Compensatory Damage Awards Research Articles

Stigma against false confessors impacts post-exoneration financial compensation.

False confessors are stigmatized more than other exonerees. Traditional theories of stigma suggest that this difference may result from confessors being seen as more responsible for their own wrongful conviction. In the current study, we examined an important tangible consequence of stigma against false confessors-namely, that it might impede their ability to win financial restitution in post-exoneration civil lawsuits. Mock jurors (N=129), recruited online, read a case summary in which an exoneree is seeking damages after being wrongly convicted due to a false confession or eyewitness misidentification, which either did or did not result from police misconduct. When the exoneree falsely confessed in the absence of police misconduct, mock jurors rated him as most responsible for his own conviction and expressed the most doubt over his actual innocence. Contrary to legal criteria, they also awarded him smaller compensatory and punitive damage awards. Notably, the false confessor was seen as more responsible than the misidentified exoneree even if his interrogation was highly coercive. In turn, false confessors who were seen as more responsible received smaller damage awards. Implications for trial procedure and exoneree compensation are discussed.

Uncapping Compensation in the Gore Punitive Damage Analysis

BMW of North America, Inc. v. Gore rests, in part, on the “understandable relationship” between a civil jury’s award of compensatory and punitive damages. Gore identifies three guideposts to determine whether a jury’s award of punitive damages are excessive: (1) the degree of reprehensibility of defendant’s conduct; (2) the disparity between compensatory and the punitive damages; and (3) the difference between punitive damages and civil penalties authorized or imposed in comparable cases. This Article argues that Gore’s second guidepost is based on a false premise as it applies in States that have capped compensatory damage awards: that the plaintiff has been fully reimbursed for actual losses. This Article contributes to existing scholarship on state law compensatory damage caps and the Gore punitive damage analysis by identifying the defect the former produces in the latter. This Article maintains that capped compensatory damages in State law tort actions also caps the Gore punitive damage analysis. This Article advocates uncapping Gore where state procedures do not allow trial judges the opportunity to review a civil jury’s award for reasonableness, where the civil jury is not informed of the cap, or where the civil jury has no opportunity to reconsider an award that exceeds the cap. Without such protections, Gore fails its dual obligation in civil litigation to protect civil defendants against unreasonably high awards and guard severely injured plaintiffs against arbitrarily low awards.

Lochnerian Values, Mandatory Compensatory Damage Caps, and Lessons from the Sixth Amendment Jury Trial Clause

The Court’s recent punitive damage award jurisprudence finds its origin in Lochner v. New York’s guarantee of substantive due process protection for economic rights. This jurisprudence (1) establishes a reasonable review for punitive damage awards and (2) sets the disparity between punitive awards and compensatory awards for economic and noneconomic damage as the one of the starting points for determining whether the punitive award is reasonable. In so doing, the Court explicitly presumes the plaintiff has received full compensation for actual and concrete losses. This presumption is false as it applies to States that have imposed caps against compensatory damage awards in personal injury cases. Most caps were initially intended to reign in “excessive” civil jury verdicts, which had allegedly caused “skyrocketing” medical malpractice insurance premiums and litigation costs. But no cap is triggered by a preliminary finding of excessiveness. Moreover, trial judges are stripped of authority to determine whether application of the cap is just or fair to the (often) severely injury plaintiff. Unlike most works on this subject, this Article investigates the impact of compensatory damage caps on the Court’s reasonable review of punitive damage awards. This Article discusses state laws that mandate fixed or capped damage awards in medical malpractice and other tort cases. This Article also discusses the State Supreme Court split on whether compensatory damages caps encroach upon state civil jury trial rights, which like their federal counterpart find their interpretative basis in the English common law. All States recognize the historic origin of the civil jury trial right. Yet even among States with identical civil jury trial clauses an analysis of State Supreme Court jurisprudence leads to a stalemate about the nature and scope of the right to a civil jury. State Supreme Courts also conflict on whether legislative authority exists to alter a jury’s determination of the value of an injury in common law cases. This Article offers a novel approach to compensatory damage caps by turning to the Sixth Amendment Criminal Jury Trial Clause, which has recently questioned whether legislative authority exists to remove the jury from the sentencing process. This jurisprudence offers three lessons about jury trial rights: first, modern procedures cannot significantly alter certain common law characteristics of the jury trial right; second, mandatory removal of the jury as the primary fact-finder was not authorized in common law cases; and third, a common law jury’s factual determinations were fully enforceable unless exceptional circumstances were presented. This Article concludes by applying these lessons to compensatory damage caps. This Article urges adoption of cap alternatives that encourage individual review upon necessity. Such alternatives should also advance the States’ dual interests to protect both civilly liable defendants from unreasonably high awards and severely injured plaintiffs from unreasonably low awards.

