A Confused Sea: Vicarious Liability For Punitive Damages Under Maritime Law
This Article discusses the current circuit split regarding the vicarious imposition of punitive damages in maritime law and explains why the United States Supreme Court or Congress should adopt the more expansive rule followed by the Ninth Circuit and most states-vicariously imposing punitive damages against an employer for the acts of managerial employees within the scope of their employment. Part II describes the various tests utilized by the federal courts of appeals and the states. In particular, it contrasts the most conservative approach employed by the Fifth Circuit and United States Court of Appeals for the Sixth Circuit, which requires corporate authorization or ratification of the employee's conduct before granting punitive damages, with the Ninth Circuit's more expansive rule, which vicariously imposes punitive damages against an employer for the acts of managerial employees. Part III critically examines the Supreme Court and federal courts of appeals' maritime precedent relied on by courts that have adopted the restrictive requirement of employer authorization or ratification. It explains how historical and legal distinctions, as well as technological advancements, have rendered long-standing justifications for the conservative rule misplaced or obsolete. Once these maritime chestnuts are stripped of their mystique, little remains to support the restrictive rule. Part IV focuses on the policy justifications for vicariously imposing punitive damages against employers for the actions of managerial employees. Although vicarious liability and punitive damages reside on opposite ends of the culpability spectrum, this Part explains how the two work together to deter broad delegation of authority to judgment-proof managers and to create incentives to invest in responsible training, supervising, and selection of employees. The rule forces employers to internalize the cost of harms caused by their managerial employees even when their actions are not official company policy. It also explains that civil damages are more efficient at deterring corporate wrongdoing than criminal sanctions because they avoid the constitutionally imposed criminal procedural hurdles. Criminal procedures are necessary to protect individuals from the depravation of liberty and stigma of a criminal conviction, but when applied to corporate persons, they create needless obstacles to financial sanctions. As a result, vicariously imposed punitive damages provide a more efficient and proportionate counterbalance to the financial incentives that lead to corporate wrongdoing. Part V establishes that these deterrence and enterprise liability rationales for vicariously imposed punitive damages are particularly compelling in light of the factual and legal peculiarities encountered throughout maritime law. The Article concludes with a brief look toward the likely resolution of the circuit split in the Supreme Court or Congress. The author concludes that rather than waiting for the Court to resolve this issue, Congress should statutorily impose vicarious liability on employers for the acts of managerial employees and perhaps prevent the next maritime disaster.