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Abstract:
The precautionary principle has become an increasingly important component of environmental policy, considered by the European Union to be a general principle of international law. As the precautionary principle has gained prominence, policy analysts have devoted increasing attention to the issue of implementation. Nevertheless, the practical implications of the principle remain unclear.

In this article, I argue that the principle has a plausible core meaning that yields a well-defined regulatory approach. The most non controversial norm apparently embodied in the precautionary principle requires that scientific uncertainty should not disadvantage those individuals who might be physically harmed by the potential hazard. This norm justifies environmental regulations based on the risk assessment reasonably preferred by potential victims. That assessment can be combined with standard economic methodology to quantify the injury cost of the potential hazard. That cost can then be evaluated pursuant to the regulatory procedure for known hazards. The resultant decision rule protects potential victims from the adverse consequences of scientific uncertainty as required by the norm apparently embodied in the precautionary principle. The decision rule requires a reasonable basis for the risk assessment adopted by potential victims. In applying the requirement of reasonableness, which determines the appropriate use of scientific evidence, regulators should be able to derive adequate guidance from the rules of international trade, as illustrated by the emerging case law that interprets the World Trade Organization Agreement on Sanitary and Phytosanitary Measures.

Although the decision rule is not allocatively efficient in important settings, such inefficiency should not be controversial as a matter of welfare economics, because the distributive objective embodied in the precautionary principle cannot be attained by the standard compensatory or transfer mechanisms-the tax and tort systems. In important contexts, though, the decision rule selects allocatively efficient precautions. Consequently, the decision rule is unlikely to be fully satisfactory for either the proponents or critics of the precautionary principle. My objective, however, is not to defend a particular conception of the principle. Rather, for the debate over the precautionary principle to be fruitful, it must move from generalities to the particularized guidance required for principled regulation. A concrete proposal for implementation is a step in that direction.

Abstract:
Throughout its history, the economic analysis of tort law has been largely limited to one question: How should tort rules be formulated so as to minimize the social cost of accidents? Throughout its history, the economic analysis of tort law has also been controversial. The two phenomena are related. It is highly controversial whether tort law should minimize accident costs to the exclusion of fairness concerns, which in turn has fostered the belief that the economic analysis of tort law is controversial.

The most forceful critique has come from those who maintain that tort liability is best justified by the principle of corrective justice. This principle is based on an individual right that imposes an obligation or duty on another individual. A duty-holder who violates the correlative right has committed a wrong, creating a duty to repair or correct any wrongful losses suffered by the right-holder. This rights-based principle of justice purportedly rules out the economic analysis of tort law.

Such sweeping claims about the irrelevancy of economic analysis must be understood in context. If the appropriate rationale for tort liability is a rights-based principle such as corrective justice, then the justification for a liability rule does not depend on whether it is allocatively efficient. Economic analysis is “ruled out” for being irrelevant to the rights-based justification for tort liability.

Allocative efficiency does not need to be the norm of tort liability in order to make economic analysis relevant. Economic analysis is not limited to issues of allocative efficiency and cost minimization. It is an open question whether a rights-based tort system would employ economic analysis, and if so, how.

To address this question, I specify the substantive content of an autonomy-based, individual right that is both allocatively inefficient and fully compatible with the relevant requirements of welfare economics. As I have argued at length elsewhere, such a right also provides a good description of tort law. Thus, the idea that economic analysis is incompatible with or irrelevant to a rights-based principle of justice is mistaken. I conclude by arguing that economic analysis is integral to any plausible rights-based tort system.

Abstract:
Tort law provides awards of punitive damages for reasons of retribution and deterrence. In light of a recent decision by the U.S. Supreme Court in Phillip Morris USA v. Williams, the retributive rationale for punitive damages will inevitably come under heightened scrutiny. The case involves a punitive award of $79.5 million that is 97 times greater than the compensatory damages, making it presumptively unconstitutional under the Court's punitive damages jurisprudence. The Court, though, has never addressed the constitutional issue in a case involving serious bodily injury or death, and so Williams poses a number of new questions. How can compensatory damages provide an appropriate baseline for evaluating punitive damages in a case of wrongful death, given that monetary damages provide no compensation to a dead person? What is the appropriate baseline? Any future deterrence provided by a punitive award cannot protect the decedent's tort right, and so the award must be justified exclusively in terms of retribution. Is retribution inherently subjective and arbitrary, unless constrained by some objective measure such as the single-digit ratio between the punitive and compensatory damages? Or is there some way to translate retribution into dollars? These questions are not limited to wrongful-death cases and must be resolved by any court trying to determine whether a punitive award is unconstitutional for exceeding the presumptively required single-digit ratio between punitive and compensatory damages. These questions can all be answered once retribution is tied to the inherent limitations of compensatory damages, which yields a method for quantifying this form of punitive damages. Based upon government data and methodology involving the monetization of fatal risks, this method shows why vindication of the decedent's tort right in Williams justifies the $79.5 million punitive award. When formulated in this manner, vindictive damages satisfy the requirements of both substantive and procedural due process and provide a baseline for reviewing courts to determine whether any given punitive award, like one based on general deterrence, is excessive in violation of substantive due process. This method fully accounts for the reprehensibility factors that determine the constitutionality of a punitive award, while also explaining why the Court could defensibly rely upon procedural due process to reverse and remand Williams back to state court.

