PAOLO GALLO PUNITIVE DAMAGES IN ITALY?

Summary: 1) Punishment and Tort Law; 2) Tort Law and non Pecuniary Damages ; 3) Tort Law and Presumed Damages ; 4) Enrichment Wrongfully Obtained ; 5) Punitive Damages and Enterprise Liability; 6) Private Sanctions and Small Criminal Claims ; 7) Breach of Contract and non Patrimonial Damages; 8) The Field of Applications of Private Sanctions; 9) The Subjective Element; 10) Punitive Damages and Due Process of the Law; 11) The Entity of Private Sanctions; 12) The Parameters for Quantification of Private Sanctions; 13) Who is Entitled to Punitive Damages?; 14) Insurance and Vicarious Liability; 15) Private Sanctions and Fragmentation of Tort Law; 16) Punitive Damages : The Future? 1) Punishment and Tort Law In ancient roman law the main function of tort law was punishment and deterrence. In the field of tortuous liability roman law was characterised by a plurality of remedies , such as actio furti , rapina , injuria , damnum iniuria datum, whose main function was punishment and deterrence rather than compensation . The wrongdoer was compelled to pay till four times as much as compensatory damages1 . One of the main features of this system was that penalties were paid directly to the victim of the tort . Roman law knew also public penal action especially in the field of tortuous conducts against the state , the public order , the kings peace , and so on . Afterwards penal law started to develop and expanded his field of application also in the field of the protection of the person , theft , robbery , injury to the person , and so on . In this way while the main function of penal law became punishment and deterrence , the main function of tort law became compensation . In modern times civil lawyers usually say that the only function of tort law is compensation. Punishment and deterrence can only be achieved by means of penal law. Also in common law countries we can notice a similar evolution and a growing tendency to differentiate the main function of tort law and penal law ; but in AngloAmerican law the function of punishment and deterrence has never been completely eliminated from the field of tort law . In England starting from XIII century, statutes introduced private penalties ; afterwards punitive damages were also contemplated by case law2 . More recently the House of Lords3 has limited the applicability of exemplary damages in three situations : 1) when the public administration deprive a citizen of his fundamental rights; 2) whenever someone aims at obtaining an enrichment as a consequence of his wrongful conduct ; 3) when punitive damages are especially provided by statute. In spite of this somewhat restrictive tendency, that has taken place in England in the second half of the XX century , punitive damages have recently greatly expanded their field of application in the Unites States. Starting from the seventies the availability of exemplary damages has been greatly expanded also in the field of products liability4 .

1 2

P. GALLO , Pene private e responsabilit civile , Milano 1996. Huckle v. Money (1763) 95 E.R. 768; Wilkes v. Wood (1763) 98 E.R. 489. 3 Rookes v. Barnard (1964) A.C. 1129; see also AB v. South West Water Services Ltd . (1993) 1 All E.R. 609. 4 OWEN , Punitive Damages in Products Liability , 74 Mich.L.R ., 1976 , 1283; ID., Problems in Assessing Punitive damages Against Manufacturers of Defective Products , 49 U.Chi.L.R. 1982, 1.

In many cases the amount of punitive damages exceeds one million of dollars5 . In these condition the availability of punitive damages in the field of products liability is correctly considered one of the main reasons of the crisis of tort law which has taken place in the United States especially in the eighties6 . In Italy , and more generally in Europe, there are no applications of private sanctions comparable to the american ones especially in the field of products liability. In spite of this, starting from the eighties, italian case law show a growing tendency to rediscover exemplary damages as a consequence of the expansion of tort law in the field of the protection of the person , his reputation , honour , privacy , and so on . 2) Tort Law and non Pecuniary Damages In Italy non pecuniary damages (pecunia doloris) can be awarded only when the behaviour is sanctioned by penal law (art. 2059 c.c., art. 180 c.p.) 7. Very disputed is the nature of non pecuniary damages. Someone sustains that non pecuniary losses should be compensated just like whatever other kind of damages8. Others are of the opinion that the compensation of non pecuniary damages has the function to compensate and to contrast the pain and suffering due to the wrongful behaviour 9. More diffused is the opinion that the main function of non punitive damages (art. 2059 c.c.) is deterrence and punishment , rather than compensation10 . In effect judges in order to quantify the entity of the sum due take in consideration also the gravity of the behaviour , the subjective element (negligence , gross negligence , intention) , the enrichment obtained as a consequence of the wrongful behaviour , and the patrimonial condition of the wrongdoer. Very clearly the subjective element of the wrong , his patrimonial conditions , and the enrichment obtained as a consequence of the wrong reveal the punitive function of non patrimonial damages . 3) Tort Law and Presumed Damages Starting from the eighties, also the growing expansion of tort law (art. 2043 c.c.) in the field of the protection of the person and his private life , has opened the way to a wider recognition of private sanctions . Traditionally tort law presupposes damages and fault. In the fifties Ehrenzweig published a very well known book 11, in which he considered the growing tendency to presume fault ( res ipsa loquitur) , especially in the field of products liability . Clearly these decisions opened the way to a wider allowance of strict liability in the field of products liability . Nowadays no one doubts any more that there are cases and situations where liability presupposes no fault . Negligence without fault clearly means strict liability ; if the fault is presumed ( res ipsa loquitur) liability presuppose no negligence.
5 6

