Tuesday, May 31, 2022
The Geneva Association is pleased to announce a special July 2023 issue of The Geneva Papers on Risk and Insurance--Issues and Practice on "Emerging risks and liability insurance in the time of pandemics". Papers should be no longer than 8,000 words and should be submitted no later than 10 June 2022. For more details, see this flyer: Download CallForpapersJuly2023_Liability
Friday, May 27, 2022
Ken Abraham & Daniel Schwarcz have posted to SSRN The Limits of Regulation by Insurance. The abstract provides:
Insurance is an enormously powerful and beneficial method of spreading risk and compensating for loss. But even insurance has its limits. A new and misleading aspiration for insurance – that it also can and often does substitute for or significantly complement health and safety regulation – is increasingly in vogue. This vision starts from the uncontroversial recognition that insurers typically adopt measures designed to counteract "moral hazard," the tendency of insurance to blunt policyholders’ incentives to take care. But proponents of this vision go on to contend that the risk-reducing potential of insurance is significantly more extensive than is traditionally imagined, because insurers are strategically-positioned to induce their policyholders to embrace precautions, procedures, policies, or training regimens that decrease the incidence of loss. Proponents of this new "regulation thesis" often dramatically summarize these points by describing insurance as a form of private "regulation” or “loss prevention,” attempting to trade on the positive optics of these notions. Enamored with this idea, commentators, activists, and lawmakers have advanced various proposals to mandate the purchase of insurance or otherwise intervene in insurance markets to address a broad range of modern social ills, including police misconduct, gun violence, cyberattacks, and harms caused by artificial intelligence. Building on emerging criticism of this regulation thesis as well as increasing empirical evidence questioning its accuracy, this Article argues that these regulatory aspirations for insurance are over-optimistic. Creating less loss than insurance otherwise might have created is not regulation or loss prevention. Rather, it is damage-control, and that is what insurance devices designed to combat moral hazard almost always involve. Insurers face a daunting set of obstacles to further reducing policyholder risk below what it would be in the absence of insurance. In short, insurance has substantial limits as a solution for the failures of regulation.
Thursday, May 26, 2022
Last month, I reported that a compromise had been reached to raise the $250,000 noneconomic damages cap for California med mal claims. On Monday, Governor Gavin Newsom signed that legislation into law. The basics of the deal, as reported by Cheryl Miller at Law.com:
The deal will raise California’s current $250,000 limit on noneconomic damages starting in 2023 to $350,000 in incidents where the victim does not die, and to $500,000 in wrongful death incidents. The caps will continue to rise incrementally over the following 10 years to $750,000 and $1 million. After 2033, the award limits will increase by 2% annually.
Melody Gutierrez at the LA Times has the story.
Monday, May 23, 2022
Robert Rhee has posted to SSRN Probabilistic Causation in the Loss of Chance Doctrine: A Comment on Efficiency and Error Mitigation. The abstract provides:
The loss of chance doctrine in tort law solves a recurring problem in the context of medical malpractice in which severely ill patients are misdiagnosed or mistreated. Absent a theory permitting probabilistic recovery, traditional factual causation inquiry always results in the finding of no causation in individual cases. But we know as a matter of practical certainty that negligence adversely affects outcomes in the minority of cases based on probabilities. While the theory is sound, the majority rule of proportional damages, calculated as the product of the full value of physical loss and the percentage reduction in the chance of survival, is demonstrably flawed. It is inefficient in two ways: it does not sufficiently deter negligence, and it does not minimize total error in misallocated payments as between tortfeasor and plaintiffs and among plaintiffs themselves. This article provides a statement of the correct rule, the underlying probability analysis, and a demonstration of the error mitigation analysis. The core problems are two: (1) a conceptualization of the proper reference class; (2) a conceptualization of probabilities as not static, but dynamic with the incorporation of time and new information.
Thursday, May 19, 2022
Recently, I wrote about a case filed by workers alleging their exposure to coal ash during a clean up resulted in numerous health issues. The plaintiffs worked for a contractor hired to clean up a coal ash spill from a power plant owned and operated by the Tennessee Valley Authority (TVA). Plaintiffs filed suit against the contractor and the contractor argued it was entitled to share the immunity of the government agency with which it contracted. The case has been going on for nine years and this was the second trip to the Sixth Circuit over this issue.
