The Effects of Seeking Punitive Damages on the Processing of Tort Claims

Journal of Legal Studies, Vol. 34, No. 2 (2005), pp. 343-369. Prepublication draft available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=585804


Punitive damages are a controversial aspect of tort litigation and have been the subject of numerous theoretical, empirical, and experimental studies. Critics have argued that the uncertainty and unpredictability that punitive damages claims inject into a case may increase the rate and amount of settlements and carry systemic consequences for the general processing of tort claims. This paper represents the first empirical examination of this hypothesis. With one of the most comprehensive data sets of tort litigation, we analyze cases that are likely to have caps on punitive damages awards and cases that are likely to be uncapped. We examine the effect of the decision to seek punitive damages on several major decision points in the tort litigation process in a series of logit regression models. With extensive control variables, we find that seeking punitive damages has no statistically significant effect on most phases of the tort litigation process.