Friday, November 18, 2005

Where Did Tort Reform Go? or, Torts Are Funny

Tort reform was a big part of Bush’s original campaign. After 9/11, however, it seems to have disappeared off the map entirely, while Social Security reform is probably just recharging its power scooter. Perhaps Bin-Laden and his flunkies sat around and said, “You know, American tort law is really screwed up. Let’s distract them, and eventually it will bring down their economy.” Far-fetched? At least as much so as a world with a jet pack in every home (which would be pretty sweet), but maybe it’s not entirely off the mark.

The Purposes of Tort Law

Tort law is intended as a method to make someone whole again when they are injured. If, for example, Tortfeasor sits next to you in class, and he kicks you in the shin (like the bastard he is), you will be injured. (Thanks Vosburg v. Putney.) Assume your leg breaks. You have a doctor bill, and tort law makes Tortfeasor foot the bill. Assume also that you are a field goal kicker for a professional football team, and the season opener is tomorrow. Your contract is not very good for you, so you miss out on some pay. Tortfeasor will also have to pay all of this back. Tort law doesn’t care that Tortfeasor works in a factory for $40K a year and you still make $1mil even after the injury. But it does do one thing right: you are obligated to try to find comparable work to mitigate the damages. There probably is no comparable work to playing football, but let’s assume you work at McDonald’s anyway for $10K (and you’re lovin’ it). Your damages from lost wages will be reduced by that amount.

The Problems with Tort Law

Of course, I have a problem with the current state of tort law and some of the assumptions it makes. Take the hypothetical situation of X and Y. (Any resemblance to actual persons, living or dead, is purely coincidental.) X and Y are driving their cars. X and Y are both talking on their cell phones. Y hangs up his phone, and ten seconds later X and Y collide. X will probably be found negligent because he was talking on his phone, and so he will have to pay for Y’s damages. But this is about as fair as a fight between Kurt Russell and Metal Gear Ray. The Metal Gear doesn’t stand a chance. Both of these guys were talking on their cell phones, as many people do when they’re driving. It was purely coincidence that X was still talking when the accident happened. We’re all negligent every day. Hell, I’ve seen my torts professor talking on her cell phone while driving. Not to minimize the victimization of the injured party, but the other party is also a victim of the system. (Although, I do have to admit that a kind of social insurance program would be at least equally as reprehensible.)

Now assume Y became a quadriplegic. X will have to pay Y’s lost wages for Y’s full life expectancy. Recall that the purpose of tort law is to make the injured party whole again. Let’s look at it this way:
Before the accident: Y worked for his wages.
After the accident: Y gets free money for just sitting around and watching TV!
Let’s not forget pain and suffering damages. Yes, I’m sure that pain and suffering is worth something, but juries tend to inflate it unrealistically, to the point that Y can buy a nice big screen TV and a mansion to ease his suffering.
And there will also be loss of enjoyment, because now Y will never again know the pure joy of scratching an itch, or of playing hopscotch. These damages are similarly difficult to quantify.

Now, let’s assume that Y died in the accident. The executor of his estate gets to sue X for Y’s lost wages as well as other things. Funeral costs are one that particularly irks me. Y would eventually have died and had a funeral anyway. If anything, Y is actually saving money on funeral costs, because they go up annually as surely as Santa Claus delivers presents or George Lucas ruins Star Wars with a new edition every year. (I heard that next time he’s going to change Leia’s slave girl outfit into a wookie costume.)
Oh yeah, and Y’s wife also gets to sue for loss of consortium.

Let’s take one final hypothetical, more related to the topic of tort reform as Bush saw it. Hypothetically, let’s just say there is a car manufacturer. Let’s call it Ford, just for fun. Also, let’s assume that they built a car that explodes when it’s hit from behind. Let’s just call that car a Pinto. Let’s further assume that Ford decides not to recall said vehicle. Now, let’s assume that a guy named Poor Bastard suffers third-degree burns in the accident and dies. His next of kin, Lucky Bastard, sues Ford. In many states, not only will he get all of the damages I’ve set out above, but also punitive damages, assuming that the jury decides Ford’s conduct was egregious enough. This is where Ford’s wealth comes in. Let’s say, for the sake of argument, that this is a multi-billion dollar company. The punitive damages, instead of being designed to make the victim whole again, are designed to be, well, punitive. So the jury thinks a $100million award might punish Ford a bit. And Lucky Bastard, being no one in particular except for a guy whose brother bought a damn ugly car, gets all that money. He will, of course, by a Volvo with that money. Yeah, right.


