2. 142 CONG. REC. S2344 (daily ed. Mar. 20, 1996) (statement of Sen. Hollings).

3. See, e.g., John L. Meredith & Brian P. Casey, Taking Cover: Preserving Error When Hit with a Claim for Punitive Damages, 47 BAYLOR L. REV. 923, 938 (1995) (noting that prejudicial awards that evidence no concern for deterrence or retribution are unconstitutional regardless of size of award (citing TXO Prod. Corp., 509 U.S. at 467 (Kennedy, J., concurring))); Developments in the Law-Jury Determination of Punitive Damages, 110 HARV. L. REV. 1513, 1514-15 (1997) (listing potential harms resulting from excessive and indiscriminate punitive damage awards, including "deterrence of socially desirable activities [and] removal of useful products from the market").

4. See infra notes 26-31 and accompanying text (noting that punitive damages stand somewhere between tort law, whose purpose is restitutionary, and criminal law, whose purpose is retributive).

5. See Smith v. Wade, 461 U.S. 30, 59 (1983) (recognizing that although punitive awards are quasi-criminal in nature, defendants cannot take advantage of safeguards associated with criminal proceedings).

6. See Kimberly A. Pace, The Tax Deductibility of Punitive Damage Payments: Who Should Ultimately Bear the Burden for Corporate Misconduct?, 47 ALA. L. REV. 825, 843 (1996) (stating that 46 states have enacted tort reform legislation curbing punitive awards in response to increased frequency and size of such awards in recent years).

7. See RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY (Proposed Final Draft 1997).

8. See BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589 (1996).

9. See MODEL PUNITIVE DAMAGES ACT (1996) [hereinafter MODEL ACT]. The Model Act was passed by the National Conference of Commissioners on Uniform State Laws on July 18, 1996, to "tighten up" state procedures with respect to punitive damages. See Marcia Coyle, Model Act Would Tighten Punitives, NAT'L L.J., Aug. 5, 1996, at A12. The commissioners hope that the Model Act will be adopted by the states. See id. It is doubtful, however, that the states will abandon the effort expended in passing legislation that reflects their views on the appropriate means of tort reform in favor of the Model Act.

10. See infra notes 70-207 and accompanying text (analyzing Supreme Court review of damages under Fifth, Seventh, Eighth, and Fourteenth Amendments).

11. See Jim Fieweger, Note, The Need for Reform of Punitive Damages in Mass Tort Litigation: Juzwin v. Amtorg Trading Corp., 39 DEPAUL L. REV. 775, 794-800, 823 (1990) (illustrating judicial system's inability to adapt to mass tort litigation).

12. See id. at 823 ("As a result of the state based nature of punitive claims, federal and state courts are powerless to individually remedy the shortcomings in mass tort punitive damages procedures. Congress, therefore, must step in to cure the ills of mass tort litigation."); Jonathan Hadley Koenig, Note, Punitive Damage "Overkill" After TXO Production Corp. v. Alliance Resources: The Need for a Congressional Solution, 36 WM. & MARY L. REV. 751, 768-69 (1995) (stressing need for legislative solution to punitive damage abuses).

13. See 142 CONG. REC. S2560 (daily ed. Mar. 21, 1996) (statement of Sen. Rockefeller).

14. Although it is true that punitive damages traditionally have been a matter of state regulation, Congress alone has the power to protect interstate commerce. See U.S. CONST. art. I, . 8, cl. 3. States have been effective in regulating punitive damages within their borders, but they are incapable of doing so on a national level. See Janet V. Hallahan, Social Interests Versus Plaintiffs' Rights: The Constitutional Battle over Statutory Limitations on Punitive Damages, 26 LOY. U. CHI. L.J. 405, 406-07 (1995) (explaining that courts have upheld state laws restricting punitive damage awards).

15. See Healy v. Beer Inst., 491 U.S. 324, 336 (1989) (indicating that Commerce Clause prohibits states from regulating commerce wholly outside its borders even if such commerce affects conditions within state).

16. See Fieweger, supra note 11, at 823 (stating that congressional solution to excessive punitive awards is needed to address problem on national scale).

17. See Day v. Woodworth, 54 U.S. 363, 371 (1851) (recognizing propriety of awarding punitive damages).

18. See Wilkes v. Wood, 98 Eng. Rep. 489, 498-99 (K.B. 1763) ("[Punitive d]amages are designed not only as a satisfaction to the injured person, but likewise as a punishment to the guilty, to deter from any such proceeding for the future, and as a proof of the detestation of the jury to the action itself."); see also Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 274 (1989) (tracing roots of punitive damages to thirteenth century England). For a detailed history of punitive damages, see Michael Rustad & Thomas Koenig, Historical Continuity of Punitive Damage Awards: Reforming the Tort Reformers, 42 AM. U. L. REV. 1269, 1284-1304 (1993).

19. See Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 8 n.4 (1991) (comparing Fay v. Parker, 53 N.H. 342, 382 (1872), with Luther v. Shaw, 147 N.W. 18, 20 (Wis. 1914)). The Court in Fay indicated, "The idea is wrong. It is a monstrous heresy. It is an unsightly and an unhealthy excrescence, deforming the symmetry of the body of law." Fay, 53 N.H. at 382. In comparison, the court in Luther saw punitive awards as a positive influence on society.

The law giving exemplary damages is an outgrowth of the English love of liberty regulated by law. It tends to elevate the jury as a responsible instrument of government, discourages private reprisals, restrains the strong, influential, and unscrupulous, vindicates the right of the weak, and encourages recourse to, and confidence in, the courts of law by those wronged or oppressed by acts or practices not cognizable, in or not sufficiently punished, by the criminal law.

Luther, 147 N.W. at 20.

20. Compensatory damages are awarded to compensate injured plaintiffs, to restore them to the position they would have been in if the injury never had occurred. See RESTATEMENT (SECOND) OF TORTS . 908(1) (1995) [hereinafter RESTATEMENT]. Compensatory damages reimburse the injured person for medical expenses, lost wages, lost earning capacity, and pain and suffering. See id. Punitive damages are not intended to compensate the individual plaintiff. See, e.g., Enstan Group, Inc. v. Grassgreen, 812 F. Supp. 1562, 1583 n.14 (M.D. Ala. 1993); Freeman v. World Airways, Inc., 596 F. Supp. 841, 846 (D. Ma. 1984); Morris v. Parke, Davis & Co., 573 F. Supp. 1324, 1326 (C.D. Cal. 1983).

21. RESTATEMENT, supra note 20, . 908(1); see also Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974) (noting that punitive damages "are not compensation for injury . . . [but] are private fines levied by civil juries to punish reprehensible conduct and to deter its future occurrence"); WILLIAM B. HALE, HANDBOOK ON THE LAW OF TORTS 234 (1896) (stating that punitive damages are awarded because of "the grossness of the wrong done, rather than as a measure of compensation").

22. See Angela P. Harris, Rereading Punitive Damages: Beyond the Public/Private Distinction, 40 ALA. L. REV. 1079, 1097-98 (arguing that conventional notion of tort law as a private right concerned only with compensation, and criminal law as a public right concerned with punishment, is inaccurate).

23. See F. Warren Jacoby, The Relationship of Punitive Damages and Compensatory Damages in Tort Actions, 75 DICK. L. REV. 585, 587 (1970) ("Punitive damages are not intended to remunerate the injured party for the damages he may have sustained. They are not to compensate; they are the penalty the law inflicts for gross, wanton, and culpable negligence, and are allowed as a warning or as an example to defendants or others."); see also Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1333 (5th Cir. 1995) ("Punitive damages . . . are fundamentally collective; their purpose is to protect society by punishing and deterring wrongdoing.").

24. See Douglas L. Carden, Punitive Damages in Products Liability Cases, 16 SANTA CLARA L. REV. 895, 922 (1976) (stating that compensatory damages alone may not deter wrongful conduct); see also The Product Liability Fairness Act: Hearings on S. 565 Before the Subcomm. on Consumer Affairs, Foreign Commerce, and Tourism of the Senate Comm. on Commerce, Science, and Transp., 104th Cong. 234-36 (1995) [hereinafter Product Liability Fairness Hearing] (statement of Jonathan Massey, attorney, Washington, D.C.) (stating that compensatory damages alone are not enough of a deterrent to keep dangerous products off the market-punitive damages are necessary); Punitive Damage Tort Reform, 1995: Hearings on S. 671 & S. 672 Before the Senate Judiciary Comm., 104th Cong. 79 (1995) [hereinafter Punitive Damages Hearing] (statement of Robert Creamer, Executive Director, Illinois Public Action). Mr. Creamer indicated that compensatory damages alone do not provide enough protection to consumers:

In the Ford Pinto case, an economic calculation was made that 180 violent deaths and 180 additional serious injuries would cost the company less than the $11 per car necessary to prevent them. It is only the possibility that a jury might award substantial punitive damages of unknown size that prevents this kind of death calculus from being done by corporations every day.

Id.

25. See Eichenseer v. Reserve Life Ins. Co., 934 F.2d 1377, 1383-84 (5th Cir. 1991) (upholding size of punitive damage award because of its deterrent effect on manufacturer); Lynda G. Wilson, Note, Corporate Successor Liability for Punitive Damages in Products Liability Litigation, 40 S.C. L. REV. 509, 513-14 (1989) (stating that punitive damages help in deterring misconduct and prove to be useful tool in preventing manufacturers' wrongful acts).

26. See Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 54 (1991) (O'Connor, J., dissenting) (describing punitive damages as "quasi-criminal punishment"); Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 275 (1989) ("[P]unitive damages advance the interests of punishment and deterrence, which are also among the interests advanced by the criminal law . . . ."); Smith v. Wade, 461 U.S. 30, 59 (1983) (Rehnquist, J., dissenting) (explaining that punitive damage awards are "quasi-criminal"); see also David G. Owen, Punitive Damages in Products Liability Litigation, 74 MICH. L. REV. 1258, 1260 (1976) (detailing purpose of punitive damages in products liability litigation); Richard A. Seltzer, Punitive Damages in Mass Tort Litigation: Addressing the Problem of Fairness, Efficiency and Control, 52 FORDHAM L. REV. 37, 43 (1983) (addressing quasi-criminal nature of punitive sanctions).

27. Dorsey D. Ellis, Jr., Fairness and Efficiency in the Law of Punitive Damages, 56 S. CAL. L. REV. 1, 2 (1982).

28. See RESTATEMENT, supra note 20, . 908 cmt. a (stating that purpose of punitive damages is same as purpose of criminal fines); see also David G. Owen, Problems in Assessing Punitive Damages Against Manufacturers of Defective Products, 49 U. CHI. L. REV. 1, 8 (1982) ("[T]he purpose of such damages is punishment and deterrence, rather than compensation . . . ."); Seltzer, supra note 26, at 43 (explaining that purpose of punitive damages is to punish offenders).

29. Landgraf v. USI Film Prod., 511 U.S. 244, 281 (1994); see also Haslip, 499 U.S. at 19 (noting that punitive damages serve same purposes as criminal punishment-"retribution and deterrence"); Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 82 (1971) (stating that punitive damages "serve the same function as criminal penalties and are in effect private fines").

30. See Haslip, 499 U.S. at 19 (finding that most states impose punitive damages "for purposes of retribution and deterrence"); Day v. Woodworth, 54 U.S. 363, 371 (1851) (explaining that juries often awarded additional compensation to plaintiffs in cases where defendants' acts were seen as wanton or malicious); Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1332-33 (5th Cir. 1995) (stating that punitive damages punish wrongdoers for their intentional or malicious acts and are used to deter similar future conduct); Acosta v. Honda Motor Co., 717 F.2d 828, 836-37 (3d Cir. 1983) (providing arguments for and against using punitive damages to serve goals of punishment and deterrence); Gryc v. Dayton-Hudson Corp., 297 N.W.2d 727, 735-36 (Minn. 1980) ("The punitive damages remedy serves to punish a . . . manufacturer for and deter that manufacturer from willfully, wantonly, or maliciously marketing a [product] which is unreasonably dangerous . . . ."); Wangen v. Ford Motor Co., 294 N.W.2d 437, 458-59 (Wis. 1980) (indicating that jury awards should not be more than necessary to serve purposes of punitive damages-punishment and deterrence); see also Model Act, supra note 9, . 1 at 3 (noting that "'punitive damages' means an award of money made to a claimant solely to punish or deter"); Richard C. Ausness, Retribution and Deterrence: The Role of Punitive Damages in Products Liability Litigation, 74 KY. L.J. 1, 39, 70-71 (1986) (explaining economic model of punitive damages for purpose of deterrence); Robert D. Cooter, Punitive Damages for Deterrence: When and How Much?, 40 ALA. L. REV. 1143, 1146 (1989) (indicating that punishment and deterrence are goals of punitive damages); Ellis, supra note 27, at 8-9 (describing objective of punitive damage awards); Jacoby, supra note 23, at 587-88; Owen, supra note 28, at 8-9.

31. But see Robert D. Cooter, Economic Analysis of Punitive Damages, 56 SO. CAL. L. REV. 79, 90 (1982) (suggesting that courts may have additional motives for awarding punitive damages including rewarding plaintiffs who otherwise would not have sued and compensating victims fully); Ellis, supra note 27, at 3 (listing several purposes for imposing punitive damages including preserving the peace, inducing private law enforcement, compensating victims for otherwise uncompensated losses, and paying plaintiffs' attorney fees); David G. Owen, A Punitive Damage Overview: Functions, Problems and Reform, 39 VILL. L. REV. 363, 374 (1994) (articulating five functions of punitive damage awards: education, retribution, deterrence, compensation, and law enforcement); see also Campus Sweater & Sportswear Co. v. M.B. Kahn Constr. Co., 515 F. Supp. 64, 105 (D.S.C. 1979) (holding that punitive damages deter manufacturers from misconduct, encourage production of safer products, and serve as "private revenge which is carried out in the courts rather than through duels or in back alleys"), aff'd, 644 F.2d 877 (4th Cir. 1981). This Article addresses only true punitive damage awards, not compensatory damages masked as punitive.

