Punishment and Willingness to Pay

Matthew S. Levine* TABLE OF CONTENTS I. INTRODUCTION .................................................................................................. I. THE PROBLEM OF WILLINGNESS TO PAY ......................................................... A. IllustrativeDifficulties.............................................................................. 1. Lucius Veratius .................................................................................. 2. Exploding Pintos ............................................................................... 3. Gandhi and King ............................................................................... B . The P roblem ............................................................................................. Ell. DETERRENCE AND EFFICIENCY ........................................................................ A. Economic Explanationsfor Punishment................................................ 1. Economics of Negligence, Crime, and Punitive Damages ............. 2. Property Rules, Liability Rules, and Trespass ................................. B. Beyond Efficiency.- PunitiveDamagesfor Efficient Conduct ............... 1. Profiting from Death: Grimshawv FordMotor Co ....................... 2. The Implications of Grimshaw......................................................... C . Prices andSanctions................................................................................ 1. Negligence Damages as Sanction .................................................... 2. Prices and Sanctions as Not Normative ........................................... D. An Efficiency Approach to Civil Disobedience...................................... 1. The Necessity Defense as Cost-Benefit Analysis ........................... 2. The Political Necessity Defense and Civil Disobedience ............... 3. Classic Civil Disobedience: Gandhi and King ................................ E. The FailureofEfficiency Approaches.....................................................
1V. RETRIBUTION AND RIGHT ................................................................................

A. A Sketch of Hegelian Retribution............................................................ 1. Criminal Punishm ent......................................................................... 2. Conversion and Theft ........................................................................ 3. Contract .............................................................................................. B. The Difficulties with Ex Ante Willingness to Pay................................... 1. Crim e and A utonomy ........................................................................ 2. C ivil Disobedience ............................................................................ 3. Tort and Contract ............................................................................... V. HISTORICIZING THE WILLINGNESS TO PAY ......................................................

330 331 331 331 331 333 333 335 335 335 336 340 340 341 344 344 347 350 350 352 353 354 355 355 355 356 358 359 359 360 361 363

*.

Law clerk to Judge Edward R. Becker, United States Court of Appeals for the Third

Circuit, Philadelphia. A.B., Harvard, 2000; J.D., Yale, 2004. 1 would like to thank James Q.

Whitman for helpful comments regarding earlier drafts of this article. All errors, of course, remain
my own.

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Talion and Composition........................................................................... 1. The Basic D evelopment .................................................................... 2. Composition and Talion as Price ...................................................... B . Sin andA tonem ent.................................................................................... 1. The Sacrament of Atonement ........................................................... 2. Anselm and Retribution .................................................................... 3. Theology and Willingness to Pay ..................................................... C . Guilt andDebt .......................................................................................... VI. SOME APPROACHES TO PRE-PAYMENT ............................................................ A . Prices on Crimes ...................................................................................... 1. Prices on Lives and Prices on Crimes .............................................. 2. The Difficulties of Pre-set Sanctions ................................................ B. Jillingnessto Pay, Wealth, and Hubris.................................................. 1. The Willingness to Pay Standard and Inequality ............................. 2. Inequality, Wealth, and Hubris ......................................................... C. Pre-Payment,Remorse, andReconciliation........................................... I. INTRODUCTION

In most aspects of modem law, we consider it a good thing that an actor is prepared to make good on his obligations and pay the costs of his actions. This proposition seems so intuitive that it is surprising to find some exceptions, cases in which an actor's willingness to pay for his actions counts as a strike against him, or at least complicates society's attitudes towards his behavior. In this article, I point to several such cases and argue that they suggest the need for some inquiry into the meaning of ex ante willingness to pay for one's violations of social or legal norms. This inquiry can deepen our understanding of the purposes of and justifications for punishment, and complicate the relationships between law, punishment, and autonomy. Part 11 of this article lays out the problem, using three examples. Part III sets out the economic efficiency approach to tort and criminal law while arguing that this approach cannot account for important intuitions and leading cases about the impact of ex ante willingness to pay on our judgments of guilt. Next, Part IV sets out another possible approach to tort and crime, what we might call a Hegelian "rightness" approach, and shows that it, too, does not fully cover the territory. Part V sets out some historical developments that offer insights into modem reactions to ex ante willingness to pay. Finally, Part VI lays out important themes in the approach to willingness to pay and suggests that they provide a way to understand our reactions that goes beyond standard theories of deterrence and retribution.

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PUNISHMENT AND WILLINGNESS TO PAY Il. THE PROBLEM OF WILLINGNESS TO PAY A. IllustrativeDfficulties

1. Lucius Veratius
In ancient Rome at the time of the Twelve Tables, the penalty for iniuria (i.e., physical battery) was twenty-five asses.' Over time, the value of the as depreciated dramatically. 2 This led to problems: There was a certain L. Veratius, a terrible nuisance and fearfully irresponsible. He used to take delight in slapping the faces of free men with the palm of his hand, and he went around followed by a servant with a purse of asses, and when he had slapped a man he would order twenty-five asses to be paid out on the 3 spot. The Roman law of iniuria developed from this point; the praetors abandoned the formula of the Twelve Tables and gave causes of action against iniuria to compensate the victim for the damage caused.4 2. Exploding Pintos Ford Motor Company produced a car, the Pinto, which had the unfortunate habit of exploding when rear-ended. One such explosion killed Lilly Gray, the driver of a Pinto, and severely burned her passenger, thirteen-year-old Richard Grimshaw. Grimshaw sued Ford and a jury awarded him $2,516,000 in compensatory damages and $125 million in punitive damages; the trial court later remitted the punitive award to $3.5 million. 6 The California Court of Appeals upheld the punitive damages award, finding the required "malice" in Ford's knowledge of the Pinto's poor safety record and failure to correct the Pinto's problem-arguably poor placement of the fuel

1.

JOHN CROOK, LAWAND LIFE OF ROME 250 (1967).

THE OXFORD CLASsIcAL DICTIONARY 359 (Simon Homblower & Anthony Spawforth eds., 3d ed. 1999). The as was once a pound of bronze; however, by the end of the Second Punic War, it weighed only about two ounces. See id By then, its value was relatively small. See WILLIAM GARDNER HALE & CARL DARLING BucK, A LATIN GRAMMAR app. at 356 (1903) (estimating the value of the as in the late third century B.c. at around two cents inearly twentieth-century American money). 3. CROOK, supra note 1, at 250-51 (quoting AuLus GELLiJS, NoCrES ArncAE 20.1.13, reprintedin THEATIc NIGHTSOFAULUS GELLIuS 410-11 (T.E. Page et al. eds., 1946)). 4. See id. lniuria eventually came to include a variety of tortious offenses, including defamation. Id. at 251. 5. Grimshaw v. Ford Motor Co., 174 Cal. Rptr. 348, 359 (Ct. App. 1981). Id at 358. Mrs. Gray's heirs received $559,680 incompensatory damages. Id. 6. 2.

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tank-because it would be cheaper not to do so. 7 Ford instead decided to pay damages for those injured or killed by explosions. 8 Ford knew that the Pinto was dangerous and that it could correct the problem, but decided not to because it would be more expensive to correct the problem than to pay damages for the injuries it caused.9 In terms of legal economic analysis, this was clearly an efficient and correct decision.' 0 But this is precisely the decision that gave
rise to punitive damages. As Douglas Laycock writes, 'The striking thing about Grimshaw is its square and utter rejection of the economic view of law."'" Ford made a decision that economically-minded judges from Learned Hand to Richard Posner would have endorsed-and a California jury was so outraged by that decision 2 that it awarded $125 million in punitive damages.'

7. 8.

Id at 384. See id

9. Id. In much of this paper, I stylize the facts of Grimshaw in one important respect: I assume that the cost-benefit analysis discussed in the case actually happened and was officially relied upon by Ford. It is a matter of some dispute whether this is the case. See RICHARD A. POSNER, TORT LAW: CASES AND ECONOMIC ANALYSIS 226 (1982). This should not matter much here; my goal is not to debate the rightness of the Grimshaw verdict, but rather to examine the concept of retribution underlying it. It is enough for my purposes that the jury, and the reviewing court, believed that Ford did in fact rely on the cost-benefit analysis in making its safety decisions. Cf Grimshaw, 174 Cal. Rptr. at 384. In any case, a widely reported form of Ford's cost-benefit analysis is the following charts. The first lists the risks to Ford of the design that was implemented: Outcome of faulty design Ford's unit value Ford's total value $36 million $200,000 180 bum deaths 180 serious bum injuries $67,000 $12.1 million $1.5 million $700 2100 burned vehicles Total $49.6 million The second lists the costs of changing the design: Total cost Unit cost Number of units 11 million cars $11 $121 million $16.5 million $11 1.5 million light trucks Total $137.5 million W Kip Viscusi, CorporateRisk Analysis: A Reckless Act?, 52 STAN. L. REV. 547, 595 (2000); see also POSNER, supra, at 225; Mark Dowie, Pinto Madness, MOTHER JONES, Sept./Oct. 1977, at 24 (describing Ford's cost-benefit analysis). 10. That is, assuming that Ford used the proper values in making its calculation. This is likely a false assumption. Equally likely, though, Ford would still have been punished even if it had used the right numbers. See infrapp. 371-72.
11. 1994).
DOUGLAS LAYCOCK, MODERN AMERICAN REMEDIES: CASES AND MATERIALs 667 (2d ed.

12.

See Grinmshaw, 174 Cal. Rptr. at 258.

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PUNISHMENT AND WILLINGNESS TO PAY 3. Gandhi and King

Two great heroes of the twentieth century, Mahatma Gandhi and Martin Luther King, Jr., shared a similar strategy to overcome injustice, a strategy of nonviolent 14 resistance.1 3 Like many revolutionaries, they violated laws that they viewed unjust. Unlike most revolutionaries, however, they did so without violence, and without resisting the operation of the law. s The law quickly punished them, and both accepted that punishment. 16 By forcing the deeply flawed legal systems to punish them and then submitting patiently to that punishment, each drew attention to the evils of those systems, and likely did more to change them than any amount of violent resistance would have. 17 In some ways they showed much more respect for principles of legality than do those who rebel against the laws they consider unjust. But in another sense, Gandhi and King showed a profound disrespect for the law. Their actions, much like those of Veratius-or, according to many critics, those of Ford-placed them, in a sense, above the law. By violating the law, with the expectation of being punished, they treated criminal punishments as no more than a cost of their activities. Such actions implicitly argue that the criminal law is an arbitrary set of harms, not a system of rules that ought to bind people's conduct. Treating law as a mere set of threats, rather than a binding source of obligation, 18 is a strong negation of the law's power; this article argues that is one reason why the nonviolent resistance of King and Gandhi had so much force. B. The Problem What the foregoing examples have in common is that, in each case, an actor violated societal norms by harming another person or breaking a criminal law. And, in each case, the actor decided, cc ante, that he was willing to pay the penalty for the violation. Of course it is generally honorable to stand ready to make good on one's obligations. This is the foundation of our system of credit and contracting, which rely on the parties' intent to fulfill their commitments. It is also a key element in tort law-an element that has not only economic but also moral underpinnings.' 9 But in

13. See Brent D. Wride, Comment, PoliticalProtestandthe IllinoisDefense ofNecessity, 54 U. Ci. L. REV. 1070, 1093-94 (1987). 14. See id.at 1093. 15. See id. 16. See id. at 1093-94. 17. Id. at 1094. 18. These terms come loosely from H.L.A. Hart's famous objection to Austinian positivism's definition of law as a set of"order[s] backed by threats," H.L.A.HART, THE CoNcErT OF LAW 6 (2d ed. 1994), and his substitution of rules of obligation. See generally id at 79-99. 19. For a fascinating discussion that sheds some light on this issue, see Tom Baker,

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the cases noted above, the matter is more complicated. Ford Motor Company was punished because it was so clear-eyed in its readiness to pay for the harm it caused. Veratius's behavior-not only the slapping, but also the blithe payment of the penalty--scandalized his fellow-citizens into drafting new legislation. 20 While Gandhi and King's actions, and their willingness to suffer punishment for their beliefs,2' strike us as noble, that willingness had a complex meaning very different from the average contract party's willingness to pay damages upon breach.
There is thus a need for some inquiry into the meaning of ex ante willingness to pay for one's violations of social or legal norms. Veratius's intentional torts, Ford's defective product design, and Gandhi's protests are very different acts in very different contexts; but they all create tension in the relationships between law,

punishment, and autonomy.

Ultimately, these disparate examples point to an important tension in law, between the obvious need to set prices and sanctions and the deep discomfort caused by those pre-set penalties. The modem dominance of law and economics should not obscure the difficulties that we naturally have with a fixed set of prices for misbehavior. Those difficulties are peculiarly highlighted where private actors take the costs into consideration as they plan their own actions. In general, we have no choice but to have fixed systems of punishment and rational systems for tort damages. But when individuals appropriate these systems for their own ends, our deep-seated discomfort with them rises to the surface.

Blood Money, New Money, and the Moral Economy of Tort Law in Action, 35 LAW & SOC'Y REv. 275 (2001). Baker surveyed Connecticut personal injury lawyers to determine, among other things, the bar's attitude toward "blood money"-that is, money collected in personal injury suits from individual defendants rather than from their insurers. Id. at 276. He found that it was extremely rare for plaintiffs (or their lawyers) to seek such blood money, but that they would do so in specific cases. Id. at 295-96. One important such case is where the defendant failed to purchase what the plaintiff views as a reasonable amount of insurance for his wealth and risk profile. Id. at 296-97. Baker writes: "The minimum [amount of insurance] is whatever it takes to claim, credibly, that you have satisfied your moral obligation to insure." Id. While an economic story for this rule is of course easy to construct, Baker and his interviewees experienced the rule not as an efficiency rule (i.e., "buy enough insurance to cover your assets") but as a moral rule. The plaintiffs' lawyers feel that there is a moral responsibility to purchase adequate insurance, and that those who fail to meet that responsibility ought to be punished. See id. 20. See CROOK, supra note 1,at 250-51. 21. See Wride, supra note 13, at 1093-94.

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PUNISHMENT AND WILLINGNESS TO PAY 1II. DETERRENCE AND EFFICIENCY A. Economic Explanationsfor Punishment 1. Economics of Negligence, Crime, and Punitive Damages

335

Modem tort theory is founded upon the so-called "Hand Formula," which considers the probability of harm (P), the cost of harm (L), and the burden of taking precautions to prevent harm (B). Under this formula, a defendant is liable in negligence if and only if B < PL. This negligence formula provides the proper incentives to a prospective defendant. If it is efficient for the defendant to take precautions (that is, if the expected harm of his actions is greater than the cost of precautions against them), then he will; if it is not, then he will not take those precautions. 24 By placing the costs of inefficient precautions on the injuring party, the law forces him to internalize the harms he causes, thereby making his conduct efficient-a process that is efficient for society as a whole. This standard economic approach can be extended to criminal law. There the focus is not on the precautions taken (the criminal, after all, is intentionally causing the harm), but rather on the criminal's expected gain from the crime. In both cases, however, the goal is to make the injurer (tortfeasor or criminal) internalize the costs of
his actions. 25 Posner writes:

In order to design a set of optimal criminal sanctions, we need a model of the criminal's behavior. The model can be very simple: A person commits a crime because the expected benefits of the crime to him exceed the expected costs ... The costs include various out-of-pocket expenses (for guns, burglar tools, masks, etc.), the opportunity costs of the criminal's time, and the expected costs of criminal punishment.26

22.