Punitive Damages, Retribution, Due Process of Law

Abstract:
This chapter for the Encyclopedia of Law and Economics (2d ed. forthcoming) provides a survey of the economic analysis of the law governing liability for defective products, commonly known as products liability. Sections 11.2 through 11.10 develop the economic framework for evaluating different liability rules. Sections 11.11 through 11.13 describe the impact that the products liability system has had on product safety, innovation, and the market for liability insurance. The remaining sections discuss the efficiency properties of the main doctrines in products liability.

Abstract:
This article, written for the first annual Access to Justice symposium at Loyola Law School of Los Angeles, addresses the implications of due process for tort reform. In a line of relatively recent cases, the U.S. Supreme Court has held that a tort award of punitive damages must satisfy the procedural and substantive requirements of the Due Process Clause of the U.S. Constitution. So far, constitutional tort-reform has been limited to punitive damages, but such reform is not necessarily limited to this area of tort law. As the article argues, other important tort practices raise the same sort of due process concerns that the Court has relied upon to justify the constitutional tort-reform of punitive damages practice. The Court's punitive damages jurisprudence may thus provide the foundation for a new type of broad-based tort reform.

Regardless of what one may think about the Court's foray into tort reform, constitutional tort-reform has desirable characteristics. Rather than addressing the substantive aims of tort liability, constitutional tort-reform is supposed to reduce or eliminate any unreasonable legal uncertainty generated by the tort practice in question. But as the article further argues, the neat distinction between substance and process cannot be attained in practice. Any reform designed to reduce legal uncertainty will depend upon a contestable conception of tort liability, a characteristic of constitutional tort-reform clearly present in the Court's punitive damage jurisprudence. The Court, though, does not have to reach the correct substantive outcome in order to make constitutional tort-reform desirable. If the Court adopts a reform that depends upon the wrong substantive conception of tort law, the states retain the power to adopt a different substantive objective for the tort practice. Constitutional tort-reform therefore can serve the valuable role of forcing state courts and legislatures to identify more clearly the substantive objectives of tort law, an issue of critical importance that has not been adequately addressed by the reform movements of the last century.

Abstract:
Market-share liability has been one of the most controversial doctrines in tort law, with a strong plurality of courts rejecting the doctrine on the ground that it radically departs from the fundamental principle of causation. Courts that have adopted this liability rule, though, believe they are adhering to the principle of causation. In the first case to adopt market-share liability, the California Supreme Court claimed that the liability rule is grounded upon an extension of alternative liability, a doctrine that has been accepted by virtually all jurisdictions. The court never adequately explained how alternative liability can be modified to yield market-share liability, and the only explanation provided by torts scholars involves redefining the tort right to permit compensation for tortious risk, conditional upon the occurrence of injury, rather than for the injury itself. However, courts do not conceptualize the tort right in these terms, for otherwise the doctrine of market-share liability would be uncontroversial. As this Article shows, market-share liability can be derived from alternative liability in a manner that neither redefines the tort right nor departs from the principle of causation. Alternative liability permits the plaintiff to prove causation against the group of defendants. This characterization of the causal rule has been recognized by some torts scholars, but has never been justified. The Article shows that evidential grouping is a defensible principle implicit in numerous cases involving analogous causal problems, including the asbestos cases. Evidential grouping not only explains the doctrine of alternative liability, it shows how a modification of that liability rule yields market-share liability largely for reasons given by the California Supreme Court. This conceptualization of alternative liability and market-share liability also explains the otherwise puzzling liability rule adopted by courts in the asbestos cases. Due to this doctrinal unity, the widespread acceptance of alternative liability should make market-share liability more widely acceptable.