Grimshaw v. Ford Motor Co. 119 Cal. App. 3d 757 , 174 Cal. Rptr. 348 (1981) . ATIYAH , American Tort Law in Crisis , 7 Ox.J.Leg.Stud., 1987, 279. 7 RAVAZZONI , La riparazione del danno non patrimoniale , Milano 1962; BONILINI , Il danno non patrimoniale , Milano 1983. 8 DE CUPIS , Danno e risarcimento , in Le pene private , BUSNELLI e SCALFI (Ed.) , Milano 1985, 323. 9 R. SCOGNAMIGLIO , Il danno morale , RDC , 1957, I, 277. 10 BONILINI , op.cit . ; P. GALLO , Pene private e responsabilit civile , Milano 1996 , 95. 11 EHRENZWEIG , Negligence Without Fault , Berkeley and Los Angeles 1951 ; ID., Negligence Without Fault , 54 Cal.L.R ., 1966 , 1422.

The evolution described by Ehrenzweig in the field of fault presents many points of contact with a very similar trend that has taken place in italian case law in the field of damage requirement . In Italy starting from the eighties we can notice a growing tendency to presume damages , especially in the field of the protection of the person and his private life . In Italy, whenever the wrongdoer is also responsible from the point of view of penal law, the victim is allowed to choose between the civil or the penal judge (art. 12 c.p.p.). If the victim choose to ask only damages instead of claiming a penal sanction , the civil judge is allowed to verify the existence of a criminal behaviour , but only in order to condemn the wrongdoer to pay non pecuniary damages (art. 2059 c.c.) . More and more , when the behaviour of the wrongdoer is relevant also from the penal point of view , non patrimonial damages are presumed in re ipsa , as a consequence of the crime itself12 . In any event if damages are presumed ( res ipsa loquitur) , it is not difficult to consider that in Italy tort law does not necessarily presuppose damages in order to operate . If the damage requirement can be presumed, whenever the behaviour of the wrongdoer is relevant also from a penal point of view, civil liability becomes a real alternative to penal liability . Traditionally , while in common law countries the honour and the reputation of peoples are protected by tort law , in civil law countries and in Italy the honour and the reputation are protected by the penal codes13 . In spite of this , starting from the eighties , we can notice a growing tendency to prefer the civil action instead of the penal action also in Italy. The victim of the wrong prefers more and more the civil action in the hope of obtaining a higher compensation , without the need to prove special damages . We can also consider that the civil judge is less rigorous than the penal one ; in this way it is possible to obtain compensation also if the behaviour is not relevant from the penal point of view for lack of intention and subjective element (negligent defamation) . The growing tendency to shift the protection of honour and reputation from the penal sector to the civil one has also lead to an increasing differentiation of the compensatory consequences of intentional and negligent violation . While roman remedies greatly differentiated the consequences of violations as a consequence of their gravity , afterwards in civil law countries has spread more and more a unitary theory of tort law ; in these conditions , whatever kind of wrong can ground a remedy without any distinction between negligent and intentional wrongs . In these conditions the amount of damages is completely independent from the gravity of the violation. In spite of this , italian case law show a growing tendency to increase the amount of damages in case of intentional violation14 . For instance while in case of negligent defamation it is only possible to obtain patrimonial damages (art. 2043 c.c.) , in case of intentional defamation the judge can also condemn the wrongdoer to compensate non pecuniary damages in re ipsa (art. 2059 c.c.). Intentional defamation is also relevant from a penal point of view , with the consequence that the judge is allowed to award non patrimonial damages (art. 2059 c.c. , art. 180 c.p.).
12

A. Roma , 5 november 1990 , Dir. inf., 1991 , 845 , T. Roma , 14 july 1989 , Dir. inf., 1989 , 952 ; T. Roma , 23 may 1988 , Dir. inf., 1989 , 919. 13 GAMBARO , Falsa luce agli occhi del pubblico , RDC, 1981 , I , 84; ID., Ancora in tema di falsa luce agli occhi del pubblico , Q., 1988 , 301; ZENO ZENCOVICH , Onore e reputazione nel sistema del diritto civile , Napoli 1985 ; RUFFINI GANDOLFI , Mass Media e tutela dell identit personale , Milano 1987. 14 LUPOI , Il dolo del debitore nel diritto italiano e francese , Milano 1969; CENDON , Il dolo nella responsabilit extracontrattuale , Torino 1974.

