Punishment but Not a Penalty? Punitive Damages Are Impermissible Under Foreign Substantive Law
Paul A. Hoversten*
It is a well-established principle that no court applies the penal laws of another sovereign. But what exactly is a penal law? According to Judge Cardozo, a penal law effects “vindication of the public justice” rather than “reparation to one aggrieved.” Although courts have historically treated punitive damages as a purely civil remedy, that attitude has shifted over time. Modern American punitive damages serve not to compensate the plaintiff but to punish the defendant on behalf of the whole community. Therefore, when courts rely on foreign substantive law to impose punitive damages, they arguably violate the well-established principle that no court applies the penal laws of another sovereign. This Note argues that punitive damages are penal in the choice-of-law sense, and state courts violate the penal exception when they impose punitive damages under or alongside foreign substantive law. It proposes several possible means to resolve this dissonance and ultimately concludes that courts should altogether eliminate the prospect of punitive damages when they impose liability under foreign substantive law.
* J.D. Candidate, May 2018, University of Michigan Law School. I am grateful to Professor Mathias W. Reimann for his insights. Thanks also to my dear friends Reed McCalib, Melissa Cassel, Laura Beth Cohen, Sally Gu, Samantha Jaffe, Charlie Stewart, and each of the Volume 116 Executive Editors for the countless contributions and improvements they made along the way.