Although there is a debate over the purpose of punitive damages, it is generally admitted that their main goals are to deter and to punish wrongdoers : "punitive damages are designed to punish a defendant for grossly inappropriate actions and, in doing so, to deter future such actions by signaling that their consequences can be severe"...
[...] It is often said that punitive damages awards are increasing both in amount and in frequency, that they are unpredictable and hence that they “provide an uncertain and unstable foundation for law”. An adverse consequence of this unpredictability is the externalization of risk by companies : critics of the current system point out the fact that due to the fear of punitive damages, firms tend to hire independent contractors to undertake risky tasks. This evolution causes both more accidents and less economic efficiency. [...]
[...] According to Sebok, A., punitive damages should be seen as a “private retribution”, not as a deterrent. This conception implies that the courts could determine the amount of punitives by simply looking at the reprehensibility of the defendant's conduct in order to fix the amount of damages. This approach has the benefit to be consistent with what actually happens in courts nowadays, while theorizing it. Chanenson, S. And Gotanda, J. also insist on the fact that the third guidepost enacted by the Supreme Court in BMW of North America, Inc. [...]
[...] And Wells, M., “Juries, Judges and Punitive Damages: An Empirical Study” (November 2001) Moller, E., Pace, N., Carroll, S., “Punitive Damages in Financial Injury Jury Verdicts”, RAND (1997) Polinski, M., and Shavell “Punitive Damages: An Economic Analysis” Harvard Law Review, 869-962 (1998) Sebok, A., “Punitive Damages: From Myth to Theory”. Iowa Law Review, Vol (2007) Moller, E., Pace, N., Carroll, S., “Punitive Damages in Financial Injury Jury Verdicts”, RAND (1997) Cooter, R., “Punitive Damages, Social Norms, and Economic Analysis”, Law and Contemporary Problems, Vol p (Summer 1997) Polinski, M., and Shavell “Punitive Damages: An Economic Analysis” Harvard Law Review, 869-962 (1998) Polinski, M., and Shavell supra note 2 See Cooper Industries v. [...]
[...] However, considering the punishment goal, it would be appropriate to relate punitive damages to wealth if and only if the goal is to punish the firm per se (and not the individuals within the firm), or to punish an individual. Intuitively, one understands that because money is worth more to poor people, less punitive damages are required to punish them adequately. What about de- coupling? . Several states decouple punitive damages which means that the plaintiff is only given a fraction of the punitive damages awarded: the award payed by the defendant is not the award received by the plaintiff. [...]
[...] Hence, it is important to see that in practice, punitive damages do not promote efficiency: they are both extra- compensatory (the plaintiff is more than compensated) and extra-disgorging (the defendant is deterred more than necessary to achieve efficiency). The Supreme Court considers that punitive damages are an expression of moral condemnation by judges and juries. Hence, private retribution is sometimes considered to be the main goal of punitive damages: the victim can seek compensation for his or her loss by delivering the wrongdoer to the Court. [...]
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