Monday, February 14, 2011
Each fall, I begin my Torts course with Fitch v. Valentine, a recent case in which a divided Mississippi Supreme Court narrowly granted a reprieve to the endangered “heartbalm tort” of alienation of affections. In making the arguments for and against resigning the tort to the ash heap of history, the various opinions in Fitch provide a nice introduction to the basic functions that we assign to tort law.
I use this post to share a more obscure but equally interesting artifact that also relates to the heartbalm torts, which include not only alienation of affections but also breach of promise, criminal conversation, and seduction. Back in 1935, in the first wave of anti-heartbalm fervor, the Association of the Bar of the City of New York prepared this report on the heartbalm torts. Download 1935 ABCNY Report As discussed below, the report offers a reminder that while the more recent push against the heartbalm causes of action has focused upon the supposedly archaic nature of these claims, the motives behind the initial anti-heartbalm movement were somewhat different.
The report, drafted by the ABCNY’s Committee on Law Reform, is just five pages long. The first page and a half is devoted to a turgid recitation of Roman and German law on claims for breach of promise to marry. The report hits its rhetorical stride only when it turns to the cause of action for alienation of affections. To the report’s drafters, these suits were, “as a general proposition, resorted to by unscrupulous men and women to extort money from defendants unwilling to go through a trial of the issues for fear of publicity,” and “the basis of the old so-called ‘badger game.’ ” (Seven decades later, the “badger game” would inspire the Clive Owen-Jennifer Aniston movie “Derailed.”)
The ABCNY report directs even stronger criticism toward claims for criminal conversation: “There would seem to be little support within the modern concepts of morality for the existence of such a cause of action. That either spouse should be entitled to receive a payment in money because of the other’s infidelity would seem to put the marriage relation on a plane so sordid as to be comparable almost to the White Slave Traffic.” The report also harrumphs, “It is inconceivable that either a man or a woman of finer sensibilities or having any right to claim adherence to the higher ideals of human conduct should ever resort to such a suit.”
These passages sound like they emanated from an institution saturated with white-shoe Wall Street attorneys, because they did. In their hour of need, the embattled heartbalm torts found few friends among the legal elite, who considered the prosecution of these claims incompatible with the image they sought to project for their profession. Bringing a heartbalm case seemed just one step above (or maybe even below) ambulance chasing. (Which, it might be added, the ABCNY also was campaigning against at around the same time.) John G. Jackson, the chairman of the ABCNY committee that produced the report, had helmed the American Bar Association’s Committee on Unauthorized Practice of the Law; he had experience policing the ethical boundaries of the profession. Perhaps Jackson perceived, in the prevailing anti-heartbalm mood of the time, an opportunity to pare back a somewhat squalid area of practice. And in any event, on balance the ABCNY was serving its clients’ interests by advocating reform; while very few Association members ever would bring a heartbalm lawsuit, a few more might expect to defend such a case.
In recommending the abolition or limitation of the heartbalm torts, the lawyers of the ABCNY found common cause with elites in other segments of society. Most notably, the small but growing cohort of female state legislators of the time sensed that heartbalm suits, which were typically but not exclusively brought by women, cast their gender in a passive light inconsistent with future gains in the statehouse. In the words of Indiana legislator Roberta West Nicholson, these representatives didn’t “want to see inferior women pull down our sex” by filing, and then prevailing upon, well-publicized heartbalm suits.
To conclude, the ABCNY report suggests that while the initial campaign against the heartbalm torts may have mostly been about gender, it was also about class. In joining forces against these causes of action, the ABCNY and legislators such as Nicholson were unlikely bedfellows. To each group, however, the heartbalm torts represented both a cause for concern—after all, outsiders might lump these elites together with the scoundrel (or merely hapless) plaintiffs and disreputable attorneys who were bringing these suits—and an opportunity to promote an aspirational agenda reflecting what their gender or profession should be, and could become.
--Kyle Graham, Assistant Professor of Law, Santa Clara Law
Friday, February 11, 2011
Kyle Graham is Assistant Professor of Law at Santa Clara Law. Prior to joining the Santa Clara Law faculty in 2009, he worked as deputy district attorney in Mono County, California. Other previous appointments include working as a staff attorney for Associate Justice Carlos Moreno of the California Supreme Court and working as an associate with the law firm of Gibson, Dunn & Crutcher LLP. He also served as a law clerk for the United States District Judge William Alsup. Professor Graham received his B.A. from Stanford and his J.D. from Yale. His most-recent publication is "Why Torts Die" in the Florida State University Law Review.
Professor Graham's timely Valentine's Day topic will be "The Heartbalm Torts and the Legal Elite, Circa 1935."
Monday, November 29, 2010
I have spent the better part of the last decade thinking and writing about federal preemption of state common law damages actions, particularly in the products liability context. I think that federal preemption provisions should be narrowly construed to preserve state tort law--I am an unapologetic fan of the tort system with all its supposed faults. I think that state common law tort doctrine, and the private litigation that stems from it, adds value to our society that is largely immeasurable. Congressional intent, the "touchstone" of preemption analysis according to the Supreme Court, should be crystal clear if it is to displace that law. A longstanding "presumption against preemption" operates as a tool of discerning congressional intent in default of such clarity, but the Supreme Court wavers in its adherence to the presumption and, consequently, it is under attack.
The Supreme Court is poised to answer another preemption case this term in Bruesewitz v. Wyeth involving preemption under the National Childhood Vaccine Injury Act (Vaccine Act). The Vaccine Act contains an express preemption provision which the Court will have to interpret and the application of the presumption against preemption, in both express and implied preemption, will be in issue. Unlike most congressional legislation which affects products liability, the Vaccine Act created a compensation system for children who are injured by the unavoidable side effects of a vaccine. The legislation was the product of a substantial outcry by vaccine manufacturers in the mid-1980s about the effect of tort litigation on the vaccine supply—manufacturers would stop producing vaccines if Congress didn’t do something. So Congress did. Over twenty years later, the Court must determine in Bruesewitz what Congress meant when it said that state tort law was preempted if a vaccine’s side effects were “unavoidable.” For those of you familiar with the Restatement (2d) of Torts § 402A on strict products liability, this language comes from comment k on liability for unavoidable risks.
In 1991, the Supreme Court began in earnest to address preemption in product liability claims and has decided over a dozen such cases using a confusing array of analyses with results that are sometimes difficult to reconcile. Bruesewitz is one of two products liability preemption cases the Court has agreed to hear this term. The other involves preemption of product liability claims under the National Traffic and Motor Vehicle Safety Act of 1966. In Williamson v. Mazda Motor of America Inc., the Court must determine whether the Motor Vehicle Safety Act impliedly preempts a claim based on the design of rear seat belt systems. This case will build on Geier v. American Honda Motor Corp., decided in 2000, in which the Court found implied conflict preemption based on the federal seat belt standard in a case involving the failure to incorporate air bags into the vehicle's design. Geier found the plainitiff's claim preempted even though the legislation contains a savings clause that purports to save common law damages actions. There is obviously much more to these cases but delving into preemption in detail is not my major goal.
While exploring the Vaccine Act and the preemption issue raised by Bruesewitz (because I never want to miss an opportunity to write something about preemption), I happened to receive an e-mail from our Torts colleague (and my former professor) Dean David Logan from Roger Williams University School of Law forwarding the following New York Times article by Binyamin Applebaum that I had not seen: http://www.nytimes.com/2010/11/15/business/15lawsuit.html?_r=1&nl=todaysheadlines&emc=a2. This article reports on the increase in private financing of tort litigation. I was startled by it. The Times article reports that “Large banks, hedge funds and private investors hungry for new and lucrative opportunities are bankrolling other people’s lawsuits, pumping hundreds of millions of dollars into medical malpractice claims, divorce battles and class actions against corporations — all in the hope of sharing in the potential winnings.” I suppose that I should not have been surprised that private investors might be interested in the results of private litigation—law firms have to go somewhere for the funds to finance such litigation.
In the way that law professors do, I began to think about the intersection of my research into the Vaccine Act preemption issue, and my newfound knowledge of the abundance of private investment in tort litigation. The increase in preemption arguments since the early 1990s surely resulted in part from product manufacturers and other litigation targets trying to get out from under the “weight,” perceived or real, of large-scale tort litigation. The occasional tort claim in the face of federal regulation never seemed to generate much preemption interest until truly large-scale tort litigation became the norm after the explosion in asbestos cases in the 1980s and 1990s. Traditional analysis of the preemptive scope of most federal regulation had not resulted in findings of preemption until then; indeed, very few such arguments had been made.
