BMW v Gore: Mitigating The Punitive Economics of Punitive Damages

Public choice and tort reform

“…Therefore, multiplied damages can be useful in preventing such efforts at concealment. The optimal damage multiplier should be the inverse of the probability of detection (Rubin, Calfee & Grady, 1997;Polinsky & Shavell, 1998). …”

“…This wealth-transfer potential gives state judges (particularly elected judges) strong incentives to rule in favor of plaintiffs. Thus, although matters of private law traditionally have been state law, there are arguments for treating tort law as a federal matter (Rubin, Calfee & Grady, 1997).…”

Public Choice and Tort Reform

“…The substantive rules are extraordinarily pro-plaintiff and the perils of massive damages (including, with increasing frequency, punitive damages (Rubin, Calfee, & Grady 1997)), thereby inducing plaintiffs to bring a lot of cases and for defendants to undertake the expenditures necessary to mount a spirited defense. Moreover, the current process provides seemingly maximum amounts of complexity and discretion, generating long and expensive litigation.…”

“…The federal government could act to try to reinstate principles of freedom of contract (Rubin 1999;Rubin 1993;Krauss 1991;Schwartz 1988) or stronger choice of law rules (Niskanen 1995;McConnell 1988). The United States Supreme Court appears to be at least somewhat aware of this temptation and has used the due process clause to limit blatant forms of discrimination against out-of-state corporations (Rubin, Calfee, & Grady 1997). These interventions as the federal level to police economic discrimination against out-of-staters is appropriate and consistent with the traditional exercise of power by the federal government.…”

Statutory interpretation, capture, and tort law: the regulatory compliance defense

“…These regulations would impose costs on in-state citizens but not on the 26. Some state punitive damage decisions recently have been argued to violate the cost externalization constraint (see Rubin, Calfee, and Grady, 1997).…”