Two wrongs do not make a right: reconsidering the application of comparative fault to punitive damage awards.

AuthorSchwartz, Victor E.
  1. INTRODUCTION

    Every once in awhile a legal topic of great importance falls through the cracks of thoughtful case law discussion and scholarly literature, seemingly lost in the seismic shift of a major change in law. When legislatures and courts transitioned en masse, beginning in the 1960s, to comparative fault regimes in order to more precisely compensate injured parties and allocate responsibility for a harm, one such casualty was how that shift in law would affect the imposition of punitive damages. (1) This intersection between comparative fault principles and punitive damages received relatively sparse attention, in part, because the law of punitive damages was also in a very different place at the time. (2) In the mid-twentieth century, awards of punitive damages were both infrequent in occurrence and generally modest in amount. (3) In certain contexts where a harm had not been committed intentionally, such as in products liability or professional malpractice, these awards would have been "unthinkable." (4) Courts, therefore, had little occasion to focus on whether and how their state's newly adopted comparative fault system would affect an award of punitive damages. (5) State legislature's enacting comparative fault systems also glossed-over this issue, if it was even identified as an issue at all. (6)

    The result of this early oversight is that the intersection of comparative fault and punitive damages has, for decades, not received its due attention. Courts have generally, and almost mechanically, not permitted any adjustment of punitive damages based on the comparative fault of another. (7) When courts have considered this specific issue, they have often provided little analysis, deferring to the "way it has always been" under contributory negligence where the prevailing party received the entire punitive damage award. (8) But this "all or nothing" approach is precisely why a contributory negligence system no longer exists in the vast majority of states; it risks unfairness to parties on either side--i.e. plaintiffs may receive too much or nothing at all from a defendant for their injury and defendants may pay too much or nothing at all for harm they have caused. (9)

    The purpose of this Article is to reexamine and appropriately analyze the application of comparative fault to punitive damages. The Article challenges the conventional wisdom that these spheres of law should remain separate. Part II begins with an overview of the development of the law of comparative fault with punitive damages. It discusses the limited attention that has been paid to potential overlap in these areas of law and draws parallels with other developments in the law of comparative fault supporting more accurate and just awards of damages. Part III analyzes the public policy arguments for and against applying comparative fault principles to punitive damage awards. Finally, Part IV proposes practical methods of incorporating comparative fault principles into awards of punitive damages to provide more just awards.

    The Article concludes that where punitive damages are awarded, and especially where they are based upon unintentional conduct, comparative fault principles should apply in jurisdictions that have legislatively or judicially adopted such a system. The Article identifies and endorses several ways courts could implement such an approach. While courts have traditionally not been receptive to the idea of applying comparative fault to punitive awards the same way as with economic and noneconomic awards, this Article examines how the same fairness considerations apply.

  2. JUDICIAL APPLICATION OF COMPARATIVE FAULT WITH PUNITIVE DAMAGE AWARDS

    1. Existing Legal Landscape

      Courts have paid relatively scarce attention to whether comparative fault principles may apply to reduce an award of punitive damages. (10) A recurring observation of the few courts and legal commentators that have reviewed this area of law is that "[c]ommentary on this subject is limited." (11) Where specifically addressed in judicial decisions, the analysis has been equally limited. (12) Courts often have dispensed with the notion of applying comparative fault to reduce a punitive award through nothing more than a sentence restating the general proposition that it ought not to be done. (13)

      Even in those decisions giving greater attention to this question, the conclusion has frequently been based on the generalized notion that because punitive damages serve a different purpose from compensatory damages--punishment and deterrence as opposed to compensating for a harm (14)--their treatment under comparative fault principles must necessarily be separate. (15) Accordingly, the majority of courts that have considered, at any level of analysis, the application of comparative fault principles to punitive damage awards have declined to recognize an intersection between the two areas of law. (16)