United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir. 1947) (Learned Hand,

J.).
23. Id; see also RICHARD A. POSNER, ECONOMC ANALYSIS OF LAW 180-182 (5th ed. 1998) (explaining the Hand Formula in its marginal form and its relation to risk aversion). Posner also briefly discusses the history of tort doctrine, arguing that "[ajlthough the Hand Formula is relatively recent, the method it capsulizes has been used to determine negligence ever since negligence was first adopted as the standard to govern accident cases." Id at 182. Strict liability regimes, which are the norm in some areas of tort, actually have similar 24. efficiency effects: while strict liability will have different effects on activity levels by prospective injurers and victims, its affect on precautions by prospective injurers will be similar to that of negligence (Hand Formula) liability. See POSNER, supra note 23, at 192. Modem products liability law is usually called strict, but is in many respects closer to a negligence standard. See id at 197-98. See id at 194. 25.

26.

Id at 242.

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Thus, the classic economic/utilitarian criminal sanction is computed via the formula G < PS, where G is the criminal's gain from the crime, P is the probability of being caught, and S is the criminal's loss from the criminal sanction if caught. 27 Finally, tort law often allows punitive damages. 28 There are a number of rationales for punitive damages, some of which will be explored below, but for now, this section focuses on the underdeterrence rationale. Not everyone who is harmed by a dangerous product will sue, and not everyone who sues will win or recover a full measure of damages. Thus, the manufacturer of a dangerous product will not fully internalize the societal harm caused by his product, and so will end up overestimating the societal value of that product. One solution to "underdeterrence" is punitive damages: if the damages that the manufacturer pays in a given case are "grossed up" to account for the victims who did not sue, then the manufacturer will be more likely to accurately internalize the costs of its dangerous product.29 This analysis is closely related to the economic/utilitarian criminal sanction formula discussed in the previous paragraph, and is one of the ways in which punitive damages for torts are similar to punishments for crimes. 2. Property Rules, Liability Rules, and Trespass The preceding analysis does not perfectly explain a simple case in which the law might award punitive damages. A builder, B, wishes to deliver supplies to his building site. The only feasible way for him to get them there is by cutting across the property of an adjacent landowner, A. This shortcut would cause minimal, easily reparable damage to A's property. B offers to pay a reasonable fee to A for the use of his land, which A refuses. B increases his offer, proposing to pay A far more than would be necessary to repair the damage to his land in order to compensate him for the inconvenience. Still A refuses. Realizing that there is no other economical way to get the supplies to his site, B cuts across A's land despite A's objection. A sues. The

27. Versions of this formula long predate Richard Posner. Among punishment theorists, Cesare Beccaria and Jeremy Bentham are perhaps most famous for advocating this sort of utilitarian
balancing. See, e.g., CEsARE BECCARIA, OF CRIMES AND PUNISHMENTS 50 (Jane Grigson trans., Marsilio Publishers 1996) (1764) ("For a punishment to be efficacious, it is enough that the disadvantage of the punishment should exceed the advantage anticipated from the crime; in which excess should be calculate[d] the certainty of punishment and the loss of the expected benefit.");
JEREMY BENTHAM, AN INTRODUCrTION TO THE PRINCIPLES OF MORALS AND LEGISLATION 166 (Oxford

Univ. Press. 1970) (1789) ("The value of the punishment must not be less in any case than what is sufficient to outweigh that of the profit of the offence."). 28. See generally Harold See, Punitive Damages: Introduction and Synopsis, 40 ALA. L. REv. 687 (1989). 29. See Bruce Chapman & Michael Trebilcock, PunitiveDamages:Divergence in Search of a Rationale, 40 ALA. L. REv. 741, 812-13 (1989).

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for A, and awards A his (minimal) real damages, plus a substantialpunitive jury finds 30
award.

This example might seem a bit bizarre, especially if we put some numbers on it. Imagine it would cost B $10,000 to get the supplies to his site in any other way and only $1,000 to get them there over A's land. Imagine that the damage to A's land could be repaired for $500 and A's time and inconvenience in dealing with the passage would be reasonably compensated by another $500. Imagine further that B offered A as much as $5,000 to allow the passage, and A refused. Imagine finally that damages. 3 1 the jury awarded A $1,000 in actual damages, plus $100,000 in punitive Here, B's proposal is clearly efficient-it would produce $4,000 in gains for A and $4,000 in gains for B,32 with no losses for anyone. It is clearly Pareto-optimal, and A's refusal is economically irrational. Why should the law protect A's irrational preferences and produce an economically inefficient result? The legal literature already has a sophisticated economic answer to these questions: punitive damages are owed because the trespasser tried to convert the property rule that protects the landowner's rights into a liability rule. Calabresi and Melamed, in their seminal paper on the subject, define the difference: An entitlement is protected by a property rule to the extent that someone who wishes to remove the entitlement from its holder must buy it from him in a voluntary transaction in which the value of the entitlement is agreed upon by the seller... Whenever someone may destroy the initial entitlement if he is willing to pay an objectively determined value for it, an entitlement is protected by a
33 liability rule.

The right to exclude trespassers from one's land is a paradigmatic example of an entitlement protected by a property rule;3 4 the word "property" most basically refers to that very right. B has made a mistake in treating A's property right as a liability right, 35 and punitive damages are designed to punish B's violation.

30. These facts are taken loosely from Jacque v. Steenbeig Homes, Inc., 563 N.W.2d 154, 165 (Wis. 1997) (affirming the jury's $100,000 punitive award on top of a $1 nominal damages award). InJacque, the jury awarded only $1 in nominal damages. Id at 156. 1 have added some 31. actual damages to sharpen the example. 32. For A: $5,000 compensation received, minus $1,000 in costs. For B: $9,000 ($10,000 alternate cost minus $1,000 actual cost) in cost savings, minus $5,000 in compensation paid.

33.

Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and

Inalienability:One New ofthe Cathedral,85 HARV. L. REV. 1089, 1092 (1972) (emphasis added). 34. Cf id. I will use the shorthand "property right" to refer to an entitlement protected by a 35. property rule in Calabresi and Melamed's terms, and "liability right" to refer to an entitlement protected by a liability rule.

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Several questions arise from this account. First, why is the right to exclude trespassers protected by a property rule rather than a liability rule? Calabresi and Melamed seem to think that property rules should be the standard way to protect entitlements, since in the normal case such rules are a better route to efficiency than liability rules. "Liability rules represent only an approximation of the value of the [entitlement] to its original owner and willingness to pay such an approximate value is no indication that it is worth more to the [trespasser] than to the owner.' ,36 Perhaps A's desire to be left alone is so important to him that it really was worth more than the $1,000 in actual (average, reasonable, etc.) damages that a jury would award, or the $5,000 that B was prepared to offer. If that is the case, then giving A only $1,000 in "actual" damages does not fully compensate him; and only free bargaining between A and B will lead to the economically efficient result.37 Providing property-rule protection to A's entitlement will require such bargaining; providing only liability rule protection will allow B to circumvent the bargaining and destroy A's entitlement while paying only approximate, socially-fixed damages. Second, how does one make the leap from the notion that "this right is protected by a property rule" to one stating that "violations of this right are punished by punitive damages"? Calabresi and Melamed answer this question obliquely in their discussion of criminal sanctions. They note that many violations of property rules are remedied not only by compensation, but also by additional criminal punishment: thieves are not simply made to repay the value of the thing stolen, but are punished with additional criminal sanctions. The reason is as follows: The thief not only harms the victim, he undermines rules and distinctions of significance beyond the specific case. Thus even if in a given case we can be sure that the value of the item stolen was no more than X dollars, and even if the thief has been caught and isprepared to compensate, we would not be content to charge the thief X dollars. Since in the majority of cases we cannot be sure of the economic efficiency of the transfer by theft, we must add to each case an undefinable kicker which represents society's need to keep all property rules from being changed at will into liability rules. In other words, we impose criminal sanctions as a means of deterring future attempts to convert property
rules into liability rules.39

36. Calabresi & Melamed, supra note 33, at 1125. 37. See R.H. Coase, The Pmblem of Social Cost, 3 J.L. & EcoN. 1,44 (1960) (arguing that, in the absence of transaction costs, bargaining between parties will produce the socially efficient allocation of entitlements). 38. Calabresi & Melamed, supra note 33, at 1126. 39. Id. Calabresi and Melamed consider but dismiss the underdetenence rationale, noting that "even if thieves were caught every time, the penalty we would wish to impose would be greater than the objective damages to the person robbed." Id. at 1125.

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339

This logic can easily be extended to punitive damages, which serve as a sort of substitute for criminal sanctions. On this view, the fact that the damages are paid to A, rather than the state, as are criminal sanctions, is irrelevant. 40 Simply stated, punitive damages can be viewed as a way to increase damages so that the prospective violator "do[es] not consider conversion an acceptable substitute for purchase," because "we want to channel resource allocation through the market as much as possible" and therefore do not want to make theft and purchase equally attractive 41 altematives. Third, if this entitlement is protected by a property rule, what entitlements should be protected by liability rules? Much of Calabresi and Melamed's article is devoted to this question; they take property rules as a default and ask in what conditions it 42 would make sense to substitute liability rules. Their basic answer is that, where a decentralized market system would not yield true valuations (e.g., due to holdout or free-rider problems), liability rules may do a better job of pricing entitlements.43 They identify two paradigmatic cases in which this might be the case: eminent domain (in which holdouts could prevent the government from undertaking socially optimal projects unless the government could condemn their land and pay only "just compensation," via liability-rule damages), 44 and accidents.45 Their analysis of accidents is as follows: If we were to give victims a property entitlement not to be accidentally injured we would have to require all who engage in activities that may injure individuals to negotiate with them before an accident, and to buy the right to knock off an arm or a leg. Such pre-accident negotiations would be extremely expensive, often prohibitively so. To require them would thus preclude many activities that might, in fact, be worth having. And, after an accident, the loser of an arm or leg can always very plausibly deny that he would have sold it at the price the buyer would have offered.46 Thus, large-scale activities that cause accidents must be regulated by liability rules, not property rules. A property-rule regime would require essentially impossible negotiations with every possible future accident victim, and this would be inefficient.

40.

See Catherine M. Sharkey, Punitive Damagesas Societal Damages, 113 YALE L.J. 347,

350-52 (2003) (discussing rationales for punitive damages, and reasons for payment of such damages to tort victims, to the state, to special funds, or to various combinations of those payees).
41. 42. 43. 44. 45. 46. POsNER, supranote 23, at 227. See Calabresi & Melamed, supranote 33, at 1107. Id Id. at 1106. Id at 1108. Id.at 1108-09.

GONZAGA LAW REVIEW B. Beyond Efficiency: PunitiveDamagesfor Efficient Conduct 1. Profiting from Death: Grimshaw v. FordMotor Co.

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Calabresi and Melamed's discussion of property and liability rules captures many of our intuitions about situations where those who are ex ante willing to pay for the harm they cause are nonetheless held to be culpable and therefore punished. But it is incomplete, and it founders on a very striking modem tort case: Grimshaw v. Ford Motor Co. 47 Grimshaw,as noted above, was a shocking blow to law and economics. Grimshaw's implicit but obvious rejection of the Hand Formula seems to throw the entire enterprise into doubt. It is also, however, worth noting how poorly Grimshaw fits into Calabresi and Melamed's framework. One could intuitively describe Grimshaw in Calabresi-and-Melamed terms as a simple case where a tortfeasor violated property rights (Grimshaw's right to bodily integrity), and therefore faced punitive damages. Certainly if Ford's CEO had walked up to a randomly chosen person and intentionally set him on fire, he would face punitive damages as well as criminal liability. In the eyes of many, Ford's behavior was not much different from this. But this view is not compatible with Calabresi and Melamed's argument. They quite clearly state that accidents are an example-indeed, the paradigmatic example--of harms that are vindicated via a liability rule.48 Of course, much was made of the intentionality of Ford's conduct: evidence showed that it knew people would die, and it continued selling the Pinto.49 But this misses the point, as Calabresi and Melamed write not merely about activities that may or may not cause accidents (e.g., everyday driving activity), but also about broader societal activities that, in the aggregate, are certain to cause accidents (e.g., the government allowing people to drive cars, or a giant auto maker selling millions of cars). 50 It is precisely those activities that must be fostered by a liability rule because property-rule protection for potential accident victims would totally stymie these activities even if they benefit society as a whole. Grimshaw awarded punitive damages, 51 a classic property-rule protection, in a case that, under Calabresi and Melamed's view, obviously warranted liability-rule treatment. Calabresi and Melamed do not explicitly reject punitive damages in Presumably, extraordinary reckless conduct, such as the liability-rule cases. whenever they were started, could be punished by exploded building of cars that punitive damages--even if they fit best under the liability-rule paradigm.53 But such
47. 48. 174 Cal. Rptr. 348 (Ct. App. 1981). Calabresi & Melamed, supranote 33, at 1108.

49. 50.
51.

Grimshaw, 174 Cal. Rptr. at 385. See Calabresi &Melamed, supranote 33, at 1108-09.
Grimshaw, 174 Cal. Rptr. at 358.

52.
53.

Id. at 1108-10.
Cf id.

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recklessness, from an economist's point of view, was lacking in Grimshaw. Ford's conduct, at least judging by its own cost-benefit analysis, seems to be the sort of efficient activity that Calabresi and Melamed would allow. 2. The Implications of Grimshaw One possible solution to this tension is that Grimshaw is wrong and Calabresi and Melamed's categories hold up. Among scholars, particularly among those of law and economics, this is a popular view. 5 David Owen, writing shortly after the Grimshawdecision, provides a representative view: The trial court's instruction in Grimshaw is probably the most unsatisfactory of any that I have seen.... The trial court there instructed the jury that "malice" could be "inferred from defendant's conduct if the conduct was willful, intentional and done in conscious disregard of its possible result." The totally unacceptable import of this standard is that every actor could be held strictly liable thereunder for punitive, in addition to compensatory, damages for any consequence to any person that was contemplated in advance of any course of action. Virtually all important actions involve some risks to some people, and responsible individuals and institutions give careful consideration to such risks before they act. It is fundamental to life in a dynamic world with an unpredictable future that one must proceed to act, notwithstanding the presence of some foreseeable risks, provided that the benefits of the contemplated action (or inaction) appear at the time to exceed the risks. If this basic tenet of riskbenefit analysis were not virtually the universal rule, life would grind nearly to a halt.... The rules of negligence law provide that an actor generally will not be liable even for compensatory damages unless the balance of trade-offs was a bad one-that is, one in which the costs exceeded the benefits, thus making the action on balance cost-ineffective. Punishment for such decisions usually can be justified only when the actor not only made the wrong decision but also made a deliberate choice to advance his good over what he knew to be the greater good of others. The trial court's instruction in Grimshaw is thus palpably in error, as it justifies punishment for most significant decisions even if made in all good faith, and even if on balance goody5
See, e.g., David G Owen, Problems in Assessing Punitive Damages Against 54. Manufacturers ofDefective Products,49 U. Cmi.L. REv. 1,6-7 (1982). 55. Id. at 21-23 (emphasis added) (quoting, in part, Grimshaw, 174 Cal. Rptr. at 385). The

appellate court in Grimshaw recognized that the trial court's instruction was erroneous insofar as it referred to the "possible," rather than "probable" result of Ford's actions, but held the error harmless.
Grimshaw, 174 Cal. Rptr. at 384, 387.

