The actual enforceability of medical malpractice exculpatory agreements remains an unsettled and underexplored question.  Courts treat general exculpatory agreements—like those signed at amusement parks—as they do any other contract, enforcing the contracts as long as they are entered into voluntarily.  But medical malpractice exculpatory agreements have been repeatedly invalidated, often under the mysterious “void-for-public-policy” rationale.  This Editorial outlines the basic arguments put forward in my Note exploring the enforceability of medical malpractice exculpatory agreements.  In the process, I set out a blueprint that medical providers might use to craft an enforceable medical malpractice exculpatory agreement.  I argue that the agreement with the best chances of being enforced is one that is not just optional for the patient and clearly worded, but also confidential.

 
I.
Judicial Resistance to Medical Malpractice Exculpatory Agreements

Cases using the void-for-public-policy rationale to invalidate medical malpractice exculpatory agreements abound, while cases upholding the agreements are difficult to find.  However, it is unclear whether the resistance to these agreements is a result of something that renders them categorically void or, alternatively, of some quality of the specific subset of agreements that are actually brought to court.

New York follows the majority rule on medical malpractice exculpatory agreements, so an in-depth analysis of New York case law is illustrative.  When invalidating medical malpractice exculpatory agreements, New York courts seem to focus on the way medical malpractice agreements are presented and worded, rather than on the subject matter or parties to the agreement.  In case after case, the courts look beyond the mere fact that the agreement is between doctor and patient and relates to liability, instead scrutinizing the specific wording of the agreement, the presentation of the agreement, and the circumstances of the bargain before ruling on an agreement’s validity.

There is reason to believe a medical malpractice exculpatory agreement could be crafted such that a New York court (and presumably any court following the majority rule) would enforce it, in spite of the fact that most cases on record involving such agreements have found them to be void for public policy.  The cases suggest that it is neither the subject matter of nor the parties to medical malpractice exculpatory agreements that render them void for public policy, but rather some feature of their presentation and signing.  Unfortunately, the cases provide few clues as to what elements are problematic.

 
II.
A Possible Culprit: Signaling Pressure in Medical Malpractice Exculpatory Agreements

A behavioral economic perspective reveals that medical malpractice exculpatory agreements create a somewhat intuitive problem that may underlie courts’ skepticism.  At the core of this problem is the signaling involved in the decision to sign (or not sign) a medical malpractice exculpatory agreement:  By refusing to sign such an agreement in exchange for a lower fee, a patient unequivocally signals to her doctor that:

(1) she is the sort of patient who would sue her doctor if injured negligently,

and

(2) she thinks there is at least some chance her doctor will make a mistake.

By refusing to sign an exculpatory agreement, the patient essentially says to the doctor, “No thanks, while I like saving money, I think there is a chance I’ll end up suing you.”

This signaling is problematic because we patients want our doctors to think we trust them.  Call it fairness, fear of retaliation, or altruism—the fact remains that many of us are uncomfortable with letting our doctors know that we have anything but the utmost faith in their abilities, even when we do have serious doubts.  This is why we are so hesitant explicitly to ask for a second opinion, even though we do not think twice about double-checking our diagnosis through anonymous means such as logging into WebMD or calling a doctor friend.  The same is true when it comes to deciding whether or not to sign a medical malpractice exculpatory agreement.  We know that if we do not sign, we will signal a lack of trust to our doctors, and this signaling effect puts pressure on us to sign, even if we otherwise would rather retain the right to sue for malpractice.

 
III.
Blueprint for an Enforceable Medical Malpractice Exculpatory Agreement

In my full Note, I discuss the plausibility of the assumption that courts’ skepticism toward medical malpractice exculpatory agreements is related to the signaling pressure identified above.  Assuming that this encumbrance to patient decisionmaking does underlie judicial suspicion of these agreements, it is possible to set out a blueprint for an exculpatory agreement that avoids signaling pressure, thereby alleviating courts’ concerns.

First, courts have clearly stated that patients must actually understand what they are signing in order to be able to waive the right to sue for malpractice.  Furthermore, courts have stated that because medical care is a necessary service, doctors cannot present malpractice waivers on a take-it-or-leave-it basis.  Thus, as a preliminary matter, any agreement that hopes to be enforced must be nonadhesive (optional) and clearly worded.

Such an agreement would still be subject to the signaling encumbrance identified above.  To cure this defect and avoid claims that a patient’s decision was not really voluntary, a medical provider hoping to create an enforceable medical malpractice exculpatory agreement would need to find a way to insulate the patient’s decision from signaling.  This could be done by making the patient’s decision confidential.  By guaranteeing the patient a zone of privacy around her decision to sign—at least vis-à-vis her doctor—a medical provider presenting a patient with a medical malpractice exculpatory agreement could guarantee that the patient’s decision was not influenced by fear of how the doctor might respond.

Contracting over malpractice confidentially would not be difficult.  The simplest method would be to utilize direct contracting between patients and managed care providers.  The doctor would only know that some patients from the managed care provider withheld the malpractice right and some did not.  She would not find out whether a given patient had decided to withhold the right unless that patient chose to sue ex post.

Even without an intermediary, contract law leaves plenty of room for a doctor and patient to enter into a traditional contract confidentially.  The doctor could present and explain two fee arrangements—one including an exculpatory agreement, one not—as two separate offers.  She could then invite the patient’s confidential acceptance of either offer, so as to remain in the dark about the patient’s decision.  Such an arrangement would be perfectly legal:  The Restatement (Second) of Contracts makes clear that the offeror may invite acceptance by whatever reasonable means she designates in making the offer, be it performance or, in this case, acceptance delivered confidentially to a third party.

Of course, even if the contract were formed confidentially, the patient may want a guarantee that her decision would remain confidential.  Confidentiality and privacy clauses are common elements of contracts, and, in this case, both offered contracts need only include clauses that guarantee confidentiality, and perhaps provide some warranty in the event that confidentiality is breached.  In addition, they might designate an independent third party—such as the doctor’s malpractice insurance company—to maintain the confidentiality of the agreement.  Again, the doctor would never find out whether a patient had signed or not, unless that patient decided to sue.

 
Conclusion

This Editorial has focused on signaling effects and confidential contracting in the context of medical malpractice exculpatory agreements, but these ideas might be applicable to other situations.  Within health law, it might be that patient choice would be facilitated in many other highly sensitive areas by using the law to make patient decisions confidential, even vis-à-vis the family doctor.  Decisions like the choice to use birth control, get an STD test, or seek out a second opinion come to mind.  Beyond the medical arena, confidential contracts might be utilized anywhere a special relationship of trust between two parties is in conflict with the signaling caused by standard contracts. Such uses might include contracts in the employment context and contracts regarding legal representation.

Acknowledgments:

Copyright © 2010 New York University School of Law.

Matthew J.B. Lawrence received his J.D. in 2009 from New York University Law School. He is now clerking for Judge Douglas H. Ginsburg of the D.C. Court of Appeals.

