The Exxon Valdez Case and Regularizing Punishment

JurisdictionUnited States,Federal
Publication year2009
CitationVol. 26

§ 26 Alaska L. Rev.1. THE EXXON VALDEZ CASE AND REGULARIZING PUNISHMENT

Alaska Law Review
Volume 26, No. 1, June 2009
Cited: 26 Alaska L. Rev. 1


The Exxon Valdez Case and Regularizing Punishment


Jeffrey L. Fisher [*]


ABSTRACT

In this Article, the Author discusses the implications of the Supreme Court's recent decision in Exxon Shipping Co. v. Baker for the Court's ongoing punitive damages jurisprudence, as well as for the Constitution's regulation of punishment more generally. The Exxon decision reveals that, notwithstanding modern rhetoric decrying supposedly "skyrocketing" punitive damages awards, the Court is troubled by the common law system of awarding punitive damages not so much because of the size of awards it allows as because of such awards' perceived unpredictability. From this insight, the Author argues that the Court's concerns about large punitive damage awards are therefore essentially procedural, not substantive, in nature. That is, the Court's current concerns over punitive damages mirror criticisms levied a generation ago against systems of criminal sentencing that generated vast and unjustified disparities in punishment. The constitutional imperative, now as then, is to regularize punishment. But that is all, the Author contends, that the Constitution really requires: once legislatures step into the breach and set to regulating punitive damages, the Court should defer to legislatures' policy goals and chosen means of effectuating them. In particular, if a legislature decides to gives its democratic imprimatur to large punitive awards, the Court should accede to such determinations in the same way it regularly accedes to legislative determinations dictating exceptionally severe criminal punishment.

TABLE OF CONTENTS

INTRODUCTION........................................................ 2

I. LEGAL ORIGINS OF, AND MODERN RESTRICTIONS ON, PUNITIVE DAMAGES.............................. 8

A. Background....................... 8

B. The Supreme Court's Development of Restrictions on Punitive Awards............................. 10

II. THE EXXON CASE............ 13

III. COMPARING PUNITIVE DAMAGES TO CRIMINAL SENTENCING........................................ 16

A. Sentencing Guidelines....................... 17

B. Modern Capital Punishment Law.......................................... 20

IV. THE IMPLICATIONS OF CONSTITUTIONALLY REGULARIZING PUNISHMENT.................................. 24

A. Punitive Damages...............................25

1. Encouraging Democratic Development of Law............................... 26

2. Pursuing Varied State Interests................................. 30

3. Establishing Maximum Punishments......................................35

B. Criminal Sentencing....................................................................43

CONCLUSION.......................................................... 46

INTRODUCTION

At last, we arrive at the root of the problem.

We have known for roughly two decades that the Supreme Court is troubled by the modern, common-law system of awarding punitive damages. [1] After grumbling about increasingly large punitive awards in the late 1980s and early 1990s, the Court has invoked the Due Process Clause in four cases over the past twelve years to strike down a series of multi-million dollar awards. [2] But the Court has been rather imprecise about what exactly is problematic about the common-law system for awarding punitive damages. At times, the Court has described unconstitutional awards as "grossly excessive," [3] or disproportionate, with respect to the defendant's conduct. [4] At others, it has derided punitive awards as "arbitrary" [5] and faulted the "imprecise" and "discretion[ary]" manner [6] in which they were administered. [7] In other words, the Court has vacillated concerning the basic issue of whether the problem plaguing the common-law system of awarding punitive damages is substantive or procedural in nature (or some combination of both).

The stakes of this conceptualization are high. If the problem with the modern system of awarding punitive damages is a substantive one, then the Court's holdings mean that the Due Process Clause in any given case flatly forbids a jury from imposing punitive damages above a given level-apparently some low-level multiple of the underlying compensatory damages-no matter how much notice the defendant received that a bigger award was possible or how fair the trial was. But if the problem with the modern system of awarding punitive damages is essentially a procedural one, then the Court's holdings mean that legislatures and courts could allow punitive damages far in excess of low-single-digit ratios so long as the governing law provides fair notice, the court gives clear jury instructions, and related rules of fair play are followed.