Fast forward to 2010. Large-scale tort litigation is the norm. And every case in which there is a federal regulation presents an opportunity for defendants to pose preemption arguments. The presumption against preemption assumes that state common law tort doctrine operates as an important counterpoint to federal regulation. What else informs the presumption? Must we explore the way in which state common law damages actions proceed--with an understanding of the monetary influences and the pressure to settle--as part of the analysis? Common law tort claims survive federal preemption efforts depending on an assessment of congressional intent but does that assessment require an understanding of the modern way that those claims come to exist and are resolved? I had not included the litigation process into my own analysis but that may have been naive. I wonder whether the value of tort law as I have always believed in it is being thwarted by those who champion it just as it is by those who would displace it with the work of federal regulators. The use of class actions and other aggregate litigation directed toward settlement was largely unknown to the Congresses writing legislation which is now the subject of preemption analysis. The Vaccine Act was written explicitly against the background of a concern for large-scale litigation and yet Congress still explicitly preserved some state common law claims. That awareness may be critical to deciding the scope of the Vaccine Act's preemption provision. In hindsight, that seems a remarkable step.
I have often criticized product manufacturers who cry that “the sky is falling” because of the flood of alleged unmeritorious litigation that they face. Private financing of litigation does not render litigation unmeritorious; on the contrary, it may suggest the opposite. But as we end another semester of teaching torts to One-Ls, my belief in the importance of a robust state tort law unimpeded by an aggressive use of preemption, and my concern over the influence of private investment of large-scale tort litigation have collided in a way that makes me ponder how I will reconcile the conflict for my Torts students of the future. What will I tell my students next year when they ask me what the purpose of tort law is in the 21st century with the mass of federal regulation controlling conduct of product manufacturers and others, and the pressure on lawyers to provide a return on investment to the financiers of private litigation. I would be interested to hear your answers.
--Mary J. Davis, Associate Dean for Administration and Faculty Development and the Stites and Harbison Professor of Law, University of Kentucky College of Law
Thursday, November 25, 2010
Mary J. Davis is the Associate Dean for Administration and Faculty Development and the Stites and Harbison Professor of Law at the University of Kentucky College of Law. She joined the faculty in 1991 after six years of a litigation defense practice, predominantly in products liability, for the law firms of Womble, Carlyle, Sandridge & Rice in Winston-Salem, North Carolina and McGuire, Woods, Battle, & Boothe in Richmond, Virginia.
She has been a visiting professor of law at the University of Texas School of Law, Boston College Law School, William and Mary College of Law and Wake Forest University School of Law. She is co-author of the textbook Products Liability and Safety: Cases and Materials(5th ed. 2008) (including the annual case supplement and Teacher's Manual). She is also a co-author of a multi-volume products liability treatise, Owen, Madden and Davis on Products Liability. Her articles have appeared in such journals as the Boston College Law Review, the University of Pittsburgh Law Review, the Wake Forest Law Review, and the Tennessee Law Review.
Professor Davis is routinely quoted in the national press on subjects of products liability and mass tort litigation. She is a 1985 magna cum laude graduate of the Wake Forest School of Law, where she served as Managing Editor of the Law Review, and a 1979 cum laude graduate of the University of Virginia. She is also a member of the American Law Institute since 2001 where she serves on the Members Consultative Groups for the Restatement (Third) of Torts and Aggregate Litigation Projects.
Monday, November 8, 2010
By dividing the legal world into public and private, the law school curriculum tends to neglect topics that straddle the two areas. Consider, in particular, “constitutional tort.” In a better world, the quotation marks would not be necessary, as everyone would know that constitutional torts are suits brought under 42 U.S.C. § 1983 or the federal common law cause of action recognized in Bivens v. Six Unknown Named Federal Agents, in which plaintiffs seek damages for constitutional violations committed in the past. At the risk of overstating the point, my sense is that, fifty years after the Monroe v. Pape first read § 1983 as making these suits broadly available, many scholars on both sides of the public-private divide stick to their side of the public-private divide and think of constitutional tort as an odd hybrid, when they think about it at all.
Modern tort law, or at least the part of it that most interests law professors, is primarily concerned with products liability, mass torts, and other events and practices that may give rise to big losses. The pressing issue always seems to be which of two private entities should bear that loss, and with what social goal in mind should liability be imposed. Torts casebooks reflect this emphasis and rarely contain any materials on constitutional tort. (I do not mean to suggest that they should do so.) Constitutional scholarship and constitutional law survey courses deal mainly with issues of separation of powers, judicial review, and the general restrictions imposed on the state by the First and Fourteenth Amendments. As a result, neither constitutional scholars nor torts experts pay much attention to constitutional torts, and students learn little about § 1983 litigation for damages unless they take a specialized upper-level course. The whole area is left to a few obscure academics (me included) who have an interest in both public and private law. Yet this kind of litigation is ubiquitous in the federal courts. Beginning with Monroe, a 1961 case, its rise can be attributed in part to the growth of the regulatory state over the past fifty years, in part to the continuing elaboration of constitutional principles first articulated in the 1960s and 1970s, and in part to the Civil Rights Attorney’s Fee Awards Act of 1976. Public employees sue for mistreatment or dismissal in violation of their rights of free speech or due process, arrestees charge excessive force or illegal searches by the police, inmates claim abuse or neglect by guards, and so on. Despite the practical importance of the constitutional law applied in these cases, constitutional law scholarship and casebooks pay little attention to it. More to the present point, torts scholars have ignored it as well.
Opportunities abound to bring the insights of tort theory to bear on the distinctive problems of constitutional tort law. When the constitutional claim involves the Fourth Amendment, for example, “reasonableness” is often the liability rule. Thus, police officers may be liable for excessive force but not for reasonable force in the circumstances. Just as in common law negligence, questions arise as to whether the judge or the jury should evaluate the officer’s conduct. While there are strong arguments for giving the jury a prominent role, it may be inappropriate simply to transplant common law judge-jury principles into constitutional tort. The problem is that case-by-case adjudication leaves the legal principle somewhat uncertain. This in turn gives rise to a defense of official immunity, which is available to police officers who commit constitutional violations unless they have violated “clearly established law.” A recent article addresses the issue. Another set of judge-jury issues come up in litigation over the free speech rights of public employees. Tort scholars interested in the general division of authority between judge and jury may find it interesting to consider whether and how the analysis of these issues should differ in the constitutional tort context. Cause-in-fact, proximate cause, and affirmative duty issues also deserve attention from scholars with a strong background in tort law.
Besides these discrete areas of doctrine, the whole array of normative issues bearing on the aims of tort law are present in constitutional tort, and should be examined in light of the distinctive features of litigation seeking retrospective relief for constitutional violations. One of these is interplay between the immunity doctrine and the “incentives” goal of tort liability. According to the Supreme Court, the aims of constitutional tort include vindicating constitutional rights and deterring constitutional violations, but those aims must be compromised in view of the need to avoid unduly deterring officers from acting boldly in the public interest. The official immunity defense attempts to achieve a balance between effective enforcement and too much enforcement. But immunity makes deterrence far harder to achieve in constitutional tort law, simply because it countenances some number of constitutional violations. A tort theorist might ask whether the current doctrine achieves the optimum balance. One problem is that Harlow v. Fitzgerald defines immunity in objective terms, thereby allowing some officers to escape liability even though they act in bad faith. In other instances, there is no effort at all to deter. Officers engaging in judicial, prosecutorial, or legislative functions enjoy absolute immunity. In addition, one can question the whole project of trying to deter misconduct by government through liability rules, given that governments can foist off the costs of their actions on taxpayers and may respond more to political pressures than to damage awards. Daryl Levinson briefly discusses this and other deterrence-related problems here (see pages 367-73). Torts theorists who favor viewing the liability rules as a means of encouraging proper behavior may find it worthwhile to ask whether and how their approach could be adapted to the constitutional tort context.
An alternative to official liability, advanced by Peter Schuck almost thirty years ago, is to accept the need for official immunity, and instead borrow from enterprise liability theory (see pages 100-21). In this view governments would be liable for the constitutional torts committed by officers in the course of their duties, just as enterprise liability holds firms liable for injuries generated by their business. While enterprise liability aspires to deter, by giving the enterprise incentives to control its workers, its hallmark is assuring the compensation of victims. Schuck’s thesis underlies a vast literature that criticizes the Supreme Court’s ruling in Monell v. Department of Social Services, which rejected respondeat superior liability on the part of municipal governments for their employees’ constitutional violations. From the perspective of tort theory, one might concede the case for enterprise liability in ordinary tort law and at the same time question its application to constitutional torts. Arguably, the problem is that the analogy between the two areas is flawed. Enterprise liability starts from the premise that out-of-pocket losses ought to be spread as widely as possible, in order to minimize the harm caused by accidents. If the reported cases are a reliable guide, constitutional torts do not typically produce large out-of-pocket losses. For the most part the injury produced by a constitutional violation is intangible and cannot be spread around, any more than emotional distress can be spread by liability for common law torts. I merely want to raise the issue and suggest that tort theorists could contribute to its resolution. Perhaps I am wrong in doubting the enterprise liability approach, and in any event I am sure that more empirical work needs to be done on this and many other constitutional tort topics.
