Crossing the Punitive-Compensatory Divide
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Received judicial and academic wisdom holds that ‘‘in our judicial system, compensatory and punitive damages, although usually awarded at the same time by the same decisionmaker, serve different purposes.’’ Compensatory damages ‘‘are intended to redress the concrete loss that the plaintiff has suffered,’’ while punitive damages are ‘‘intended to punish the defendant and deter future wrongdoing.’’ Likewise, the notion of a punitive-compensatory divide, or the alleged rigidity of these doctrinal categories of damages, drives the approach to tort policy in many realms, including the highly-charged debate surrounding tort reform—perhaps most controversially, proposals for caps on damages. At the same time, there is acknowledgement that, for example, damages for emotional distress traverse this punitive-compensatory divide. According to the Restatement (Second) of Torts, ‘‘In many cases in which compensatory damages include an amount for emotional distress, such as humiliation or indignation aroused by the defendant’s act, there is no clear line of demarcation between punishment and compensation and a verdict for a specified amount frequently includes elements of both.’’ This theme was echoed by the U.S. Supreme Court in a recent punitive damages case, when it remarked that, although ‘‘it is a major role of punitive damages’’ to condemn conduct leading to ‘‘outrage and humiliation,’’ “[c]ompensatory damages [may] . . . already contain this punitive element.” What is the import of this blurred distinction between emotional distress compensatory damages and punitive damages? Does it become especially significant, for example, when punitive damages are not an available avenue? Over two decades ago, the Wisconsin Supreme Court speculated that ‘‘if punitive damages are not allowed, juries [will] give vent to their desire to punish the wrongdoer under the guise of increasing the compensatory damages, particularly those for pain and suffering.” More recently, in examining modern statutory and judicial constraints upon punitive damages, Victor Schwartz and Leah Lorber have resurrected this theme, claiming that ‘‘plaintiffs’ lawyers . . . have poured new wine of punishment evidence, once used to obtain punitive damages, into old bottles of pain and suffering awards.’’ Tom Baker’s interviews with plaintiffs’ attorneys lend a modicum of support: ‘‘as the plaintiffs’ lawyers report, in practice there is no clear dividing line between compensatory and punitive damages. Compensatory damages can punish, just as punitive damages can compensate.’’ Academics are uncovering a parallel phenomenon at work in jury decisionmaking. As Cass Sunstein and colleagues report, ‘‘[a]lthough pain-and-suffering awards are essentially compensatory, there can be little doubt that such awards sometimes reflect jury judgments about the egregiousness of the defendant’s behavior. Hence, such judgments are likely to have a punitive component.’’ With even greater conviction, Michelle Anderson and Robert MacCoun pronounce that ‘‘[t]he dynamic relationship between the two awards might resemble a water-filled balloon; if one pushes down on one end, the other pops up.’’ The time is ripe to consider the implications of the collapsing punitive-compensatory divide. My goal in this chapter is to uncover judicial recognition of the crossover or ‘‘substitution’’ phenomenon, and to tie these developments to a considerable—and growing—body of empirical evidence that suggests the validity of such a substitution effect. Experimental mock juror studies comprise the bulk of the existing empiricism. Jonathan Klick and I have contributed to this body of evidence an econometric regression analysis using broadly representative state court jury trial data. Until recently, this crossover hypothesis, although widely presumed in certain circles, had not been tested empirically in the real world. The chapter concludes with an exploration of alternative explanations for the crossover effect that has now been demonstrated using divergent experimental and econometric techniques.
Source Publication
Civil Juries and Civil Justice: Psychological and Legal Perspectives
Source Editors/Authors
Brian H. Bornstein, Richard L. Wiener, Robert Schopp, Steven L. Willborn
Publication Date
2008
Recommended Citation
Sharkey, Catherine M., "Crossing the Punitive-Compensatory Divide" (2008). Faculty Chapters. 1769.
https://gretchen.law.nyu.edu/fac-chapt/1769
