Reconciling punitive damages with tort law's normative framework.

• Author: Nezar, Amir

INTRODUCTION I. THE CONFLICT BETWEEN CORRECTIVE JUSTICE AND ECONOMICS A. Corrective Justice Versus Economic Analysis of Tort Law B. The Corrective Justice Alternative II. CORRECTIVE JUSTICE AND INSTRUMENTAL ACCOUNTS OF PUNITIVE DAMAGES A. The Tension Between Corrective Justice and Punitive Damages B. Punitive Damages and the Economic Deterrence Explanation C. The Retributive Idea of Punitive Damages D. The General Instrumental Nature and Consequences of Economic and Retributive Theories III. PROBLEMS CREATED BY INSTRUMENTAL THEORIES A. Gore's Rationale for How To Measure Punitive Damages B. Three Problems 1. The Definitional Problem 2. Deterrence and the Horizontal Equity Problem 3. The Lottery Problem C. The Normative Disjoint Between Punitive Damages and Tort Law Creates a Mess IV. RECONCILIATION AND JUSTIFICATION THROUGH THE MORAL ACCOUNTING INTEREST A. A Brief Recap of the Deficiency That Needs Answering B. Answering the Deficiency 1. The Terms of the Discussion 2. The Argument for the Moral Accounting Interest 3. The Moral Accounting Interest Versus the Graft Defense 4. The Potency of a Unified Theory Without Normative Disjoint C. Some Final Distinctions and a General Point V. APPLYING THE UNIFIED ACCOUNT A. Addressing the Three Problems 1. The Definitional Problem 2. The Lottery Problem and the Horizontal Equity Problem B. Other Benefits CONCLUSION INTRODUCTION

Punitive damages have long been a controversial area of tort law. (1) But they have gained a new degree of jurisprudential visibility following the Supreme Court's recent string of decisions addressing their constitutional status. (2) While these decisions have struggled to provide doctrinal clarity and have been marked by strong disagreement within the Court, (3) one powerful theme has emerged: the need for coherent legal principles for applying punitive damages. (4)

For someone who endorses a corrective justice theory of tort law, as I do, this appeal for guiding legal principles presents a golden opportunity for corrective justice to demonstrate its practical value in legal decisionmaking. Unfortunately, despite its influence, corrective justice has never quite squared its theory of the normative structure of tort law with punitive damages. As such, it does not appear capable of offering the principled guidance for which punitive damages jurisprudence calls out.

In this Note I respond to that deficiency, but to do so I must reconcile corrective justice with punitive damages. To effect this reconciliation I present a novel concept for understanding punitive damages and tort law generally: what I call the "moral accounting interest" of tort law. Tort law's moral accounting interest describes (1) tort law's capacity and reasons for distinguishing wrongful losses from the morally harmful manner in which they are inflicted, and (2) tort law's recognition that granting a plaintiff a complete accounting for her injury depends on recognizing moral harms as additional to but normatively distinct from wrongful losses. (5)

The moral accounting interest explains and justifies punitive damages in a way that enriches corrective justice theory. Corrective justice theory explains liability as a mechanism for making defendants accountable to plaintiffs for wrongful losses. Tort law's moral accounting interest adds the principle that full accountability requires considering the entire and distinct circumstances of the wrongful loss--including the morally harmful manner of its infliction. The moral accounting interest explains our intuition that intentionally or recklessly caused losses are worse than negligently caused losses. Punitive damages, on this view, account for the additional moral harm caused by intentional or reckless conduct that violates the plaintiff's entitlement to be treated with moral respect.

This Note makes a concerted effort to explain the distinctive character of punitive damages within tort law itself. By contrast, recent writings on the topic have simply asserted (often without support) that the best justification for punitive damages is generally deterrence or punishment. (6) I argue that this approach is mistaken. Moreover, my approach differs substantially from that of other tort theorists by applying theory to actual judicial considerations. I take this approach to deflect the common criticism of tort theorists that they are unhelpfully abstract. (7)

To frame this discussion within the broader theoretical debates over tort law, I present a brief outline of the conflict between corrective justice and economic theories of tort law in Part I. I compare these approaches' competing analyses and their explanations of tort law generally, as they inform the debate on punitive damages as well. I endorse corrective justice as the better approach.

