Punitive Damages and Enterprise Liability

Abstract

Punitive damage awards have increased dramatically in recent years. My study of civil trial judgments in the courts of Cook County, Illinois (the Chicago metropolitan area) shows that the number of punitive damage judgments in the years 1978 and 1979 (the most recent years of the sample) were greater than that of any year since 1959 (the first year of the sample). Indeed, punitive damage awards in these years were, respectively, four and two and one-half times as large as the average annual number of punitive damage judgments from 1959 to 1979. Punitive damages have been awarded in Cook County now in virtually all areas of civil liability, from street hazard and road construction cases to product liability, malpractice, and landlord-tenant cases. Since the late 1960's, there has occurred a steady increase in the number of punitive damage judgments in business tort and—unusually enough—contract breach cases. Of course, this increase in jury awards comprises only some very small fraction of the total sums paid out to parties claiming punitive damages. Professor Ellis's excellent treatment of punitive damages demonstrates that there are no available theoretical justifications for these developments. No new theories of justice have been discovered to generate more frequent punitive awards. Nor has economic theory developed new reasons. The narrow economic justifications for punitive damages are now commonplace. Moreover, there are no reasons to believe either that the level of malice or the magnitude of losses from intentional or reckless behavior has increased in recent years. How, then, can we explain the great increase in punitive damage awards?