by Douglas Kysar, September 2009
No market, whether regulated or not, is free of government involvement. At the very least, markets depend for their effective operation on the existence of strong governmental institutions to identify and protect property rights, to authenticate and enforce contractual agreements, and to evaluate the legal consequences of harms that are imposed on others without their consent. These three fundamental areas of private civil law-property, contract, and tort-provide the essential building blocks of even the most conservative conception of government and its role within the economy. Moreover, these areas of law are permeated with questions that require moral and political judgment: How much of a river's water flow should upstream landowners be permitted to divert for their own use? Should contracts for the sale of products be enforceable when one party knows that the other is unaware of serious hidden product risks? When market actors cause physical harm to others without their consent, are the victims entitled to monetary compensation?
Until relatively recently in the Anglo-American legal tradition, questions of this nature were answered primarily by courts. Within the United States, for instance, state courts served this role until the twentieth century, when pervasive and complex social, economic, and environmental problems eventually necessitated the development of a much more robust legislative and executive presence, both at the state and federal levels. Thus, all "regulation" as we know it exists on top of a foundation of legal principles that has been developed and in many respects continues to be developed by courts. Any time that legislators enact a statute to create rights and responsibilities among citizens and to empower a regulatory agency to enforce them, those legislators are acting against the backdrop of the common law. Conversely, even if the conservative view of limited government is accepted, "deregulation" in the fullest sense will not actually occur. Instead, regulatory responsibility will simply get shifted to other government venues, such as state legislatures and agencies in the case of federal or state courts in the case of a more comprehensive dismantling of regulation.
In recent years, proponents of "tort reform" have sought to alter or eliminate the ability of common law courts to exert their traditional authority in this area. Proponents claim that courts have expanded the boundaries of tort law too far and that tort lawsuits have become a new form of "regulation through litigation." These reform proposals are especially controversial because they constitute a form of "deregulation" in the judicial arena. By seeking to cut back on the traditional ability of courts to address nonconsensual harms in society, proponents of tort reform offer a complementary strategy to the general regulatory rollback that has been pursued at the state and federal level through cost-benefit analysis, data quality requirements, and other legislative and regulatory maneuvers. Understanding the purported justification and potential consequence of tort reform is therefore essential to any comprehensive analysis of environmental, health, and safety regulation.
The adverse publicity and financial consequences of tort liability can provide powerful incentives for actors to change their behavior, ultimately resulting in far less damage to the environment and to the health and livelihood of human beings. Indeed, it is often said that American regulatory agencies are able to remain smaller and less intrusive than comparable agencies in Europe and other industrialized nations precisely because the United States has an active tort system that complements and backs up agency efforts. This regulatory effect of tort law should hardly be surprising, given that some of our most successful federal environmental statutes, such as CERCLA, are premised on a belief that the threat of financial liability will provide strong behavioral incentives to prevent and ameliorate harmful activities. Similarly, by standing ready to impose financial consequences after the fact if an actor causes an unreasonable harm, common law tort liability operates to influence behavior before the harm ever occurs. We know that litigation has helped to uncover and compensate numerous harms caused by such products as asbestos, DES, and the Dalkon Shield. What we do not see are the many similar harmful products and substances that were never marketed or released due to the cautionary influence of tort liability.
Opponents of the tort system, however, contend that common law tort liability has been extended too far and that "activist judges" have begun forcing payment of compensation for minor or fictitious harms through an expensive apparatus-the civil justice system-in a way that threatens to impair the American economy and to erode notions of "personal responsibility." For this reason, opponents have pursued tort reform at both the state and federal level for the last thirty years, seeking to pass legislation that narrows the circumstances in which defendants will be held liable for the harms that they cause, restricts the type and magnitude of relief measures that will be available to plaintiffs in successful cases, and specifies the procedures that plaintiffs can or must utilize in order to make their claims. More specific proposals along these lines include changes to the substantive standards for identifying defective products and for imposing joint and several liability on multiple harm-causing actors, elimination or restriction of available monetary relief including especially pain and suffering and punitive damages, and alteration of procedural rules to reduce class action litigation and to subject medical malpractice claims to pre-litigation screening.
What's At Stake?