Punitive Damages Revisited: A Statistical Analysis of How Federal Circuit Courts Decide the Constitutionality of Such Awards

Using the data of punitive damages decisions of U.S. federal circuit courts from 2004 to 2012, this paper attempts to establish empirically the following. (1) There is no apparent statistical difference between the levels of jury and judge awards. (2) U.S. Supreme Court decisions such as Philip Morris (2007) or Exxon (2008) do not actually or substantially affect the level of punitive damage awards. (3) With regard to the cases involving remittitur or reduction of awards, the Exxon decision did not radically affect the decreasing ratio of punitive to compensatory damage awards. (4) As the levels of compensatory awards go up, the ratio becomes strikingly low and stable. (5) Finally, the proportionality between punitive and compensatory awards is not the key factor that influences upper court judges when they consider the constitutionality of punitive damages. Unexplained portions of the relationship between the amount of punitive damages and the wealth of a defendant remain to be examined further.

Compensatory Damage Awards for Nonphysical Personal Injuries: The Murphy Pendulum

The Murphy case involves the question of whether compensatory damage awards received for nonphysical personal injury are subject to the federal income tax. Such awards had been excluded from a taxpayer's gross income since 1918, but in 1996, Congress amended I.R.C. Sec. 104(a)(2) with the intention of taxing these awards. The taxpayer (Murphy) received an award for nonphysical personal injuries after the 1996 amendment and has argued in three judicial proceedings that, despite the amendment, her award is not taxable. This paper traces the path of the Murphy case through the IRS and the courts, discusses the income tax issues raised in the various forums, and makes recommendations to clarify and improve the federal income tax treatment of compensatory damages for nonphysical personal injury.

Matters of Life and Death: Justice in Judgments of Wrongful Death1

Two experiments investigated the influence of social categories on mock juror judgments of wrongful death compensatory damages. The research also examined whether these cues—decedent race, parental status, age, and socioeconomic status—differentially affected noneconomic and economic awards and, further, the extent to which jurors' distributive justice concerns could explain the findings. Results revealed a decedent's parental status to consistently impact noneconomic awards; whereas his parental status, age, and socioeconomic status all consistently affected economic awards. Decedent race did not inform participants' judgments. These results were in close alignment with the values participants expressed (Study 2) regarding the use of social categories in compensatory damage awards. Overall, the pattern of findings supports a distributive justice account.

The Fungibility of Damage Awards: Punitive Damage Caps and Substitution

Conventional wisdom suggests that punitive damages are growing out of control. To stop juries from awarding blockbuster punitive damages, a number of states have passed caps to set a ceiling on the amount of punitives. In principle, if plaintiffs' attorneys and/or juries wish to circumvent such caps, they could simply increase the amount of compensatory damages awarded. To investigate this possibility, we examine data from the Civil Justice Surveys performed by the National Center for State Courts and present evidence in both difference-in-difference and triple differences frameworks that punitive damage caps are associated with an increase in compensatory damage awards. These results suggest that caps alone are a poor way to constrain damage awards.

The Fungibility of Damage Awards

Conventional wisdom suggests that punitive damages are growing out of control. To stop juries from awarding blockbuster punitive damages, a number of states have passed caps to set a ceiling on the amount of punitives. In principle, if plaintiffs' attorneys and/or juries wish to circumvent such caps, they could simply increase the amount of compensatory damages awarded. To investigate this possibility, we examine data from the Civil Justice Surveys performed by the National Center for State Courts and demonstrate, in a triple differences framework, that punitive damage caps are associated with a statistically significant increase in compensatory damage awards. This effect is robust to using various contemporaneous within-state counterfactual controls. These results suggest that caps alone are a poor way to constrain damage awards.

