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Punitive Damages

Many Americans have differing views on the U.S. tort system and legal system in

general, but the rationale for many of the laws and statutes can be explained with just a little

background in economics. On the other hand, some statutes seem to clearly be in the wrong

when looking at them from an economics perspective. One such instance that is sure to draw

very heated opposing views is the Wrongful Death Act in Illinois. Judge Lopinot, in a recent

wrongful death suit stated, “It has long been the law in Illinois that, as a general rule, the right to

seek punitive damages for personal injuries ends with the death of the injured part (Gvillo

2015).” The case in question involved a high speed collision estimated at about 100 miles per

hour. Alcohol and or drugs were allegedly involved, although it has not been proven. The

plaintiff, who is the mother of a girl killed in the collision, is seeking punitive damages because

she believes the accident was avoidable (Gvillo 2015). This paper will not examine whether or

not the mother should receive the punitive damages, but rather the possible implications of the

statute in Illinois overall by using this particular case as an example. Coming from an economic

perspective, tort law aims to avoid costly accidents. Tort law is supposed to encourage the injurer

to internalize the effects caused by his actions or his lack of care (Cooter and Ulen 189).

Both efficient and inefficient accidents exist whether or not the general population

recognizes it. If it costs more to prevent an accident than the resulting damage from that accident

would cost, then it would not be efficient to prevent that specific accident (Friedman 1989).

Decreasing the speed limit on roads to five miles per hour would prevent almost all traffic

accidents and it would save many lives, but the costs associated with the change would be

staggeringly high. In general, Americans seem to be in favor of higher speed limits even though

it brings with it a higher probability of accidents and injuries. Most people are willing take the

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higher likelihood of accidents if it means allowing them significantly shorter travel times. Based

on anecdotal evidence and the actual events that have transpired, it seems inefficient to prevent

all traffic accidents. Accidents are always going to happen, no matter how many precautions are

taken, therefore the goal should be to minimize the total sum of accident costs and prevention

costs (Friedman 1989). Accident costs may seem unrelated to punitive damages, but in order to

only have the efficient number of accidents, the injurer must properly internalize the damages

that he causes. Tort awards are only granted if there is harm, cause, and a breach of duty.

Assuming that all three of these conditions are met, damages for torts should be possible to

acquire for the plaintiff. Damages should not necessarily always be awarded, but the plaintiff

should have the option of seeking damages even in the case of a wrongful death. Most people

would rather have a crippled family member than a dead family member, although the courts

seem to treat crippling disabilities as worse than a wrongful death (Cooter and Ulen 2011). The

way damages are awarded in American courts, breaking a passenger’s back in a car crash may be

much more costly to the defendant than killing a passenger in a similar car crash. Although it is

most likely inadvertent, this gives potential injurers an adverse incentive. Sometimes it may be in

the injurer’s best interest to take less care under the Illinois law than he otherwise would if the

state would allow family members of a deceased party to sue individuals for wrongful death.

Why should the state disallow family members of the deceased party to seek damages for

wrongful death? If we accept that increasing the expected punishment (the expected punishment

equals the probability of getting caught multiplied by the severity of the punishment if you are

caught) for certain actions will decrease those actions, then why isn’t the punishment for reckless

disregard of others’ safety more severe? Although not all accidents are worth preventing, most of

the time wrongful death suits will be worth preventing because of the high value that society

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places on human life. There are high costs involved in determining the value of a lost life, and

people close to the injured party will never believe that the compensation is enough, but neither

of these are legitimate reasons against allowing damages for a wrongful death. As long as the

estimates for the value of the lost life are reasonable, then potential injurers will be better able to

assess which precautions are worth taking.

Those who are somewhat familiar with the legal system may claim that it is correct to

disallow plaintiffs from suing for wrongful death because the only person who had standing is

now unable to take the injurer to trial. Although the most severely injured party is deceased, the

family is also injured. Emotional injuries are very difficult to quantify, but it is easy to believe

that the mother of the deceased has been injured in some form. It makes sense to base the

damages on the economic value of the lost life since emotional damages are nearly impossible to

determine accurately, but it does not make sense to place no value on the life lost. If there is an

injurer who is most likely at fault and there are no damages awarded for the lost life, then isn’t

that basically placing zero value on that life lost? Injurers may be avoiding the efficient amount

of punishment if they don’t have to answer to civil claims over wrongful death. In certain cases a

defendant may face both civil and criminal punishments, or it is possible to face only a civil

punishment because of the differences in standards of evidence. In some cases a person may be

most likely at fault, but still escape criminal punishment because it can’t be proven beyond a

reasonable doubt. Punishments could very likely be too mild in states that don’t allow civil cases.

The injurer could potentially walk away without even paying a fine, even when he is most likely

responsible. In civil cases the evidence required is only a preponderance of evidence, which is

likely to hand out many more punishments than people would receive under the stricter standard

of evidence used in criminal trials.

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There is a case to be made against always allowing punitive damages in civil cases

however. An argument claiming reduced rationality in cases involving alcohol or drugs is a valid

argument to examine. If alcohol and drugs were involved, then maybe the injurer was unable to

make the most rational choice at that moment. The motivation behind awarding damages to the

injured party is to make them whole, but also to encourage the injurer to internalize the costs of

his actions, and to deter people from committing those actions in the future. A person in a

reduced mental state due to drugs or alcohol may be unable to see the potential and foreseeable

consequences of his actions. The main reason punishments exist is to alter behavior, and to

hopefully avoid certain outcomes. Punishments don’t affect behavior of irrational people in the

same way that they affect the behavior of a perfectly rational individual. Punishments or

normally altered for people with certain mental conditions. An individual who is declared legally

insane won’t be put in jail, but rather in a mental hospital. The punishment overall is less severe,

but the person is still incapacitated. Alcohol and drugs are certainly different than legally

recognized mental diseases though. Courts may wish to curb the use of alcohol and drugs since

they inevitably lead to more accidents. If the expected punishment is severe enough, then some

people will be dissuaded from abusing certain substances. A person using drugs or alcohol may

have diminished rationality, but whatever actions are taken is still the responsibility of that

person. A rational person could determine the possibilities of what might happen in the future in

order to plan for it. While diminished rationality may be an argument for altering how punitive

damages are assessed, it is not an argument for eliminating punitive damages en masse.

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References

Friedman, David. 1989. “An Economic Explanation of Punitive Damages.” http://www.daviddfriedman.com/Academic/Punitive/Punitive.html

Isringhausen Gvillo, Heather. 2015. “Mother’s prayer for punitive damages dismissed in fatal high speed collision case.” Madison-St. Clair Record. May 4. http://madisonrecord.com/issues/426-wrongful-death/270515-mothers-prayer-for-punitive-damages-dismissed-in-fatal-high-speed-collision-case

Robert Cooter and Thomas Ulen. Law and Economics. Boston: Pearson Education, 2011, 257-258.