This Legal Workshop Editorial is based on the following Student Note: Matthew J.B. Lawrence, In Search of an Enforceable Medical Malpractice Exculpatory Agreement: Introducing Confidential Contracts as a Solution to the Doctor-Patient Relationship Problem, 84 N.Y.U. L. REV. 850 (2009).

The stakes are high here.  To begin, where humor is stifled, the First Amendment hangs in the balance.  Most potentially humorous utterances are actionable precisely because of their content, a key trigger for First Amendment protection.  To a limited extent, scholars have explored this ramification of humor regulation, particularly in the context of sexual harassment litigation.  Yet even leaving aside core First Amendment values, regulating humor implicates other important concerns nowhere discussed in case law or legal scholarship.  Philosophers, literary theorists, natural scientists, and social scientists have long documented beneficial qualities from humor, benefits as wide ranging as pain relief, social cohesion, and creativity.  One might expect the law to protect such socially beneficial activity.  That’s not to say that humor doesn’t have its downsides.  At the least, though, the law might distinguish situations where humor fosters good from those where humor produces negative effects.  Yet only on rare occasion do courts speak explicitly of their decisions’ effect on humor.  They need greater awareness of the law’s regulatory effect on humor.

 
I.
How Courts Regulate Humor: A Taxonomy

Humor occurs in most aspects of human life and, accordingly, appears in a wide variety of legal contexts.  A look at three diverse legal subjects—contracts, trademark, and employment discrimination—yields a rough taxonomy.  As a starting point, the case law divides into two groups: (1) instances when the court’s decision to regulate turns on whether the disputed communication is humorous and (2) those when the court regulates the communication irrespective of whether it is funny.

Take the joke between Chuck and Gladys.  In the first category of cases, courts actually engage the question whether Chuck’s communication was indeed a joke.  When the answer is “yes, Chuck made a joke,” these cases explicitly remove the communication from legal restriction—thereby protecting it from civil liability.  Chuck might avoid liability, for example, if a court decides that Chuck’s statement to Gladys was no more than a drunken jest about selling her his car, simply a joke rather than a legally enforceable contract.  The court’s decision allows the joke (and others like it) to thrive, unfettered by legal obligations.  This analysis also occurs in trademark litigation, where courts in essence conclude that the level of jest is so high that no harm to an intellectual property interest occurs.

It may sound fishy or wrong for courts to make an editorial judgment about whether something is humorous.  Remarkably, though, the cases are often straightforward, tracking formalistic legal analysis.  The humor-regulating enterprise becomes more problematic, however, in the second category of humor regulation, when courts impose liability regardless of whether the communication is funny.  In this category, courts instead focus on whether the communication is sufficiently hurtful as to justify stifling it.  Examples of this category are common in employment cases involving sexual harassment and occasionally occur in trademark cases.  Functionalism and indeterminancy abound in these opinions; they are riddled with inconsistencies and irrationalities, qualities common when courts struggle to make difficult choices between competing alternatives.

 
II.
Case Law Tracks Humor Theory

One remarkable quality of humor-regulating opinions is their faithful (yet tacit) tracking of humor theory espoused by non-legal thinkers.  Humor theory provides a scholarly grounding for the dichotomy between humorous communications that avoid liability and those that do not.  Humor theory traditionally distinguishes three broad categories of humor: (1) incongruity humor, (2) superiority humor, and (3) release humor.  The “funny” in incongruity humor comes from the juxtaposition of two incongruous or inconsistent phenomena.² Superiority humor, by contrast, seeks amusement through a communication that makes one person feel successful at the expense of others.  Release humor taps into repressed sources of pleasure, pressure, or anxiety, focusing on taboo or difficult topics such as sex, excretion, or death.  As it turns out, cases evaluating whether a particular communication is a liability-avoiding joke test whether the joke reflects “incongruity” humor.  On the other hand, cases regulating a jest act in those instances where the jest reflects what scholars would call “superiority” and “release” humor.

Thus—in all three doctrinal areas (contracts, trademark infringement, and employment discrimination)—courts are more likely to protect the same type of humor: incongruity humor.  In other words, incongruous humor tends to avoid law’s grip, while superiority humor or release humor triggers legal control.  In addition, courts in all three areas tend to integrate scholarly definitions of parody and satire uniformly to afford puns favored status.

What’s the explanation for this overlap between humor scholarship and case law?  Could it be erudition of the judiciary?  Or is it dumb luck?  Common sense?

I vote for common sense.  But common sense has many faces in the context of humor.  I count at least three: common sense grounded in logic, humor’s intrinsic qualities, and social norms.  The logical foundation of common sense derives from the societal context in which courts create legal definitions of claims and defenses.  Intrinsic meaning refers to the proposition that truly funny utterances may tap into humor receptors found within all human psyches.  Social norms in this context are shared cultural preferences about humor.

The logical explanation for consistency in humor regulation derives from the analytical connections between legal requirements (such as the definition of a cause of action) and humor scholarship.  Take for example sexual harassment law’s focus on regulating superiority humor.  Sexual harassment law is—at least in part—a species of the law of wrongs, designed to impose liability in order to remedy a personal injury.  The decision to regulate depictions of an individual as inferior (whether funny or not) is hardly surprising, given civil law’s function of imposing liability to remedy an injury.  Since advanced human society seeks to reduce conflict, law has a mechanism for discouraging hurtful behavior that might promote conflict.  As citizens sharing the same human society as lawmakers, non-legal academics also focus on humor with conflict-creating potential, expending considerable effort to explain it.  Accordingly, they have refined a theory of superiority humor with analytical kinship with another human context—legal regulation.  Sexual harassment regulation is but one example where the overlap of law and humor scholarship derives from the simple fact that both endeavors concern humanity.

The second possible face of common sense—the intrinsic quality of humor—is more contestable.  Many suggest that no consensus definition of humor exists because a person’s perception of humor is largely intuitive, defying precise description.  To the extent that this intuition results from an inherent human quality (something one might call a “funny bone”), one could argue that legal regulators and humor theorists are simply operating with the same hard-wired, intrinsic understanding of how humor operates.  Under this view, incongruity humor arguably stimulates this shared funny bone more effectively than any other type of humor.  Proof of such a funny bone, however, has so far eluded cognitive scientists and other humor theorists.

Common sense’s third face—social norms—is likely the most important, since its explanatory potential survives regardless of whether one proposes that humor is constructed entirely from contingent social perceptions or believes that every human psyche harbors an inherent funny bone waiting for stimulation.  Understanding of social norms suggests that both legal thinkers and humor theorists prefer the same types of humor because humor appreciation is imbued with cultural preferences that the two groups happen to share.

The law’s integration of social norms about appropriate humor is cause for both celebration and concern.  First, the good news.

