Punitive Damages in Financial Injury Jury Verdicts

Forensic economics experts (FE) working with attorneys engaged in litigation, whether consulting, preparing a report, or testifying at deposition or trial, generally are expected to have some knowledge (1) of the state’s statutory and case law regarding allowable damages and methods; and (2) that certain topics (e.g., taxes, collateral sources) should not be mentioned or considered at certain times since a mistrial could result. This situation creates a tension: forensic economics experts are economics experts and are not attorneys, but nonetheless must have a reasonable understanding of the relevant state law. In this vein, the Journal of Forensic Economics (JFE) continues to publish a series of articles on the ways such damages are calculated in different state jurisdictions, one state at a time.2 The state of South Dakota is included in this issue and this paper adds Illinois to the list. Following the format of previous articles in this JFE series, Section II provides a listing of the controlling statutes, general case law, and court rules. Section III discusses the concept of earning capacity which appears throughout PI and WD case law in Illinois. Section IV discusses discounting to present value. Fringe benefits are discussed in Section V, while Section

영미법과 대륙법은 손해배상법제상의 차이가 있다. 영미법계의 징벌적 손해배상제도를 대륙법계인 우리나라에서 전면적, 직접적으로는 도입하는데 있어서는 그러한 차이의 극복방안이 필요할 것이다. 피해자가 전보배상을 받았음에도 또 다시 징벌적 손해배상을 받음으로써 그 몇 배수에 해당하는 금전적 이득을 얻는 것에 대하여도 사회적 합의가 요청된다. 징벌적 손해배상제도의 장점과 단점을 면밀히 살피고 국민의 법감정과 법의식에 맞는 제도를 검토할 필요가 있다. 징벌적 손해배상의 본고장인 미국에서 조차 지나치게 고액인 징벌적 손해배상 제도의 문제점 때문에 이를 제한 및 폐지하려고 하는 움직임이 있음을 감안해 볼 때 우리나라에서도 징벌적 손해배상의 인정범위(범주) 및 금액의 무한정 ․ 무제한 확장에는 신중을 기하지 않을 수 없다. 또한 배심원제도가 없는 우리나라에서 법관이 징벌적 손해배상액의 산정에 관해 일반적인 재량을 행사하는 것은 우리 법감정 아래에서는 받아들이기 어려울 수 있다. 결국 입법과정에서 사회적 합의를 이루어 내야 할 것이다. 생각건대 참여연대의 “징벌적 배상에 관한 법률안”에서 제안하고 있는 것처럼 배액배상의 형태와 상한선폐지의 형태를 혼합하는 방안도 현실적인 대안이 될 수 있을 것 같다. 피해자가 받은 실손해의 2배정도의 상한을 두는 경우에서부터 상한을 두지 않는 이론상으로는 무한대까지 징벌적 손해배상액에 차등을 두어 세부적으로 규정하는 것이 적절하지 않을까 생각해본다.The purose of the law of torts is to compensate people who have been injured as a result of tortuous acts. In many such mass tort case involving product liability, consumer fraud, the plaintiffs generally requested punitive damages. There are two types of damages that can be awarded in product liability cases. - the compensatory damage is to compensate a victim who has suffered a loss or damage. - the punitive damage is to punish a aggressor who did harm for a victim.“punitive damages” are damages, other than compensatory or nominal amages, awarded a person to punish for his outrageous conduct and to deter him and other like him from similar conduct in the future. it can be said that punitive damages are in some sense “quasi- criminal”, standing somewhere between the civil law and criminal law. Since 1986, in respons to the argument that American punitive damages are unpredictable, unfair, and excessive, many states began to implement legislative reforms in order to scale back multiple punitive damages awards and to minimze overkill. To have consistency and uniformity in the state laws of punitive damages, the National Conference of Commissioners on Uniform States Law( NCCUSL) adopted the Model Punitive Damages Act in 1996. the Model Punitive Damages Act provides a lot of factors to be considered in determining a punitive damages awards, such as the nature of the wrongful conduct, the amount of actual damages etc. According to the 14th Amendment to US Constitution, no person shall be deprived of life, liberty or property without of process. the legal scholars and practitions from civil law countries generally reject the coctrine of punitive damages. Korea has recently enacted several statutes authorizing punitive damages. the Fair Transaction in Subscontracting Act introduced a treble damages in order to protect subcontractors, who are the weaker contracting parties than the general contractors. This interplay between the providing adequate compensation to an injured plaintiff and deterring wrongdoers underlies much of the of Torts.