Having developed this context, in Part II, I discuss how corrective justice has failed to explain or justify punitive damages in the way that it has explained and justified the general normative framework of tort law. As a result, one may be tempted to look to economic or retributive theories for an instrumentalist explanation of punitive damages. I recapitulate instrumentalist justifications for punitive damages before arguing that these accounts put punitive damages at odds with tort law's basic normative structure. I describe the tension as being one of "normative disjoint" between instrumental accounts and tort law's ordinary structure.

In Part III, I present the problems that spring from this normative disjoint in the context of the paradigmatic Supreme Court case, BMW of North America, Inc. v. Gore. (8) I pinpoint three specific problems created by instrumental accounts: the "definitional problem," the "horizontal equity problem," and the "lottery problem." Solving these problems requires an account of punitive damages that is harmonized with tort law's normative structure.

I develop that account in Part W, in the form of tort law's moral accounting interest. I show how this interest flows from tort law's structural concern with relational duties and with remedies for their violations. Most importantly, I demonstrate how this account explains punitive damages as a function of tort law's institutional interest in allowing plaintiffs to demand full accountability from defendants for plaintiffs' injuries. Combining this interest with corrective justice's enforcement framework, I show how these ideas form a rich symbiotic relationship that defines both the conditions for and the full scope of accountability.

Finally, in Part V, I apply my principled account to the jurisprudential concerns in Gore. I show that the moral accounting interest provides pragmatic guidance for understanding and applying punitive damages. This coherent normative framework solves the problems I discuss in Part III, succeeding where instrumental approaches to punitive damages fail in Gore and elsewhere.

1. THE CONFLICT BETWEEN CORRECTIVE JUSTICE AND ECONOMICS

   Since my argument for tort Jaw's moral accounting interest incorporates an endorsement of corrective justice theory (9) over economic theories of tort law, (10) I begin with some background on the conflict between these two approaches.

   1. Corrective Justice Versus Economic Analysis of Tort Law

      Economic analysis of tort law and corrective justice currently stand as arguably the most important competing theories attempting to explain and justify tort law. (11) Generally, those whom I call "legal economists" advance a form of economic theory that views tort law in instrumental terms. (12) For them, tort law is a tool of social management, (13) usually for the sake of advancing goals of efficiency and of maximization of social welfare. (14) In their view, tort law (and law generally) is best understood as obeying and instantiating economic principles that further these goals,is For example, Guido Calabresi and A. Douglas Melamed developed a framework for understanding property rules and liability rules according to the Coasean transaction costs (16) that attend the transfer of rights in goods. (17) William Landes and Richard Posner helped expand upon the familiar idea that tort law assigns responsibility for an injury to the cheaper cost avoider, (18) within a broader framework geared toward minimizing the costs of accidents. (19) And legal economists generally argue that tort law plaintiffs act as "private attorneys general" who ensure economically efficient behavior. (20) To paraphrase Oliver Wendell Holmes, Jr., for the legal economist the life of the law is not logic, it is economics. (21)

      Corrective justice theorists such as Jules Coleman have vigorously contested this picture, arguing that these economic theories do not fit the actual practice of tort law. (22) They begin with what is known as the "bilateralism" critique. (23) This critique points out that tort law makes an injurer directly accountable to the person she injured through the mechanism of liability. By contrast, the economic approach to tort law necessarily implies that each party is accountable not to the other, but to overall social norms of efficiency and accident avoidance. (24) The corrective justice theorist contends that any approach that does not explain the basic analytical link between plaintiffs and defendants cannot coherently explain tort law. (25)

      An economist may respond that this supposed relationship between wrongful injurers and victims does not really exist, for when we say "wrongful injurer," what we really mean is "least cost avoider," even though we use the term "wrongful injurer" in practice. (26) But one cannot purport to explain "legal practice as [one] finds it" by "treat[ing] legal concepts as if they could be remade at will in the light of one's preferred normative theory." (27) This move "finds the practice void of content and constraint, remakes it in economic terms, and then quite unsurprisingly provides an economic analysis of it." (28)

   2. The Corrective...