Separating Compensatory and Punitive Damage Award Decisions by Trial Bifurcation.

In a simulated products liability trial, we tested the effects of bifurcating decisions regarding compensatory and punitive damage awards. Fifty-nine groups of 5-7 jurors heard evidence in a unitary or bifurcated format, deliberated about the case to a unanimous decision, and awarded damages. Trial bifurcation decreased variability in compensatory damage awards across juries hearing the same case, and also decreased the tendency for juries to award extremely high compensatory damages. In addition, deliberation led to lower compensatory awards in the low injury severity condition and higher awards in the high injury severity condition. Jurors reported that they were using evidence more appropriately when the decisions were bifurcated. Implications of evidence bifurcation in civil trials are discussed.

The Influence of Client Importance on Juror Evaluations of Auditor Liability

This study examines whether client importance affects jurors' evaluations of auditors. Specifically, we examine whether client importance is significantly related to juror evaluations of responsibility and blame as well as auditor liability and damage awards. The results indicate that when an auditor is involved in litigation associated with an audit client that is financially more important to the auditor, participants evaluated the auditor as less objective, more blameworthy, and more deserving of punishment. Client importance is also found to significantly affect jurors' liability assessments. Further analysis indicates the effects of client importance on liability assessments can be attributed to independence perceptions. Despite these differences, results indicate only a marginally significant influence of client importance on punitive damage awards and no influence on compensatory damage awards.

Application for Leave to Appeal: Charter Committee on Poverty Issues in Council of Canadians et al. v. Canada (Supreme Court of Canada)

This case concerns whether the investor- state adjudicative regime established by Chapter 11 of the North American Free Trade Agreement (“NAFTA”) respects the requirements of the Canadian Charter of Rights and Freedoms and the principle of constitutionalism. It raises the critical and unresolved question of whether the Charter requires the government to ensure that Charter rights are protected when it negotiates and implements new adjudication regimes under international agreements which impact on Charter rights. Though NAFTA tribunals cannot be expected to incorporate the Charter in their decision-making, the Executive action of negotiating the terms of treaties and international agreements is subject to judicial review for accordance with the Constitution. The present argument is not premature for lack of showing that a particular Chapter 11 tribunal decision impairs the constitutional or Charter rights of any individual Canadian. CCPI argues that the Chapter 11 adjudicative regime itself fails to respect the requirements of sections 7 and 15, by failing to ensure that Charter rights and values are adequately considered and protected. Investor-state adjudication frequently engages issues related to personal security or health, which have not been excluded from the scope of section 7. The threat of adjudication significantly affects government policy. Investor-state tribunals do not have the authority or competence to consider how their adjudication may impact section 7 interests. The Court has recognized in the Charter context that monetary awards and settlements against governments for public policy undertaken in good faith can interfere with the efficient functioning of government and reduce governments’ ability to provide social and health programs and services. Investor-state tribunals are under no obligation to consider or balance competing social interests in granting compensatory damage awards, even when Charter interests such as the right to health are engaged. Delegation of such unconstrained adjudicative authority to investor-state tribunals without ensuring that the rights to life, liberty and security of the person will be adequately protected amounts to a violation of section 7. The violation is not in accordance with the principles of fundamental justice, as the adjudication process has not been crafted to ensure that domestic and international human rights are taken into account in investor-state adjudication. NAFTA Chapter 11 does not meet the basic procedural requirements of fundamental justice, as individual Canadians whose rights are affected do not have as-of-right standing in investor-state disputes. Section 1 serves as an important balance between all the rights at stake. A NAFTA Chapter 11 challenge allows for no such balancing. The NAFTA Chapter 11 regime cannot be justified under the Oakes test. If the goal of promoting foreign investment in Canada and protecting Canadian investment elsewhere is deemed sufficiently important, there is no connection between levels of foreign direct investment and the existence of investor-state dispute procedures. CCPI submits that the Supreme Court should issue a delayed declaration of invalidity.