Well, the only conclusion I can make is that tort law starts out with an excellent premise, and then turns the tortfeasor into the real victim. Most of the time it’s just somebody who was a little careless, as we all are. And he better hope that he makes twice as much at his job as the other guy, otherwise he won’t have any money left for himself. And, of course, we can’t forget all the Lucky Bastards out there who get a windfall profit out of the deal.


  1. are you highlighting the hard words just for me? not a bad Idea.
    Arrgh! this tort thing is always something that has irked me. Tho, i wasn't quite sure what it was. I've always just called it being 'sue happy'. When I was religious, I decided that 'sueing' was sinnful. Because, It involved punishing people for being human & was a vindictive act.
    Just being a person who is not involved in the law. I have heard plenty of people jusify their reasons for sueing. Even tho, I am not religious anymore, the whole process makes me sick & I would hate to be involved in it.
    I'm sure you could come up w/reasons where it is right, it's just that I see it as a dirty business.

  2. This is a great post. As a layman, I think tort "reform" is aimed in two directions.

    1. Reduce pain and suffering damages. This is the wild card.

    2. Prevent class action lawsuits. It's easier to buy off victims one at a time and they don't look as attractive individually as clients.

    I posted awhile ago about a class action that only benefitted the lawyers.

  3. Thanks for the comment over on my site. Gotta completely disagree with you, tho. Tortfeasors as victims? Come on ! Where's your sense of equity? The entire concept values holding people accountable for their negligence (not simple carelessness). By having this system, we encourage wrongdoers to pool their risk and their costs and buy insurance to ensure that victims don't have to bear the risk of having someone negligently injure or kill them. The key question is who should bear the risk, the innocent of the negligent? It's no contest in my view.

    I hear these criticisms all the time. The real question is, anybody have a better way of doing it? Anyone think it's a good idea to eliminate accountability so we can have the luxury of not having to complain that other people are sue-happy?

  4. The hard words aren't just highlighted, but they're links to definitions. Just part of my continuing effort to edu-tain.

    And yes, many tortfeasors are victims. How often do you talk on your cell phone while driving? Or mess around with your radio? Or speed (often negligence per se)? We all do negligent things all the time.

    It is difficult to try to find a better way to do things, though. You are right on that point. Mostly I think the damages should be reduced. I mean, seriously, if you're not working I don't see getting paid for lost wages. I could see getting paid at the worker's compensation rate, but not full wages. And you know all my other damages concerns as well.

    And not everyone has insurance or can afford enough insurance to pay for large medical bills. I believe that the minimum insurance in Nebraska will only pay $5000.

    Isn't it also possible that a perfectly innocent person would fail to salt their sidewalk and that someone will slip on it?

  5. Good post Kelly. This country is in desperate need of tort reform. I live in an area that used to be synonymous with "Lawyer". Ever heard of the expression "Philadelphia Lawyer"? As far back as I can remember that term was not meant to be a compliment.

    Class action lawsuits have to be the most egregious though. In the recent past we have seen lawsuits against tobacco companies, asbestos manufacturers, grain elevator operators and the list goes on and on. I’m not saying that these companies should not have been sued for the damage they have done whether intentional or not. I’m saying that class action lawsuits do not benefit the plaintiff. There may be hundreds of plaintiffs involved or even thousands and each one has his or her story of the damage done to them or their family. When all is said and done though, the plaintiffs walk away with a pittance compared to that of the attorney who may have never even heard of that company before the suit began. I’m not saying that the attorney does not deserve to be compensated fairly because I understand the expenses that are necessary and the investigations that have to be done to prove their case. I’m saying that the way things are set up now it favors the attorney and not the plaintiff that has to live with the damage that has been done.

    I’m sure Nebraska has its share of good attorneys and I do not disparage anyone for taking up on this profession but the profession and some its practices need to be revised and cleaned up. I have seen so many class action lawsuits litigated and won in the business I’m in such as hearing loss, carpal tunnel syndrome and PCB (poly chlorinated biphenyl) exposure just to name a few. My medical coverage has become more and more expensive due to two major factors; medical professional negligence and insurance to protect good doctors from unreasonable lawsuits by hungry attorneys. Pain and suffering awards account for the largest portion of the awards in many cases that I have seen. This is because that is where the majority of the attorney’s fee comes from. It’s not rocket science

    . I don’t have the answer, I wish I did. You however are young and ambitious from everything I’ve been reading. Good for you Kelly, I’m glad to see that. Now go and change the world.

    PS Come to Philadelphia sometime and work with one of the Law firms here for some experience. It’ll open your eyes I guarantee.

