Why tradition supports punitive damages and how the defense bar misreads history.

In recent years, die defense bar has increasingly invoked the historical practice of common law English courts and 19th-century U.S. courts to argue for constitutional and legislative limits on punitive damages awards. For example, defendants have frequently contended that punitive awards were traditionally restricted to no more than a few times a plaintiff's compensatory damages and that modern products liability, consumer protection, or mass tort litigation raises wholly new problems for which punitive damages were never intended.

However, a survey of English and U.S. cases shows that die relevant tradition regarding punitive damages is precisely the opposite of what the defense bar claims.

The U.S. Supreme Court and other courts have increasingly accepted the invitation to consult common law traditions in ascertaining the constitutional constraints on punitive damages, in part as one feature of a broader trend in defining the protections afforded by due process.

In 1991, for example, in Pacific Mutual Life Insurance Co. v. Haslip, the Court explained that, because "the common law method for assessing punitive damages was well established before the Fourteenth Amendment was enacted," the Court really could not "say that the common law method for assessing punitive damages is so inherently unfair as to deny due process and be per se unconstitutional."(1)

Two years later, in TXO Production Corp. v. Alliance Resources Corp., the Court indicated that it might look to "history and widely shared practice" in determining "whether a particular state practice so departs from an accepted norm as to be presumptively violative of due process."(2)

Last year, in Honda Motor Co. v. Oberg, the Court did just that. It held that Oregon's restrictions on judicial review of punitive damages awards were unconstitutional in light of what the Court believed was a long historical tradition "recogniz[ing] judges' authority to award new trials on the basis of the size of damage awards."(3)

Given the receptiveness of the federal judiciary to arguments based on the lessons of history, and given contemporary legislative efforts to limit punitive damages, plaintiffs' lawyers should be aware that tradition is on their side. Punitive damages were inaugurated in cases where a plaintiff had suffered little compensable loss, but where society's need for deterrence and punishment dictated an additional award.

Centuries ago, this produced precisely the sort of lopsided ratios between punitive and compensatory damages that the defense bar claims to be so novel and to find so disturbing.

Whatever the interests that society has deemed to be important objects of legal protection, punitive damages have often borne dramatic ratios to their compensatory counterparts. If there is a "proportionality principle" to be extracted from history, it is that punitive damages need not be proportional to compensatory loss, but rather proportional to the need to deter and punish the defendant. This amount is frequently far in excess of the actual harm that the plaintiff suffered.

The defense bar also contends that punitive damages in products liability or other consumer actions are somehow suspect because, as a historical matter, they allegedly were not awarded m those cases. This argument has more to do with the social conditions of pre-industrial England and the United States - and with the relative scarcity of products liability suits - than with the legal principles underlying punitive damages.

As the Supreme Court has observed, "Although the precise nature and use of punitive damages may have evolved over time, and the size and frequency of such awards may have increased, this Court's decisions make clear that the concept of `punitive damages' has a long pedigree in the law."(4)

In fact, punitive damages were awarded in products liability actions in the last century. Indeed, at the time of the framing of the Fourteenth Amendment, punitive damages were available in many jurisdictions on a showing of gross negligence and not just deliberate or intentional wrongdoing.

More fundamentally, punitive damages have always been used as a populist weapon to help equalize the playing field between the powerful and the powerless - whether between king and subject, railroad and passenger, or corporation and consumer.

To Punish and Deter

The Supreme Court has observed that "the practice of awarding damages far in excess of actual compensation for quantifiable injuries was well recognized" in the 18th century.5 The purpose of these punitive or exemplary damages was not to make the victim whole, for they greatly exceeded any injury that the plaintiff might have suffered. Rather, these awards served society's interest in achieving optimal punishment and deterrence. They encouraged plaintiffs to sue and vindicate principles of law as private attorneys general.

In the 1763 English case of Wilkes v. Wood, for example, the victim of an illegal search requested "large and exemplary damages" on the ground that "trifling damages would put no stop at all to such proceedings."(6) Even though the plaintiff had suffered little actual injury, he received 1,000 [pounds] after Lord Chief Justice Charles Pratt explained to the jurors that they

have it within their power to give damages

for more than the injury received.

