Don’t Tilt the Playing Field: A Response to Polsky and Markel

From modest beginnings in eighteenth-century England, punitive damages have developed into a potent legal weapon. Professors Polsky and Markel would now make that weapon even more powerful by allowing expert testimony concerning the deductibility of punitive damages from taxable income. The Professors envision an expert explaining to the jury the rule regarding deductibility and explaining how the jury could increase the amount of a punitive damages award to offset the effect of the deduction. Their principal rationale is that, otherwise, the defendant’s true cost will be less than the jury intended and less than it deemed necessary for punishment.

This is a solution in search of a problem. As the Professors acknowledge, plaintiffs “have not been seeking to introduce tax evidence against defendants when seeking punitive damages.” The probable explanation is that plaintiffs’ attorneys would prefer to appeal to jurors’ anger rather than their intellect. That preference is not likely to disappear.

But even if some plaintiffs were to offer expert testimony of the kind that the Professors contemplate, such testimony should be excluded. First, receiving testimony about deductibility would tilt the playing field in favor of plaintiffs, since juries usually are not informed either (a) that compensatory damages based on lost wages are not included in determining plaintiffs’ taxable income, even though the wages they replace would have been taxed, or (b) of collateral sources of compensation such as health insurance and disability benefits. Second, admitting expert testimony about the deductibility of punitive awards would exacerbate the distorting effects of admitting evidence of the wealth of corporate defendants. Third, giving effect to the jury’s intent is less significant with respect to the amount of punitive damages than with respect to most other issues submitted to the jury.

Good Scholarly Intentions Do Not Guarantee Good Policy

Professor Bartlett has written a bold article pushing back against what might be called inchoate or half-hearted empiricism. The half-hearted empiricist recognizes the value of empirical evidence to help solve a legal problem but, for whatever reason, fails to acknowledge the complexity and uncertainties of the evidence and as a result offers haphazard prescriptions. Professor Bartlett’s article demonstrates what a whole-hearted commitment to empiricism looks like: it involves an engagement with primary sources rather than a reliance on secondary sources (or tertiary sources in the form of law review summaries of secondary sources), a review of research relevant to a problem rather than a review of a subset of research focused on one particular aspect of a problem, and a struggle to find usable prescriptive lessons in a literature that ranges from basic-level research with little obvious real-world application to applied research that can be so situation-specific that its generalizability can be questioned. Whole-hearted empiricism is hard, messy work, as well as a frustrating undertaking. Unlike theory- or model-based approaches to policy that self-consciously simplify the world and avoid many empirical complications, an evidence-based approach must confront empirical complexities and try to find meaning in the midst of ever-changing empirical evidence, imperfect studies, and contradictory findings located among the fragmented social sciences. Consequently, rarely will consensus exist on the prescriptive meaning of the assembled evidence. It should thus not be surprising that, after saying a few words on the dangers of half-hearted empiricism, I raise some questions about the empirical conclusions and recommendations offered by Professor Bartlett and suggest that her attempt to foster good intentions might more usefully be focused on firms rather than managers.

Reading Arizona

BOTH sides in our nation’s ongoing immigration disputes are spinning the Arizona v. United States ruling as a victory—plus an occasion to appeal to supporters for more money to battle through the fall election cycle and the predictable next rounds of litigation and legislation. It’s the federal side, however, that has the better claim to success.