Richard Epstein provides another representative example of the law and economics response.
He wrote not about Grimshaw,but about an earlier Indiana criminal prosecution of Ford for reckless

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To law and economics scholars, Grimshaw is a triumph of emotion over rationalitya decision that rejects sound economic approaches to planning 6and damages in favor of a standardless approach based on jurors' feelings of outrage.5 But it is impossible to treat Grimshaw as a mere aberration. Other courts have awarded punitive damages in similar situations where companies more or less decided that it would be cheaper to pay compensatory damages for accidents than to take precautions to prevent those accidents.5 7 English case law involving punitive

homicide in connection with another exploding Pinto. Richard A. Epstein, Is Pinto a Criminal?, REGULATION, MariApr. 1980, at 15. Epstein takes the Hand Formula as a given, and writes: When. . . the prosecution said that Ford had made a conscious choice to "trade" cost against safety, the answer is that this is precisely what the tort law.., establishes as the limit of its legal obligation ...When the prosecution said that the defendant had used explicit cost-benefit formulas or had assigned monetary values to human life and suffering, the answer is that Ford did so in compliance with court decisions announcing that such computations will avoid civil liability... It cannot-should not-be the law that Ford may first be permitted (if not required) to make certain cost-benefit calculations under the tort law, only then and for that reason to be held guilty of reckless homicide under the criminal law. Id at 19-20. Epstein's article is interesting because it is focused on the mens rea requirement of the criminal prosecution; he does not assume that Ford's cost-benefit calculations were right, but says that this question "is wholly unrelated to the mental element of the [criminal] case." Id. Epstein's analysis cannot comprehend the prosecutor's (and the Grimshaw jury's) visceral reaction, that the fact of the cost-benefit analysis itself established the mental element. He responds to that visceral sense with a reductio adadsurdum: Federal automotive officials had clear responsibility for approving the design of the Pinto. They therefore had to make the same cost-benefit analysis required of Ford in order to discharge their statutory duties. They also had to set some value on human life in order to determine what precautions were needed and why. If they did not set standards that could in fact have saved lives, did they not sacrifice human life every bit as much as Ford officials? at 21. Id. 56. Viscusi, for instance, calls it 'jury misbehavior," and suggests that "jurors will be offended by, or will not fully understand," the risk-analysis approach. Viscusi, supranote 9, at 570, 588. See, e.g., Brown v. Mo. Pac. R.R-, 703 F.2d 1050, 1053 (8th Cir. 1983) (upholding a jury 57. verdict that included punitive damages against a railroad that allegedly decided "that it is cheaper to be sued than to protect railroad crossings"); Sturm, Ruger & Co. v. Day, 594 P.2d 38, 47 (Alaska it would 1979) ("[T]he threat of punitive damages serves a deterrence function in cases in which ... be cheaper for the manufacturer to pay compensatory damages to those who did present claims then it would be to remedy the product's defect."); Forrest City Mach. Works, Inc. v. Aderhold, 616 S.W.2d 720, 726 (Ark. 1981) (approving the concept of punitive damages in product liability cases, where the manufacturer decided that it would be cheaper to pay compensation than to remedy the defect, but reversing the punitive award as inconsistent with the evidence); see also LAYCOCK, supra note 11, at 668. The Sturm, Ruger& Co. court's reliance on "deterrence" is a bit off; ifthese products actually are efficient (that is, if it would cost more to change them than to pay for the harm they cause), then we should not want to deter them.

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damages has similar elements. In a leading case, Lord Devlin held that one of the three limited categories of cases supporting punitive damages is that "in which the defendant's conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff."58 Without qualification, Lord Devlin's formulation is the Hand Formula--that is, it indicates cases59in which the defendant should not be liable at all, notwithstanding punitive damages. Thus Grimshaw cannot simply be a mistake-or, if it is a mistake, it is a systemic mistake, one built into the psychology of jurors and judges. Cases like this may be economically inefficient, but they respond to a common sentiment that efficient ex ante cost-benefit analyses can be punished. Explaining this sentiment would seem to require moving beyond economic efficiency. Incidentally, scholars have identified other economically perverse effects of awarding punitive damages in cases like Grimshaw. David Owen notes one of them: [T]he more a manufacturer is truly concerned about its product's safety, the more it will encourage self-criticism and "negative" analyses of the product within the company. For example, it often is desirable during the initial stages of a product's design to test it to its limits to discover what those limits are: cars may thus be crash-tested until their gas tanks burst, and rats may be injected with a drug in ever higher doses until some die. Documentary evidence (especially films) of such tests can later retum to haunt the manufacturer, as they did in the GrimshawPinto case.6 We might conclude that such decisions tend to punish not only financial responsibility and cost-benefit analysis, but also any safety testing. In a sense, this is primarily an evidentiary problem. Responsible safety testing will create documentation that could look bad for the manufacturer in the course of a lawsuit. Such an evidentiary problem might be approached through evidence rules and rulings, an analysis outside the scope of this article.6' 58. Rookes v. Barnard, [1964] Lloyd's Rep. 28,65. with United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir. 1947). 59. Compare id. One crucial qualification for the formula might be if Lord Devlin were talking about only intentional violations of property rules (e.g. intentional copyright infringement), as seems likely. Under Calabresi and Melamed's analysis, such cases might well require punitive damages because the efficient approach would be market bargaining rather than unilateral infringement of the right. See Calabresi & Melamed, supra note 33, at 1126 n.71. But, applied to negligence cases, Lord Devlin's formulation is at best very odd, and at worst exactly the opposite ofthe correct approach. 60. Owen, supranote 54, at 17-18 (footnotes omitted). 61. See FED.R. EviD. 403, 407-409. Thus, judges might apply Federal Rule of Evidence 403 or its state equivalent strictly insuch cases, excluding relevant but prejudicial crash-test footage in order to encourage manufacturers to conduct and document such tests without fear of increased liability. See id at 403. Similar policies underlie other federal evidentiary exclusions. See, e.g., id at 407 (excluding evidence of subsequent remedial measures in negligence and products liability cases); at 409 (excluding id.at 408 (excluding evidence of offers to compromise claims to show liability); id.

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But this tendency may not merely be an evidentiary problem, but also an indication of an intuition parallel to the one that punishes Ford's ex ante calculation of its tort judgment costs. Ford is being punished for calculating how safe is safe enough- making its own decisions about safety rather than leaving them to the later determination of the jury. Here, too, Ford is usurping ex ante what seems to be the ex system. The courts will likely react to that usurpation with post role of the court 62 harsher penalties. C. PricesandSanctions 1. Negligence Damages as Sanction One approach to the Grimshaw problem is to characterize it as a distinction between prices and sanctions. Robert Cooter developed this approach in his article PricesandSanctions.61 According to Cooter, "a sanction [is] a detriment imposed for doing what is forbidden, and a price [is] money extracted for doing what is permitted.4 4 On this analysis, negligence damages are a sanction,6 5 and Ford (and Posner) simply got it wrong in reading them as a price: Economists sometimes think of sanctions as prices, which prevents them from understanding the normative character of the law. To illustrate this confusion in the area of tort law, suppose an individual believes that compensatory damages are the price of negligence. When accused of negligence, he might explain to the court that he deliberately took actions proscribed by the legal standard in order to avoid the high cost of compliance, and, in doing so, he was fully prepared to compensate anyone who was injured. The court might reply that the injurer has a duty to take reasonable care, not permission to be careless and pay compensatory damages. The court might add that deliberate violation of the legal standard, as admitted by the injurer, provides grounds for punitive damages. Finally, the court might suggest that punitive damages be set high 6 6 enough to deter the injurer in the futre. The problem with this approach is that it assumes some standard of negligence that is divorced from the cost-benefit analysis conducted by Ford (and implied by the Hand evidence of payment of medical expenses to show liability). For each rule, the Advisory Committee Notes make it clear that, despite the probative value of the evidence, it is excluded inorder to further the policy goals of encouraging remedial measures, settlements, and prompt medical care. Id at 40709 advisory committee's note. 62. See, e.g., id at 348. 63. Robert Cooter, PricesandSanctions, 84 COLUM. L. REv 1523 (1984). 64. Id at 1538. 65. See id. 66. Id at 1543.

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Formula). Intuitively, this seems reasonable, as negligence is defined as a failure to exercise the level of care that a reasonable person would exercise in the circumstances; 6 7 it is set by community standards, not by economic analysis. Thus, a reasonable level of care might be "don't design cars that kill people." Moreover, any failure to adhere to that level of care, whatever its costs, would be negligent; an intentional failure to do so would be enough to support punitive damages. But this cannot be right. Every car model that has ever been built occasionally kills people occasionally. "Avoid deaths, whatever the cost," cannot possibly be the community's standard for product design. Calabresi characterizes the notion that "society wants to avoid accidents at all costs" as a "myth. 6 8 He writes: Our society is not committed to preserving life at any cost.... [L]ives are spent not only when the quidpro quo is some great moral principle, but also when it is a matter of convenience. Ventures are undertaken that, statistically at least, are certain to cost lives. Thus we build a tunnel under Mont Blanc because it is essential to the Common Market and cuts down the traveling time from Rome to Paris, though we know that about one man per kilometer of tunnel will die. We take planes and cars rather than safer, slower means of travel. And perhaps most telling, we use relatively safe equipment rather than the safest imaginable because-and it is not a bad reason-the safest cost too much.69 So the notion that a product that poses any threat to safety is per se negligent is unsupportable. Of course, Cooter could be arguing for some lower standard of negligence that is nonetheless derived from community norms rather than from economic analysis, but it is extremely unclear what that standard would be. It is quite likely that the average citizen would be uncomfortable setting the appropriate level of accidental deaths via cost-benefit analysis by assigning a dollar value to each human life lost and measuring that dollar value against the costs of precautions. But at this late date in the law and economics revolution, it is probably impossible to argue that this is not what actually happens in practice.7 It is all well and good to say that an actor that decides, on a cost-benefit analysis, to reject the community's standards should be punished. However, when the community's standards are themselves based on a cost-benefit analysis, the argument is weakened; and when the community's standard is not a set standard (e.g., "take level Xof precautions") fixed by the community's ex ante cost-benefit analysis, but is rather a standard requiring a cost-benefit analysis (e.g., "take the efficient level of precautions"), the argument vanishes. Ford was following the community standard

67. 68. (1970). 69. 70.

BLACK'SLAWDICIONARY 1061 (8th ed. 2004). GutDo CALABREsI, THE COSTS OF AccDENTS: A LEGAL AND ECONOMIC ANALYsIs 17 Id. at 17-18. See, e.g., Viscusi, supranote 9, at 550.

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compared B to PL, and took the set out in the most famous of all negligence cases: it71 costs. social total minimized that precautions of level Cooter has something to say about these difficulties. In his discussion of negligence liability, he notes that the best way to achieve an efficient negligence standard is to have a community standard, based on broad experience, about what is and is not negligent conduct.72 Thus in automobile accident cases, courts ask not
whether a driver took an efficient level of precautions, but whether he acted as would a reasonable driver under the same or similar circumstances. 73 Community norms of reasonable care synthesize long, collective experience with balancing the risks of driving with its benefits: everyone knows that driving 100 m.p.h. in a school zone while reading the newspaper and talking on a cell phone, though it may get you to work faster, is too dangerous to be reasonable; similarly, most people realize that driving 5 m.p.h. and coming to a complete stop whenever another car approaches, 74 though it may reduce accidents, is not an effective use of automotive technology. Society's collective judgments about costs and benefits provide a standard of care, and individuals who violate that standard risk the sanction of negligence damages. But, as Cooter recognizes, these collective norms do not begin to cover the whole range of cases.75 We all have a pretty good idea of what driving practices are
71. See Cooter, supra note 63, at 1540-41. To reject this view, one would have to argue that the United States had specific standards for automobile safety which Ford violated. This is clearly false on the facts of Grimshaw, where no violation of statutory standards was found or alleged. Cf Grimshaw v. Ford Motor Co., 174 Cal. Rptr. 348, 348 (Ct. App. 1981). Ford's negligence was notper se, based on a violation of statutory standards, but was grounded on the fact that the Pinto exploded and killed people. Id.at 358. Products liability is notionally strict, though this characterization is highly debatable. See PosNER, supra note 23, at 197. To the extent that products liability is strict, rather than negligencebased, it is, in Cooter's terms, a price rather than a sanction. See Cooter, supranote 63, at 1524, 1539. Thus, Cooter's discussion of mistaking sanctions for prices should have no application to Grimshaw; if products liability is strict, then Ford was exactly right in thinking of it as a price. Cf id at 1543. Cooter, supra note 63, at 1540. 72. 73. See, e.g., RESTATEMENT (SEcOND) OF TORTS 283 (1965) ("Unless the actor is a child, the standard of conduct to which he must conform to avoid being negligent is that of a reasonable man under like circumstances."). A nice illustration of the evolution of these standards comes from two well-known 74. grade-crossing cases. Compare Balt. & Ohio RR. Co. v. Goodman, 275 U.S. 66, 69-70 (1927) (Holmes, J.) (holding that a driver who failed to get out of his car at a railroad grade crossing to look for oncoming trains was negligent), with Pokora v. Wabash Ry. Co., 292 U.S. 98, 104 (1934) (Cardozo, J.) ("Standards of prudent conduct are declared at times by courts, but they are taken over from the facts of life. To get out of a vehicle and reconnoitre is an uncommon precaution, as everyday experience informs us."). Justice Cardozo's approach adopted the normal practices of drivers as decisive of due care; while Justice Holmes's may have been safer. Compare Goodman, 275 U.S. at 69-70, with Pokora, 292 U.S. at 104. Nonetheless, the everyday balancing of costs and benefits has enshrined Justice Cardozo's approach as the legal standard. See RESTATEMENT (SEcOND) OF ToRTs 283 (1965). 75. See Cooter, supranote 63, at 1541.

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reasonable or unreasonable, yet few of us have any intuition about what fuel-tank
76 design practices are safe. Some practices (e.g., driving) have reasonableness norms that are widely understood by the community (and applied by jurors);77 others (e.g.,

accounting) have reasonableness norms that are easily determined by asking the relevant community (expert witnesses, etc.); 78 while others probably do not have any
such pre-made reasonableness norms at all. 79 Cooter addresses this issue too. He writes: "If the market failure prevents an efficient community standard from arising and the courts nonetheless decide to adopt a negligence rule, officials must compute '

0 the optimal standard directly or proceed by successive approximations."