Damages are designed not only as a

satisfaction to the injured person, but

likewise as a punishment to the guilty,

to deter any from proceeding in the future,

and as a proof of the detestation

of the jury to the action itself.(7)

Converted to constant dollars using only a 3 percent discount rate, 1,000[pounds]in 1763 equals over $1.5 million today.

Wilkes was not an aberration. In Huckle v. Money,(8) another 1763 case, the court approved an award of exemplary damages of 300[pounds] - which the U.S. Supreme Court later described as "an enormous sum almost 300 times the plaintiff's weekly wage"(9) - to a journeyman printer falsely imprisoned for six hours, despite the fact that he was treated to "beefsteaks and beer, so that he suffered very little or no damages."(10) The ratio of punitive damages to compensable harm in that case was at least 15 to 1.(11)

In Merest v. Harvey in the early 19th century, the jury imposed 500[pounds] in damages for "treading [plaintiff's] grass and hunting for game," despite the absence of any concrete injury to the plaintiff.(12) In upholding the award, the court asked, "[I]n a case where a man disregards every principle which actuates the conduct of gentlemen, what is to restrain him except large damages?"(13)

The court rejected the notion that "the jury are not justified in giving more than the absolute pecuniary damage that the plaintiff may sustain."(14) One judge commented, "I remember a case where a jury gave 500[pounds] damages for merely knocking a man's hat off; and the court refused a new trial."(15)

U.S. courts followed the same approach from the 1700s to the framing of the Fourteenth Amendment in 1868 and afterward. A leading commentator observed that "the cases are very numerous in the books which show that very large additions must have been made for punitory effect to the amount which would otherwise have been found."(16) He warned that "one who does an act maliciously, must be careful to see that the act is lawful; otherwise, though the actual injury may be slight, the exemplary damages may be considerable."(17)

Another commentator concluded that "the reported cases offer many interesting instances of startlingly large verdicts for punitive damages," and "no definite ratio is prescribed" between actual and punitive damages."(18)

Several 19th-century cases serve as examples. In Alcorn v. Mitchell, $1,000 ($38,000 today) in punitive damages were awarded, where the defendant spat in the plaintiff's face, causing no compensable harm at all.(19) In Reed v. Davis, the court upheld a $500 award ($73,000 today) for trespass, even though there was "little or no damage done to the goods or to the persons of the plaintiff or his family."(20) The court said the jury had "discovered a determination to vindicate the rights of the poor against the aggressions of power and violence."(21)

And in New Orleans, Jackson & Great Northern Railroad v. Hurst, the court upheld $4,500 in punitive damages ($250,000 today) awarded by a jury where a train dropped the plaintiff three-quarters of a mile beyond the station and forced him to walk back, even though he suffered no harm.(22)

The reasoning behind these awards was typically premised on the need to deter the defendant's wrongdoing - regardless of the damages the individual plaintiff suffered. In one of the earliest punitive damages cases in the United States, in 1791, the jury was instructed "not to estimate the damages by any particular proof of suffering or actual loss; but to give damages for example's sake, to prevent such offenses in the future."(23)

As one court explained in 1893, "The damages recoverable being punitive and exemplary, ... the admeasurement of the recovery must be by reference alone to the quality of the wrongful act or omission, the degree of culpability involved in the doing of the act or omission ... without any reference to, or consideration of, the loss or injury. ..."(24)

Accordingly, 19th-century U.S. Supreme Court decisions reflect the understanding that punitive damages were frequently not commensurate with compensable harm. For example, in Day V. Woodworth, the Court observed that "it is a well-established principle of the common law" in tort actions that "a jury may inflict what are called exemplary, punitive, or vindictive damages upon a defendant, having in mind the enormity of his offense rather than the measure of compensation to the plaintiff."(25)

Similarly, in Barry v. Edmunds, the Court recognized that punitive awards were distinct from compensatory awards, and only the latter were imposed "commensurate to [the plaintiff's] injuries."(26) In cases of malice, punitive damages could vastly exceed compensable harm. The Court cited a South Carolina trespass case where punitive damages were $3,000 and actual harm only $20, producing a ratio of 150 to 1.(27)

Whenever society's interests were at issue, punitive awards were not tied to the plaintiff's harm. One court ruled in 1839 that a plaintiff was entitled to punitive damages for the loss of three horses caused by a bridge collapse. The court explained that punitive damages were needed "for the sake of example" because bridge maintenance is a duty "in which the public at large have a deep interest."(28)

