Making Tort Law: What Should Be Done and Who Should Do it
Posted: 17 Oct 2003
Date Written: 2003
The expansive application of tort law to business enterprise has established courts as regulators of the safety and supply of virtually all mass-produced goods and services, including those such as prescription drugs and medical care, upon which the lives and livelihood of most people depend. With the annual social overhead for tort litigation ranging into the hundreds of billions and less than 40% of the expenditure reaching injured plaintiffs, this tremendously expensive system imposes a heavy social burden, including all of the consequences for individual welfare when businesses pass through their litigation costs in lower employment and wages and higher priced and fewer products and services. The question naturally arises: what does society get in return?
In this book, the authors develop and rigorously subject the tort system to a theoretically sound and thoroughly realistic mode of normative analysis. Starting from the premise that tort law should be designed to promote the well-being of individuals according to the system they would choose before knowing whether they are victims or beneficiaries of the processes of production and the legal system, the authors show that if given the opportunity, individuals would prefer a legal regime that reduced total accident costs to a minimum. In view of this standard, the authors critically examine the most salient of the aims professed for tort liability: preventing socially inappropriate risk-taking; insuring consumers and others at risk against accident loss; redistributing wealth from well-heeled businesses to less well-off accident victims; and vindicating individual rights of plaintiffs to a "day in court" and "corrective justice."
The authors conclude that, with appropriate reforms, the system of tort liability can usefully serve a deterrence function, complementing administrative regulation, bargaining and reputational effects of the marketplace, and other social forces to prevent businesses from taking unreasonable risks. In short, tort law may effectively "smoke out" and sanction abuses and inefficiencies in the mass production, distribution, and use of products and services, and thereby aid in deterring them. However, the authors demonstrate the superiority of legislatures in providing social insurance and redistributing wealth progressively, and emphatically reject tort law as a patently wasteful, ineffective, and unnecessary means of securing accident insurance or wealth redistribution. They also dismiss deontological assertions concerning the vindication of individual process rights as sentimental and distracting myths - precisely because these justifications demand the allocation of legal and other social resources regardless of the adverse effects on individual well-being.
Having identified deterrence of unreasonable risk as the primary function of tort law, Fried and Rosenberg then elaborate a practical program of system-wide and specific reforms of tort law to facilitate its deterrence function. Among the most important issues addressed are those concerning the timing of judicial intervention, scope of sanctions, and scale of enforcement and the related questions about predicating liability solely on risk, the relative benefits of strict liability versus negligence and contributory versus comparative negligence, and the warrant for non-pecuniary and punitive damages. The book's further contribution is in conducting a comparative information-cost analysis to derive guidelines and "default" rules for allocating the tasks of devising and implementing reforms to legislatures and courts, according to the institution best suited to take the lawmaking initiative.
JEL Classification: D00, D62, K00, K13, K23, K41
Suggested Citation: Suggested Citation