Thursday, January 7, 2010
An article in the Wall Street Journal -- Soldiers Fight in the Courts Over Liability in War Zones, by Dionne Searcey -- discusses recent and historic attempts by soldiers to bring suit against third parties over injuries suffered while on duty. Barred from suing the government, soldiers have instead sued manufacturers who might be responsible for toxic exposures or malfunctions in military equipment. Manufacturers have in turn responded by citing the military contractor defense, under which they are also given protection from liability if they manufactured according to government specifications.
It has always seemed to me that rather than litigate the many policy issues, the better approach would be to leave it to a clear contractual waiver of lawsuits by incoming soldiers. That way, the government could sort out the many policy concerns by itself and in negotiation with its outside contractors (who may reduce the price of products if covered by a lawsuit waiver), and then the government could instead provide extended health and disability benefits, with all parties saving legal fees. (Such is the reasoning for police and fireman who are generally denied lawsuit rights aginst third parties, but supposedly receive more generous health, life, and disability benefits.) Or the government may decide not to seek a contractual waiver for certain entities, and instead allow lawsuits. Whatever the result, the complicated policy issues are addressed by military experts (and agreed to ex ante by potential soldiers), rather than by far-removed courts. Instead, the courts are left to a more minimal and well-suited role in construing contractual waivers.
Tuesday, January 5, 2010
What were the most important developments in mass torts in the last decade?
Arguably the Agent Orange litigation represents the 1980's and Amchem represents the 1990's. So what case most typifies the first decade of the twenty-first century? I nominate the Vioxx MDL for the honor.
The Agent Orange litigation and particularly the settlement represents the rise of settlement class actions as a vehicle for resolving mass torts. The Amchem case (and maybe Ortiz too) represent a shift away from settlement through class actions. Vioxx represents the rise of innovative aggregate litigation procedures for resolving mass tort cases. It also represents the inherent contradiction in mass tort law -- the triumph of the individual proof rule in an area of the law where aggregation is the dominant method of resolution. One thing that has remained the same, however, is the importance (no, necessity) of excellent innovative judges (such as Judge Weinstein, the architect of the Agent Orange settlement and Judge Fallon, the architect of the Vioxx settlement) to orchestrate settlement.
But there is more. Agent Orange and Amchem are both about mass industrial and environmental harms. But for my money the developments that have been most interesting have been in the large pharma and medical device field. Is this because of the shift of our economy from the manufacturing to service sectors? It certainly is related to larger trends in the economy.
The old model (or analogy) of a quasi-administrative agency that Agent Orange represents will not be the approach going forward. I think the better analogy today is to insurance and risk spreading. Mass tort settlements are characterized by all the problems that insurance companies face: moral hazard (i.e. fraudulent claims or "if you build it they will come"), adverse selection (can you get the high value claims in the settlement so that it is really global?), and the actuarial valuation of claims (that is, using statistical or statistics-lite methods to determine compensation).
Notice that I don't mention the Katrina litigation or the 9-11 Compensation Fund. These do not seem to have had the impact that Vioxx has, but I am happy to hear arguments to the contrary.
I am writing about the issue of insurance as a model for thinking about mass settlements and thinking of putting together a conference about actuarial litigation. Interested readers should contact me directly. ADL