In these conditions it is not difficult to arrive at the conclusion that the main function of non patrimonial damages (art. 2059 c.c.) is not compensation , but deterrence and punishment . The expansion of tort law in the field of the protection of the person and his private life has lead to a grooving attenuation of the damage requirement , which can be presumed in re ipsa . Proof of special damages is no more required in order to obtain redress in tort law . In this way tort law has become a general remedy for the protection of private rights , and presupposes non more damages in order to operate . Whoever violates a private interest can be compelled to pay a private sanction to the injured party , whose main function is deterrence and punishment , rather than compensation . 4) Enrichment Wrongfully Obtained A second group of situations where it would be useful to apply private sanctions takes place whenever someone enriches himself as a consequence of his wrongful behaviour 15 . The enrichment obtained as a consequence of the tort may be higher than damages ; in these conditions if the wrongdoer is only compelled to pay damages , he will enrich himself. For instance if someone sells goods of his neighbour at a price higher than their effective value , he should be compelled to give back the whole sum of money obtained ; otherwise he will gain the difference between the real value and the price obtained . The same holds true whenever someone tries to utilise the image of an actor , a football player , and so on , for advertising purposes (right of publicity)16. If the enrichment is higher than the loss sustained by the victim of the wrongful conduct , whoever has infringed his right should be compelled to pay not only damages , but also the whole enrichment . No one could be allowed to enrich himself at the expenses of another ; otherwise everybody would be induced to infringe the rights of other peoples in order to gain the difference between the detriment inflicted and the enrichment obtained . 5) Punitive Damages and Enterprise Liability Punitive damages could be useful also when the loss is very spread and the tortfeasor is a big company17. Whenever a lot of people sustains losses as a consequence of the wrongful conduct (products liability , pollution, and so on) , the producer should be compelled to internalise the whole social cost connected with his productive activity ; otherwise the producer will enrich himself at the expense of the whole community18. This is the reason why in the United States starting from the seventies punitive damages have been applied in the field of products liability19.
15

SACCO , Larricchimento ottenuto mediante fatto ingiusto , Torino 1959 ; P. GALLO , Arrichimento senza causa e quasi-contratti , I rimedi restitutori , Torino 1996. 16 P. GALLO, Pene private , cit., cap. VI; P. Roma , 2 january 1985 , GI , 1985 , I , 2, 479; A. Roma, 8 september 1986, FI , 1987, I, 919; Cass., 28 march 1990, n.2527, FI, 1990, I, 2369; T. Monza, 26 march 1990, FI, 1991, I, 2863. 17 Grimshaw v. Ford Motor Co. 119 Cal. App. 3d 757 , 174 Cal. Rptr. 348 (1981) . 18 GIUSSANI , Le mass tort class actions negli Stati Uniti dAmerica , Riv. crit. dir. priv. , 1988 , 331 ; SCHUCK , Agent Orange on Trial , Cambridge , Ma., 1987 ; FLEMING , Mass Torts , Am.J.Comp.Law , 1994, 507.; RHEINGOLD , The MER/29 Story - An Instance of Successful Mass Disaster Litigation , 56 Cal.L.R. , 1968, 116; Note , Managing the Large Class Action , 87 Harv.L.R ., 1973, 426; Note , Class Action for Punitive Damages , 81 Mich.L.R ., 1983, 1787. 19 OWEN , op.cit.