32. KAN. STAT. ANN. . 60-3701(b) (1994); see also MISS. CODE ANN. . 11-1-65(e) (Supp. 1996). The Mississippi Code also mandates that courts consider a variety of factors in assessing damages:

In all cases involving an award of punitive damages, the fact-finder, in determining the amount of punitive damages, shall consider, to the extent relevant, the following: the defendant's financial condition and net worth; the nature and reprehensibility of the defendant's wrongdoing, for example, the impact of defendant's conduct on the plaintiff, or the relationship of the defendant to the plaintiff; the defendant's awareness of the amount of harm being caused and the defendant's motivation in causing such harm; the duration of the defendant's misconduct and whether the defendant attempted to conceal such misconduct; and any other circumstances shown by the evidence that bear on determining a proper amount of punitive damages.

Id.

33. See Coffey v. Fayette Tubular Prods., 929 S.W.2d 326 (Tenn. 1996). The court in Coffey enumerated the factors for consideration in assessing a punitive damage award:

[I]n Hodges we set forth a list of factors to guide the discretion of the fact finder in assessing the amount of punitive damages. We instructed the fact finder to consider:

(1) The defendant's financial affairs, financial condition, and net worth;

(2) The nature and reprehensibility of the defendant's wrongdoing, for example

(A) The impact of defendant's conduct on the plaintiff, or

(B) The relationship of defendant to plaintiff;

(3) The defendant's awareness of the amount of harm being caused and defendant's motivation in causing the harm;

(4) The duration of defendant's misconduct and whether defendant attempted to conceal the conduct;

(5) The expense plaintiff has borne in the attempt to recover the losses;

(6) Whether defendant profited from the activity, and if defendant did profit, whether the punitive award should be in excess of the profit in order to deter similar future behavior;

(7) Whether, and the extent to which, defendant has been subjected to previous punitive damage awards based upon the same wrongful act;

(8) Whether, once the misconduct became known to the defendant, defendant took remedial action or attempted to make amends by offering a prompt and fair settlement for actual harm caused;

(9) Any other circumstances shown by the evidence that bear on determining the proper amount of the punitive award.

Id. at 328 (citing Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901-02 (Tenn. 1992)); see also Jonathan Woodner Co. v. Breeden, 665 A.2d 929, 941 n.19 (D.C. 1995) (explaining factors drawn from common law used in determining punitive awards); Schaffer v. Edward D. Jones & Co., 552 N.W.2d 801, 807 n.3 (S.D. 1996) (setting forth factors jury may consider when awarding punitive damages); Management Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co., 539 N.W.2d 111, 122 (Wis. Ct. App. 1995) (noting that Wisconsin "case law establishes the factors to be considered in determining the proper amount to be awarded as punitive damages").

34. See RESTATEMENT, supra note 20, . 908(2) & cmts. b-e.

35. See Owen, supra note 28, at 9 (noting that juries consider the seriousness of defendant's misconduct when assessing punitive damages).

36. See TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 460 (1993) (noting that in calculating punitive damages, jury may consider potential harm that might have resulted from defendant's bad acts as well as harm that actually occurred, but requiring reasonable relationship between harm and punitive damage award (citing Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 21 (1991))); Garnes v. Fleming Landfill, Inc., 413 S.E.2d 897, 909 (W. Va. 1991) ("As a matter of fundamental fairness, punitive damages should bear a reasonable relationship to compensatory damages."); see also Acosta v. Honda Motor Co., 717 F.2d 828, 839 (3d Cir. 1983) (recognizing that size of compensatory damage award should be considered when assessing punitive award); Tudor Assocs. Ltd., II v. AJ & AJ Servicing, Inc., 843 F. Supp. 68, 79 (E.D.N.C. 1993) (requiring punitive damage awards to "bear a rational relationship to the sum reasonably needed to punish the defendant for his conduct"); Owen, supra note 28, at 9 (explaining that some states mandate that punitive awards "bear a reasonable relationship" to compensatory award). But see Jacoby, supra note 23, at 603-04 (arguing that there is no logical basis for requiring punitive damages to be related to compensatory). The Supreme Court made clear in TXO, however, that the ratio of punitive damages to actual damages, although a factor to be considered, is not dispositive. See TXO, 509 U.S. at 462.

37. See, e.g., Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 21-22 (1991) (stating that in assessing punitive damages, jury should consider "financial position" of defendant); Boyle v. Lorimar Productions, Inc., 13 F.3d 1357, 1359-60 (9th Cir. 1994) (noting that California's jury instructions require juries to consider defendant's financial condition in determining whether award is sufficient to punish and deter); Silkwood v. Kerr-McGee Corp., 485 F. Supp. 566, 603 (W.D. Okla. 1979) (instructing jury that consideration of defendant's wealth when assessing punitive damages is "consistent with the general purpose of such an award in deterring the defendant . . . from committing similar acts in the future, and for punishment of the defendant for such acts"), aff'd, 637 F.2d 743 (10th Cir. 1980).

38. See Kenneth S. Abraham & John C. Jeffries, Jr., Punitive Damages and the Rule of Law: The Role of Defendant's Wealth, 19 J. LEGAL STUD. 415, 416-20 (1989) (arguing that considering defendant's wealth when assessing a punitive award encourages punishment based solely on defendant's status, is incompatible with purposes of tort law and compensation, and does not deter socially undesirable conduct). Such criticism ignores the fact that punitive damages are not based merely in tort law, but actually stand between tort and criminal law; therefore, the fact that considerations of wealth make them incompatible with the traditional notions of tort compensation offers no support for excluding this information from the punitive damage assessment process.

39. See TXO, 509 U.S. at 464 n.29 (noting that for punitive damages to be effective, courts must take into account all relevant factors, including defendant's financial position); cf. Theodore Eisenberg et al., The Predictability of Punitive Damages, 26 J. LEGAL STUD. 623, 628-29 (1997) (arguing that amount of punitive damages should reflect defendant's financial position).

40. The jury instruction given in TXO read in relevant part:

The object of [punitive damages] is to deter [product manufacturers] from committing like offenses in the future. Therefore the law recognizes that to in fact deter such conduct may require a larger fine upon one of large means than it would upon one of ordinary means under the same or similar circumstances.

TXO, 509 U.S. at 464 n.29.

41. See TXO Prod. Corp. v. Alliance Resources Corp., 419 S.E.2d 880, 889 (W. Va. 1992) ("[A]n award that might be unreasonable if awarded against Jeff's Neighborhood Hot Dog Stand could be quite reasonable if awarded for the same conduct against McDonald's."), aff'd, 509 U.S. 443 (1993).

42. See Haslip, 499 U.S. at 21-22 (noting that in assessing punitive damages, jury should consider "financial position" of defendant); Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1333 (5th Cir. 1995) (indicating that because the purpose of punitive damages is to deter wrong-doing, damage awards are tailored to defendant's wealth); Acosta v. Honda Motor Co., 717 F.2d 828, 839 (3d Cir. 1983) ("[T]his court has previously recognized that . . . the wealth of the defendant . . . should be taken into account in assessing punitive damages."); Caron v. Caron, 577 A.2d 1178, 1180 (Me. 1990) (noting that damages must have some relationship to defendant's financial status in order to act as deterrent); Braley v. Berkshire Mut. Ins. Co., 440 A.2d 359, 363 (Me. 1982) (stating that punitive damage awards "must . . . bear some relationship to the actual wealth of the defendant"); Whittington v. Whittington, 535 So. 2d 573, 584 (Miss. 1988) (considering financial worth of defendant in computing punitive damages); Bundy v. Century Equip. Co., 692 P.2d 754, 759 (Utah 1984) (finding that, in absence of evidence regarding defendant's net worth, an award of punitive damages cannot be sustained); see also KAN. STAT. ANN. . 60-3701 (1994) (stating that court must consider financial condition of defendant in assessing punitive damage award); MISS. CODE ANN. . 11-1-65(e) (Supp. 1996) (noting that fact-finder must consider "defendant's financial condition and net worth" in determining amount of punitive damages to award); RESTATEMENT, supra note 20, . 908(2) & cmts. b-e.

43. See Haslip, 499 U.S. at 22.

While punitive damages in Alabama may embrace such factors as the heinousness of the civil wrong, its effect upon the victim, the likelihood of its recurrence, and the extent of the defendant's wrongful gain, the factfinder must be guided by more than the defendant's net worth. Alabama plaintiffs do not enjoy a windfall because they have the good fortune to have a defendant with a deep pocket.

Id.

44. See Owen, supra note 28, at 9. But see CONN. GEN. STAT. ANN. . 52-240b (West 1991) (noting that judge shall determine amount of punitive damages to be awarded in products liability cases); KAN. STAT. ANN. . 60-3701 (1994) (allowing jury to decide if punitive damages are appropriate, but shifting determination of amount from jury to judge); OHIO REV. CODE ANN. . 2307.80 (Anderson 1995) (mandating that court determine amount of damages); Owen, supra note 26, at 1320-22 (advocating that judges, not juries, should determine amount of punitive damage awards); Lisa M. Sharkey, Comment, Judge or Jury: Who Should Assess Punitive Damages, 64 U. CIN. L. REV. 1089 (1996) (arguing that judges, not juries, should decide amount of punitive damage awards).

45. See, e.g., Grimshaw v. Ford Motor Co., 174 Cal. Rptr. 348 (Cal. Ct. App. 1981) (up-holding trial court's remittitur to $3.5 million of a jury award of $125 million in punitive damages); 735 ILL. COMP. STAT. ANN. 5/2-1207 (West 1992) (noting that trial court has discretion to enter remittitur if punitive damage award is excessive). In fact, in Honda Motor Co. v. Oberg, 512 U.S. 415 (1994), the Supreme Court held that an amendment to a state constitution that prohibited judicial review of punitive damage awards was a violation of due process. See id. at 432.

46. See 735 ILL. COMP. STAT. ANN. 5/2-1115.05(c) (West Supp. 1996); see also MINN. STAT. ANN. . 549.20 (West Supp. 1996) (permitting separate proceeding to determine punitive damages); N.C. GEN. STAT. . 1D-30 (1995) (allowing defendant to request that liability for compensatory and punitive damages be tried separately).

47. See, e.g., KAN. STAT. ANN. . 60-3701 (1994); MONT. CODE ANN. . 27-1-221(7)(a) (1991).

48. See MONT. CODE ANN. . 27-1-221(7)(a) (1995) (stating that evidence of defendant's financial condition is not admissible until fact finder determines, in a separate proceeding, amount of punitive damage award, at which point defendant's financial condition must be considered); see also UTAH CODE ANN. . 78-18-1(2) (1996) (noting that evidence of defendant's wealth is admissible only after finding liability for punitive damages); Oberg, 512 U.S. at 432 ("[T]he presentation of evidence of a defendant's net worth creates the potential that juries will use their verdicts to express biases against big businesses, particularly those without strong local presences.").

49. See Oberg, 512 U.S. at 432 (recognizing jury bias against large out-of-state firms); see also Glennon v. Dean Witter Reynolds, Inc., 83 F.3d 132, 138 (6th Cir. 1996) (deciding that review of arbitrators' punitive awards is unwarranted "because arbitrators do not share juries' bias against big business defendants").

50. See, e.g., Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 54-55 (1991) (O'Connor, J., dissenting) ("Over the last 20 years, the Court has repeatedly criticized common-law punitive damages procedures on the ground that they invite discriminatory and otherwise illegitimate awards." (citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974))); id. at 39 (Scalia, J., concurring) ("[P]unitive damages assessed under common-law procedures are far from a fossil, or even an endangered species. They are (regrettably to many) vigorously alive. To effect their elimination may well be wise, but is not the role of the Due Process Clause."); Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 282 (1989) (O'Connor, J., and Stevens, J., concurring in part and dissenting in part) ("Awards of punitive damages are skyrocketing. As recently as a decade ago, the largest award of punitive damages affirmed by an appellate court in a products liability case was $250,000. Since then, awards more than 30 times as high have been sustained on appeal.") (internal citations omitted); see also Product Liability Fairness Hearing, supra note 24, at 432 (statement of Theodore B. Olson, Esq., Gibson, Dunn & Crutcher LLP) (stating that "punitive damage awards are exploding out of control"). But see Michael Rustad, In Defense of Punitive Damages in Products Liability: Testing Tort Anecdotes with Empirical Data, 78 IOWA L. REV. 1, 57-58 (1992) (finding that from 1965 to 1990, there were only 355 punitive damage awards in products liability cases and more than half of these punitive damage awards were reduced in settlement or were reduced by appellate courts).

51. 499 U.S. 1 (1991).

52. Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 61-62 (1991) (O'Connor, J., dissenting) (internal citations omitted).

53. Petition for Writ of Certiorari at 26, BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589 (1996) (No. 94-896).

