Punitive Damages Transformed into Societal Damages
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Description
Whether termed civil penalties or statutory multiplied damages, ‘supra-compensatory’ damages are of increasing theoretical and practical interest not only in the United States, but also abroad, notably in France and Australia. Notwithstanding criticisms directed at the controversial remedy of punitive damages and more generally at the notion of punishment within civil law, there is a growing recognition that some form of supra-compensatory remedy may be necessary to deter certain forms of conduct on the part of actors, especially corporations. Around the world, ‘supra-compensatory’ damages seemingly arise phoenix-like from the ash heap of increasingly maligned ‘punitive’ damages. There is a general consensus that punitive damages are intended ‘to punish and to deter’. But this consensus masks deep and significant disagreements in terms of whether these purposes are, or should be, one and the same—namely retributive punishment whose corollary effectuates deterrence—or instead separable, with deterrence holding its own as a non-retributive purpose distinct from punishment. Courts and commentators typically use the language of retributive punishment when describing the aims of punitive damages and the relevant features of the remedy. But at the same time, there is increasing recognition that the separate aim of deterrence is often at play, especially in situations where the defendant’s conduct has caused widespread societal harm. Courts and commentators struggle because of this alleged mismatch—namely, the awkward fit between the retributive punishment connotations of ‘punitive’ damages to serve societal deterrence purposes. The struggle is two-fold. First, punitive damages seem especially troubling because notions of retributive punishment, common in criminal law, seem wholly out of place in the civil sphere. For this reason, when courts award punitive damages they are inclined to place various limitations on the remedy, with the goal of avoiding ‘disproportionate punishment’. Second, notions of societal deterrence seem out of place in private law focused on bilateral interactions between the parties involved in the litigation. The notion of supra-compensatory damages for societal deterrence purposes injects a public regulatory purpose into private law. This dimension is significant where there are third-party effects or externalised harms to others stemming from bilateral interactions between defendants and plaintiffs. And it is also significant with respect to corporate wrongdoing. Statutory damages recognise this public interest element; common law courts have experienced more difficulty fashioning remedies accordingly. My aim in this chapter is to interrogate what courts are saying—typically using the language of retributive punishment—when they might actually be doing something else—namely, effectuating societal deterrence. As a descriptive matter, I demonstrate that embedded within punitive damages is a component of damages designed to deter the tortfeasor. But my aim is also normative and aspirational – namely, what should courts be doing to effectuate societal deterrence? Building on prior work, I explore various statutory and judicial mechanisms that could transform punitive damages into societal damages. I consider whether the case for conceptualising punitive damages as a societal remedy is especially compelling in certain realms characterised by statutorily defined violations, such as in the consumer protection realm. Moreover, I explore how a reconceptualization of punitive damages as a societal remedy could have far-reaching effects both in terms of the evolution of US doctrine, but also influencing law reform efforts in various other countries. Sections II and III lay the necessary conceptual foundation by, first, disaggregating punitive damages by functional purpose and, second, setting forth theoretical constructs and practical factors relevant for achieving societal deterrence. Once the societal deterrence goal is acknowledged, however, the spectre of ‘windfall’ gains to the plaintiff looms large. It would be sheer coincidence if the amount needed to deter the defendant exactly equaled the amount of the plaintiff’s losses. Section IV (the heart of the chapter) presents societal damages funds—remedial funds created alternately by statute, common law courts, or private parties effectuating settlements—as an apt response to the injection of the public societal deterrence purpose within the framework of a private civil lawsuit. Finally, section V concludes by suggesting the far-reaching implications for debates regarding constitutional excessiveness review, insurability and vicarious liability for punitive damages, once punitive damages are transformed (in whole or in part) into societal damages.
Source Publication
Punishment and Private Law
Source Editors/Authors
Elise Bant, Wayne Courtney, James Goudkamp, Jeannie Marie Paterson
Publication Date
2021
Recommended Citation
Sharkey, Catherine M., "Punitive Damages Transformed into Societal Damages" (2021). Faculty Chapters. 1763.
https://gretchen.law.nyu.edu/fac-chapt/1763
