November 5, 2006
More on Damages Posted by Fredric Smoler at 12:30 PM EST John Steele Gordon writes that state judges cannot be trusted to judge justly, because “tort lawyers are, by far, the greatest contributors to the electoral campaigns of state judges.” It would be interesting to generalize from this principle. If credit card companies are bigger contributors to congressmen who pass bankruptcy laws than are people with a lot of credit-card debt, should we strip Congress of the power to legislate in this and comparable cases? To ask this question is to answer it. He also writes that plaintiffs should not receive punitive damages because “compensatory damages make the plaintiff whole. All the harm done him is, at least in theory, undone by them.” Perhaps in theory. In fact, the expense and trouble of going to court is a significant deterrent to ordinary people attempting to recover damages, and the chance of punitive damages encourages people to go to court, and makes attorneys chance their arm. Encouraging people to go to court is a mixed blessing, but discouraging them from going to court has costs of its own. If we remove part of our existing structure of incentives, we should probably replace it with another, and some of the obvious possibilities have their own problems. More freely assigning costs to the victor—the British rule—is widely thought to discourage people from seeking justice. Providing legal representation at taxpayer expense to impecunious litigants does not seem very likely. As it is, rich malefactors already have a decisive edge in litigation against most plaintiffs; contingency-fee litigation plus the possibility of punitive damages tilts the board a bit in the opposite direction. As for plaintiffs receiving punitive damages, I can see a case for a person who has been wronged receiving additional compensation when the injury is particularly wanton. I can also imagine going the other way. What seems most important is that punitive damages be inflicted when they are merited, and that they be painful enough to make sure that wrongdoers with economic motives can never correctly calculate that the risk of compensatory damages is only the cost of a given business strategy. Mr. Gordon closes with a question, and an answer: “Would the system, if that’s the word, we have now be the one we would design from the ground up? Of course not.” Maybe so, but we rarely get chances to design political systems from the ground up, and Mr. Gordon is not doing so now. He is rather seeking to tilt the board against plaintiffs, to achieve what he thinks a just and prudent end. I can imagine other changes instead, ones I think would check some evils of the current system while leaving what I take to be some of its strengths in place. One such change would be to increase the use of sanctions for frivolous litigation.
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