The Yale Law Journal

November 2003

Punitive Damages as Societal Damages

Catherine M. Sharkey
113 Yale L.J. 347 (2003)

Jury awards of "classwide" punitive damages provide windfalls to individual plaintiffs, particularly in products liability, fraud, civil rights, and employment discrimination cases. This suggests a new angle from which to approach the ongoing punitive damages debate. Under current law, classwide assessment of widespread public harms has proceeded under the rubric of retributive punishment and deterrence--the traditional justifications for punitive damages-- bypassing class action procedural requirements and unjustly enriching the plaintiff. In the wake of the Supreme Court's admonition in State Farm that such a practice can violate due process by exposing defendants to the risk of "multiple punitive damages awards for the same conduct," the Article proposes explicit recognition of a distinct category of compensatory societal damages for redress of third-party and societal harms. Up until now, this category has been quietly subsumed within punitive damages. But damages for specific harms to third parties and more diffuse harms to society are actually compensatory (as opposed to punitive) in nature, and should, once assessed, be distributed by legislatures, courts, and juries accordingly. Drawing upon heretofore unconnected trends in punitive damages and class action tort cases, and state-level legislative and judicial innovations with "split-recovery" schemes for distributing punitive awards, the Article explores various mechanisms for transforming punitive damages into societal damages, including the formation of an "ex post class action" at the remedial stage and the punitivedamages- only class at the liability stage. The theory of compensatory societal damages--whether or not embraced by legislatures and courts--reveals more clearly the tradeoffs in transforming the doctrine of punitive damages to achieve the compensatory and deterrence goals of the tort system.