How Does One Punish a Fiction?

Having spent a good deal of time over the past several years studying all the various nuances of punitive damages law [John J. Kircher & Christine M. Wiseman, Punitive Damages: Law & Practice (2000 & Supp 2008)], questions still remain unanswered: How can a legal fiction like a corporation engage in egregious conduct so as to justify imposition of punitive damages against it? How does one punish and deter a corporate entity.

Most jurisdictions do allow punitive damages to be awarded against business entities for the wrongful conduct of their employees or agents. Some are very liberal, allowing punitives to be awarded against the business simply if the agent’s conduct was sufficient to make the business liable for the compensatory damages occasioned by the act. In others additional proof is required. The principal must direct the agent to perform the egregious act; the principal must subsequently approve that act; or, the agent who performed the act must have been in a “managerial capacity” at the time that act was performed. Obviously, with a corporation, the one doing any of those three things must be a human being.

Imposing punitive damages upon a corporation does not punish or deter the human being who engaged in the egregious conduct, it merely renders such a person anonymous. It is akin to requiring a liability insurer to pay the punitive damages resulting from the wrongful conduct of its insured. But some jurisdictions allow that as well. The life of the law is certainly not logic!

This Post Has 3 Comments

  1. Michael M. O'Hear

    Corporate criminal liability presents the exact same disconnect with the underlying theories of punishment. Here, too, the life of the law is anything but logical!

  2. Dan Markel

    I hope the third installment of my trilogy on punitive damages will persuade you otherwise!

  3. Andrew Shaw

    We often hear that the law is a moving target. Given that, I am still amazed at the level and “skill” of an ordinary jury of 12 persons. Coupled with a good judge, fiction can become real. So, Professor Kircher, punitive damages and tort law will change again . . . especially when the value of our dollar is lower, compared to other costs.

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