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PUNITIVE DAMAGES

The plaintiff who prevails in a tort case is entitled to compensatory DAMAGES, including damages for pain and suffering. In a limited number of cases involving aggravated wrongdoing, the plaintiff can recover punitive damages as well. Sometimes the understanding is that these damages are indeed punitive: that their intent is to punish defendants for their wrongdoing. At other times, punitive damages seem designed to provide a higher level of deterrence than would be occasioned by the mere threat of compensatory damages; at this juncture, the language of "exemplary damages" becomes apt.

Although scholars have long expressed uneasiness with punitive damages, until recently their constitutionality has been taken for granted. In recent years, however, the number of punitive-damage awards has increased, and the size of the average punitive-damage verdict has soared. These changes have encouraged the posing of new questions as to their constitutionality. In Browning-Ferris Industries, Inc. v. Kelco Disposal, Inc. (1989), the defendant committed a business tort against the plaintiff that resulted in $51,146 in actual damages. A jury awarded the plaintiff these damages—and six million dollars in punitive damages as well. An argument advanced by the defendant was that this award constituted an "excessive fine," forbidden by the Eighth Amendment. Amazingly, Browning-Ferris was the first case involving the excessive-fines clause that the Supreme Court had ever considered. The Court, divided 7–2, finally decided that punitive damages awarded in private civil actions are not "fines" and are hence unregulated by the clause. The majority opinion, authored by Justice HARRY A. BLACKMUN, left open the question as to whether the clause pertains only to proceedings that are officially criminal: rather, the rationale adopted by Blackmun was that the clause has no application to a legal proceeding in which the government is no way a party. The dissent, authored by Justice SANDRA DAY O'CONNOR, would have found the clause applicable to punitive-damage awards and, hence, would have subjected such awards to a "proportionality" analysis that O'Connor drew from the case law under the Eighth Amendment's CRUEL AND UNUSUAL PUNISHMENT clause.

Although denying the relevance of the Eighth Amendment, the Browning-Ferris majority acknowledged that large punitive-damage awards might raise a problem of DUE PROCESS. A concurring opinion signed by Justices WILLIAM J. BRENNAN and THURGOOD MARSHALL emphasized the likely relevance of due process. Indeed, the majority and concurring opinions together suggest two different kinds of due process issues. One is an issue of SUBSTANTIVE DUE PROCESS : that due process might be violated by punitive-damage awards that are substantively excessive. The other issue relates to PROCEDURAL DUE PROCESS; here the concern is for the lack of clarity in the standards that the jury relies on in calculating the amount of punitive damages.

If the vagueness in the standards for calculating punitive damages raise a due process problem, a related problem concerns the amorphousness in the standards relied on in determining whether or not to award punitive damages. Moreover, there are further constitutional issues that punitive-damage practices might be thought to entail. If punitive damages are regarded as sufficiently penal to render at least somewhat relevant the BILL OF RIGHTS, then the "preponderance of the evidence" standard of proof that states have traditionally relied on in punitive-damage cases might be inadequate. (Indeed, as part of the tort-reform movement of the late 1980s, several states have raised the punitive-damage standard of proof to clear and convincing evidence.) In so-called "mass-tort" situations involving such products as asbestos and the Dalkon Shield, a large number of punitive-damage verdicts can be entered against a particular defendant on account of a single (although continuing) course of harm-causing conduct. At some point, the cumulation of these awards might suggest an issue of due process or DOUBLE JEOPARDY. Indeed, in early 1989, one federal district court judge did find a constitutional violation, although a lack of adequate precedent later persuaded him to withdraw most of his holding.

The Supreme Court further considered the procedural due process issues in Pacific Mutual Life Insurance Co. v. Haslip (1991). This case involved an $840,000 punitive damage verdict against an insurance company for the bad faith of its agent. The majority's opinion strongly suggested that a punitive damage award resulting from "unlimited jury discretion" would offend due process. The Haslip jury, however, had been given at least minimal standards; and its award had then been reviewed by both the trial judge and the Alabama Supreme Court, under rather elaborate procedures. This combination of protections enabled the Haslip majority to conclude that the "punitive damages award in this case" did not violate due process. The majority's case-specific reasoning effectively leaves open the due process status of a large intermediate range of punitive damage practices. Although the Court affirmed Alabama's "preponderance" standard of proof, even this affirmance was tied to Alabama's special set of procedures. And since evidence of defendant's wealth is inadmissible in Alabama punitive damage actions, the Court was in a position to conclude that Alabama procedures are not biased against "a defendant with a deep pocket."

Justices Anthony Kennedy and Antonin Scalia each wrote separate opinions in Haslip, concurring only in the majority's result. In their view, the long-standing historical acceptance of punitive damage practices all but eliminates the due process question. Justice Sandra Day O'Connor dissented, arguing that the limited standards applied by the Alabama jury were void for vagueness and also that the Alabama trial procedures entailed a due process violation. In her view, Alabama could satisfy constitutional requirements by allowing the jury to consider the seven substantive factors that the Alabama Supreme Court itself takes into account in the course of appellate review.