Proceeding "by successive approximations" means no more than doing an individual ex post cost-benefit analysis for each case.81 At this point, Cooter's justification for punitive damages entirely vanishes; his theory cannot explain punishing a company for performing the exact balancing that a court will later perform. 2. Prices and Sanctions as Not Normative The difficulties that Cooter's theory faces in dealing with Grimshaw extend beyond the specific case of intentional failure to take precautions to avoid accidental deaths. Cooter's use of terms suggests that his is a moral theory: one can act in a way that incurs a price, and pay that price, but one cannot morally act in a way that incurs a sanction merely because one is willing to bear the sanction. 82 Such a theory would seem to add a certain amount of clarity to the issue of ex ante willingness to pay. But, it cannot be sustained. Reading any normative value into Cooter's distinction is, in the end, a category mistake.
76. And, to the extent that we do have such an intuition in the context of litigation, it is likely to be ill-founded. If a fuel tank blew up, jurors are likely to feel that it was unreasonably designed, regardless of how small was the ex ante probability of such an explosion. See, e.g., Jeffrey J. Rachlinski, A PositivePsychological Theory ofJudging in Hindsight, 65 U. CHI. L. REV. 571, 571 (1998) ("[P]sychologists have demonstrated repeatedly that people overstate the predictability of past events--a phenomenon that psychologists have termed the 'hindsight bias.'). See Cooter, supranote 63, at 1541. 77. at 154041. See id. 78. 79. One imagines that engineering has important reasonableness norms to which an expert witness could testify Making an airbag with holes in it probably isn't reasonable according to professional standards. But clearly, there are also decisions that cannot be made by professional reasonableness norms. For example, whether to install an airbag in the first place is a cost-benefit decision that might not be answered the same way by every engineer designing every kind of car. However, this norm, too, might change over time, so that in ten years designing a car without airbags would be as unthinkable as designing a car without seatbelts would be today. Cooter,supra note 63, at 1541. 80. 81. See id See Cooter, supra note 63, at 1523. Cooter writes, "Officials should create prices to 82. compel decisionmakers to take into account the extemal costs of their acts, whereas officials should impose sanctions to deter people from doing what is wrong." Id

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Cooter's approach is grounded in economics,8 3 and it assumes that society has 84 some idea of standards it wishes to impose in the most effective and efficient ways. If lawmakers know the standard that they want-that is, if they know the optimal level of an activity-then they should impose a sanction. 85 If, on the other hand, they cannot easily determine the optimal level of the activity, but do know the costs that the activity imposes on others, they should impose a price. 8 6 Thus, if the community is convinced that murder is a bad thing, it should impose a sanction on murder. The precise level of the sanction-a term of years, life imprisonment, or execution-is, on this view, of secondary importance. What matters is that the existence of a sanction will prevent most people from engaging in the activity at all.87 On the other hand, while it may be known that too much pollution is a bad thing, it may not be immediately obvious what the proper tradeoff is between the harms of pollution and the advantages of production. 88 Thus it might make sense to charge manufacturers a set price for each ton of pollution they emit and rely on the incentives so created to find the optimal amount of pollution. Here, unlike with sanctions, the precise level of the price is of primary importance; if the price does not accurately reflect the social costs, then the policy will not achieve the optimal level of the activity 8 9 If polluters are charged a penny per ton, there will be too much pollution; if they are charged a 9 million dollars per ton, there will be too little industry. This distinction is based purely on efficiency. 91 It does not provide any normative reason to think that someone who violates a sanction-backed norm is morally wrong, while someone who does something that incurs a price is not. On this theory, a sanction is set because society has determined that, in general, any violation of a sanction-backed rule will be inefficient.92 But, if the only justification is 93 efficiency, and an actor sees that a violation of the rule would actually be efficient,

83.
84.

See id.
See id at 1524.

85. Id 86. Id. at 1532-33. This simplifies Cooter's argument; he writes not in terms of "knowing" the correct level of the activity or external harms, but interms of information costs. Id. If it is easier or cheaper for lawmakers to gather information about optimal levels of activity, sanctions are called for,

if it is easier to gather information about external costs, prices are appropriate. Id. at 1533.
87. Cooter,supra note 63, at 1532 ("Most people conform to a reasonable obligation backed by a reasonable sanction, even if the legal standard is inefficient or otherwise undesirable."). 88. Cf id at 1532. Or it may be that the question ofwhether to regulate pollution via prices or sanctions is controversial. See, e.g., Keith Keplinger, The Economics of Total Maximum Daily Loads, 43 NAT. REsouRcEs J. 1057, 1081 (2003) (discussing the possibility of industry buying and
selling pollution reduction credits).

89. 90. 91. 92. 93.

See Cooter,supranote 63, at 1532. See, e.g., id at 1525, 1528-31. See idat 1532. See id at 1533. This could surely happen with some fiequency. Such an excuse would basically be a

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then Cooter's theory provides no normative reason to disapprove of such action.

Therefore, it would not be irrational for the actor to take the level of the sanction into account in deciding whether a violation would be efficient. Cooter does provide an explanation for why violating a sanction-backed norm

(e.g., negligence) can justify punitive damages.

If it is profitable for an injurer to

violate negligence norms, it may well be even more profitable for him to fall far short of the community's standard.95 This provides an efficiency explanation for punitive damages awarded for intentional misconduct with the intent to pay damages rather than comply with a negligence standard (Ford's alleged offense). From a strict efficiency point of view, it is not clear why this works as an explanation. Generally, sanctions are designed to prevent normal people from doing a forbidden activity, and to punish and deter those who violate the rules based on society's general efficiencybased conclusion about what standard is appropriate. But that general conclusion presumably does not by definition take into account the "exceptional injurers" for whom the benefits of breaching the standard are much higher than usual. And it seems plausible that those injurers should be able to argue that if society had properly standard for them, evaluated their particular situations, it might have revised 9the 6 rather than punishing them for falling far below that standard.
weak form of the necessity defense without requirements of imminence, etc. Virtually any type of conduct that society has in general ruled out of bounds, could be justified as efficient in a particular circumstance-consider Jean Valjean stealing a loaf of bread to feed his starving family, see VICTOR HuGo, LEs MIsERABLEs (Charles E. Wilbour trans., 1931), or George W. Bush authorizing extrajudicial killings of suspected terrorists. We think that theft and murder are so unlikely to be good on balance that we forbid them in all cases-but there are nonetheless cases where it is imaginable that at least some would argue that these crimes do in fact lead to "efficient" (i.e., net positive utility) results. Sometimes the courts say that these actions are not crimes at all (e.g., terrorist assassinations or the necessity defense); sometimes they remain crimes within the determination of the justice system, but we have a harder time condemning them morally (e.g., Jean Valjean). 94. See Cooter, supranote 63, at 1543. 95. Id at 1544 ("Intentional fault is gross because once the injurer decides to disobey the legal standard it pays to fall far short of it."). This typically applies to "exceptional injurers, [for whom] compliance costs or the benefits from noncompliance are unusually high." Id. at 1543. "For these injurers, violating the standard and paying compensatory damages is cheaper than conforming." Id An example might be helpful. The general standard for driving speed might be "drive no 96. faster than 65 m.p.h." Specific exceptions might exist for police cars and ambulances. A private citizen driving his pregnant wife to the hospital might also break the speed limit-and it might be worth it for him to "fall far short of' the legal standard by driving 90 m.p.h. He has determined that his "compliance costs or the benefits from noncompliance are unusually high," and so unapologetically breaks the speed limit. While in abstract terms we might be shocked by "exceptional injurers" who let their own high compliance costs overrule society's goal of deterring negligence, most of us would be considerably less shocked by this driver's conduct, and would not see him as deserving extra punishment for intentionallyviolating legal norms. In legal terms, this is the territory of the necessity defense. In Cooter's economic efficiency terms, though, it is difficult to distinguish this "exceptional injurer" from Ford, and explain why our

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The deterrence/efficiency approach to punishment can also shed light on civil disobedience, though its results here are not especially enlightening. This examination involves the concept of the necessity defense and its controversial application to civil disobedience. 1. The Necessity Defense as Cost-Benefit Analysis In general, the criminal law recognizes the defense that a defendant's criminal conduct was necessary in order to prevent a greater evil.97 The relevant Model Penal Code (MPG) provision is as follows: Conduct that the actor believes to be necessary to avoid a harm or evil to himself or to another is justifiable, provided that: (a) the harm or evil sought to be avoided by such conduct is greater than that sought to be prevented by the law defining the offense charged; and (b) neither the Code nor other law defining the offense provides exceptions or defenses dealing with the specific situation involved; and (c) a legislative purpose to exclude the justification claimed does 98 not otherwise plainly appear. In theory, this would allow defendants to escape the strictures of criminal law if their own cost-benefit analysis indicated that their chosen course of action was proper. In practice, however, the necessity defense is often strictly constrained. 99 Judges have limited necessity evidence to justify a variety of crimes, including escape from prison 00 to avoid physical harm, 1 medical use of marijuana, 0 1 and distribution of needles without a prescription in order to stem the spread of l 102 Some statutory regimes are also stricter than the MPC. For example, New York requires that the action be "necessary as an emergency measure to avoid an imminent public or private injury"

driver should be excused from punishment while Ford should not be. 97. MODEL PENAL CODE 3.02(1) (Official Draft and Explanatory Notes 1985). 98. Id. The justification is unavailable if the actor recklessly or negligently brought about the situation requiring the choice of evils. Id. 3.02(2). 99. POSNER, supra note 23, at 261-62. Judge Posner writes that the defense is "regarded with disfavor except when it takes the form of self-defense," which is arguably a form of the necessity defense, but notes that it "will usually succeed if there is a very great disparity between the cost of the crime to the victim and the gain to the injurer." Id. 100. See, e.g., United States v. Bailey, 444 U.S. 394,394-95 (1980). 101. See, e.g., United States v. Oakland Cannabis Buyers' Coop., 532 U.S. 483, 483 (2001); Commonwealth v. Hutchins, 575 N.E.2d 741,745 (Mass. 1991); State v. Poling, 531 S.E.2d 678, 684 (W. Va. 2000). 102. See Commonwealth v. Leno, 616 N.E.2d 453,456 (Mass. 1993).

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in order to claim the defense, and refuses to base necessity0 3"upon considerations pertaining only to the morality and advisability of the statute."' The necessity defense should not be viewed as a blanket invitation to all citizens to perform a cost-benefit analysis each time it might be beneficial for them to violate a criminal law. Instead, it is a fairly limited residual category of justification, available only in special cases. Accordingly, the Ninth Circuit wrote in UnitedStates v. Schoon, a necessity case: "In the traditional cases, a prisoner flees a buming cell and averts death, or someone demolishes a home to create a firebreak and prevents
the conflagration of an entire community.' 4 It is worth examining the sense in which the necessity defense is based on 05 The prisoner whose cell is burning will flee even if no utilitarian reasoning.1 necessity defense is allowed, as long as the punishment for escape is anything less than death-and even, presumably, if it is death. 10 6 Thus allowing the defense here is not required to align incentives; the prisoner will do the socially optimal thing regardless of whether the defense is allowed.1 07 In cases of true "necessity," namely, where the harm to be avoided is truly enormous in comparison to the statutory objectives and penalties, the criminal law will have no incentive function. 10 8 Instead, punishment is remitted in these cases because it is not justified--the defendant has done nothing wrong, so punishing him will only serve to introduce evil (the harm of

103. N.Y. PENAL LAW 35.05 (McKinney 2003). 104. 971F.2d193,198(9thCir. 1991). 105. Seeid at 196. 106. The prisoner, faced with the choice of certain and immediate death by burning or an uncertain later death by punishment, justifiably will most likely choose the latter. 107. See id at 198. Of course, in many other cases, the defense will serve a vital incentive function: most classically, if the person creating a firebreak risks prison even though he saves a whole town, he may forego creating the firebreak and doom the town. Here, the defense is necessary, or at least helpful, to make sure that incentives are correct One could easily construct a necessity defense that covers this case but not the prisoner (e.g., "necessary to prevent harm to others that is greater than the harm sought to be prevented by the law"), though this is, of course, a fairly pointless exercise. 108. See id at 196-98. That is, provided that the necessity directly impacts the actor, the prisoner in a burning cell will not be influenced by laws one way or the other, but a bystander whose home is not threatened by a fire may need proper incentives to create a firebreak. Cf id.at 196-97. Of course one can imagine legal systems where the harm to be prevented is enormous in relation to the statutory objectives, but not in relation to the statutory penalties. Thus, a Victorian beggar might be faced with the choice of starving to death or stealing a loaf of bread. While the harm of the theft would be small, the penalty for it might be death. In this case, the law might deter an action that may be arguably optimal. Cf id. (Although Posner would argue that it is not: "since transaction costs are low, my inability to negotiate a successful purchase of the bread shows that the bread is really worth more to the gourmand." PosNER, supra note 23, at 262. This is not. I would contend, a necessary result of the economic approach.) Generally, however, I assume that modem law uses heavy penalties to prevent serious harms, and relatively lighter penalties to prevent relatively minor harms.

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09 his punishment) without the offsetting benefit of preventing other evil. 1 The necessity defense is not solely about creating proper incentives; it also makes a judgment about what actions are proper: even actions that violate the letter of the law, are proper if they prevent much greater harms.

2. The Political Necessity Defense and Civil Disobedience One widely noted pattern for invoking the necessity defense is found in cases of civil disobedience. Schoon is the leading case in this line, which is sometimes referred to as the "political necessity defense."' 10 Gregory Schoon and two codefendants were convicted of obstructing the activities of the Tucson office of the Internal Revenue Service ("IRS") after they staged a protest that involved splashing simulated blood around the office."' Their protest concerned the use of American tax money in El Salvador, and at trial they raised a necessity defense, offering testimony about bloodshed in El Salvador and claiming that their protest was necessary to stop the violence." 2 The trial court rejected the defense as a matter of law, and the Ninth Circuit, in a careful opinion, affirmed.' 1 3 Judge Boochever considered the four elements of the necessity defense: choice of evils, imminent harm, direct causal relationship between action and averting harm, and lack of legal alternatives.'14 He found that the final three elements were lacking. 1 5 There was no immediate harm because a democratically arrived-at government policy is not a cognizable "harm."' 16 There was no direct causal relationship because the protesters could not themselves stop the violence in El Salvador. 117 Finally, there were clear legal alternatives to these protests, such as petitioning Congress to change its 8 policy. 1 Judge Boochever was surely right in his own analysis of the missing elements of the traditional necessity defense, but another approach is worth considering. Schoon and company claimed that the harms they wanted to prevent outweighed the harms prevented by the statute they violated.' 19 This is perfectly sensible-thousands of

109. Cf BENTHAM, supra note 27, at 158 ("[A]ll punishment in itself is evil. Upon the principle of utility, if it ought at all to be admitted, it ought only to be admitted in as far as it promises to exclude some greater evil."). 110. See, e.g., Wride, supra note 13, at 1070.

111. 112. 113. 114. 115. 116. 117. 118. 119.

Schoon, 971 F.2d at 195. Id. Id. Id. at 195, 197-98. Id at 196-200. Schoon, 971 E2dat 198. Id Id. Seeid. at195.

