Constitutional Limits on Punitive Damages: An Evaluation of the Role of Economic Theory in Prescribing Constitutional Constraints on Punitive Damage Awards

November 16, 2009

Dorothy Henderson Shapiro

Over the last fifteen years, the Supreme Court has formulated new constitutional principles to constrain punitive damages awards imposed by state courts, invoking its authority under the Due Process Clause of the Fourteenth Amendment. This intervention has been controversial from the start, generating dissents from several Justices asserting that the actions of the Court are unwarranted and amount to unjustified judicial activism. Over the ensuing years lower courts and commentators have criticized the Court’s prescription of procedural and substantive limitations, finding them to be vague and unnecessarily restrictive of state common law prerogatives. Some observers with an economic orientation have entered the debate, motivated by runaway punitive damage awards in some states. Their core premise is that actual damages alone are sufficient in most tort cases, and that adding punishment on top of compensation creates inefficient incentives to adopt unnecessary precautions against negligent or reckless harm...

Constitutional Limits on Punitive Damages: An Evaluation of the Role of Economic Theory in Prescribing Constitutional Constraints on Punitive Damage Awards