Friday, June 17, 2005

Tort Reform or Jury Elimination: Redux

Jonathan Wilson, who has self-published a book advocating tort reform, not surprisingly disagrees with my argument that the hidden agenda behind tort reform is to eliminate the civil jury system, at least for corporate America.

Wilson is correct on one point: I do lump all tort reformers together. This is because I am looking at the political realities, and the money, behind tort reform. I am not interested, in this context, in some of the academic arguments that are not being urged by the big money behind tort reform. I am focusing on the Republican tort reform agenda.

Also, he is correct that I didn't spend much time going into the flawed premises behind the corporate-sponsored book Punitive Damages: How Juries Decide. (Symmetrically, Wilson did not address any of the flaws Prof. Hoffman identified in the theories underlying Punitive Damages.) In response to Wilson, I will do so here.

What the “Behavioralists” in Punitive Damges claim is that punitive damages awards given by juries have no relationship to the harm or wrongdoing by corporate defendants. The niggardly interpretations of harm and wrongdoing accepted by the “Behavioralists” are unsatisfying (except, of course, to corporate counsel.) Moreover, their view of what juries should do would require completely eliminating the jury role in determining punishment in tort cases.

Could a jury rationally believe a cost/benefit analysis cannot rationally justify placing a dangerous product in the stream of commerce - and punish the company that did so? Harshly? Not according to the “Behavioralists.” The “Behavioralists” want the legal system to provide no more than "economically efficient" deterrence of corporate misconduct. Juries, on the other hand, want fairness and justice. The "Behavioralists" would prefer to see established fines and penalties, overseen by technocratics, taking the place of juries. The conscience of the community, as the jury is often called, would be silenced - and technocratic cost/benefit analysis would take its place.

A criminal who kills people may be given the death penalty in criminal courts. A corporate tortfeasor whose actions do similar harm should risk the same penalty: bankruptcy, corporate death. Rarely do juries decide corporate misconduct was so bad as to justify this death penalty. However, having it available does more to deter corporate misconduct than the criminal death penalty can to deter murder. Unlike most murderers, corporations are rational actors with the self-control to act in their own interest. The risks of corporate misconduct shouldn't be balanced with the rewards; they should overwhelmingly outweigh them.

Wilson cites Punitive Damages for the proposition that
"there is no rational connection between the evidence involved in punitive damages cases and the punitive damages awarded by juries. A later study by Viscusi demonstrated that, inappositely, juries were more likely to punish responsible corporate decision-making (i.e. trade-offs between cost and safety) than they were to reward it."

So juries do not do cost/benefit analysis. Guess what. Neither do criminal courts! Cost/Benefit analysis is not the goal of punishment. And punitive damages are intended to punish wrongdoing. If the thesis behind Punitive Damages is credited, then we should do similar cost/benefit analysis whenever we determine to punish a criminal.

Of course, the classic jury-critic problem is evident here: legislatures and judges are no better, and usually worse, than juries at cost/benefit analysis. So Wilson would have us ruled by experts. In this regard I am reminded of the words of Chesterton:

"Our civilization has decided, and very justly, that determining guilt or innocence of men is a thing too important to be trusted to trained men. [When it] wishes for light upon that awful matter, it asks men who know no more law than I know, but who feel the things that I felt in the jury box. When it wants a library catalogued, or the solar system discovered, or any trifle of that kind, it uses up its specialists. But when it wishes anything done which is really serious, it collects twelve of the ordinary men standing around. The same thing was done, if I remember correctly, by the Founder of Christianity."

G.K. Chesterton, Tremendous Trifles (1910). Heaven forbid that we should ever be ruled by 'experts.' I, for one, trust the justice of a jury far more than the narrow logic of technocrats.

Wilson argues that the failure of juries to do cost/benefit analysis undercuts the goal of deterring unsafe and reckless conduct. I strongly disagree.

Any cost-benefit analysis is limited, naturally, by the benefits and costs that are included into the calculation. And, those benefits and costs, in our legal system, are facts to be determined by juries. But the tort reformers want to constrain the jury's fact-finding role in this context, somewhat independently of the evidence. Imposing a cost-benefit "test" to actual litigation is artificial, and fails to encompass the myriad of actual considerations before the jury.

Is Jury Elimination the Real Goal?
If anyone doubts that the goal of the tort reform movement is to eliminate juries, one has only to look at the success of the first round, the movement towards arbitration in the place of litigation. The Federal Arbitration Act encourages corporations to include arbitration clauses in form contracts. Often hidden in the small print at paragraph 37, arbitration clauses exist in credit card agreements, pest control service agreements, cable modem agreements, etc. If you’ve signed a contract with a large or medium size corporation (and even some small ones), you have probably signed an arbitration agreement.

Most consumers are either not aware of such agreements, are only vaguely aware of them, or do not believe they are binding in case of a real injury. They are wrong. They have given up almost all their legal rights.

When you sign such an agreement, you abandon your right to sue the entity you contract with. If the company then defrauds you, burns your house down, gives your family cancer, or recklessly employs rapists who assault your children, your recourse is to take them to binding arbitration. No judge, no jury: just a lawyer, often retired, who decides who he thinks should win and how much.

Forget about hiring yourself a lawyer at no up-front expense. Arbitration requires that the party initiating proceedings pay a huge lump sum, often over $10,000, to begin proceedings. Many cannot afford to even initiate arbitration, which is far more expensive for the plaintiff than taking a case to trial. And, no matter how willful, wrongful, and knowing the tortious action is, arbitrators cannot give punitive damages, and their awards can rarely be appealed.

Of course, because your award, if any, will be much smaller, good lawyers probably won’t want to handle your arbitration claim on a contingency fee. You are on your own.

Arbitration agreements are contractual. Therefore, they do not cover all tort victims. Now that their customers are precluded from suing them, corporations are out to ensure that they cannot be held fully liable to those third-parties who are injured by their faulty products, services or employees.

It is a natural progression.

Wilson is also correct in that I give short-shrift to "loser pays" schemes and similar arrangements. The number of dollars and the amount of political capital invested in such schemes is a miniscule fraction of that spent to cap punitive or non-economic damages such as pain and suffering. These proposals tend to take the lion's share of the tort reform energies. "Loser pays" arrangements are, for the most part, a side-show.

Should we have "loser pays" rules in criminal cases? I don't think Tom Sneddon would agree. But why should innocent corporations be able to recover their costs, and innocent citizens wrongly accused of crime unable?

Because so little litigation actually filed is frivolous, there is little frivolous litigation to derail. Again, the effect of loser-pays arrangements that are not isolated to frivolous cases is simply to raise the costs of litigation. These measures simply raise the risks for plaintiff's counsel, making it less likely that small or difficult cases will even be filed, no matter how meritorious they may be. Corporate convenience has again trumped justice.

Greedy Trial Lawyers: A Perfect Smokescreen

For the most part, the general public has failed to see the dire threat tort reform poses. By demonizing “trial lawyers,” the tort reformers have found an easy and unpopular target. But tort reform isn’t aimed at lawyers; it is aimed at reducing jury power and limiting victim recovery. It is only by hiding what tort reform actually does that its proponents hope to succeed. Few of us yearn to abandon our Seventh Amendment rights to a civil jury trial; few of us want to see companies who injure or kill our loved ones escape with no meaningful punishment. But hey, who doesn’t want to knock those arrogant trial lawyers down a notch?


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