      The precise means by which courts have rejected such apportionment of fault have varied. (17) For instance, some courts have not focused specifically on applying comparative fault principles to punitive damages, but rather whether a state's comparative negligence statute applies to intentional acts for which punitive recovery could be implicated. (18) Punitive damages, however, may be awarded for more than just intentional acts, which strains these courts' analyses. Punitive damages are sometimes available where an intentional act has been committed, but may also be available in cases of negligence (often as a "gross negligence" standard) or recklessness. (19) Never the less, some courts have used the application of comparative fault principles to intentional acts as the predicate for broadly rejecting comparative fault where punitive damages could be at issue in contexts involving unintentional acts.

      For example, the New Jersey Supreme Court, in Blazovic v. Andrich, (20) held that although the state's Comparative Negligence Act extends beyond ordinary negligence actions to include intentional torts, it does not apply to allow comparative fault apportionment of punitive damages for any type of act. (21) Interestingly, the court rejected "the concept that intentional conduct is 'different in kind' from both negligence and wanton and willful conduct" for the purpose of applying apportionment principles, reasoning that "consistent with the evolution of comparative negligence and joint-tortfeasor liability in this state, we hold that responsibility for a plaintiffs claimed injury is to be apportioned according to each party's relative degree of fault, including the fault attributable to an intentional tortfeasor." (22) But, the court continued, "[w]here tortious conduct merits punitive as well as compensatory damages, a plaintiffs comparative fault will reduce recovery only of compensatory damages." (23) Thus, the court adopted the unique position of permitting apportionment of compensatory damages for intentional torts, yet denying apportionment from ever applying to reduce an award of punitive damages, even if pursuant to a less culpable unintended act. (24)

      Other courts have more directly addressed the application of comparative fault principles to punitive damages. Instead of distinguishing intentional acts from the scope of comparative negligence statutes, these courts have looked to the specific purpose of punitive damages as compared with compensatory damages. For example, the Iowa Supreme Court, in Godberson v. Miller (25) interpreted the state's statutory comparative fault scheme to find that punitive damages were not subject to comparative fault because "punitive damages are designed to exact a penalty from the defendant for conduct that is grossly negligent, wanton, willful or reckless." (26) Here, the defendant argued that the comparative fault statute's definition of "fault" as an act "in any measure negligent or reckless" should apply to punitive damages arising from such conduct. (27) While the court noted that the defendant's argument "carries a certain technical appeal," it nevertheless reasoned that "[p]unishment, not compensation, is the goal" of punitive damages and the goal of the statute was "proportional compensation, not punishment." (28)

      The Kansas Supreme Court reached a similar result in Bowman v. Doherty. (29) Here, the court declined to reduce a $900 punitive damage award resulting from legal malpractice after the trial court reduced the actual compensatory award of $100 by half to account for the plaintiffs negligence (30%) and that of an assistant district attorney (20%). (30) The result, therefore, was that the ratio of punitive damages to compensatory damages owed by the defendant went from nine-to-one to eighteen-to-one following the application of comparative fault to only the compensatory award. (31) The court explained its decision not to apply comparative fault to the punitive award because "[a]n award of punitive damages is to punish the wrongdoer, not to compensate for the wrong." (32) The court reasoned that because these "[considerations are different," it therefore followed that "[p]unitive damages and comparative fault are separate" and do not intersect. (33)

      The majority of other courts specifically deciding whether comparative fault principles may apply to a punitive damage award have adhered to this same basic rationale. (34) Some other courts, however, have expressly declined to decide this issue so as to avoid the risk of painting with too broad of a brushstroke. (35) Still others have declined to address the issue because the parties failed to identify that it was an issue to be considered. (36)

      On the opposite end of the spectrum are a handful of cases that have applied comparative fault principles to reduce a punitive damages award. (37) Significantly, this body of case law has supported the intersection of comparative fault with punitive damages under both common law and a state's statutory comparative fault...

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