Giving Full Faith and Credit to Punitive Damage Awards: Will Florida Rule the Nation?

Abstract

This Article considers the constitutional status of state punitive damage judgments and the particular obligation that sister-states have to enforce them. Part I considers the legality of measures recently enacted by the tobacco companies' home states to delay enforcement of the judgment in Engle. This discussion will show that, contrary to the public protestations of many legal scholars, those states properly exercised their authority under the Full Faith and Credit Clause of the Constitution when they acted to defer enforcement of the Engle judgment while it is appealed through the Florida courts.

Part II of this Article considers whether there is any obligation under the Full Faith and Credit Clause to enforce sister-state judgments for punitive damages. According to Supreme Court precedent dating back to the nineteenth century, "penal" judgments are not entitled to full faith and credit. While the penal judgment rule has not seen great service in recent decades, its reexamination is timely. First, there is widespread agreement that modern punitive damages awards no longer serve the compensatory purposes they served at the time the Full Faith and Credit Clause was ratified: Punitive damages now serve the quasi-criminal purposes of deterrence and punishment, and are therefore penal in nature. Second, an increasing number of states have reaffirmed the penal role of punitive damages by appropriating a share of the plaintiff's punitive award. Such shared recovery laws emphasize that punitive awards now vindicate "public wrongs," and so fulfill the historical purpose of penal laws.

This Article contends, however, that the penal judgment rule should not be extended to permit the denial of full faith and credit to judgments for punitive damages. Notwithstanding the linguistic similarity in the epithets penal judgments and punitive damages, the concepts address quite different concerns. Further, application of the penal judgment rule to punitive damages awards would serve no state or litigant interest not already addressed by other constitutional provisions - particularly the Due Process Clause. For these reasons, courts should not revivify the penal judgment rule to address contemporary problems posed by punitive damages awards.

This Article concludes that the Constitution offers defendants who suffer the imposition of catastrophic verdicts like that in Engle a measure of protection. States may, and after Engle should, eliminate appellate bond requirements for punitive awards when there is no reason to suspect that the judgment debtor will intentionally dissipate its assets. This approach will leave intact appellate bond requirements for compensatory damages, and thus secure the judgment creditor's right to be made whole for his losses. At the same time, judgment debtors need not face the prospect of bankruptcy, or exorbitant settlement, simply because they cannot post security for an aberrant, punitive verdict like that in Engle. The Supreme Court has emphasized the critical role of appellate courts in policing unconstitutionally excessive punitive verdicts, and that role can only be fulfilled if the appellate process is affordable.

Realistic appellate bond requirements, however, are only part of the solution. Engle sounds a grave warning. The current system of tort law increasingly "commits the fate of an entire industry or, indeed, the fate of a class of millions, to a single jury."The constellation of interests affected by mass tort litigation--injured persons, consumers, states, national industries, and local economies - exceeds the competence of a single jury or single state court to resolve. A national solution is needed, and by default the task of devising that solution falls on Congress.

Keywords: punitive damages, damages, full faith and credit clause, judgments, tobacco litigation

JEL Classification: K30, K40, K41