 
III.
Law and Social Norms: Cause for Celebration

For humor theory, social notions of appropriate behavior inform the structure and definitions theorists emboss on different forms of humor.  Understanding how these theories are reflected in law yields greater appreciation for what courts and other regulators are accomplishing.  The theories also provide guidance to lawyers who need to predict how courts might resolve a controversy, to understand existing case law, and to gather raw material for advocacy.  Similarly, a court evaluating whether to protect a particular communication (and wishing to avoid reversal on appeal) may usefully inquire whether the communication reflects incongruity, superiority, or release humor, or other categories identified by humor theorists.  Where the humor categories clearly guide litigants, attorneys, and courts in the course of dispatching life’s duties, humor regulation becomes an instance where legal rules—through the sometimes hapless machinery of the common law—can produce effective and efficient results.

That’s the good news for lawyers, judges, and those subject to legal regulation (i.e., everyone).  Self-conscious evaluation of potential humor regulation in light of humor theories promises to guide decision-makers choosing among alternatives.  What’s more, the confluence between law and humor theory announces equally upbeat news for humor theorists—illustrating how a human institution (the American legal system) validates the relevance and accuracy of humor research from social sciences, humanities, and natural sciences.  Moreover, to the extent that humor scholars identify individual and social benefits of incongruity humor, one might even say that the law’s special solitude for that brand of humor reinforces those beneficial effects.

 
IV.
Law and Social Norms: Cause for Concern

Alas, I am not entirely sanguine: the potential salutary effects of humor theory’s overlap with legal regulation are only part of the story.  As a normative matter, I question whether traces of the three humor theories in American law predict the best future for humor regulation.  For one thing, the burgeoning humor literature and nuanced theories that now provide usual fare for humor theorists suggest that more refined analysis awaits law’s use.  Moreover, even assuming that the tripartite humor scheme were the current “gold standard,” the law should not necessarily always favor incongruity humor and disfavor the two others.  The tripartite scheme does not restrict courts to the boundaries of general social norms.  Instead, regulating humor casts courts in the business of monitoring taste, a perilous enterprise in a free society—particularly when done unconsciously.  While thoughtful use of the three theories might guide courts in making difficult choices and assist lawyers in providing advice and predicting litigation outcome, humor embodies complexities beyond the theories’ reach and courts’ understanding.  Humor both reflects and perpetuates complex power dynamics that are difficult to predict and dangerous to regulate.

 
V.
Regulating Taste

By “taste,” I mean a sense of decorum for what is appropriate in a given context—informed by personal preference as well as community standards.  While the line between taste and social norms is blurred, my discussion here confines taste to evaluating whether an expression is proper or fitting to an occasion.  To inform her judgment about taste, a judge need not confine herself to broadly held norms.  Thus, many problems arise from taste regulation.  First, a court may apply a standard of taste that deviates from mainstream or consensus views.  Mainstream views may be difficult to identify and subject to varying interpretation; indeed, the striking indeterminacy in the trademark cases suggests difficulties in identifying a uniform standard of propriety.  A second, related problem is the strong likelihood in a pluralist society that tastes differ across social strata and that courts systematically prefer one social class’s tastes over another.  Courts’ preference for incongruity humor might be symptomatic of this—with courts identifying incongruity with “wit,” a form of humor long associated with privileged upper classes.  Even where courts might identify a high degree of social consensus to condemn particular humor, prudence counsels them to hesitate before transforming condemnation into law.  Even a universally detested utterance should not necessarily be held illegal.

Creating legal rules through litigation may also unintentionally suppress humor that promises individual and social benefits.  When courts enter judgments adjudicating specific parties’ rights, they also send a warning to others considering similar activities.  Responding to this message of deterrence, citizens may overreact, allowing for an unnecessarily large buffer between their own activity and activity specifically proscribed by legal rule.  The law’s regulatory effect is thus broader than the letter of the law.  Whether evaluating the wisdom of an advertising campaign, creating a parody of a protected trademark, or drafting corporate sexual harassment policies, decision-makers labor under the weight of risk aversion and difficulties in distinguishing lawful and lawless humor.

 
VI.
Humor’s Complexity Creates Heightened Regulatory Challenges

As trumpeted in First Amendment rhetoric, regulation of expression risks muting outlying values and tastes, which society might beneficially evaluate and debate.  Through the process of legal compliance, mainstream ideas are privileged at the expense of those closer to the fringe.  Although fringe or unpopular ideas might support beneficial social norms—or at least act as a clarifying foil for them—the ideas remain unexpressed and beneficial norms are consequently less vibrant.  Reducing the array of goods available in the market place, the theory holds, harms beneficial norms and ideas that are expressed.

For hurtful communication such as that regulated in contract, trademark, and sexual harassment litigation, the answer is not necessarily a complete moratorium on regulation by law in favor of regulation by the marketplace of ideas.  The reason lies in humor’s paradoxical capacity to inflict deep pain and to promote individual and collective benefit.  Humor can be simultaneously confining and liberating, emotional and cerebral, as well as loving and aggressive.  In the context of discrimination, for example, humor can challenge stereotypes, shed insight into prejudice, and at the same time solidify pejorative impressions.

Humor’s bipolar nature creates a puzzling dynamic for legal regulators concerned with compensating hurt, increasing efficiency, and preventing harm.  On one hand, these aims counsel regulators to be particularly watchful of humor’s aggressive side.  Yet this aggressive quality also enables humor to serve its own important policing functions.  This policing capacity comes from humor’s pugnacious side, which enables humor to push boundaries and question conventional wisdom.  Regulators thus face a dilemma, since the same quality that makes humor useful to society also makes it capable of significant harm.

One response to this dilemma posits that humor operates as its own check, providing a system of self-regulation that counsels a hands-off approach to legal regulation.  As is usually the case with humor, however, this ready answer is over-simplistic.  Humor’s self-regulating quality operates as a rolling dialectic, a prism of reflections and contradictions that creates shifting groups of insiders and outsiders.  While insiders might use humor to belittle outsiders, outsiders might deploy humor to challenge social hierarchy.  This outsider humor can make fun of the conventional, critiquing collective judgments as well as mocking mainstream norms and behaviors.  When a group appreciates this mockery and shares in the laughter and fun, the humor starts to create a new community of insiders.  But when subsequently redeployed to the exclusion of others, the humor creates a new group of outsiders—those who either personally serve as the “butt” of the jokes, who do not think the jokes are funny, or who are members of the group that the jokes mock.

One might conclude that legal regulation is not only incapable of controlling this fluctuating power balance, but also unnecessary given the self-regulating system.  Yet even if this were hypothetically true on an aggregate or meta-level, a hands-off approach is not justified.  Courts must respond to complaints of real harm to individual people.  In addition, humor’s mysterious nature undermines any guarantee that the dialectic operates so elegantly or effectively.  Outsiders might not always succeed in harnessing humor’s force to challenge power relations in society.  What is “funny” coming from a powerful person is not always “funny” coming from the disempowered.  Thus, while in many instances, the natural oscillation between negative and positive humor might perform important checking functions, humor alone cannot be trusted to avoid the type of serious personal harm for which courts generally deploy their resources.  Thus, despite humor’s elusive and complex nature, regulation is necessary.

