Article

Taxing Punitive Damages

There is a curious anomaly in the law of punitive damages. Jurors assess punitive damages in an amount that they believe will best “punish” the defendant. But, in fact, defendants are not always punished to the degree that the jury intends. Under the Internal Revenue Code, punitive damages paid by business defendants are tax deductible and, as a result, these defendants often pay (in real dollars) far less than the jury believed they deserved to pay.

To solve this problem of under-punishment, many scholars and policymakers, including President Obama, have proposed making punitive damages nondeductible in all cases. In our view, however, such a blanket nondeductibility rule would, notwithstanding its theoretical elegance, be ineffective in solving the under-punishment problem. In particular, defendants could easily circumvent the nondeductibility rule by disguising punitive damages as compensatory damages in pre-trial settlements.

Instead, the under-punishment problem is best addressed at the state level by making juries “tax aware.” Tax-aware juries would adjust the amount of punitive damages to impose the desired after-tax cost to the defendant. As we explain, the effect of tax awareness cannot be circumvented by defendants through pre-trial settlements. For this and a number of other reasons, tax awareness would best solve the under-punishment problem even though it does come at the cost of enlarging plaintiff windfalls. However, given the defendant-focused features of current punitive damages doctrine, this cost is not particularly troubling.

Ex Ante Regulation of Computer Search and Seizure: A Reassessment

In the last decade, magistrate judges around the United States have introduced a new practice of regulating the search and seizure of computers by imposing restrictions on computer warrants. These ex ante restrictions are imposed as conditions of obtaining a warrant: Magistrate judges refuse to sign warrant applications unless the government agrees to the magistrate’s limitation on how the warrant will be executed. These limitations vary from magistrate to magistrate, but they generally target four different stages of how computer warrants are executed: the on-site seizure of computers, the timing of the subsequent off-site search, the method of the off-site search, and the return of the seized computers when searches are complete.

This Article contends that ex ante restrictions on the execution of computer warrants are both unconstitutional and unwise. The Fourth Amendment does not permit judges to devise limits on the execution of warrants. When such limits are imposed, they have no legal effect. The imposition of ex ante limits on computer warrants is also harmful: Ex ante assessments of reasonableness in ex parte proceedings are highly error-prone, and they end up prohibiting reasonable practices when paired with ex post review. Although ex ante restrictions may seem necessary in light of the present uncertainty of computer search and seizure law, such restrictions end up having the opposite effect. By transforming litigation of the lawfulness of a warrant’s execution into litigation focusing on compliance with restrictions rather than reasonableness, ex ante restrictions prevent the development of reasonableness standards to be imposed ex post that are needed to regulate the new computer search process. Magistrate judges should refuse to impose such restrictions and should let the law develop via judicial review ex post.

Jurisdiction-Stripping Reconsidered

The literature exploring Congress’s power to “strip” jurisdiction from the federal courts has focused too narrowly on the text and original understanding of Article III. Even when analysis can profitably begin there, it is it often a fallacy to believe that it can terminate without consideration of other factors. Exclusively originalist analyses of Congress’s powers over jurisdiction cohere badly with, and often make little sense in light of, non-originalist doctrines defining substantive constitutional rights. The Supreme Court’s recent decision in Boumediene v. Bush, invalidating a jurisdiction-stripping provision under the Suspension Clause, provides a partial template for reconsideration of jurisdiction-stripping issues. As Boumediene illustrates, participants in jurisdiction-stripping debates need to reckon with issues of constitutional theory involving the appropriate synthesis of original understandings, when they are identifiable, with non-originalist doctrines and functional considerations. 

The synthesis advocated in this Article reflects three broad themes. First, notwithstanding contrary language in a nineteenth century precedent, Congress’s purpose in enacting jurisdiction-stripping legislation may matter crucially to the question of constitutional validity. Legislation enacted for the purpose of inviting lower court defiance of Supreme Court precedents should be held unconstitutional under modern authorities that make constitutional permissibility depend on legislative motives. Second, Congress cannot use its power to control jurisdiction to preclude the award of constitutionally necessary remedies. In many cases, constitutional rights first recognized in the twentieth and twenty-first centuries entail rights to injunctions when no other remedy is available. Third, issues involving congressional preclusion of judicial jurisdiction are often bound up with issues involving the permissible use of non-Article III federal tribunals such as administrative agencies. Even when initial adjudication by a non-Article tribunal is permissible, as it was inBoumediene, the Constitution typically requires some mode of access to a constitutional court. 

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