More on Economic Substantive Due Process
In the post-Lochner era, the Supreme Court has tolerated state use of the police power to oust private law relationships. Privately erected law, though, still controls in the absence of state legislation which can be rationally justified under the police power. The state must have some good reason to demand that its laws govern in place of those laws drafted by individuals.A member of Columbia Fed Soc just posted his Law Review note on SSRN discussing the Court's recent substantive due process jurisprudence in punitive damages, and arguing that it should extend to the context of statutory damages.
In a footnote to his proposition: "[BMW v. Gore] prescribed 'guideposts' that are to guide courts in determining whether the state court’s award fell within the scope of its acceptable interest in deterrence and retribution," he says:
Gore, 517 U.S. at 568 ("Punitive damages may properly be imposed to further a State's legitimate interests in punishing unlawful conduct and deterring its repetition."); see also Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 432 (2001); Prosser and Keeton on Torts 9-10 (5th ed. 1984). Although these are the two acceptable interests cited by the court, they are certainly not the only two discussed in case law and in the literature. See Anthony J. Sebok, What Did Punitive Damages Do? Why Misunderstanding the History of Punitive Damages Matters Today, 78 Chi-Kent L. Rev. 163, 163--64 (2003) (noting the "variety of plausible purposes" for punitive damages, including compensation); David G. Owen, A Punitive Damages Overview: Functions, Problems and Reform, 39 Vill. L. Rev. 363, 373-374 (1994) (explaining that "[a]lthough most courts refer only to 'punishment' and 'deterrence' as rationales for [punitive] damages, this masks the variety of specific functions that punitive damages actually serve," including such additional functions as education, compensation and law enforcement).The issue produces an interesting split in the Court; State Farm had dissents from Justices Scalia, Thomas, and Ginsburg.
Note that the finding of economic substantive due process limits in the context of punitive damages is a wild departure from the court’s history, which has, since Lochner, never validated substantive due process outside of the individual rights context. Compare Williamson v. Lee Optical of Oklahoma 348 U.S. 483, 487 (1955) (acknowledging significant overinclusiveness in a statute, but holding that “it is for the legislature, not the courts, to balance the advantages and disadvantages of the new requirement”) with Roe v. Wade; Lawrence v. Texas. Instead, the Court has applied a "minimum rationality" standard to economic legislation, allowing any rational purpose for the statute. In limiting the state’s interest to punishment and deterrence, the Court departs from that standard in the context of punitive damages.
It will be interesting to see what happens in the case the note is based on--Lowry's v. Legg Mason--and whether the Fourth Circuit agrees that the punitive damages jurisprudence should be extended to statutory damages.