Yesterday, the court rejected the claim to derivative immunity (opinion here: Download 6thCircuit_Decision_Opinion (1)). Although most tort immunity issues involving the federal government are focused on the Federal Tort Claims Act, the TVA is explicitly excluded in that statute. TVA is a hybrid government/private entity and the legislation creating it included a sue-and-be-sued clause. The proper immunity analysis to be applied to TVA was recently covered in Thacker v. TVA, 139 S. Ct. 1435 (2019). Based on that analysis, when determining derivative immunity, the two broad questions are: (1) would the TVA have been immune if it were sued directly?; and (2) is the contractor entitled to share the immunity of TVA?. The second question revolves around whether the contractor followed the TVA's instructions, but there is a dispute in this case about how to phrase the standard. The test for TVA's immunity is itself divided into two parts. The first is whether the act in question was commercial or governmental. If it was commercial, there is no immunity. If it was governmental, there is a further issue to be resolved. If TVA is operating in a governmental capacity, the sue-and-be-sued clause is limited by implied exceptions if: (1) the suit is not consistent with a statutory or constitutional scheme; (2) the suit would gravely interfere with the performance of a government function; or (3) for other reasons it was plainly the purpose of Congress to use the sue-and-be-sued clause in a narrow sense (essentially a catch-all).
In this particular case, the court worked through the following analysis. First, would the TVA have been immune if it were sued directly? (Was the act in question--cleaning up a coal ash spill--commercial or governmental? And are these tort suits inconsistent with the Supremacy Clause and CERCLA (the statute under which the clean up proceeded)? Are these torts suits a grave interference with a government function? Second, should the contractor share in the TVA's immunity?
The court found no need to decide whether the clean up was commercial or governmental and no need to decide if the contractor would share the TVA's immunity. It held that even if the clean up was a governmental function, the suits were not inconsistent with the Supremacy Clause or CERCLA and were not a grave interference with a governmental function. As to the consistency with the Supremacy Clause and CERCLA, the court noted that the plaintiffs' theory does not challenge the adequacy of the safety plan drawn up pursuant to CERCLA; the plaintiffs allege that the contractor failed to comply with those terms (a jury in a phase I trial has concluded the contractor did fail to comply with the terms). As to the grave interference issue, the court emphasized the existence of the sue-and-be-sued clause and again noted that the plaintiffs were not challenging the safety plan itself, only the contractor's compliance with it.
Next up is a case in the Tennessee Supreme Court (June 1) on whether the Tennessee Silica Claims Priorities Act applies to these cases and perhaps after that a phase II trial. Anila Yoganathan at the Knoxville News Sentinel has the story.
Tuesday, May 17, 2022
Tomorrow (5/18) is torts day at the ALI's Annual Meeting. Concluding Provisions (Nora Freeman Engstrom and Mike Green, Reporters) is discussed from 3-4:30 Eastern. Remedies (Richard Hasen and Doug Laycock, Reporters) is discussed from 4:30-6 Eastern. I believe this is the first time two Torts Restatements have been discussed at the same Annual Meeting.
Monday, May 16, 2022
Cathy Sharkey has posted two pieces to SSRN. First, Common Law Tort as a Transitional Regulatory Regime: A New Perspective on Climate Change Litigation. The abstract provides:
This book chapter explores how common law (state or federal) tort law evolves to fill regulatory voids. Particularly in areas that pose emerging, and incompletely understood, health and safety risks, common law tort liability holds out the potential for a dynamic regulatory response, one that creates incentives to develop additional information about potential risks and stimulates innovation to mitigate and/or adapt to these risks. In this temporal model, common law tort plays an essential role in transition, allowing for experimentation with various risk-minimization methods and remedial approaches until optimal approaches emerge which could then be enshrined in more uniform regulations.
The chapter identifies and assesses this dynamic, information-forcing role for common law tort liability in the realm of climate change litigation. In this model, common law tort, rather than a relic of the past, emerges as relevant to the future of environmental risk regulation, as indeed superior to legislation and/or regulation in terms of addressing newly-emergent risks. Moreover, the model suggests that the interaction between common law tort and federal statutes and regulations will remain interactive and dynamic over time.
The chapter then uses climate change litigation as a case study to shed light on the expansion of common law public nuisance to fill a regulatory void in this area, revealing the modern relevance of common law tort in environmental law. The chapter concludes with a preliminary evaluation of the extent to which experimentation among states and municipalities with regard to various adaptation measures fits the optimal model of common law tort in transition, with a final gesture toward forces at play that may stymie the common law’s evolutionary impulses.