Humor presents a remarkable case study in the brilliance and foibles of the common law system.  Through the lens of contract, trademark, and sexual harassment cases, we see courts fumbling their way to the same wisdom that humor theorists took centuries to develop.  Thus, preferences for incongruity humor, penalties for release and superiority humor, as well as celebrations of parody and protections for puns are now well established in legal doctrine.  And all this occurs while courts engage in the important governmental function of tailoring remedies for individual harms and signaling rules for all citizens to fashion their behavior.  Yet this apparently spontaneous confluence of humor theory and law also creates an opportunity for grave harm to society—with court decisions stifling a host of beneficial forces.  Creativity, self-regulation in social relations, and personal pleasure in comedy are only a few of the benefits that courts might undermine.

The question then becomes how to chart a balance: how do we guide courts to interfere only where humor becomes too hateful, too superior, too inane, or too foul to regulate social ills or to bestow benefit on anyone?  Thankfully, at least three important bodies of knowledge stand ready to assist.  First, a rich literature of law and social norm theory awaits further mining.  Next is the vast library of First Amendment studies.  These two bodies of work, however, cannot alone inform the task of understanding humor’s sources, internal functions, and effects in society.  Only with the help of the humor theorists can courts successfully navigate humor’s mysteries as they dispatch their duty to regulate “funny.”

Acknowledgments:

Copyright © 2009 Cornell Law Review.

Laura E. Little is Professor of Law and James E. Beasley Chair in Law at Temple University Beasley School of Law.

This Legal Workshop Editorial is based on the following Article:   Laura E. Little, Regulating Funny: Humor and the Law, 94 CORNELL L. REV. 1234 (2009).

My article advocates a variety of “agency-forcing” measures designed to enhance the ability of Congress, the executive, and especially the courts, to ensure that agencies abide by executive mandates and other reforms, and to provide a check on overt politicization or inaction on agencies’ part. The article also introduces the concept of “indirect challenges” to agency rulemaking, arising outside of the Administrative Procedure Act’s domain of direct challenges to agency action, at a later juncture when a defendant asserts a preemption defense to state common law tort actions.

On May 20, 2009, President Barack Obama issued a memorandum announcing his administration’s official policy on preemption: “[P]reemption of State law by executive departments and agencies should be undertaken only with full consideration of the legitimate prerogatives of the States and with a sufficient legal basis for preemption.”¹ The new administration’s pronouncement creates a conducive climate for reforming the agency decisionmaking process along the lines suggested in my article.

 
I.
The Past: Agency Disregard of State Regulatory Interests

President Obama’s directive to federal agency heads is to review preemptive statements in regulatory preambles and codified rules promulgated over the last ten years and to take corrective action to amend those that are not legally justified. The first part of my article (“Agency Disregard of State Regulatory Interests”) could serve as an appropriate target list. It explores the federal agencies’ dismal track record on accountability and highlights why reform is necessary.

A close look at the circumstances behind the Food and Drug Administration’s (FDA) issuance of the 2006 drug labeling preemption preamble reveals a lack of transparency, procedural irregularity, and utter indifference toward state governmental entities. In its notice of proposed rulemaking in December 2000, the FDA disclaimed any potential preemptive effect.² With this denial, the FDA relieved itself from the further requirements of the executive mandate on federalism (Executive Order 13,132), which requires consultation with relevant state organizations. Any interested parties that followed FDA involvement in pharmaceutical regulation—particularly those monitoring agency rules with the potential to oust existing state law regulations and common law tort liability—would, moreover, take this as a signal to focus antipreemption efforts elsewhere. It therefore came as a surprise—unwelcome, to say the least—that the final rule issued by the FDA in January 2006 contained an express statement of preemptive intent.³ The FDA’s preemption statement, moreover, materialized in the rule’s preamble, thus eluding detection via the transparent and public process of notice-and-comment rulemaking.

In an act of breathtaking hubris, the FDA included a federalism impact statement (required by Executive Order 13,132) that defended its actions and subtly held state governmental groups to blame for not submitting any comments on the proposed rule. Perhaps in an effort to camouflage its duplicitous, 180-degree change in its position on the rule’s preemptive effect, which it deliberately set out in a preamble and without public comment, the FDA dared to suggest that it consulted with state governmental officials and entities. At best, the FDA was referring to its solicitation of comments during the notice-and-comment period—although it was during that period that the FDA disclaimed any preemptive effect. At worst, the FDA was being disingenuous—the view espoused by state representatives such as the National Conference of State Legislatures (NCSL) and members of Congress led by Representative Henry Waxman. With the benefit of hindsight, the FDA’s 2006 drug labeling preemption preamble can be seen as but one example of agency bait-and-switch tactics, a pattern the FDA has followed again and again in both the drug and food contexts.

Nor does the FDA stand alone in its transgressions. National Highway Transportation and Safety Administration’s (NHTSA) proposed Roof Crush Resistance rule was emblematic of a consistent pattern and practice whereby NHTSA disclaimed any federalism impact while simultaneously asserting the preemptive effect of the rule.⁴ NHTSA also bypassed any consultation with relevant state organizations on the ground that the proposed rule lacked “sufficient federal implications to warrant consultation with State and local officials or the preparation of a federalism summary impact statement.” ⁵

These are but two examples of federal agencies’ documented disregard of congressional and executive mandates to incorporate into their rulemaking processes consultation with relevant state entities and investigation of the potential consequences of their rules on state regulatory schemes. It is the grim background against which my article charts a new path.

 
II.
The Future: Agency Accountability to State Regulatory Interests

In recognition of the key role that federal agencies have—and ought to have—played in judicial preemption determinations, I have previously proposed an “agency reference model” that “directs attention to a repository of agency information—ideally reflecting a broad range of views, having been vetted by expert and public opinion—focusing on the precise nature of the agency’s regulatory cost-benefit (or risk-risk) determinations as well as the economic consequences of various determinations and the effects of state regulation on federal regulatory schemes.”⁶ Even the Court’s antipreemption decision in the Wyeth v. Levine⁷ pharmaceutical case (in which the FDA’s preemption preamble received especially harsh treatment) recognized the significance of input from the relevant federal agency: Agencies have “a unique understanding of the statutes they administer and an attendant ability to make informed determinations about how state requirements may pose an ‘obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’”⁸ Given the significance of their role, it is imperative that federal agencies be made accountable to state regulatory interests, what I have dubbed “federalism accountability.”

 
A.     Federalism Executive Order 13,132

The 1999 Federalism Executive Order 13,132 provides a blueprint for reform: timely and meaningful consultation with the states throughout the process, issuance of federalism impact statements that detail the effects upon the states and changes in the federal-state balance, robust interchanges during the notice-and-comment period, including solicitation of comments and responses thereto.⁹ The spirit of the executive order is even more far-sighted, envisioning a cooperative partnership between states and agencies in the development of rules and regulations. Critical to the success of any such reforms, however, is an effective enforcement mechanism—a serious drawback of the existing executive order.