John Goldberg and Benjamin Zipursky’s civil recourse theory seems to me to be a more promising set of norms for constitutional tort. Professor Robinette may well be right to question the descriptive claims of civil recourse theory. I share Professor Jane Stapleton’s view that civil recourse may be more effective as a normative theory than as an account of the nature of tort law. Constitutional torts may be an especially attractive area for elaborating civil recourse norms, since constitutional violations or some subset of them would clearly qualify as “wrongs” for which recourse should be available. One of the issues that deserves attention is whether the preceding sentence should say “some” or “all.” Another concerns damages. Civil recourse favors “damages as redress” over “damages as indemnification.” Whatever may be the better model for ordinary tort, redress seems a more appropriate goal than indemnification in constitutional tort, on account of the intangible nature of many constitutional injuries. In short, civil recourse provides plenty of resources for torts scholars interested in contributing to the development of constitutional tort.
--Mike Wells, Marion and W. Colquitt Carter Chair in Tort and Insurance Law, Georgia School of Law
Thursday, November 4, 2010
Michael L. Wells is the Marion and W. Colquitt Carter Chair in Tort and Insurance Law at the University of Georgia School of Law. His recent scholarship includes a new edition of Constitutional Torts (with professors Tom Eaton and Sheldon Nahmod) and Constitutional Remedies (with Professor Eaton). He has also published numerous articles in such leading journals as the Cornell Law Review, Duke Law Journal, Virginia Law Review, Georgia Law Review, William & Mary Law Review, Constitutional Commentary and Yale Journal of International Law.
Select recent articles include: "A Common Lawyer's Perspective on the European Perspective on Punitive Damages" in the Louisiana Law Review (2010), "State-Created Property and Due Process of Law" in the Georgia Law Review (2009) (with Alice Snedeker), "Scott v. Harris and the Role of the Jury in Constitutional Litigation" in Review of the Law (2009), "International Norms in Constitutional Law" in the Georgia Journal of International and Comparative Law (2004) and "Proximate Cause and the American Law Institute: The False Choice Between the 'Direct Consequences' Test and the 'Risk Standard'" in the University of Richmond Law Review (2003).
Wells is fluent in French and has served as a visiting professor at the University of Lyon (III) in Lyon, France, on six occasions and as a professor in the Duke-Geneva Institute in Transactional Law. He is a member of the American Law Institute.
Wells earned his bachelor's and law degree from the University of Virginia, where he served as articles editor for the Virginia Law Review. He clerked for Judge John D. Butzner Jr. of the U.S. Court of Appeals for the 4th Circuit and practiced with the law firm of Covington & Burling in Washington, D.C., for two years before joining the law faculty at the University of Georgia. He has also served as a visiting professor at the College of William & Mary and Boston University, and has been a visiting scholar at the University of Aix-Marseille in Aix-en-Provence, France.
Monday, November 1, 2010
There is widespread acceptance of the idea that tort law and insurance are intimately related. The growth of liability insurance permitted the expansion of tort liability through the twentieth century, and the expansion of tort law in turn spurred the further development of liability insurance. The compensation objective of tort would not be served without the presence of insurance. First-party insurance obviates the need for tort in some circumstances and, through the collateral source rule, effectively funds contingent fees in other circumstances. And so on.
All of these ideas are based on the assumption that insurance works—that companies assess risks, insureds purchase policies against those risks, and the companies pay claims that are within coverage. Unfortunately, the facts about insurance are increasingly at odds with this assumption. Most companies pay out most claims most of the time, of course. But more and more, insurance companies deny valid claims in whole or part and force policyholders and tort victims to litigation to obtain the benefits to which they are entitled.
The economics of insurance creates this potential for opportunism. Every dollar a company does not pay out in claims is a dollar it keeps in profit. Outright denials, reduction of the amounts paid, and using litigation to diminish and deter claims potentially provides a greater benefit to a company than it loses in disappointed customers and a negative reputational effect.
Insurance companies have always been subject to these temptations. Since the early 1990s, however, the strategy has become more systematic and institutionalized across auto, homeowners, and disability insurance and extended even to commercial lines. Three factors led to the change.
First, there were a series of external shocks that put insurance companies under financial pressure. An extended soft underwriting market forced companies to continually cut premiums to attract customers. Medical costs, a principal part of the payouts of auto insurance companies, rose dramatically. Mother Nature intervened and made things worse as hurricanes, earthquakes, and wildfires imposed losses for which companies had inadequately reserved.
Second, attitudes changed. As elsewhere in American finance, a mania for growth and profits took hold. Many companies shifted from mutual to stock ownership to tap the capital markets as a source of growth. Allstate, newly demutualized, embarked on an extreme strategy of reducing underwriting standards and expanding its base of agents to increase its market share, and as it spun off from its lifelong association with Sears, shareholder value became primary. GEICO began spending half a billion dollars annually on advertising to attract customers, triggering a price war fought with premium and advertising dollars.
Third, a change agent entered the picture. Allstate and other companies hired the mega-consulting firm McKinsey & Company to redesign their claim strategies. At Allstate, McKinsey defined claims as a “zero-sum game,” with the policyholder and the company competing for the same dollars. Its goal was “to redefine the game . . . to . . . radically alter our whole approach to the business of claims.” Computer systems would be put in place to set the amounts policyholders would be offered, claimants would be deterred from hiring lawyers, adjusters would be rewarded for underpaying claims, and settlements would be offered on a take-it-or-litigate basis.
As a consequence, the claims department has become a profit center rather than solely the place that honors the company’s promise to pay what it owes, no more but no less. The results have been dramatic: For the property/casualty industry as a whole, the pure loss ratio—the amount paid in claims—has declined sharply; the industry pays out about a nickel less for every premium dollar compared to ten years ago and a dime less compared to twenty years ago.
The new reality of the insurance industry poses a number of challenges for the tort system. Most obviously, tort law’s compensation goal is undermined if compensation through insurance is less readily available. Beyond that, other perverse effects are possible.
For example, there may be both more litigation and less litigation.
If insurance companies are less willing to pay under liability policies at the full value of claims and more willing to contest claims through litigation, fewer claims will be settled and more brought to court. If they are less willing to honor first-party claims, insureds who are the victims of torts and might otherwise be satisfied with the benefits of their own insurance coverage may sue their injurer. And there will be more litigation about the claims practices themselves, under the rubric of bad faith.
At the same time, there may be less litigation, and less litigation in ways that challenges some of our conventional ideas about tort. One type of claim singled out by insurers and their management consultants is the minor auto accident producing soft tissue injuries, the so-called MIST case (Minor Impact, Soft Tissue). Companies over-invest in the defense of individual MIST claims in order to deter future claims, in part by changing the economics of law practice to make unprofitable the pursuit of such claims on a contingent fee. The argument is often made that the tort system tends to overcompensate small injuries and undercompensate large injuries. As MIST claims are singled out, at least half of the argument is undercut; victims of such accidents are often undercompensated.
These challenges may require some rethinking by tort scholars. Even more important is the threat posed to insurance as an institution. Insurance is the great protector of the standard of living of the American middle class. Illness, injury, and death will occur, and insurance can ease the financial burden of loss, but only when it works.
--Jay Feinman, Distinguished Professor of Law, Rutgers-Camden
Thursday, October 28, 2010
Feinman is a well-known expert on contract law, tort law, insurance law, and legal education. His many publications include Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It (Portfolio/Penguin 2010); Un-Making Law: The Conservative Campaign to Roll Back the Common Law (Beacon Press, 2004; paperback 2005); Law 101: Everything You Need to Know About the American Legal System (Oxford University Press, 2000; 2nd ed. 2006; 3rd ed. 2010) (also published in English edition in China and in translation in Spanish, Arabic, Japanese, Dari, Pashtu, Urdu, and Bulgarian); 1001 Legal Words You Need to Know (Oxford University Press, 2003; paperback 2005) (also published in Chinese-English edition); Professional Liability to Third Parties (American Bar Association, 2000; 2nd ed. 2007); Economic Negligence (Little, Brown, 1995); and more than fifty scholarly articles. His scholarly work has been widely cited in the academic literature and by courts, including the United States Supreme Court.
Among his professional activities, Feinman is an elected member of The American Law Institute and a member of the Board of Legal Scholars of the Academy of Trial Advocacy. He has served as Chair of the Association of American Law Schools Section on Contracts and Section on Teaching Methods. At Rutgers, he has served as Associate Dean and Acting Dean of the law school. He is a member of the New Jersey bar.