Whenever the loss is very spread in the whole community compensation of single items of damage is not enough to deter the wrongful behaviour ; especially when the wrongdoer has a deep pocket. In these conditions only punitive damages can lead to a whole internalisation of the entire social cost. Till this moment the applications of punitive damages in the field of products liability have taken place only in the United States . In Europe , and particularly in Italy , private sanctions have not been applied in the field of products liability . The loss may be very spread not only in the field of products liability , but also in case of environmental liability20 . Pollution may endanger a lot of people and activities , also very far from the factory which pollutes the air or the water 21. For instance in case of nuclear disaster the pollution may last for thousand of years and reach peoples who live thousand miles away from the disaster itself22 . In Italy environmental liability has been recently disciplined by the legislator23 . This provision has stated that whoever endanger the environment is compelled to pay damages . The judge , whenever the loss is very spread , in order to quantify the loss itself takes in consideration the gravity of the behaviour , the cost to restore the environment , and the enrichment obtained as a consequence of the tort . Legitimated to the action is the State itself , who is also entitled to the sum in question . In any event who pollutes the environment is not only compelled to pay damages , but also to give back the whole enrichment obtained as a consequence of his wrongful behaviour . This statute aims at protecting the environment in a very strong way by means of pecuniary sanctions , whose function is not only compensation , but also deterrence and punishment . 6) Private Sanctions and Small Criminal Claims Penal law , starting from roman law , has greatly developed both in civil law countries and in common law countries . Penal law has expanded his field of application till eighteenth century. During XVIII century many philosophers started to reconsider the whole problem of punishment and deterrence , aiming at a reduction of the criminal behaviours and of the gravity of physical sanctions24. This trend has opened the way to a progressive reduction of the field of penal law 25. Who does not pay his debt is no more imprisoned 26; the same olds true in case of adultery , homosexuality , prostitution , miscarriage, mendacity , wandering, toxicomania , suicide, and so on27 . The progressive reduction of the sphere of application of penal law has opened the way to the search of alternative forms of deterrence and punishment28.
20 21

POZZO , Danno ambientale ed imputaqzione della responsabilit , Milano 1996. SANDS , Principles of International Environmental Law, New York 1995 ; BADIALI , La tutela internazionale dellambiente , Napoli 1995 ; ZILIOLI , Il risarcimento del danno derivante da incidenti industriali transnazionali , Milano 1995. 22 JACCHIA , Il rischio da radiazioni nellera nucleare , Milano 1963 ; Corte Distrettuale della Pennsylvania , 27 february 1985 , FI , 1986 , IV , 134. 23 Art. 18 L. n. 349 , 1986. 24 BECCARIA , Dei delitti e delle pene, Livorno 1764 ; VERRI, Osservazioni sulla tortura , Roma 1994; FOCAULT , Sorvegliare e punire , Torino 1976. 25 DELMAS-MARTY , Dal codice penale ai diritti delluomo , Milano 1992 ; GAILLARDOT , Les sanctions pnales alternatives , RIDC , 1994, 683. 26 BONINI , La carcere dei debitori - Linee di una vicenda settecentesca , Torino 1991. 27 PALIERO , Note sulla disciplina dei reati bagatellari , Riv.it.dir.proc.pen., 1979, 983; ID., Minima non curat praetor , Padova 1985. 28 MANN , The Middle Ground Between Criminal and Civil Law, 101 Yale L.J., 1992, 1796.

In Italy this process has opened the way to the substitution of a good deal of penal sanctions with administrative sanctions 29. In this condition not only administrative sanctions , but also civil sanctions could offer an effective alternative to penal sanctions. In effect , especially in the field of the protection of the honour of the persons , italian case law show a clear tendency to substitute penal law with tortuous liability ; the same holds true in case of seduction of innocent maidens with a promise of marriage30 . Tort law can represent an effective substitute of penal law , especially in the field of the protection of the person and his private life , honour , privacy , and so on . It seems also incontrovertible that in these applications the main functions of tort law become deterrence and punishment , rather than compensation . 7) Breach of the Contract and non Patrimonial Damages Traditionally in the United States punitive damages could be allowed only in the field of tort law . In these conditions the breach of a contract is not considered a sufficient ground for punitive damages. Very different may be the situation whenever the breach can be considered wrongful also from the point of view of tort law . In these cases punitive damages can be allowed as a consequence of the tort . More generally the availability of punitive damages in the field of contract law may be doubtful. Punitive damages , just like specific performance, restrain efficient breach31. In these conditions punitive damages should be allowed only if we intend to protect very strongly the other party from the risk of efficient breach . In any event , traditionally also in civil law countries , non pecuniary damages couldnt be allowed in case of breach of contract . In Italy the reason of this exclusionary rule is that non pecuniary damages can be allowed only in case of wrongs relevant also from the penal point of view. In spite of this there are situations where non pecuniary losses may exceed patrimonial damages . For instance the german Supreme Court has awarded 25 thousand DM to a man whose semen had been negligently destroyed by a semen bank32 . In another case decided by the Tribunale of Rome , a lawyer had booked a countryhouse in Greece33 . In spite of this , when he arrived in Greece the country-house was no more available . In these conditions the lawyer was compelled to spend his vacations in a less comfortable apartment. The Tribunale of Rome awarded the lawyer twice as much the sum that he had paid for the country-house, as a compensation of non pecuniary damages that he had suffered. Very clearly in these situations only the availability of punitive damages or non pecuniary damages can offer a real protection of the other party. 8) The Field of Application of Private Sanctions Our previous analysis has shown that there are four main situations were punitive damages seem useful : a) whenever the wrongful behaviour has infringed the rights of the victim without causing damages at all , or at least patrimonial damages ; in these
29

