Here, the concern is not over some deviation from the one-on-one lawsuit.  Rather, the basic suggestion is to circumscribe what an ostensible individual action may do, by way of litigation or settlement, in order to prevent that lawsuit from exerting some binding force upon nonparties who are broadly similar to the parties involved.  The idea, in other words, is to constrain what individual litigation may do, precisely because such a proceeding is not a de facto class action empowered to act upon nonparties.

In recent years, variations of this concern have surfaced across seemingly unrelated contexts:  in the Supreme Court’s 2008 decision in Taylor v. Sturgell,¹ concerning preclusion principles and the procedural doctrine of “virtual representation”; in the Court’s 2007 decision in Philip Morris USA v. Williams,² regarding the constitutional due-process limits on punitive damages; and with respect to the widely-reported $4.85 billion deal in 2007 to resolve mass tort litigation over the prescription pain reliever Vioxx.³  Each of these situations merits scholarly attention in its own right.  My suggestion is that something deeper is going on here, but that its nature and implications remain undertheorized.

Each instance involves a situation of “embedded aggregation.”  In each, a doctrinal feature of what is ostensibly individual litigation—the scope of the right of action the plaintiff asserts, the nature of the remedy that the plaintiff seeks, or the character of the alleged wrong—gives rise to demands for the suit to bind nonparties in some fashion, beyond the ordinary kind of stare decisis effect that any case might exert.  An aggregate dimension, in short, is embedded doctrinally within what appears to be an individual lawsuit; and that aggregate dimension, in turn, gives rise to demands for a binding effect of a commensurately aggregate scope.

Taylor v. Sturgell provides the perfect backdrop for this set of issues.  Taylor involved the Freedom of Information Act (FOIA), which confers an undifferentiated right upon “any person” to request the disclosure of “records” that the federal government holds.⁴  The difficulty that this undifferentiated right presents is that, as to any given record, the universe of potential claimants who might assert a right to disclosure is without legal limits.

The Taylor Court held that constitutional due process forbids the judgment in one FOIA requester’s losing effort to compel disclosure from exerting preclusive effect upon a subsequent requester of the identical record, at least absent agreement or collusion between the two requesters.⁵  To hold otherwise—as some lower courts had attempted to do by developing a doctrine of virtual representation—would be to enable courts to “create de facto class actions at will.”⁶

The concern over nonparties in individual actions, however, extends well beyond FOIA litigation.  Under current doctrine, the limits on punitive damages as a matter of federal constitutional due process bespeak a similar concern.  In Philip Morris USA v. Williams, the Supreme Court held that the “Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties.”⁷  To do so, the Court reasoned, would be to punish the defendant “for injuring a nonparty victim”—in Williams, the many other Oregon smokers of the defendant’s cigarettes—without an “opportunity to defend against the charge” based upon the particulars of those nonparties.⁸  The Oregon court had never certified Williams to proceed as a class action.

On its face, the discussion of nonparties in Williams seems to dwell on the inputs to a punitive damages award in individual litigation rather than on the outputs in terms of nonparty effects.  With respect to allegations of extreme market-wide misconduct, however, the two cannot be so cleanly separated.  Prior to Williams, serious concern had emerged that punitive damages awards in seriatim individual lawsuits over the same course of extreme market-wide misconduct might amount, in the aggregate, to multiple punishment, such as to warrant a clampdown on the availability or application of punitive damages for later plaintiffs.

Williams holds that punitive damages are, at least in theory, exclusively about punishment of the defendant for the extremity of its wrong as to the particular plaintiff at hand, not as to nonparties.⁹  The Court nonetheless added that the jury still may consider harm to nonparties to assess the reprehensibility of the defendant’s misconduct vis-à-vis the plaintiff.¹⁰  As a result, after Williams, an ostensible individual action for punitive damages as to market-wide misconduct will continue to have at least some nonparty dimension—again, even though nonparties have not been brought into the suit.  The important point remains that Williams, too, grapples with how to regulate a kind of embedded nonparty dimension in individual litigation—here, under the Court’s due-process jurisprudence for punitive damages.

The concern that the disposition of ostensibly individual cases might gravitate over to a kind of class action in disguise is not limited to adversarial litigation.  The Vioxx settlement took the form not of a class action settlement but, rather, of a contract between the defendant manufacturer Merck & Company, Inc., and the small number of law firms within the plaintiffs’ bar with large inventories of Vioxx clients.  The contract described a grid-like compensation framework, but Vioxx claimants themselves literally were nonparties to that contract.  The enforcement mechanism for the deal consisted not of preclusion but, rather, of contractual terms whereby each signatory law firm obligated itself to do two things:  to recommend the deal to each of its Vioxx clients and—to the extent permitted by applicable ethical strictures—to disengage from the representation of any client who might decline the firm’s advice to take the deal.  Absent a signatory law firm’s commitment of its entire Vioxx client inventory to the deal, Merck would have the discretion to reject the firm’s enrollment, meaning that none of the firm’s clients would be eligible to participate.

The Vioxx settlement garnered (by a comfortable margin) the overall rate of participation from Vioxx claimants that Merck had specified as a precondition for its funding obligations.  In a public speech, one of the key dealmakers on the plaintiffs’ side explicitly touted the arrangement as a form of “mass settlement without class actions.”¹¹  Along similar lines, the federal district judge who shepherded the Vioxx litigation toward settlement went on to describe the proceedings as a “quasi-class action.”¹²  The terminology here is revealing.  The reference to a “quasi-class action” is the counterpart in the Vioxx setting to the Taylor Court’s concern over the creation of a de facto class action.  This is precisely the problem for critics of the Vioxx deal.

