Punitive Damages: A Detailed Overview

Question

Task: Conduct a critical analysis of conventions mentioned under punitive damages. Provide some recommendations so that the existing confusion could be eliminated.

Answer

The term punitive damages are also termed as exemplary damages in the academic discipline of law. The term punitive damages signify the situation where a certain punishment is established on the person so that the retribution for the wrongful activity could be provided to the claimant. The same provisions of punitive damages would prevent the defendant from committing similar unlawful activities in the future. Levying down serious punitive damages would ensure that the jury bench is strictly against the act committed under the respective case (Polinsky & Shavell, 1998). The clarity over the context of punitive damages is majorly described in the court history of England and Wales. A detailed description of the exemplary damages could be observed in the jurisdictions ruled under the civil cases of AB v South West Water Services Ltd (cause of action test), Rookes v Barnard (categorist test). The parameters of the categorist test and cause of action test should be satisfied in every civil case demanding punitive damages (Cooter, 1988). The final verdict would depend on the perception of the jury bench even if both the parameters are proven before them. The topic of punitive damages being awarded to the plaintiff has always been a point of debate and controversy among the law community (Gotanda, 2003). The proceedings followed behind deciding the punitive damages of the plaintiff has always been very complex, and law professionals often found this process less transparent. It doesn't require a special mention that the normal public was extremely confused about how to charge a civil case regarding punitive damages. Whereas one department of the legal community debates that the provision of the punitive damages would provide a legal solution for the mishappening suffered by the plaintiff, the other party argues that the restrictions and fine under the punitive damages could only be levied if the case is of criminal nature (Sharkey, 2003). The report on punitive damages would provide discussion over the related concepts and would recommend some required reforms in the same field.

The division of the legal community which justifies the existence of punitive damages, put forward the debate that the fine and punishments levied under the concept of punitive damages are different when compared to the punishments levied under the criminal context (Jeffries, 1986). The retributions levied under the punitive damages are more of civil punishments in nature and prove their difference from criminal cases in a below-mentioned manner.

• There is no particular stigma attached to the cases of punitive damages, unlike in the context of criminal cases. The punitive damages are not viewed by society as a very serious offence or punishment.
• It is the state itself that acts as the plaintiff in the criminal cases. The state takes the whole responsibility against curbing the criminal offences even if the charges are accused by a private individual or body. Whereas in the case of civil laws, the act of punishment is demanded by the particular individual who has suffered through the unlawful and unethical activities of the counterparty.

The second division of the legal community put forward the argument that the plaintiff tries to enrich and benefit themselves from playing the victim card against the particular position of the defendant (Owen, 1994). Though the argument that the punitive damages would avoid such instances in the future and the plaintiff party would get the required compensation for its loss by the respective legal provisions are not countered by this particular division of the legal community. It depends upon the pieces of evidence presented before the judiciary bench that the respective statements are made regarding it. In the context in which the defendant is insured, the jurisdiction would generally favour the side of the defending party. The insuring agency would be held to pay the plaintiff if the defendant has failed to meet the expectation, as mentioned in the contract or agreement. The insurer is liable to pay the punitive damages if the defendant has applied for a compulsory insurance scheme. Thus, there is a provision of shifting the burden of payment in the legal provisions of punitive damages as per the concept of minimal deterrent effect (Ellis, 1982).

The provisions under the punitive damages highly focus on satisfying the loss encountered by the plaintiff in a particular instance. Though a lot of legal experts criticize the convention under the punitive damages that it would help extend the plaintiffs to get profited from the windfall. The same approach was further supported by the legal expert, Lord Diplock, under the statements made in Broome V Cassell & Co Ltd. It has been further clarified that there is a possibility that the actual wrongdoer would get benefited by utilizing the loopholes of punitive damages (Sebok, 2006).

There is another dimension for this context since the procedures under the punitive damages could be convoluted and misused by interpreting it along with the conventions of criminal punishments. It is because of the sub intent to levy fines and punishments to the defendants. The defendant is provided with all the similar safeguards and protections as in the case of criminal cases (Eisenberg et al., 1997). The major aspect which is similar to that of the criminal case is that the presented pieces of evidence should be of very high relevance, the right to remain silent while prosecution and investigation, protection against any sort of self-incrimination, etc. It is the same argument put forward by the legal community for the existence of the provisions of punitive damages. It is very crucial that the punishers should be deterred from further pursuing their wrongful activities against others.

Though apart from the constructive aspects, there is also some destructive aspect of the punitive damages.

The existence of punishment in the civil case is stated to be one of the major criticisms against the context of punitive damages. The execution of condemnation and deterrence is another factor that strongly resembles the restrictions levied under criminal cases. There needs a specific distinction between the scope and jurisdictions of criminal cases and civil cases. The restrictions made by the provisions of the punitive damages would draw the concept of intermediate level of punishments for the activities which are slightly serious when compared to the civil laws but could not be distinguished under the criminal cases. Although the restrictions are not made serious as that in criminal cases, certain protection and securities should be provided to the defendants. It is to satisfy the same cause that the provisions like the right to remain the silent and lighter liability of presenting the evidence are ensured (Sales & Cole, 1984).

It is to the state or the government that the fine in the monetary medium is paid as compensation to the anti-social and illegal activities. The same provision was cleared in the jurisdiction made under the case of Riches v News Group Newspapers Ltd. The payment of immense financial reward is ensured by the legal system since the compensatory money is provided in addition to the punitive damages (Daniels & Martin, 1990). Thus, it is prevalently criticized by the legal community that the punitive damages are misused by the people in encouraging litigiousness. It is frequently observed that the plaintiff gets hugely benefited by the wealth of the defendant, and the same cause is further strengthened by the legal provision in punitive damages.

