Court Opinion

ID: 9688744
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:02:45.001373+00
Date Added: 2024-06-11T18:18:41.736501
License: Public Domain

FINE, J.
¶ 48. (concurring). I fully join in Judge Wedemeyer's opinion. I wish to add a few words, however, about what I believe has been a general transformation of punitive damages from a useful social tool into something filled with the seeds of dangerous, albeit unintended, consequences. None of my comments has influenced my decision in this matter; as the Majority opinion explains, the recovery of punitive damages in these cases is barred by Wis. Stat. § 895.85, and as judges on an intermediate appellate court we are bound by the law given to us by the Wisconsin Supreme Court, the legislature, and, on matters of federal-constitutional interpretation, the United States Supreme Court.
*671¶ 49. Punitive damages, as the term denotes, are designed to punish and deter egregious anti-social conduct. Indeed, under the Wisconsin Supreme Court's most recent analysis, punishment and deterrence are the only purposes for which punitive damages may be awarded in this state. Trinity Evangelical Lutheran Church v. Tower Ins. Co., 2003 WI 46, ¶ 50, 261 Wis. 2d 333, 355, 661 N.W.2d 789, 799 ("[T]he purpose of punitive damages is to punish the wrongdoer, and to deter the wrongdoer and others from similar conduct, rather than to compensate the plaintiff for any loss.").
¶ 50. Until the Wisconsin legislature enacted Wis. Stat. § 895.85, the right to recover punitive damages was created and shaped wholly by judges in this state, and not by the legislature. Punitive damages were designed to be a "quasi-criminal" way to punish conduct that would otherwise go unpunished. Kink v. Combs, 28 Wis. 2d 65, 80, 135 N.W.2d 789, 798 (1965).
Suffice it to say that whatever shortcomings the award of punitive damages may have, nevertheless, it must be remembered that it has the effect of bringing to punishment types of conduct that though oppressive and hurtful to the individual almost invariably go unpunished by the public prosecutor.
Ibid. Thus, punitive damages are similar to and supplement the criminal law. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. _, 123 S. Ct. 1513, 1520 (2003) (punitive-damage "awards serve the same purposes as criminal penalties"). To be effective, however, they must, as one case colorfully noted, be sufficiently painful to "sting." Gianoli v. Pfleiderer, 209 Wis. 2d 509, 531, 563 N.W.2d 562, 570 (Ct. App. 1997). In the early days, if "A" hurt "B" by conduct that was sufficiently egregious to warrant an award of punitive damages, assessment *672of punitive damages against "A" would not only punish "A" but would also deter "A" and others like "A" from doing it again.
¶ 51. Circumstances have changed, however, from an "A" versus "B" situation to one where the harm sought to be punished by punitive damages may have been caused by an employee or employees of large corporations. At first blush, it may seem that "large corporations" are fair game. First, many persons have a "prejudice against large corporations," especially if they are from out of town. TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 464 (1993) (Stevens, J., for a plurality of the Court and announcing its judgment). Second, large corporations are seen as golden-eggs-laden geese from which there is an endless supply of "free money." This is a dangerous myth unsupported by economic realities; just as there is no "free lunch," there is no "free money" — the money has to come from someone, and, in the case of large corporations, it comes from employees, shareholders, and customers.
¶ 52. Unlike small, closely held corporations, sole proprietorships, or small partnerships, large corporations are generally far-flung businesses employing thousands or tens of thousands of employees. These businesses, so vital to our economy, are owned not by the managers who control what the corporations do, but by shareholders who, with rare exceptions, have no control over either those managers or corporate policy. And these corporations are not living creatures that can be punished like a person can be punished; they cannot be sent to prison. Subjecting corporations to draconian criminal or criminal-like penalties, hurts only their employees, shareholders, and customers. Thus, by one estimate, the criminal prosecution of the large public-accounting firm Arthur Andersen cost 80,000 employ*673ees their jobs, all but a few of whom were not guilty of anything related to the firm's prosecution.1 Imposition of punitive damages can have similar life-derailing consequences for those innocent of any wrongdoing, because, to repeat, when corporations are forced to pay punitive damages most of the pain falls on employees, shareholders, and customers. Indeed, often the culpable employee escapes any punishment.