Additionally, in recent years frustrated state attorneys general, municipalities, and other government actors have turned to the courts and tort law for assistance in their efforts to regulate certain powerful industries that are seen as capable of avoiding socially desirable regulation through their undue influence over legislators. For instance, exasperated by years of legislative inaction with respect to cigarettes and guns, which together account for 469,000 deaths per year, states and cities filed lawsuits against tobacco and firearm manufacturers premised on such longstanding tort principles as fraud, negligence, and nuisance. Proponents of tort reform deplore this strategy of "regulation through litigation" and have sought to include in their legislative proposals measures that are designed to curtail the practice. In the case of firearms, their efforts to obtain legislative immunity have been successful (See CPR White Paper: Lawyers, Guns, and Money).
Tort reformers also have sought to change tort law from within, most notably by advocating changes to the judicially created standards for admissibility of scientific evidence establishing that the defendant's product or activity was the cause of an environmental, health, or safety harm. At the federal level, the Supreme Court's decision in Daubert v. Merrell Dow Pharmaceuticals, Inc. ensured that defendants in tort suits have ample opportunity to challenge the scientific credentials of expert witnesses in suits involving complex harms such as toxic products or environmental contaminants. Similar procedures subsequently have been adopted in many state jurisdictions. Ensuring the accuracy and reliability of scientific testimony is certainly a strong judicial interest, but critics of Daubert and its line of cases argue that the decisions in practice have turned out to resemble the political campaign of reformers in the regulatory arena who use similar "sound science" procedures to harass, delay, and otherwise obfuscate the regulatory process. Rather than aiming to eliminate "junk science" from the courtroom, critics of evidentiary reforms believe that their proponents merely sought to make it more difficult and more expensive for plaintiffs to obtain relief for legitimate claims.
A Progressive Perspective
Decisions on the Table
Even more telling is the fact that when researchers examine the universe of potential tort suits-that is, the overall number of individuals who suffer a harm caused by another actor in a way that gives rise to a legitimate claim for compensation-they find that tort law is grossly under-enforced. The most comprehensive study of medical malpractice, for instance, found that only one out of every eight potentially valid claims was pursued through legal means and that no more than half of those filed eventually resulted in compensation to the malpractice victim (see CPR white paper The Truth About Torts: An Insurance Crisis, Not a Lawsuit Crisis). The reasons for this level of under-enforcement are readily understood. Pursuing a claim in court is an expensive and emotionally devastating proposition, despite tort reformers' contrary characterization of litigation as a "lawsuit lottery" pursued by plaintiffs and their lawyers for frivolous reasons. Quite simply, vast numbers of deserving plaintiffs simply "lump it" rather than experience the expense and pain of pursuing a perfectly legitimate lawsuit. Plaintiff's lawyers do frequently take cases on a contingency fee basis, which helps to increase access to the courts among poor plaintiffs, but the financial risk inherent in that approach ensures that lawyers undertake a careful screening of cases to pursue only claims that are likely to succeed on the merits. The common law system, in other words, already has in place institutional mechanisms that prevent a "litigation explosion" and that, if anything, lead to a "litigation deficit."
As one can see, drawing generalizations about the state of the tort system is an exercise fraught with difficulties. Yet this is precisely what the tort reform lobby seeks to do in constructing its vision of a broken, out of control system. Before disrupting the careful balance of substantive and administrative interests that courts have crafted over hundreds of years of jurisprudence and experience, legislators should be certain that they have a strong, empirically verified reason for altering judicial practice in a way that burdens injured plaintiffs. Unlike the case of conventional regulation, in which scientific uncertainty about threats to the environment or human health should be construed in favor of preventative government action, there should be a presumption against acting to restrict the traditional function of courts as a forum for identifying and remedying social harms.
For this reason, efforts to carve out special exemptions from the rules of tort law should be viewed with great suspicion. When Congress proposes legislative immunity for a favored industry, it prematurely disrupts the ability of tort law to identify and address an emerging social problem. One significant, but often forgotten value of lawsuits is their ability to focus attention on problems that other institutions have failed to address or have yet even to recognize. Courts are the one forum in our political system where the concerns of ordinary citizens must be heard and answered. In that sense, the openness and ability of courts to hear claims from ordinary citizens represents a vital component of the overall approach to environmental, health, and safety regulation. Not only does tort law provide important safety incentives for the prevention of threats to the environment and human health, it also provides a platform for citizens to reach out and seek public acknowledgment of the problems that harm and threaten them, but that have failed to attract the attention of legislators who too often seem busy heeding the call of special interests. No legislative action to curtail this traditional outlet for citizen concern should be taken lightly.