SAVING HUGE COSTS?

[Note:  This posting is a continuation of a report on the development of a civics unit of study.  This unit is directing students to formulate informed positions on a governmental topic:  ground rules overseeing tort law.  It is being developed in real time.  Writer wants to identify his basic source of information, the Great Course’s course, Law School for Everyone.[1]]

In the last posting, this blog began reporting on its development of a unit of study in which a tension within tort law is highlighted; i.e., strict liability vs. negligence as a standard by which to assign liability in a tort case.  After establishing the fact that tort law development took a turn in mid-nineteenth-century courtrooms – from the strict liability standard to introducing negligence as a determinant factor, that posting addresses a reason for this shift:  industrialization.

          To further understand this shift, that posting describes how there seems to have been two basic explanations:  industrialization caused higher density of population – and more opportunities for joint accidents – and a strict liability regime was proving to be very expensive to business interests.  And one business it particularly was hurting was the railroads.

          Railroads, given the technology of that time, caused or provided many opportunities for harm to be inflicted.  Here is what Edward K. Cheng says of this “minefield:”

Incidents involving trains back in the nineteenth century were frighteningly common.  People and other vehicles were hit by trains at crossings.  Steam boilers exploded.  And sparks and cinders from coal-powered locomotives set fire to fields.  If you are a railroad company operating under a strict liability regime, you pay for all those harms.[2]

As was explained in the last posting, railroad companies, under a strict liability standard, were held liable for all those occurrences and, of course, that seriously hit their bottom lines.  So, if one looks at that history from an economic/political perspective, one is apt to believe profit-concerns caused courts to shift to a negligence standard.

          But before one casts strict liability to the dust bin of history, one can observe that it has made a limited, but important comeback.  Beginning with court decisions in California, dating to the 1960s, there is one area in which strict liability has become the standard again  and that is in product liability.

          One buys a consumer product – say an electronic appliance – and the thing is wired incorrectly.  At home, that person uses the product, causes a spark, hits an accelerant, and the house burns down.  Is there negligence?  Probably, but by whom?  Some worker on the assembly-line?  Again, probably, but which one?  And if the worker is identified, can he/she afford making the homeowner whole?  Probably not.  In those cases, the standard has again become strict liability and that liability falls on the business that produced the product.

          Yes, the company can question whether the product was used incorrectly and if so contributed to the fire.  It therefore can claim the company should not bear full liability or any liability – this will be further addressed in a subsequent posting.  But in the main, courts today utilize strict liability when it comes to assigning responsibility in tort claims against companies that produce and sell consumer or industrial products. 

And in passing, this evolving legal sentiment exemplifies how case law – common law – changes over time, albeit slowly.  And for those cases responsible for instituting change, they become famous cases within legal circles.  They are famous but considered weird – out of the usual.  Not only do these cases get a bit of notoriety, but so do the judges that issue the decisions in those cases; judges like Oliver Wendell Holmes and Benjamin N. Cardozo.

But despite this tantalizing aspect of common law – as opposed to civil law – one can ask:  is this the best way to go about handling torts?  Should the system shift totally away from common law and join many other nations by not relying on precedent, but on statutory law?  This account briefly mentions this at this point, because from here on, these postings will just accept a common law bias. 

In evaluating this nation’s adjudicating torts, citizens can and, perhaps, should question this basic alignment.  And, in turn, one should understand that to keep a common law system, as opposed to shifting over to civil law, is a political decision.  It should be mentioned, there have been efforts to rely more on civil law. 

But what are the concerns over common law?  Reformers cite several concerns;[3] many regarding the quality of juries.  Common law often leaves certain aspects of law or torts somewhat ambiguous.  And reformers argue that that leaves juries free to succumb to emotional appeals.  For example, often observers gauge juries as being too generous with defendants’ money in awarding damages. [4]   There have been legislatures that have enacted caps on such awards to reign in that generosity.

Reformers have also looked at the ease of filing class action lawsuits.  A class action lawsuit occurs when many plaintiffs join forces to make a claim in court for harm they all have allegedly suffered from the actions of a defendant.  Reformers have criticized this type of legal action and have called for tightening the rules allowing them.

