Monday, July 04, 2005

My Final Chapter on the Tort Reform Debate

It is increasingly apparent that Wilson's interest in continuing this debate is only to push his book. While it is understandable that would be his interest, it is not mine.

First, I should point out that, contrary to Wilson's claim, I am not a trial lawyer (a term he considers a pejorative.) As the bio on this blog, and my bio on my firm's web site, clearly show, I am an appellate attorney. I do both civil and criminal appeals and complex drafting.

Wilson repeats himself ad nauseum, without contributing much in the way of new ideas. Instead, he takes issues I have not discussed and says "Conrad does not dispute xxx." Of course, what I have not discussed I have neither disputed nor conceded.

Other Cases are Okay for Juries to Consider

Wilson's argument relies wholly on one case - State Farm v. Campbell, which he reads selectively. State Farm involved an insurance company which falsified records and refused to offer policy limits in a case in which its insured was undeniably at fault in an accident which left one person dead and another permanently disabled. It was shown that State Farm had a national policy of denying liability as much as possible, regardless of the facts, in order to minimize recovery. (This is an oversimplification, but it will do for our purposes.) Campbell sued State Farm for bad faith, and the jury awarded $2.6 million in actual damages, and $145 million in punitive damages. The trial court judge reduced this to $1 million and $25 million. The Utah appellate courts reinstated the $145 million.

Wilson claims that State Farm prohibits a jury from considering a corporation's conducts in other cases. He ignores the fact that State Farm was a Utah case. The Supreme Court said that because a State cannot punish a defendant for conduct that may have been lawful where it occurred, a State court cannot consider a corporate defendant's conduct in other states. If this was a federal case, involving a violation of federal law, the "other states" rule would not apply.

What is relevant, however, is that the Court explicitly authorized juries to consider other cases. The Court said that one factor in determining the reprehensibility of a defendant's conduct is whether that conduct involved repeated actions or was an isolated incident. Thus, a jury can properly consider how often and how regularly the complained-of tortious acts takes place when assessing punitive damages, within the jurisdiction of the applicable sovereign - in this case, Utah.

Not Economically Efficient

Moreover, the Supreme Court eschews any claim that punitive damages should provide "economically efficient deterrence of corporate misconduct" -- a concept Wilson claims as a given. According to State Farm, punitive damages are to provide both deterrence AND retribution. (Of course, the possibility of retribution in itself deters.) Never did the Court say that punitive damages need be, should be, or should attempt to be, economically efficient. Retribution is never economically efficient.

In fact, State Farm not only permits, but logically requires, juries to consider exactly the factors I stated juries consider: the wealth of the defendant and the likelihood of the harm being repeated. Clearly, the wealth of the defendant is important, as the deterrence value of the award varies depending on the wealth of the defendant. (The risk of a $100,000 punitive damages award may not deter Bill Gates one iota, while it may dramatically effect my conduct.) Moreover, because juries ARE to consider whether the conduct involved repeated actions, they must also determine whether the conduct is continuing. (If not, there is nothing left to deter, and retribution becomes the only determining factor. And again, the degree of retribution should be judged against that particular defendant; Gates would scoff at a $100,000 retribution award; I would probably cower before it.)

Wilson claims that economically efficient deterrence of misconduct is THE goal of punitive damages. The Supreme Court disagrees, in the case Wilson relies on. Seems rather like the end of the story on that one.

Comparisons with Criminal Cases

It appears that Wilson has no experience with criminal cases. Here, I am at an advantage: I do criminal and civil appeals. For example, he claims that we have elaborate safeguards to prevent criminal juries from imposing unjust sentences. In most states and in federal courts, juries do not impose sentences at all save in capital cases; in those in which juries routinely impose sentences, they are free to impose any sentence from the minimum to the statutory maximum.

Wilson bizarrely claims that criminal defendants have discovery rights greater than those that civil defendants have. Even more bizarrely, he claims that the exclusionary rule is a discovery right. First, the exclusionary rule is not about discovery at all; secondly, criminal defendants have very, very limited discovery rights and (in all but a very small number of states) no rights to conduct depositions, see witness statements before trial, no right to know exactly what theory the prosecution is going to trial on, etc. He gets the indictment, and little else.

Moreover, jury selection in criminal and civil cases proceed by the same rules. While the Sixth Amendment guarantees an "impartial jury" in criminal cases, and the Seventh guarantees only a "jury" in civil cases, this distinction has been erased through statute and court practice.

Excessive Litigation is a Myth

Wilson then claims that tort reform is about limiting frivolous lawsuits, not about capping damages in substantive suits. This is a frivolous defense of the tort reformers. Frivolous lawsuits are by definition losers; what Wilson is complaining about are substantive suits with small economic damages that he considers, in his words, "silly." Such suits cannot economically be litigated without the possibility of punitive and non-economic damages. And that is what the tort reformers want to eliminate.

What Wilson depends upon is a fictitious claim that there is some sort of "litigation lottery" going on. For that, consider the words of Prof. Nancy S. Marder, from her excellent article "Introduction to the Jury at a Crossroad: The American Experience," from the Chicago-Kent Law Review, Vol. 78, pg. 909 (2003):

"Although the McDonald's jury became emblematic in the press for much that was wrong with the civil jury system, this jury was not alone in receiving condemnation for its damage award. Numerous other cases in which the jury awarded damages that the press depicted as excessive contributed to this view of the civil jury as having gone awry. Indeed, if one were to read only newspaper accounts of civil jury trials, one would conclude that most juries award excessive damages, and that they do so because they sympathize with the plaintiffs at the expense of corporations. Coverage of cases involving tobacco, asbestos, and other types of product liability paint this picture. Yet, empirical studies indicate otherwise."

What? EMPIRICAL STUDIES INDICATE OTHERWISE? Public perception, as influenced by the sensation-seeking media, give a false impression of a litigation lottery? Exactly.

Perhaps Wilson should pay some close attention to these empirical studies (and perhaps should also read his own case, State Farm v. Campbell, less selectively). Juries are, perhaps more than any other actors in the American legal system, acting conscientiously and responsibly. This doesn't make good headline news. It is, however, backed up by close examination. It is the truth.


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