The U.S. Supreme Court’s ongoing effort to limit excessive punitive damages takes a different twist in Exxon Shipping Co. v. Baker. Rather than relying on due process, the Court uses its “common law” power over federal maritime law to hold that punitive damages in maritime cases must not exceed compensatory damages, adopting a 1:1 ratio as the cap.

The Court’s earlier due process rulings bind state courts since they rest on the 14th Amendment. In that role, however, the Court can only set outer limits, and it has been unwilling to set precise numerical standards. Although the Court’s new common law decision is not directly binding outside the field of federal maritime law, that role permits the Court to review a wider range of information and to adopt the precise standard that it deems best. The 1:1 ratio it adopts is much more confining than its due process cases, which suggested punitive awards generally should not exceed a single digit multiplier of compensatory damages, e.g. a 9:1 ratio.

Most state courts exercise broad common law powers over the types of cases that give rise to punitive damages. They may find Exxon Shipping persuasive, both in its analysis of the purposes of punitive damages and its conclusion that common law courts can and should confine punitive damages to a fairly narrow numerical range.

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