Torts: A Love/Hate Relationship

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A conversation with four Fordham Law professors about tort law

Americans believe that wrongdoers must be held accountable, and yet public conversation is now rife with complaints about tort law gone wild. Why does America have a love/hate relationship with legal redress?

To find out, Fordham Lawyer sat down recently with four torts experts: Professor Howard Erichson; Professor Benjamin Zipursky, the James H. Quinn ’49 Chair in Legal Ethics; Distinguished Professor Michael M. Martin; and Associate Professor Jed Shugerman.

Do we have a problem with “frivolous lawsuits” in the United States?

Zipursky: There’s a huge amount of money at stake now in tort litigation, and that means a lot of people are investing in it. They’re also investing in the politics of it. The business community for the last several decades has made it a goal to get the public to perceive the tort system as a system out of control. All the studies that have been done by neutral actors tend to show that the claims about a tort system out of control are widely exaggerated.

Shugerman: It is true that too many lawsuits are frivolous, but I use studies of the medical malpractice system by Michelle Mello and David Studdert that show that not enough people sue. They find that of all the cases where there are medical injuries one could sue for, only 5 percent sue. There could be many reasons for that. It could be the injury was too small to generate a lawsuit, but a lot of times it’s really that a lawyer doesn’t want to take the case if it’s not a slam dunk. The lack of a slam dunk isn’t because of the error, it’s because the victims are not sympathetic enough. The damage awards turn so much on the earning capacity and socioeconomic status of the victims that it can turn the market of lawyers away from very meritorious cases.

Martin: People sue because they want both to get compensation that will pay off a medical bill or lost earnings and to get redress of dignity, in a sense. Sometimes these are situations in which clients and lawyers decide that the lawsuit is a way of getting some sort of redress for, not the physical harm, but the emotional or psychological components of it.

Howard ErichsonErichson: The tort reform lobby did an amazing job of planting and pushing the idea that this country has a huge problem with frivolous lawsuits. Of course it’s true that there are some non-meritorious claims filed as lawsuits. It’s also true that there are many meritorious claims that are never asserted, but there’s no lobby to push that idea very powerfully. So we end up with this strong public perception that the tort system is skewed in favor of plaintiffs. The famous case of the woman who spilled hot coffee from McDonald’s on her lap and sued is a great example of a lawsuit that actually wasn’t as frivolous as it was made out to be. It’s a much more complicated story than was reported, and the number of students who know the true story behind it increases every year. This new generation of students is able to find more outlets for facts. Perceptions are changing a bit about these cases.

Are cynics overlooking the moral side of torts?

Shugerman: The moral side of torts is perhaps its most powerful. After the Johnstown flood in 1889, which killed 2,000 people as a result of a dangerous activity, there was a very rapid shift in the states, mainly among elected judges, to move toward strict liability for moral reasons. The moral argument reflected the economic argument. It had a moral intuition that, if you engage in risky behavior, you have a moral duty to pay for the harms you inflict. I think one lesson is that economic arguments can be put in moral terms, and moral arguments can be put in economic terms, but what really drove the change to strict liability was the sense of morality and corrective justice. That your risky activities caused people harm and you had a duty to them to rectify that accident.

Martin: In the 20th century, similar arguments can be made in the growth of strict liability for products. This is the sense that somebody is benefiting from putting out mass-produced products and that person is in a better position—whether you talk about economically or morally—to compensate what might be called the adventitious or fortuitous injured person, even though a whole bunch of people benefit. It’s a form of social insurance really. I think that’s influenced by the fact that in our country there isn’t any other really good form of social insurance for most kinds of injury behavior.

Erichson: Right. The starting point for every tort dispute is that there’s been a loss—an injury—and the question is who should bear that loss. Should the loss simply fall on the victim, or should someone else have to pay for that injury? After that, things go a little bit crazy, because there can be various reasons why a court would force somebody else to pay for the victim’s injury. In negligence cases it’s because there’s some notion that this other person committed a wrong; that is where you get into the moral aspect. In strict liability cases, it’s for other reasons such as cost or social insurance.

Zipursky: It is not true that every tort involves a loss. In fact, the oldest torts—trespass to person and trespass to property—didn’t Benjamin Zipurskynecessarily involve any loss at all. The reputational hits that people take, particularly over the Internet, are becoming a major issue. Defamation is not fundamentally about loss, it’s about a wrong that’s done to somebody. There may or may not be any identifiable loss, and it’s certainly not about loss shifting, but the lack of a mechanism for insuring people against losses has made people focus understandably on the accident-law part of tort. That’s the point that most immediately serves people’s needs.

Why must Americans turn to torts for redress?

Shugerman: The problem in America is that without the social safety net, we’ve become more of a litigious culture. If you’re injured and you don’t have insurance or not enough insurance, you might turn to a lawsuit. Private insurance companies sometimes push the people they cover to sue, so they can recover their costs. We don’t see the same litigiousness in countries that offer more of a safety net to their citizens. At the same time, the tort system is so random that it leads people to think they can sue and win the lottery. A lucky few receive huge damage awards, but there are still very needy people who get neither the social safety net nor the access to justice in the courts or compensation from the jury.