Feinman has received every teaching prize awarded at Rutgers, including the Lindback Foundation Award for Distinguished Teaching (2005), the Warren I. Susman Award for Excellence in Teaching (2004), and the Provost’s Award for Teaching Excellence (1999).
Feinman received his B.A. degree summa cum laude from American University and his J.D. degree cum laude from the University of Chicago, where he was a member of the Order of the Coif and Comment Editor of the University of Chicago Law Review.
Monday, October 25, 2010
Today's guest blogger is James R. Hackney, Jr., Professor of Law and Faculty Director of Research at Northeastern University School of Law.
Risk Management, Torts and Corporate Finance
My guess it that I am one of the few American law professors who teach both torts and corporate finance. This coincidence has as much to say about my educational and professional background as it does the about the curriculum needs of my institution. At first blush, one might assume that the two fields could not be further apart. However, there is one very important unifying characteristic—both are concerned with risk management. Of course, torts scholarship and doctrine focus on how we should distribute the economic consequences of accident risks, and by extension what constitutes an ideal level of risk (and accidents). In corporate finance, risk is a central concept in theories dealing with diversification, asset valuation, the efficiency of markets, and the valuation of derivatives (options). The other commonality between corporate finance and torts is that they both rely on science (or the practical application of scientific techniques) in the effort to manage risk. Two recent events, the Gulf oil spill and the financial crisis, illustrate the conjunction between risk management and science in both the tort and corporate finance arenas. They also illustrate the dangers in placing too much belief in the science or methods of risk management.
The Gulf oil crisis was an environmental catastrophe of monumental proportions. One of the interesting features of the crisis is that it illustrated the failure of a major institution, British Petroleum (“BP”), to adequately account for the risks of its activities. It also highlighted that government regulators had obviously failed at the risk calculus as well. The science of cost/benefit analysis (Learned Hand) is appropriately called into question. Of course, this is a reoccurring theme—the actual catastrophic event causes us to either second guess our risk calculus or want to do away with risk calculus all together. Guido Calabresi aptly described this phenomenon in Tragic Choices.
Similar to our belief that cost/benefit analysis will adequately manage risks in the torts arena, there was a belief that the science of corporate finance could manage risks in the financial arena. The financial sector was allowed to produce a plethora of exotic financial products over the last few decades that were designed to manage or minimize risk. Collateralized debt obligations are bundles of risky assets (most notably, in relationship to the most recent crisis, real estate mortgages). The science of diversification, as articulated by the Nobel Prize winning economist Harry Markowitz, would suggest that holding this diverse bundle of assets would minimize the risk. (Of course, the science of diversification also includes the caveat that systematic risk, such as the wholesale collapse of the real estate market, cannot be diversified away.) In addition, players in the market, such as Goldman Sachs, further hedged their bets (or simply just bet) regarding real estate through the purchase of credit default swaps (CDSs). The CDS phenomenon is a perfect example of the strategy of hedging (via derivatives) in action. Just as the science of cost/benefit analysis failed us in avoiding the Gulf disaster, theories of diversification and hedging deployed in the praxis of finance failed us in the lead up to the financial crisis. This is nothing new. Asset bubbles have been a consistent phenomenon in recent decades, and indeed throughout human history.
A big part of the cultural malaise that we associate both with the Gulf disaster and the financial crisis (apart from the natural and economic consequences) is that once the events occurred and there was an obvious need to clean up the mess, the science and technologies that BP, Wall Street, and the government chose to deploy again seemed woefully inept. The repeated attempts by our most brilliant scientists and engineers to “cap” the spill to no avail seemed to deflate the nation. Our continued inability to stem the tide of foreclosures and unemployment continue to frustrate the body politic. The science of macroeconomic policy, even in the hands of an expert on the Great Depression, Federal Reserve Chairman Benjamin Bernanke, is obviously coming up short or not working quickly enough to satisfy our quick thirst for results. (Of course, in both the BP and economic crisis contexts any critique of the expertise deployed must be limited to those actually relied upon to render advice. As in most situations, there were those within the scientific community whose voices may not have been heeded.) It is difficult to measure the long-term effects the Gulf and financial crises will have on our society. My hunch is that it will make us a bit more skeptical regarding our capacity to manage risks and rely on private actors (as well as the government) to do so. It may also make us less sanguine with regard to the scope and application of science.
- James R. Hackney, Jr.
Professor of Law
Northeastern University School of Law
Saturday, October 23, 2010
Monday's Guest Blogger is James R. Hackney, Jr., Professor of Law and Faculty Director of Research at Northeastern University School of Law, where he teaches in the areas of torts, corporate finance, corporations, critical race theory, and law and economics.
Professor Hackney’s research focuses on intellectual history, torts, the mutual fund industry, law and economics, and critical race theory. He is the author of the acclaimed book, Under Cover of Science: American Legal-Economic Theory and the Quest for Objectivity (Duke University Press, 2007). Selected publications include Book Review, “On Markets and Regulation: Richard Posner’s Conservative Pragmatist Evolution” (reviewing Richard Posner’s A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression), 3 Law and Financial Markets Review 539 (2009); “Duties of Fund Directors Under State Law,” Fund Governance: Legal Duties of Investment Company Directors. Robertson, ed. Law Journal Press, 2005; “Ideological Conflict, African American Reparations, Tort Causation and the Case for Social Welfare Transformation,” 84 Boston University Law Review 1193 (2004); “Law and Neoclassical Economics Theory: A Critical History of the Distribution/Efficiency Debate,” 32 Journal of Socio-Economics 361 (2003); “Law and Neoclassical Economics: Science, Politics and the Reconfiguration of American Tort Law Theory,” 15 Law and History Review 275 (1997); “The Intellectual Origins of American Strict Products Liability: A Case Study in American Pragmatic Instrumentalism,” 39 American Journal of Legal History 443 (1995); and “A Proposal for State Funding of Municipal Tort Liability,” 98 Yale Law Journal 389 (1988).
In 1997-98, Professor Hackney was a Visiting Professor of Law and John M. Olin Fellow at the University of Southern California. He also has taught as a Visiting Professor at Boston University School of Law and Harvard Law School. Professor Hackney has served on the Executive Committee for the AALS Torts & Compensation Systems Section, and was Co-Chair of the AALS Socio-Economics Section. In 2003 & 2005, he was named Teacher of the Year. Prior to joining the Northeastern faculty, Professor Hackney was an associate with the Los Angeles law firm of Irell & Manella.
Monday, October 11, 2010
Today's guest blogger is Lester Brickman, Professor of Law and former Acting Dean at at the Benjamin N. Cardozo School of Law.
YES, VIRGINIA, THERE IS A LITIGATION EXPLOSION
The dispute over the growth of tort liability and whether this has resulted in a “litigation explosion” transcends mere statistical jousting. Invariably, those who conclude that there has been explosive growth in tort litigation support reforms to roll back excessive tort liability expansion. Conversely, those who reject the explosive growth thesis also reject tort reforms as unnecessary and unwise. In the tort reform wars, the battle over whether there has been a substantial increase in the scope of tort liability and resulting “explosion” in litigation, as measured by the volume of tort litigation, looms large. The accepted wisdom, of course, is that the claim of a “litigation explosion” is pure bunk. Not so fast.
The litigation explosion deniers mostly rely on empirical data on the numbers of tort lawsuits filed, collected by the National Center for State Courts or found in annual reports issued by the federal judiciary, as well as studies by the RAND Institute of Civil Justice. Based solely on this published data, I concur that there is no factual basis for a litigation explosion. But the published data suffers from many critical infirmities which I describe in my forthcoming book, Lawyer Barons: What Their Contingency Fees Really Cost America (Cambridge Univ. Press, Jan. 2011).
Furthermore, the tort filing statistics measure ignores increases in tort claim valuation and the total amounts of wealth transferred through the tort system, and as a result, does not a provide a meaningful account of what is occurring in the tort system. Consider, for example, the experience of New York City. While the number of tort claims filed against the city grew by 50 percent between 1984 and 1994, the dollar value of the settlements and judgments in the same time period increased by over twice that amount, from an average of $14,386 per claim to $29,894, up 108 percent. Even when the aggregate number of tort claims filed against the city dropped by 18.5% between 1995 and 2004, the dollar amount of settlements and judgments increased by 122%, from $241.5 million to $536.8 million.
These inadequacies pale when compared to the most glaring defect in case filing statistics: the omission of millions of tort claims that have resulted in tens of billions of dollars in wealth transfers. Relying on case filings as a measure of what is going on to the tort system is like relying on U.S. census data, which omits California, New York and Texas, to measure the nation’s population growth.