Absent a judgment capable of yielding class-wide preclusion, the glue to hold the Vioxx deal together ultimately consisted of individualized consent from each Vioxx claimant when the time came to accept (or reject) her signatory lawyer’s advice to enroll in the deal.  For critics of the deal, this individualized client consent is illusory—a kind of consent obtained only through the leveraging of mass client representation against itself.  On this account, the deal effectively pitted the economic interest of the signatory firms against their obligation to render advice that they tailored to their individual clients’ particular situations.  Further, the deal threatened dissenting clients with the prospect of having to start anew with alternate counsel, if the client could find any.  For all its details, however, the central thrust of this criticism should sound curiously familiar.  The insistence upon individualized client consent, unburdened by the strictures of Vioxx settlement contracts, is the counterpart in the world of mass-tort settlements today to the insistence upon individualized procedure in Taylor and Williams.

The doctrine of virtual representation, the constitutional law of punitive damages, and the settlement of mass torts via contracts with plaintiffs’ law firms clearly are not the same thing.  Still, cohesive consideration of these situations brings into focus the notion of embedded aggregation as an underexplored category within our modern civil-justice landscape.  I seek to initiate such a conversation by understanding embedded aggregation in terms of the right of action that a plaintiff asserts, the remedy a plaintiff seeks, and the wrong on the merits that the litigation concerns.  A situation of embedded aggregation arises whenever any of these features extends beyond the plaintiff in an individual lawsuit.  If so, then demands will tend to arise to bind, in some fashion, nonparties who are similarly situated, so as to bring the scope of resolution into line with the doctrinal feature that has an aggregate dimension.

The most revealing aspect of the concern that individual litigation somehow is verging into a quasi or de facto class action is this:  The features of Taylor, Williams, and the Vioxx litigation that make them situations of embedded aggregation—ironically enough—also, in all likelihood, would defeat efforts to aggregate them overtly as class actions.  The result is to leave the law today in a kind of procedural Catch-22, whereby embedded aggregation seemingly invites class action treatment, but such treatment is unavailable due to the very features that make the situation one of embedded aggregation.

In decades past, much debate centered upon the aspiration for the class action more or less to occupy the field of aggregate procedure.  The elaboration of a distinctive body of procedural doctrine on what the class action realistically may and may not do in the decades since the adoption of Rule 23 in its modern form have brought the remaining gaps in the world of aggregation into sharper focus.  I contend that the constraints on class certification that courts have elaborated over decades of real-world experience with the device are not hypertechnical bugaboos.  Rather, they stem from a well-taken notion of preclusive symmetry—an insistence that the plaintiff class ought not to be positioned to wield the bargaining leverage of a class-wide trial without, at the same time, affording to the defendant the assurance of a commensurately binding victory, were the defendant, rather than the plaintiff class, to prevail on the merits.

Drawing on the FOIA, punitive damages, and Vioxx examples, the law may frame an emerging prescription for situations of embedded aggregation in a world in which the modern class action does not, and will not, realistically shoulder the entire regulatory load.  The way out of the procedural Catch-22 in which the law finds itself consists of hybridization—the combination of individual actions with some manner of centralizing mechanism, just not always or inevitably the unity of litigation that the class action device generates.

For FOIA, the law might make such a move to specify what one might call a unity of forum for litigation that involves an undifferentiated right of action.  The practical goal would be largely to disable seriatim lawsuits over the same government-held record in courts spread across the country by specifying a single forum for such actions.  For punitive damages, developments in tobacco litigation contemporaneous with Williams embody a nascent and underdeveloped aspiration toward what one might call a unity of party—the notion that situating as plaintiff the government itself (with the aid of private whistleblowers empowered to litigate on its behalf) might best accomplish supra-compensatory relief.

The Vioxx deal underscores that the drive to identify some manner of centralizing or unifying mechanism in situations of embedded aggregation is not just the stuff of academic pipedreams.  In seeking to deploy mass client representation in mass tort litigation as a mechanism for closure, the Vioxx deal effectively crafts a near-unity of representation—if not of all Vioxx claimants by a single law firm (ala class representation), then in substantial part, due to the concentration of large Vioxx client inventories in the hands of a small number of signatory firms.  Further reform in the ethical strictures for what are known as aggregate settlements can refine and better regulate the use of this approach.

In sum, moving outside the parameters of the class action—to quasi, de facto versions that one cannot realistically fold into the class action device—means shifting into new settings a similar need for a centralizing mechanism and, crucially, for legal regulation of the manner in which that mechanism may exercise coercive power.  By bringing into sharper view situations of embedded aggregation in which the class action cannot shoulder the regulatory load, I seek to break down the prevalent supposition of a neat division between the perceived need for legal regulation of class actions and the supposedly benighted world of autonomous individual lawsuits.

For situations of embedded aggregation, the answer does not lie in a roving, undifferentiated mandate for class actions.  But neither does the answer lie uniformly in undifferentiated insistence upon notions of individual autonomy from the ancestral past of one-on-one litigation.  The elaboration in decades past of what is now a distinctive law of class actions has opened up a welcome conceptual space for experimentation with hybrid forms of rights, remedies, and wrongs that call for a commensurately hybrid approach on the part of the civil justice system.  The time has come, in short, to move the conversation about aggregation beyond the class action device—to broaden the menu of approaches available for our modern world of mass civil claims.

Acknowledgments:

Richard A. Nagareda is a Professor of Law and Director of the Cecil D. Branstetter Litigation & Dispute Resolution Program at Vanderbilt University Law School.

This Legal Workshop Editorial is based on Mr. Nagareda’s Article: Richard A. Nagareda, Embedded Aggregation in Civil Litigation, 95 CORNELL L. REV. ___ (forthcoming 2010).

Copyright © 2010 Cornell Law Review.

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.