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10 Regulation 33 (1986)
New Light on Punitive Damages

handle is hein.journals/rcatorbg10 and id is 35 raw text is: New Light on Punitive Damages William M. Landes and Richard A. Posner HERE IS MUCH TALK these days about the need to reform the tort system. One fre- quently urged reform would eliminate or curtail punitive-damage awards, particularly in products liability cases. We have no desire to join the debate over whether this or any other tort reform is feasible or desirable or, if so, whether the mechanism of reform should be state or federal legislation or judicial modifica- tion of judge-made doctrines. We do, however, have some interesting data that may be relevant to the debate. Collected in the course of writing our forthcoming book, The Economic Structure of Tort Law, these data concern punitive-damage awards in recent reported cases, especially but not exclusively products liability cases, in both state and federal courts. The data suggest- though they certainly do not show conclu- sively-that concern with the incidence of puni- tive-damage awards may be exaggerated. Other than in cases of intentional wrongdoing, these awards appear to be rare. Punitive Damages in Tort Cases The torts system allows victims of negli- gence and other civil wrongs to sue the alleged injurer for damages. Injurers' damage payments William M. Landes is Clinton R. Musser Professor of Economics at the University of Chicago Law School. Richard A. Posner is a judge of the United States Court of Appeals for the Seventh Circuit and a se- nior lecturer at the University of Chicago Law School. This article is based on material in Chapters 6 and 10 of their forthcoming book, The Economic Structure of Tort Law, which will be published in 1987 by Harvard University Press. are usually limited to the losses suffered by vic- tims-medical expenses, lost income, and com- pensation for pain and suffering. In some cases, however, injurers may be assessed an ad- ditional amount called punitive damages. The black-letter law of punitive damages is that they are awarded where the defendant's wrong- doing has been intentional and deliberate, and has the character of outrage frequently associ- ated with crime, or where it indicates such a conscious and deliberate disregard of the inter- ests of others that the conduct may be called willful or wanton, or reckless, which means proceeding with knowledge that the harm is substantially certain to occur. (These quota- tions are from the current edition of the leading torts treatise, Prosser and Keeton on the Law of Torts.) In general, punitive damages are appropri- ate in these circumstances for the same reasons punishment is appropriate for criminal offenses. Intentional harms, such as misappropriation of property and deliberate injuring, are likely to be inflicted for purposes of obtaining some specific gain that could be obtained through a voluntary market transaction; also, because intentional harms are engaged in knowingly, their perpetra- tors may try to conceal them. Damage awards equal to the victim's damages provide inade- quate deterrence against such deliberate, con- cealed harms, since the wrongdoer's expected damage payment is frequently less than his im- mediate gain. The current debate over punitive damages does not involve intentional torts. It in- volves products liability and other accident cases where liability is based on negligence or strict liability-where harm has been done, but not de- liberately. REGULATION, SEPTEMBER/OCTOBER 1986 33

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