¶ 53. I recognize that the Wisconsin Supreme Court has said that all of this is OK by ruling, without supporting economic data or analysis, that it is unlikely for a corporation to be able to pass to consumers punitive-damages-related increased costs, and, also, that it is not unfair to force shareholders to pay penalties flowing from punitive-damages awards. Wangen v. Ford Motor Co., 97 Wis. 2d 260, 287-288, 291, 294 N.W.2d 437, 452, 453 (1980) ("But the loss of investment and the decline in value of investments are risks which investors knowingly undertake, and investors should not enjoy ill-gotten gains."). I respectfully disagree. Although Wangen's assessment of the equities is logical in the abstract, consequences of punitive-damages awards can be malignant in practice. Oliver Wendell Holmes, Jr., once presciently observed: "The life of the law has not been logic: it has been experience." Oliver Wendell Holmes, Jr, The Common Law 1 (1881). Experience tells us that something is terribly wrong when the sting of "quasi-criminal" punitive damages falls on innocent employees, shareholders, customers, and, in *674some cases, taxpayers. Wangen, 97 Wis. 2d at 327, 294 N.W.2d at 470-471 (Coffey, J., dissenting).2
¶ 54. But punitive-damages awards are loved by personal-injury lawyers, and judges are thus reluctant to staunch their flow. Indeed, Wangen conceded that punitive-damages awards (ostensibly designed to punish only) are also a back-door way to pay lawyers: *675"[P]ayment of punitive damages to the injured party is justifiable as a practical matter, because such damages do serve to compensate the injured party for uncompensated expenses, e.g., attorneys' fees and litigation expenses, and that the [punitive-damages] windfall motivates reluctant plaintiffs to go forward with their claims." Id., 97 Wis. 2d at 292, 294 N.W.2d at 454.3
¶ 55. There is also a roll-of-the-dice aspect to punitive damages; very few persons who are harmed by conduct warranting imposition of punitive damages ever get to recover from those who caused the harm even compensatory damages, no less punitive damages. The plaintiffs in this case suffered grievous losses, but, sadly, their pain is not unique to them. Last year in Wisconsin, for example, 164 persons were homicide victims.4 Nation-wide, the toll was more than 16,100, or, on the average, forty-four per day.5 My guess is that few if any of the families of these victims will receive anything from those who killed their loved ones. And then, of course, there are the countless other victims of crime who suffer horrendous injuries short of death. *676They, too, rarely, if ever, receive any payment from those who raped or maimed them. These victims, to borrow Horace's poignant words, suffer "unwept, unknown, because they lack a sacred poet." Horace, 4 Odes ix 1. 25. Our current system of punitive damages is of no help to them.
¶ 56. Courts have recognized the out-of-balance unfairness of huge punitive-damages awards, and have gradually attempted to trim some of the rougher edges. See Campbell, 123 S. Ct. at 1527 (Ginsburg, J., dissenting) (collecting cases). This is not enough; tinkering with the engine is useless when that engine is, as I believe it is, in need of an overhaul. As noted, our task as judges on an intermediate appellate court is to apply the law as it is given to us by the legislature and the Wisconsin Supreme Court. Both the Wisconsin Supreme Court, which can only act in the context of cases brought to it by lawyers, and the Wisconsin legislature, which has broad plenary power to make law, should set things right. As Justice Antonin Scalia has observed: "State legislatures and courts have the power to restrict or abolish the common-law practice of punitive damages, and in recent years have increasingly done so." Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 39 (1991) (Scalia, J., concurring); see also BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 614-619 (1996) (Ginsburg, J., dissenting) (table of "State Legislative Activity Regarding Punitive Damages").
¶ 57. We should have a system that punishes the guilty, not the innocent, and, further, punitive damages should not be lottery-like windfalls for a tiny percentage of those who suffer pain inflicted by others.6

 Interview with Samuel A. DiPiazza, Global Chief Executive Officer, PricewaterhouseCoopers, at http://www.pwcglobal.com /ru/eng/ins-sol/issues/03-07-08_sd_ve.html (last visited Aug. 26, 2003).