  6. I'm speaking from a personal point of veiw which happens to still be a luxury I enjoy.
    The innocent of the negligent?
    My, My, trusty getto. Every 'victims' dream justifacation.
    The prob. is no matter what the circumstance, this is the defense.(I know that is not literally true, I'm in a hurry here)
    As long as people are greedy, whiney with a everyone is against me & I deservse a piece of the pie attitude, it's prob. only going to get worse.

  7. Hey l>t: Sorry 'bout that one, it was a typo. S'posed to be 'innocent or the negligent.' Oops! And people aren't greedy. Not quite sure why you think they are. Only a small fraction of people file lawsuits, and well over 90% of lawsuits are business related (like collection, real estate, business litigation). Torts make up a tiny portion of the lawsuits filed and litigated in this country each year. You can find out your own local percentage in your locality by doing a search using the codes assigned to the files when the cases are filed. It's a myth that this is some kind of problem or tax on society. There's no factual basis for the assertion. It's 100% opinion.

    And to Kelly: I'm putting you on the blogroll, I like your site.

    BTW: Talking on a cell phone, changing the radio isn't negligent. Not quite sure why you think it would be. Negligence = the failure to act reasonably. Changing the radio station or having a conversation isn't unreasonable. Non-negligent accidents and injuries happen all the time and are not compensable. It's only the ones that result from negligence that result in viable, recoverable lawsuits. Which, in my experience, isn't very many.

  8. It's at least arguable that talking on a cell phone is negligent. Seems to me that's a jury question. Thanks for putting me on your blogroll. I don't have one but I'll have to put up a link to your blog too.

    Taking the cell phone question again, put it to the Hand formula if you want.

    For those who haven't been to law school, Judge Hand's formula is as follows: behavior is negligent if
    the burden of not acting in that way is greater than the probability of the harm multiplied by the extent of the harm.

    What exactly is the burden of not talking on the phone while you drive? The harm that could occur is pretty clear. It seems the probability of harm would be low, which may be damning to a plaintiff's case. But in reality the litigated question is the burden, is it not?

    Aren't there things you do that are, most likely, negligent? I know people that read while they drive. One in particular studies physiology with his map light at night while he drives down the highway. People change CDs, sometimes having to reach down to the floor on the passenger side to get them. People take off their coats while they drive when it gets too warm.

  9. trusty G. If what you say is true then good. Kelly knows I have a lawyer predujuce that I am try to see through.
    Because some day, I might have to face a lawyer again & I want to be prepared

  10. Oh, no, Kelly . . . me negligent? Why never . . . ;^)

  11. Kelly, you seem to be adding the concept of intent into negligence, and I think this is where you go wrong.

    Negligence doesn't require intent. I don't intend to hit someone when I run the stop sign, but that doesn't mean my actions don't fall below the standard of care. Your cellphone example is faulty because the mere presence and use of the cell phone is not negligence. It may go to the evidence, but if the other car was speeding, or ran the stop sign, the use of the cell phone alone, assuming the driver was obeying the rules of the road, will not change things.

    Our society generally believes you pay for the harm you cause. While I realize that being a quadraplegic and getting to stay home and watch TV all day sounds like fun, I think you forget some things. Number one, anyone who is in a serious accident likely makes themselves uninsurable for the rest of their lives, especially if they can no longer work. That means medical bills are paid out of pocket.

    You also seem to argue that just because loss of enjoyment of life and pain and suffering are difficult to quantify, that they should not be compensated for at all. Yet they do have value, don't they? Sure, money is an imperfect and ultimately inadequate way of giving that value back, but it's the only one we have. Would you rather we simply place no value at all on it?

    If anything, tort law merely shifts costs on to the responsible party. The purpose of tort "reform" is to limit the ability of those with wealth to be held accountable for their tortious acts. Which is why almost all tort "reform" centers around damage caps.

    If one is a conservative, this should be an outrage to you. You are taking the power to decide damages away from the individuals and giving it to the government. A government which has never heard the facts of the case.

    As for punitive damages in your example, the damages would actually be attributed to all members of the probate estate in an amount to be determined by the jury. However, your point is well taken - why should the individual benefit from punitives? Perhaps the better way to do things would be for punitives to go to victim's compensation funds - or maybe the state's Medicaid fund to help pay the bills that we taxpayers already pay of those who can't afford medical care. At any rate, to the benefit of society as a whole.

    What should not happen is that punitives should be capped. That completely guts the purpose of punitives - which is to deter certain detrimental conduct.

  12. Trusty G., I'm not one who usally has a problem admitting ignorance but... You tell me people aren't greedy & here we debating Tort Reform & Caps on damages. Hmmm
    j-g talks about 'hungry attorneys'.
    Well, someone has to hire the 'hungry Attorney'. & we know the 'hungry Attorney' gets the job.
    Look, I know I'm not qualified to talk 'Law' but some of this envolves human nature & that I am qualified in.