The Supreme Court's decision to review the $5 billion punitive damages award arising from the notorious Exxon Valdez oil spill- reduced to $2.5 billion by the Ninth Circuit-offered the prospect that the Court would finally pin down the conceptual basis for exerting serious appellate review over punitive damages. Exxon's challenge to the award, which was roughly five times the plaintiffs' compensatory recoveries, was largely substantive in nature. [8] And the trial in the case had been managed to avoid various procedural pitfalls: the trial court created a "mandatory punitive damages class" to avoid the prospect of double punishment; the trial court made sure that the jury did not hear any evidence concerning Exxon's actions in other jurisdictions or respecting anyone besides the plaintiff class; and the trial court gave the jury "unusually detailed" instructions to guide the jury's discretion in calibrating any punitive award to what it determined to be the nature of Exxon's wrongdoing. [9] Finally, there was reason to expect a clear theoretical explication from the Supreme Court because the case was grounded in maritime law-a form of federal common law. This legal framework rendered the Supreme Court more free than in purely constitutional cases arising from state-court judgments to reveal and to implement its own policy preferences concerning "the desirability of regulating [punitive damages] as a common law remedy." [10]

The result in Exxon seems to reinforce the prevailing view that the Court's punitive damages jurisprudence has a robust substantive component. [11] The Court reduced the award from roughly $2.5 billion to $500 million, or from a five-to-one ratio to compensatory damages to a one-to-one ratio. [12] The business bar already is propounding the decision as a substantive decision, suggesting that the Constitution limits punitive awards to a one-to-one ratio of compensatory damages, at least when such damages are substantial and the conduct giving rise to the award is something short of extraordinarily reprehensible. [13]

The Court's opinion, however, reveals that its concerns with punitive awards are far less substantive than the result would suggest. "The real problem," the Court said, "is the stark unpredictability of punitive awards." [14] The "spread between high and low individual awards," the Court continued, "is unacceptable." [15] So in the absence of any statutory framework governing the size of maritime punitive awards, the Court felt entitled to establish a presumptive cap on awards that was just above the average amount awarded by juries in tort cases involving similar misconduct. [16]

The Court's emphasis on unpredictability-rather than its dramatic one-to-one remedy-finally reveals the Court's true source of unease with the modern system of awarding punitive damages. In a nutshell, this Article contends, the Court perceives the common-law system of imposing civil punishment as mirroring two historically erratic systems of imposing criminal punishment. The Court expressly referred to one such system: the sentencing system for noncapital felonies that prevailed in federal courts before the advent of the Federal Sentencing Guidelines. [17] Under that system, judges had unfettered discretion to choose sentences within enormous ranges. [18] Judges, as a functional matter, could follow any theory of punishment they desired, and they could rely on any factors they wished in selecting sentences. [19] Consequently, a defendant who came up for sentencing had "no way of knowing or reliably predicting whether he [would] walk out of the courtroom on probation, or be locked up for a term of years that may consume the rest of his life, or something in between." [20]

The second system-unmentioned by the Court, but seemingly equally if not more salient-is the system of capital punishment that existed in the states prior to the Supreme Court's decision in Furman v. Georgia. [21] Under that system, every defendant convicted of murder or another capital offense was subject to the death penalty. Yet state law gave juries no rules or even guidance toward determining which offenders should be sentenced to death. As a result, capital punishment was arbitrarily imposed on an unlucky-rather than a necessarily more reprehensible-slice of the class of eligible offenders. [22]

The Court's treating the common law system of awarding punitive damages as equivalent to unstructured systems of imposing criminal punishment reveals that its recent invocation of due process principles to invalidate punitive awards is, at once...

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