There are somewhere between 15,000,000 and 20,000,000 civil cases filed annually in state courts, including divorce, property, contracts, torts, and landlord-tenant cases. An estimated 1,000,000 to 1,500,000 of these civil suits are tort cases. In addition, there are approximately 50,000 to 70,000 tort filings a year in federal courts. However, the actual number of plaintiffs who become claimants in state and federal courts is actually far higher than these numbers suggest. Here is why: Each time a lawyer files a tort case, he pays a filing fee to the court. In mass tort litigations -- such as asbestos -- tort lawyers came up with a clever ruse, which both saved money and materially increased the pressure on defendants to settle tens of thousands of mostly bogus claims. In states such as Texas, Mississippi, West Virginia, and Illinois, lawyers filed complaints against dozens, if not hundreds, of asbestos defendants on behalf of a single plaintiff, let’s say John Smith. They then added ten to fifty additional plaintiffs to the case. However, the title of the case remained John Smith vs. [one hundred defendants listed by name], so the lawyer paid one filing fee. For purposes of counting the number of case filings, John Smith and fifty other plaintiffs vs. one hundred defendants -- which added up to over 5,000 claims -- counted as one filing! As many as 100,000 asbestos plaintiffs who filed suit against scores of defendants totaling millions of claims were thus omitted from case filing statistics.
A similar process occurred when asbestos and other mass tort cases were consolidated in state courts. Here too, lawyers saved money on filing fees by listing only a handful of plaintiffs in a consolidated case and paying their filing fees, even when there were actually thousands of plaintiffs.
Another source of vastly undercounting civil case filings is the virtual omission of class actions and the substantial omission of bankruptcy trust claims filings. These constitute an enormous and growing number of claims, generating billions of dollars in wealth transferred through the tort system and hundreds of millions dollars in contingency fees for lawyers.
Class actions include millions of claimants who become eligible for billions of dollars of compensation annually but who are virtually all invisible when it comes to counting tort case filings. Class action lawyers pay filing fees only for each of the named plaintiffs. Since the number of civil cases filed is determined on the basis of the number of filing fees paid, the putative class action counts for statistical purposes as one or perhaps two or three civil actions. This accounting is unchanged by the fact of certification of a class. In addition, some states do not count a civil action as filed until a jury or first witness is sworn at the commencement of a trial -- events that rarely occur in class actions.
While some class action settlements incorporate thousands of individual claims filed in courts, other class action settlements include claims that are filed after a settlement has been reached and a trust or other mechanism has been created for payment of the settlement funds. For example, when the silicone breast implant litigation settlement was reached, approximately 440,000 women filed claims to be paid out of the settlement. The vast majority of these claimants were recruited by lawyers after the settlement was reached and had not previously filed suit in a court. Accordingly, these hundreds of thousands of claims were not counted in case filing compilations.
Another area of large-scale undercounting involves trusts or similar mechanisms for the payment of claims, which are created in the course of certain bankruptcy proceedings. Assets are transferred from the debtor in bankruptcy to the trust for the payment of current and, in the case of latent injuries, future tort claimants. While many of those filing claims with the trust have previously filed tort actions in federal or state court, filing a tort action in a court is typically not a prerequisite for filing a claim with the trust. As many as hundreds of thousands of asbestos claimants, mostly generated by litigation screenings, who presented claims to the trusts and received and continue to receive, in the aggregate, billions of dollars of compensation, may never have brought suit in a court and are, therefore, not counted in tort claim filing data.
If joined cases, consolidated cases, class actions, mass tort settlements, and bankruptcy trust filings were included in tort claims filing data -- as they properly should be -- then there has indeed been a “litigation explosion.” Nonetheless, as I discuss in Lawyer Barons, the fact that there has been a litigation explosion does not, in and of itself, mean that there is an excess of litigation that imposes social costs that far exceed benefits.
Whether that is the case is the issue I tackle in my book. Contrary to a broad academic consensus, I argue that the financial incentives for lawyers to litigate in many instances have become so inordinately high that they perversely impact our civil justice system and impose other substantial costs. But that is a subject for another day.
- Lester Brickman
Professor of Law
Benjamin N. Cardozo School of Law
Thursday, October 7, 2010
Monday’s Guest Blogger is Lester Brickman, Professor of Law and former Acting Dean at the Benjamin N. Cardozo School of Law, where he teaches contracts and legal ethics. He has written extensively on legal ethics and his writings have been widely cited in treatises, casebooks, scholarly journals and judicial opinions. Among his areas of specialty are contingency fees and their effect on the tort system, mass tort litigation, asbestos litigation, regulation of attorney fees in the tobacco litigations, fee arbitration, and class actions.
Professor Brickman is publishing a book on contingency fees due out in January 2011: Lawyer Barons: What Their Contingency Fees Really Cost America (Cambridge Univ. Press). The book is a broad and deep inquiry into how contingency fees distort our civil justice system, influence our political system and endanger democratic government. While the public senses that lawyers manipulate the civil justice system to serve their own ends, few are aware of the high costs that come with contingency fees. This book, which distills 20 years of Professor Brickman’s research, sets out to change that, providing a window into the seamy underworld of contingency fees that the bar and the courts not only tolerate but even protect and nurture. Contrary to a broad academic consensus, the book argues that the financial incentives for lawyers to litigate are so inordinately high that they perversely impact our civil justice system and impose other unconscionable costs. It thus presents the intellectual architecture that underpins all tort reform efforts.
Professor Brickman also has written extensively on asbestos litigation. His articles and testimony before the Senate Judiciary Committee and a subcommittee of the House Judiciary Committee have been influential in directing attention to critical asbestos litigation abuses. He has been acknowledged by four federal courts as an expert on the history of asbestos litigation, asbestos bankruptcy trusts and the effect of tort reform on future asbestos claim generation. In early 2005, President George W. Bush introduced Professor Brickman to an audience in McComb County, Michigan, as an expert on asbestos litigation issues and asked Professor Brickman to explain the need for a legislative solution for asbestos litigation abuses.
Professor Brickman has been widely quoted in the press on lawyer fee issues as well as on tort reform issues. He has testified before Congress on the delivery of legal services, asbestos litigation, contingency fee abuses generally and in tobacco litigation and on the constitutionality of congressional regulation of fees in tobacco litigation. He has served on the professional responsibility committees of the New York State and City bar associations and on the Professional and Judicial Ethics committee of the Association of the Bar of the City of New York. Professor Brickman is a graduate of Carnegie-Mellon University, the University of Florida Law School and has a Masters in Law degree from the Yale Law School.
Monday, October 4, 2010
Guest Blogger Catherine Sharkey on "The Politics of Preemption: NHTSA, State Tort Law & Automobile Safety"
Today's guest blogger is Catherine M. Sharkey, Professor of Law at New York University School of Law.
The Politics of Preemption: NHTSA, State Tort Law & Automobile Safety
Today, the first Monday in October, marks the beginning of the U.S. Supreme Court 2010 Term. This Term, the Court, after a year’s hiatus, is getting back into the game of federal preemption.
In Williamson v. Mazda Motor of America, Inc., all eyes should be on Justice Stephen Breyer. Williamson is revisiting the scope of implied conflict preemption under the National Traffic and Motor Vehicle Safety Act of 1966 [Safety Act] as announced in 2000 by Justice Breyer in Geier v. American Honda Motor Co. The plaintiff in Geier, injured in an automobile accident, alleged that Honda negligently and defectively designed her vehicle because it was not equipped with airbags in addition to seatbelts. The defendant, Honda, complied with Federal Motor Vehicle Safety Standard [FMVSS] 208 promulgated by the National Highway Traffic Safety Administration [NHTSA] that gave automobile manufacturers a range of choices among different passive restraint devices.
NHTSA argued in an amicus brief before the U.S. Supreme Court in Geier that allowing the state tort claims to proceed would interfere with the federal regulatory policy intended to provide a menu of options to automobile manufacturers—a policy designed, in part, to stimulate industry experimentation. Convinced that “the agency’s own views should make a difference,” Justice Breyer’s majority opinion gave “some weight” to the agency’s view. In a 5-4 decision, the Court held that, notwithstanding the fact that the Safety Act directed the agency to promulgate “minimum” safety standards and the fact that the Act also included an express “savings” clause that seemed to preserve common law liability, Alexis Geier’s state law claims were impliedly preempted (though they were not expressly preempted by the Act).
Ten years later, the preemptive force of the Safety Act and NHTSA’s FMVSS 208 safety regulation is back before the U.S. Supreme Court. Ms. Williamson, riding in the back middle seat of a Mazda minivan, was killed in an automobile accident. Her estate and survivors allege Mazda negligently designed the minivan because the back middle seat where Ms. Williamson was seated had a lap seatbelt only, as opposed to the lap and shoulder belts equipped in the front and back side seats. Like the Honda in Geier, the Mazda complied with FMVSS 208, which allowed manufacturers to install either lap or lap/shoulder belts in all non-outboard seating positions. The trial court sustained Mazda’s preemption defense; the California state appellate court affirmed, holding that the policy concerns of testing multiple forms of passive restraints (e.g. airbags) that led to preemption in Geier also applied to seatbelts; and the California Supreme Court declined to review the case. Given the lack of disagreement among lower courts—which overwhelmingly have concurred with the California appellate court’s interpretation of Geier—the U.S. Supreme Court’s grant of certiorari came as somewhat of a surprise.