The Punitive Damages Calculus: The Differential Incidence of State Punitive Damages Reforms

Chapter 4 made clear that the international public policy exception is the yardstick used by the courts in the five Member States examined to decide on the enforceability of American punitive damages judgments. Like any type of private law judgment, a foreign punitive damages judgment should not violate international public policy if it wants to stand a chance at the enforcement stage. Similarly, chapter 3 made clear that the penetration of U.S. punitive damages through the field of applicable law is only possible if the international public policy of the forum is not offended by this type of damages. In this chapter we explore the concept of international public policy. Rather than preoccupying ourselves with further defining the notion, we focus on what it contains, or better, what it should contain. We briefly categorise and expand upon the arguments employed by the Member States courts under the international public policy exception to deny the enforcement of U.S. punitive damages awards. Where possible, we attempt to refute them. Finally, we express and elaborate on the opinion that Member States’ courts should not refuse the enforcement of American punitive damages because their own legal systems contain private law instruments akin to punitive damages or pursuing identical or similar goals. This opinion forms the main contention of this chapter. The relevant issue is not whether these ‘punitive traces’ are completely identical to punitive damages or form an alternative to them. The question is rather whether their existence in the legal systems of the Member States as well as in European Union law supports our contention that European continental systems sometimes pursue penal and/or deterrent goals in private law. In this chapter we answer this question in the affirmative. We argue that courts should not treat U.S. punitive damages as, in themselves, contrary to international public policy. American punitive damages should only be analysed under the excessiveness prong of the international public policy test. Although this chapter focuses on the enforcement of judgments, it should be noted that the inferences drawn also apply to the private international law area of applicable law. U.S. punitive damages as such should not be disallowed under international public policy when they are part of the applicable law. They should only be barred to the extent that they are of an excessive nature.

INTRODUCTION Punitive damages have been a feature of civil litigation for centuries. Although they are available in only a small number of cases, the media has given disproportionate attention to punitive damages awards. This high profile has led to much criticism. Indeed, few doctrines in legal history have been more vilified than the doctrine allowing the award of punitive damages in civil actions. In 1873, the Supreme Court of New Hampshire characterized the doctrine as “a monstrous heresy” and “an unsightly and unhealthy excrescence, deforming the symmetry of the body of law.” More recently, a former Solicitor General of the United States, in a 1994 article, compared punitive damages to a “giant underground fungus.” Some observers fear that the amount of punitive damages awards has grown beyond acceptable bounds and, “as if feeding upon itself, has escalated to astronomical figures that boggle the mind” and represents a “destructive force that erodes the economic stability of society.” Notwithstanding such graphic expressions of outrage, the United States Supreme Court has consistently stated that punitive damages may be awarded in civil actions for the purposes of punishing and deterring defendants under appropriate circumstances. Many, but by no means all, of these cases have been tort actions that have involved personal injuries, or insurance bad faith or fraud claims related to personal injuries.

Enforcing Punitive Damages Awards in France: Facing Proportionality within International Public Policy

In a landmark ruling, the Cour de cassation held that “an award of punitive damages is not, per se, contrary to public policy,” but that “it is otherwise when the amount awarded is disproportionate with regard to the damage sustained and the debtor’s breach of his contractual obligation.” Schlenzka & Langhorne v. Fountaine Pajot, S.A. involved the failed attempt by American judgment creditors to enforce their California judgment against a French defendant in France. At the same time that the judgment creditors were taking their case through the French legal system, the Cour de cassation, in a different line of cases, liberalized the conditions under which a foreign judgment could be enforced in France. But when the Court opened one door for the American plaintiffs, it closed another by refusing to enforce the judgment because it included disproportionate punitive damages. The Court’s reasons were inconsistent with prior interpretations of proportionality and disingenuous to the court’s modern approach to the enforcement of foreign judgments. In just a few words, the Court echoed prevailing French and European sentiments about American punitive damage awards. Unfortunately, the prevailing attitudes are dominated more by prejudice than by fact and reason. “The chances of getting a substantial punitive damages judgment from a U.S. court recognized by any court outside of the U.S. are virtually nil.”

My empirical study first replicates and then extends a prior preliminary empirical study by Cass Sunstein and Judy Shih of sexual harassment damages awards. It covers a comprehensive set of 232 cases in which plaintiffs won some positive amount of compensatory damages from state and federal, trial and appellate court decisions from 1982–2004 (published either in official reporters or solely on Westlaw). Contrary to Sunstein and Shih's finding, my analysis of these data reveals a consistent, and statistically significant, positive relationship between punitive and compensatory damages (at least in cases where punitive damages are awarded). My new empirical study then employs dependent variables that, in my view, are more theoretically and statistically sound than those employed by Sunstein and Shih and others who have focused exclusively on the relationship between punitive and compensatory damages: total combined damages (i.e., all compensatory and punitive damages), and what I term “outrage” damages, or combined noneconomic compensatory and punitive damages. My empirical results, using these new dependent variables, essentially confirm Sunstein and Shih's conclusions regarding the irrelevance of variables pertaining to the nature and severity of harassment. What my study reveals as crucial predictive factors, by contrast, are factors pertaining to damages limitations. My study highlights that these factors—including the effect of the 1991 Civil Rights Act, and whether plaintiffs append state civil rights and tort claims to their Title VII claims—are critical to a fuller understanding of damages determinations in sexual harassment cases.