Next, Personalized Damages. The abstract provides:
In Personalized Law: Different Rules for Different People, Professors Omri Ben-Shahar and Ariel Porat imagine a brave new tort world wherein the ubiquitous reasonable person standard is replaced by myriad personalized “reasonable you” commands. Ben-Shahar’s and Porat’s asymmetrical embrace of personalized law—full stop for standards of care, near rejection for damages—raises four issues, not sufficiently taken up in the book. First, the authors equivocate too much with regard to the purposes of tort law; ultimately, if and when forced to choose, law-and-economics deterrence-based theory holds the most promise for modern tort law. Second, the damage-uniformity approach clearly dominates the status quo of “crude” personalization. Third, via a deterrence lens that eschews “misalignments” in tort law, a personalized standard of care necessitates personalized damages. Fourth, the true benefit of an ideal personalized damages regime might be further uncovering the root cause of racial and gender disparities in status quo tort damages. Paradoxically, ideal personalization might then reinforce the damage-uniformity approach.
Wednesday, May 11, 2022
Sandra Sperino has posted to SSRN The Causation Canon. The abstract provides:
It is rare to witness the birth of a canon of statutory interpretation. In the past decade, the Supreme Court created a new canon—the causation canon. When a statute uses any causal language, the Court will assume that Congress meant to require the plaintiff to establish “but for” cause.
This Article is the first to name, recognize and discuss this new canon. The Article traces the birth of the canon, showing that the canon did not exist until 2013 and was not certain until 2020. Demonstrating how the Court constructed this new canon yields several new insights about statutory interpretation.
The Supreme Court claimed the new causation canon represents “ancient” and “long-held” principles of common law. The Supreme Court’s claims about the causation canon are easily disprovable with only a cursory re-view of Supreme Court cases from the past 40 years. This is not a case of a contested or difficult historic record.
With the causation canon the Court did not simply apply the common law to statutes. Instead, it created its own new federal causation standard that is not consistent with any state’s common law or even the Restatement of Torts. The Court significantly changed the common law and then magnified the significance of the change by imposing it as a default statutory interpretation canon that will apply across both federal civil and criminal statutes.
This new canon represents a significant change in the way the Supreme Court has used the common law, and it does not fit comfortably within claims made about textualism generally or substantive canons specifically. Creating a new federal common law of factual cause and imposing that newly created law as a default standard significantly raises the profile of this area of statutory interpretation and demands greater scholarly inquiry.
Tuesday, May 10, 2022
Kip Viscusi and Rachel Dalafave have posted to SSRN The Broad Impacts of Lighter Safety Regulations. The abstract provides:
The Consumer Product Safety Commission’s regulation of disposable lighters was targeted at preventing injuries due to use of lighters by children not over 4 years of age. Based on a difference-in-differences analysis of national data for 1990-2019, this article estimates that the regulation reduced all injuries to the target population by 71%, burn injuries by 74%, and injuries severe enough to warrant admission to the hospital by 85% overall and by 84% for burn injuries. Unlike the counterproductive performance of safety cap regulations, this safety device enhanced safety levels in the target population group. The safety improvements from lighter safety devices outweigh any lulling effect of viewing products as being “childproof.” The regulation had a broader safety impact beyond the target population group, as it also reduced all types of injuries by at least 50% for children in the 5-17 age group. Total annual risk reduction benefits were $940 million-$1,465 million. A benefit-cost analysis based on a retrospective assessment of the regulation finds a more favorable impact than was anticipated.
Wednesday, May 4, 2022
Sarah Swan has posted to SSRN Running Interference: Local Government, Tortious Interference with Contractual Relations, and the Constitutional Right to Petition. The abstract provides:
Local governance is a participatory sport. Businesses bring preemption claims; constituents and other entities enforce municipal laws; and individuals and interest groups enthusiastically engage in significant grassroots petitioning and lobbying. The boundary between the governed and those doing the governing is at its most porous here, with constituents and leaders often moving in and out of such roles. Citizens can easily access leaders, and leaders show a high level of receptivity to resident requests.
This public participation in local governance is usually applauded. However, when constituents complain about a municipality's ongoing contract with a private party, they may find themselves in a very different position. Instead of being praised for their political participation, they might face a lawsuit for tortious interference with contractual relations. Tortious interference with contractual relations is an unruly tort at the best of times, but it becomes even more so in the context of local government, when what otherwise be commended as contributing to participatory democracy or exercising the constitutional right to petition is instead portrayed as unlawful interference. A recent case from a Florida appellate court affirming that an environmental activist owes $4.4 million in damages for disparaging a public-private partnership illustrates the tort's many problematic features and its poor fit within the context of local government.
Fortunately, the clash between tortious interference and the right to petition can be resolved, as numerous other courts have found, with a robust application of the Noerr-Pennington rule. Especially when combined with more capacious anti-SLAPP legislation and the new narrowed version of tortious interference set forth in the recent Restatement (Third)of Torts, the Noerr Pennington doctrine properly protects the rights of petition crucial to local government functioning, while still retaining a small sphere of potential liability for egregious wrongdoing.