 
B.     Agency-Forcing Measures

President Obama’s presidential memorandum admonishes all agencies to adhere to the strictures of Executive Order 13,132 and directs that preemption provisions should be codified in regulations, not inserted in regulatory preambles. It is an executive agency-forcing measure. But like Executive Order 13,132 itself, the presidential memorandum does not create any enforceable rights. The White House could use its Office of Information and Regulatory Affairs’ (OIRA) centralized review to enforce the order. Alternatively, Congress could codify the order. Each of these avenues has been proposed before in this (or a similar) context—thus far, to no avail. Although my article revisits executive and congressional enforcement mechanisms, my main focus is on the comparatively underexplored realm of judicial enforcement.

The United States Supreme Court’s Wyeth v. Levine decision stands as an intriguing exemplar of how courts can force agencies to act (or change their ways). In rejecting a drug manufacturer’s assertion of implied preemption of state failure-to-warn claims, the Court looked askance at the FDA’s “proclamations of pre-emption” in its 2006 drug labeling preemption preamble. The Court specifically mentioned that the FDA’s failure to “offer[] States or other interested parties notice or opportunity for comment” rendered its views on state law “inherently suspect.”¹⁰

At the same time, the Court did not in any way abandon its embrace of implied preemption jurisprudence.¹¹ Bent on reconciling its implied preemption holdings, the Court contrasted its propreemption Geier v. American Honda Motor Co., Inc.¹² decision, in which the Department of Transportation had promulgated a regulation with “force of law,” with the situation in Wyeth, in which the FDA had put forth its views in a preamble that evaded the notice-and-comment rulemaking procedures. Justice Stephen Breyer concurred separately to emphasize the majority’s concession that agency regulations with “force of law” can preempt. Justice Breyer spelled out that the FDA “may seek to embody [its] determinations [whether and when state tort law acts as a help or hindrance to federal regulatory goals] in lawful specific regulations describing, for example, when labeling requirements serve as a ceiling as well as a floor.”¹³

Wyeth will thus motivate agencies to look inward (and, in line with President Obama’s presidential memorandum on preemption, backward as well). Agencies will be dissuaded from operating on the basis of politically motivated “proclamations of pre-emption”—such as the one offered in the 2006 FDA preemption preamble—that would not withstand judicial scrutiny. Agencies, instead, will be goaded toward notice-and-comment rulemaking, which “offer[s] States or other interested parties notice or opportunity for comment.”¹⁴

Courts already have tools to ensure that agencies disclose relevant data and provide reasoned responses to material objections raised during the rulemaking process. Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co.¹⁵ articulates a standard of “hard look” review in the context of determining whether a regulation is “arbitrary and capricious” under § 706 of the Administrative Procedure Act (APA). Direct challenges to preemptive rules in the health and safety arena are, however, few and far between. This is in marked contrast to other areas, such as environmental regulation, in which nonprofit governmental organizations take an active role in challenging rules adverse to state regulatory interests. A host of potential reasons may explain this seeming market failure: the absence of clearly identified and effective representatives of state regulatory interests in which common law tort standards (as opposed to state regulations enforced by state-level agencies) are at issue; insufficient financial impact upon the states, which is often what galvanizes participation by state governmental entities; and formidable standing and ripeness barriers. To the extent that the agencies’ insertion of preemptive provisions into preambles to rules (not to mention instances where the agency engaged in the kind of bait-and-switch tactics discussed above) simultaneously diverted the attention of the watchdogs and may have insulated the rules from direct judicial challenge,¹⁶ Wyeth could expand the domain of direct challenges to preemption provisions in notice-and-comment rulemakings by virtue of the fact that agencies will be spurred in that direction.

Even more significantly, Wyeth could augur the dawn of a novel form of indirect challenge to agency rulemaking (arising outside of the APA’s domain of direct challenges to agency action) at a later juncture when a defendant asserts a preemption defense to state common law tort actions. Courts have an opportunity to scrutinize both the empirical substrate of the regulatory record compiled by the agency as well as its articulated reasons underlying any interpretive policy.

Wyeth directs that, even in contexts in which Congress has not authorized the agency to preempt state law directly or the agency has not promulgated regulations with “force of law,” the Court looks to the agency’s explanation of how state law affects the regulatory regime. The question becomes “what weight [the Court] should accord the FDA’s opinion.”¹⁷ The Court had previously given a nod (if not outright deference) to agency proclamations of preemption in “regulations, preambles, interpretive statements, and responses to comments.”¹⁸ In these cases, the Court studiously avoided specifying the level of deference owed agency interpretations on preemption. Several lower courts gave Chevron, or mandatory, deference to the FDA’s preemption preamble.

I have argued that courts could play a role here by conditioning any deference to an agency’s preemption position on that agency’s compliance with the strictures of Executive Order 13,132. A few federal district courts have taken such a hard-line position, rejecting preemption defenses based upon the FDA’s assertion of preemption in the drug labeling context. I have also argued that the agency’s views should be accorded Skidmore “power to persuade” (not Chevron mandatory deference) as a means to encourage agencies to engage in formal notice-and-comment rulemaking processes that, arguably, vet the agency decisionmaking process and make the agency respond to substantive concerns raised by all affected parties. In Wyeth, the Court (at least implicitly) endorsed my position. The FDA’s preemption preamble miserably failed this standard—the Court was unpersuaded by what the agency “said” when it seemed contrary to what it “did.” Put differently, deficits in the agency regulatory record cannot be overcome by embellishment by the agency in the interpretive sphere. By virtue of subjecting agency action and interpretation to Skidmore deference at the preemption juncture, which turns on the “thoroughness, consistency, and persuasiveness” of the agency’s explanation of state law’s impact on the federal scheme, courts establish a framework for indirect challenges to agency rulemaking.

Anticipation of such judicial review at this stage would, moreover, force agencies (prodded by interested parties) not only to adhere to the strictures of the executive order, but also to compile a diligent agency record that would serve as the basis of the court’s evaluation of whether the state tort action seeks to “redo” the analysis conducted by the agency and should therefore be ousted.

NHTSA’s recent withdrawal of its preemption language in the roof crush final rule exemplifies the type of response from agencies anticipated by my article. Without much (if any) fanfare,¹⁹ on May 12, 2009, NHTSA quietly removed controversial preemption language, stating that the agency had “reconsidered the tentative position presented in the [proposed rule] . . . . [and] do[es] not foresee any potential State tort requirements that might conflict with [the] final rule.”²⁰ During the notice-and-comment period (as detailed in the final rule), “[c]onsumer advocacy groups, members of Congress and State officials, trial lawyers, consultants and members of academia, and private individuals strongly opposed our view that there could be conflict. The opposing letters from State officials included one signed by 27 State Attorneys General and the National Conference of State Legislatures.”²¹ In reaching its determination that it “do[es] not currently foresee any potential State tort requirements that might conflict with [the roof crush standard] final rule,” NHTSA repeatedly adverted to the absence of empirical evidence in the agency record to substantiate any conflict between state law tort requirements and the federal regulatory regime.²²

To date, NHTSA’s response is far more promising than has been the FDA’s. In 2008, the FDA promulgated a drug regulation (“changes being effected” or “CBE”) that governs when manufacturers can unilaterally change their labels in response to new risk evidence.²³ During the notice-and-comment period, members of Congress challenged the proposed CBE rule on empirical grounds. The group requested data on the number of CBE supplements submitted to the FDA since 1982, as well as examples of any cases in which a CBE supplement was used to the detriment of public health (as claimed by the FDA). The FDA’s response hardly instills confidence in its claims regarding the impending dangers of overwarning: of more than 3000 CBEs, the FDA noted four relevant examples in which the FDA rejected manufacturers’ CBE supplemental applications—none of which offered evidence of threatened harm to the public.²⁴ Under my proposed model, the empirical backing for the FDA’s position would be scrutinized by a court, and, in turn, the FDA’s position would likely fail under hard-look review.