  13. I'm back after the weekend, and I'll respond to a couple of your comments.
    I'm not importing intent into the negligence analysis. If someone acts intentionally (fitting into one of the major intentional torts) I have no problem with them paying for the rest of their lives.
    It has been said that punitive damages are meant to deter conduct. But that's one of the effects of tort law. Tort law serves the dual purpose of compensating the victim and shaping conduct to be economically efficient. When you throw punitive damages into it, then you're importing moral concerns into a foreign environment. Tort law makes no moral judgments. Your suggestion that it would go into a victim compensation fund makes it more palatable to me.
    I am a conservative, but taking these questions away from the jury doesn't bother me. I guess the 7th Amendment doesn't occupy a special place in my heart. And besides the point, constititionally speaking the legislature has such power.

    My biggest problem is that I fear for people who get enormous judgments against them for mere negligence. I don't like how damages are calculated. Now if lost wages were calculated along the same lines as worker's compensation payments, I would have no problem with that. And while pain and suffering, etc., are definitely worth something, juries in many instances have proven themselves to be irresponsible. A lot could be accomplished simply by limiting what kinds of arguments plaintiffs' lawyers could make. And maybe legislatures should put forth formulas to help the juries, I don't know.

  14. "I am a conservative, but taking these questions away from the jury doesn't bother me. I guess the 7th Amendment doesn't occupy a special place in my heart. And besides the point, constititionally speaking the legislature has such power."

    There is nothing less conservative than reducing access to a jury.

    I don't understand your beef with paying for the mistakes your harm causes. In reality, for most people their exposure is limited to their insurance coverage, because they are largely judgment proof. If you've got significant assets, and failed to adequately insure, why should you receive protection?

    And why shouldn't the person who you harmed be entitled to full compensation for those injuries?

    "And while pain and suffering, etc., are definitely worth something, juries in many instances have proven themselves to be irresponsible."

    According to. . . . ? Do you know what the average jury verdict in a tort case is? $28,000. Judges already have the right of remittur, and parties can appeal. Why limit them more? Because a few mistakes were made in cases you read about in a newspaper? You're advocating wholesale changes on what are likely statistically insignificant anomalies.

    Why are legislators who have never heard the facts of the case going to get things any more right than juries?

  15. Legislatures are eminently capable of gathering sufficient information to set forth rules of general applicability.

    And yes, there are many judgment-proof people. But the most vulnerable class of people are the middle class, who could get a judgment lien on their home for a momentary lapse of care. I'm not saying that tort victims aren't deserving of compensation. I am saying that the tort system has problems. I'm not even necessarily advocating any particular type of reform. The basic purpose of this post was to educate my mostly non-lawyer readership about some of the problems with the tort system in an amusing way.

    My biggest problem is with some of the damages. Like I said, lost wages shouldn't be paid in full. And courts don't take into consideration innumerable mitigating factors, such as reduced costs of working in the labor force and the fact that the completely disabled are not actually working for their money anymore. Take it from a bird's-eye view of two people who make equal amounts of money. Before the accident:
    P works for $, keeps $
    D works for $, keeps S
    After the accident:
    P works for $, gives $ to D
    D does not work, gets $
    Where is the incentive for P to even work? It would probably be better for him to give up and depend on the welfare system as much as possible?

  16. "Legislatures are eminently capable of gathering sufficient information to set forth rules of general applicability. "

    So why even have courts at all? Why not just have the legislature declare the results of all cases by fiat? Those silly founders seriously overrated the right to a jury trial, eh? That's quite the conservative position.

    Your position assumes there is no insurance nor does it allow for the filing of bankruptcy. You've yet to explain why the victim of the other party's negligence, and his family, should have to suffer when they were not at fault.

    Nor is it a net loss to society if Defendant pays for the damages he/she causes. You've potentially left the other, non-negligent party on welfare as well. Your position appears to be simply that I don't like it simply because I don't like it.

    And of course, Defendant retains the capability to make more money in the future. Plaintiff has lost that capability.

  17. "Defendant retains the capability to make more money in the future. Plaintiff has lost that capability."
    Yes, but does that mean he should get as much money as he would have had if he was working? I think not. That's simply ridiculous.

    "So why even have courts at all?"
    Because the legislature can only set forth rules of "general applicability," as I said. Courts need to apply the rules set out by the legislatures.

    And besides that, you make it sound like I don't think a negligent person should pay at all. This is far from the truth. I simply don't accept the way that damages are calculated.