Legge n. 689 , 1981 ; ROSSI VANNINI , Illecito depenalizzato amministrativo , Milano 1990 ; SINISCALCO , Depenalizzazione e garanzia , II ed., Bologna 1995. 30 Cass., 8 July 1993, n. 7494, Corr. giur., 1993, 1052. 31 Texaco/Pennzoil , FI 1987,IV,c.300 , with a comment of PARDOLESI , Per un pugno di (miliardi di) dollari; Cour dAppel de Paris, 13 may 1988 , Dir. comm. int ., 1990, 398, with a comment of DRAETTA , La sentenza Vittel : un caso Pennzoil in Francia. 32 BGH 9 november 1993 , FamRZ , 1994, 154; see also : OLG Munchen, 5 april 1990 , VersR , 1990, 1398; T. Genova, 5 july 1993, n. 1809, GI, 1994, I , c. 1048. 33 T. Roma , 6 october 1989, Resp. civ. prev. , 1992, 263, with a comment of C. VACCA.

conditions the main functions of tort law is deterrence and punishment , rather than compensation ; b) when the enrichment wrongfully obtained is higher than damages ; if the wrongdoer enrich himself as a consequence of the tort , he should be compelled to give back his whole enrichment ; otherwise he would be induced to consider the duty to compensate the victim such as a cost ; in any event the only compensation of the victim wouldnt be enough to deter the wrongful behaviour (underdeterrence) ; c) whenever the loss is very spread (products liability , pollution , mass torts) , and the wrongdoer is a big company (deep pocket) ; in these conditions , especially in situations of underlitigation , the compensation of only part of the victims is not enough to deter efficiently the wrongdoer ; only punitive damages can induce the manufacturer to internalise the whole social cost connected to his activity; d) private sanctions could be also useful in the field of small criminal claims ; the progressive reduction of the sphere of penal law has opened the way to alternative means of deterrence ; this is especially true in the field of the protection of the person , his private life, honour, reputation, privacy, and so on. 9) The Subjective Element Traditionally in common law countries punitive damages could be awarded only in case of intention , malice , recklessness, and so on . In any event negligence or gross negligence is not considered enough in order to award punitive damages. Law and economics can confirm these conclusions . In effect if our main goal is to minimise the whole social cost Cs34 = Ci35 + Cp36 it seems efficient to spend in preventive activity only if Cp < Ci. In these conditions if we increase by means of punitive damages the compensation due , the wrongdoer would be induced to spend more than required by economic efficiency in preventive activity. The same holds true in case of strict liability. If we increase the award due by means of punitive damages the wrongdoer would be induced to spend in preventive activity more than required by efficiency , and the injured party will enrich himself at his expenses. On the other side very different seems the question in case of intentional interference with the rights of another . In the field of intentional wrongs the function of punitive damages is to deter who tries to turn round the market ; for instance in case of intentional exploitation of the image of a well known actor for commercial reasons (right of publicity) , punitive damages may deter unauthorised exploitations. In other words punitive damages may deter every kind of wrongful appropriation by rendering more profitable to ask the previous consent of the actor in question . In these conditions it seems highly recommended to limit the availability of punitive damages in the field of intentional violations. 10) Punitive Damages and Due Process of the Law In the United States the eight amendment of the Constitution forbids excessive penalties (double jeopardy) , and the fourteenth amendment states that no one could be deprived of his life , liberty and property without due process of the law. In these conditions the conformity to the Constitutions of punitive damages has been highly disputed37.

34 35

Cs = whole social cost . Ci = cost of incidents. 36 Cp = cost of prevention.