Why?  Because associated with class action, there are two effects:  one, by joining forces, legal fees are minimized for individual plaintiffs making the tort action more efficient for them; and, two, since the cost is much less, the threshold for motivating potential plaintiffs to initiate a lawsuit is drastically increased and consequently leads to more legal actions.  If one is harmed to the tune of $100, he/she might not sue if he/she is acting alone, but if it’s a class action suit, the calculations are different.

Perhaps this issue should be introduced when any instruction begins talking about tort law and makes the distinction between common law and civil law.  As this blog has mentioned, this development is in real time and this issue came up at this point of that development.  Next posting will address one of those basic concepts associated with tort law:  duty.

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[1] Edward K. Cheng, “Torts,” Law School for Everyone – a transcript book (Chantilly, VA:  The Teaching Company/The Great Courses, 2017), 230-445.

[2] Ibid., 246.

[3] There is an ample literature over the issue of whether America should be a common law nation or a civil law nation.  Different aspects of this question, in turn, have their own scholarly works.  For example, one article that argues for a “mix” system and is relatively easy to understand is offered by University of California professor, Stephen D. Sugarman.  See Stephen D. Sugarman, “A New Approach to Tort Doctrine:  Taking the Best from Civil Law and Common Law of Canada,” n. d., this is a document that downloads and is designated with the following:  [DOC].

[4] A dramatic rendition of this – much to the delight of audiences – is found in the feature film, The Verdict.  See Sidney Lumet (director), The Verdict, 20^th Century Fox, 1982.

TO FAULT OR NOT TO FAULT

Inevitably, from time to time, one does something that causes something else to happen that the person did not intend to happen.  Less frequently, when one does such a thing, the unintended effect hurts someone else; the act causes harm.  For example, a visitor to a neighbor’s house is carrying an urn of hot sauce, the pet of the house runs across his/her path, and the visitor trips.  This results in the hot sauce spilling all over an expensive sofa, staining it.  Oh well.

          The visitor, who if was on the lookout for the pet, would have avoided the accident.  But he/she was not.  One can say the pet caused the harm, but surely, the pet did not set out to have that hot sauce all over the couch.  One can also argue the visitor caused it.  No one, though, would say the visitor was at fault for the harm.  Should the visitor be held liable for making the sofa-owner whole?  To generalize the question:  should a person be held liable for a resultant harm if the person caused the harm, but, as in the example, was not a fault?

          This question, one perhaps difficult to answer, was not difficult before the nineteenth century.  If a person caused a harm, he/she was held responsible and liable in those earlier days.  But, as pointed out in a previous posting, case law – common law – does change.  It changes slowly, but it does change and this shift from automatically holding the person who caused a harm liable – called strict liability – to the more commonly held standard today, holding the person who is at fault – called negligence – liable was a profound change.

          As alluded to, that shift took hold in the nineteenth century.  An historical question is why:  why did this nation’s courts begin to prioritize fault over cause?  In tort cases – ones that depend on determining fault – there are two types:  intentional fault and negligence fault.  Here, the focus is on negligence.[1]  What is negligence?

          To answer that question, a look at one of the establishing cases for this newer standard, is helpful.  In Blyth v. Birmingham Waterworks Co., a harmed citizen sued the waterworks company and based the suit on a local statute.  The statute incorporated Birmingham Waterworks to supply that city with water.  Further, the statute provides language as to how the resulting piping should be maintained.

          So, in this case, Blyth is the plaintiff and Birmingham Waterworks is the defendant.  The defendant had laid piping near the plaintiff’s house.  Due to cold weather, that main leaked and caused damage to the plaintiff’s house.  This led to the lawsuit in which the plaintiff accused the defendant of negligence.  The court, after hearing the evidence, decided in favor of the plaintiff.  In so doing, the court provided what has become the primary definition for negligence:

In Negligence to prove defendant’s fault for liability to be established, the defendant must be in breach of a duty of care … it means that the defendant must do something that a reasonable person would not do, or omit to do something that a reasonable person would do …[2]

Here is another version in more common language:

Negligence is the failure to do something a person of ordinary prudence would do or the taking of an action that a person of ordinary prudence would not take.  A mere accident that is not occasioned by the failure to take such an action or the taking of such an action does not qualify as negligence.[3]

This definition brings out certain concepts that will prove to be central in applying the principles of what has become tort law in the years that followed this mid-eighteenth-century case.  They include duty and reasonableness.

