• 12 May 2009

Retributive Damages as Intermediate Public Sanctions: A Synopsis

Dan Markel - Florida State University College of Law

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Punitive damages’ complex and rapidly evolving nature has unsurprisingly attracted the attention of scholars from a variety of disciplines.  But what are punitive damages for?  In terms of normative answers, a number of scholars, such as Professors Polinsky and Shavell, think that extra-compensatory damages should focus on advancing the goal of optimal deterrence (or what I also call “cost internalization” or “deterrence”).1 Under this framework, a defendant’s culpability or state of mind is immaterial to her obligation to pay for the harms that she causes.  Instead, what matters is whether any likelihood exists that the defendant would evade paying compensation for the harms she caused.  If there is such a possibility, then the amount of punitive damages should be calibrated accordingly.2  However, as Professor Sharkey points out, a total cost internalization approach would not necessarily ensure or require compensation to victims for their losses.3

 
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.dingbat

 

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.

  1. Other scholars have also embraced cost internalization as a goal for punitive damages, including Judge Guido Calabresi and Professors Sharkey and Galligan. In the text, I am conflating deterrence with optimal deterrence (or cost internalization) and thus implicitly obscuring the work of some economists who view punitive damages law through the prism of complete deterrence. See, e.g., Keith N. Hylton, Punitive Damages and the Economic Theory of Penalties, 87 GEO. L.J. 421, 423 (1998).
  2. But see Keith N. Hylton & Thomas J. Miceli, Should Tort Damages Be Multiplied?, 21 J.L. ECON & ORG. 388 (2005).
  3. See Catherine M. Sharkey, Punitive Damages as Societal Damages, 113 YALE L.J. 347, 401-02 (2003); id. at 390-91.
  4. See also David F. Partlett, The Republican Model and Punitive Damages, 41 SAN DIEGO L. REV. 1409 (2004) (defending a robust role for juries in punitive damages awards on the basis of republican theory).
  5. E.g., Marc Galanter & David Luban, Poetic Justice: Punitive Damages and Legal Pluralism, 42 Am. U. L. REV. 1393, 1432-35 (1993).
  6. Dan Markel, How Should Punitive Damages Work?, 157 U. PA. L. REV. (forthcoming 2009).
  7. See Markel, Retributive Damages, at 304-09.
  8. See Markel, Retributive Damages, Part II. Some of my prior works have addressed how this theory applies to other criminal justice policy issues. See generally Dan Markel, Against Mercy, 88 MINN. L. REV. 1421 (2004) {hereinafter Markel, Against Mercy} (providing a retributivist critique of sites of unreviewable discretion for grants of mercy by executive figures); Dan Markel, Are Shaming Punishments Beautifully Retributive? Retributivism and the Implications for the Alternative Sanctions Debate, 54 VAND. L. REV. 2157 (2001) {hereinafter Markel, Shaming Punishments} (considering alternative criminal sanctions through the lens of retributive justice theory); Markel, State, Be Not Proud, 40 HARV. C.R.-C.L. L. REV. 407, 457-77 (2005) (arguing that retributive justice is incompatible with the death penalty); Dan Markel, The Justice of Amnesty? Towards a Theory of Retributivism in Recovering States, 49 U. TORONTO L.J. 389, 392 (1999) (arguing that the particularized amnesty regime utilized by some recovering states as part of a transitional justice program can be compatible with retributive justice). More recently, I have extended this theory to the Supreme Court’s Eighth Amendment jurisprudence, see Dan Markel, Executing Retributivism: Panetti and the Future of the Eighth Amendment, 103 NW. U. L. REV. (forthcoming Spring 2009), available at http://ssrn.com/abstract=1263683; and to the role that a defendant’s family status should play in her criminal liability and punishment, see DAN MARKEL, JENNIFER M. COLLINS, ETHAN J. LEIB, PRIVILEGE OR PUNISH: CRIMINAL JUSTICE AND THE CHALLENGE OF FAMILY TIES (2009).
  9. The victim vindication accounts say little about how to achieve consistency and predictability across cases. Furthermore, the dominant cost-internalization accounts do not typically require inquiry into and judgment of the reprehensibility of the defendant’s actions, so its proponents are not really interested in communicating condemnation to offenders.
  10. In Retributive Damages, I explained why and how non-victims should have a role in facilitating the punishment of misconduct that involved harmless wrongdoing or wrongs that victims themselves did not seek to vindicate (fully). See Markel, Retributive Damages, at 279-86. The proposal I describe in Retributive Damages also discusses methods to control the settlement problems that arise when private parties may try to reach agreements that prevent the state from collecting its share of the damages.
  11. Cf. Markel, Retributive Damages, at 290-96 (offering rationales for “scaling fines to the defendant’s financial position”).
  12. The gain-stripping aspect of the retributive damages structure makes this approach broadly consistent with the “complete deterrence” approach advocated by economists like Keith Hylton. See Hylton, Punitive Damages and the Economic Theory of Penalties, 87 GEO. L.J. 421, 464-67 (1998) (stressing that an optimal penalty system would eliminate the prospect of gain by the offender); see also David D. Haddock et al., An Ordinary Economic Rationale for Extraordinary Legal Sanctions, 78 CAL. L. REV. 1, 20 (1990). As explained in the text, the retributive damages penalty also includes a wealth- and reprehensibility-informed monetary penalty that puts the defendant in a worse position than she was at the status quo ante. Complete-deterrence models permit but do not require that setback, which is part of how the retributive message of condemnation is communicated. See Markel, Retributive Damages, at 242-43 (contrasting the messages of complete deterrence and retribution).
  13. Such a flat fee avoids the lottery effects that a plaintiff would enjoy from having the good “fortune” of having a wealthy injurer.
  14. Indeed, depending on the circumstances, the restructuring to evade payment could arguably be a factor used to raise one’s reprehensibility score.

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