What has changed in the decade since Geier?
(1) Wyeth v. Levine: In October Term 2008, the Court decided Wyeth v. Levine, which narrowed the range of implied preemption. The Court held that the Food and Drug Administration’s (FDA) premarket approval of a pharmaceutical drug’s labeling did not preempt the injured patient’s failure to warn state tort claim. In a 6-3 decision penned by Justice Stevens, the Court rejected Wyeth’s arguments based upon two categories of implied preemption: (1) impossibility, i.e., that Wyeth could not comply with the state law duty to revise its labeling without violating federal law; and (2) obstacle, i.e., that state tort law obstructs the purposes and objectives of the federal drug labeling regulatory regime. The Wyeth majority castigated the FDA for its about-face of its longstanding position and proclaiming preemption of state tort law in a preamble to a drug labeling rule, which evaded the notice-and-comment process under the Administrative Procedure Act, whereby states and other affected entities can participate and voice their concerns. For this reason, the Court was not prepared to defer to the FDA’s pro-preemption view.
(2) Obama Administration: In May 2009, President Obama issued a Presidential Memorandum on Preemption, which outlined the new Administration’s policy that “preemption of State law by executive departments and agencies should be undertaken only with full consideration of the legitimate prerogatives of the States and with a sufficient legal basis for preemption.” More concretely, echoing the Supreme Court’s reprimand of the FDA in Wyeth, President Obama directed federal agencies to cease the practice of “preemption by preamble.” The Memorandum signaled a political shift, with the new Administration distancing itself from the prior pro-preemption, anti-tort law position of the previous administration.
(3) NHTSA’s position: Whereas NHTSA argued in favor of preemption in Geier, it has adopted a decidedly anti-preemption position in its amicus brief in Williamson. Since Geier, according to NHTSA, lower courts around the country have misinterpreted the case to find that any time NHTSA gives manufacturers different options to satisfy a safety standard, state tort law is preempted. NHTSA claims that in Williamson (unlike in Geier) there is no federal policy to affirmatively encourage diverse forms of seatbelts. And, according to NHTSA, the agency’s “longstanding” position has been that NHTSA standards do not generally preempt state tort law, aside from relatively rare situations, as in Geier, where the agency’s affirmative policy presents an outright conflict. NHTSA proposes a standard whereby courts should defer to its judgment when it states that a rule does not have preemptive effect.
(4) Composition of the Supreme Court: The vociferous dissent in Geier was written by then-Justice Stevens, joined by then-Justice Souter, and Justices Thomas and Ginsburg. The Geier dissenters formed the majority in Wyeth. The Wyeth dissenters (Justice Alito, joined by Chief Justice Roberts and Justice Scalia) are likely to stand by their more expansive reading of Geier in Williamson. Justice Kagan—who has replaced Justice Stevens, the staunchest torch bearer for the anti-preemption position on the Court—has recused herself, setting up the possibility of an even 4-4 split. There is some uncertainty with respect to the positions of Justice Kennedy (who joined the majorities in Geier and in Wyeth) and Justice Sotomayor (who replaced Justice Souter). But, to my mind, the pivotal Justice to watch is Justice Breyer, who authored the Geier majority. Justice Breyer joined the Wyeth majority, but concurred separately to emphasize that agency regulations with “force of law” (unlike the FDA preemption preamble) can impliedly preempt state law.
My prediction? Williamson will narrow the reach of Geier implied obstacle preemption, but will not sound the death knell entirely—much to Justice Thomas’ chagrin. Justice Breyer (and the Court) is likely to defer to NHTSA’s “expert” view on whether state tort law impedes federal regulatory policy where there has been notice-and-comment rulemaking and where the agency’s position is consistent and longstanding. Williamson will then be a further data point for my claim that reliance on agencies’ views in regulatory preemption cases has been a staple of Supreme Court jurisprudence. What is missing thus far—and what is needed to guard against agency political flip-flop with each Administration’s change of view on implied preemption and state tort law—is a coherent framework for the level of deference to accord to agency positions on preemption, coupled with heightened judicial scrutiny of the agency’s regulatory record that supports its position.
- Catherine M. Sharkey
Professor of Law
New York University School of Law
Monday, September 20, 2010
Guest Blogger Donald Gifford on "No 'Ordinary Tort' — Climate Change Tort Actions and the Supreme Court"
Today's guest blogger is Professor Donald G. Gifford, the Edward M. Robinson Research Professor of Law at the University of Maryland School of Law.
No “Ordinary Tort”—Climate Change Tort Actions and the Supreme Court
The U.S. Supreme Court rarely grants certiorari in common law tort cases. Possibly an exception is imminent. It was not surprising that the defendant-utility companies would petition the Supreme Court to accept certiorari in Connecticut v. American Electric Power Co. in which plaintiffs sued six electric utility companies seeking abatement of emissions from the defendants’ fossil-fuel-powered plants that allegedly contributed to global warming. The Court of Appeals for the Second Circuit allowed the public nuisance action to proceed and in the process held that the
(1) political question doctrine does not bar adjudication of the claims;
(2) plaintiffs—eight states, the City of New York, and several land trusts—all have standing to pursue their claims; and
(3) plaintiffs have properly stated claims under the federal common law of nuisance.
What perhaps is surprising is that the Obama administration recently filed a brief urging the Court to take the case and reverse the Second Circuit, in the process infuriating many in the environmental law community. Admittedly, the Solicitor General urged the Court to reverse the Second Circuit’s decision because of a lack of “prudential” standing and displacement of the common law claims by the EPA’s regulation under the Clean Air Act, grounds narrower than those proffered by the defendants.
In the long term, and viewed from the environmental law perspective, the legal issues raised by the current round of public nuisance actions against greenhouse gas emitters may not prove terribly consequential. The EPA recently began a process intended to lead to its regulation of greenhouse gas emissions from fixed sources (e.g., industrial plants). If such regulation occurs, it seems likely that courts facing the same issue in similar suits in the future will hold that common law public nuisance suits are displaced by this regulation under the Clean Air Act.
To the torts scholar, however, the defendants’ cert petition and the Obama administration’s at least somewhat supportive reaction pose fascinating issues. Both standing and political question doctrine issues seem strangely out of place in a tort action. Traditionally the standing issue has been raised when a litigant challenges the action or inaction of the political branches of government on the basis of a statutory or constitutional claim. It is generally thought that in tort litigation, the issue of standing collapses into the substantive cause of action. Obviously, plaintiffs must allege and prove injury-in-fact and causation, essential requirements of standing, as part of their substantive causes of action. In a parallel vein, a party raising the political question doctrine as a challenge to justiciability typically argues that the U.S. Constitution allocates responsibility for the pending issue to one of the political branches of government—either the executive or the legislative branch—and not to the courts. Yet Article III specifically delegates “cases” and “controversies” to the judicial branch.
What is going on? Are the defendants merely advancing unprincipled arguments to avoid the huge costs of abating their contributions to global climate change? Is the Administration simply misguided? I do not think so.
Contrary to the Second Circuit’s conclusion, the public nuisance action seeking to abate defendants’ contributions to global climate change is not “an ordinary tort suit.” The climate change litigation fits into a new genre of tort litigation, which I have called “public interest tort actions,” that includes government tort actions against gun manufacturers and lead pigment manufacturers a decade ago. Public interest tort litigation seeks to use the tort system to impose comprehensive judicial regulation when plaintiffs believe that either the political branches of government have refused to regulate when they should have acted or the government’s actions fall short of a minimally adequate response. The plaintiffs are usually collective entities, such as state or municipal governments or class actions. The substantive claim represents a collective harm, usually public nuisance.
Public interest tort litigation, unlike ordinary torts, raises serious justiciability concerns whether analyzed under either standing or the political question doctrine. Laurence Tribe and his two co-authors recently argued that the Supreme Court should use the standing doctrine “to prevent some of the most audacious judicial sallies into . . . the climate change case, where plaintiffs assert only undifferentiated and generalized causal chains from their chosen defendants to their alleged injuries.” The appropriate role of common law courts is to adjudicate circumscribed, bounded disputes, not society-wide or even worldwide problems.