          From a historical perspective, one question becomes central:  why do the courts shift in this way, from strict liability to negligence in the mid-1800s?  Apparently, chief among the theories explaining the change have to do with the effects of industrialization.  Intuitively, this makes sense.

          If one thinks about it, industrialization transformed the demographics of the American population.  Prior to industrialization, the nation was large and agricultural.  Consequently, the population was spread thin throughout the nation’s landscape.  Further, such a sparse population finds it rare that people get into what are called joint accidents.  It was uncommon for one person to run into another person or to have the situations that lead to accidental and harmful events to occur.  When they occurred, accidents most likely happened between or among family members.

          Strict liability, when rare accidents took place, satisfied any contention that arose due to any harm.  “You did it, you’re responsible” could have summarized how people saw such events.  But industrialization changed all that.  With the factory system blossoming around the country, the population was drawn into those factories’ locations – denser factory towns sprung up.  Also, supporting those developments were the financial centers, like New York or Chicago, and those cities became both industrial centers and supportive service centers.  Their populations exploded.

          For example, the New York urbanized area experienced the following growth:  in 1800, population was 60,000; in 1850, it was 590,000; in 1870, it was 1,443,000; in 1900, it was 3,802,000; in 1930, it was 10,090,000; and in 1970, it was 16,207,000.[4]  With those numbers, one can readily visualize the incidence of joint accidents becoming ever more frequent and with that increased frequency, one can also visualize the vast array of factors and conditions leading to those accidents. 

Yet strict liability doesn’t much care about such factors in terms of determining fault.  Even in the simplest car accident:  driver A and driver B run into each other.  With strict liability, driver A pays for driver B’s harm and vice versa.  One doesn’t ask who was to fault.  With industrialization, with the advent of automobiles, for example, strict liability made less sense.  If driver A was at fault – perhaps ran a red light – then he/she should pay for all the damages assuming driver B demonstrated no negligence.[5]

So, to answer the question – what to do? – the obvious solution was to introduce the consideration of negligence.  And so, one explanation of why strict liability gave way to considering negligence was, as just demonstrated, naturally worked into court decisions over the latter part of the nineteenth-century.  But there is another view and Robert J. Kaczorowski reports on this development.  He states:

[Morton] Horwitz argues, the original standard of tort liability was not fault but strict liability.  He maintains that the fault theory of negligence was not established in tort law until the nineteenth century by judges who sought “to create immunities from legal liability and thereby to provide substantial subsides for those who undertook schemes of economic development.”  The modern notion of negligence, then, was incorporated into tort law by economically motivated judges for the benefit of businesses and business enterprises.[6]

One can interpret this view as being a more economic and political explanation.  By shifting to a negligence standard, the accusation is that the affecting judges took a pro-business posture and, in effect, began to provide business, especially big business, substantial subsidies.  The relevant court decisions allowed and continues to allow large corporation to escape sizable judgements against them.

Today, there is a complex landscape of tort law where there is a mixture of standards.  This blog will address some of them.  There is a reason why effective lawyers do well in securing high incomes; it is a difficult field in which to practice.  That field is composed of a few intentional tort cases – usually treated as criminal matters – a large sector of negligence cases, and a much smaller area of strict liability cases. 

This blog will address this tension between strict liability and negligence in, at least, the upcoming posting.  It will also look at the tension between malfeasance and nonfeasance, and factual causation and legal causation.

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[1] Intentional tort will be addressed in the future.

[2] Following standard citation form for case law:  11 Exch. 781 (1856).

[3] “Blyth v. Birmingham Waterworks Co,” Case Briefs, n. d., accessed September 16, 2018, https://www.casebriefs.com/blog/law/torts/torts-keyed-to-prosser/negligence/blyth-v-birmingham-waterworks-co/ .

[4] “New York Urbanized Area:  Population & Density from 1800 (Provisional),” Demographia, n. d., accessed September 16, 2018, http://demographia.com/db-nyuza1800.htm .  While the population numbers are estimates, they are based, in part, on Census data.

[5] Or if the accident is no one’s fault, still each driver pays for the other’s damage or harm.  With strict liability, fault plays no role in assigning liability.

[6] Robert J. Kaczorowski, “The Common-Law Background of Nineteenth-Century Tort Law,” Fordham Law School, 1990, accessed September 17, 2018, https://pdfs.semanticscholar.org/74ba/0630b8c59bb5fcef22fbffaf96e56b91282f.pdf .