Punitive damages, “punies,” as some lawyers often refer to them, can powerfully alter the dynamic of all sorts of legal claims. Depending on one’s perspective, they can serve as a plaintiff’s Ace in the Hole; defendant’s Sword of Damocles; or the inferno of a jury’s ire. If really naughty conduct is at issue, the risk of a runaway jury verdict socking it to “the bad guy” defendant can be at the heart of whether allegations are pursued, lawsuits filed, and most significantly, how claims settle at various stages of the game.
The concept sounds simple and justified: society should discourage egregiously bad behavior by hitting wrongdoers where it hurts worse – in the pocketbook – in ways beyond simple compensation to innocent victims. Let’s empower a jury, serving at once as a community’s collective conscience, mouthpiece, ethical deliberator, and enforcer, to hit hard those whose misconduct harms and poses particularly dangerous risks to society. Let’s let juries teach ‘em a lesson, one neither they nor those like ‘em will soon forget, so we’ll all be safer and better off.
But this venerable feature of U.S. law isn’t without compelling counterargument or detractors. While effective, punitive damages (a/k/a “exemplary damages” in some courts) can cripple or destroy entire industries, or at least significant players within them. With runaway jury verdicts of punitive awards come greatly increased insurance costs and extreme accident avoidance measures that can be expensive and inconvenient to all concerned. These produce exponentially higher manufacturing and operating costs that result in higher consumer pricing. In other words, communities may be safer by juries having the option to tack a few million (or more) to a personal injury claimant’s damages, but those communities also get to foot the ultimate bill for that advantage.
And why should a claimant, notwithstanding his/her innocence and unfortunate circumstances, get the windfall of becoming filthy rich in terms far beyond what would be justified by his/her loss? Doesn’t that encourage nonmeritorious claims? Even a long shot at a big fortune might be worth taking. And wouldn’t the deterrent or punitive effect be the same if the state’s coffers, and not the plaintiff’s wallet, were fattened by exemplary damage awards? That approach would benefit society, whose interests the system is supposed to protect.
Some states don’t allow punitive damages awards at all. Moreover, the track records of jurisdictions vary greatly as to how inclined their juries are to tack big punitive bucks onto actual damages. Those circumstances frequently lead plaintiffs and their lawyers to “forum shop,” i.e., to figure out a way to get their suits heard before the most desirable court.
Quite a complex set of issues, eh? These questions become even more complex when law governing a claim is subject to statutes and/or other legal concepts that address what damages are recoverable for what losses. Maritime law, with its goal of national uniformity, is loaded to the gunnels with legal specifics that often deviate from land-based norms. But like all other aspects of law, and despite many of its principles’ ancient history, admiralty is an evolving body of concepts. Not quite a “moving target,” as its evolution is slow and usually with warning, particularly as compared with other fields. But law must keep pace with industry, societal attitudes, evolving judicial views, and other factors. Given the significance of the threat of punitive damages in marine litigation, the topic merits attention.
In a typical year, some 80% of maritime litigation addresses personal injury and wrongful death claims. Costs of marine insurance/P&I Club coverage are driven significantly by personal injury risk, and expenditures for equipment and to implement programs related to personnel safety are enormous. Each year, it seems a national or transnational regulatory body issues new regs or guidelines related to safety, and nothing could harm a company’s public image worse than a rep that it disregards its employees’ welfare.
Here’s some bad news for industry: the law is showing clear trends toward increasing the extent of maritime employers’ exposure to damages resulting from employee injury and death (claimants and their lawyers might call it sweetening the pot). The U.S. Court of Appeals for the Fifth Circuit, one of the most authoritative and influential circuits in the country on maritime issues, recently issued an opinion empowering Jones Act seamen to recover punitive damages in personal injury and wrongful death claims. What’s more, it’s a persuasive and well-written explanation of the law and its history that courts across the land easily could follow.
The mounted drilling rig attached to a barge operated by Estis Well Service in a waterway within Louisiana experienced some malfunctions which crewmembers were trying to fix. The rig toppled over, killing one crewmember and injuring three others. In the ensuing lawsuit before the U.S. District Court for the Western District of Louisiana, all claimants sought to recover from Estis punitive damages in addition to those typically awarded in seamen’s personal injury suits. Because punitive damages are “the subject of national debate with no clear consensus,” and in response to Estis’s motion to dismiss the crewmembers’ punitive damages claims, the trial court certified the issue to the Fifth Circuit Court of Appeals for immediate consideration.
