The Food-Chain Issue for Corporate Punishment: What Criminal Law and Punitive Damages Can Learn from Each Other

March 20, 2008

Christopher R. Green

At the end of this month, the Supreme Court will hear arguments in Exxon v. Baker concerning a $2.5 billion punitive award against Exxon for the 1989 Exxon Valdez oil spill. The first question asks when, under federal admiralty law, a corporation may be punished for the actions of its agents. The Ninth Circuit affirmed liability for punitive damages under circuit precedent, following the Restatements of Torts and Agency, allowing corporate punitive damages if a misbehaving agent is “employed in a managerial capacity and acting in the scope of employment.” Exxon v. Baker presents the Supreme Court with the food-chain question for corporate punishment: how high in the corporate hierarchy must misbehavior go before the corporation itself may be punished? Every American jurisdiction allows corporations to be punished with criminal liability and with some form of punitive damages. In both criminal law and the law of punitive damages, there is persistent division about the food-chain question. However, the fields develop with virtually no contact from one to the other, and the rules states adopt in each field have no correlation with the rules they adopt in the other....

The Food-Chain Issue for Corporate Punishment: What Criminal Law and Punitive Damages Can Learn from Each Other