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Vanderbilt Law Review

First Page

813

Abstract

Intentionally destroying property-boundary markers by sawing down the posts.' Causing environmental disasters. Fraudulently refusing to settle insurance claims within coverage limits. Bad-faith dealing in big oil contracts. Hiding mild weather damage to new vehicles. Creating and marketing cigarettes while knowing about their carcinogenic risks. Contributing to automobile accidents. No, these are not items on some nefarious villain's to-do list. These are all examples of cases where courts have awarded punitive damages against the tortfeasors on top of their compensatory liability. While each tort is unquestionably wrong, some certainly appear more wrong than others.

In recent years, punitive damages have become a fashionable topic in the legal community-and unsurprisingly so, given their prevalence and gaudy statistics. After all, civil plaintiffs in state courts of general jurisdiction win over $40 billion each year in punitive-damages awards,8 and this figure doesn't even include money recovered in federal court. Needless to say, such high figures draw attention. Commentators, judges, and even nonlawyers have all pointed to punitive-damages awards as evidence of a runaway judicial system that throws out fiscal penalties like Monopoly money. First to respond were the state legislatures. As of 2005, twenty- nine states have instituted statutory caps on punitive-damages recovery, and thirty-four states have amended their state codes to reduce the magnitudes and frequencies of punitive-damages awards. Most of these limitations were implemented within the last twenty years.

The Supreme Court has also noticed the trend in punitive- damages awards. In a series of decisions from 1991 to 2003, the Court implemented procedural- and substantive-due-process restrictions on punitive-damages awards, culminating in a holding that punitive- damages awards more than nine times the magnitude of compensatory rewards would rarely satisfy due process requirements." More recently, in the litigation stemming from the Exxon Valdez oil spill, the Court used its common-law-making authority to place a more stringent ratio cap of one-to-one for punitive- to-compensatory damages in maritime cases.

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