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Louisiana Law Review

Abstract

In Exxon Shipping Co. v. Baker, the U.S. Supreme Court recognized the right to recover punitive damages in admiralty cases and held that punitive damages in the case before it could not exceed the amount of the compensatory damages awarded plus the amount of settlements in related cases. In so holding, the Court reviewed many studies related to punitive damages and said that in a case where the defendant’s conduct was reckless but not worse, where the damages awarded were substantial, and where the defendant was not motivated by profit a 1:1 ratio of punitive to compensatory damages was appropriate. After Exxon, it was unclear if the decision imposed an across-the-board 1:1 ratio cap on punitive damages vis-à-vis compensatory damages in admiralty or was limited to cases “like” Exxon. This Article argues that the appropriate reading of Exxon is that it created a variable, multi-factor approach to punitive damages in maritime cases, rather than a universal 1:1 rule. The variable approach is supported by a careful reading of Exxon itself, the desirability of flexibility in imposing punitive damages for purposes of adequate punishment and efficient deterrence, and the jurisprudence since Exxon. While a variable approach is more desirable than a 1:1 cap, thorny issues arise with the application of any ratio in punitive damages cases involving the arbitrary and capricious failure to pay maintenance and cure. The injured seaman often joins the failure to pay maintenance and cure claim with Jones Act and unseaworthiness claims; but punitive damages are not available in Jones Act and unseaworthiness claims. Thus, where the claims overlap a court must be careful that the compensatory damages denominator in the punitive damages ratio fraction only includes compensatory damages arising out of the failure to pay the maintenance and cure claim. This piece recommends how courts can assure the needed precision and accuracy.

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