This article provides the first empirical analysis of punitive damages in securities arbitrations. Using a data set of over 6,800 securities arbitration awards, we find that claimants prevailed in 48.9 percent of arbitrations and that 9.1 percent of those claimant victories included a punitive damages award. The existence of a punitive damages award was associated with claims that suggested egregious misbehavior and with claims that provided higher compensatory awards. The pattern of punitive awards is more consistent with a traditional view of punitive damages that incorporates a retributive component than with a law and economics emphasis on efficient deterrence. We also report evidence that the relation between punitive and compensatory awards did not differ substantially between the securities arbitrators’ data and data on juries available from periodic Civil Justice Surveys by the Bureau of Justice Statistics.

The purpose of this paper is to provide evidence about court practice in awarding punitive damages. Of the four prominent theories of punitive damages, the validity of the Punishment-Deterrence Theory and Compensation Theory were determined to be quantifiable for testing. Regression analysis is employed to relate the size of punitive damages to measures of financial punishment, compensation, punitive damages insurability, degree of malice, and type of liability claimed. The analysis was applied to several samples of cases in which punitive damages were assessed against corporations. Support for the Compensation Theory is evident in all of the samples. Support for the Punishment-Deterrence Theory is evident in a precisely-defined sample. These results indicate that the size of the punitive damages award is substantially determined by the compensatory award given the plaintiff and to a lesser degree by the financial status of the defendant. Liability issues have received extensive attention recently due in large part to the unavailability of affordably-priced commercial liability insurance. One aspect of that attention has been proposals to limit punitive damages. Although the desirability and appropriate application of punitive damages has long been an item of debate,' these proposals seem to be the first significant attempt at the legislative level to limit the scope of punitive damages awards. Much of the debate about these legislative actions has been anecdotal. In this paper an attempt is made to provide some empirical evidence of the practice of awarding punitive damages. Development of such evidence should help assess the impact of proposed and recently enacted laws related to punitive damages.

The U.S. Tax Code allows corporate defendants to treat punitive damages as a deductible expense. Legal scholars argue that tax-unaware jurors fail to recognize that deductibility significantly reduces defendants' after-tax punishment, leading to an under-punishment problem. They propose that explicitly informing jurors about tax-deductibility could mitigate this problem. We conduct an experiment to test this claim. Compared to a control group of jurors who are told nothing about taxes, jurors who learn about tax-deductibility award higher damages when the defendant's effective tax rate (ETR) is low, but not when ETR is high. Our results highlight the cost of tax avoidance (low ETRs) for firms in a previously unexamined setting. Our findings suggest that allowing jurors to consider tax-deductibility leads to higher damages only under a narrow set of circumstances, offering limited support for the under-punishment hypothesis. Our results should be of interest to scholars in accounting, law, and public policy. Data Availability: Contact the authors.

Are Juries Less Erratic than Individuals? Deliberation, Polarization, and Punitive Damages

According to black letter doctrine, punitive damages “are damages, other than compensatory or nominal damages, awarded against a person to punish him for his outrageous conduct and to deter him and others like him from similar conduct in the future.”1 A jury (or judge, under some circumstances) may, in its discretion, render punitive damages in cases in which the defendant is found to have injured the plaintiff intentionally or maliciously, or in which the defendant’s conduct reflected a conscious, reckless, wilful, wanton, or oppressive disregard of the rights or interests of the plaintiff. No state allows punitive damages on a showing of simple or mere negligence. Punitive damages may be assessed against an employer vicariously for the misconduct of its employees, although some states restrict such awards to instances where a managing officer of the enterprise ordered, participated in or consented to the misconduct. The amount of a punitive damages award is determined by the jury upon consideration of the seriousness of the wrong, the seriousness of the plaintiff’s injury, and the extent of the defendant’s wealth.

Some states have allocated the authority to determine the amount of punitive damages to judges rather than to juries. This study explored the determination of damages by jury-eligible citizens and trial court judges. The punitive damage awards of both groups were of similar magnitude and variability. The compensatory damages ofjurors were marginally lower but, in some conditions, were more variable than the compensatory damage awards of judges. Both groups appropriately utilized information about both the actual and potential severity of the harm to the plaintiff in determining punitive damages and used only the actual severity of the injury in determining compensatory damages. The punitive damage awards of both groups were influenced by the wealth of the defendant, but the compensatory damage awards of judges were marginally more influenced by defendant wealth than those of citizens. The results are discussed in the context of proposals for punitive damages reform.

Punitive Damage Class Actions and the Baseline of Tort