In ruling the claimants may indeed seek to recover from Estis punitive damages, the Fifth Circuit’s opinion goes through a fascinating review of the history of damages in maritime personal injury cases. The court’s analysis is rooted in the duel sources of maritime law, i.e., judge-made “general maritime law” derived from the judiciary’s constitutionally-bestowed authority; and statutory law Congress itself has enacted. Historically (and we’re going way, way back), injured seamen were entitled to receive from their employers maintenance (a daily cost-of-living stipend allowing them to subsist at a shipboard living standard while they convalesce); cure (payment of their medical bills through maximum medical recovery); and to pursue a cause of action for unseaworthiness (based on some aspect of the vessel not being fit for its intended purpose). In other words, nothing in the law empowered injured seamen to pursue negligence claims against their employers.
However, punitive damages historically were awarded under the general maritime law when, as the Fifth circuit put it, “willful and wanton misconduct of the shipowner [is shown] in the implication or maintenance of unseaworthy conditions.”
Given that workers in other federally regulated industries (namely, railroad employees) had better legal deals, Congress enacted in 1920 the Jones Act (named after Washington’s Senator Wesley L. Jones) and the Death on the High Seas Act (DOHSA), which created for injured and deceased seamen causes of action against their maritime employers based on negligence and other torts. Claims under the general maritime law for maintenance and cure, alleging unseaworthiness, etc., can and still are brought concurrently. With these two enactments, we had statutorily defined rights within federal law designed to assure national uniformity alongside historical causes of action under the general maritime law. However, the new statutory rights didn’t specify whether punitive damages could be tacked onto principal damages awards.
Developing statutes and case law interpreting them led to courts disallowing certain varieties of damages. In 1990, the U.S. Supreme Court, in Miles v. Apex Marine Corp., determined that non-pecuniary damages could not be awarded in claims based on the general maritime law if the Jones Act and DOHSA didn’t specifically allow them. The court reasoned it wouldn’t make sense for judges to award claimants damages under the general maritime law beyond those Congress saw fit to allow. Remember, admiralty’s primary goal is national uniformity of law that players can rely on regardless of where a mishap occurs. But fast forward to 2009, and the Supreme Court chips away at, or at least redefines, that notion. In Atlantic Sounding Co. v. Townsend, the Big Nine upheld a punitive damages award against an employer which had failed to pay maintenance and cure. At that point, an injured seaman could get punies if the egregious misconduct related to an established common law right, as the Jones Act and DOHSA didn’t specifically eliminate them.
In this case, the Fifth Circuit grappled with harmonizing Miles and Townsend. Where do the former’s uniformity and statutory construction principles end, and the latter’s preservation of historical rights begin? Quoting Townsend, the court ruled that “the laudable quest for uniformity in admiralty does not require the narrowing of available damages to the lowest common denominator approved by Congress for distinct causes of action.” Put simply, “if a general maritime law cause of action and remedy were established before the passage of the Jones Act, and the Jones Act did not address the cause of action or remedy, then that remedy remains available under that cause of action unless and until congress intercedes.” Because the statutes don’t specifically nix punitive damages, they’re by and large still available.
Estis raised some points about the timing of when seaworthiness became a strict liability concept, which was after the Jones Act’s passage, but the court would hear none of it, ruling “[o]ur task is not to reconstruct maritime law as it existed in 1920, but to assess whether Congress, in passing the Jones Act and DOHSA, intended to displace pre-existing maritime remedies or foreclose them going forward.”
This decision certainly is subject to rebuttal and contrary opinions. Indeed, as the court itself notes, other jurisdictions go the other way. Perhaps a definitive Supreme Court decision will clear up the discord. In any event, courts generally appear inclined toward allowing punitive damages as part of a trend toward honoring rights enjoyed under the general maritime law. Industry should take heed.
Ref: Estis Well Service, LLC v. Suire, et al., 731 F.3d 505 (5th Cir. 2013)
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