There is less logic in levying the defendant with the punitive damages since the same act would poise the defendant at the position of insolvency. The punishment given to the defendant is way more than required since there is no requirement of paying punitive damages if the compensatory sum is already given. The actual loss to the petitioner would be very small when compared to the fine and compensation paid by the defendant (Morris, 1930). The amount would further multiply and impact harshly if there are multiple plaintiffs. Payment for compensatory damages is quite illogical if compared to that of the actual loss.

The lack of clarity on how much financial fine or compensation the defendant would have to pay the plaintiff on the proven ground is also another point of criticism put forward by the particular section of the legal community. It purely depends on the perception and calculation of the sitting bench that the magnitude of the compensation would be decided. The lack of set guidelines for the calculation of the compensation has always raised a question against the verdict made by the judiciary bench. The provisions under the punitive damages hence violate the basic and legal rights of the defendant. There is a high possibility that the jury would state the sentence of punishment in a biased manner because of fear, hatred, or dislike towards the defendant (Zipursky, 2005).

We seriously recommend regarding punitive damages that:

• It is highly recommended that the magnitude of the punitive damages should only be decided by a judicial bench rather than a single judge. It would avoid any chance of biasedness or misappropriation in the jurisdiction. The fine should be to the limit that the defendant would be punished for the committed illegal activity. It should be according to the graveness of the act committed by the defendant that the magnitude of compensation should be decided. There should be an additional bench to sustain awareness of the involved judges regarding the non-exhaustive statutory list. If the assigned amount of compensation is immense for the defendant and could not be paid without going through undue hardship, then it is highly recommended that the sum should be lowered to a considerable level.
• A general set of laws or principles should be devised rather than just evaluating the scenario by considering the parameters of categories test and cause of action. The liabilities levied on the defendant should not be major when the personal financial ability is considered.
• The plea for punitive damages should be classified under different divisions, and a specific application should be submitted by the plaintiff regarding it. The concept and the existence of probabilities should be taken into account by the jury while hearing the cases dealing with punitive damages. Since these cases are not actually criminal in nature, the required quality of the evidence should be kept to that of the civil proceedings. The payment of the punitive damage should be focused on benefitting the plaintiff rather than posing damage or loss to the defendant. In the case in which multiple plaintiffs have demanded punitive damages from the defendant, only a single party from the plaintiff should be considered so that the financial pressure and punishment on the defendant would not exceed beyond an unbearable limit.
• The punitive awards should only be levied if the claim is proven on solid ground. The punitive damage should not be awarded if there is any form of suspicion in the occurrence of misdeed. Suppose there is no proven evidence that the rights of the plaintiff are breached by the defendant, then there is no point in assigning the punitive damages. Apart from awarding the punitive damages, the jury should consider some other lighter form of sanctions.

Conclusions
It has been observed in the above-provided content that there should be some reforms in the provisions of punitive damages. Though civil justice is to be provided in this context, the defendant would have to go through a severe breach of personal rights. It is recommended that the punitive damages should only be levied in very rare cases and could only be charged in the cases with a serious illegal act. The legislative is required to provide more clarity to the legal proceedings done in the case of punitive damages. The calculation of the numerical magnitude of the punitive damages should be clear to the defendant; otherwise, it would raise a lot of confusion among the engaged parties. The legal provisions of the punitive damages should not be misused by the petitioners as the source of windfall profit. The overall compensation should not be excessive and within the financial ability of the defendant. The judicial system should give special effort on the unpredictable impression of the punitive damages proceedings.

References
Cooter, R. D. (1988). Punitive Damages for Deterrence: When and How Much. Ala. L., Rev., 40, 1143.

Daniels, S., & Martin, J. (1990). Myth and reality in punitive damages. Minn. L. Rev., 75, 1.

Eisenberg, T., Goerdt, J., Ostrom, B., Rottman, D., & Wells, M. T. (1997). The predictability of punitive damages. The Journal of Legal Studies, 26(S2), 623-661.

Ellis Jr, D. D. (1982). Fairness and efficiency in the law of punitive damages. S. Cal. L. Rev., 56, 1.

Gotanda, J. Y. (2003). Punitive damages: a comparative analysis. Colum. J. Transnat'l L., 42, 391.

Jeffries Jr, J. C. (1986). Comment on the Constitutionality of Punitive Damages, A. Va. L. Rev., 72, 139.

Morris, C. (1930). Punitive damages in tort cases. Harv. L., Rev., 44, 1173.

Owen, D. G. (1994). A punitive damages overview: Functions, problems and reform. Vill. L. Rev., 39, 363.

Polinsky, A. M., & Shavell, S. (1998). Punitive damages: An economic analysis. Harvard Law Review, 869-962.

Sales, J. B., & Cole Jr, K. B. (1984). Punitive damages: A relic that has outlived its origins. Vand. L., Rev., 37, 1117.

Sebok, A. J. (2006). Punitive damages: from myth to theory. Iowa L. Rev., 92, 957.

Sharkey, C. M. (2003). Punitive damages as societal damages. Yale LJ, 113, 347.

Zipursky, B. C. (2005). A theory of punitive damages. Tex. L. Rev., 84, 105.