The Fungibility of Damage Awards: Punitive Damage Caps and Substitution

36 Pages Posted: 27 Jun 2006  

Jonathan Klick

University of Pennsylvania Law School; Erasmus School of Law; PERC - Property and Environment Research Center

Catherine M. Sharkey

New York University School of Law

Date Written: February 23, 2007

Abstract

Conventional wisdom suggests that punitive damages are growing out of control. To stop juries from awarding blockbuster punitive damages, a number of states have passed caps to set a ceiling on the amount of punitives. In principle, if plaintiffs' attorneys and/or juries wish to circumvent such caps, they could simply increase the amount of compensatory damages awarded. To investigate this possibility, we examine data from the Civil Justice Surveys performed by the National Center for State Courts and present evidence in both difference-in-difference and triple differences frameworks that punitive damage caps are associated with an increase in compensatory damage awards. These results suggest that caps alone are a poor way to constrain damage awards.

Keywords: Tort Reform, Blockbuster Awards, Punitive Damages, Punitives, Juries, Litigation

JEL Classification: K00, K13, K41

Suggested Citation

Klick, Jonathan and Sharkey, Catherine M., The Fungibility of Damage Awards: Punitive Damage Caps and Substitution (February 23, 2007). FSU College of Law, Law and Economics Paper No. 912256; Columbia Law and Economics Working Paper No. 298. Available at SSRN: https://ssrn.com/abstract=912256 or http://dx.doi.org/10.2139/ssrn.912256

Jonathan Klick

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
2157463455 (Phone)

Erasmus School of Law ( email )

3000 DR Rotterdam
Netherlands

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

Catherine M. Sharkey (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-998-6729 (Phone)

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