Consider, too, drug manufacturer Johnson & Johnson’s request that the agency “reaffirm its practice to provide a full and complete written response to all CBE supplements . . . [t]o enhance transparency and accountability in the safety labeling process.”²⁵ Johnson & Johnson urged the FDA to “provide a comprehensive, written response to the sponsor describing FDA’s grounds for approval, disapproval, or request for modifications to the CBE supplement.”²⁶ The FDA declined to do so, and issued a quick dismissal without elaboration.²⁷ The framework I have proposed would, in fact, require the FDA to provide such comprehensive, written responses that would become part of the official agency record reviewable by courts making preemption determinations.²⁸

 
III.
Conclusion

In my article, I advance two basic normative claims—albeit against a backdrop that seems to be in considerable tension with achieving them. First, agency disregard of states’ interests is by no means inevitable. Second, and more fundamentally, Congress, the executive, and, most significantly, the courts can ensure that these state regulatory interests are no longer ignored by implementing agency-forcing measures that will steer agencies toward a more responsive, and responsible, course.

Acknowledgments:

Copyright © 2009 Duke Law Journal.

Catherine M. Sharkey is Professor of Law at New York University School of Law.

This Editorial is based on the following full-length Article:   Catherine M. Sharkey, Federalism Accountability: “Agency-Forcing” Measures, 58 DUKE L.J. 2125 (2009).

In Retributive Damages: A Theory of Punitive Damages as Intermediate Sanction,¹ Professor Dan Markel “reimagine[s]” the law and proposes an interesting theory of punitive damages.² Unlike work by other scholars,³ Professor Markel intentionally situates his theory of “retributive damages” outside the historical framework and doctrinal limits of punitive damages.  Instead, Professor Markel argues that states should replace the current punitive damages framework with a new statutory scheme akin to the federal sentencing guidelines.  Though satisfying on a purely theoretical level, Professor Markel’s paradigm raises two initial questions.  First, can the “retributive damages” model properly be considered punitive damages?  Second, do “retributive damages” avoid the doctrinal problems that have plagued punitive damages for decades?  In my view, the answer to both questions is “no.”

 
I.
It’s Not “Punitive Damages”

In this first article in a planned quartet, Professor Markel proposes using public retributive justice theory to frame a new system of punitive damages.  Under his proposal, state legislatures would define the conduct subject to retributive damages by statute.  Plaintiffs who were harmed by a defendant’s violation of the retributive damages statute could seek retributive damages as a remedy in a traditional tort action.  However, if the plaintiff chose to forgo retributive damages or if the statutory violation did not cause any harm, private attorneys general could bring an action for retributive damages alone.  In either case, the jury would use a set of legislative guidelines to determine a reprehensibility “score” for the defendant’s conduct.  In a structure similar to the criminal sentencing guidelines, the judge would then take the jury’s reprehensibility score and apply it to a statutorily defined table setting the amount of damages based on the defendant’s wealth.  Next, courts would evaluate the profitability of the defendant’s conduct.  If the reprehensibility-based damages combined with compensatory damages did not eliminate the profit from the defendant’s wrongdoing, courts also would impose a gain-elimination penalty.  The reprehensibility penalty and the gain-elimination penalty would both be paid to the state and could be credited against future criminal sanctions.  To encourage suits under this scheme, the defendant would be required to pay a fixed $10,000 award to the named plaintiff as well as the plaintiff’s attorney’s fees.  Finally, a plaintiff could not settle a retributive damages claim without state approval.

Putting aside the merits of Professor Markel’s retributive damages scheme as a type of damages, one thing is clear: it is not punitive damages.  Like Professor Markel’s “retributive damages,” punitive damages are “extra-compensatory” in that both types of awards exceed the plaintiff’s actual harm.⁴ But that’s where the similarities end.  Unlike the statutory scheme envisioned by Professor Markel, punitive damages are a type of common law damages available in a civil tort suit by a private plaintiff.⁵ In most states, juries are instructed to calculate the amount of punitive damages based on a variety of factors.⁶ Those factors include the reprehensibility of the defendant’s conduct, but they also include numerous other factors.⁷ Moreover, in most states, plaintiffs keep the bulk of a punitive damages award.⁸

Professor Markel would change so many of these characteristics that it is impossible to consider his proposal a form of “punitive damages.”  Consider just a few of the differences.  Retributive damages can be pursued by uninjured third parties or the state itself; punitive damages can be pursued only by the tort victim.  Retributive damages are awarded wholly to the state; punitive damages are awarded to the private plaintiff.  Retributive damages are calculated according to a statutorily defined table; punitive damages are calculated by a jury according to common law principles.  Retributive damages cannot be settled without the approval of the state; punitive damages can be settled at the will of the parties.

To be sure, scholars have criticized many of these features of punitive damages.⁹ And it is true that judicial opinions largely have failed to articulate a coherent rationale for punitive damages.  Nevertheless, despite the ongoing debate about the theoretical justifications for punitive damages, nearly all fifty states and federal courts have accepted the doctrine of punitive damages.¹⁰ Indeed, punitive damages have a long historical pedigree dating back to the Hammurabi Code in 2000 B.C.¹¹

 
II.
A Few Due Process Problems with “Retributive Damages”

The question then becomes whether “retributive damages” would be better than the current system of punitive damages.  Because Professor Markel’s article is only the first of a planned series, much is left unanswered at this stage, which makes a complete assessment of “retributive damages” difficult.  I’d like to consider a couple of threshold due process issues.