In any event the american Supreme Court has repeatedly confirmed the conformity to the constitutional provisions of punitive damages38. The italian Constitution states that no one should be punished without a previous statutory provision (art. 25 II : nulla poena sine lege); and that penal responsibility is strictly personal (art. 27 I ) . Also in Italy specialists of penal law agree that these provisions operate only in the field of sanctions that limit the personal liberty . 11) The Entity of Private Sanctions Very difficult is the question to determine the entity of private sanctions. In the United States , especially in the field of products liability , the entity of the sums awarded has constantly increased till the eighties . This is correctly considered one of the main reason of the crisis of american tort law which has taken place in the eighties39. More recently in order to contrast the increasing expansion of punitive damages , and also in order to prevent double punishment for the same behaviour ( ne bis in idem), in many states have been introduced limitations by statute 40. Sometimes has been also stated that only the state is entitled to punitive damages. A very similar question has arisen in Italy as a consequence of the tendency of courts to increase the amount of sums awarded. Frequently the sums awarded , especially in the field of the protection of the person , his private life , honour , privacy , and so on , are higher than one hundred millions of italian lire . In these conditions it is highly recommended to contrast somehow the expansive tendency of private sanctions also in Italy . Otherwise this tendency could lead to a crisis of the whole system , just like in the United States. In order to control the amount of private sanctions it is possible to state that punitive damages shouldnt exceed a fixed maximum , such as one hundred millions italian lire ; or that punitive damages must be a multiple of effective damages , just like in roman times . Whenever the enrichment obtained by the wrongdoer is higher than damages , in order to deter effectively his behaviour it is enough to compel him to give back the whole enrichment obtained at the expense of the injured party . 12) The Parameters for Quantification of Private Sanctions The exact amount of punitive damages and private sanctions should be determined by judges. The parameter more diffused are four: a) the gravity of the lesion; b) the subjective element of the wrong (negligence, gross negligence, intention); c) the patrimonial condition of the wrongdoer; d) the enrichment obtained as a consequence of the wrongful act.
37

WHEELER , The Constitutional Case for Reforming Punitive Damages , 69 Va.L.R., 1983, 269; JEFFRIES, A Comment on the Constitutionality of Punitive Damages , 72 Va.L.R., 1986, 139; MASSEY , The Excessive Fines Clause and Punitive Damages : Some Lessons from History , 40 Vand.L.R., 1987, 1233; BITTLE, Punitive Damages and the Eight Amendment : An Analytical Framework for Determining Excessiveness, 25 Cal.L.R. ., 1987, 1433; M.S. ROMANO , Danni punitivi e profili di legittimit costituzionale , Q., 1989, 396. 38 Browning-Ferris Industries of Vermont inc. v. Kelco Disposal Inc. , 26 june 1988 , FI , 1990, IV, 174 , with a comment of M.S ROMANO; Pacific Mutual Life Insurance Co. v. Haslip , 4 march 1991 , FI , 1991, IV, 235, with an annotation of PONZANELLI; USA Supreme Court , 25 june 1993 , FI , 1994, IV, 92, with an annotation of PONZANELLI, Non c due senza tre : la corte suprema USA salva ancora i danni punitivi. 39 OLSON , New Directions in Liability Law , New York 1988; DANIELS, MARTIN, Mith and Reality in Punitive Damages , 75 Minn.L.R ., 1990, 1, 16. 40 More diffusely , P. GALLO , Pene private , cit., 193.

A) The first criterion means that the entity of punitive damages should be compared to the gravity of the infringement. This parameter operates generally in the whole field of tort law ; so it is certainly the less important in order to qualify the amount due as a private sanction rather than as a mere compensation. B) More qualifying is the subjective element of the wrong . If the amount due is determined also in reference to the subjective element of the wrongdoer , we have clearly gone beyond the boundary between compensation and punishment. Italian case law clearly shows that the amount due is deeply influenced by the subjective element of the wrongdoer. While in case of negligent infringement the amount due is determined with reference to patrimonial damages (art. 2043 c.c.) , if the violation is intentional the wrongdoer may also be compelled to give back the whole enrichment, and to compensate non patrimonial damages in re ipsa (art. 2059 c.c.). C) Often courts consider also the patrimonial conditions of the wrongdoer 41. When the violation is committed by a big company , a producer , an editor with a very deep pocket , the amount due is often calculated with reference to the patrimonial capacity of the wrongdoer. This is especially true in the United States in the field of products liability , were awards higher than one million dollars are very frequent . Otherwise the company wouldnt be deterred in a sufficient way42. In spite of this we can ask ourselves if it can be considered rational to condemn someone for what he has rather than for what he has done? If we take in consideration the patrimonial capacity of the wrongdoer , the penalty will be compared to the entity of his patrimony rather than to his behaviour . Moreover in order to deter the wrongdoer it would be enough to compare the penalty to the enrichment obtained as a consequence of the violation. D) Often courts and statutes consider also the enrichment obtained as a consequence of the wrongful behaviour43. Whenever the wrongdoer obtains an enrichment as a consequence of the tort , he should be compelled to give back the whole enrichment ; otherwise he would be induced to consider the duty to pay damages such as a cost . Deterrence requires that no one should be allowed to enrich himself at the expense of another . 13) Who is Entitled to Punitive Damages? The rationality of punitive damages can be discussed also from the point of view of the beneficiary of the penalty. Punitive damages can enrich the beneficiary of the penalty , who will be put in a better position than before the commission of the wrong. The question has been discussed especially in the United States where sums of more than one million dollars have been awarded to the injured party , without any justification at all44. We can also consider that the deterrence effect of the penalty is not influenced by the beneficiary , but only by the entity of the sum due. This is the reason why in the United States , especially in the field of products liability, have been stated that penalties should be awarded to public funds , rather than to who has sustained the loss .