54. For example, in the well-publicized McDonald's case in which a customer spilled coffee into her lap, the jury's award of $2.7 million in punitive damages was reduced by the judge to $640,000. See Liebeck v. McDonald's Restaurants, Inc., No. CV-93-02419, 1995 WL 360309, at *1 (D.N.M. Aug. 18, 1994); Benjamin Weiser, Tort Reform's Promise, Peril; Legislation Could Mean Tight Limits on Liability, WASH. POST, Sept. 14, 1995, at A1 (stating that $2.7 million award later was reduced by judge to $640,000). The $70 million verdict against a director of Amerco was reduced to $7 million. See In re Shoen, 193 B.R. 302, 305 (Bankr. D. Ariz. 1996) (reducing jury damages award in remittitur proceeding based on jury finding that defendants reduced plaintiff's stock value in contested corporation by $1.4 billion). The $58 million verdict against Maryland Casualty for breach of contract and bad faith also was reversed as excessive. See Dempsey v. Maryland Cas. Co., BC-033631 (Super. Ct. Los Angeles Co., Oct. 27, 1994) (invalidating $61 million jury award based on Maryland Casualty's breach of contract and bad faith in refusing to pay fire insurance claim); Verdicts Reversed by Judges, NAT'L L.J., Feb. 6, 1995, at C14 (listing Dempsey as one of 11 of 1994's largest damage award reversals). In the Mercury Finance case, the judge found the $50 million award excessive and offered the plaintiff a choice between a new trial or a remitted award of $2 million. See Johnson v. Mercury Fin. Co. of Ala., No. CV-93-072 (Cir. Ct. Barbour Co. Ala., Jan. 27, 1995) (reducing award through undisclosed settlement when trial court deemed $90,000 compensatory and $50 million punitive awards excessive based on used car sale in which $1000 was added to $2700 automobile purchase price to cover financing acquisition fee); Alvin C. Harrell, Disclosure of "Acquisition Fees" in Assignments of Consumer Chattel, 49 CONSUMER FIN. L.Q. REP. 145, 147-48 (1995) (describing political climate in Barbour County, Alabama, including historical ties between plaintiff's attorney, 6000 member jury pool, and judge presiding over case which led to excessive award in "aberrational" decision of otherwise "well-settled" legal principle in consumer chattel paper transfer). The parties reportedly settled rather than seek a new trial. See id. at 148. The $6.9 million punitive damage award against Baker & McKenzie for sexual harassment subsequently was reduced by the judge to $3.5 million. See Weeks v. Baker & McKenzie, 66 Fair Empl. Prac. Cas. (BNA) 581, 584-85 (Cal. Super. Ct. Nov. 28, 1994) (finding 138:1 ratio of punitive to compensatory award excessive where law firm defendant took corrective action before trial by forcing offending partner to leave firm and reducing award from $6.9 million to $3.5 million). The judge reversed the $80 million verdict against Hughes for racial discrimination, finding the award excessive and "grossly disproportionate." Lane v. Hughes Aircraft Co. Inc., BC-075519 (Super. Ct., Los Angeles Co., Oct. 19, 1994) (finding that prejudicial evidence was admitted improperly and that plaintiff's counsel improperly used inflammatory language in arguments to jury); Verdicts Reversed by Judges, NAT'L L.J., Feb. 6, 1995, at C14 (citing Hughes Aircraft as one of 11 of 1994's largest damage award reversals). The $109 million judgment against Blockbuster for "maliciously defrauding one of its investors" was settled. See Owen McDonald, Out-of-Court Settlement Reached in Blockbuster Investor Suit, Jan. 7, 1996, available in 1996 WL 8351823. The $5 million judgment against Hilton Hotel for negligence and for maliciously and oppressively denying the plaintiff her right to safety subsequently was reduced by the judge to $3.9 million. See Coughlin v. Hilton Hotels Corp., 879 F. Supp. 1047, 1053 (D. Nev. 1995) (reducing compensation contribution and punitive treble damage amounts by $400,000 previously paid by separate defendant); Robin Abcarian, Balancing Safety and the Bottom Line in Nevada, L.A. TIMES, June 7, 1995, at 1 (reporting Nevada state legislative efforts to reduce hotel liability for safety and security related negligence involving hotel guests).

55. See Weiser, supra note 54, at A1 (outlining proposed tort reform legislation). In his exhaustive 1992 study of punitive damages, Professor Michael Rustad found that half of all punitive awards are appealed and half of those appealed are reversed or reduced. See Rustad, supra note 50, at 57-58. Yet even this study does not reflect accurately how many awards would have been reduced by the court because many plaintiffs settle for less than the amount rewarded before the court has the opportunity to reduce. See id.

56. See Darryl K. Brown, Structure and Relationship in the Jurisprudence of Juries: Comparing the Capital Sentencing and Punitive Damages Doctrine, 47 HASTINGS L.J. 1255, 1301 (1996) (arguing that courts have regulated the imposition of punitive damages by focusing "jury deliberation on factors deemed relevant by the legislature and minimiz[ing] consideration of irrelevant factors").

57. See Product Liability Fairness Hearing, supra note 24, at 432 (statement of Theodore B. Olson, Esq., Gibson, Dunn & Crutcher LLP) ("[T]he frequency and magnitude of punitive damage awards are exploding out of control when measured either by jury verdicts or by amounts affirmed on appeal . . . .").

58. See id.

59. See Carrie Menkel-Meadow, Whose Dispute Is It Anyway?: A Philisophical and Democratic Defense of Settlement (In Some Cases), 83 GEO. L.J. 2663, 2680-81 (1995) (describing effect of jury verdicts and settlement process on future litigation).

60. See Punitive Damages Hearing, supra note 24, at 85-94 (statement of George L. Priest, Professor of Law and Economics, Yale Law School). According to one study, there has been a dramatic increase in punitive damage claims filed in tort cases. See id. at 87.

61. See Pace, supra note 6, at 841.

62. See Malcolm E. Wheeler, A Proposal for Further Common Law Development of the Use of Punitive Damages in Modern Product Liability Litigation, 40 ALA. L. REV. 919, 919 (1989) ("The last two decades have witnessed dramatic growth in both the frequency and size of punitive damages awards in product liability litigation. . . . Today, hardly a month goes by without a multimillion-dollar punitive damages verdict in a product liability case."); see also James B. Sales, The Emergence of Punitive Damages in Product Liability Actions: A Further Assault on the Citadel, 14 ST. MARY'S L.J. 351, 391-92 (1983) (noting that product suppliers are threatened by number and size of punitive damages awards facing manufacturing industry). But see Stephen Daniels & Joanne Martin, Myth and Reality in Punitive Damages, 75 MINN. L. REV. 1, 35-62 (1990) (presenting empirical evidence to contradict claims regarding size and frequency of punitive damages awards); Rustad, supra note 50, at 23 ("Every empirical study of punitive damages awards concludes that there is simply no evidence that punitive damages are routinely awarded.").

63. See, e.g., GA. CODE ANN. . 51-12-5.1(c) (1993 & Supp. 1996) ("[P]unitive damages shall be awarded not as compensation to a plaintiff but solely to punish, penalize, or deter a defendant . . . ."); KY. REV. STAT. ANN. . 411.184(1)(f) (Banks-Baldwin 1995) ("'[P]unitive damages' includes exemplary damages and means damages, other than compensatory and nominal damages, awarded against a person to punish and to discourage him and others from similar conduct in the future . . . .").

64. See, e.g., ALA. CODE . 6-11-20(a) (Supp. 1992); CAL. CIV. CODE . 3294(a) (West Supp. 1992); CONN. GEN. STAT. ANN. . 52-240(b) (West 1997); GA. CODE ANN. . 51-12-5.1(d), (e) (1993 & Supp. 1996); 735 ILL. COMP. STAT. ANN. 5/22107 (West Supp. 1996); OHIO REV. CODE ANN. . 2307.801(A) (Banks-Baldwin 1994); OR. REV. STAT. . 30.925(1) (1995).

65. See, e.g., ALA. CODE . 6-11-20(a); ALASKA STAT. . 09.17.020 (Michie Supp. 1996); CAL. CIV. CODE . 3294(a); GA. CODE ANN. . 51-12-5.1(b); IDAHO CODE . 6-1604(1) (1992); 735 ILL. COMP. STAT. ANN. 5/21115.05(b); IND. CODE ANN. . 34-4-34-2 (West Supp. 1996); IOWA CODE ANN. . 668A.1 (West 1992); KAN. STAT. ANN. . 60-3701(c) (1995); KY. REV. STAT. ANN. . 411.184; MINN. STAT. ANN. . 549.20(a) (West 1996); MISS. CODE ANN. . 11-1-65(1)(a) (1995); MONT. CODE ANN. . 27-1-221(5) (1991); NEV. REV. STAT. ANN. . 42.005 (Michie 1995); N.J. STAT. ANN. . 2A:15-5.12 (West Supp. 1996); N.C. GEN. STAT. . 1D-15(b) (1995); N.D. CENT. CODE . 32-03.2-11 (Supp. 1995); OHIO REV. CODE ANN. . 2307.80 (products liability cases); id. . 2315.21(c)(3) (all other tort actions); OKLA. STAT. ANN. tit. 23, . 9(A) (West 1987); OR. REV. STAT. . 18.537; S.C. CODE ANN. . 15-33-135 (Law. Co-op. 1993); S.D. CODIFIED LAWS . 60-3701(c) (Michie 1993); UTAH CODE ANN. . 78-18-1(a) (1992). The state of Colorado raised the burden of proof to "beyond a reasonable doubt" before punitive damages can be imposed. See COLO. REV. STAT. ANN. . 13-25-127(2) (West 1989). The state of Maryland requires proof of actual malice. See MD. CODE ANN., CTS. & JUD. PROC. . 3-504(b) (1995); see also Owens-Illinois, Inc. v. Zenobia, 601 A.2d 633, 653 (Md. 1992) (holding that proof of actual malice is required to award punitive damages).

66. See, e.g., OHIO REV. CODE ANN. . 2307.801(B); OR. REV. STAT. . 30.925(2); TEX. CIV. PRAC. & REM. CODE ANN. .. 41.011(a), 41.012 (West 1997).

67. See supra note 65 and accompanying text.

68. See, e.g., COLO. REV. STAT. ANN. 13-21-102 (West Supp. 1996) (stating that punitive damage awards cannot exceed compensatory damages); CONN. GEN. STAT. ANN. . 52-240(b); FLA. STAT. ANN. . 768.73(1) (West 1992 & Supp. 1993) (limiting punitive damages to three times compensatory damages unless plaintiff proves by clear and convincing evidence that higher award is not excessive); 735 ILL. COMP. STAT. 5/2-1115.05(a) (limiting punitive damages to three times economic damages); IND. CODE ANN. . 34-4-34-4; KAN. STAT. ANN. . 60-3701; MONT. CODE ANN. . 27-1-221; NEV. REV. STAT. ANN. . 42.005 (imposing $300,000 cap on punitive damages when actual damages are less than $100,000); N.J. STAT. ANN. . 2A:15-5.14(b) (limiting punitive damages to five times compensatory damages or $350,000, whichever is greater); N.C. GEN. STAT. . 1D-25(b) (capping punitive damages at greater of three times compensatory damages or $250,000); N.D. CENT. CODE . 32-03.2-11(4) (stating that punitive damages cannot exceed two times compensatory damages or $250,000, whichever is greater); OHIO REV. CODE ANN. . 2307.80; OKLA. STAT. ANN. tit. 23, . 9; TEX. CIV. PRAC. & REM. CODE ANN. . 41.007 (capping punitive damages at greater of $200,000 or four times compensatory damages); VA. CODE ANN. . 8.01-38.1 (Michie 1992) (capping all punitive damages at $350,000). But see GA. CODE ANN. . 51-12-5.1(e)(1) ("In a tort case in which the cause of action arises from product liability, there shall be no limitation regarding the amount which may be awarded as punitive damages.") (emphasis added). Georgia does, however, offer defendants some protection in that only one punitive award can be recovered for any act regardless of the number of separate causes of action that might arise from that act. See id. . 51-12-5.1(e)(1). Although this may aid corporations being sued in Georgia, it has no bearing on actions brought in other states, because Georgia's power to legislate stops at its borders. See supra notes 14-15 and accompanying text (discussing national scope of tort award problems).

69. See, e.g., 735 ILL. COMP. STAT. 5/2-2107 (stating that if defendant's conduct "was approved by or was in compliance with standards set forth in an applicable federal or state statute or in a regulation" then no punitive damages may be awarded); OHIO REV. CODE ANN. . 2307.80 (compliance with FDA regulations bars punitive damage awards); 1987 TEX. GEN. LAWS . 81.008 (same). But see Gryc v. Dayton-Hudson Corp., 297 N.W.2d 727, 735-36 (Minn. 1980) (holding that compliance with minimal federal standards of product flammability testing in children's clothing materials does not preclude award of punitive damages).

70. See, e.g., BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589, 1604 (1996) (due process challenge); Honda Motor Co. v. Oberg, 512 U.S. 415, 418 (1994) (procedural due process challenge); TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 446 (1993) (procedural and substantive due process challenge); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 7 (1990) (procedural due process challenge); Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 276-77 (1989) (due process and excessive fines challenge); Paul M. Sykes, Note, Marking a Road to Nowhere? Supreme Court Sets Punitive Damages Guideposts in BMW v. Gore, 75 N.C. L. REV. 1084, 1086 n.9 (1997) (listing recent Supreme Court decisions involving constitutional challenges to punitive damages awards).

71. See U.S. CONST. amend. V ("[N]or shall any person be subject for the same offence to be twice put in jeopardy of life or limb . . . ."); U.S. CONST. amend. VII ("In Suits at common law . . . no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law."); U.S. CONST. amend. VIII ("Excessive bail shall not be required, nor excessive fines imposed . . . ."); U.S. CONST. amend. XIV, . 1 ("[N]or shall any State deprive any person of life, liberty, or property, without due process of law . . . .").

72. See, e.g., Haslip, 499 U.S. at 41 (Kennedy, J., concurring) (urging legislators to consider measures that address size and unpredictability of punitive damages awards).

73. 116 S. Ct. 1589 (1996).

74. See BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589, 1602-03 (1996) ("As in Haslip,[499 U.S. 1 (1991),] we are not prepared to draw a bright line marking the constitutionally acceptable punitive damages award. Unlike that case, however, we are fully convinced that the grossly excessive award imposed in this case transcends the constitutional limit."). At least a majority of the Court held that the award was unconstitutionally excessive. Unfortunately, the Justices are no more uniform in their views regarding the regulation of punitive damage awards than the 50 states. See Timothy S. Lykowski, Tightening the Constitutional Noose Around Punitive Damages Challenges: TXO, What It Means, and Suggestions That Address Remaining Concerns, 68 S. CAL. L. REV. 203, 228-38 (1994) (providing comparative analysis of various Supreme Court Justices' approaches to punitive damages awards including Justice Scalia's "traditional approach," Justice Stevens' "reasonableness" approach, Justice Kennedy's "comparative" approach, and Justice O'Connor's "most limiting" approach).

75. U.S. CONST. amend. V.

76. 490 U.S. 435 (1989).

77. United States v. Halper, 490 U.S. 435, 446 (1989).

78. See id. at 437-38.

79. See id. at 448-49. The Court held that if the civil payment had been remedial, as opposed to punitive, it would have been constitutional. See id.

80. Id. at 451.

81. See infra notes 90-96 and accompanying text (considering Double Jeopardy Clause implications of splitting plaintiffs' damage awards in light of growing state efforts to recoup portions of punitive damage awards into state treasuries and victims' compensation funds); see also Clay R. Stevens, Comment, Split-Recovery: A Constitutional Answer to the Punitive Damages Dilemma, 21 PEPP. L. REV. 857, 885 (1994) (arguing that Court in Halper implicitly suggested that split recovery of punitive damages implicates Double Jeopardy Clause).

82. See Stevens, supra note 81, at 884.

83. U.S. CONST. amend. VIII.

84. 492 U.S. 257 (1989).