Similarly, punitive damages awards against railroads, which were common, were justified by the need to change socially harmful behavior. As one court noted in 1869, "the doctrine of exemplary damages is more beneficial in its application to [corporations] than in its application to natural persons."(29) The court explained, in language that is appropriate today,

Careful engineers can be selected who

will not run their trains into open

draws and careful baggage-men can

be secured who will not handle and

smash trunks and band-boxes, as is

now the universal custom; and conductors

and brakemen can be had who

will not assault and insult passengers;

and if the courts will only let the verdicts

of upright and intelligent juries alone,

and let the doctrine of exemplary damages

have its legitimate influence, these

great and growing evils will be very

much lessened, if not entirely cured.

There is but one vulnerable point

about these ideal existences cured corporations;

and that is the pocket of the

monied power that is concealed behind

them; and, if that is reached, they

will wince. When it is thoroughly understood

that it is not profitable to employ

careless and indifferent agents, or

reckless and insolent servants, better men

will take their places, and not before.(30)

Consumer Actions

Another refrain of defense lawyers is that historically punitive damages were imposed only in cases of intentional torts, such as assault and battery. They claim there is something novel and suspicious about the imposition of punitive damages in products liability and other consumer actions. In fact, punitive damages were imposed in early products liability cases where a defendant's lack of due care threatened the public safety.

For example, in Fleet v. Hollenkemp, an 1852 case, the court let stand a punitive damages award against a local drug store where the store's agent had accidentally mixed cantharides in the plaintiff's medicine, making him ill. The court found the agent "guilty of inexcusable negligence in compounding and putting up the medicine."(31) It observed that "whether exemplary damages should or should not be given does not depend upon the form of the action so much as upon the extent and nature of the injury done and the manner in which it was inflicted, whether by negligence, wantonness, or with or without malice."(32)

More generally, the U.S. Supreme Court has already ruled, in interpreting 42 U.S.C. S1983 (whose predecessor was [section]1 of the Civil Rights Act of 1871), that 19th-century courts permitted punitive damages to be imposed on the basis of gross negligence or recklessness and not just intentionally malicious or criminal wrongdoing. In 1983 in Smith v. Wade, the Court observed that "the large majority of state and lower federal courts were m agreement that punitive damages awards did not require a showing of actual malicious intent; they permitted punitive awards on variously stated standards of negligence, recklessness, or other culpable conduct short of actual malicious intent."(33)

Another federal court explained in 1894 that punitive damages were imposed on the basis of "that form of malice ... where, without `deliberate mind' or `formed design,' the offender has been so grossly and recklessly negligent, so wantonly indifferent to another's rights, that he should be required to pay damages in excess of were compensation as a punishment and example" - even in the absence of any showing of intentional wrongdoing by the defendant.(34)

Other 19th-century cases were decided on this theory. In Welch v. Durand, for example, the court held that punitive damages were proper where the defendant's pistol bullet, fired at a target, ricocheted and hit the plaintiff, on the ground that punitive damages could be imposed "in actions of tort founded on the malicious or wanton misconduct or capable neglect of the defendant."(35) The court added that "it is an immaterial fact that the injury was unintentional, and that the bah glanced from the intended direction.... [If] the act is done where there are objects from which the balls may glance and endanger others, the act is wanton, reckless, without due care, and grossly negligence."(36)

In Frink & Co. v. Coe, punitive damages were awarded against a stagecoach company for employing a known drunkard as a driver. The theory was that "if a stage proprietor or carrier is guilty of gross negligence, it amounts to that kind of gross misconduct which will justify a jury in giving exemplary damages, even where an `intent or design' to do the injury does not appear."(37)

Similarly, in Maysville & Lexington Railway Co. v. Herrick, die Kentucky Supreme Court held that a trial court correctly refused to instruct the jury that "willful or intentional wrong" was required to award punitive damages in a railroad accident case.(38) The state supreme court explained,

The absence of slight care in the management

of a railroad train, or in keeping

a railroad track in repair, is gross

negligence; and to enable a passenger

to recover punitive damages, in a case

like this, it is not necessary to show the

absence of all care, or "reckless indifference

to the safety of... passengers,"

or "intentional misconduct" on the

part of the agents and officers of the

company.(39)