Market-Share Liability, alternative liability, asbestos liability, evidential grouping

Abstract:
Tort law has always recognized the principle expressed by the Latin maxim volenti non fit injuria, or "a person is not wronged by that to which he or she consents." The absence of consent is part of the prima facie case for tort liability, distinguishing tortious behavior from socially acceptable behavior. Nevertheless, the value of consumer choice in strict products liability is surprisingly unclear. Consider the liability rules governing defects of product design or warning, the most important categories of product defect. According to the Restatement (Third) of Torts: Products Liability, "[t]he emphasis is on creating incentives for manufacturers to achieve optimal levels of safety in designing and marketing products." The optimal level of safety has no apparent connection to the amount of safety that would be chosen by consumers, because "consumer expectations do not play a determinative role in determining defectiveness." Whether a product is defective in these cases instead depends on "[a] broad range of factors," including "the nature and strength of consumer expectations regarding the product." In some cases, consumer expectations can be "ultimately determinative" of the liability question, but it is not apparent why the liability rules exclusively rely on consumer choice in only these cases but not others. Consumer choice could also limit liability under the assumed-risk rule, and yet assumption of risk is not an independent defense in products liability, deepening the impression that this body of tort law undervalues individual choice.

The impression is misleading. Strict products liability appropriately values consumer choice. The value of consumer choice, however, is obscured by the way in which the Restatement (Third) has de-emphasized the importance of consumer expectations. Properly understood, the value of consumer choice not only justifies the liability rules in the Restatement (Third), it also provides the key to understanding the important limitations of strict products liability, including those based on assumed risks.

Abstract:
Some environmental, health and safety laws emphasize safety over cost considerations by invoking the principle that safety matters more than money. Others rely on cost-benefit analysis (CBA) that equates safety and money. Despite their apparent inconsistency, the two regulatory approaches can be reconciled. The safety principle most plausibly stands for a distributive claim that in the context of nonconsensual risky interactions among strangers, the safety interests of potential victims deserve greater weight than the ordinary economic interests of potential injurers. To determine whether the safety principle is inconsistent with CBA, cost-benefit outcomes must be evaluated in light of the safety principle. The tort system, with its confluence of risk regulation and injury compensation, provides a good institutional setting for such an analysis. Evaluating cost-benefit tort rules in this light reveals that potential victims are inadequately compensated for certain types of nonconsensual risks threatening death, an inequity that can be quantified with cost-benefit methodology. The inequity is defensibly remedied by altering the duty of care to give safety interests greater weight than economic interests, the weighting sanctioned by the safety principle. The more exacting safety requirement reduces risk below cost-benefit levels. The added risk reduction is a form of compensation for potential victims that eliminates a windfall potential injurers would otherwise receive from cost-benefit legal rules. As compared to conventional cost-benefit outcomes, modified CBA yields welfare levels for potential injurers and victims that more closely approximate the welfare levels they would attain under conditions of actual consent or ideal redistributive institutions. Redressing the distributive inequity characteristic of some cost-benefit outcomes therefore produces a well-defined decision rule that modifies CBA in a manner that corresponds to the safety principle. Modified CBA satisfies the requirements of modern welfare economics and can accommodate a wide range of normative concerns. The approach also closely conforms to important tort practices, suggesting that it implements a version of the safety principle closely corresponding to the version adopted by the tort system. The value of modified CBA is illustrated by the structure it gives to the precautionary principle, a vague regulatory norm based on the safety principle that has become increasingly important and controversial in international law. The rationale for modified CBA shows how cost-benefit methodology can operationalize the version of the precautionary principle adopted by the Commission of the European Communities.

Cost-Benefit Analysis, Environmental, Health and Safety Regulations, The Precautionary Principle, The Safety Principle

Abstract:
This article, written for the symposium on Guns, Crime and Punishment in America, analyzes the relation between tort law and criminal behavior. The analysis reveals an inconsistency that requires redress. In applying negligence doctrine, courts have expressly recognized that the threat of criminal and tort liability does not induce perfect compliance with the law. By contrast, in applying the rule of strict liability for abnormally dangerous activities, courts assume everyone acts lawfully. For reasons illustrated by the tort cases involving the manufacture and distribution of handguns, courts should eliminate the inconsistency by applying the rule of strict liability in a manner that accounts for unlawful behavior. The use of strict liability to enforce the duty of care, which is expressly rejected by the proposed Restatement Third of Torts: General Principles, is faithful to the rule of strict liability in the Restatement (Second) of Torts. Moreover, the enforcement rationale for strict liability is consistent with other rationales for strict liability, including the reciprocity rationale. The value of the enforcement rationale for strict liability is illustrated by the tort cases involving handgun manufacturers. The enforcement rationale reveals that the appropriateness of strict liability depends on how the self-defense interests of non-criminal gun owners should be weighed against the competing security interests of individuals who do not own guns and are exposed to the risk of being injured by gun-toting criminals. In an analogous context, tort law has decided in favor of self-defense. The implications of this well-established tort principle provide a persuasive rationale for not applying strict liability to the manufacture and distribution of handguns, a rationale far superior to the existing rationale that dismisses the strict liability claim on the ground that the threat of negligence liability induces all gun-toting criminals to exercise reasonable care.