The Future of Classwide Punitive Damages

Abstract

Conventional wisdom holds that the punitive damages class action is susceptible not only to doctrinal restraints imposed on class actions but also to constitutional due process limitations placed on punitive damages. Thus, it would seem that the prospects for punitive damages classes are even grimmer than for class actions generally.

This conventional picture misunderstands the role of punitive damages and, in particular, the relationship between class actions and punitive damages. It either ignores or underestimates the distinctly societal element of punitive damages, which makes them especially conducive to aggregate treatment. Furthermore, punitive damages classes offer a solution to the constitutional due process problem of juries awarding “classwide” damages in a single-plaintiff case.

Courts’ conceptualization of punitive damages as either individualistic or societal dictates how they decide the certification question. My survey of recent case law reveals that courts taking the plaintiff-focused individualistic view of punitive damages tend to deny class certification, while courts embracing the defendant-focused societal view are more likely to certify a punitive damages class, all else being equal. Therefore, the viability of the punitive damages class depends upon the persuasiveness of the societal conception of punitive damages.

Based on this empirical grounding, I discuss two possibilities for reform. First, state legislatures and courts could affirmatively define the collectivized, societal rationale for punitive damages. Such state legislative measures would likely withstand constitutional scrutiny under Philip Morris USA v. Williams, given the U.S. Supreme Court’s reaffirmation of the primacy of the state’s role in defining the legitimate purposes of punitive damages. Second, federal courts — in the absence of definitive guidance from authoritative sources on state substantive law — could consider the underlying societal rationale for punitive damages in the course of their certification decisions. To do so would not only be permitted, but indeed warranted, by the Rules Enabling Act.

Keywords: punitve damages, class action, Philip Morris, Williams

JEL Classification: K13, K41