As an initial matter, tying the amount of the retributive damages award to the defendant’s wealth, as Professor Markel’s model would do, raises facial due process concerns.¹² Under Philip Morris v. Williams, the Court held that “the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon non-parties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation.”¹³ In addition, under State Farm v. Campbell, “[a] State cannot punish a defendant for conduct that may have been lawful where it occurred.”¹⁴ Nor can a state punish the defendant for unlawful conduct outside its jurisdiction.¹⁵ Basing a retributive damages award on a defendant’s wealth, however, risks punishing a defendant for harm to non-parties in violation of Philip Morris, and further risks punishing a defendant for lawful conduct and out-of-state conduct in violation of State Farm.¹⁶

Moreover, anchoring the amount of a penalty to the defendant’s wealth does not take into account the second BMW guidepost: the ratio between the extra-compensatory award and “the actual harm inflicted on the plaintiff.”¹⁷ Although Professor Markel correctly notes that “harm” is not per se limited to compensatory damages alone, his retributive damages scheme does not provide room for the jury—or judge on post-verdict review—to evaluate the reasonable relationship requirement.  In response, Professor Markel points to the legislative foundation of his new system and argues that the statutory nature of retributive damages justifies greater deference by courts.  Thus, he suggests that the reasonable relationship requirement would not apply to “retributive damages.”  As I previously have argued,¹⁸ however, legislative penalties are not immune from constitutional scrutiny.  Rather, the Supreme Court has applied the same constitutional excessiveness standards, including the reasonable relationship requirement, to jury awards of punitive damages as well as criminal fines and sentences.¹⁹ Thus, this constitutional requirement cannot be ignored.

Finally, allowing a private attorney general to sue based on harm to a non-party violates the black letter of Philip Morris. Professor Markel acknowledges this issue, but he argues that the retributive damages scheme survives constitutional scrutiny because the private attorney general “is not suing to recover for harm to the victim, but rather to initiate an intermediate sanction for the defendant’s wrongful conduct.”²⁰ This argument misses the mark.  The Supreme Court stated unambiguously that the amount of a punitive damages award must be tied to the harm to the individual plaintiff: a punitive damages award cannot be used “to punish a defendant directly on account of harms it is alleged to have visited on nonparties.”²¹ Moreover, allowing a retributive damages award to be based on harm to non-parties would prevent the defendant from raising all possible defenses.  In Philip Morris, for example, the Court noted that other allegedly injured smokers might have known smoking was dangerous or might not have relied upon the defendant’s statements.²² Professor Markel’s retributive damages scheme raises similar concerns.

 
III.
Conclusion

In short, Professor Markel does not suggest a new theory of punitive damages that harmonizes the rather confused law in this area.  Rather, he offers a new statutory civil penalty system, and it remains unclear whether this system will survive due process scrutiny.  Beyond these questions, I wonder about the inevitable issues that would arise from a system that combines aspects of the harshly criticized sentencing guidelines with the complexity of qui tam law added on top of existing punitive damages jurisprudence.  I look forward to seeing how Professor Markel addresses these and other underlying issues in his subsequent pieces.

Acknowledgments:

Copyright © 2009 Cornell Law Review.

Sheila B. Scheuerman is Associate Professor of Law at Charleston School of Law.

Special thanks to Keith N. Hylton, Anthony J. Sebok, Christopher J. Robinette, and Benjamin C. Zipursky for comments.

This Editorial is a response to the following Legal Workshop Editorial:  Dan Markel, Retributive Damages as Intermediate Public Sanctions: A Synopsis, LEGAL WORKSHOP (May 12, 2009), based on A Theory of Punitive Damages as Intermediate Sanction, 94 CORNELL L. REV. 239 (2009).
Click Here for the Markel Legal Workshop Editorial.
Click Here for the full Markel Article.

 
I.
A Brief Overview of Normative Punitive Damages Theory

In contrast to the cost internalization school, other scholars (including Professors Sebok, Zipursky, Geistfeld, Goldberg, Galanter & Luban, and Colby) analyze punitive damages law primarily in terms of how such damages might vindicate a victim’s dignity and autonomy interests, which the defendant’s conduct may have injured or insulted.  Since these victim vindication approaches effectively legitimize the utilization of enhanced awards to repair the injury that the defendant’s misconduct caused to the plaintiff’s dignity, these damages are better labeled “aggravated” damages.  Some victim vindication theorists have defended large parts of extant punitive damages common law on the grounds that these practices serve as vehicles by which victims or their allies can persuade juries to avenge victims’ interests through ad hoc, and therefore unpredictable, awards of money damages.  Sharing some of these views, some social-justice tort theorists (including Professors Koenig and Rustad, Wenger and Hoffman) view common law jury-driven punitive damages practices as means for ordinary people to fight malfeasant entities and their lobbyists seeking business-friendly tort reform.⁴

A number of the victim vindication scholars draw on the work of Jean Hampton’s victim vindication justification for punishment and thus identify their work as committed to or consistent with the values of retributive justice.⁵  But as emphasized in the insightful interpretive accounts of tort law and punitive damages by Zipursky and Sebok, the tort system conventionally empowers victims to either pursue punitive damages or forbear pursuing such damages.  That observation is important because it shows that no one forces punitive damages on the victim in the common law approach.  Rather, the decision to seek legal recourse (or not) permits the victim to exercise her autonomy and seek repair to her dignity interests.  The same may be said for allowing victims to have almost unfettered control over settlements with defendants.

These two practices, and the support these quasi-retributivist scholars implicitly or explicitly give to them, reveal an important gap between victim vindication accounts and the interests underlying a retributivist account, properly understood.  Victim vindication is different from retributive justice because the latter is best understood as a theory supporting the development of state-supervised institutions that promote equality and rule of law values in the reduction of Type I and Type II punishment errors.  In other words, retributivists have strong reasons to give 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 as compared to other similar offenders in the jurisdiction).  Importantly, the victim vindication accounts say little about the need for building a system that tries to reduce all four kinds of Type I and II errors.

Indeed, to the extent that victim vindication theorists of punitive damages invoke retributive justice values to bolster their accounts, this silence is a real weakness.  After all, the failures by victim vindication theorists to defend some procedural safeguards and to create meaningful guidelines for cabining jury discretion and judicial review are recipes for Type I errors.  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 enables more Type II errors.  This should be of concern to nonretributivists as well: certainty of punishment, perhaps more than severity of punishment, has, for the last generation or so, been thought to have an appreciable effect on reducing misconduct.

Thus, if we want a retributivist structure of punitive damages, it has to reflect some concern for reducing all four kinds of Type I and Type II errors.  Of course, a pluralistic scheme of extra-compensatory damages should be designed to provide space for the pursuit of both cost internalization and victim vindication as well, and my forthcoming companion piece to Retributive Damages says more about how to do that.⁶  But since these two goals have received substantial attention already, we must see how they would fit alongside or apart from what a public retributive justice theory entails for the implementation of punitive damages.  To that end, let me provide a summary of the basic structure of “retributive damages” that I propose.

