Free Speech, Breathing Space, and Liability Insurance

Abstract

An important piece of the "speech-tort" picture has been almost completely missing from doctrinal and policy analysis: the role played by liability insurance in protecting speech. In New York Times v. Sullivan (1964), the Supreme Court began adopting First Amendment restrictions on liability for defamation and other speech torts: false light, intentional infliction of emotional distress, and public disclosure of private information. The Court’s purpose was to create 

“breathing space” for valuable speech, by precluding  liability for some speech that has no constitutional value in itself. 

However, there is a little-known but highly important liability insurance regime that also affords breathing space, more broadly than the constitutional rules, by insuring against liability for unprotected speech and the costs of defending virtually all speech-tort suits, regardless of their validity. There have been decades of extensive legal scholarship about the First Amendment’s restrictions on speech-tort liability. Yet this scholarship has largely ignored the fact that all of the liability for the speech torts that the First Amendment does permit can be and often is covered by liability insurance. In addition, Supreme Court Justices Clarence Thomas and Neil Gorsuch recently have separately criticized existing constitutional limitations on liability for defamation as too broad, without any mention of the widespread existence and availability of insurance protecting against liability for defamation. The Justices’ criticisms of defamation law garnered a lot of attention and a barrage of responses, which have also omitted any reference to the possible relevance and significance of liability insurance to the debate about the proper scope of liability for defamation. 

This Article takes insurance against speech-tort liability out of the shadows, bringing First Amendment theory and doctrine into the orbit of thinking about liability insurance and its operation in practice. The Article identifies and analyzes the sources and scope of the coverage that insurance provides against speech-tort liability, combining insights about the complex and intertwined consequences of the threat of speech-tort liability with what we know about how liability insurance both creates breathing space and attempts to mitigate excess risk-taking by those who are insured. The Article argues that, whether the end result is to change the law or simply to provide a firmer and more knowledgeable foundation for maintaining the law as it now stands, proponents of reform should either invoke the availability of liability insurance in support of their position or explain why their analyses ignore it. And opponents of reform should explain why they maintain their support of the status quo in spite of the availability of liability insurance. Finally, the Article considers the relevance of liability insurance to different theories of tort liability and analyzes the principal possible alternative to the current constitutional limits on liability, a negligence standard, concluding that such a standard would have considerable deficiencies.

Keywords: torts, liability insurance, defamation, breathing space