Opinion ID: 424892
Heading Depth: 3
Heading Rank: 2

Heading: Does the Strict Liability Context Limit the Effectiveness of Punitive Damages?

Text: 30 Section 908(1) of the Restatement (Second) of Torts makes clear that 31 [p]unitive damages are damages, other than compensatory or nominal damages, awarded against a person to punish him for his outrageous conduct and to deter him and others like him from similar conduct in the future. 32 (Emphasis added.); see Herman v. Hess Oil Virgin Island Corp., 524 F.2d 767, 772 (3d Cir.1975) ([I]t is proper to assess punitive damages as a deterrent and an example to the community.). While few, if any courts, have challenged these goals, some courts and commentators have suggested that the connection between punitive damages and the goals of punishment and deterrence will be attenuated in the strict products liability context. 33 Proponents of this argument point out that the magnitude of recent jury verdicts, coupled with the potential for a single design defect to serve as the template for hundreds or thousands of defective, injury-causing products, means that a manufacturer may be liable for many millions of dollars merely as compensation to injured victims. See 3 L. Frumer & M. Friedman, Products Liability Sec. 33.01. Thus, the argument runs, compensatory damages have reached such a level in products-liability litigation that, despite their more limited purpose, they have begun to perform the functions heretofore performed by punitive damages. Manufacturers, the argument concludes, therefore already have every incentive to insure that their products are as safe as possible. Indeed the Court of Appeals for the Second Circuit observed as early as 1967: 34 Many awards of compensatory damages doubtless contain something of a punitive element, and more would do so if a separate award for exemplary damages were eliminated. Even though products liability insurance blunts the deterrent effect of compensatory awards to a considerable extent, the total coverage under such policies is often limited, bad experience is usually reflected in future rates, and insurance affords no protection to the damage to reputation among [users, consumers, and distributors] which an instance like the present must inevitably produce. 35 Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 841 (2d Cir.1967). Thus the Roginsky court concluded that punitive damages were unnecessary to punish and deter the reckless marketing of defective products. 12 36 We are not persuaded that limiting recovery to compensatory damages will, in all cases, provide an effective deterrent against the type of wrongful conduct for which punitive damages are usually available. For example, the cost of litigation relative to the likely recovery may deter victims of product defects from suing the manufacturer, even under a regime of strict liability, where products causing numerous minor injuries are involved. The availability of punitive damages to those who do sue may offset the decreased deterrence attributable to those who thus could but do not. Similarly, consumers will not always be aware of the source of an injury caused by a product defect, see Sturm, Ruger & Co. v. Day, 594 P.2d 38, modified, 615 P.2d 621 (1980) on rehearing, 627 P.2d 204 (Alaska), cert. denied, 454 U.S. 894, 102 S.Ct. 391, 70 L.Ed.2d 209 (1981); Owen, Punitive Damages in Products Liability Litigation, 74 Mich.L.Rev. 1258, 1287-95 (1976) (also noting the expense of litigation), or they may wrongfully attribute the accident to their own clumsiness; the manufacturer's reprieve in such cases will be offset by the availability of punitive damages in other cases. Finally, under existing doctrine, compensatory damages may prove an inadequate deterrent even when victims do bring suit. Current doctrine does not, for example, allow the estate of a decedent killed by a defective product to recover the value of life to the decedent himself; recovery is instead limited to the pecuniary loss to those immediately surrounding the decedent. In many instances, this doctrine may lead to inadequate compensation. In addition, those peripherally injured by accidents to another generally are not allowed to bring suit, yet their loss may be, in moral or practical terms, extremely substantial. See Owen, Civil Punishment and the Public Good, 56 So.Cal.L.Rev. 103, 113 (1982). While punitive damages may not be a logically perfect method of remedying these perhaps unavoidable flaws in our system of justice, they are a useful surrogate not necessarily precluded by a strict products liability regime. 37