Punitive damages awards in consumer fraud and products liability cases are within the historical tradition of tort law for an even more fundamental reason: Punitive damages have traditionally been used as a populist weapon to help level the playing field between powerless plaintiffs and powerful defendants. As the U.S. Supreme Court observed in an 1886 case,

The dignity and value of the right assailed,

and the power and authority of

the source from which the assault proceeds,

are elements to be considered in

the computation of damages, if they

are to be not only compensation for

the direct loss inflicted, but a remedy

and prevention for the greater wrong

and injury involved in the apprehension

of its repetition.(40)

In common law England, punitive damages were often employed against the crown and the aristocracy. In 19th-century America, they were frequently used against railroads and robber barons. As the Pennsylvania Supreme Court observed in 1886, "The liability of railway and other corporations to exemplary damages for gross negligence is well settled."(41)

The modern-day heir of this populist legacy is the consumer plaintiff suing a large corporate defendant. Using punitive damages to redress the imbalance in the relationship between consumer and corporation is squarely within their historical tradition.

In recent years, the defense bar has pursued a well-coordinated judicial, legislative, and public relations campaign

against punitive damages. One of the primary themes of this campaign has been the supposedly unprecedented character of contemporary punitive damages awards.

Plaintiffs' lawyers should carefully prepare themselves to dispel that myth and to educate judges, legislators, and citizens regarding the true historical tradition of punitive damages.

Notes

(1) 499 U.S. 1, 17 (1991). (2) 113 S. Ct. 2711, 2720 (1993) (plurality opinion) (internal quotations omitted). (3) 114 S. Ct. 2331, 2337 (1994). (4) Molzof v. United States, 112 S. Ct. 711, 715 (1992). (5) Browning-Ferris Indus. v. Kelco Disposal, Inc., 492 U.S. 257, 274 (1989) emphasis added). (6) 98 Eng. Rep. 489,490 (C.P. 1763). (7) Id. at 498-99 (emphasis added). (8) 95 Eng. Rep. 768 (C.P. 1763). (9) Oberg, 114 S. Ct. 2331, 2335. (10) 95 Eng. Rep. 768. (11) See Browning-Ferris Indus., 492 U.S. 257, 274 n.20. (12) 128 Eng. Rep. 761 (C.P. 1814). (13) Id. at 761. (14) Id. (15) Id. (16) 1 J.G. SUTHERLAND, A TREATISE ON THE LAW OF DAMAGES 737 (1883). (17) Id. at 748. (18) CHARLES T. MCCORMICK, HANDBOOK ON THE LAW OF DAMAGES 298 & n.7 (1935) (emphasis added). (19) 63 Ill. 553 (1872). (20) 4 Pick. 216, 217 (Mass. 1826). (21) Id. at 218. (22) 36 Miss. 660, 667 (1859). (23) Coryell v. Colbaugh, 1 N.J.L. 77 (1791). (24) Richmond & Danville PR. v. Freeman, 97 Ala. 289, 294 (1893) (emphasis added). (25) 54 U.S. (13 How.) 363, 371 (1851) (emphasis added). (26) 116 U.S. 550, 563 (1886) internal quotation omitted). (27) Id. at 564. (28) Whipple v. Walpole, 10 N.H. 130,132 (1839). (29) Goddard v. Grand Trunk Ry., 57 Me. 202, 224 (1869). (30) Id. at 224. (31) 52 Ky. (13 B. Mont.) 219, 222 (1852). (32) Id. at 225-26. (33) 461 U.S. 30,45 (1983). (34) Press Pub. Co. v. McDonald, 63 F. 238, 246 (2d Cir. 1894). (35) 36 Conn. 182, 185 (1869). (36) Id. (37) 4 Greene 555, 559 (Iowa 1854). (38) 76 Ky. 122 (1877). (39) Id. at 127 (ellipsis in original). (40) Barry, 116 U.S. 550, 566 (emphasis added). (41) Lake Shore & Michigan S. Ry. v. Rosenzweig, 113 Pa. 519, 544 (1886).

Jonathan S. Massey, a former law clerk to Justice William J. Brennan Jr., is a sole practitioner in Washington, D.C. He has testified before Congress on the subject of punitive damages and has represented plaintiffs before the U.S. Supreme Court in the recent cases of TXO Production Corp. v. Alliance Resources Corp. (1993), Honda Motor Co. v. Oberg (1994), and BMW of North America, Inc. v. Gore (pending).