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Editor: Christopher J. Robinette
Widener Commonwealth Law School

Thursday, October 17, 2013

Two by Sharkey

Cathy Sharkey (NYU) has posted two articles to SSRN.  First, The Future of Classwide Punitive Damages.  The abstract provides:

Conventional wisdom holds that the punitive damages class action is susceptible not only to doctrinal restraints imposed on class actions but also to constitutional due process limitations placed on punitive damages. Thus, it would seem that the prospects for punitive damages classes are even grimmer than for class actions generally.

This conventional picture misunderstands the role of punitive damages and, in particular, the relationship between class actions and punitive damages. It either ignores or underestimates the distinctly societal element of punitive damages, which makes them especially conducive to aggregate treatment. Furthermore, punitive damages classes offer a solution to the constitutional due process problem of juries awarding “classwide” damages in a single-plaintiff case.

Courts’ conceptualization of punitive damages as either individualistic or societal dictates how they decide the certification question. My survey of recent case law reveals that courts taking the plaintiff-focused individualistic view of punitive damages tend to deny class certification, while courts embracing the defendant-focused societal view are more likely to certify a punitive damages class, all else being equal. Therefore, the viability of the punitive damages class depends upon the persuasiveness of the societal conception of punitive damages.

Based on this empirical grounding, I discuss two possibilities for reform. First, state legislatures and courts could affirmatively define the collectivized, societal rationale for punitive damages. Such state legislative measures would likely withstand constitutional scrutiny under Philip Morris USA v. Williams, given the U.S. Supreme Court’s reaffirmation of the primacy of the state’s role in defining the legitimate purposes of punitive damages. Second, federal courts — in the absence of definitive guidance from authoritative sources on state substantive law — could consider the underlying societal rationale for punitive damages in the course of their certification decisions. To do so would not only be permitted, but indeed warranted, by the Rules Enabling Act.

Second is Against Categorical Preemption:  Vaccines and the Compensation Piece of the Preemption Puzzle.  The abstract provides:

In tort preemption cases, when federal law ousts conflicting state tort law, two fundamental functional premises should hold true: (1) the federal standard of care is more than a minimal standard and (2) the state standard of tort liability has a significant regulatory effect (if not the regulatory purpose) by trading off risks and benefits to inhibit or to encourage risk-taking conduct that interferes with, or substantially alters, a federal regulatory scheme. The regulatory role of state tort law is front and center in this paradigm of preemption. But what about the compensatory role of tort law? Should there, in fact, be a third premise that the federal regulatory regime must provide a substitute to injured victims for tort-based compensation? Or perhaps a weaker version, such that the absence of federally provided compensation is a thumb on the scale against preemption? Conversely, should the existence of such a federal compensation scheme weigh in favor of preemption?

The National Childhood Vaccine Injury Act (Vaccine Act) is a rare example whereby Congress provides for a federally administered compensation fund alongside its newly fashioned regulatory standards. The vaccine context thus provides an opportunity to explore the relationship between preemption and compensation.

In this Article, I provide some alternative frames for analysis. Frame One is conventional statutory interpretation focused on statutory text and legislative history.  Frame Two is consideration of the backdrop of tort lawsuits at the time when Congress acted and, relatedly, whether Congress provided a substitute administrative compensation scheme for tort law remedies. This frame is key to resolving disputes that amount to implied field preemption — namely, a categorical preemption claim that federal law ousts state law regardless of the precise risks considered by the underlying federal regulatory agency. My argument here is that the absence of compensation — particularly against a backdrop in which, prior to enactment of the federal scheme, tort law effectuated both regulatory and compensatory goals — renders the regulatory scheme incomplete. Conversely, the existence of a federal compensation scheme keeps categorical preemption claims on the table.

But the analysis should not end with Frame Two. Even if a categorical preemption argument fails because of the absence of a federal compensation fund, a narrower form of risk-based implied conflict preemption — in which the underlying regulatory agency has considered the risks and benefits at issue and resolved them in a way that is at odds or in tension with imposition of the asserted state-law duty — may be justified. And even where a categorical preemption argument is plausible, given the existence of a federal compensatory regime, there may nonetheless be a stronger underlying risk-based argument worth considering. Here is where Frame Three comes into play. Frame Three encapsulates the “agency reference model” I have developed in prior work, whose prime target is conflict preemption. The primary question in conflict preemption cases involving ambiguous congressional intent should be whether the federal agency considered the same risks and benefits that are the source of the competing state standard. Substantial deference should also be accorded to the underlying agency’s position on preemption, based on the thoroughness and consistency of its considered views.


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