Opinion ID: 3009780
Heading Depth: 2
Heading Rank: 3

Heading: Purpose of Punitive Damages

Text: As noted above, defendants accurately characterize the purposes of punitive damages under Pennsylvania law. See Martin v. Johns-Manville Corp., 494 A.2d 1088, 1096 (Pa. 1985) (In Pennsylvania, the function of punitive damages is to deter and punish egregious behavior.) (citations omitted).4 However, those penal objectives are not necessarily in conflict with the Amendments Act. Defendants correctly point out that the 1988 Act created a system of mandatory insurance premiums in order to create a fund to compensate those who were injured in nuclear accidents. This scheme causes all operators of nuclear reactors to collectively shoulder the cost of damages paid to anyone who recovers in a public liability action. Defendants rely in part upon Esmond v. 4 We note that Pennsylvania law is consistent with the Supreme Court's characterization of punitive damages. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974) (describing punitive damages as private fines levied by civil juries to punish reprehensible conduct and to deter its future occurrence). 18 Liscio, 224 A.2d 793 (Pa. Super 1966), to argue that punitive damages can not be imposed on any particular defendant or group of defendants without violating this collective approach to compensation. They suggest that Pennsylvania's law does not permit one personally guilty of conduct which warrants imposition of punitive damages to `shift the burden of punitive damages to his insurer.' Brief of Appellants at 15 (quoting Esmond, 224 A.2d at 800). We do not think that Esmond prohibits punitive damages in a public liability action. Under the scheme of compensation established by the Amendments, an award of punitive damages which required payment out of the second layer of liability would presumably be spread vicariously through the industry, and no one facility would be penalized more than another. See 42 U.S.C. § 2210(b). This is not totally inconsistent with Esmond wherein the court stated, [i]n general, allowing one who is only vicariously liable for punitive damages to shift the burden of satisfying the judgment to his insurer does not conflict with the rule of policy that we announce today. 224 A.2d at 800. As a practical matter we are, of course, aware of the possibility that several large punitive damage awards here, as with any mass tort litigation involving a limited fund, might deplete the fund. In Juzwin v. Amtorg Trading Corp., 705 F. Supp. 1053, 1055 (D. N.J.) modified, 718 F. Supp. 1233, 1235 (D. N.J. 1989), then district judge Sarokin noted the particular dangers that plague punitive damage awards in mass tort 19 litigation and expressed concerns which we share in deciding the availability of punitive damages in these cases: Defendants can be held liable over and over again for the same conduct, a result which would be barred by virtue of the right against double jeopardy in a criminal matter. Although an award in an individual case may be fair and reasonable, the cumulative effect of such awards may not be. . . . Payment to individual plaintiffs rather than to a fund or class raises special problems in mass tort litigation. There is a decided risk that the earlier claimants will deplete the available assets to pay later claimants. Such a risk may exist even as to compensatory damages, but it would seem inappropriate to impose repeated penalties on a company if the result is to deny compensatory damages to subsequent claimants. See also Dunn v. HOVIC, 1 F.3d 1371, 1393 (3d Cir. 1993) (dissenting opinion arguing against punitive damages awards in mass tort cases in general and in asbestos cases in particular). As we explained in Dunn, [w]e do not disagree with the concerns that have been expressed about punitive damages awards . . . . We differ instead with those who would have the judiciary resolve the conflicting policy arguments. Id. at 1387. We have neither the authority nor the desire to usurp Congress' policymaking function regarding the benefits and burdens of punitive damages in mass tort cases; rather, we are constrained to interpret the law as written. In doing so, however, we call attention to the possible inequities built into a statutory scheme such as is before us here, where plaintiffs must resort to a finite fund to get compensatory as well as punitive damages. Because there is no conflict between the Amendments Act and 20 the substantive laws of Pennsylvania which allow punitive damages, we will instruct the district court to proceed with the litigation of these matters in a manner consistent with this opinion. In so doing, we emphasize that the district court has authority to prioritize the various claims if punitive damages are awarded and that the Price-Anderson Act's tri-level insurance scheme is easily adaptable to such a prioritization of claims. It cannot be gainsaid that [i]f there is a limited fund, priority should be given to compensating those who have been injured rather than conferring windfalls on those who have already been compensated. Juzwin, 705 F. Supp. at 1055. We see nothing in the Act that precludes a district court from using its discretion to limit or even preclude punitive damages in accordance with the financial constraints of the fund and the Act's prohibition against punitive damage awards being paid out of the federal layer of insurance. However, we do not express any view as to whether the district court should so exercise its discretion. We leave the resolution of this issue to the district court.