Sunday, June 26, 2005

Tort Reform: A Myopic Vision

Jonathan Wilson continues the discussion on tort reform. Curiously, many of the points I've made he ignores; he sets up several obvious straw men to knock down in their stead.

Wilson claims I have conceded that punitive damages have "no relationship to the harm or wrongdoing by corporate defendants." I've never said this is true; what I've said is that this is the claim the Behavioralists make. It is plainly untrue; while punitive damage awards have a relationship to the harm or wrongdoing of corporate defendants, that is not the ONLY thing they have a relationship to. Other factors come into play - and properly so. Juries also determine the likelihood of the harm being repeated, the wealth of the corporation (and thus the amount of punishment needed to deter future wrongdoing), the attitude of the corporation towards their wrongdoing (i.e., the amount of recalcitrance or remorse shown), and numerous other factors.

While Wilson's attempt to tell me what I would say if the civil justice system did, in fact, produce "economically efficient deterrence of corporate misconduct" is simply another strawman, the point is that "economically efficient deterrence of corporate misconduct" is not and has never been the goal of the civil justice system. Nor should it be.

What Wilson ignores is that an award of "punitive damages," in a civil case, serves the same purpose as "punishment" in a criminal case.

It punishes.

And the really anemic part of Wilson's argument is his failure to address that point.

We do not flinch against allowing criminal courts to impose exceptional sentences in order to deter other actors against committing similar crimes. Why should we flinch at allowing civil juries to impose exceptional sentences in order to deter other corporations from committing similar torts?

There simply is no reason.

Wilson invokes an ancient civil case for the proposition that "the defendant ought not be responsible for something he could not have reasonably forseen." However, punitive damages only hold the defendant responsible for torts he could have reasonably foreseen. So this is another obvious strawman. The only issue is whether the defendant could have foreseen the extent of punishment he would receive.

Of course, it has long been the rule that the entity committing a tort need not be able to foresee the extent of damages the tort would cause - a tortfeasor is liable for extraordinary damages caused, for instance, to an extremely vulnerable victim. A trash-hauling company that hires drunk drivers can't complain that they could not have foreseen that the drunks would hit a crowded school bus or ambulance instead of a passenger car. And of course, because punitive damages are always available, a corporation should foresee that its misconduct may always be punished dramatically.

An efficient way to keep them on their best behavior, one would hope.

Now, let us compare the realpolitik differences between what tort reformers DO, and what they SAY. Tort reform issues tend to do two things: reduce noneconomic damages (pain and suffering and the like), and to reduce punitive damages.

Neither of these, of course, have any relationship to frivolous lawsuits. They only deal with actual torts in which someone has been actually harmed. What, for example, is the ECONOMIC costs of, say, a surgeon removing a non-cancerous breast by mistake - and then removing the cancerous one as well? A woman has been left with no breasts instead of one.

Except for strippers and streetwalkers, breasts are not tangible economic assets. However, for a woman, what would be the value of that remaining natural breast? Should her compensation be capped at an arbitrary number - or should a jury be left to decide?

We know what the tort reformers would say; give her a couple hundred grand and send her on her way. Juries would probably add a zero to that.

Or two.

What is the "rational relationship" for "economic efficiency?" How would that be determined? By whom? According to what mechanically-applied formula? Determined by whom? How?

Now, Wilson proposes shifting the prevailing party's attorneys fees to the party who rejects a settlement, unless they recover more than the settlement offer at trial. Of course, such a rule would only work in cases in which a Defendant ADMITTED they had committed an actual tort. (A Plaintiff who flat out lost would not recover less than a zero settlement offer.) There is something important that Wilson's proposal omits - something of Constitutional dimension that goes precisely to the fabric of what makes America America.

That is that everyone that has been wronged is entitled to their day in court. Wilson would entitle them to a payday, but put a tax on their day in court. If a person prefers $5 awarded by a jury to $5,000,000 in a settlement, they should be entitled to force the defendant to a jury trial SIMPLY TO PUT THE DEFENDANT'S MISCONDUCT TO THE JUDGMENT OF A JURY. Wilson's proposal presumes that the only interests plaintiffs ever have are venal ones; I have had many clients who didn't care what the outcome was nearly so much as they wanted to have the evidence of the defendant's wrongdoing made public. The Defendant can concede damages, but the Plaintiff has a right to have a jury hear the case and set damages.

The Seventh Amendment (at least in Federal cases) guarantees the plaintiff this right - and any procedural rule that would tax the insistence on trial by jury would violate this principle. Of course, most States have similar provisions in their Constitutions.

It ain't economically efficient to allow this. But it is Constitutional. An amazing number of clauses in the Constitution are less than economically efficient - including just about the whole Bill of Rights. But that is part of the cost we all pay to be relatively self-governing and free.

And again, of course, Wilson does not answer why we should not enforce the same rule in criminal cases. Should the defendant who wins at trial be entitled to the return of his legal fees? Should O.J., Robert Blake, and Michael Jackson all be reimbursed by the taxpayers?

If not, why should G.E., Chrysler, and A.D.M. be entitled to reimbursement on suits that they may win?

Wilson depends on emotion-charged but contentless terms like "litigation lottery" and "individual responsibility." Is it not responsible for corporations who have committed torts to be subject to punishment for their actions? It appears that Wilson uses the term "individual responsibility" only to contrast it to "corporate responsibility," which he eschews.

The statistics simply don't support this idea that juries are bankrupting corporations left and right. There is no "litigation lottery." Corporate America is capable of inflicting great torts on society and on individuals, and (as Enron, Martha Stewart, Tyco, Adelphia, World-Com, etc., all show) acting with arrogance and contempt for the public in doing so. When they do so, they may be subjected to great punishment. And sometimes, juries find it appropriate to do so. This threat does more to restrain corporate misconduct than any schedule of fines ever could - and it is fair, grounded in American law and history, and effective.


At 10:25 AM, Blogger rattlerd said...

"We do not flinch against allowing criminal courts to impose exceptional sentences in order to deter other actors against committing similar crimes. Why should we flinch at allowing civil juries to impose exceptional sentences in order to deter other corporations from committing similar torts?"

Could it be because defendants in civil trials face a significantly lower standard of proof (preponderance of evidence v. beyond reasonable doubt), and lack the elaborate set of protections that criminal defendants are entitled to - 5th amend, etc. - including a lower standard for bringing an action at all? Doesn't that weaken the case that they are similarly situated? Please understand that I'm not trying to be snarky or sarcastic - I'm couching this as a question as I am sincerely wondering, and it's possible I have misrepresented the situation through my own misunderstanding.

At 5:39 PM, Blogger Clay S. Conrad said...

Actually, this cuts the other way. First, juries tend to impose higher burdens when given clear and convincing evidence instructions than when given the flawed reasonable doubt instructions that shift the burden onto the defense.

Secondly, remember that I've only considered acquittals as reimbursable. Under Wilson's paradigm, any time a plaintiff won but got no more than he was offered as a settlement, the plaintiff would be entitled to reimbursement of his attorneys fees. A defendant could concede liability and still be entitled to reimbursement under this paradigm.

What should be done when a plaintiff has multiple causes of action and wins big on ones and loses entirely on others? Partial reimbursement?

Or, on the criminal side, when a defendant is convicted, but only of a lesser included offense?

Obviously, a scheme like this can be imposed, but it seems that it will always be arbitrary and unjust in application.


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