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deaths in El Salvador are of course worse than some disrupted audits in Tucson-but only if there was some reasonable expectation that their protest would have some effect. If they seriously believed that the benefits of their actions outweighed the harms, they either had a bizarrely grandiose view of the efficacy of their protest, or their valuations of the harms and benefits were different from those of the law. The latter is plausible: humanitarian protesters might well value the lives of anonymous Salvadorans more highly than does the U.S. government, and they might well worry less about inconveniencing IRS employees and disrupting government functions. Nonetheless, it seems likely that the Schoon defendants' "necessity" balancing was influenced by an unrealistic view of their own efficacy. A balancing that weighed the harm caused by the protests against the benefit of stopping violence in El Salvador, discounted by the slim probability that the protests would do any appreciable good to achieve that benefit, would likely result in a determination that there was no "necessity" in a choice-of-the-lesser-evil sense. Indeed, the factors named by Judge Boochever could be recharacterized as indicia of which way a simple utilitarian balancing would go. If the formula is "violate the law if H, < PHn," where H, is the harm caused by the protest/violation, P is the probability that the protest will succeed, and Hn is the harm caused by inaction, then the court's determination that a democratic policy is not a cognizable "harm" suggests that the protestors are wrong about the magnitude of H,. The lack of a direct causal relationship between the protest and the desired result lessens the magnitude of P; and the existence of legal alternatives lessens the magnitude of H, because if legal routes can solve the problem, then the harm of not violating the law is much less. Thus, the factors identified in Schoon can be read as independent conditions on the necessity defense. Alternately, that defense can be read simply as a cost-benefit analysis, with the Schoon elements as factors to consider in performing that analysis. 3. Classic Civil Disobedience: Gandhi and King Schoon and his friends were obviously not the first people to think of breaking the law to call attention to a noble cause. Presumably they saw themselves as following in the tradition of civil disobedience that stretches back at least to Gandhi and Martin Luther King, Jr.' 20 But there is one critical difference. Gandhi and King be punished for their law-breaking, while Schoon argued that he should be asked to 12 1 let off.

120.

It is worth noting here the distinction between "direct" civil disobedience, that is,

protesting against a law by breaking it (e.g. black protesters illegally sitting at a whites-only lunch
counter) and "indirect" civil disobedience, which "involves violating a law or interfering with a government policy that is not, itself, the object of protest." Schoon, 971 E2d at 196. The analysis in this section should not turn on the distinction, though the Schoon opinion makes much of it, and in fact rules "that necessity can never be proved in a case of indirect civil disobedience." Id at 197. 121. CompareWride,supranote 13,at 1093, with Schoon, 971 F.2dat 195.

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This difference has been remarked in the commentary on the "political necessity defense" cases.122 It has typically been analyzed in terms of the effectiveness of the protest: Gandhi and King called more attention to their cause and showed greater devotion to it by suffering punishments for it.123 "If the person practicing civil disobedience is set free not because the offensive institution has been removed but because the system of justice has made an exception, then the contradiction [of using the justice system 1to defend an unjust institution] remains hidden, and the object of 24 the protest is lost.' A simple economic analysis of the difference is also readily available. When Martin Luther King, Jr. disobeyed a segregationist law, knowing and intending that he would be imprisoned for it, the economic conclusion is that, in his valuation, the harm of the unjust law 125 outweighed the direct harm of his protest 126 plus the personal harm of being imprisoned. Schoon et al., on the other hand, by raising the necessity defense,' 27 suggested that they valued protecting El Salvador over the disruption caused by their protest--but not over the personal harm caused by their convictions. Thus, the political necessity defense protesters implicitly place less value on their cause than classical civil-disobedience advocates placed on theirs, demonstrating less conviction of the rightness of their cause. It is reasonable to assume that people discount the harm of their actions to other people: a protestor who spills blood over IRS files will probably not feel the harm of his actions as keenly as the IRS agent whose months of work are ruined, or as the IRS janitor who has to clean up the mess. Willingness to accept consequences is an important indicator that one's balancing of the necessity factors is, if not correct, at least sincere. Simply put, going to jail for a cause shows a lot more commitment than hurting other people for that cause and then asking to be excused.
E.The Failureof Efficiency Approaches

In general, efficiency approaches neither explain the results reached in cases like
Grimshawnor community intuitions concerning the effect of ex ante consideration of
1 2 penalties on ultimate determinations guilt. price/sanction The Hand Formula, the 129 and theof 3 0 Calabresi and Melamed framework, Cooter distinction1 all fail to

122. See, e.g., Laura J. Schulkind, Note, Applying the Necessity Defense to Civil DisobedienceCases, 64 N.YU. L. REv. 79, 79-80 (1989); Wride, supranote 13, at 1093-94. 123. Cf Wride, supranote 13, at 1093-94.
124. Wride, supra note 13, at 1094.

125. 126. 127. 128. 129. 130.

Discounted by the probability that his protest would change it. The disruption, unrest, police costs, etc. Schoon, 971 F.2d 193 at 195. See United States v. CarrollTowing Co., 159F.2d 169, 173 (2dCir. 1947). Calabresi & Melamed, supra note 33, at 1092. Cooter, supra note 63.

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explain exactly what the Ford Motor Company did wrong. There seems to exist a widespread distaste for ex ante willingness to pay that cannot be explained solely by notions of economic efficiency and proper deterrence.
IV RETRIBUTION AND RIGHT

As economic approaches do not seem to fully answer important questions about the interaction of willingness to pay and punishment, this article now turns to the other major strand of punishment theory-retribution. I briefly sketch a Hegelian account of punishment and its relation not only to the criminal law, but also to tort and contract law. This account seems to close some of the holes left open by the economic deterrence account, but it does not solve all of the difficulties. A. A Sketch ofHegelianRetribution 1. Criminal Punishment Hegel believed that the purpose of punishment is to "annul" crime by inflicting an injury on the criminal to cancel out the injury that criminal had inflicted on society.' 31 But he rejected simple talionic "eye for an eye" punishments. 132 The essence of crime has to do not with the specific injury or theft, but with the coercion of rights; the retribution, then, need only be an equivalent coercion of rights, not the same particular coercion."' 33 The idea that punishment should be a "coercion of rights" stems from Hegel's Kantian view of the purpose of punishment. 34 On this theory, punishment of a criminal is: [E]o ipso his implicit will, an embodiment of his freedom, his right; on the contrary, it is also a right established in the criminal himself, i.e. in his objectively embodied will, in his action. The reason for this is that his action is the action of a rational being and this implies that it is something universal and that by doing it the criminal has laid down a law which he has explicitly recognized in his action and under which in consequence he should be brought as under his right.'35

131.

See GEORGE HEGEL, PHILOOPHYOF RiGHT 71 (T.M. Knox trans., Clarendon Press 1967)

(1821). at 72. 132. Id. 133. PeterG Stillman,Hegel' IdeaofPunishment, 14J. HIsT. PHIL. 169, 177 (1976). 134. Seeid. 135. HEGEL, supra note 131, at 70. Markus Dubber clarifies: To Hegel, a criminal act violates another's freedom. The offender therefore is understood to act according to the maxim that she should violate another's freedom. Universalizing
this maxim produces the law that one should act so as to violate another's fieedom.

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The notion that punishment has, as its goal, respect for the criminal's rationality has further consequences. Particularly interesting for our purposes, it mandates the principle of nulla poena sine lege; the criminal must be aware that he is violating the law.136 The law must be known in order for it to be the law of the criminal himself; if law is "the property of a class which makes itself an exclusive clique," then for those who are ignorant of it "the justice they receive remains in their eyes a doom pronounced ab extra."137 For Hegel, "[p]unishment should involve consenting criminals," meaning that the laws should be reasonable and known in advance, and the court system should be fair.'3 8 An emphasis on the consent of the criminal is consenting to and that the laws can be (and are) requires that he know what he 39 advance.' in everyone to known 2. Conversion and Theft Retributivists often draw a distinction between intentional wrongdoing and mere "inadvertent transgression on the rights of others.' 140 A good-faith dispute over who is entitled to certain property is handled civilly in tort, while an attempt to negate another's rights to property, without any justification, is a threat to all property entitlements and, as such, is criminal. 41 Thus a beachcomber, criminally prosecuted for stealing logs from a logging company's property may offer the defense that he thought the logs were driftwood and therefore thought he had a right to salvage them. "2 His conduct is tortious, not criminal: The beachcomber by his action is not denying that the company's rights are relevant. Rather he accepts that the company has rights, but simply disputes that they extend to the logs in question. The appropriate response by the logging

Honoring the offender's rationality requires the application of this universal law to her.
Markus Dirk Dubber, Rediscovering Hegels Theory of Crime and Punishment, 92 MICH.L. REv. 1577, 1583 (1994) (reviewing MARK TUNICK, HEGEL'S POLMCAL PHILOSOPHY: INTERPRETING THE
PRAcrICEOF LEGALPUNISHMENT (1992)).

136. 137.
138.

SeeBLAcK'sLAwDICnONARY 1098 (8thed. 2004); Stillman, supranote 133, at 180. HEGEL, supranote 131,at 145.
Stillman, supranote 133, at 180.

139. Id. 140. Chapman & Trebilcock, supra note 29, at 780. at 780-81. 141. Cf id. 142. Id. at 781 (borrowing the facts of Regina v. Shymkowich, [1954] S.C.R. 606). For a United States, 342 U.S. 246, 275-76 (1952), which parallel American case, consider Morissette v. held that a junk dealer who removed spent shell casings from an Air Force bombing range has a defense against a charge of "knowingly convert[ing]" government property if he honestly believed that the casings were abandoned by the government.

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is a private action against the beachcomber's conversion of the two company 14 3

logs.

Hegel says of such a dispute that it: [E]ntails the recognition of rightness as the universal and decisive factor, so that it is common ground that the thing in dispute should belong to the party who has the right to it. The suit is concerned only with the subsumption of the thing under the property of one or other of the parties-a straightforward negative judgment, where, in the predicate "mine," only the particular is negated.'44 On the other hand, intentional criminal theft is not merely a dispute about entitlements, but rather an attempt to negate the category of entitlements; that is, the thief's "actions amount to more than a denial that the company has any rights to these logs; instead, they amount to a denial of the relevance of rights altogether.' '145 Or, as Ernest Weinrib writes: Takings justify liability inasmuch as they imply a general denial of the validity of right. A taking is an illegitimate appropriation: the taker attempts to assert dominion over something that is already a physical or proprietary embodiment of another's personality. In acting as if the embodiments of another's personality are available for appropriation, the taker is treating those entitlements as if they were devoid of free will. Thus, the taker signals through his actions that he does not recognize the categorical difference between persons, who have a capacity for rights, and other entities, which lack free will and therefore do not have that capacity. Because free will is the substance of right, and because personality represents the most fundamental condition of the will's freedom, to treat persons entities lacking free will is to imply that right can have no field of as if they were 46 application. Thus the Hegelian account draws a clear distinction between theft and conversion, a distinction that is more problematic under an efficiency account in which the only goal is to deter inefficient non-market transactions. On the other hand, the efficiency account may do a more sophisticated job of explaining some distinctions that the law draws. For instance, the trespasser who is willing to pay in advance for his trespass, but who is rebuffed by the landowner, is faced with punitive damages. 147 The Hegelian account would ask whether the trespasser is denying the
143. Chapman& Trebilcock, supra note 29, at 781. 144. HEGEL,supranote 131, at 65.

145. Chapman &Trebilcock, supranote 29, at 781. 146. Ernest J. Weinrib, Right and Advantage in PrivateLaw, in HEGEL AND LEGAL THEORY 275-76 (Drucilla Cornell et al. eds., 1991); see also Stillman, supranote 133, at 171-72. 147. See, e.g., Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154, 165 (Wis. 1997).

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category of right by violating property rights, or affirming the category by trying to negotiate in good faith, agreeing to pay the costs, and then proceeding in the expectation that he will in fact pay the landowner's costs. Such questions do not appear susceptible to answers proceeding from general ideas of right. On the other hand, the distinction between property rules and liability rules, grounded in notions of efficient market transactions, here provides an elegant answer. 3. Contract American law regularly allows people to intentionally violate the rights of others without "punishing" them, leaving only a non-punitive civil remedy.la8This is our law of contract, which seeks only to compensate the injured party, not to punish the breaching party.149 The promisor can easily escape his promise, trampling the entitlements of his promisee; the promisee gets only expectation damages, and the promisor is never "punished" for his breach.' 0 This is superficially at odds with the Hegelian account sketched above. Hegel's moral account of contracting is general and focused on the notion of consent; it does not address the questions of the appropriate remedy. 15 1 However, the Hegelian account can deal with this objection readily: state, as guardian [T]his objection fails to fully appreciate to what matter the ... of the category of Right, is properly to respond in the form of a criminal law action. In the standard breach of contract case, and in particular in the intentional (often "efficient") breach of contract case, the breaching party is not really denying the relevance of rights to the dispute. Rather, the breaching party is at all times prepared to pay compensation, and thus to recognize the category of Right if a breach of the contract or damages flowing from that breach can be proved. In this respect, she is quite unlike the thief who, at the time the impugned 52 transaction takes place, steals without any intention of paying compensation.' This distinction solves the difficulty of contract law. It also explains why some sorts of intentional contract breach are criminal. Generally speaking, those cases in which

148.

See, e.g.,

Oliver Wendell Holmes, The Path of the Law, 10 HARv. L. REv. 457, 462

(1897).
149. See FARNSWORTH ETAL., CONTRACrS: CASEs AND MATERIALS 1 (6th ed. 2001) ("[The

law is concerned mainly with relief of promises to redress breach and not with punishment of
promisors to compelperformance.');Holmes, supranote 148, at 462 ("The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it-and nothing else."). 150. SeeFARNswORTH,supranote 149, at 1-2. 151. See HEGEL, supra note 131, at 57-64. Hegel's discussion of"Wrong" similarly does not at 64-74. address the issue. Id. 152. Chapman & Trebilcock, supra note 29, at 783.

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damages are characterized as the promisor never intended either to perform or pay 153 punishment. criminal support often can "fraud," and B. The Difficulties with Ex Ante Willingness to Pay The Hegelian account of punishment serves as a sophisticated representative of retributive punishment theory and such punishment's interactions with civil law. Economic and deterrence theories fail to fully capture community intuitions about the problem of ex ante willingness to pay. In some respects, it seems that the Hegelian account does better. But problems remain. Classical retributive theory does not entirely explain why we object to ex ante willingness to pay for crimes and torts. 1. Crime and Autonomy
154 and see what the Let us begin with the simple example of Lucius Veratius Hegelian account would say about him. On one hand, the explanation is simple enough: Veratius has coerced the rights of others, so he should be punished by a similar coercion of rights. Simply collecting the twenty-five asses handed out by his slaves155 does not provide for that coercion of rights because he is voluntarily paying the price. As a result, the payment fails to constitute a real punishment. This is why society objects to his conduct and seeks to punish him more severely. But that does not tell the whole story. Veratius is acting quite rationally on a lower level of abstraction than that at which Hegel was operating. Rather than willing, by his actions, a universal law of "violate the autonomy of others," which would then have to be applied to him, he is simply applying a known, legislated law. Respecting his autonomy, treating him as "consenting to punishment," would seem to require applying to him the punishment of the published law that he knowingly broke-the punishment to which he literally consented. The tension here is between two conceptions of "law": the indeterminate Kantian general law, theoretically willed into existence by criminals, of "violate others' rights"; and the literal, legislated law, of "pay twenty-five asses for iniuria." In most cases, this tension is buried below the surface of Hegelian punishment theory. The typical thief does not want to go to prison, so sentencing him to prison is a coercion of his autonomy that both satisfies the determinate legislated law and fulfills the Hegelian condition of satisfying one right's coercion with another. The theory breaks

153. See, e.g., Wharf (Holdings) Ltd. v. United Int'l Holdings, Inc., 532 U.S. 588, 596 (2001) (holding that where the seller of an option on securities had a "secret reservation" not to permit its exercise, the seller is liable not merely for contract breach but also for securities fraud under Securities Exchange Act 10(b)). 154. See supra notes 1-4 and accompanying text.
155. CROOK, supranote 1, at250-51.