85. See Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 260 (1989). Until 1980, Browning-Ferris was the sole provider of roll-off waste collection service (large scale trash removal) in Burlington, Vermont. See id. That year, a former Browning-Ferris local manager entered the market himself, creating a company named Kelco. See id. Kelco had 40% of the roll-off waste market within one year and 43% within two years. See id. When Browning-Ferris was unable to buy out its only competition, the company reacted by trying to drive Kelco out of business by cutting its price by 40% for all new business. See id. Browning-Ferris' regional vice-president ordered the Burlington office to "put [Kelco] out of business. Do whatever it takes. Squish him like a bug." Id. A salesman in the Burlington office was told to put Kelco out of business, being instructed that if "it means give the stuff away, give it away." Id. at 260-61. Kelco brought suit against Browning-Ferris alleging that Browning-Ferris' illegal pricing strategy violated section 2 of the Sherman Act. See id. at 261. A Vermont jury found that Browning-Ferris tried to monopolize the roll-off waste disposal market by interfering with Kelco's contractual relations and awarded Kelco $51,000 in compensatory damages (later trebled) and $6 million in punitive damages. See id. at 260-61.

86. See id. at 260. The court found this interpretation consistent with the intent of the Framers, which was to place limits on the powers of the new government. See id. at 266.

87. Id. at 264 (emphasis added).

88. See Stephen R. McAllister, A Pragmatic Approach to the Eighth Amendment and Punitive Damages, 43 U. KAN. L. REV. 761, 780-87 (1995) (arguing that Excessive Fines Clause should apply where states require that a percentage of a punitive damage award be paid into the state treasury or to a state-sponsored fund).

89. See Browning-Ferris, 492 U.S. at 276 n.21 ("We leave [this] question open for purposes of the Eighth Amendment's Excessive Fines Clause.").

90. See, e.g., COLO. REV. STAT. ANN. . 13-21-102(4) (repealed 1995) (one-third of all punitive damage awards must be paid into state treasury); FLA. STAT. ANN. . 768.73(2)-(4) (West Supp. 1992) (thirty-five percent of punitive damage awards must be paid into state funds); GA. CODE ANN. . 51-12-5.1(e)(2) (1993 & Supp. 1997) (seventy-five percent of all punitive damage awards are paid into state treasury); 735 ILL. COMP. STAT. ANN. 5/2-1207 (West Supp. 1996) (statute allows trial court to apportion punitive damage award between plaintiff, his attorney, and State's Department of Rehabilitation at its discretion); IOWA CODE ANN. . 668A.1(1)-(2) (West 1987) (statute requires that seventy-five percent of punitive damage award be paid into civil fund); KAN. STAT. ANN. . 60-3402(e) (1994) (fifty percent of all punitive damage awards in medical malpractice cases must be paid into state treasury); MO. ANN. STAT. . 537.675.2 (West Supp. 1992) (fifty percent of punitive damage award paid to the Tort Victims Compensation Fund); N.Y. C.P.L.R. . 8701 (McKinney Supp. 1995) (statute requires that 20% of punitive damage awards be paid to state); OR. REV. ST. . 18.540 (1994) (after plaintiff's attorney fees have been paid, 50% of remaining punitive damage award will go to state's Criminal Injuries Compensation Fund); UTAH CODE ANN. . 78-18-1(3) (1992) (after plaintiff's attorney fees and court costs have been paid, 50% of punitive damage award in excess of $20,000 will go to state's General Fund). In a 1992 amendment, the state of Florida reduced its portion of the punitive damage award from 60% to 35% to prevent the state's take from discouraging lawyers who work on a contingency basis from pursuing cases where the recovery would almost exclusively be punitive damages (a case with low compensatory damages-such as an injured homemaker without lost wages). See FLA. STAT. ANN. . 768.73(2)(b) (West Supp. 1992).

91. See supra note 90 and accompanying text.

92. See, e.g., E. Jeffrey Grube, Note, Punitive Damages: A Misplaced Remedy, 66 S. CAL. L. REV. 839, 845-55 (1993) (arguing that windfalls from punitive damage awards could go directly to states without undermining deterrent rationale); Leo M. Stepanian II, Comment, The Feasibility of Full State Extraction of Punitive Damage Awards, 32 DUQ. L. REV. 301, 327-28 (1994) (arguing in favor of awarding punitive damages directly to the state instead of the plaintiff). But see James D. Ghiardi, Punitive Damages: State Extraction Practice Is Subject to Eighth Amendment Limitations, 26 TORT & INS. L.J. 119, 130-31 (1990) (maintaining that awarding punitive damages to state brings these awards within purview of Eighth Amendment's Excessive Fines Clause, which may result in them being held unconstitutional).

93. The plaintiff already has received full compensation for her injuries through compensatory damages. Allowing the plaintiff to keep a punitive damage award, therefore, provides the plaintiff with a windfall. See Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 841 (2d Cir. 1967) (denying punitive damage award when evidence was insufficient to meet New York recklessness requirement and citing increased government regulation, criminal penalties, and compensatory awards as sufficient deterance measures); Molenaar v. United Cattle Co., 553 N.W.2d 424, 427 (Minn. App. 1996) ("State legislatures have imposed other reforms, such as avoiding a windfall by requiring the punitive damages to be paid to the state rather than a litigant."); see also Note, An Economic Analysis of Plaintiff's Windfall from Punitive Damage Litigation, 105 HARV. L. REV. 1900, 1907-08 (1992) (arguing that punitive damage awards create plaintiff windfalls leading to inefficient economic results and proposing legislative response requiring payment to state fund). But see Stevens, supra note 81, at 908 n.77 ("[T]he plaintiff is not completely undeserving because she must expend time, effort, and money as the catalyst who brings the defendant to justice for the sake of society.").

94. See Harris, supra note 22, at 1102 (stating that punitive damages are concerned with injuries to community). Commentators also have argued that if the state were awarded all punitive damage awards, it would increase the number of times parties settled and thereby reduce litigation of these types of cases. See Stepanian, supra note 92, at 325-27. Full state extraction enhances the incentive to settle because plaintiffs likely would settle for any amount greater than their compensatory damages. This result is based on the premise that plaintiffs would be able to keep the money in excess of compensatory damages, whereas that excess amount would go to the state if the case went to trial. See id.

95. See McBride v. General Motors Corp., 737 F. Supp. 1563, 1569-70, 1578 (M.D. Ga. 1990) (finding that state statute allocating 75% of all products liability punitive damage awards to state was a violation of Excessive Fines Clause and was a violation of due process and equal protection because it applied only to product liability suits); Kirk v. Denver Publ'g Co., 818 P.2d 262, 272 (Co. 1992) (holding that state statute that required one third of punitive damage award to be paid to public treasury was unconstitutional taking under both United States and Colorado Constitutions because punitive damage judgment is private property right); Gordon v. State, 585 So. 2d 1033, 1035-38 (Fla. Dist. Ct. App. 1991), aff'd, 608 So. 2d 800 (Fla. 1992) (finding Florida provision apportioning punitive damage awards between plaintiff and state constitutional because a plaintiff does not have a cognizable right to recover punitive damages); see also Burke v. Deere & Co., 780 F. Supp. 1225, 1242 (S.D. Iowa 1991) (holding that state statute that requires portion of punitive award to be paid to civil reparations fund administered by courts does not provide state with any interest in award and, therefore, does not implicate Eighth Amendment concerns), rev'd, 6 F.3d 497 (8th Cir. 1993); Fuller v. Preferred Risk Life Ins. Co., 577 So. 2d 878, 887 (Ala. 1991) (Shores, J., concurring) (suggesting that court has inherent power to apportion punitive damages between plaintiff and state general fund or "some special fund that serves a public purpose or advances the cause of justice"); Shepard Components, Inc. v. Brice Petrides-Donohoe & Assocs., Inc., 473 N.W.2d 612, 619 (Iowa 1991) (requiring 75% of punitive damage award to be paid to state does not violate due process or equal protection because plaintiffs do not have vested property rights in punitive damage awards).

96. See Owens-Corning Fiberglas Corp. v. Dudley, 667 So. 2d 783, 783 (Fla. Dist. Ct. App.) (per curiam), cert. denied, 116 S. Ct. 2498 (1996) (affirming without comment trial court verdict awarding $4.06 million in compensatory damages, $8.25 million in punitive damages, and $3320 in plaintiff's costs in asbestos personal injury action).

97. See BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589, 1591-92 (1996) (providing three "guideposts" used to indicate the excessiveness of a punitive damage award: (1) the degree of reprehensibility of defendant's conduct; (2) the ratio between plaintiff's compensatory damages and the punitive damage award; and (3) the difference between the award and the civil or criminal sanctions that could be imposed for comparable misconduct). The "guideposts" articulated in BMW look surprisingly similar to the considerations Justice O'Connor proposed in her dissent in Browning-Ferris. Justice O'Connor stated:

First, the reviewing court must accord "substantial deference" to legislative judgments concerning appropriate sanctions for the conduct at issue. Second, the court should examine the gravity of the defendant's conduct and the harshness of the award of punitive damages. Third, because punitive damages are penal in nature, the court should compare the civil and criminal penalties imposed in the same jurisdiction for different types of conduct, and the civil and criminal penalties imposed by different jurisdictions for the same or similar conduct.

Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 301 (1989) (O'Connor, J., dissenting).

98. Browning-Ferris, 492 U.S. at 279.

99. See BMW, 116 S. Ct. at 1595 ("Only when an award can fairly be categorized as 'grossly excessive' . . . does it enter the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment.").

100. In addition to its analysis under the Eighth Amendment, Browning-Ferris is significant for its foreshadowing of substantive due process review of punitive damage awards. Justice Brennan, joined by Justice Marshall, issued a concurring opinion expressing his belief that the Due Process Clause imposes both procedural and substantive limitations on punitive awards. See Browning-Ferris, 492 U.S. at 280-81 (Brennan, J., concurring). Justice Brennan actually suggested the "grossly excessive" test, which subsequently was endorsed by the Court. See id. at 281 (Brennan, J., concurring). Justice O'Connor, joined by Justice Stevens, dissented on the Excessive Fines Clause issue and agreed with Justice Brennan regarding the substantive limitations imposed by the Due Process Clause. See id. at 283 (O'Connor, J., dissenting).

101. U.S. CONST. amend XIV, . 1.

102. See infra note 186 and accompanying text.

103. 499 U.S. 1 (1991).

104. See Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 18 (1991) ("[W]e cannot say that the common-law method for assessing punitive damages is so inherently unfair as to deny due process and be per se unconstitutional.").

105. Id.

106. See id. at 4.

107. See id. at 5. An arrangement was made for Union Fidelity to send its billings for the city's health insurance premiums to Ruffin at one of Pacific Mutual's branch offices. See id. Once recieved, Ruffin was responsible for remitting the payments to Union Fidelity. See id.

108. See id.

109. See id. The cancellation notices never were forwarded to the city. See id.

110. See id. The insurance company refused to extend coverage to Haslip and, as a result of her inability to pay, her doctors placed the account with a collection agency, adversely affecting Haslip's credit. See id.

111. See id. Ruffin was sued individually and as a proprietorship, and Pacific Mutual was sued under a theory of respondeat superior. See id.

112. See id. at 6-7. The jury was instructed that if it found the defendants liable for fraud, it could award punitive damages to the plaintiff. See id. at 6. The jury also was directed to take into consideration "the character and the degree of the wrong as shown by the evidence and necessity of preventing similar harm" when fixing the amount. Id. at 6 n.1.

113. See Pacific Mut. Life Ins. Co. v. Haslip, 553 So. 2d 537 (Ala. 1989), aff'd, 499 U.S. 1 (1991). The Alabama Supreme Court determined that the trial judge appropriately had reviewed the punitive damages awarded by the jury, held a hearing, and set forth on the record the reasons why he felt the law did not authorize a remittur. See id. at 543.

114. See Haslip, 499 U.S. at 21, 23-24. "This appellate review makes certain that the punitive damages are reasonable in their amount and rational in light of their purpose to punish what has occurred and deter its repetition." Id. at 21.

115. Id. at 21-22. The Supreme Court reiterated the criteria set forth by the Alabama Supreme Court in Hammond v. City of Godsen, 493 So. 2d 1374, 1379 (Ala. 1986), for determining whether a punitive award is excessive or inadequate. See Haslip, 499 U.S. at 20.

116. 419 S.E.2d 870 (W. Va. 1992), aff'd, 509 U.S. 443 (1993).

117. See TXO Prod. Corp. v. Alliance Resources Corp., 419 S.E.2d 870, 888 (W. Va. 1992), aff'd, 509 U.S. 443 (1993). According to the court, "really stupid defendants" are those who have harmed victims unintentionally as a result of extreme carelessness. See id. The court held that in those "really stupid" cases, punitive damages generally should be limited to five times the compensatory damages. See id. at 889.

118. See id. at 889. "Really mean defendants" are those who have committed intentional acts that they knew were harmful. See id. The court held that in these cases, punitive damages that are 500 times compensatory damages are not per se unreasonable. See id.

119. See id. at 887-88. The court held that when actual compensatory damages are minimal and the potential for harm from defendant's stupidity was great, a punitive award exceeding five times the compensatory award may be justified. See id. at 889.

120. See id. Because the type of fraudulent action intentionally undertaken by the defendant could have caused millions of dollars in damages to other victims, the court found the defendant within the "really mean" category and, consequently, subject to substantial punitive damages. See id.

121. See TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 447-49 (1993).

122. See id. at 447 (quoting TXO, 419 S.E.2d at 875). TXO would pay Alliance $20 per acre in cash, 22% of the oil and gas revenues in royalties, and all of the development costs as part of the "phenomenal" offer. See id.

123. See id. at 448.

124. See id.

125. See id. at 449.

126. See id.

127. See id. at 449-50.

128. See id. at 450.

129. See id. at 450-51. Alliance introduced evidence that TXO had been caught in four similar instances of fraud and misrepresentation preceding the activities in this case. See TXO Prod. Corp. v. Alliance Resources Corp., 419 S.E.2d 870, 881-83 (W. Va. 1992), aff'd, 509 U.S. 443 (1993); see also Sandra L. Nunn, The Due Process Ramifications of Punitive Damages, 63 U. CIN. L. REV. 1029, 1032 n.22 (1995) (discussing videotaped depositions of four attorneys concerning matters in which TXO and each of its clients were involved).