41 42

Art. 133 bis c.p.; Restatement (Second ) , Sez. 908. ABRAHAM, JEFFRIES, Punitive Damages and the Rule of Law : The Role of the Defendants Wealth, in J.Leg.stud., 1989, 415. 43 SACCO , Larricchimento ottenuto mediante fatto ingiusto , cit., P. GALLO , Pene private e responsabilit civile , cit., 199 ; Rookes v. Barnard (1964) A.C. 1129; A. Roma, 5 november 1990, Dir.inf., 1991, 845; A. Milano, 23 december 1986, Dir.inf., 1987, 585; T. Monza, 36 march 1990, FI , 1991, I , 2862; art. 12 legge sulla stampa , 1948; art. 18 legge n. 349, 1986. 44 Note, An Economic Analysis of the Plaintiffs Windfall from Punitive Damage Litigation , 105 Harv.L.R ., 1992, 1900; BRESLO, Taking the Punitive Damage Windfall Away from the Plaintiff : An Analysis , NWULR , 1992, 1130.

Likewise in Italy art. 18 l. 349/86 has stated that in case of pollution the penalty should be awarded to the state. This solution seems very interesting , especially when the loss is very diffused ; otherwise single victims would obtain clear windfalls from their litigation45. Very different is the question when the loss is not diffused , but endangers single victims. Whenever someone infringes the rights of another , he should be compelled to pay damages , or at least a penalty , directly to the victim of his behaviour . This is especially true in the field of the protection of the person , his private life , honour , privacy , and so on . In these cases , if the amount of the penalty is correctly determined by reference to the gravity of the behaviour , the subjective element of the wrongdoer, and the enrichment obtained as a consequence of the violation, only the injured party should be entitled to the awarded sum. 14) Insurance and Vicarious Liability In the United States it has been deeply discussed if insurance and vicarious liability could be extended also in the field of punitive damages46. Generally insurance can cover also punitive damages , and the vicarious liable can be compelled to pay also punitive damages. This is certainly one of the main reason of the deep crisis of the american insurance system which has taken place in the eighties . Also in Italy vicarious liability covers non patrimonial damages47 . On the other side in Italy the insurer could not be responsible for intentional wrongs (art. 1900 c.c.). This means that in Italy penalties should be paid directly by the wrongdoer himself48. Generally it is excluded that penalties should be paid also by heirs ( actio personalis moritur cum persona)49. On the other side we can consider that whenever the wrongdoer has been enriched at the expense of another , also his heirs should be compelled to give back the extant enrichment. 15) Private Sanctions and Fragmentation of Tort Law One of the consequence of the growing availability of punitive damages in the field of tort law is the progressive fragmentation of tort law . Tort law can be considered no more a coherent body of rules . While in certain field we can notice a certain tendency to limit liability (contracts of carriage , air disasters, and so on) 50 in others contexts liability has constantly increased (products liability , pollution , and so on). Especially in the field of enterprise liability in no more than one hundred years the system has shifted from a situation of clear underdeterrence to a situation of
45

Note, 106 Harv.L.R ., 1993, 1691; GRUBE, Punitive Damages: A Misplaced Remedy , 66 South Cal.L.R ., 1993, 839. 46 More diffusely , P. GALLO , Pene private e responsabilit civile, cit., 205. 47 Cass., 12 may 1962, n. 965, GC , 1962, I , 2188, con nota di VENDITTI, Sullobbligo del proprietario del veicolo di risarcire i danni non patrimoniali cagionati dalillecito penale del conducente . 48 Au. D. CANDIAN , Responsabilit civile ed assicurazione , Milano 1993. 49 ELLIS, Punitive Damages in Iowa: A Critical Assessment , 66 IowaL.R., 1981, 1005, 1051. 50 PONZANELLI, Le clausole di esonero dalla responsabilit civile , Milano 1984; PELLEGRINO, Studi sulle limitazioni del debito del vettore terrestre di merci , Messina 1994; BUSNELLI , Limitazioni risarcitorie, diritto dei trasporti, Codice civile , in Il limite risarcitorio nellordinamento dei trasporti , Milano 1994, 1.