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down only in the unusual case in which the offender consciously wants to accept the punishment. Only here do the two conceptions of law conflict. Both are, however, necessary to the Hegelian account. Punishing people whimsically, without a fixed, known law, would not be treating them as rational beings and would deny their consent to the system. But inflicting on them a punishment that they were willing to undergo before committing the crime would not
violate their autonomy, would not annul their crime, and so would not treat them as rational beings subject to punishment. No solution to the problem posed by Veratius is satisfactory: punishing him according to the letter of the law abandons the idea of punishment, while punishing him according to his deserts abandons the idea of law. 2. Civil Disobedience The two conceptions of law noted above interact differently in the area of civil disobedience, giving what is in some ways a rather satisfactory result. The law of the legislature works the same here as with any other crime: the legislature passes the law to punish, annul, and deter, etc. crime, and the protestor violates that law with the understanding that he will receive the set punishment for doing so. But the general law willed into being by the protestor is not the same as with other laws: it is not "coerce the rights of others [for your own personal benefit]," but something nobler, "violate a law if it is unjust."' 5 6 Quite likely there are still reasons on the Hegelian account to carry out the punishment fixed by the law. 57 There is somewhat less
156. This is still, I think, problematic as a general maxim of conduct In Kantian terms, it is doubtful that anyone could wish that this maxim would become a universal law,IMMANUEL KANT, GROUNDING FOR THE METAPHYSICS OF MORALs 30 (James W. Ellington trans., Hackett 1993) (1785), because doing so would negate the power of democracy to bind people to properly enacted laws. Nonetheless, it is not the same sort of self-interested coercion of the autonomy of others that is instantiated in typical crimes. 157. The protestors are still doing whatever bad thing the law, presumably for good reason, prohibits. One imagines that the IRS agents whose files Schoon and company drenched in blood felt that their autonomy had been coerced. Southem lunch-counter owners faced with sit-ins probably felt the same way. It is probably a bit more complicated than that. The distinction that Schoon drew between "direct" and "indirect" civil disobedience, see supranote 120, is a helpful starting point. In "indirect" civil disobedience-violating a law other than the one you're protesting, United States v. Schoon, 971 E2d 193, 196 (9th Cir. 1991)-the previous paragraph is applicable: protestors have broken some law that concededly has a good purpose. Schoon presumably did not think that people should generally destroy government property, and most protestors arrested for breach of the peace or trespass probably do not think that those crimes are generally a good idea. In "direct" civil disobedience, however, the assumption that the law only prohibits bad actions breaks down. Civil rights marchers might not have thought that everyone should be able to disturb the peace at all times, but they probably did think that everyone should be able to sit anywhere they want on a public bus. Most of us would say they were right Thus while the IRS agents may have had a legitimate complaint against Schoon, whether or not his protest was justified, the Southern lunch-counter owners had considerably less cause to complain. They had no right to exclude blacks to begin with.

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reason, however, to want to go beyond this quantum of punishment and further punish the protestors to coerce their autonomy. This is not a particularly complete explanation of civil disobedience. In particular, it plays a bit loose with the question of what general law protestors are enacting: while they see their actions as nobly motivated, many thieves might feel the same way. The retributivist account depends more on intentional coercion of the rights of others than it does on the subjective motivation of the actor doing the coercion and does not fully explain the distinction between civil disobedience and conduct like that of Veratius. 3. Tort and Contract As we have seen, committing a crime while intending to pay the penalty does not satisfy the retributive purpose of punishment. Instead, it coerces the rights of others without a counterbalancing coercion of the rights of the actor. As we have also seen, some coercions of the rights of others need not be met by Unintentional violations (e.g., corresponding rights-coercion punishments. accidents), or violations that consist of intentional actions that are not intended to violate rights (e.g., conversion of what an actor thought was unclaimed property) are treated as torts and remedied only by compensatory damages. 58 Treating the actor rationally here does not require punishment; his will is not to violate the rights of others, and so violating his rights is not necessary to correct the effects of his action. Breaches of contract can also be explained-4o a point. Here, no punishment is warranted because the breaching party is not denying the rights of the counterparty; rather, he is ready, at the time of breach, to pay compensation. The problem for the Hegelian account is that the same is true of Veratius. He, too, is willing to compensate those whom he slaps. The distinction is still salvageable. The difference is not between the specific intents of a breaching contract party and Veratius; rather, it is between how we generally conceive of the different activities. In general, we think of contract as a
In general, targets ofjustifie, direct civil disobedience have not really had their rights coerced. Although this is tangential to the main argument, it is a bit problematic. If the Hegelian account cannot provide a reason for punishing justified direct civil disobedience, and that punishment can only be rather imperfectly explained on a deterrence theory, see supra pp. 353-54, then we suspect that such protestors ought not to be punished-which defeats their goal of getting punished to call attention to injustice. Perhaps the solution is simply that we cannot necessarily tell at the time what civil disobedience is justified and what is not. On this view, civil disobedience always involves doing something harmful that might warrant punishment: violating the law, that is, ignoring the results of the democratic process because they think that they are right and the people are wrong. This could be said to violate the rights of the populace to have its will enacted as law, and is enough of a bad thing to wanant imposition of the punishment set in the criminal law. 158. Such damages constitute a coercion of rights, but not a punitive one as the point is to pay back the victim, not to coerce the tortfeasor's rights. The latter effect is only incidental.

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regime in which one's rights are upheld either by performance or payment of damages. One's right in a contract is to the benefit of the bargain, which one can receive either in specific performance or in expectation damages. Contracts, at least since Holmes, are conceived of economically; one's rights are to a quantum of value, not a specific thing. 159 Thus, paying damages rather than performing is not really a coercion of rights at all. On the other hand, we generally believe that we have a specific right not to be slapped in the face. The difference between Veratius's iniuria and a contract breach is that, while both actors stand ready to make good their injury, society conceives of those injuries in different ways: one is a violation of rights, the other simply a choice of which form of the right to uphold. In Hegelian terms,160 Veratius is instantiating a universal law along the lines of "coerce the rights of others," while the breaching contract party is applying a universal law more like Holmes's famous statement about the meaning of contract: "The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it-and nothing else."' 61 This distinction becomes much murkier when we move to Ford, arguably the of Ford assaulted the bodily integrity 162 modem descendant of Veratius. Like Veratius, .... it. others because the penalties for doing so were outweighed by the benefits to Ford's conduct can be characterized in different ways depending on which level of would generality you look at: in general, Ford realized that some number of people 163 ,The die because of its cars, but it never intentionally killed any particular person. distinction between "accident" and "intentional harm" may have been clear enough in Roman times, or even to Hegel, but as the modem world engages in more large-scale activities that cause accidents, and is more aware of the statistical certainty that some accidents will result from these activities, that distinction is no longer tenable. The retributivist's question about Ford would probably be, "did Ford intentionally coerce the rights of others (leading to punishment), or should its actions be characterized as an accident (leading to only tort damages)?" This question is not obviously informed by Ford's ex ante willingness to pay, and calculation of, damages. That ex ante calculation might be taken as evidence that the conduct is better characterized as intentional rather than as accidental, but such a reading would be a bit nafve when one realizes that any company engaging in large-scale, potentially accident-causing activities prepares to pay damages for those activities. 164 If the

159. When contracts are less economic and more about specific things (e.g., with sentimental value) they are more likely to be enforced specifically. See U.C.C. 2-716(1) (2000) ("Specific performance may be decreed where the goods are unique or in other proper circumstances.").
160. SeeStillman,supranote 133, at 177. 161. Holmes, supranote 148, at 462. 162. Compare CROOK, supra note 1, at 250-51, with Grimshaw v. Ford Motor Co., 174 Cal. Rptr. 348, 384 (Ct. App. 1981). 163. See Viscusi, supranote 9, at 569-70.

164.

Cf Baker, supra note 19, at 275. In the most typical circumstances-where the actor

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Pinto explosions are best characterized as accidental, then the retributivist account would suggest that punitive damages are inappropriate; if they are best characterized as intentional, then punitive damages may be appropriate-but punishing Ford beyond the measure of its expected punishment (compensatory damages) brings into play some of the same paradoxes we saw with Veratius. 165 In neither case does the retributivist account answer questions about why Ford's ex ante calculations of its liability seem to influence feelings about its ultimate guilt. In this sense, the retributivist account does not solve the central difficulties of willingness to pay.
V. HISTORICIZING THE WILLINGNESS TO PAY Having suggested that the existing literature does not fully address the difficulties in self-set prices on criminal or tortious activity, this article now turns to history for a brief examination of two crucial developments in the pricing of criminal1 66 acts. The first of these developments is the prevalence, in early legal systems, of two different 67 and perhaps competing sets of penalties: talion, or "eye for an eye" punishments,'168 and composition, or the payment of monetary penalties to the victims of crimes. The second involves the development and refinement of Christian notions of sin and penance, particularly since the Papal Revolution of the twelfth and thirteenth centuries. 169 These two trends shed light on the complexities of our modem notions of crime and penalty. I also consider some more speculative historical analysisNietzsche's fascinating discussion of the origin of the concept of guilt in the relation of debtors and creditors.

who expects accidents and buys liability insurance-that willingness to pay is seen as a good thing, and even as an indicator that resulting accidents are a result of bad luck rather than moral fault. See generallyid 165. See supra Subsection l. B. 1. 166. In this part, words like "criminal" and "crime" become a bit nebulous. Early legal systems did not always distinguish crime and tort in the way that we do; crimes were often viewed as offending their victim rather than the state's justice system, see James Q. Whitman, At Origins of Law and the State: Supervision of iolence, Mutilationof Bodies, or Setting ofPrices?, 71 CH.-KENT L. REv. 41, 56 (1995)-thus the prevalence of composition penalties paid to the victim discussed in this part. Similarly, the Church did not always distinguish crime and sin in the same way that modems do; crimes were generally sins, and sins were often punished criminally by church or state
authorities. See HAROLD J. BERMAN, LAW AND REvOLUTION: THE FoRmATION OF THE WESTERN

LEGALTRADmON 73 (1983). 167. Whitman, supranote 166, at 45-46. 168. Id at 45-46,49-50. 169. See BERMN, supranote 166, at 170-71.

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Early legal systems are marked by two approaches to penalties for crime: talionic punishments, in which those who harm others are visited with identical or similar harms ("an eye for an eye, a tooth for a tooth"), 170 and composition, in which those 71 who harm others pay monetary penalties to their victims.' The dominant historical understanding of these two approaches is the "self-help model." 72 In its simplest form, this model assumes that talionic punishment began as private (or clan) vengeance. 17 The early state emerged to regulate talionic 1 74 vengeance to avoid the escalation of violence characteristic of the state of nature. Eventually, the state itself began to exact the talionic punishment and "monopolize the legitimate use of violence." 75 Finally, the state replaced talionic punishment with the more humane system of monetary composition.l/7 This model is subject to significant criticism. Most notably, James Whitman argued that the model misinterprets the sources, which do not indicate a simple shift from talion to composition. 177 First of all, the model misstates the chronology. The better reading appears not to be that composition developed after talion, but that they were constantly interrelated, with composition as a way for the offender to ransom himself out of talionic punishment at the victim's option.178 Second, it drastically oversimplifies the meanings of the two types of penalties found in the archaic codes. As Whitman notes, the famous talionic codes are not exclusively devoted to talionic 79 mutilation. 1 "Indeed, it is one of the most familiar facts about pre-modem law of all periods that it makes heavy use of mutilation penalties."' 80 Similarly, the famous composition codes are not exclusively devoted to setting the prices for composition:
170. Whitman, supra note 166, at 46 (quoting Exodus 21:23-25). 171. Id. at49-50. 172. The description of the self-help model here comes from Whitman, supra note 166, at 4143. 173. Id. at42. 174. Id. 175. Id The phrase, of course, is from Max Weber. 176. Whitman, supra note 166, at 42. 177. Id. at44-45. 178. Id. at 56-57 (explaining the work of J.D. Michaelis, an eighteenth-century scholar of Mosaic law). Thus the Twelve Tables provide that "If a person has maimed another's limb, let there

be retaliation in kind, unless he makes agreement for composition with him." Whitman, supra note 166, at 46 (quoting 1 FoNTEs IlRus RoMANi ANTEJusTIIANI 53 (Salvatore Riccobono et al. eds., 1968)). 179. Id.at 47.
180. Id. Whitman cites a rule from the Laws of Hammurabi, which dictates punishing a child

who strikes his father by cutting off his hand. Id.

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Here again, though, we should note immediately that the setting of composition is only a sub-category of what we find. The larger category, quite clearly, is the more general category of price-setting. Many of the composition enactments are associated with other forms of price-setting both of commodities and of wages.181 Thus the self-help model is too simplistic in its treatment both of talion and composition, treating each as an independent category, when in fact each can be viewed as part of a larger theme of pre-modem law (mutilation or price-setting). 2. Composition and Talion as Price The notion of composition as a species of price-setting is particularly important for our inquiry. Whitman concludes: The archaic codes seem, on their face, to have been produced by authorities whose overarching aim, with regard to the money economy, was not to control a system of vengeance, but to set a system of prices. The concern of the early state as price-setter, on some level, it seems reasonable to hypothesize, was not first control of violence, but the control of payments in money and and foremost the 182 weighed metal. On this view, the early dawning of legal consciousness shows an odd similarity to the modem law and economics revolution. The punishment of misbehavior is simply a subcategory of a larger economic systematizing, just one part of the need to regulate the complete economy. But such regulation, whether of the economy as a whole or of the economy of crime and revenge in particular, will always be unstable. Judge Posner understands, as the Laws of Eshnunna 183 and the Burgundian Code' 84 did not, that prices for commodities must ultimately vary based on the supply of and demand for those commodities.' 85 Since the widespread failure of communist states, no modem western legislature is likely to promulgate a set of prices for all marketable goods, and state attempts to set or influence the prices of individual goods are highly controversial. Modem criminal codes, like the Code of Hammurabi, set the penalties for all recognized crimes.' 86 The correctness of this approach, for crimes though not 181. Whitman, supra note 166,at51. 182. Id at 81. at 51-52. 183. See id. 184. See id. at 52-53. 185. See POSNER, supra note 23, at 4-5. 186. Indeed, modem codes go further than did the ancient ones in this respect. The modem maxim is nulla crimen, nulla poena, sine lege, BERMAN, supra note 166, at 186; modem criminal law does not merely aim to be comprehensive, it is requiredto be. An offense that does not appear in

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for commodities, cannot seriously be questioned; basic principles of legality require that crimes and their punishments be set in advance. But the early linkage between punishment-setting and general price-setting is nonetheless instructive. Early legislators saw them as two parts of the same problem, 187 and presumably they saw it as a problem: How do you make people pay the right price for grain? How do you make people exact only the proper punishment for maiming? The self-help model can give some insights. However these codes arose, it seems reasonable to think that one of their goals was to repress escalating feud violence and replace it with correctly calibrated punishments for offenses. 1 But this repression could not have been easy; feuding clans who were accustomed to taking what vengeance they found appropriate would not easily acquiesce in allowing the state to regulate and supplant their power to do so. It is quite plausible that this unease is a common attribute of humanity, not merely of archaic feud cultures, and it stems not merely from a desire for vengeance but also from an uncertainty that the proper penalty for a crime or a tort can be set in advance by a table.
B. Sin andAtonement

1.The Sacrament ofAtonement While early evidence is not abundant, it seems that in its first millennium Christianity featured some form of penance for serious sins89 This penance was public and involved excommunication, demonstration of a change of heart, a period of repentance and probation, and finally a rite of reconciliation.' 90 Penance typically involved penitential works and reconciliation with God, the community, and the victims of the penitent's actions. 191 In the eleventh and twelfth centuries, though, the westem Church developed a new doctrine of penance, which incorporated the notion of Purgatory and affirmed a priestly power to absolve the penitent.192 This priestly power is particularly
the codes is not an offense; a punishment that is not specified in advance cannot be inflicted. 187. See Whitrnan,supra note 166, at 51. 188. Regardless of whether the self-help model's chronology is right, there are examples of societies where the punishment for harming a person is exacted by the victim's kinship group. In some cases the punishment is worse than the crime, which leads to an escalating cycle of vengeance and counter-vengeance. See, e.g., id at 46-47. An interesting parallel may be drawn between this vendetta system and another early form of economic organization: the gift exchange, in which the goal was not equivalency of value but rather escalation of gifts. See MARCEL MAuss, THE GITFr 1-2,
63 (Ian Cunnison trans., Cohen & West Ltd. 1966) (1950).