130. See TXO, 509 U.S. at 451.

131. TXO, 419 S.E.2d at 889-90. In deciding whether the $10 million punitive damage award in this case met the "reasonable relationship" test under West Virginia law, the court considered three factors: "(1) the potential harm that TXO's actions could have caused; (2) the maliciousness of TXO's actions; and, (3) the penalty necessary to discourage TXO from undertaking such endeavors in the future." Id. at 889.

132. See TXO, 509 U.S. at 462.

133. See id. at 458.

134. See id. at 462. The Supreme Court held that "the disparity between the punitive award and the potential harm does not, in our view, 'jar one's constitutional sensibilities.'" Id. (quoting Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 18 (1991)). The Court held that the "dramatic disparity" is not dispositive in light of the potential harm to which Alliance was subject, TXO's bad faith, TXO's wealth, and the fact that TXO had a long standing pattern of fraud, trickery, and deceit. See id.

135. See id. at 460. The Supreme Court noted that the "shocking disparity" stressed by TXO dissipates when one considers the possible loss of royalties payments to Alliance had TXO succeeded in its wrongful plan. See id. at 462.

136. A "dramatic disparity" between actual damages and punitive damages (even one 526 times the actual damages) is not determinative of excessiveness in light of other factors involved in the case. See id. at 459-62.

137. See Nunn, supra note 129, at 1085 (recognizing that because the Supreme Court's line of constitutional impropriety moves on a case-by-case basis, "[e]xactly what will cause a punitive damages award to cross this moving line in a given case remains unanswered").

138. 512 U.S. 415 (1994).

139. See Honda Motor Co. v. Oberg, 512 U.S. 415, 435 (1994).

140. See id. at 418.

141. See id.

142. See id.

143. See id.

144. See id. at 430-32. Although Oregon provides pre-verdict safeguards against arbitrary awards, the safeguards do not protect the defendant adequately from the possibility that juries may disregard specific instructions and may impose excessive punitive damages. See id. at 429.

145. See id. at 426.

146. 116 S. Ct. 1589 (1996).

147. See BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589, 1593-94 (1996). Apparently, Gore requested that the jury award punitive damages in the amount of $4000 for each of the approximately 1000 partially refinished cars that BMW sold as new during a ten-year period, even though many of these sales took place outside the state and in states where it was not illegal to withhold this information from the customer. See Brief for Petitioner at 7, BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589 (1996) (No. 94-896), available in 1995 WL 126508.

148. See BMW, 116 S. Ct. at 1595. The Alabama Supreme Court found that the jury improperly included sales outside the state in computing the amount of punitive damages. See id. The court held that the state could not punish BMW for acts that occurred outside state borders. See id. The court determined that a $2 million punitive damage award would be "constitutionally reasonable" under the circumstances. See id.

149. See id. at 1592-93.

150. See id. at 1604. The Court held: "Only when an award can fairly be categorized as 'grossly excessive' in relation to [the state's legitimate interests in punishment and deterrence] does it enter the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment." Id. at 1595.

151. See id. at 1598-99. In his concurrence, Justice Breyer, articulated seven factors that appellate courts should use to determine whether a punitive damage award is grossly excessive: (1) the award must bear a "reasonable relationship" to the harm that is likely to occur from defendant's conduct as well as the harm that actually has occurred; (2) the "degree of reprehensibility" of defendant's conduct; (3) the award must "remove the profit" of the illegal activity; (4) the financial condition of the defendant; (5) the costs of the litigation and the state's desire to encourage plaintiffs to bring wrongdoers to trial; (6) whether criminal sanctions have been imposed; and (7) whether other civil actions have been filed against this defendant for the same conduct. See id. at 1606-07 (Breyer, J., concurring) (citing Green Oil Co. v. Hornsby, 539 So. 2d 218, 223-24 (Ala. 1989)).

152. See id. at 1610 (Scalia, J., dissenting). Justice Scalia stated, "Since the Constitution does not make that concern any of our business, the Court's activities in this area are an unjustified incursion into the province of state governments." See id. (Scalia, J., dissenting). Justice Ginsburg, joined by the Chief Justice, also dissented on federalism grounds with Justice Ginsburg arguing that the Court was encroaching on decisions more appropriately left to the states. See id. at 1614 (Ginsburg, J., dissenting).

153. See id. at 1610-11 (Scalia, J., dissenting).

154. Id. at 1611 (Scalia, J., dissenting).

155. See id. at 1611-12 (Scalia, J., dissenting).

156. See id. at 1612 (Scalia, J., dissenting) (internal citations omitted).

157. See id. at 1613 (Scalia, J., dissenting).

158. See supra note 156 and accompanying text.

159. See BMW, 116 S. Ct. at 1613 (Scalia, J., dissenting) (noting that loophole in guideposts will cause state courts to uphold large awards for the protection of consumers).

160. See infra note 163 and accompanying text (explaining why current system does not work).

161. See Marcia Coyle, Punies Decision Gives Business Potent Ammo, NAT'L L.J., June 3, 1996, at A11.

162. See infra notes 317-21 and accompanying text (explaining that statutory and regulatory penalties offer only minimum standards and are often outdated because of rapidly changing technology).

163. See Teresa Moran Schwartz, Prescription Products and the Proposed Restatement (Third), 61 TENN. L. REV. 1357, 1385 (1994) [hereinafter Schwartz, Prescription Products] (declaring that tort system takes over when regulation fails). Regulation often is inadequate to police corporate wrongdoing because: (1) regulatory agencies are understaffed and underfunded; (2) the regulations are outdated; (3) there is generally a "lag time" between technological advances and regulations to cover those advances; and (4) regulatory violations often are difficult to police. The tort system in general and punitive damage awards in particular play a vital role in policing corporate wrongdoing when the agencies and regulations fall short. See generally Teresa Moran Schwartz, The Impact of the New Products Liability Restatement on Prescription Products, 50 FOOD & DRUG L.J. 399, 405-06 (1995) [hereinafter Schwartz, Impact of the New Restatement] (describing lack of clarity in current FDA regulations); Schwartz, Prescription Products, supra, at 1385-87 (explaining how regulations and tort system can work together to deter unsafe practices); Teresa Moran Schwartz, Punitive Damages and Regulated Products, 42 AM. U. L. REV. 1335, 1343-44 (1993) [hereinafter Schwartz, Punitive Damages] (detailing judicial treatment of regulations and listing concerns about process); Teresa Moran Schwartz, The Role of Federal Safety Regulations in Products Liability Actions, 41 VAND. L. REV. 1121, 1146-52 (1988) [hereinafter Schwartz, Products Liability] (articulating reasons why federal regulatory standards do not work).

164. See Lykowski, supra note 74, at 247 (citing factors that limit usefulness of comparison with criminal penalties).

165. See id. (recognizing that tools such as maximum fine levels and imposition of fines per incident give judges "infinite flexibity" when determining damage award).

166. See Peter A. Antonucci, BMW v. Gore: What Signal Is the Supreme Court Really Sending on Punitive Damages?, Nov. 22, 1996, available in 1996 WL 672396 (calling BMW and subsequent cases "the vehicles that will drive the next chapter in the nation's battle to reform the tort system").

167. See supra note 156 and accompanying text (describing why Supreme Court's guideposts articulated in BMW are not helpful).

168. See Marcia Coyle, Court Disposes of Punitives Lawsuits, NAT'L L.J., June 10, 1996, at A12 (speculating that cases with excessive awards would be remanded for application of guideposts).

169. The Court remanded Ford Motor Co. v. Sperau, 116 S. Ct. 1843 (1996), Combustion Eng'g, Inc. v. Johansen, 116 S. Ct. 1843 (1996), and Apache Corp. v. Moore, 116 S. Ct. 1843 (1996).

170. See Mark I. Levy, High Court Takes Care of Business, NAT'L L.J., July 29, 1996, at C8 (suggesting that denial of review of cases means Justices see limits of decision).

171. See S. REP. NO. 104-69, at 5-6 (1995) (calling current product liability litigation system "a lottery").

172. See id. at 14 (stating that only federal legislation can create uniformity necessary in liability system).

173. See Moran v. Johns-Manville Sales Corp., 691 F.2d 811, 816 (6th Cir. 1982) (awarding punitive damages to insulation installer for disease suffered due to asbestos).

174. See In re Agent Orange Prod. Liab. Litig., 506 F. Supp. 762, 773-74 (E.D.N.Y. 1980) (barring chemical companies that produced Agent Orange from seeking contribution or indemnification from federal government).

175. See Grimshaw v. Ford Motor Co., 119 Cal. App. 3d 757, 820 (1981) (awarding damages to individuals severely burned in Ford Pinto).

176. See In re Dalkon Shield IUD Prods. Liab. Litig., 526 F. Supp. 887 (N.D. Cal. 1981), vacated and remanded on other grounds sub nom. Abed v. A.H. Robins Co., 693 F.2d 847 (9th Cir. 1982).

177. See Note, Class Actions for Punitive Damages, 81 MICH. L. REV. 1787, 1791 (1983) (viewing multiple punitive damage awards as harmful because defendants' assets may be exhausted prematurely). Judge William W. Schwarzer explained to Congress how this problem may exist presently in asbestos litigation:

There are now some 100,000 asbestos cases pending in federal and state courts, and it is expected that over the next ten years an equal number will be filed. Considering that nearly every one of these cases includes a prayer for punitive damages, should such damages be awarded in many of these cases, the aggregate amount would be far in excess of what the defendants would be able to pay. Even without considering punitive damages, the compensation claims alone currently exceed the aggregate assets of the asbestos industry.

Asbestos Litigation Crisis in Federal and State Courts: Hearings Before the Subcomm. on Intellectual Property and Judicial Admin. of the House Comm. on the Judiciary, 102d Cong. 137 (1992) (statement of Judge William W. Schwartzer, Director, Federal Judicial Center) (footnote omitted).

178. See Judith Camile Glasscock, Comment, Emptying the Deep Pocket in Mass Tort Litigation, 18 ST. MARY'S L.J. 977, 993 (1987) (listing discontinuation of beneficial products as possible outcome of multiple punitive awards).

179. 1 F.3d 1371 (3d Cir. 1993).

180. See Dunn v. Owens-Corning Fiberglass, 774 F. Supp. 929, 933-34 (D.V.I. 1991).

181. See Dunn v. Hovic, 1 F.3d 1371, 1373 (3d Cir. 1993). The Third Circuit remitted the punitive award to $1 million. See id.

182. See id. at 1374.

183. See id. at 1389 (ruling that evidence produced by defendant fell short of due process violation).

184. See id. at 1391 (suggesting that "punitive damages overkill" can be solved by scrutinizing past awards paid and ability of defendant to pay future awards). The defendant, however, may not always want to admit evidence concerning other punitive awards that have been imposed. On the one hand, evidence of prior awards of punitive damages could persuade the jury that the defendant already has received sufficient punishment for his act and that no further deterrence is necessary. See John A. Albers, Note & Comment, State of Confusion: Substantive and Procedural Due Process with Regard to Punitive Damages After TXO Production Corp. v. Alliance Resources Corp., 26 U. TOL. L. REV. 159, 201 (1994) (acknowledging that previous punitive damage award payouts may promote sympathy for defendants). On the other hand, such evidence could infuriate the jury, demonstrating to them just how egregious others perceive the defendant's acts to be. See Dennis N. Jones, Multiple Punitive Damage Awards for a Single Course of Wrongful Conduct: The Need for a National Policy to Protect Due Process, 43 ALA. L. REV. 1, 29-30 (1991) (noting that jury might decide to award similarly high damages).

185. See Dunn, 1 F.3d at 1386 ("[N]o single court can fashion an effective response to the national problem flowing from mass exposure to asbestos products."); see also Fischer v. Johns-Manville Corp., 512 A.2d 466, 480 (N.J. 1986) (admitting that courts are powerless in this area); Davis v. Celotex Corp., 420 S.E.2d 557, 565-66 (W. Va. 1992) (discussing unfairness in allowing courts to determine punitive damages).

186. See Gary T. Schwartz, Mass Torts and Punitive Damages: A Comment, 39 VILL. L. REV. 415, 422-23 (1994). Professor Schwartz argued:

This inappropriateness is seen as rooted in our legal system's norm against double jeopardy - let alone multiple jeopardy. . . . United States v. Halper seemingly indicates that the Double Jeopardy Clause does not pertain to private suits seeking punitive damages. Yet, whatever the limitations of the Excessive Fines Clause, when a punitive damage award becomes sufficiently excessive, it violates the substantive norms included in the Due Process Clause. (This point was raised by the Court as a possibility in Browning-Ferris, and was confirmed by the Supreme Court's later opinions in Pacific Mutual Life Insurance v. Haslip and TXO.) Similarly, the core of the prohibition against double jeopardy is probably included in the Due Process guarantee.

Id. (footnotes omitted).

187. See Seltzer, supra note 26, at 55.

188. See Juzwin v. Amtorg Trading Corp., 718 F. Supp. 1233, 1235 (D.N.J. 1989) (citing diversity of treatment by courts as reason not to have one-award rule), rev'd sub nom. Juzwin v. Asbestos Corp., 900 F.2d 686 (3d Cir. 1990). The Court pointed out:

[T]his court does not have the power or the authority to prohibit subsequent awards in other courts, notwithstanding its opinion that such subsequent awards violate the due process rights of the defendants against whom such verdicts are entered. Until there is uniformity either through Supreme Court decision or national legislation, this court is powerless to fashion a remedy which will protect the due process rights of this defendant or other defendants similarly situated.

Id. Congress once considered enacting a national "first comer" statute, but ultimately rejected this legislation because the first punitive award assessed against a defendant may not punish it sufficiently for its misconduct. See S. 44, 98th Cong. . 12f (1984).

189. See Juzwin, 718 F. Supp. at 1235 (realizing that jury instructions stating that punitive award must relate to actual harm suffered directly conflicted with "first-comer" statute that accounts for all of defendant's misconduct). Although it seems unfair that the first plaintiff gets the entire punitive damage award, the first plaintiff has the heaviest burden in bringing suit. Once the first plaintiff blazes a trail, it will be easier for others to follow. A punitive damage award is not a reward or compensation; it is not earned by the plaintiff. Rather, it is a punitive sanction against the defendant for misconduct.

