102 Iowa L. Rev. 651 (2017)
The vicarious liability doctrine, which holds third parties responsible for the legal obligations of their duly authorized agents, was designed in part to ensure that tort victims are not undercompensated by insolvent agent wrongdoers. But many legal scholars are highly critical of the doctrine and suggest that fact finders’ systematic biases—particularly with respect to corporate third parties—cause unworthy tort plaintiffs to be overcompensated at the expense of innocent, deep-pocket corporate defendants. These scholars have offered little empirical evidence for these claims and, in fact, behavioral research suggests that their predictions are incorrect.
This Article introduces the concept of the vicarious windfall. A vicarious windfall describes a situation—contrary to our intuitions—in which lay fact finders are significantly less inclined to assign vicarious tort liability to a corporate employer, compared to their willingness to assign liability to the employee-agent who directly causes the harm. The vicarious windfall rests on insights from construal level theory and moral psychology, which suggest that laypeople perceive indirect wrongdoers as more psychologically distant from themselves, which causes fact finders to perceive indirect actors as less morally culpable for harm.
This Article reports the results from three original experiments, in which the theory of the vicarious windfall is tested in the context of a toxic tort lawsuit. The experiments reveal that, regardless of the fact finders’ business experience: (1) jurors are less likely to assign tort liability to corporate actors vicariously (in contravention of popular wisdom); and (2) jurors award significantly lower punitive damages against vicarious defendants compared to the agent who harmed the plaintiff directly. Vicarious windfalls have significant implications for the future direction of corporate tort doctrine, for the debate regarding juror competency, and for attorneys’ strategic decisions in civil litigation.