 
II.
The Basic Structure of Retributive Damages: A Recap

While this Section outlines the basic structure of retributive damages, it does not explain in detail the rationale underlying this structure or why this structure is desirable vis-à-vis other remedial or penal options.  Those issues are both addressed and defended at length in Retributive Damages.  As I elaborate there, retributive justice theory offers not only a reason for reconfiguring punitive damages, but also a set of constraints.⁷ After all, once properly understood, retributive justice is tethered to concerns for equality, modesty, accuracy, proportionality, impartiality, and the rule of law; such notions 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” (Galanter & Luban) or revenge (Sebok & Colby) or a jury’s interest in ventilating its outrage or serving its role as a popular check on abuses of power (Wenger & Hoffman, Partlett).  In some respects this public retributive interest means ensuring modest and fair sanctions 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 Retributive Damages, I made these claims based largely on the account of punishment I call the confrontational conception of retributivism (CCR).⁸ The CCR seeks to communicate to defendants through coercive condemnatory measures that constitute a setback the state’s interests in the integrity of its laws.  In the retributive damages context, the statute describing the scope of retributive damages is the dictate of law.  Hence, someone who violates that statute stands in a similar position, vis-à-vis the CCR, as someone who, for example, violates a typical criminal prohibition against theft or fraud.  The offense warrants a coercive response by the state that adequately and parsimoniously communicates condemnation of that offense to the offender.  Assuming that the offender is without justification or excuse, that person ought (defeasibly) to be punished through retributive damages.  Doing so helps instantiate our commitments that we are moral agents capable of conforming our behavior to law; that we should be held accountable for violating it; that, under the law, we all are entitled to enjoy the same cluster of equal liberty; and that we will defend our democratic sovereignty regarding that package of liberty against usurpations by offenders.  By extending punishment against violators of this retributive damages statute, we continue to vindicate the value of persons’ rights and interests and our belief in the moral competence of persons to act freely within a zone created by those protected rights and interests.

One virtue of this account, when fully fleshed out, 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 Type I and Type II errors.  Accounts of both retributive justice and retributive damages ought to offer sustained reflection on the reasonable reduction of all of these kinds of error.  By contrast, and as suggested above, victim vindication and cost internalization lack the conceptual resources to do so effectively.⁹

To realize these goals, I argue that under the retributive damages framework, when people defy certain legal obligations, the state may either seek to punish them through traditional criminal law or make available the sanction of retributive damages.  Such damages would be credited against any further criminal sanctions imposed by the state for the same misconduct.  Retributive damages statutes would empower victims—or in some cases, private attorneys general¹⁰—to act on behalf of the state to seek the imposition of an “intermediate sanction.”  Retributive damages are situated as an intermediate sanction falling on the civil side between criminal fines and compensatory damages.  Thus, because criminal fines can be levied without jury trials and counsel, it should follow that the intentionally less severe penalty of retributive damages could also have a different and perhaps smaller basket of procedural safeguards.  Moreover, determinations of retributive damages liability would not serve as predicates for impeaching someone’s testimony in a future trial or as a basis for enhancing one’s punishment in a subsequent criminal trial for the same or different conduct.  Nor would they trigger any disqualifications professionally (e.g., debarment) or civically (e.g., jury service or voting).

Under this proposal, the amount of the penalty is determined largely by the reprehensibility of the defendant’s misconduct.  Specifically, the civil sanction’s amount is informed by two kinds of measurements.  The first measurement is a number on a reprehensibility scale, while the second translates that reprehensibility score into an amount of damages.  As a preliminary matter, the state legislature or sentencing commission would devise a set of guidelines for juries (or judges in bench trials) to help them objectively assess how reprehensible the misconduct is.  The guidelines would calibrate reprehensibility, perhaps on a scale of one to twenty, with twenty being the worst, using many of the factors that courts currently use to evaluate the defendant’s reprehensibility.  Some factors, such as a defendant’s history of past-adjudicated misconduct, might increase reprehensibility, while other factors, such as preexisting compliance programs or remedial actions and restitution measures taken by the defendant upon discovery of the misconduct, might mitigate reprehensibility.  In addition, the guidelines would include commentaries with hypothetical examples of misconduct that fall on various places on the scale.

The amount of the penalty would assess a percentage of the defendant’s financial condition (or net value for entities) that increases with the reprehensibility of the defendant’s misconduct.  To use an example, a finding of two on the scale of reprehensibility could lead to a retributive damages award of one percent of defendant’s net wealth, and a finding of twenty could lead to a penalty of ten percent of the defendant’s assets.¹¹

To ensure that the defendant does not benefit from the misconduct against the plaintiff, the total retributive damages award should also strip the defendant of gains, if any, in excess of compensatory damages that are owed to the plaintiff and that arose from the misconduct.  These payments (the gains and the reprehensibility-based penalty) go to the state.¹² The defendant should also pay plaintiff’s lawyers’ fees (for the marginal labor necessary to prove the defendant’s reprehensibility) and a modest and fixed award to the plaintiff—I suggested something in the range of $10,000—for bringing the case to the public’s attention.¹³ These payments together (to the state, the plaintiff, and the lawyer) constitute what I take to be the most sensible, though not the only, way to structure extra-compensatory damages designed to advance the goals of retributive justice.  Of course, the plaintiff could also receive an amount based on compensation for aggravated injuries to the person’s dignity if compensatory damages in that jurisdiction did not already account for that injury.

Consistent with the notion that retributive damages are supposed to serve as an intermediate sanction on the public’s behalf, legislatures may authorize courts to order defendants to pay the damages amount as a percentage of profits in coming years in situations where the defendant’s viability is jeopardized if required to pay the penalty in one lump sum.  Additionally, if one is concerned that a defendant committed grave misconduct and then restructured its finances to make it appear that it could not pay the amount owed, the courts might adjust the retributive damages based on the financial condition of the defendant at the time the misconduct (last) occurred.¹⁴

The scheme described above furnishes potential defendants little basis for complaining that the amount or award of retributive damages is a surprise.  Indeed, this scheme is not much different from the guidelines for assessing criminal liability and sentencing now common in many jurisdictions.  Of course, the defendants in criminal cases have more procedural safeguards in place, and thus, if we are deputizing plaintiffs to facilitate the imposition of an intermediate sanction, then we should enhance at least some of the procedural protections available in retributive damages cases.  The most important of these safeguards, to my mind, is the heightened (clear and convincing) standard of proof required to permit assignations of retributive damages.  Other safeguards and their rationales are developed in greater detail in the forthcoming companion article.  These safeguards include some protections against duplicative punishment; hybrid standards of appellate review that disaggregate the factual predicates and legal determinations of where the reprehensibility score should ultimately fall; and the defendant’s option to bifurcate the proceedings so that evidence of wealth does not “pollute” determinations of liability.

With a structure in place to both encourage and control privately instigated public rebukes, the retributive damages framework lends promise to the hope of tort reform worth having.

Acknowledgments:

Copyright © 2009 Cornell Law Review.

Dan Markel is Assistant Professor, Florida State University College of Law.

This Editorial is based on the following full-length Article:   Dan Markel, Retributive Damages: A Theory of Punitive Damages as Intermediate Sanction, 94 CORNELL L. REV. 239 (2009). Click Here for the Full Version

Several companion articles are in motion to develop and extend the framework summarized here: Dan Markel, How Should Punitive Damages Work?, 157 U. PA. L. REV. (forthcoming 2009; draft on SSRN); Dan Markel, Punitive Damages & Complex Litigation (manuscript on file with author); Dan Markel & Gregg Polsky, Taxing Punitive Damages (manuscript in progress).

I am grateful to Michael Page for reviewing an earlier draft of this essay, as well as the many people who helped me with the larger Retributive Damages project.

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