190. See id. (recognizing impossiblity of ensuring that one award covers all of defendant's misconduct).

191. See Victor E. Schwartz & Mark A. Behrens, The American Law Institute's Reporters' Study on Enterprise Responsibility for Personal Injury: A Timely Call for Punitive Damages Reform, 30 SAN DIEGO L. REV. 263, 281 (1993) (advocating proposal in which subsequent claimants could seek punitive damages only by presenting new evidence of defendants' "conscious and deliberate misconduct"); see also Punitive Damages Hearing, supra note 24, at 100 (testimony of Victor E. Schwartz, Esq., General Counsel, American Tort Reform Association) (agreeing with Senator Hatch's proposed solution to problem of multiple damage awards). Such evidence could include the fact that the defendant destroyed or hid damning evidence in the first trial. See id. at 102 (allowing further punishment of defendant in such instances).

192. See, e.g., TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 472 (1993) (Scalia, J., concurring) (stating that punitive damage reform should be undertaken by "the proper institutions of our society," legislatures, not courts); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 39 (1991) (Scalia, J., concurring) (noting that state and federal legislatures should work to restrict punitive damages); Dunn v. Hovic, 1 F.3d 1371, 1399 (3d Cir. 1993) (Weis, J., dissenting) ("Unquestionably, a national solution is needed."); Cantrell v. GAF Corp., 999 F.2d 1007, 1017 (6th Cir. 1993) (noting that relief from multiple punitive awards should be sought from legislature, not courts); Glasscock v. Armstrong Cork Co., 946 F.2d 1085, 1096-97 (5th Cir. 1991) (realizing problems in law as it stands); Edwards v. Armstrong World Indus., Inc., 911 F.2d 1151, 1155 (5th Cir. 1990) ("If no change occurs in our tort or constitutional law, the time will arrive when [a defendant's] liability for punitive damages imperils its ability to pay compensatory claims and its corporate existence."), rev'd sub nom. Celotex Corp. v. Edwards, 514 U.S. 300 (1995); Juzwin, 718 F. Supp. at 1235 (urging national legislation or Supreme Court decision to promote uniformity and protect due process rights); W.R. Grace & Co. v. Waters, 638 So. 2d 502, 505 (Fla. 1994) (noting that the only "realistic solution" to imposition of multiple punitive awards is "federal legislation").

193. See John Calvin Jeffries, Jr., A Comment on the Constitutionality of Punitive Damage Awards, 72 VA. L. REV. 139, 147 (1986) (explaining that repetitive nature of damages cannot be stopped unless national solution is attempted).

194. See GA. CODE ANN. . 51-12-5.1(e)(1) (Supp. 1996); see also MO. ANN. STAT. . 510.263(4) (West Supp. 1997) (crediting defendant with prior punitive damage payments).

195. See U.S. CONST. art. I, . 8 ("The Congress shall have Power . . . To regulate Commerce with foreign Nations, and among the several States . . . ."); see also Punitive Damages Hearing, supra note 24, at 100 (testimony of Victor E. Schwartz, Esq., General Counsel, American Tort Reform Association) (noting that Congress should respond to the request by "federal and state judges, as well as state legislators," for multiple punitive damages fairness legislation).

196. U.S. CONST. amend. VII.

197. 116 S. Ct. 2211 (1996).

198. See Gasperini v. Center for Humanities, Inc., 116 S. Ct. 2211, 2215 (1996).

199. See Gasperini v. Center for Humanities, Inc., 66 F.3d 427, 428 (2d Cir.) (awarding $1500 for each lost slide), vacated, 116 S. Ct. 2211 (1996).

200. See id. at 431.

201. Gasperini, 116 S. Ct. at 2215 (questioning whether New York's practice of appellate review of jury awards is compatible with Seventh Amendment right to trial by jury).

202. See id. at 2222-24. Gasperini was a major victory for the business community. Had the Court held that appellate review was not constitutional, there would be virtually no check on unbridled power of juries to award unjustified amounts of punitive damages. In 1992, an exhaustive punitive damage study of the 355 punitive damage awards in product liability cases over the 25 years preceding 1992 found that more than half of all punitive awards were appealed, and that more than half of those appealed were reversed or reduced. See Rustad, supra note 50, at 57. Absent the check of judicial review/remittitur, all of the awards determined to be unreasonable and excessive would have stood.

203. See Gasperini, 116 S. Ct. at 2217-18 (citing "shock the conscience" as federal standard).

204. See id. (citing "deviates materially" as N.Y. state standard). In its 1986 effort to reform tort law, New York codified a standard of judicial review on the size of jury verdicts. See N.Y. C.P.L.R. . 5501(c) (McKinney 1995). According to the New York legislature, the federal "shock the conscience" test was an insufficient check on damages awards. Therefore, New York enacted a standard that would invite more careful appellate scrutiny of damage awards: "the appellate division shall determine that an award is excessive or inadequate if it deviates materially from what would be reasonable compensation." Id.

205. See Gasperini, 116 S. Ct. at 2219-24 (examining Erie doctrine and ruling that Seventh Amendment does not preclude federal courts from using "deviates materially" standard).

206. See id. at 2220-21 (acknowledging that the "twin aims" of the Erie doctrine, "discouragement of forum-shopping and avoidance of inequitable administration of the laws," forces such a decision (quoting Hanna v. Plumer, 380 U.S. 460, 468 (1965))). Although the state law was procedural, the state's objective in enacting the law was substantive. See id. at 2220. If the federal courts continued to apply the federal standard to cases arising out of New York law, there would be a substantial difference in the outcome of the cases, thereby implicating the twin aims of Erie. See id.

207. See id. at 2220-21 (stating that "abuse of discretion" is standard currently used by federal circuits when faced with assertion of inadequacy or excessiveness).

208. See Robert Bork & Theodore Olson, Commentary, Trial Lawyers and Other Closet Federalists, WASH. TIMES, Mar. 9, 1995, at A21 (explaining that "litigation explosion disregards state lines"). Congressional power to regulate punitive damage awards in products liability cases comes from the Commerce Clause. See U.S. CONST. art. I, . 8 ("The Congress shall have the Power . . . To regulate Commerce with foreign Nations, and among the several States . . . .").

209. See S. REP. NO. 104-69, at 1-2 (1995) (charging current liability system with stifling innovation and with keeping beneficial products off market).

210. See id. at 2 (explaining that American companies are hampered by liability system when competing in global market). Research and development in American industry are being halted or discouraged by the threat of excessive punitive damage awards, thereby making American businesses less competitive in the international market. Consequently, the punitive damages problem is a direct threat to the economic stability of corporate America. See id. at 10-11; see also 141 CONG. REC. S6398 (daily ed. May 10, 1995) (statement of Sen. Glenn) (advocating that legislation is needed to reform system). But see Product Liability Fairness Hearing, supra note 24, at 505 (statement of Stephen Daniels, Ph.D., American Bar Foundation) (challenging notion that punitive damages are source of problem). Proponents also claim that ultimately, consumers are paying for excessive punitive damage awards as companies will pass the burden onto the consumer in the form of higher prices for their goods and services. See 141 CONG. REC. S6397 (daily ed. May 10, 1995) (statement of Sen. Domenici) (noting that Americans no longer can afford to pay tort tax).

211. See S. REP. NO. 104-69, at 14-17 (1995) (providing history of tort reform legislation in Congress).

212. See H.R. 956, 104th Cong. (1996); see also Otto G. Obermaier & Lee Dranikoff, Congressional Legislation Seeks Litigation Reform, N.Y. L.J., Oct. 23, 1995, at S1 (listing different pieces of legislation recently passed by Congress).

213. See H.R. 956 . 2(b) (setting forth purposes of Act). If tort reform is as urgent as proponents claim, then it should be applicable to all cases in which punitive damages can be assessed. In 1996, product liability actions represented only 10% of all federal civil cases filed. See Annual Report of the Director of the Administrative Office of the United States Courts, Table C-2A, at 138 (1996). Limiting these reforms to product liability actions thus would not have the widespread impact some might expect.

214. See H.R. 956, . 102. The federal bill would not have preempted more restrictive state laws. See id. . 108(b)(3)(D). The federal bill would have set only the minimum standards for reforming punitive damage awards. If the state law were more restrictive of punitive awards-for instance, if a state had a higher burden of proof, like Colorado where the burden is beyond a reasonable doubt, or if it had a lower cap, like Virginia where all punitive damage awards are capped at $350,000-then the more restrictive state law would have continued to prevail in that jurisdiction. There was no logical reason supporting such a one-sided application of law. Certainly, the federal legislature was not doing this to preserve state sovereignty, because the bill would have preempted all those states which had less restrictive laws. Moreover, such a provision would have undermined the uniformity and predictability that would have been created by enacting a national law. A federal law would be most beneficial if it preempts all state laws, both those that are more restrictive and those that are more lenient. If the federal legislature insisted upon this one-sided preemption, however, it should have limited the law to cut-and-dry issues such as the amount of the cap, as opposed to issues involving more discretion and potential ambiguity such as the liability standard.

215. See id. . 108(a) (awarding punitive damages only if there is "clear and convincing" evidence of defendant's misconduct).

216. Id.

217. See id. . 108(b) (placing cap on punitive damage awards of two times economic and noneconomic loss or $250,000, whichever is greater).

218. See id. . 108(c) (permitting either party to request a separate proceeding, to be held after the determination of the amount of compensatory damages, on whether to award punitive damages and the amount of the award).

219. See Veto Message from the President, 142 CONG. REC. H4425 (daily ed. May 6, 1996). Many claim that Clinton is controlled by the American trial lawyers who do not want to limit runaway juries because it would reduce their earnings. See John F. Harris, Clinton Vetoes Products Liability Measure; Move Triggers Barrage of Accusations Between White House and Hill Republicans, WASH. POST, May 3, 1996, at A14 (quoting Bob Dole as saying, "It is the trial lawyers who are calling the shots at the White House."); see also John E. Yang, House Fails to Override Liability Veto, WASH. POST, May 10, 1996, at A23 (charging President Clinton with putting interests of trial lawyers before other Americans). Some also claim that the Republicans were not pushing tort reform very hard because it was an important GOP fund-raising tool, and in an election year, they wanted the manufacturers' lobby to keep funneling money their way. See T.R. Goldman, Tort Reform: What Happened, What's Next, LEGAL TIMES, July 8, 1996, at 1 (quoting GOP House staffer as saying, "If federal tort reform efforts had concluded in 1995 the influence of trial lawyer money on the Democratic presidential campaign would have been seriously eroded, and with it, a lucrative GOP fund-raising tool as well.").

220. The use of, and demand for, excessive awards as a social reform tool has become too wide-spread. Multimillion dollar punitive awards have become the rule rather than the exception and as such, area threat to the viability of the manufacturing community and the stability of American industry.

221. See Ellis, supra note 27, at 34-53 (arguing that vague punitive damage standards and broad jury discretion is unfair and inefficient).

222. See id. at 56 (stating that uncertain criteria for arriving at punitive amounts invariably will lead to unpredictability and disparate awards); Owen, supra note 31, at 384 (noting that standards for determining defendant's liability and assessing punitive damages are too vague).

223. The current punitive damage system leaves manufacturers without any definite notion of what conduct is prohibited and what punishment will be imposed. See Nadine E. Roddy, Punitive Damages in Strict Products Liability Litigation, 23 WM. & MARY L. REV. 333, 347 (1981) (noting that manufacturers often contend that standards for punitive damages do not give proper notice). Without a clear idea of what conduct is prohibited, manufacturers cannot alter their behavior in order to be law abiding. As one commentator noted:

People cannot obey the law unless they know it; they cannot know the law unless they know which law to learn. If I am to know the law that governs an act or transaction, I must be able to identify, before I act, the one state empowered to govern. It is no answer to say that I can usually comply with the more restrictive rule, because that eliminates the political authority of the more permissive state. Nor is it an answer to say that I do not need to know rules of compensation, loss allocation, and the like. I believe that one should generally obey the applicable law even if the sanctions for violation are light, but this view is not universally shared. If we give even a little credence to the insights of law and economics, my need to know the law extends to rules that specify the consequences of compliance and violation.

Douglas Laycock, Equal Citizens of Equal and Territorial States: The Constitutional Foundations of Choice of Law, 92 COLUM. L. REV. 249, 319 (1992) (footnotes omitted).

224. See In re A.H. Robins Co., 880 F.2d 709, 730 n.29 (4th Cir. 1989).

Two goals of tort law should be predictability and uniformity. As a practical matter, until the legality of a particular course of conduct has been adjudicated, potential defendants are guided only by a general standard . . . and by analogous cases decided under that standard. What may appear to be inconsistent adjudications in similar situations can generally be rationalized because of differences in the facts. But if various fact finders reach inconsistent conclusions about the same set of facts, the defendant (and others in similar circumstances) is left without any guidance concerning the legality of its conduct, which may serve important legitimate aims.

Id.

225. See Robert D. Cooter, Punitive Damages for Deterrence: When and How Much?, 40 ALA. L. REV. 1143, 1145 (1989) (mentioning that uncertain punitive damages are neither fair nor efficient).

226. Martin A. Kloter, Reappraising the Jury's Role as a Finder of Fact, 20 GA. L. REV. 123, 127 (1985) (discussing idea that unpredictability impairs judicial process).

227. See FRIEDRICH AUGUST VON HAYEK, THE ROAD TO SERFDOM 78 (1944) ("One could write a history of the decline of the Rule of Law . . . in terms of the progressive introduction of these vague formulas into legislation and jurisdiction, and of the increasing arbitrariness and uncertainty of, and the consequent disrespect for, the law and the judicature."); see also Jason Scott Johnston, Uncertainty, Chaos, and the Torts Process: An Economic Analysis of Legal Form, 76 CORNELL L. REV. 341, 341 (1991) (noting that certainty is central concern of modern jurisprudence); Nancy Levit, Ethereal Torts, 61 GEO. WASH. L. REV. 136, 136-37 (1992) (stating that law involves search for order and predictability); Roscoe Pound, Justice According to Law, 13 COLUM. L. REV. 696, 705 (1913) (arguing that society administers justice according to law by fixing standards that individuals may determine prior to controversy, thereby providing reasonable assurance that all individuals receive similar treatment).

228. See Note, Forum Shopping Reconsidered, 103 HARV. L. REV. 1677, 1689 (1990) (stating that forum shopping is caused by disparate results among various state systems).

