Wednesday, April 21, 2010
Sharkey on the Exxon Valdez Litigation
Catherine Sharkey (NYU) has posted "The Exxon Valdez Litigation Marathon: A Window on Punitive Damages" on SSRN.
It looks like one of the things Sharkey discusses in the paper (which I haven't read yet but looks fascinating and important) is the fact that the Exxon case was a punitive damages class action. Notably, it was a punitives class sought by the defendants not plaintiffs. The plaintiffs actually opposed the class certification (and lost). It seems to me that from an economic point of view punitive damages classes make perfect sense because punitives are all about defendants' conduct, not plaintiff's, so individual issues should not predominate. We only start to get concerned about the relationship between plaintiff's harm and defendant's punitive exposure when we know that many other cases are going to come about seeking punitive damages (in other words, the defendant faces duplicative awards for the same conduct). For contrary views see Nagareda, Punitive Damages Class Actions and the Baseline of Tort and Sheila Scheuerman, Two World Collide: How the Supreme Court's Recent Punitive Damages Decisions Affect Class Actions.
Here is the abstract of Sharkey's paper:
The Exxon Valdez litigation marathon - a protracted, two-decade-long battle over the propriety and constitutionality of the jury’s $5 billion punitive damages award - provides a window into the past, present, and future of punitive damages. Acting akin to a common law court under federal admiralty jurisdiction, the U.S. Supreme Court provided a template for lower courts to follow. Free of constitutional constraints, the Court diagnoses the problem with punitive damages - unpredictability - and propose a solution: a 1:1 ratio of punitive to compensatory damages. The flaws in the Court’s statistical analysis provide a reminder that those “unsophisticated in statistics” should proceed with caution. The Court’s single-minded focus on unpredictability almost inexorably drives it to embrace and reinforce an exclusively retributive rationale for punitive damages. The Court invokes the analogy of the sentencing guidelines as a model for achieving greater predictability; once enamored with this model, the linkage between the guidelines and criminal retribution spills over to punitive damages as civil retribution. There is, moreover, an uncanny coincidence between the Court’s common law, policy-laden analysis, and the heavy-handed direction its constitutional excessiveness decisions had been taking.
Three issues loom large on the horizon of punitive damages doctrine and policy. First, the Court’s fixation on unpredictability can be linked with a broader trend in the Court’s jurisprudence of circumscribing the role of the civil jury in the name of certainty, predictability, and efficiency. Second, the Court had before it a case in a unique procedural posture: the plaintiffs were part of a “limited fund,” mandatory, non-opt out class action for resolution of punitive damages only. Because that element of the case was not appealed to the Court, the Court left for another day resolution of the classwide determination of punitive damages. Third, the Court’s quest for a national solution to the punitive damages problem and its equation of punitive damages and criminal fines presage impending federalism battles. By elevating a single punitive damages goal - that of retributive punishment - the Court sets the stage for a clash with state courts and legislatures who might be inspired to define their legitimate state interests in punitive damages differently.