Zipursky: A number of other countries are following us even as we complain about our system. A robust contingency fee system is a way of allowing more accident victims to sue. One flipside is that if we now start to shear away contingency awards, as many jurisdictions are doing in their own state legislatures, then there’s a double whammy on injured persons. Secondly, given the complexity and sophistication that now require fantastically sophisticated lawyers spending huge amounts of money on litigation, we have a very complex model of how the legal profession works, at least on the plaintiff side in mass tort cases.

Is the tort system inefficient?

Jed ShugermanShugerman: When you think about torts as a system of compensation, it’s very inefficient because so much of the money goes to the lawyers and to overhead costs. For every dollar that goes to a victim, one dollar is overhead for the lawyers and the legal system. That’s a very inefficient system compared to insurance or alternative systems of compensation.

Martin: Bringing litigation turns out to be a very expensive way to provide deterrence because of that overhead rate. That cost is a significant factor in getting the deterrence that we want.

Erichson: It’s not simply a matter of finding the most efficient way to deter or the most efficient way to compensate, it’s a matter of the law actually providing a claim against the person who caused the injury. There’s something really important and powerful about the idea that we give to injured persons a claim against someone who committed a wrong against them. In a very American way we leave it to private citizens and their lawyers to decide when they want to seek compensation and impose punishment and deterrence to deal with bad things that happen. It’s not clear to me that this is less efficient than the alternatives.

Are mass tort claims more efficient?

Erichson: The problems with mass tort litigation these days aren’t problems of inefficiency, they’re problems of clients being treated poorly by lawyers who hold all the power. In general I’d say yes, class actions have a very special kind of efficiency, but I understand why courts are reluctant to certify a class action in cases involving individual medical causation. That said, you can’t litigate something like the Vioxx pharmaceutical product liability dispute or the Gulf oil spill environmental dispute one claim at a time. Not only would it be incredibly inefficient for the court system, it would be economically unfeasible for the plaintiffs and their lawyers. The only way to have any kind of a level field is through aggregate litigation, and lawyers have found ways of representing large numbers of claimants even in non-class actions to be able to handle the cases pretty efficiently.

How does tort law influence, or how is it influenced by, insurance?

Martin: We commented on the relative lack of a social insurance system, but that isn’t to say that the modern tort system doesn’t Michael M. Martininvolve insurance to a large extent. It’s a complicating factor when tort law goes after people who have done wrong but have liability insurance. The other complicating factor is that many accident plaintiffs who suffer injuries in accidents have some sort of first-party insurance. That can also raise complications when we’re talking about what tort law is doing and what it ought to be doing.

Zipursky: Even before Obamacare, many states had rejected a traditional rule called the collateral source rule, which said it didn’t matter if you were getting health insurance for your injuries, you could still recover fully from the person who was negligently driving his truck or the company that owns the truck. Because of the rejection by many states of the collateral source rule, plaintiffs who have their health insurance already covering a lot of their injuries won’t have as promising a tort suit from the plaintiff’s lawyers’ perspective if they have health insurance. So if we make health insurance more available as we have done with Obamacare, one might expect that, ironically, to be helping the tort reformers.

Shugerman: Several different reforms address medical malpractice. There’s the National Vaccine Injury Compensation Program, and Florida and Virginia have birth injury funds. They’re basically insurance programs that target areas that had been generating huge numbers of malpractice claims. Instead of winning the lottery or losing the lottery, families that have a childhood vaccine side effect or a birth injury get some guarantee of compensation. It’s much more reliable with lower overhead, and much more efficient. So lawyers don’t get the contingency fees or the large payouts, but the victims get more compensation.

Do the misperceptions about torts make them a challenge to teach?

Shugerman: What is wonderful about the tort system, despite its inefficiencies, is that it allows every average individual to have their day in court, to seek social redress and corrective justice without having to depend upon other people’s political power. That is at its core what is really powerful about teaching first-year law students about torts because it is about core principles of justice without needing bureaucracies or elected officials or legislators.

Zipursky: There’s so much we do to structure a lawsuit—to structure the way the jury gets a case, the way the jury thinks of the case, and then the way the courts work through it. That’s part of the reason torts is such a great first-year class, because it’s a great opportunity to teach them about all the structure.

Erichson: Also, torts is more about settlement than it is about litigation, so all the work that goes into setting up the case is really setting up a better settlement. Most tort cases settle, but only in the shadow of going to court do you have the prospect of settlement for fair amounts.

Martin: I’d like to meet the person who says that torts aren’t inherently interesting. It’s a wonderful time exploring students’ intuitions about compensation and deterrence and moral right and questions like that. They understand the context, but there are various ways of approaching that context and thinking about it. That’s what makes it fun.

Shugerman: Teaching tort law also opens the door to legal realism. Huge political forces depend on even the small cases generating rules that work out of the other. On the one hand, it’s important to open the students’ eyes to see that the law is partly political. But it also allows you to show how you can shape a legal system with clear, bright-line rules that help resist hindsight bias, other kinds of bias, and the corruption of politics.

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