189.

See RICHARD P.McBR[EN, 2 CATHOLICISM 777-78 (1980).

190. Id. at 778. 191. BERMAN,supra note 166, at 172. 192. See id. at 166-185 (tracing the development of the doctrine of Purgatory, the new sacrament of penance, and the rise of Anselm's doctrine, set forth in Cur deus homo?, of Christ's

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important; it lent a particular judicial aspect to the proceedings that was not previously present: [A] new formula was introduced in the West: Ego te absolvo ("I absolve you"). This was at first interpreted as the priest's certification of God's action, resulting from contrition and confession. In the twelfth century, however, it was a performative, that is, a sacramental, as well as a interpreted as having 1 93 declarative, effect. Coupled with the rise of penitential manuals, which provided numeric formulas for how much penance each particular sin required,' 94 these developments led inexorably to a much more mechanical view of sin and penance. A subjective practice in which sinners did good works, prayed, and reconciled with their victims and communities in the hope of winning God's grace was replaced by a formal system in which a sinner confessed to his priest and received absolution after performing a penance set out in a 95 manual. 1 Such a system is obviously subject to abuses. The pre-Reformation sale of indulgences is the classic abuse in which the liturgical price for sin-contrition, acts of atonement, prayers, etc.-was replaced by a literal, monetary price.1 96 While earlier, and eastern, forms of "charismatic" penance 197 placed real contrition and the later western formulaic approach highlighted the reconciliation in the foreground, 1 98 price equivalency for sins. 2. Anselm and Retribution A second, intimately related, doctrinal change of the early second millennium also contributed to the rise of equivalency notions ofjustice. This is Anselm's theory of Jesus Christ's sacrifice for mankind. 199 Berman gives the argument as briefly as can be done: God created man for eternal blessedness. This blessedness requires that man freely submit his will to God. Man, however, chose to disobey God, and his sin sacrifice and atonement). 193. Id at 173.
194. See id at 69. This discussion owes generally to James Q. Whitnan, Lecture on The

Development of the Western Legal Tradition, Yale Law School (Nov. 7,2002). 195. Id. 196. See BERMAN, supra note 166, at 171. 197. Id. at 173. 198. Seeid.at 171.
199. See generally ST. ANsELM, WHY GOD BECAME MAN AND THE ViRGIN CONCEPTION AND ORIGINAL SIN 26-27 (Joseph M. Colleran trans., Magi Books, Inc. 1969); BERMAN, supra note 166,

at 177-85 (expounding Anselm's theology and its relation to retributive justice).

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of disobedience is transmitted by inheritance to everyone. Justice requires either that man be punished in accordance with his sin, or else that he make satisfaction for the dishonoring of God. As for punishment, none would be adequate.... As for satisfaction, there is nothing man can offer to God that would be valuable enough to restore his honor. Thus man cannot, though he ought to, atone for his sin. God can (since he can do anything), but he ought not would to. Since only God can and only man ought to make an offering which 2 00 constitute satisfaction, it must be made by a God-Man [Jesus Christ]. This theory had enormous implications for theology; our interest in it, though, lies in its impact on law. As Berman writes, "redemption was explained essentially in terms of a legal transaction."20 ' That transaction was not, however, a mere exchange. It was a repayment to restore the order of justice; Christ was necessary because no other atonement could adequately expiate man's sins, and those sins needed to be expiated2 2 This view of the necessity of Christ's sacrifice influenced views of the necessity of temporal punishment: The new concepts of sin and punishment based on the doctrine of atonement were not justified in Germanic terms of reconciliation as an altemative to vengeance, or in Platonic terms of deterrence and rehabilitation, or in Old Testament terms of the covenant between God and Israel. . . .The main justification given by Anselm and by his successors in Westem theology was the concept of justice itself Justice required that every sin (crime) be paid for by temporal suffering; that the suffering, the penalty, be appropriate to the sinful act; and that it vindicate ("avenge") the particular law that was violated.20 3 3. Theology and Willingness to Pay These developments in religious doctrine provide several insights into the modem discomfort about ex ante willingness to pay for offenses. The rise of a more mechanical, less charismatic form of penance supported a similar shift in criminal punishment but did not fully displace the felt need for charismatic penance and punishment. Controversy over indulgences and mechanical forms of penance may be driven by the idea that these forms of penance omit or downplay the necessity for contrition and reconciliation with the community. The same might be said of secular examples of ex ante willingness to pay. Veratius's conduct was shocking because he understood iniuria and compensation as a simple transaction. 2 04 A more correct understanding would involve reconciliation with his victims and genuine contrition 200. 201. 202. 203. 204.
BERMAN, supranote 166, at 177. Id at 181. Id at 177. Id. at 183. See CROOK, supra note 1,at 250-51.

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for his actions. Because paying for one iniuria and then embarking on the next negates the possibility of reconciliation or contrition, Veratius's readiness to pay was a disproof of those necessary ingredients, and so should lead to greater moral condemnation. The revolutionary theology of Anselm also has something to teach us about ex ante willingness to pay. Anselm's approach stressed the importance of justice as an independent consideration.2 5 Punishment is not merely about compensating victims, but also about restoring the balance of justice that has been denied by the crime. Such a theory might support simple accounting notions of guilt and repayment, under which ex ante willingness to pay would be no cause for condemnation. At the same time, though, it makes clear that the issue is not just paying for the particular concrete harms caused by a crime or tort. An actor who is willing to pay for the harm he causes, but who considers only particular harms and not the violation of justice caused by his action, is justifiably subject to condemnation; his willingness to pay misunderstands what, exactly, he is paying for.
C. Guilt andDebt

In this abbreviated tour of the historical origins of society's attitudes toward guilt, punishment, and payment, one further stop is warranted. This is Nietzsche's famous question: "[H]ave the previous exponents of the genealogy of morals had even the slightest inkling that the central moral concept of 'guilt' [Schuld] originated from the 20 6 Nietzsche's view is that, for most of very material concept of 'debt' [Schulden]?" its history, punishment was exacted out of anger at harm done, anger which is then taken out on the person who causes it-albeit held in check and modified by the idea that any damage and can really be paid off, even if this is through the somehow has an equivalent 07 2

pain of the culprit.

He then traces this equivalency to primitive debtor-creditor law, which gave "precise and in part horrifically detailed measurements" of the "pounds of flesh" that creditors could take from insolvent debtors.208 He also gleefully notes that the Twelve Tables at Rome, moving beyond this primitivism, "decreed the amount which creditors
excised in such cases a matter of indifference, 'si plus minusve secuerunt, nefraude esto." '' 209 He also notes the visceral satisfaction that inflicting pain can provide, and

205.
206.

See BERMAN, supranote 166, at 177.

FRiEDRICH NIEZSCHE, ON THE GENEALOGY OF MORALs 44 (Douglas Smith trans., Oxford Univ. Press 1996) (1887) (bracketed German inserted by Smith). 207. Id. at 45 (emphasis in original). 208. Id.at 46. 209. id. The Latin of the Twelve Tables translates "if they take more or less, let it be no

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the "festivity" of this infliction of pain, to explain why such punishments could be seen as equivalents of the debtor's debt or the criminal's crime.21 This might provide an intriguing insight into the problem of ex ante willingness to pay. In Nietzsche's view, guilt and debt are genetically related: punishment for guilt is a kind of payment for debt. Actors like Ford and Veratius understand this, to a point; they are willing to pay for their offenses, which they see as a kind of debt and are surprised when that ex ante willingness to pay is not enough-in fact, it is an exacerbating factor in their guilt. The reason that they are surprised is not because they misunderstand the relation between guilt and debt, but that they misunderstand the pre-history of debt. The origins of an exchange treatment for guilt may be in debt, but debt to the ancients was not the dry accounting matter it is to us now. The risk of debt and the possibility of that "festive" infliction of pain when debt could not be repaid made the concept of debt less dry and more visceral, with the result that grounding the concepts of criminal and moral guilt in debt was acceptable and compelling. Modem bankruptcy laws and economic sophistication have made our treatment of debt dry and economic, with the result that the continued mapping of moral guilt onto concepts of debt, like that suggested by Ford's cost-benefit analysis, is no longer compelling. When guilt and debt were both terrible concepts, they could be equated; now that debt has become mundane, the link between them shows occasional cracks.
VI. SOME APPROACHES TO PRE-PAYMENT

Informed by economic retributivist and historical perspective on the problem of ex ante willingness to pay for legal violations, we can now begin to draw some basic conclusions about the effect of that willingness on subsequent determinations of moral, criminal, or tort blame. This part will examine three important areas of interest: notions of price, problems of hubris and inequality, and issues of remorse. A. Priceson Crimes 1. Prices on Lives and Prices on Crimes The notion that setting prices on human lives is uncomfortable for most laymen is not novel. Kip Viscusi has written about jurors' reactions to cost-benefit analyses 211 in the context of Grimshaw and similar cases. Viscusi, writing from the law and economics perspective, deplores jurors' emotional responses that lead to uneconomic

crime."
210. Id.at47-48. MacCou, The Costs and 211. See Viscusi, supra note 9, at 547, 558; see also Robert J. Benefits of Letting Juries Punish Corporations:Comment on ktscusi, 52 STAN. L. REV.1821, 1825

(2000).

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212 Other scholars support the jurors' damage awards like the one in Grimshaw. intuitions and question the validity of cost-benefit analysis in making decisions about human lives.213 Lisa Heinzerling, in particular, has mounted a sustained attack on the use of this practice in environmental and safety regulation, using a combination of intuitionist and economic arguments to refute the models of economists like Viscusi.21 VIC~ .214

Heinzerling and others who question cost-benefit analysis may have a point,
though from an economic perspective their work is often suspect.2 1 However, the cost-benefit analysis in Grimshaw can be seen from two perspectives. On one hand, what Ford (allegedly) did was no different than the cost-benefit analysis regularly performed by the Environmental Protection Agency ("EPA"), Occupational, Health

and Safety Agency ("OSHA"), the Department of Transportation, and other

government agencies which regularly make tradeoffs between human life and economic efficiency.21 6 On the other hand, what Ford did was troubling, not only because it priced human life, but also, because it priced its own conduct. I argue that the latter aspect of Ford's behavior is under-analyzed and may have as much to do with what got it into trouble as its pricing of human lives. Thus, some argue that the prices set by economists on human lives are too low.2 17 If true, this might be a justification for punitive damages, both to correct insufficient safety incentives provided by this mistaken pricing, and to punish companies for callously disregarding the real value of human life. But there is evidence to suggest that juries are not punishing companies because those companies'
212. See MacCoun,supra note 211, at 1822-23. 213. Cf id. at 1827-28. 214. See Frank Ackerman & Lisa Heinzerling, Pricingthe Priceless: Cost-BenefitAnalysis of Environmental Protection, 150 U. PA. L. REV. 1553, 1573-75 (2002); Lisa Heinzerling, Correspondence, Discounting Life, 108 YALE L.J. 1911, 1911 (1999) [hereinafter Heinzerling, DiscountingLife]; Lisa Heinzerling, Comment, The Rights of StatisticalPeople, 24 HARv. ENVrL. L. REv. 189, 189 (2000) [hereinafter Heinzerling, StatisticalPeople]. 215. For instance, Heinzerling chides economists for not "calculat[ing] the value of both statistical life and life itself," but instead "measurfing] only the value of risk [of death] and not the value of life." Heinzerling, StatisticalPeople, supra note 214, at 204. This refers to the fact that economists construct the value of statistical lives by asking how much people must be paid (e.g., in increased wages for risky jobs) to accept small risks of death. Id. at 203-04. Heinzerling's objection is, however, surely misplaced; it is like a losing roulette player complaining that his $1 should have bought not only a 1-in-38 chance of winning $35, but also (separately) $35 itself. 216. Consider, for example, Richard Epstein's rhetorical suggestion that, if Pinto was a criminal, then so were the federal regulators who approved its design. See Epstein, supra note 55, at 15, 18. 217. See, e.g., Ackerman & Heinzerling, supra note 214, at 1566 (arguing that economists neglect the value of peoples' lives to other people); Heinzerling, DiscountingLife, supranote 214, at 1913 ("These 'willingness-to-pay' studies do not measure the ultimate value a person places on her own life; they measure only the value she places on an increased risk of death."); Heinzerling, StatisticalPeople, supranote 214, at 204-05 (placing monetary values on life and risk).

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estimates of the value of life are too low. Viscusi conducted a study of mock jurors to examine their attitudes toward risk analysis and punitive damages. 21 8 Among the variables in his study was the value used to conduct cost-benefit analyses.2 19 His Scenario 3 involved a company using expected jury verdicts (compensatory damages), as Ford allegedly did, to value lost lives at $800,000; while Scenario 4 involved a company using the approach of the National Highway Traffic Safety Administration (NHTSA) to value those lives at $3 million.220 The results were revealing: [U]ndertaking a sound risk analysis does not seem to be beneficial to the company's prospects. The propensity of the respondents to award punitive damages is almost identical--O.93-in each case. But the level of punitive damages awarded turns out to be greater when the company performs the analysis correctly [using the NHTSA approach] than when it simply uses the compensatory damages value. The geometric mean award value increases from $4.0 million in Scenario 3 to $5.3 million in Scenario 4. The median award value is $3.5 million in Scenario 3, less than half the $10 million median value for Scenario 4--a statistically significant difference.22 i Thus, valuing lives more highly led to greater punitive damages, which suggests that juries are not punishing companies (only) for undervaluing human life. Viscusi's explanation for the difference involves "anchoring effects": [T]he higher value-of-life amount used by the company in Scenario 4 as compared to Scenario 3 provides a dollar anchor for the jury in determining the appropriate punitive damages award. Somewhat perversely, use of a higher a company's internal analysis may raise the target award value-of-life estimate in 222 level in jurors' minds. This explanation is consistent with the idea that juries are simply punishing companies for placing a value on human life, though they themselves are using those same companies' values as a measure of how much the companies should be punished. But another difference between Scenarios 3 and 4 is that Scenario 4 223 Thus, mentions that its valuation is that used by NHTSA to set safety standards. while both scenarios involve a company setting a value on life, Scenario 4's value is
218. Viscusi, supranote 9, at 552-53. 219. See id 220. Id at 592.

