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40 Emory L. J. 303 (1991)
Statutory Punitive Damage Caps and the Profit Motive: An Economic Perspective

handle is hein.journals/emlj40 and id is 313 raw text is: STATUTORY PUNITIVE DAMAGE CAPS AND THE
If one believes newspaper headlines, punitive damage awards are
skyrocketing. In the past decade, punitive damages in the millions ot dol-
lars have been awarded and are no longer automatically rejected by courts
as excessive.1 Though calmer voices have maintained that there is no crisis
in the punitive damages arena,2 it is understandable that multi-million-
dollar punitive damage awards garner a great deal of media attention.
The result is an outcry by the public (or, what is more likely, an outcry
by those potentially liable for punitive damages in the future) for some
maximum limit, or cap, to be placed on punitive damages. To a certain
extent, the wave of tort reform that has swept through the legislatures
of the various states has responded to this demand.
When evaluating the need for punitive damage caps, it is important to
remember the policy behind punitive damages in general: The proximate
end of the civil sanction ... is redress to the injured party; but its remote
and paramount end is the same as that of the crimiftal sanction: the pre-
vention of offenses generally.3 If this is indeed the goal of damage
awards, the question arises whether it makes sense for the legislature to
set a cap which in essence limits the court's ability to accomplish that
This Comment examines that question from the perspective of economic
efficiency.4 Part I provides a brief background discussion of the standard
1 E.g., Browning-Ferris Indus. v. Kelco Disposal, Inc., 845 F.2d 404 (2d Cir. 1988), affd, 109
S. Ct. 2909 (1989) (86 million); Ford Motor Co. v. Stubblefield, 171 Ga. App. 331, 319 S.E.2d 470
(1984) (S8 million); Palmer v. A.H. Robins Co., 684 P.2d 187 (Colo. 1984) ($6.2 million).
' Objective studies, however, have confirmed what trial lawyers already knew: Large punitive
verdicts may capture headlines, but they are exceedingly rare. Corboy, License To Do Evil?, Nat'l
L.J., Nov. 6, 1989, at 13, col. 2 (citing M. PETERSON, S. SARMA & M. SHANLEY, PUNrrrvE DAM-
AGES: EMPIRICAL FINDINGS 65 (Rand Institute for Civil justice 1987)).
3 Williams, The Aims of the Law of Tort, 4 CURRENT LEGAL PROaS. 137, 144 (1951) (citing 1
JURISPRUDENCE 504 (R. Campbell 5th ed. 1911)), reprinted in A. OGUS & C. VELJANOVSKi, READ-
4 Our . . . finding, that the practices and law governing private adjudication appear to be
strongly influenced by economic considerations and explicable in economic terms, is evidence that
economic theory has a major role to play in explaining fundamental features of the legal system.
Landes & Posner, Adjudication as a Private Good, 8 J. LEGAL STUD. 235, 284 (1979).

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