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overdeterrence , which has opened the way to the crisis of the american tort system of the eighties . Very interesting is also the expansion of tort law in the field of the protection of the person , and his private life . In this context the main function of tort law is not compensation , but punishment and deterrence . While in the field of enterprise liability the main goal of tort law is internalisation of the external costs , in the field of the protection of the person and his private life , the main function of tort law is deterrence ; in other words , there is not a loss to internalise , but a behaviour to deter and disincentive for the future. The amount of damages may also depend upon the subjective element of the wrongdoer. Italian case law clearly shows that when the infringement is not intentional, the sum due covers only patrimonial damages (art. 2059 c.c.) ; on the other side, whenever the violation is intentional , judges may condemn the wrongdoer to pay also a sum for non patrimonial damages (art. 2059 c.c.). In this field the main function of tort law is clearly deterrence and punishment , rather than compensation. We can go a steep further considering that there are two main model of tort law. A) There are many useful activities that can also make damages to the whole community (pollution , incidents, and so on). In this context the main function of tort law is compensation. Who makes whatever kind of activity should be compelled to internalise the whole social cost connected to it. In this way the activity in question will go on only if the whole benefits are higher than the whole social costs(art. 2043 c.c.). B) On the other side there are also completely useless activities , such as defamation , and so on ; in this field the main function of tort law is not compensation , but deterrence and punishment. The wrongdoer should be compelled to pay a penalty to the injured party, whose function is deterrence ; in other words there is not a loss to internalise, but a right to protect, and a behaviour to forbid. The expansion of tort law in the field of the protection of the person and his private life has opened the way to a new model of civil responsibility , whose main function is to protect the rights of the victim. In these conditions the damage is not necessarily required; the remedy can operate whenever a private right (such as honour, reputation , privacy, and so on) has been infringed. This model of tort law has many similarities with the old roman remedies, such as actio furti, rapina, injuria, and so on. 16) Punitive Damages: The Future? In the twentieth century while the field of application of penal law has progressively reduced, tort law has continuously expanded his availability, especially in the field of enterprise liability, consumer protection, and the protection of the person and his private life. In these conditions in many occasion tort law has replaced the availability of criminal sanctions; in Italy this is especially true in the field of defamation. In many occasions private and administrative sanctions have replaced the criminal ones. This whole process has also lead to a rediscovery of the punitive function of civil liability. In these conditions the damage itself seems no more a necessary requisite of civil liability. In order to obtain redress in tort it is enough to prove the violation of a civil right. The infringement of a right (Rechtsverletzung) not necessarily causes also damages. Whatever kind of wrongful violations of private rights may ground a tort remedy , also when there are no damages at all. In other words the infringement itself (Rechtsverletzung) may open the way to the commination of a private sanction. 11

In these conditions , if tort law presupposes no more necessarily damages , the main problem becomes how to correctly quantify the entity of private sanctions. Especially in the field of enterprise liability excessive sanctions may overdeter productive activities, and open the way to the crisis of the whole tort system. But if we correctly quantify the amount due, considering the gravity of the violation and the enrichment obtained as a consequence of the wrong, private sanctions and punitive damages may correctly operate also in the third millennium.

CURRICULUM Paolo Gallo has been born in 1962 in Tourin, Italy, where actually lives. He teaches private law in the Law Faculty of the University of Tourin. Previusly he has teached private law and comparative law in the University of Trento (1987-92), in the University Bocconi of Milano (1992-1994), in the University of Parma (1994-97), and in the University of Alessandria (1993-97). His main interests are Comparative Law, Law and Economics, Torts, Restitution. Among his publications it is possible to remember: 1) P. GALLO, Lelemento oggettivo del tort of negligence, Giuffr, Milano 1988 2) P. GALLO, Larricchimento senza causa, Cedam, Padova 1990 3) P. GALLO, Sopravvenienza contrattuale e problemi di gestione del contratto, Giuffr, Milano 1992 4) P. GALLO, Pene private e responsabilit civile, Giuffr, Milano 1996 5) P. GALLO, Arricchimento senza causa e quasi contratti, I rimedi restitutori, in Trattato di diritto civile, dir. da Sacco, Utet, Torino 1996 6) P. GALLO, I rimedi restitutori in diritto comparato, in Trattato di diritto comparato, dir. da Sacco, Utet, Torino 1997 7) P. GALLO, Grandi sistemi giuridici, Giappichelli, Torino 1997

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