Regarding the political question doctrine, in the leading case of Baker v. Carr, the Supreme Court identified six factors that individually or in combination with one another might lead a court to conclude that an issue poses a political question and therefore is non-justiciable. Here, two of these factors are most relevant: “a lack of judicially discoverable and manageable standards for resolving it;” and “the impossibility of deciding without an initial policy determination of a kind clearly for non-judicial discretion . . . ”
When it comes to global climate change, as one environmental group has advertised, each of us is a plaintiff. Left unsaid is the reality that each of us who drives a gasoline-powered or hybrid vehicle or who heats her home with fossil fuels is also, at least theoretically, a defendant. No judicially discoverable and manageable standards exist to determine whether any particular defendant’s contributions to global climate change exceed reasonable levels and what limits courts should impose. Determining the appropriate mixture of regulatory levels across all greenhouse-gas emitters and industries would require weighing the relative societal costs and benefits of reducing emissions from each of the literally hundreds of millions (in the U.S.) or billions (worldwide) of fossil fuel consumers. These are not the kind of decisions that a common law court is capable of making. Climate change is the society-wide—indeed worldwide—type of harm that our constitutional structures anticipated the political branches would handle. Solving the problem requires policy decisions appropriately made by political institutions deriving their legitimacy from something other than a court’s reasoned elaboration from precedents that bear little or no resemblance to the complex meteorological, ecological, and economic issues inherent in climate change litigation.
In the past, public nuisance actions have proved to be an important weapon in efforts to prevent environmental degradation. Using public nuisance to tackle climate change, however, is going too far. Most of us came to intellectual maturity during a time in which the Supreme Court generally stayed out of tort actions. We are inclined to see intervention from today’s Supreme Court, typically regarded as conservative and pro-business, as an illegitimate intrusion into our world of common law courts. But, before reaching that conclusion, we should carefully consider whether global climate change public nuisance litigation is in fact merely an “ordinary tort” or whether climate change litigation is a well-intentioned but fundamentally flawed circumvention of our constitutional structure that asks the trial court to do the impossible.
- Donald G. Gifford
Edward M. Robinson Research Professor of Law
University of Maryland School of Law
 Connecticut v. Am. Elec. Power Co., 582 F. 3d 309 (2d Cir. 2009), petition for cert. filed, 79 U.S.L.W. 3092 (U.S. Aug. 2, 2010) (No. 10-174).
 582 F. 3d 309 (2d Cir. 2009).
 Brief of the Tennessee Valley Authority in Support of Petitioners’ Petition for a Writ of Certiorari, Am. Elec. Power Co. v. Connecticut, 582 F. 3d 309 (2d Cir. 2009), U.S. Supreme Court No. 10-174 (hereinafter “TVA Brief”), brief docketed Aug. 24, 2010, available at http://www.openmarket.org/wp-content/uploads/2010/08/obama-brief-aep-v-connecticut-aug-2010.pdf
 TVA Brief, 24 – 32.
 Am. Elec. Power Co., 582 F. 3d at 331.
 Donald G. Gifford, Climate Change and the Public Law Model of Torts: Reinvigorating Judicial Restraint Doctrines, 62 S.C. L. Rev. __ (2011), available at http://papers.ssrn.com/so13/papers.cfm?abstract_id = 1674443.
 Laurence H. Tribe, Joshua D. Branson & Tristan L. Duncan, Too Hot for the Courts to Handle: Fuel Temperatures, Global Warming, and the Political Question Doctrine 24 (Washington Legal Foundation, Critical
Legal Issues Working Paper Series, No. 169, 2010), available at http://www.wlf.org/Upload/legalstudies/workingpaper/012910Tribe_WP.pdf.
 369 U. S. 186 (1962)
 Id. at 210 – 15.
Monday, September 13, 2010
Guest Blogger Andy Popper: "Leaping Forward--or Not--With the 2010 Foreign Manufacturer Legal Accountability Act"
Earlier this summer I testified in favor of H.R. 4678, The Foreign Manufacturers Legal Accountability Act. While at first the bill looked like it would sail through, recent highly vocal and stunningly well-funded opposition from foreign automobile manufacturers and others (can you guess which absolutely huge auto manufacturer – from
Gross sales of foreign manufactured goods in the
H.R. 4678 would require foreign manufacturers of certain products and component parts to designate a registered
This strikes me as a simple, elegant, and appropriate step forward. It levels the civil liability landscape, stripping foreign manufacturers of an unfair advantage over domestic manufacturers and addresses a powerful but understandable anomaly in our legal system.
By making possible litigation against those who place into the stream of commerce defective goods, the bill triggers the corrective justice incentive mechanisms of the tort system. When you create the realistic possibility for liability, you activate incentives to make safer and more efficient products.
It is both the current state of the law – and problematic – that a foreign producer cannot readily be held accountable in state courts even if (a) the product was unquestionably dangerous and defective, (b) the harm to the victim was foreseeable, and (c) the foreign producer has sold large numbers of these products in the
We all recognize the legal issue: assertion of jurisdiction over an individual or entity presents a challenge when the entity’s contacts with state are limited. Not surprisingly, many foreign manufacturers do not have an officer, agent, representative, employee, office, or property in a particular state where their products cause harm. At present, such manufacturers cannot readily be “haled” into state court if their contacts fail to meet the constitutionally compelled “minimum contacts” requirement. In addition, the assertion of judicial power must be consistent with notions of fair play and substantial justice, fundamental fairness, and reasonability – for the defendant. In the absence of the ingenious solution presented in H.R. 4678, these norms prevail and access to justice is limited or denied.
Opponents have argued that the terms of the bill violate WTO constructs. They claim this system would discriminate unfairly against foreign manufacturers. Frankly, it is hard to see how H.R. 4678 would create any undue barrier or obstacle to trade. It imposes on foreign manufacturers the same responsibilities and obligations of domestic sellers and producers. This is a straightforward and essential change, giving injured persons access to the civil justice system.
Check out the full text of the legislation as well as the testimony and statements filed regarding H.R. 4678 at: http://energycommerce.house.gov/documents/20100616/Popper.Testimony.06.16.2010.pdf
Monday, August 30, 2010
I’d like to use the opportunity to alert torts profs to the new American Law Institute Principles of Liability Insurance project and my forthcoming book with Sean Griffith, Ensuring Corporate Misconduct: How Liability Insurance Undermines Shareholder Litigation (U. Chicago Press 2010). Both projects grow out of my long term participation in insurance as governance research.
The ALI project is predicated on a jurisprudential and sociological claim. In jurisprudential terms, liability insurance is an important meeting place between tort and contract, legal fields in which the ALI has a long tradition of involvement. Within the area of insurance, liability insurance is uniquely intertwined with the law: the law (mostly, though not only, tort law) defines the underlying liabilities that the insurance is designed to cover, and the existence and nature of liability insurance coverage has had and will continue to have a major impact on the development of those liabilities.
As a sociological reality, the presence or absence of liability insurance can affect whether a particular liability action is brought in the first place, and against whom. Judges and legislatures develop liability rules with an understanding, whether implicit or explicit, that insurance may be available to cover the resulting liabilities. In light of this close relationship between liability insurance and the real world of liability, particularly tort liability, the law of liability insurance was a natural choice for an ALI law-improvement project.
While the ALI project will surely evolve, our current plan is to have three chapters. The first will address a variety of contract doctrines in the liability insurance context. The second will address the definition of the range of liabilities covered by various forms of liability insurance. The third will address the management of the liabilities, including such topics as the duty to defend, the duty to settle, and the duty to cooperate.
Ensuring Corporate Misconduct contributes to our understanding of the sociological claim underlying the ALI project. Beginning with Ross’s magnificent Settled Out of Court, sociolegal researchers have explored the practical connection between liability and insurance almost exclusively in relation to personal injury and almost exclusively in relation to claims brought against individual defendants. In this project, Sean and I went into the field to explore the relationship between liability and insurance in a very different context: shareholders’ claims against large corporations.
Despite the name, D&O insurance is largely corporate asset protection insurance, not directors’ and officers’ protection insurance. Corporate indemnification agreements provide the main protection for directors and officers. D&O insurance indemnifies the corporation for its indemnification obligations to directors and officers and, in the case of securities claims, for the corporation’s own liabilities as well. D&O insurance protects directors and officers only when the corporation cannot, most significantly in the case of insolvency or derivative actions for which corporate indemnification is prohibited by state corporate law.
The narrative of the book follows our efforts to evaluate the impact of Directors and Officers Insurance on the deterrence effect of shareholder litigation. We explore D&O insurance pricing and underwriting process as part of the deterrence process. We evaluate D&O insurers’ efforts to control the moral hazard of their insurance products. We describe the insurers’ role in the litigation and settlement context. And we explore whether D&O insurance coverage defenses and related coverage litigation preserves the deterrence function of shareholder litigation.
The title gives away our bottom line. We conclude that D&O insurance undermines the deterrence role of shareholder litigation. D&O insurers manage the moral hazard of their insurance products by pricing to reflect the moral hazard, with the result that D&O insurance likely facilitates corporate misconduct. All is not lost, however. Mandatory disclosure of the terms of D&O insurance contracts and of the amount of D&O insurance payments for the defense of settlement of each shareholder claim would allow D&O insurance to further, rather than undermine, the deterrence impact of shareholder litigation, magnifying the deterrence signals of D&O insurance underwriting and coverage decisions by transmitting those signals through the securities markets.
