Catherine M. Sharkey

Punitive Damages As Societal Damages

Jury awards of classwide punitive damages provide windfalls to individual plaintiffs, particularly in products liability, fraud, civil rights, and employment discrimination cases. This suggests a new angle from which to approach the ongoing punitive damages debate. Under current law, classwide assessment of widespread public harms has proceeded under the rubric of retributive punishment and deterrence the traditional justifications for punitive damages bypassing class action procedural requirements and unjustly enriching the plaintiff. In the wake of the Supreme Courts admonition in State Farm that such a practice can violate due process by exposing defendants to the risk of multiple punitive damages awards for the same conduct, the Article proposes explicit recognition of a distinct category of compensatory societal damages for redress of third-party and societal harms. Up until now, this category has been quietly subsumed within punitive damages. But damages for specific harms to third parties and more diffuse harms to society are actually compensatory (as opposed to punitive) in nature, and should, once assessed, be distributed by legislatures, courts, and juries accordingly. Drawing upon heretofore unconnected trends in punitive damages and class action tort cases, and state-level legislative and judicial innovations with split-recovery schemes for distributing punitive awards, the Article explores various mechanisms for transforming punitive damages into societal damages, including the formation of an ex post class action at the remedial stage and the punitive-damages-only class at the liability stage. The theory of compensatory societal damages whether or not embraced by legislatures and courts reveals more clearly the tradeoffs in transforming the doctrine of punitive damages to achieve the compensatory and deterrence goals of the tort system.

Economic Analysis of Punitive Damages: Theory, Empirics, and Doctrine

This chapter — to be included in Research Handbook on the Economics of Torts (Arlen ed., Kluwer, forthcoming 2012) — assesses economic rationales for punitive damages in light of contemporary empirics and doctrine. The primary economic rationale for supra-compensatory damages is optimal deterrence (or loss internalization): when compensatory damages alone will not induce an actor to take cost-justified safety precautions, then supra-compensatory damages are necessary to force the actor to internalize the full scope of the harms caused by his actions. Alternative economic rationales — disgorgement of ill-gotten gains and enforcement of property rights — have been proposed to align the theory with the historical and conventional focus of punitive damages on intentionally wrongful behavior. Notwithstanding its academic prominence, the economic deterrence rationale has not dominated doctrine. In fact, the U.S. Supreme Court has all but rejected economic deterrence, by instead placing increasing emphasis on a competing retributive punishment rationale. But, since punitive damages lie squarely within the purview of state law, state legislatures and courts possess a degree of freedom to articulate state-based goals of punitive damages — such as economic deterrence — even in the face of heavy-handed federal constitutional review imposed by the U.S. Supreme Court.

Crossing the Punitive-Compensatory Divide

C ROSSING THE P UNITIVE -C OMPENSATORY D IVIDE Sharkey Draft * Do not Quote or Cite w/o Permission* C ROSSING THE P UNITIVE -C OMPENSATORY D IVIDE Catherine M. Sharkey * T ABLE OF C ONTENTS I NTRODUCTION 3 I. B LURRING C ATEGORIES OF D AMAGES 8 Explicit Category Shifting 8 1. Jurors 8 a. “Equifinality”: The Pursuit of Multiple Goals 8 b. Mock Juror Experiments 10 2. Attorneys 12 B. Implicit Category Dismantling 14 1. Legislatures 14 a. Compensatory Purpose of Punitive Damages 14 b. Insurability of Punitive Damages 15 2. Courts 17 a. Compensatory Punitive Damages 17 b. Punitive Compensatory Damages 18 A. II. A N E MPIRICAL T EST OF C ROSSOVER : “P UNITIVE ” C OMPENSATORY D AMAGES ........20 A. Data 21 1. Civil Justice Survey Data 21 2. Sample: Size & Description 22 B. Methodology 22 1. Model Specification 23 2. Dependent Variables 23 3. Independent Variables 24 a. Litigation variables 24 b. State law variables 24 i. Punitive Damages Caps 24 ii. Insurability of Punitive Damages 24 c. County demographic variables 24 i. Median Income 25 ii. Poverty 25 C. Limitations 26 D. Results 28 1. Jury Trial Verdicts 28 a. Combined Data 28 b. Auto versus Non-Auto Cases 30 2. Bench Trial Verdicts 31 E. Interpretations & Implications 31 Associate Professor of Law, Columbia Law School. An earlier version of this paper was presented at the Columbia Law School Faculty Lunch Series, where I received helpful comments. I have also benefited from discussions with, and comments from, Ian Ayres, Guido Calabresi, Jonathan Cedarbaum, Ariela Dubler, Noah Feldman, Sam Issacharoff, Ed Morrison, Richard Primus, John Witt, and Kenji Yoshino.

Tort Liability for Pure Economic Loss: A Perspective from the United States and Some Comparative European Insights

This article describes and evaluates from a comparative perspective the approach to tort liability for pure economic loss adopted in the Restatement (Third) Torts: Liability for Economic Harm. The analysis highlights three fundamental issues: whether a claim in tort can arise concurrently with a claim in contract; whether claims for professional negligence merit special treatment and, if so, how; and whether claims relating to negligent misrepresentation should be subject to the same rules as apply to negligence generally. Consideration of how these issues are addressed in English, French, and German law suggests that debates in the United States might usefully be informed by European experience.

Tort-Agency Partnerships in an Age of Preemption

Abstract At the core of the tort preemption cases before the U.S. Supreme Court is the extent to which state law can impose more stringent liability standards than federal law. The express preemption cases focus on whether the state law requirements are “different from, or in addition to” the federally imposed requirements. And the implied conflict preemption cases examine whether the state law standards are incompatible (impossibility preemption) or at least at odds (obstacle preemption) with the federal regulatory scheme. But the preemption cases in the appellate pipeline - what I shall term the “second wave” of preemption cases - address a separate analytic question. Their focus is less on the substantive aspects of regulatory standards, and more on their enforcement. When can state tort law impose substantive duties or obligations that are “parallel” to federal requirements without thereby encroaching upon a federal agency’s discretionary enforcement prerogative? This is the new frontier in products liability preemption. My proposed model suggests that courts facing these new issues should solicit input from federal agencies before resolving them. The model thereby offers a hybrid private-public model for the regulation of health and safety. It advocates an extension of my “agency reference model” to the “enforcement preemption” context: courts should place more emphasis on FDA input when deciding whether tort requirements are “parallel” to federal dictates, and (perhaps even more so) whether, even if they are, they nonetheless infringe on the federal agency’s discretionary enforcement prerogatives. Courts would thus seek guidance from federal agencies to determine whether a private right of action exists for the enforcement, via state law claims, of federal regulations