The Effects of Defendant Profit Information on Compensatory and Punitive Damage Awards in Civil Litigation

Three experiments were conducted in order to examine the effects of defendant wealth on civil litigation damage award decisions. Wealth was manipulated in each experiment by presenting participants with either high or low company profit information for that year. All participants read three trial scenarios in which the defendant Manufacturer was found responsible for the plaintiffs injuries. Fifty-two participants awarded economic damages in the first experiment. Contrary to law, profit information influenced the economic awards, such that high profits resulted in significantly higher award amounts and award variances. In the second experiment, 50 participants awarded pain and suffering awards. These awards were not influenced by profit information. The final experiment (n=55) involved punitive damage awards. Higher profits increased both the magnitude and variability of punitive awards.

Punitive damage decision making: the decisions of citizens and trial court judges.

Some states have allocated the authority to determine the amount of punitive damages to judges rather than to juries. This study explored the determination of damages by jury-eligible citizens and trial court judges. The punitive damage awards of both groups were of similar magnitude and variability. The compensatory damages ofjurors were marginally lower but, in some conditions, were more variable than the compensatory damage awards of judges. Both groups appropriately utilized information about both the actual and potential severity of the harm to the plaintiff in determining punitive damages and used only the actual severity of the injury in determining compensatory damages. The punitive damage awards of both groups were influenced by the wealth of the defendant, but the compensatory damage awards of judges were marginally more influenced by defendant wealth than those of citizens. The results are discussed in the context of proposals for punitive damages reform.

Plaintiff injury and defendant reprehensibility: Implications for compensatory and punitive damage awards.

A criticism of the civil jury is that jurors' decisions about damages are capricious and arbitrary. In particular, critics point to the skyrocketing nature of punitive damage assessments as evidence of a system run amok. The purpose of this study was to examine the factors that influence jurors' decisions about compensatory and punitive awards. We assess whether, as the law intends, jurors' decisions about compensation are influenced by the severity of the plaintiff's injury but not by the reprehensibility of the defendant's conduct, and whether assessments of punitive damages are related to the defendant's conduct but not to the plaintiff's injury. Across three cases, mock jurors generally utilized relevant information and ignored irrelevant factors in their decisions about damages. Results are discussed in terms of the extent to which juror decision making comports with legal doctrine.

The Tort Remedy in Search and Seizure Cases: A Case Study in Juror Decision Making

Civil suits for damage awards against police officers alleged to have engaged in illegal searches have long been suggested as an alternative to the exclusionary rule as a remedy for police misconduct. A review of empirical literature on the incidence and outcomes of such suits suggests that defendant officers often prevail and that the awards do not seem large enough to produce the punishment and deterrence effect often claimed by proponents of the tort remedy. Using an experimental technique involving simulated trials and adults called for jury service as subjects, we examine the effects of two procedural aspects of such suits on juror awards. The extent of municipal liability and the substitution of the U.S. government as plaintiff do not appear to affect the incidence or size of compensatory or punitive damage awards. Denying jurors information about the outcome of the search does appear likely to increase damage awards. The article both explores factors affecting juror decision-making in these cases and illustrates the utility and limitations of the experimental method for testing suggested policy innovations.

The Tort Remedy in Search and Seizure Cases: A Case Study in Juror Decision Making

Civil suits for damage awards against police officers alleged to have engaged in illegal searches have long been suggested as an alternative to the exclusionary rule as a remedy for police misconduct. A review of empirical literature on the incidence and outcomes of such suits suggests that defendant officers often prevail and that the awards do not seem large enough to produce the punishment and deterrence effect often claimed by proponents of the tort remedy. Using an experimental technique involving simulated trials and adults called for jury service as subjects, we examine the effects of two procedural aspects of such suits on juror awards. The extent of municipal liability and the substitution of the U.S. government as plaintiff do not appear to affect the incidence or size of compensatory or punitive damage awards. Denying jurors information about the outcome of the search does appear likely to increase damage awards. The article both explores factors affecting juror decision-making in these cases and illustrates the utility and limitations of the experimental method for testing suggested policy innovations.