Deputy Dean and William Maul Measey Professor of Law and Health Sciences
Wednesday, June 9, 2010
The Measure of Injury: Race, Gender, and Tort Law by Martha Chamallas (Ohio State) and Jennifer Wriggins (Maine) was published a little over a week ago by NYU Press. The advance reviews:
"This book is brimming with insights about how societies do and should express what matters in assigning liability for human pain and loss." Martha Minnow (Harvard)
"This book asks important questions about the tort system....A promising direction for scholarship...." Keith Hylton (Boston University)
An "Author Meets Readers" panel discussed the book at Law & Society late last month. Catharine Wells (Boston College) was kind enough to provide me a post based on her remarks from the panel. Her guest post will be up tomorrow.
Monday, May 10, 2010
We really enjoyed hosting our Spring 2010 guest bloggers. Our guests explored a wide array of topics:
- Mike Green on "Let's Be Careful Out There"
- Richard Epstein on "Multiple Standards of Liability in Tort Law: Of context and categories"
- Kenneth Abraham on "Four Conceptions of Insurance"
- Alan Calnan on "Due Process, Probable Cause, Duty and Torts"
- Anita Bernstein on "Pervading"
- Ken Simons on "What can tort law (and tort law scholars) learn from criminal law (and criminal law scholars)?"
- Michael McCann on "'Game Presentation' and Torts: The Unappreciated Dangers of Flying Hotdogs"
- James Henderson on "The Moral Foundation of Tort"
- Richard Nagareda on "Developments in the Resolution of Mass Torts: The New Face of Client Consent"
- David Owen on "Foreseeability in Accident Law"
- Alex Long on "Should Tort Law Be Tougher on Lawyers?"
- Phoebe Haddon on "Update on the UMD Clinic and Thoughts on Don Gifford's New Book"
- Jennifer Wriggins on "Torts, Insurance, and the Value of Injury"
- Andrew Klein on "Science, Causation, and Toxic Torts"
- Mark Geistfeld on "Tax breaks for bad behavior? On the relation between income taxes, punitive damages and liability insurance"
Thanks to everyone who participated this spring. Guest Blogger Monday will return in the Fall.
- Sheila & Chris
Monday, May 3, 2010
Geistfeld on "Tax breaks for bad behavior? On the relation between income taxes, punitive damages, and liability insurance"
They make the nice point that if punitive damages are not deductible, then plaintiffs and defendants have an incentive to “disguise punitive damages as compensatory damages in pre-trial settlements.” Doing so decreases the (after tax) cost of settlement for defendants, creating a gain that can then be shared by the settling parties. By way of extended analysis, Polsky and Markel go on to conclude that the best way to solve the “under-punishment problem” created by deductibility is not to eliminate the tax break, as everyone had previously concluded, but instead to apprise juries of the deductibility issue so that they will “gross up” the punitive award to offset the tax break.
Largely missing from the analysis, however, is discussion of how liability insurance affects the incidence of tort liability. Once this dimension of the problem has been recognized, it becomes apparent that there is a much stronger case against the deductibility of punitive damages.
Consider a world (largely like our own) in which every defendant worth suing has liability insurance covering at least a portion of a tort judgment (or any other form of civil liability that permits the award of punitive damages). Suppose our insured defendant has incurred punitive damages liability. Perhaps surprisingly, this form of liability is not expressly excluded from coverage under the standard-form liability-insurance contracts. Whether the defendant can actually collect on the insurance, however, depends on whether the jurisdiction permits the insurability of punitive damages as a matter of public policy.
Nine or so jurisdictions, including California and New York, prohibit the insurance of punitive damages. In these jurisdictions, any settlement between an insured defendant and the tort plaintiff presumably will allocate the appropriate amount to punitive damages. Regardless of how the defendant and plaintiff would otherwise like to characterize the proportion of compensatory and punitive damages covered by the settlement, the insurer is obligated to indemnify only the former category and accordingly will seek to maximize the portion of the settlement attributable to punitive damages (and excluded from coverage). The insurer usually can police the terms of the settlement directly (the insurance contract gives the liability insurer the right to settle the case). But if the insurer does not fully participate in the settlement, the terms of the settlement would not have preclusive effect in a subsequent coverage dispute with the tort defendant/policyholder regarding the amount of the settlement that is covered by the policy and properly allocable to compensatory damages. The liability insurer, therefore, presumably will monitor the portion of the settlement allocable to punitive damages, effectively precluding plaintiffs and defendants from otherwise manipulating settlements in a manner that would thwart efforts to restore the full “sting” of punitive damages by making them nondeductible.
The argument against deductibility then largely generalizes to the remaining jurisdictions that permit the insurability of punitive damages. The standard-form liability-insurance contracts do not cover liabilities for “expected or intended harms.” In these cases, the insurer can deny coverage altogether—for both compensatory and punitive damages—and so it will not monitor the portion of any settlement properly allocable to punitive damages. In light of the settlement problem identified by Polsky and Markel, the best approach would be to deny deductibility for the entire liability. These instances of intentional wrongdoing clearly implicate the retributive concerns that would create a problem of “under punishment” in the event that the punitive award receives a tax break. Rather than let the litigants manipulate settlements for tax reasons, why not eliminate the tax break altogether for liabilities of this type? Why should these intentional wrongdoers be able to deduct any of their liabilities as a cost of doing business?
Regardless of how one answers this question, the case for nondeductibility remains intact. The public policy concerns implicated by the insurability issue are substantively identical to those posed by the deductibility issue: each allows the tort defendant to distribute the cost of the punitive award to a wider group (other policyholders; other taxpayers). In deciding to permit the insurance of punitive damages, a jurisdiction has concluded that the redistribution afforded by liability insurance does not create any public policy problem of “under punishment.” So, too, in these jurisdictions the redistribution afforded by the deductibility of punitive damages does not create any public policy problem of “under punishment.” Consequently, even if a tax rule of nondeductibility could be largely circumvented by the settling parties as Polsky and Markel conclude, there is no “under-punishment problem” created by the de facto deductibility of punitive damages. This does not mean that the deductibility issue is largely irrelevant. The tax rule against deductibility is still desirable as a federal matter because it furthers the public policy of those states that reject the insurability of punitive damages on the ground that wrongdoers should not be able to redistribute their punishment to others.
Admittedly, I live in a state where punitive damages are not insurable, and the analysis of Polsky and Markel has much more to offer than I have indicated. They artfully unravel the surprising complexity of what appears to be a rather straightforward issue—whether bad behavior deserves a tax break. Clearly, I should have put this article into my “read right away” pile (although that pile, of course, also ends up getting shuffled around at the close of the academic year).
- Mark Geistfeld
Sheila Lubetsky Birnbaum Professor of Civil Litigation
New York University School of Law
Thursday, April 29, 2010
Monday's guest blogger is Mark Geistfeld. Geistfeld is the Sheila Lubetsky Birnbaum Professor of Civil Litigation at New York University School of Law, where he teaches Insurance, Torts, and Products Liability.
Geistfeld joined the NYU faculty in 1992. From 1997 to 2003, he served as the Director of the LL.M. (C.J.) Program, and in 2005, he served as Co-Director for the Center for Law, Economics, and Organization. Geistfeld was the Crystal Eastman Professor of Law in 2004,and is now the inaugural Sheila Lubetsky Birnbaum Professor of Civil Litigation.
Geistfeld's publications are too numerous to list here. A few of his recent publications include "Efficiency, Fairness, and the Economic Analysis of Tort Law," in Theoretical Foundations of Law and Economics (Mark D. White, ed., Cambridge University Press, 2009); "Products Liability," in Encyclopedia of Law and Economics, Vol. 1 (Michael Faure, ed., Edward Elgar Press 2nd ed., 2009); "Social Value as a Policy-Based Limitation of the Ordinary Duty to Exercise Reasonable Care," 44 Wake Forest Law Review 899 (2009); "The Value of Consumer Choice in Products Liability," 74 Brooklyn Law Review 781 (2009); Tort Law: The Essentials (Aspen Publishing, 2008), and "Punitive Damages, Retribution, and Due Process," 81 Southern California Law Review 263 (2008).
Geistfeld received his J.D. from Columbia Law School, and also a Ph.D. (Economics) from Columbia University. He also holds a M.A. (Economics) from the University of Pennsylvania. Prior to joining academia, Geistfeld was a law clerk to Judge Wilfred Feinberg, of the United States Court of Appeals for the Second Circuit. He also worked in the New York offices of Dewey Ballantine and Simpson, Thacher & Bartlett.