Wischer v. Mitsubishi Heavy Industries America9/30/2003
y the public prosecutor.
Ibid. Thus, punitive damages are similar to and supplement the criminal law. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. ___, 123 S. Ct. 1513, 1520 (2003) (punitive-damage "awards serve the same purposes as criminal penalties"). To be effective, however, they must, as one case colorfully noted, be sufficiently painful to "sting." Gianoli v. Pfleiderer, 209 Wis. 2d 509, 531, 563 N.W.2d 562, 570 (Ct. App. 1997). In the early days, if "A" hurt "B" by conduct that was sufficiently egregious to warrant an award of punitive damages, assessment of punitive damages against "A" would not only punish "A" but would also deter "A" and others like "A" from doing it again.
. Circumstances have changed, however, from an "A" versus "B" situation to one where the harm sought to be punished by punitive damages may have been caused by an employee or employees of large corporations. At first blush, it may seem that "large corporations" are fair game. First, many persons have a "prejudice against large corporations," especially if they are from out of town. TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 464 (1993) (Stevens, J., for a plurality of the Court and announcing its judgment). Second, large corporations are seen as golden-eggs-laden geese from which there is an endless supply of "free money." This is a dangerous myth unsupported by economic realities; just as there is no "free lunch," there is no "free money"-the money has to come from someone, and, in the case of large corporations, it comes from employees, shareholders, and customers.
. Unlike small, closely held corporations, sole proprietorships, or small partnerships, large corporations are generally far-flung businesses employing thousands or tens of thousands employees. These businesses, so vital to our economy, are owned not by the managers who control what the corporations do, but by stockholders who, with rare exceptions, have no control over either those managers or corporate policy. And these corporations are not living creatures that can be punished like a person can be punished; they cannot be sent to prison. Subjecting corporations to draconian criminal or criminal-like penalties, hurts only their employees, shareholders, and customers. Thus, by one estimate, the criminal prosecution of the large public-accounting firm Arthur Andersen cost 80,000 employees their jobs, all but a few of whom were not guilty of anything related to the firm's prosecution. Imposition of punitive damages can have similar life-derailing consequences for those innocent of any wrongdoing, because, to repeat, when corporations are forced to pay punitive damages most of the pain falls on employees, shareholders, and customers. Indeed, often the culpable employee escapes any punishment.
. I recognize that the Wisconsin Supreme Court has said that all of this is OK by ruling, without supporting economic data or analysis, that it is unlikely for a corporation to be able to pass to consumers punitive-damages-related increased costs, and, also, that it is not unfair to force shareholders to pay penalties flowing from punitive-damages awards. Wangen v. Ford Motor Co., 97 Wis. 2d 260, 287-288, 291, 294 N.W.2d 437, 452, 453 (1980) ("But the loss of investment and the decline in value of investments are risks which investors knowingly undertake, and investors should not enjoy ill-gotten gains."). I respectfully disagree. Although Wangen's assessment of the equities is logical in the abstract, consequences of punitive-damage awards can be malignant in practice. Oliver Wendell Holmes, Jr., once presciently observed: "The life of the law has not been logic: it has been experience." Oliver Wendell Holmes, Jr., The C
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