221. Id.at 558. 222. Id 223. Viscusi, supra note 9, at 592. In Scenario 4, mock jurors were told that "the company used a value of $3 million per accidental death, which is the value used by the [NHTSA] in setting auto safety standards." Viscusi, supranote 9, at 555.

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arguably more legalistic. It looks more like a price than a sanction. While the tort damages at issue in Scenario 3 are a prediction of what the legal system will make the companypay for causing harm, they are based on ultimately unpredictable future jury verdicts. 2 4 The valuations in Scenario 4, on the other hand, are taken directly from a sort of price list officially sanctioned by the law.225 There may be greater discomfort about a private actor co-opting a pre-set legal standard than about that actor predicting a punishment that ultimately remains in the hands of independent jurors. This becomes more clear when we consider the example of Lucius Veratius.226 His outrageousness was not in valuing the harm he actually did "setting a price on human [slapping]"-but rather in co-opting the prices set by the law. The core of the problem is not pricing harms, but rather pricing law violation. 2. The Difficulties of Pre-set Sanctions In many respects, putting "prices" on law violations 22 7 is a commendable and necessary thing. It provides actors with notice of what is forbidden and exactly how forbidden it is. Both aspects are important. Actors should be on notice, not only that both speeding and murder are illegal, but also, that the penalties attached to the latter are much greater than those attached to the former.2 2 8 The differences in penalties indicate the different importance society attaches to different types of violations. Rational actors must have the chance to consider the societal importance of a norm when deciding whether to conform to it. Problems occur when an actor takes these penalties completely seriously as a self-contained price list. Veratius did this, viewing the penalty for iniuria not as an indication of societal disapproval but as simply a price to pay.229 Ford did the same when it made calculations about the price for committing torts and then prepared to 230 pay that price. It does not matter if Ford calculated correctly or how it did the calculation: the act of setting the price is the error. As we have seen, had the company used a higher, more accurate value for wrongful-death damages, rather than

224. 225.

Cf id.at 592. Cf id Of course, in an important sense, the NIITSA valuations are not really a price,

because the NHTSA does not charge anyone these amounts for killing drivers. Rather, it uses these values as part ofits own cost-benefit analysis in setting regulatory standards. Id
226. See CROOK, supra note 1, at 250-51. 227. Here I ignore the distinction drawn by Cooter, see Cooter, supra note 63, at 1523, and simply use the term "price" to refer to pre-set, listed penalties, whether prices or sanctions. 228. See BMW, Inc. v. Gore, 517 U.S. 559, 574 (1996) ("Elementary notions of faimess enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a State may impose.").
229. 230. See supra notes 1-4 and accompanying text. See supra notes 5-12 and accompanying text.

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23 the lower value that Ford calculated courts would make it pay, the punitive 232 What is at stake is not the damages that the jury awarded might have been higher. cost-benefit analysis, but rather Ford's conscious decision to pay the price for negligence. This reasoning also provides a way to understand civil disobedience and the necessity defense. The commentators on Schoon dutifully point out that Schoon and company made a mistake:

The necessity defense has no role to play in a strategy of civil disobedience. The point of civil disobedience is to force a society to recognize the contradiction of using a system of justice to defend an unjust institution. If the person practicing civil disobedience is set free not because the offensive institution has been removed but because the system of justice has made an exception, then the contradiction remains hidden, and the object of the protest is lost. Of course, civil disobedience in this form is not the only sort of political protest. And it is unrealistic to assume that all protesters will remain undeterred by the prospect of prosecution. Nevertheless, in an important sense the use of the necessity defense not only conflicts with a commitment to order and majority 233 rule, but also robs the protest itself of some of its demonstrative power. This is fine; but it understates the real impact of civil disobedience. Submission to the punishment has its effect not merely because the public sees a non-violent, heroic figure like Dr. King languishing in jail for following his conscience. Rather, it is effective and striking because the very willingness to accept society's price for the 234 supposed criminal action indicates a profound disrespect for the legal system. Gandhi was correct in his speech to a judge who sentenced him for sedition: Non-violence implies voluntary submission to the penalty for non-co-operation with evil. I am here, therefore, to invite and submit cheerfully to the highest penalty that can be inflicted upon me for what in law is a deliberate crime and what appears to me to be the highest duty of a citizen. The only course open to 231.
232.

Cf supra note 9.
See supranotes 223-229 and accompanying text.

233. Wride, supra note 13, at 1094. 234. But cf Letter from Martin Luther King, Jr., from Birmingham Jail, to fellow clergymen (Apr. 16, 1963), available at http://www.sas.upenn.edu/ AfricanStudies/ArticlesGen/Letter_Birmingham.html. King wrote that "an individual who breaks a law that conscience tells him is unjust and who willingly accepts the penalty of imprisonment in
order to arouse the conscience of the community over its injustice, is in reality expressing the very

highest respect for law." Id Insofar as this suggests that the motive for accepting the punishment is to arouse public sympathy, of course that is one motive; insofar as it claims to be respectful to the law, contrary to my claims, one suspects that Dr. King is using the word "law" to mean something like "higher law" (whether that of God or of the Constitution), and not the law of Jim Crow Alabama.

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you, the judge, is either to resign your post, and thus disassociate yourself from evil if you feel that the law you are called upon to administer is an evil and that in reality I am innocent, or to inflict on me the severest penalty if you believe that the system and the law you are assisting to administer are good for the people of the country and that my activity is therefore injurious to the public 235
weal,

Gandhi was pursuing higher motives in much the same way that Veratius was gratifying his perverse impulses-by using the law's own penalty structure to make a statement, thereby rejecting that law in a much more high-handed way than a thief who attempts to conceal his crime. Whereas the Schoon defendants quibbled with particular decisions about whether various activities should be punished, Gandhi treated the legal system itself like a mere obstacle, a cost of his campaign, rather than a system of moral obligations binding upon him. Ex ante willingness to pay is crucial when making such a statement: while seeking to evade punishment-whether by stealth, violence, or necessity defense arguments-implicitly accepts the obligatory force of the law, simply breaking the law and accepting the punishment, with plans to break it again, instantiates a belief that the law has no moral force. When people like Veratius instantiate that belief, we think of them at best as eccentric and at worst sociopathic. But when people like Gandhi do so, not out of malice or strangeness but to achieve profoundly moral ends, we often question, not their conduct, but the laws that they break.
B. Willingness to Pay, Wealth, and Hubris

1. The Willingness to Pay Standard and Inequality Cost-benefit analysis is based on the straightforward economic logic that goods are worth what people are willing to pay for them and that the people who are willing to pay the most for goods are those who should get them. 36 This emphasis on willingness to pay leads, of course, to favoring the wealthy, as those who have more 237 money are willing to spend more of it for a given good. This standard naturally exacerbates differences between rich and poor. The classic example is that, if a rich gourmand is willing to pay $5 for a loaf of bread, while a starving beggar can only give his last dollar for the bread, then efficiency posits not only that the gourmand get 238 the bread, but that he values it more. This logic holds whether the wealthy actually

235. MAHATMA GANDw, A Pleafor the Severest Penalty Upon His Convictionfor Sedition, reprintedin THE LAW AS LrrERATURE 100-01 (Louis Blom-Cooper ed., 1961); see also Wride, supra note 13, at 1094. 236. See Ackerman & Heinzerling, supranote 214, at 1556. 237. Idat 1574-75. 238. POSNER, supranote 23, at 262.

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do pay for the good in question: even if they do not, presumably their gain is greater than that of other possible possessors of the good, so they could in theory compensate the less-well-off out of their surplus. This line of reasoning led Larry Summers, when he was chief economist at the World Bank, to conclude that the "economic '2logic 39
behind dumping a load of toxic waste in the lowest wage country is impeccable. 2. Inequality, Wealth, and Hubris This critique of cost-benefit analysis is relevant to our inquiry. If governmental cost-benefit analysis tends to devalue the demands of equity and unduly burden the poor, then such an analysis conducted by private actors tends to be much worse. A private party who weighs the harms and benefits himself, and pronounces himself willing to pay for the harm he causes to society, is pronouncing his own norm that the rich should get the economic advantages that cost-benefit analysis tends to give them. Thus, part of what is offensive about Veratius is the emphasis on his wealth; 240 not only "I can slap you and get away with it," but "I can do so because I'm rich." His wealth is presumably what allowed him to flaunt societal norms. This is why demands for punitive damages against corporations are often expressed in terms of a percentage of the company's total assets or income, with the goal being to make the 24 1 We have a sense that wealth should not company "feel" the damage award. provide a right to flout societal norms. Similarly, in the Grimshaw context, Ford will probably pay less if its victims are poorer.242 An actor's ex ante willingness to pay tends to correlate with both his own
239. Ackerman & Heinzerling, supra note 214, at 1574 (quoting Memorandum from Lawrence H. Summers, Chief Economist, World Bank to Distribution (Dec. 12, 1991), http://www.whirledbank.org/ourwords/summers.html). 240. See CROOK, supranote 1,at 250-5 1. 241. See Viscusi, supra note 9, at 558. 242. See Heinzerling, Statistical People, supra note 214, at 193 ("mhe upshot of the prevailing method for valuing statistical lives-which asks how much individuals are willing to pay to reduce risk in their own lives-also favors the statistical lives of the rich over the statistical lives of the poor."). As to statistical lives, Heinzerling's claim is doubtful, since it assumes without much evidence that economists and regulators produce different valuations for statistical lives for different activities, based on the socio-economic classes of people who tend to engage in those activities. Heinzerling cites Viscusi's claim that regulators should place "a higher value of life on the well-being of the lives of airline passengers than those killed in motor-vehicle crashes because the airline at 193 n.13 (quoting W Kip Viscusi, Equivalent Frames of passengers have a higher income." Id. Reference for Judging Risk Regulation Policies, 3 N.YU. ENVTL. L.J. 431, 447 (1994)). However, regulators do not seem to do so. In fact, the NHTSA valuation used in Viscusi's study ofjury attitudes was viewed as superior to compensatory-damages-based valuations in part because it went "beyond the value of a person's earnings or the usual amount of a compensatory damage award" to "reflect [] the risk-money tradeoff based on the individual's own willingness to pay for greater safety." Viscusi, supra note 9, at 555. Nonetheless, Heinzerling's claim is correct as to valuations of the lives of real (not statistical)

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wealth and the relative poverty of his victims. A system that values the well-being of the rich over that of the poor is likely to cause discontent. While many areas of law could be described as valuing the rich over the poor, ex ante willingness to pay puts it particularly clearly. Willingness to pay is related to ability to pay, and can suggest to juries that the actor considers himself above the law because of his wealth. Even though the actor is in fact willing to submit to the law's penalties, and thus may not view himself as "above the law" at all, his very ability to pay suggests that the law's penalties do not have the intended punitive effect on him. Civil disobedience is very different in this regard. Those who engage in civil disobedience are not necessarily wealthy, and the "harm" of their actions is not generally inflicted on those poorer than they are. More importantly, they are often willing to suffer non-monetary penalties, which tend to disfavor the wealthy, who 243 This suggests a moral probably suffer more from jail time than do the poor. distinction between civil disobedience and actions like Ford's or Veratius's. At the same time, it is possible that civil disobedience gains some rhetorical force by its identification with a technique that is more often associated with wealth and power. Protestors who are willing to pay the penalty for their "crimes" can express a type of power. They can thus identify themselves, not as desperate revolutionaries, but, as people who are able to make the type of decisions about imprisonment that, in other contexts, wealthy actors can make about their willingness to pay financial costs. C. Pre-Payment,Remorse, and Reconciliation Obviously, committing a crime or tort while planning in advance to pay the penalty for that offense negates the possibility of contrition or remorse. A man who assaults another in a moment of passion may later regret his actions, and real remorse might accompany the punishment imposed by the law. But a man who slaps another and then pays him the set monetary penalty before moving on to his next assault makes it very clear that he feels no remorse at all. Remorse does not play a significant role in either deterrence or retributivist theories of punishment, though it does have much to do with the practice of tort and 244 It clearly plays at least some role in our moral view of conduct, criminal law. specifically that bad conduct without remorse is much worse than bad conduct followed by remorse. Ex ante willingness to pay, as evidence of a lack of remorse, people, in that typically wrongful death suits allow recovery of compensatory damages for the
financial support that the decedent would have provided to his decedents, see, e.g, LAYCOCK, supra note 11, at 153, 155, so richer decedents' lives will be "worth" more than those of poorer decedents. 243. See, e.g., POSNER, supra note 23, at 247 ("mhe greater a person's earning capacity, the
greater his loss if conviction for a crime impairs it."). 244. See, e.g., U.S. SENTENCING GUtDELINES MANUAL 3El.1 (2000) (reducing criminal penalties for those who "accept responsibility" for their crimes); Steven Keeva, Does Law Mean Never HavingTo Say You're Sory, 85 A.B.A.J. 64,64 (1999) (describing the role of apologies in tort

law).

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may therefore justify additional punishment simply because it indicates that the actor
is morally inferior to245 someone who acts with no plans to pay the penalty, but later

does so remorsefully.

The broader point is that those who commit offenses with plans to pay the penalty lack the rich understanding of their offenses, that seems to be intuitive to most

people. Their conduct can be analyzed from the point of view of deterrence or
retribution, and in many cases will seem perfectly acceptable under those points of

view. The reasons that jurors, judges, and legislators nonetheless object to their conduct come from notions outside of those theories--notions of remorse, but also of reconciliation with victims and communities. Mechanical forms of punishment or compensation can serve deterrence, retribution, and compensation rationales; but they seem to do less for the other felt needs ofjustice-reconciliation, and remorse. Ex ante willingness to pay, then, is problematic because it brings into sharp focus the intuitive difficulties of a system of pre-set, mechanical punishments. While such a system is entirely necessary to serve the major ends of justice, such as legality, deterrence, and retribution, it cannot fully capture all of our intuitions of what justice requires. Usually, this is fine. We find the murderer more reprehensible because he never expresses remorse for his actions, but we are nonetheless assuaged by the fact that his punishment is extremely unpleasant, and we do not see too much need to change the system to further punish him. But in cases of ex ante willingness to pay, the disconnect is clear. The offender freely accepts the penalty and still thinks he got a pretty good deal. His calculation throws into stark relief the failures of pre-set penalties to address fully all of the concerns that motivate punishment. The relationship between offense and penalty is not one of simple exchange, of a mathematical proportion that provides the correct deterrence or that properly annuls the guilt of the crime. Actors who are willing to pay the penalty for their offense may understand and accept the mathematical proportions involved; but they downplay the other factors-remorse, reconciliation, respect for the moral determinations of law-and decide for themselves which factors are and are not worthy of respect. Thus, ex ante willingness to pay the penalty for an offense can sometimes be a justifiable reason for increased punishment or blame, as a vindication of legal norms that go beyond deterrence and retribution but are nonetheless a crucial part of our sense of guilt and punishment.

245. Of course, this must be counter-balanced against other indications of moral goodness or badness; the actor who is willing to pay the penalty, though perhaps not exactly remorseful, is probably "accepting responsibility," while the actor who does not plan to pay the penalty will likely commit his crime sneakily to avoid detection.