Punitive Damages: Divergence in Search of a Rationale

Abstract

After a comparative review of the law on punitive damages in the United Kingdom, Canada and the United States, a review that shows a significant divergence of thinking across these different legal systems, we look more closely at the compensatory, retributive, and deterrence rationales for punitive damages. We show that these different rationales imply different ways of looking at the general puzzle of conjoining a punitive focus on the defendant with a compensatory role for the plaintiff, and so have quite different implications for such first-order issues as the type of conduct addressed and the quantum of damages to be prescribed. We also demonstrate that the different rationales imply very different legal responses at a second-order level of institutional detail, including whether punitive damages should be insurable, whether vicarious liability is appropriate, or whether certain criminal law type procedural protections (e.g., a higher burden of proof) are required. At the conclusion of our analysis we provide a summary matrix of the different implications of all the rationales for both the first and second-order issues. This matrix accounts for why it is generally believed that the law on punitive damages is not now developing in a sufficiently single-minded or coherent fashion. No single legal institution can be responsive to the requirements of all three rationales, and a choice must be made among them. We hope that our analysis helps to inform that choice.

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