Opinion ID: 410209
Heading Depth: 1
Heading Rank: 2

Heading: policy arguments against punitive damages award

Text: 26 JM offers numerous reasons why an award of punitive damages would be inappropriate in this case. The first is that the goals of punishment and deterrence would not be served by awarding punitive damages. JM argues that there is no conduct to deter because Johns-Manville modified its products in the 1960's. In Ohio, however, the deterrence sought by punitive damages is general, not specific: the offending party is set up as an example to others that they might be deterred from similar conduct. Detling, supra, 70 Ohio St.2d at 136, 436 N.E.2d 208 (emphasis added); see also 30 OJur 3d, Damages, § 148 (citing cases). Whether a defendant's particular course of conduct has ceased is irrelevant to the accomplishment of this broader purpose. 27 In Drayton v. Jiffee Chem. Corp., 591 F.2d 352, 365-66 (6th Cir. 1978), we affirmed a district court's refusal to award punitive damages in a product liability case. The trial court had noted both improving industry practices, and a change in corporate ownership, as weighing against such an award. See 395 F.Supp. 1081, 1097-98 (N.D.Ohio 1975). The trial court's action may be questioned in light of later Ohio precedent; moreover, our own affirmance, by a divided court, was lukewarm. See 591 F.2d at 365-66, 371-74. Drayton was a case tried to the bench, and it was key to this Court's affirmance that the trial judge's decision not to award punitive damages was based upon considerations of both law and fact. Id. at 365. We also noted the trial judge's factual characterization of the plaintiffs' arguments for punitive damages as  'more shrill than persuasive'. Id. at 366. Finally, we invoked Rule 52(a), Fed.R.Civ.Pro., a pellucid indication that a factual determination was being left undisturbed. See 591 F.2d at 366. Nothing we said in Drayton requires us to disallow punitive damages in this case. 28 JM contends that no culpable party would be punished by an award of punitive damages here. It points out that the persons responsible for the business decisions giving rise to JM's liability have long ago left JM's employ. We noted in Gillham that, under Ohio law, a corporation may be subjected to punitive damages for the tortious acts of its agents within the scope of their employment in any case where a natural person acting for himself would be liable for punitive damages. 523 F.2d at 108. JM would have us overlook the liability of the legal person. We decline to adopt the boundless principle that legal entities may escape liability for punitive damages if the culpable persons are no longer agents of the corporation. It is agency at the time of the tortious act, not at the time of litigation, that determines the corporation's liability. JM's rule would make the corporate veil an impenetrable shield against punitive damages; JM points to nothing in Ohio law from which such a shield could be fashioned. 29 We are not dissuaded from allowing punitive damages because this cost will ultimately be borne by innocent shareholders. Punitive damage awards are a risk that accompanies investment. Shimman v. Frank, 625 F.2d 80 (6th Cir. 1980) did not establish a contrary rule. In that case we reduced, but did not eliminate, an award of punitive damages against a union; we noted that the ones who will end up paying for the punitive damages award are the union members. For this reason, courts should be slow to award huge punitive damages awards against unions. Id. at 103 (fn. omitted). The case of a union member and shareholder are, however, not wholly analogous. Individual workers only seldom can choose which union to belong to; a group of workers cannot change bargaining agents overnight. Investors may typically place their money where they choose and withdraw it when they wish. The prospect of ultimate liability for punitive damages may encourage investors to entrust their capital to the most responsible concerns. 30 JM urges with particular force that punitive damages should not be awarded against a company that faces a multitude of product liability actions. If punitive damages are awarded in many of these actions, JM argues that it will not be punished, but destroyed. We have read Judge Friendly's interesting essay on such a prospect, and its implications for the law, in Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 838-41 (2d Cir. 1967). However eloquent the essay, it is confessed dictum. Judge Friendly noted that the New York cases afford no basis for our predicting that the (New York) Court of Appeals would adopt a rule disallowing punitive damages in a case such as this, and the Erie doctrine wisely prevents our engaging in such extensive law-making on local tort liability, a subject which the people of New York have entrusted to their legislature and, within limits, to their own courts, not to us. Id. at 841. So it is here. The relief sought by JM may be more properly granted by the state or federal legislature than by this Court. Such legislative relief is even now being sought by asbestos-product manufacturers. See 68 A.B.A.J. 398 (April 1982); New York Times, Aug. 10, 1982, at 34.