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Unpublished Paper
The Disappearing Opt-Out Right in Punitive Damages Class Actions
ExpressO (2011)
  • Richard Frankel
Abstract

The tension between protecting defendants from multiple punitive damages awards for a single act and ensuring that wronged plaintiffs can recover punitive damages is one of the most pressing problems in punitive damages law today. Numerous commentators have proposed non-opt-out class actions for punitive damages as the best solution to the “multiple punishment” problem because they subject defendants to a single collective punitive damages award that can be distributed equitably across all injured plaintiffs. This Article challenges that position. It argues that mandatory classes improperly deprive class plaintiffs of their right to opt out and pursue their own individual claims while allowing defendants to self-servingly cap their punitive damages liability at an artificially low level that thwarts the punishment and deterrence purposes of punitive damages.

First, this Article explains that because the Supreme Court has held that an individual plaintiff can collect punitive damages only for harm done to that plaintiff, allowing plaintiffs to opt out and pursue their own claims creates no risk of imposing duplicative punishment on defendants. Second, this Article suggests that mandatory classes are particularly inappropriate for class action settlements because settlements are not punitive in nature. In a class settlement, parties have incentives to manipulate the settlement fund’s allocation of punitive damages in ways that bear no connection to wrongdoing or punishment, and that allow defendants to significantly reduce their punitive damages exposure. Instead, preserving class members’ right to opt out protects plaintiff autonomy and helps ensure that defendants pay an appropriate amount of punitive damages.

Keywords
  • class actions,
  • punitive damages
Disciplines
Publication Date
February 28, 2011
Citation Information
Richard Frankel. "The Disappearing Opt-Out Right in Punitive Damages Class Actions" ExpressO (2011)
Available at: http://works.bepress.com/richard_frankel/1/