229. Seventy percent of all products manufactured are sold in other states. See 142 CONG. REC. S2560 (daily ed. Mar. 21, 1996) (statement of Sen. Rockefeller).

230. The notions of fairness and justice require that individuals have notice as to what constitutes socially reprehensible conduct and as to the punishment for non-compliance. See BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589, 1598-99 (1996) (explaining that fairness under Constitution requires notice of possible punishment).

231. See supra notes 26-31 and accompanying text (discussing why punitive damages may be described as "quasi-criminal"); Smith v. Wade, 461 U.S. 30, 59 (1983) (Rehnquist, J., dissenting) (discussing special legal categorization for punitive damages).

232. See discussion supra Part IV.B.

233. See discussion supra Part IV.A.

234. See H.R. 956, 104th Cong. . 108(a) (1996); Model Act, supra note 9, . 5(2).

235. See supra notes 26-31 and accompanying text; see also Kenneth Mann, Punitive Civil Sanctions: The Middleground Between Criminal and Civil Law, 101 YALE L.J. 1795, 1810-13 (1992) (analyzing distinctions between criminal and civil penalties).

236. But see Steven D. Smith, The Critics and the "Crisis": A Reassessment of Current Conceptions of Tort Law, 72 CORNELL L. REV. 765, 766 (1987) (rejecting restitutionary aspect of tort law, instead proposing dispute resolution as essential function of tort law).

237. See In re Winship, 397 U.S. 358, 363-64 (1970).

238. H.R. 956, . 101(4).

239. Id. . 108(a) (emphasis added).

240. See infra notes 241-42 (providing examples of differing approaches to punitive damages).

241. Alabama's statute, for example, permits punitive damages "in a tort action where it is proven by clear and convincing evidence that the defendant consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to the plaintiff." ALA. CODE . 6-11-20(a) (1993 & Supp. 1996). Florida's statute permits punitive damages for "willful, wanton, or gross misconduct." FLA. STAT. ANN. . 768.73(1)(a) (West 1994 & Supp. 1995). Georgia allows punitive damages when "defendant's actions showed willful misconduct, malice, fraud, wantonness, oppression, or that entire want of care which would raise the presumption of conscious indifference to consequences." GA. CODE ANN. . 51-12-5.1(b) (1982 & Supp. 1997). Illinois allows for punitive damage awards only when the "defendant's conduct was with evil motive or with reckless and outrageous indifference to a highly unreasonable risk of harm and with a conscious indifference to the rights and safety of others." ILL. COMP. STAT. ANN 5/2-1115.05(b) (West 1993). Mississippi permits the imposition of punitive damages for a wide range of conduct; the plaintiff must prove "that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety of others, or committed actual fraud." MISS. CODE ANN. . 11-1-65(1)(a) (Supp. 1996). Perhaps the broadest of all states' tort reform laws, Mississippi's statute allows punitive damages upon proof of anything from "actual malice," which implies a high degree of intentionality, to "gross negligence," which merely can be a reckless disregard of others. See id.

242. Vagueness in the standard for awarding punitive damages is particularly destructive because these damages, standing somewhere between criminal and tort law, publicly condemn a defendant's actions as socially reprehensible. See David G. Owen, The Moral Foundations of Punitive Damages, 40 ALA. L. REV. 705, 727-28 (1989) (noting that vague standard is harmful because damages often lead to public stigma and society should be certain such condemnation is appropriate).

243. H.R. 956, . 108(a). This also is the standard adopted by the Model Act recently approved by the uniform law commissioners. See Model Act, supra note 9, . 5(2) (noting that "defendant acted with a malicious or fraudulent intent to cause the injury or a conscious and flagrant disregard for the rights or interests of others in causing the injury"). The single federal standard, however, is preferable to the Model Act standard which seems to articulate a number of different kinds of conduct that will give rise to punitive damages.

244. But see E. Donald Elliot, Why Punitive Damages Don't Deter Corporate Misconduct Effectively, 40 ALA. L. REV. 1053, 1057-58 (1989) (arguing that "conscious indifference" standard is too vague).

245. See Ellis, supra note 27, at 22-23 (arguing that even if standards for assessing punitive damages were consistent, any movement away from "purposeful harm" standard would be problematic).

246. See Gregory J. Sexto, Corporate Insurability of Punitive Damages Arising from Employee Acts, 11 J. CORP. L. 99, 113 (1985) (observing that it is more difficult to deter unintentional conduct than intentional conduct).

247. See H.R. 956, . 108(c) (stating that bifurcation is permissible).

248. See John T. Simpson, Jr., Discovery of Net Worth in Bifurcated Punitive Damages Cases: A Suggested Approach After Transportation Insurance Co. v. Moriel, 37 S. TEX. L. REV. 193, 228 (1996) (asserting jury prejudice is negated because defendant's net worth is not admissible until jury finds defendant liable for punitive damages).

249. See TXO Prod. Corp. v. Alliance Resources Corp., 419 S.E.2d 880, 889 (W. Va. 1992) (discussing role wealth should play in computing appropriate punitive award), aff'd, 509 U.S. 443 (1993).

250. See Malcolm E. Wheeler, The Constitutional Case for Reforming Punitive Damages Procedures, 69 VA. L. REV. 269, 272 (1983) (noting that bifurcation may be necessary to ensure due process protections). But see Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 17 (1991) (holding that common law method of determining punitive damages is not "so inherently unfair as to deny due process and be per se unconstitutional").

251. See H.R. 956, . 108(8). Economic losses are those actual out-of-pocket expenses suffered by the injured party such as medical bills and lost wages. See id.

252. See id. . 101(12). Noneconomic loss is pain and suffering or non-pecuniary damages. See id.

253. See id. . 108(b). The bill, however, contains an additur provision that permits a judge to raise a punitive damage award if the court determines that the statutory cap "would result in an award of punitive damages that is insufficient to punish the egregious conduct of the defendant against whom the punitive damages are to be awarded or to deter such conduct in the future." Id. . 108(b)(3)(A). Although this provision attempts to placate those who oppose capping punitive damage awards, its constitutionality is suspect under existing precedent. See Dimick v. Schiedt, 293 U.S. 474, 495 (1935) (finding that additur could not be utilized by federal courts because procedure violates Seventh Amendment); see also Irene Deaville Sann, Remittiturs (and Additurs) in the Federal Courts: An Evaluation with Suggested Alternatives, 38 CASE W. RES. L. REV. 157, 163-64 (1987) (stating that federal courts may not add to jury awards because of possible Seventh Amendment violation). But see Gasperini v. Center for Humanities, Inc., 116 S. Ct. 2211, 2222 n.16 (1996) (hinting that federal additur soon may be held constitutional by Supreme Court, because four Justices in Dimick conceded that nothing in Seventh Amendment precludes federal court from forcing additur (citing Dimick, 293 U.S. at 495)).

There is no logical reason for the different constitutional treatment of additur and remittitur, and at least two states currently authorize judicial additur of punitive damage awards. See MO. ANN. STAT. . 510.263(6) (West Supp. 1997) ("The doctrines of remittitur and additur . . . shall apply to punitive damage awards."); TENN. CODE ANN. . 20-10-101(a)(10) (Supp. 1996) ("[T]he trial judge may suggest an additur in such amount or amounts as the trial judge deems proper.").

254. See Amelia J. Toy, Comment, Statutory Punitive Damage Caps and the Profit Motive: An Economic Perspective, 40 EMORY L.J. 303, 323 (1991) (outlining argument of cap supporters and stating that corporations could be driven to bankruptcy unless statutory caps are imposed).

255. It is hard to follow the argument that American competitiveness in the global marketplace is hampered by punitive awards. Foreign manufacturers that do business in the United States are subject to the same conditions as American manufacturers. Moreover, it seems that manufacturing better, safer products will improve American competitiveness far more than limiting punitive damage awards will.

256. Conference Report on H.R. 956, Common Sense Product Liability Reform of 1996, 142 CONG. REC. H3190 (daily ed. Mar. 29, 1996) (statement of Rep. Bliley).

257. See Ausness, supra note 30, at 85-86 (stating that potential exposure to liability leads to significant social costs); Ellis, supra note 27, at 47 (noting that uncertainty as to amount of punitive damages causes considerable losses to society).

258. See Patricia Cohen, The IUD: Birth-Control Device that the United States Market Won't Bear, WASH. POST, Aug. 6, 1996, at A1, A10 (observing that doctors in United States are reluctant to prescribe IUD devices even though they are freely prescribed and widely used in European markets).

259. See id. (pointing out that some experts on women's health belive that IUD is excellent option for many women).

260. See id. (stating that many manufacturers believe that introducing device to U.S. market is not worth potential exposure to liability).

261. See BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589, 1598-99 (1996) (discussing how common notions of fairness mandate that people receive fair notice of punishment they may face).

262. See Rustad, supra note 50, at 83 (proposing that punitive damages do not harm American corporations any more than foreign corporations because both are subject to U.S. law); Product Liability Standards: Hearings on H.R. 1910 Before the Subcomm. on Commerce, Consumer Protection, and Competitiveness of the House Comm. on Energy and Commerce, 103d Cong. 329, 332 (1994) (statement of Andrew F. Popper, Professor of Law and Deputy Dean, Washington College of Law) (arguing that there is no tort crisis sufficient to justify congressional intervention). There does not seem to be sufficient objective evidence to conclude that American businesses are harmed as badly as cap supporters claim or that consumers are deprived of a large number of products by over-deterrence. Although it is beyond the scope of this Article, a great deal of empirical evidence is needed to support these claims. Without sufficient objective evidence, it is impossible to draw a conclusion either way. This Article, therefore, presumes that consumers lose out on some products when American businesses are hampered by large punitive damage awards.

263. See Wilson, supra note 25, at 513-14 (indicating that punitive damages assist in deterring misconduct).

264. See Associates Fin. Servs. Co. of Ala. v. Barbour, 592 So. 2d 191, 199 (Ala. 1991) (reciting reasoning of earlier case in which court found that only substantial monetary fines will ensure that purpose of punitive damages is carried out (quoting Rideout's-Brown Serv., Inc. v. Holloway, 397 So. 2d 125, 127 (Ala. 1981))) (citation omitted).

265. Although it may be true that the punitive damage system occasionally deprives the public of valuable products, it also protects the public from exposure to dangerous products. No remedy is perfect.

266. See WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF TORT LAW 4-5 (1987) (discussing early thinking on tort law and positive economic theory). Judge Learned Hand articulated his famous negligence formula, B < PL, in United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir. 1947). According to Judge Hand, harmful activity should be deterred when the cost of that harm (L) multiplied by its probability (P) is greater than the cost of preventing the harm (B). Thus, if B < P there is no harmful activity. See id.; see also RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 163-68 (1992) (explaining Judge Hand's formula for determining negligence liability).

267. See Jerry J. Phillips, A Comment on Proposal for Determining Amounts of Punitive Awards, 40 ALA. L. REV. 1117, 1118 (1989) (noting that cost-benefit analysis often is utilized when considering which activities and designs to avoid).

268. See id. (stating that company will take action only if cost of such action is less than its potential benefits).

269. See LANDES & POSNER, supra note 266, at 4-5 (discussing view that tort liability discourages behavior that is unjustified by utilitarian standards).

270. Commentators have argued that punitive damages are inappropriate when the manufacturer weighed the costs and benefits of a particular activity and undertook the activity because the cost was less than the benefit. See Wheeler, supra note 62, at 953 (arguing that juries should be instructed to consider cost-benefit analysis in assessing liability). Such an argument presupposes that socially desirable conduct turns on a pure economic analysis of available options. This premise overlooks the fact that punitive damages are awarded to punish a manufacturer for socially reprehensible conduct. They are a form of regulation. Punitive damages are not awarded simply for economic inefficiency, because a corporation took an action even though costs exceed benefits; they are also awarded when potential societal costs exceed potential societal benefits. Societal costs and benefits cannot be measured purely in monetary terms. For example, under an economic efficiency analysis of the costs and benefits of excluding the rubber bladder from vehicle design, Ford properly concluded that it would be more economically efficient to exclude the bladder. See Grimshaw v. Ford Motor Co., 174 Cal. Rptr. 348, 361 (1981). Despite the correctness of the economic analysis, few dispute the appropriateness of imposing damages for such conduct.

271. See Grimshaw, 174 Cal. Rptr. at 361 (discussing design changes that were examined by Ford but rejected due to their additional expense). The plaintiffs were passengers in a Ford Pinto when it was rear-ended and burst into flames. See id. at 359. Plaintiff Gray died and Plaintiff Grimshaw suffered severe burns to his entire body. See id. The court found that Ford knew of the design defect in the Pinto and knew that the gas tank would explode in rear-end collisions even at low speeds. See id. at 361-62. Ford had conducted several crash tests that demonstrated the Pinto's susceptibility to fire. See id. at 385. Despite this knowledge, Ford chose not to correct the design problem after conducting a risk/benefit analysis. See id. at 361. Ford discovered that it would cost $11 per vehicle to install rubber bladders in 11 million Pintos and 1.5 million trucks, totaling $137 million; and it estimated that it would cost only $49.5 million if instead they paid the compensatory damages of the 360 people they anticipated would die or be injured in fires resulting from this design flaw. See Owen, supra note 28, at 56 n.264 (reproducing Grush-Saunby Report that Ford had prepared on costs and benefits of correcting Pinto's defective gas tank). Ford performed a straight forward cost-benefit analysis and chose the least expensive alternative. See Grimshaw, 174 Cal. Rptr. at 361. Grimshaw was awarded $2,516,000 in compensatory damages and $125 million in punitive damages, which the trial court reduced to $3.5 million. See id. at 358.

272. Conference Report on H.R. 956, Common Sense Product Liability Reform Act of 1996, 142 CONG. REC. H3188 (daily ed. Mar. 29, 1996) (statement of Rep. Conyers, Jr.).

273. Of course, the actual number of injuries will be much higher than those who actually sue Compact. Many injured individuals will not sue at all; some will collect from their insurance company or from the insurance company of the driver who rear-ended them. Only those plaintiffs or their attorneys who realize that there may have been a design defect in the car will bring suit against Compact.

274. H.R. 956, 104th Cong. (1996).

275. Although it is true that the federal bill did allow for additur in certain circumstances and, therefore, did not have an absolute cap, Congress' clearly expressed intent is that judges should do so only in the rarest of cases. See H.R. CONF. REP. NO. 104-481, at 31 (1996).

