme. If not statutory, punitives are usually based on gross negligence, which is many times proven with reference to the number of regulations or rules that were broken by the offending party. Eliminating a private right of action to seek punitives and thus punish violations of these statutes is basically removing an important and efficient statutory enforcement mechinism. I think that allowing private citizens to enforce social norms by seeking punitive damages is more efficient than a bulky regulatory system, and is also less capable of manipulation by corporate interests.
Why is it bad that the plaintiff receives a windfall in punitive damage cases? Is a punitive damage windfall somehow worse than a windfall from inheritance?
22: again, the SCOTUS opinion is that, absent some guidelines by which excessive award will be struck down, there is no due process. (So the court supplied some such rules.) I think these are bad decisions, but it's not as nonsensical as you are painting it.
Also, in re: corporate death penalties, we have corporate criminal liability for that. If a corporation really does something very bad the state can seek bankruptcy-inducing fines, or even seek dissolution directly. The question is whether we should allow something like this sort of "death penalty" to be in the hands of private litigants. (Vigilante justice?) (I think we should, but you can perhaps see why phrasing it in those terms is probably not the most helpful rhetorical approach.)
The entire lawsuit system is screwed up, and punitive damages are about the *only* incentive for someone to go through the massive pain-in-the-assness of filing a suit. That or you've been injured so very badly that you really cannot pay your own medical expenses (and even then, the doctor's bills have to be much, much greater than any potential lawyer's fees).
This is just pretty patently wrong. The vast majority of lawsuits filed do not seek punitive damages. The incentive to bring them is the chance of a recovery to compensate you for your medical bills, pain and suffering, lost wages, etc. Even more incentive in the system we've largely adopted whereby the plaintiff doesn't even have to pay the lawyer at all unless/until s/he wins. By and large "the massive pain-in-the-assness" of filing a lawsuit is the lawyer's problem.
24: I've actually never completely understood this, but "windfalls" are anathema for most judges. "Windfalls" in society--like inheritance or, hell, winning the lottery--are one thing, but the legal system doesn't want to be seen creating them. (So much so that they often err on the side of undercompsation, if you ask me, which is nuts.)
A judicial appeal is not a form of due process?
Well, sure, but that doesn't mean that the event you're appealing from wasn't an abridgment of your due process rights. We don't generally say that constitutional rights aren't violated as long as there's an appellate court to sort it out at some point.
(And sorry, I didn't mean to be a prick about the chronology thing, mainly just pointing out that the ideology behind this stuff is more complicated than might be expected, and can't be easily equated to conservative, or even pro-business, judicial activism.)
I didn't mean to be a prick about the chronology thing
No offense taken, no apology necessary. The correction was not pedantic, and it contributed materially to the advancement of the debate.
Also, in re: corporate death penalties, we have corporate criminal liability for that. If a corporation really does something very bad the state can seek bankruptcy-inducing fines, or even seek dissolution directly.
But we're talking about cases where the wrongdoing may be covered by tort law rather than criminal law. It has to be a private litigant, because they are the injured party with standing to sue, and because the criminal justice system could not possibly police all of these infractions even if it was inclined to do so, which is doubtful in any event.
And remember, the defendant has a right to trial by jury here. We let a jury condemn a man to death, why shouldn't they be able to make similarly fateful decisions about the solvency of a juridical person.
I have to duck out now, I'm on a plane about to take off.
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Following Sir Kraab's sage counsel, I wanted to point y'all to a wee favor I'm asking in another thread.
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now post it on the power thread, for the symmetry
I would like to know whether most countries follow the English system, where the prevailing party's costs are paid by the other side.
In the U.S., each side bears its own costs.
Punitives are thus sought, in many cases, to cover expenses & att'y fees. Of course, most plaintiffs are paying on a contingency basis anyway -- thus, a punitives award may just bring the plaintiff closer to actually collecting 100% of what he's supposedly due.
Regardless, provided that appellate courts aren't shy about reining in crazy verdicts, I don't have a problem with punitives (speaking as someone who represents civil defendants for a living).
They're supposed to be reserved for reprehensible conduct, and if you do something reprehensible, then you *should* get whacked.
The idea that settlements are 'compensatory' is also wrong. You settle based on the value of the suit. And in a case where punitives are sought and the claim is at least colorable, you take some amount of punitives into account.
It's not supposed to be corporate death. That's why you have to put on evidence of net worth.
(You have to then mentally divide the compensatory and puntive portions into two separate claims--almost as if the lawyer is working for two separate clients in the same case--the plaintiff and the gov't. So, for example, a defendany can't offer a client $1M more in compensatory damages in order to escape $100M liability on the punitives. That portion of the claim isn't the client's, and the client can't decide to settle it.
Brock, isn't there a serious standing problem here? If the punitive damage portion of the claim isn't the client's, then there's no one with standing as an injured party controlling the case -- the government isn't a party to the lawsuit, whether or not they're going to receive the punitives. Who has standing? Are we just letting lawyers without any standing act as private Attorneys General at their own whim?