September 23, 2015

Huffington Post editorial criticizes limits on punitive damges

Joanne Doroshow, director of NYU Law's Center for Justice & Democracy (CJD), wrote a piece for the Huffington Post last week entitled "When a Corporation is 'Too Big to Care' About Breaking the Law."  The theme is that corporations (particularly Johnson & Johnson) are running amok, and that punitive damages are no longer an effective deterrent of corporate misconduct now that statutory caps and U.S. Supreme Court decisions have taken away the threat of unlimited punitive damages.

Doroshow supports her argument by linking to an earlier CJD paper that purported to debunk myths about punitive damages.  As we observed when that paper was issued, it didn't do much debunking.  Instead of focusing on the main criticism of punitive damages (that they are awarded arbitrarily), the article dispelled the "myth" that punitive damages are awarded in a high percentage of cases.  That myth is itself mythical (a meta-myth?) because no-one seems to actually be taking that position.

The CJD's arguments about the effects of tort reform seem to be based entirely on anecdotal evidence.  Alleged misconduct by Johnson & Johnson is offered as proof that bad actors don't fear punitive damages.  The award of punitive damages in Dalkon Shield litigation is offered as proof that punitive damages are needed to deter corporate misconduct.  Of course, critics of punitive damages have plenty of anecdotes of their own to show that juries can and do render arbitrary punitive damages awards against corporations and individuals alike, with devastating effects.  None of that really provides concrete information about whether unlimited punitive damages would provide a net benefit to society.

I'm still hoping that someone will attempt to elevate this debate with actual data, by devising a method for studying whether malicious misconduct is more prevalent in states that have caps on punitive damages, or states that ban punitive damages altogether, versus states that do not.  States are supposed to provide a laboratory for experimentation on the effects of legislation, but so far no one seems to be monitoring this particular experiment.