276. The statute provided for $250,000 or two times compensatory damages, whichever is greater. See H.R. 956, . 108(b). In the case of the 100 burn deaths, where compensatory damages are estimated at $250,000, punitive damages would be two times the compensatory damages or $50 million.

277. In the case of the 200 injured plaintiffs, $250,000 is more than two times their compensatory damages, which are only $100,000 in this example. Thus, each injured plaintiff would receive $250,000 for a total of $50 million.

278. Of course, there is the loss of public confidence in the corporation and litigation expenses that add to the "expense" of committing socially reprehensible actions. In fact, one commentator has recommended that punitive damage awards and the reasons for the punishment be highly publicized to effectuate a more powerful social sanction. See Andrea A. Curcio, Painful Publicity-An Alternate Punitive Damages Sanction, 45 DEPAUL L. REV. 341, 372 (1996) (arguing that publicizing corporate misconduct and resulting penalties on the Internet will best effectuate intended punishment and deterrence).

279. See generally Rustad & Koening, supra note 18, at 1316 (discussing Gearhart v. Uniden Corp. of Am., 781 F.2d 147 (8th Cir. 1986), in which defendant accepted liability for known defendant as "a mere cost of doing business").

280. See id. at 1312.

281. See Elliott, supra note 244, at 1057 (claiming that unpredictability is the "central failing" of punitive damages).

282. Rustad & Koenig, supra note 18, at 1277.

283. Presumably, the additur provisions of the federal bill would have permitted higher awards in such cases at the judge's discretion. See H.R. 956, 104th Cong. . 108(b)(3)(A) (1996). Congress' intention, however, was that "occasions for additional awards will be very limited indeed." H.R. CONF. REP. NO. 104-481, at 31 (1996).

284. Michael Rustad & Thomas Koenig, Punitive Damages in Products Liability: A Research Report, 3 PROD. LIAB. L.J. 85, 94 (1992).

285. See Product Liability Fairness Hearing, supra note 24, at 89 (testimony of William Fry, Executive Director, HALT, an organization of Americans for Legal Reform) (noting that punitive damages, or fear of them, are passed on "to consumers in the form of higher prices or products not getting to the market").

286. See 141 CONG. REC. S5884 (daily ed. May 1, 1995) (statement of Sen. Hatch) (discussing need for U.S. manufacturers to add costs of punitive damages into price of products thus affecting U.S. consumers and competitiveness of U.S. corporations in global marketplace).

287. Proponents for national tort reform contend that punitive damage awards need regulation because consumers, especially the low income purchasers, ultimately bear the costs of punitive damage payments. See id. at S5882 (statement of Sen. Hatch) ("The effect of the greater frequency and magnitude of punitive damages recoveries of modern times has been to increase the price level for all products and services provided in the U.S. economy."); see also id. at S5801 (daily ed. Apr. 27, 1995) (statement of Sen. Snowe) (claiming that consumers must pay higher prices due to runaway awards). One problem with this theory, however, is that it assumes that the consumer is a captive and would continue to buy the corporation's product or service regardless of the increases in price. One cannot ignore the argument that in a competitive market, a corporation would not be able to raise its prices too high or consumers simply would switch to a competitor's product. See generally GEORGE J. STIGLER, THE THEORY OF PRICE 21-44 (1966) (delineating factors affecting consumer demand including price fluctuations).

288. See 141 CONG REC. S5950 (daily ed. May 2, 1995) (statement of Sen. Kyl) (musing that "[t]hese outrageous punitive damages create a tort tax paid by consumers in the form of higher prices, higher insurance premiums, and reduced market choice and quality"); Richard J. Mahoney, Punishment Without End, WASH. POST, June 15, 1995, at A21 ("The real damage caused by multiple punitive damage awards is that the American public has been hit with a 'hidden litigation tax.'").

289. Furthermore, if corporations are permitted to insure against punitive damage awards as some states allow, a manufacturer with insurance would pass the costs of premiums on to consumers and the insurance company would spread the loss associated with the punitive damage payment among its customers in the form of higher premiums.

290. See generally STIGLER, supra note 287, at 87 (describing type of competitive market in which sellers outnumber buyers).

291. See generally id. (describing type of competitive market in which buyers outnumber sellers).

292. See generally id. at 21-44 (discussing factors affecting consumer demand including responses to price increases).

293. Such a situation could arise if a corporation had a patent on one of its product and chose not to license it to others.

294. This is true, even if, as proponents of tort reform argue, punitive damage payments are skyrocketing in magnitude. It should not be forgotten that punitive damage awards undergo judicial review to determine their reasonableness. See supra notes 45, 55 and accompanying text (discussing settlement agreements and reductions in awards by appeals courts).

295. As one commentator noted:

Loss spreading is a separate justification for imposing a full measure of damages on business firms that cause the harm. Firms can spread the losses broadly among individuals who benefit from the harm-causing activity. Depending on the economics of the situation, losses are spread either among consumers through increased prices or among owners by virtue of lower profits. Either way, someone who derives a substantial direct benefit from the injury-producing product or activity bears the cost.

Charles R. Temper, Compensation for Harm from Charitable Activity, 76 CORNELL L. REV. 401, 430-31 (1991) (footnote omitted).

296. See Thomas Koenig & Michael Rustad, His and Her Tort Reform: Gender Injustice in Disguise, 70 WASH. L. REV. 1, 78-79 (1995) (explaining that women generally receive smaller economic awards for similar injuries because women generally have lower earnings and spend fewer years in workforce).

297. See Punitive Damages Hearing, supra note 24, at 80 (statement of Robert Creamer, Executive Director, Illinois Public Action).

[T]his proposal would have the result of basing punishment meted out to a wrongdoer on the income of the victim. It would punish those who injure wealthy executives more than those who injure women who are homemakers. It would punish those who injure sports stars more than those who injure children. The proposal is particularly discriminatory against women, who generally suffer less economic loss from injury than men since they typically earn less income.

Id. (statement of Robert Creamer, Executive Director, Illinois Public Action).

298. See Koenig & Rustad, supra note 296, at 87.

When damages awards are based primarily on out-of-pocket costs and loss of earnings, women are placed at a significant disadvantage. Without the prospect of non-economic and punitive damages, many grievously injured women will be unable to convince an attorney to take their case. The proposed limitations on punitive damages are gender injustice in disguise.

Id.

299. 138 CONG. REC. S6521 (daily ed. May 12, 1992) (statement of Sen. Cranston).

300. See Kathleen Morris, Through the Looking Glass: Recent Developments in Affirmative Action, 11 BERKELEY WOMEN'S L.J. 182, 188 (1996) (charging that "minorities and women tend to be 'ghettoized' into lower-paying, lower-skilled jobs").

301. See Jenny Rivera, The Violence Against Women Act and the Construction of Multiple Consciousness in the Civil Rights and Feminist Movements, 4 J.L. & POL'Y 463, 498 (1996) (finding access to the legal system a significant obstacle for minority women).

302. See supra notes 23-31 and accompanying text.

303. Model Act, supra note 9, . 7.

304. See BMW of N. Am., Inc. v. Gore, 116 S. Ct. 1589, 1598-1602 (1996); TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 468 n.28 (1993); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 21-22 (1991).

305. Punitive Damages Hearing, supra note 24, at 1 (statement of Sen. Hatch).

306. See Model Act, supra note 9, . 10(a).

307. Model Act, supra note 9, . 10(a). The Model Act also requires that the reviewing court make and enter its findings and the basis for its decision. See id. . 10(c).

308. Id. . 10.

309. See Punitive Damages Hearing, supra note 24, at 105 (testimony of Victor E. Schwartz, Esq., General Counsel, American Tort Reform Association) (calling on Congress to remedy unfairness caused by imposition of multiple punitive damage awards).

310. See id. . 10.

311. On a purely practical note, Congress would be more likely to pass tort reform legislation if the controversial cap were omitted. As Congress has tried to pass such reform every year since 1982, it would seem preferable to pass some reform-like the elevated burden of proof and uniform standard requiring intentional conduct-rather than no reform. Given President Clinton's re-election, perhaps it is time that Congress consider a more limited reform for the time being.

312. The effectiveness of punitive damage awards already are undermined by permitting their insurability and the tax deductibility. See Pace, supra note 6, at 828 (insisting that tax deductibility of punitive damages frustrates deterrence and punishment goals of product liability laws). Permitting corporations to insure against their own intentional misconduct or to deduct the payment of these fines from their taxes costs the public twice, first when it is subjected to unsafe products and second when it must bear the burden of the corporation's intentional misconduct through higher taxes and insurance premiums. See id. Ideally, federal reform would address both of these concerns by prohibiting their insurability and removing the tax incentive, that is, deductibility, for the misconduct. See id.

313. See supra note 68 and accompanying text (listing state statutes that include regulatory compliance defense). The most recent federal tort reform attempt, H.R. 956, originally contained a regulatory compliance defense for companies that act in compliance with FDA regulations. See H.R. 956, 104th Cong. . 7 (1996); see also Victor E. Schwartz & Mark A. Behrens, Punitive Damages Reform-State Legislatures Can and Should Meet the Challenge Issued by the Supreme Court of the United States in Haslip, 42 AM. U. L. REV. 1365, 1383 (1993) (arguing in favor of regulatory compliance defense against punitive damages).

314. See Peter Huber, Safety and the Second Best: The Hazards of Public Risk Management in the Courts, 85 COLUM. L. REV. 277, 333-35 (1985) (asserting that courts should defer to expert opinions of agencies); see also James A. Henderson, Jr., Judicial Review of Manufacturers' Conscious Design Choices: The Limits of Adjudication, 73 COLUM. L. REV. 1531, 1555-56 (1973) (challenging suitability of courts to implement tort reform).

315. See Huber, supra note 314, at 335 (indicating that licensing agencies such as Nuclear Regulatory Commision compare public risks among industry competitors).

316. See id. (expressing view that courts are not qualified to second-guess agencies).

317. See Don Phillips, As Upstart Valujet Grew, So Did FAA's Anxieties, WASH. POST, June 10, 1996, at A1, A12 ("I've been concerned for some time that the airline picture is changing faster that our methods of checking up on the changing picture." (quoting John L. McLucas, a former FAA administrator)).

318. See RESTATEMENT (THIRD) OF TORTS, supra note 7, . 7 & cmt. e (adopting common law approach that regulatory standards set minimal not optimal standards and therefore, rejecting per se regulatory compliance defense); see also Plummer v. Lederle Labs., 819 F.2d 349, 356 (2d Cir. 1987) (concluding that compliance with federal consumer notification regulations precludes application of strict liability but may be used to establish negligence); Silkwood v. Kerr-McGee Corp., 769 F.2d 1451, 1458 (10th Cir. 1985) (upholding on remand punitive damages award despite defendant's compliance with federal nuclear safety regulations); Toner v. Lederle Labs., 732 P.2d 297, 311 n.12 (Idaho 1987) (arguing that FDA certification should constitute non-negligence per se); Gonzales v. Surgidev Corp., 899 P.2d 576, 590-91 (N.M. 1995) (stating that compliance with regulations will not preclude award of punitive damages); Mulhern v. Outboard Marine Corp., 432 N.W.2d 130, 135 (Wis. Ct. App. 1988) ("[C]ompliance with the federal regulation would not have preempted the state strict liability action because the Act and the regulation are only minimum safety standards which do not provide private tort remedies."). But see Grundberg v. Upjohn Co., 813 P.2d 89 (Utah 1991) (giving judicial deference to regulatory compliance); Stone Man, Inc. v. Green, 435 S.E.2d 205, 206 (Ga. 1993) (stating that punitive damages generally are not available when defendant has complied with applicable regulations governing conduct at issue); McDaniel v. McNeil Lab. Inc., 241 N.W.2d 822, 828 (Neb. 1976) (refusing to submit to strict liability theory in case where defendant adhered to FDA regulations).

319. See RESTATEMENT (THIRD) OF TORTS, supra note 7, . 7(a).

320. See id. . 7(b).

321. See Schwartz, Products Liability, supra note 163, at 1152 (finding that in cases where punitive damage are awarded regulatory agencies generally have failed to protect public adequately); see also Rustad, supra note 50, at 73 ("The government is a slow starter and a slow finisher in uncovering corporate misconduct in product liability cases.").

322. See Rustad, supra note 50, at 73-75 (speculating that government reluctance to investigate and prosecute product liability cases is due to expense and expertise required). Professor Rustad found 355 punitive damage awards in products liability actions from 1965 to 1990. See id. at 30; see also Rustad & Koenig, supra note 284, at 89 (stating that punitive damage awards are rare, although actual number of awards is unknown because no national reporting system exists). Examining each of these cases, Professor Rustad found that government regulators were ineffective at uncovering corporate misconduct.

Despite these serious threats to the public safety, corporate defendants rarely received official sanctions. Only one defendant [of 355] in our sample was criminally sanctioned for its failure to protect the consuming public. A total of only eleven defendants received some form of civil penalty from a local, state, or federal agency.

Rustad, supra note 50, at 73.

323. See Schwartz, Products Liability, supra note 163, at 1147 (discussing extent of influence enjoyed by business on agencies because agencies rely on industry-generated data in developing regulations).

324. John F. Manning, Constitutional Structure and Judicial Deference to Agency Interpretations of Agency Rules, 96 COLUM. L. REV. 612, 677 n.308 (1996); see also Richard J. Pierce, Jr., The Role of the Judiciary in Implementing an Agency Theory of Government, 64 N.Y.U. L. REV. 1239, 1280-81 (1989) (describing how members of industry and agency policy-makers control decision-making process); Mark Seidenfeld, A Civic Republican Justification for the Bureaucratic State, 105 HARV. L. REV. 1511, 1565-66 (1992) (suggesting that top level of agency policy-makers, because they are fewer in number, are easier to influence than the hundreds of legislators needed to pass new laws).

325. See Schwartz, Products Liability, supra note 163, at 1147.

326. See Seidenfeld, supra note 324, at 1565.

327. See Schwartz, Punitive Damages, supra note 163, at 1363 (arguing against regulatory compliance defenses); see also Schwartz, Products Liability, supra note 163, at 1147 (voicing concerns that industry has too much influence on regulatory process as compared to the relatively weak influence of public interest groups).

328. See Model Act, supra note 9, . 7.