 There are two categories of persons who will automatically bear the costs of the majority decision, depending on the strength and market position of the manufacturer: (1) the employees and stockholders; or (2) the consumer-taxpayer. If the manufacturer is not in a strong financial position so as to be able to bear these added costs, he will be faced with the threat of being forced out of business or into bankruptcy, thus resulting in a loss of jobs (unemployment) and the curtailment of competition, to the detriment of the consumer. If bankruptcy or the loss of business and jobs is to be avoided, it is the consumer who will ultimately bear the burden of punitive damage awards through the payment of higher prices for the goods in the market place. As the cost of such damages is passed on through higher product prices, the consumer will foot the bill for a penalty imposed for its very own protection. If the consumer does not pay higher prices, as a taxpayer, he will pay for the hidden costs of government with higher taxes for increased welfare, retraining and unemployment programs occasioned by business failures. Moreover, imposition of multiple punitive damage awards could have an adverse impact not only on the manufacturer, Ford, but also those commercial businesses that supply materials for use in construction of cars, such as the producers of automobile locks, tires, catalytic converters, etc. Are we going to further intimidate Wisconsin manufacturers with the threat of high punitive damage awards? The recovery of punitive damages against American businesses resulting in higher product costs obviously magnifies their disadvantage in competition with foreign manufacturers.
Wangen v. Ford Motor Co., 97 Wis. 2d 260, 327, 294 N.W.2d 437, 470-471 (1980) (Coffey, J., dissenting).

 Similarly, "compensatory" but noneconomic damages work "essentially as a pool from which the attorney's fees of personal-injury plaintiffs" are paid. Guzman v. St. Francis Hosp., Inc., 2001 WI App 21, ¶ 5, 240 Wis. 2d 559, 571, 623 N.W.2d 776, 782 (Ct. App. 2000) (upholding statutory cap on noneconomic damages in medical-malpractice cases).

 Tom Rybarczyk & Kelly Wells, Homicides Reported in State at 14-year Low, Milwaukee J.S., July 1, 2003, available at http://www.jsonline.com/néws/state/june03/151979.asp (June 30, 2003).

 Callie Marie Rennison, Ph.D. & Michael R. Rand, U.S. Department of Justice, Office of Justice Programs, Bureau of Justice Statistics, Criminal Victimization, 2002, Aug. 2003, NCJ 199994, available at http://www.ojp.usdoj.gov/bjs/pub/ascii /cv02.txt (August 13, 2003).

 One approach to solving the windfall part of the problem was tried by Dardinger v. Anthem Blue Cross & Blue Shield, 781 N.E.2d 121 (Ohio 2002), when it directed that a significant *677portion of the punitive damages awarded be distributed to a cancer hospital and research institute at Ohio State University, even though no statute authorized such a distribution. Id., 781 N.E.2d at 146. Dardinger noted, however, that its approach was similar to that authorized by statute in some other states: "Numerous states have formalized through legislation a mechanical means to divide a punitive damages award between the plaintiff and the state. In some states, the state's portion goes to a special fund, in others, to the general fund. Annotation (1993), 16 A.L.R. 5th 129." Id., 781 N.E.2d at 145.1 offer no opinion as to whether such an approach or one similar to it should be adopted in Wisconsin; that is an issue for either the legislature following extensive inquiry, or the Wisconsin Supreme Court after briefing and argument.