When is Sexual Abuse Within the Scope of Employment?

Martha Chamallas, Vicarious Liability in Torts: The Sex Exception, 48 Val. U. L. Rev. 133 (2013), available at SSRN.

Martha Chamallas’s Monsanto Lecture, Vicarious Liability in Torts: The Sex Exception, is timely and important, inviting renewed scholarly attention to the oft-neglected topic of vicarious liability.

Since the 1990s, courts have faced a steady stream of suits brought against schools, hospitals, religious institutions, and other entities for sexual abuse committed by employees. In addressing these suits, Chamallas argues, courts have adopted an unjustifiably narrow approach to vicarious liability.

Modern doctrine maintains that an employee’s on-the-job wrong will be imputed to her employer when the wrong is foreseeable, or involves the realization of risks characteristic of the employer’s enterprise. Under these tests, vicarious liability has at times extended to employees’ intentional acts of physical violence, as well as to negligence perpetrated by drunken, off-duty employees.

It is thus surprising, Chamallas argues, to find prominent cases in which courts decline to impose vicarious liability for sexual abuse. For example, the California Supreme Court refused to hold a hospital liable for its medical technician’s molestation of a young woman during the performance of an ultrasound, and also declined to hold a school district liable for a teacher’s abuse of a student during a school-sanctioned extra-curricular activity. According to Chamallas, modern legal tests for “scope of employment” are capacious enough to permit liability in cases such as these. Moreover, standard instrumental rationales for respondeat superior (“let the master answer”)—that it incentivizes appropriate precaution-taking by employers, better ensures compensation of victims, and fairly comports with the risks characteristic of the employer’s enterprise—arguably also favor liability. So why would courts decline to hold employers liable under the circumstances?

Chamallas maintains that the pattern of decisions reveals an implicit acceptance by judges of the outdated notion that sexual misconduct is ‘special.’  Whereas judges will treat cases in which an enraged employee attacks another, or a drunken employee carelessly injures a third party, as an expression of ‘normal’ human tendencies, they will regard cases of sexual abuse as the product of the individual employee’s ‘deviant’ compulsions.

The treatment of sexual abuse as exceptional, Chamallas argues, reflects a traditional bias in the law—one exposed long ago in feminist critiques of the law of sex crimes and workplace harassment. Although today courts are closer to accepting the idea that sexual violence is first and foremost violence, and that sex-based discrimination is first and foremost discrimination, courts applying tort law have not learned the equivalent lesson. Chamallas speculates that this failing may be attributable to judges’ cognitive biases, as well as to the power of stock, positive images of organizations such as hospitals, schools, and churches. Both kinds of error, she maintains, encourage judges to fixate on the individual abuser’s proclivities while ignoring the context that sets the stage for the abuse.

Chamallas next identifies developments in federal and foreign law that point the way to a better approach, including the Canadian Supreme Court’s 1999 Bazley decision. It imposed vicarious liability on a non-profit that operated treatment facilities for emotionally disturbed children on the ground that abuse of children within its care by an employee was a risk characteristic of the enterprise.

The article concludes by recommending a rule that would impose vicarious liability for employee sexual abuse “if an employer materially increases the risk of tortious action either by conferring power or authority on its employees over vulnerable persons or by regularly placing its employees in situations of intimate or personal contact with clients, customers, or other potential victims.”  This rule, Chamallas maintains, would help correct for the tendency of courts to apply scope-of-employment tests narrowly in sexual abuse cases, yet would nonetheless spare employers from liability for abuse merely coincidental to employment—e.g., a case in which a custodian employed by a bank takes advantage of his building access to molest an adult bank employee.

As one would expect from an entry into Valparaiso’s prestigious Monsanto Lecture series, there is a great deal to learn from Chamallas’s thoughtful and broad-ranging discussion. Of course, the lecture format also limits the inquiry, such that certain claims might benefit from further development.

First, more work may be required to establish the genuineness of the puzzle that animates the article. It is true that modern courts sometimes invoke facially broad tests for scope-of-employment, and have sometimes applied these tests to impose vicarious liability for employees’ intentional wrongs. Still, it may be an error to infer from these formulations, and a relatively small sample of cases, that there is a general judicial willingness to hold employers liable for employees’ intentionally inflicted injuries. After all, courts use similarly broad generalities in describing concepts such as “duty” and “proximate cause,” yet an examination of specific decisions demonstrates that, in application, these concepts are more circumscribed than first-cut verbal formulations suggest. In short, more in-depth analysis of the reasoning and results of more decisions may be necessary to establish that vicarious liability is particularly narrow in sexual abuse cases.

Second, even granting the genuineness of the puzzle, Chamallas’s explanation of the exceptional treatment of vicarious liability for sexual abuse raises some puzzles of its own. If judges’ reluctance to impose vicarious liability in these cases is explained by their cognitive biases and their reliance on stereotypes, what has permitted them to mitigate these influences in reforming rules of criminal and employment law, but not tort law?

Finally, it is worth considering whether there is a principled account of vicarious liability that would support Chamallas’s judgments about how certain sexual abuse cases should be decided, but does not turn on the sexual nature of the misconduct. Suppose a cable television technician with no history of improper conduct sexually assaults an adult woman while in her home to perform scheduled repairs. It seems likely that vicarious liability would not attach under Chamallas’s proposed rule. Yet it is not clear to me that ‘no employer liability’ is the right answer, nor that the sexual nature of the assault is critical to a proper determination of the issue. Suppose the assault were nonsexual and instead part of a robbery. For both versions of the assault, might there be a single basis for employer liability—for example, a non-delegable duty owed by the employer to its customer, given the nature of the services rendered?

However one answers these questions, Professor Chamallas is to be commended for her enlightened and enlightening analysis of the critically important doctrine of respondeat superior.

 
 

Tort Liability as Compensation

Mark Gesitfeld, Compensation as a Tort Norm, in Philosophical Foundations of the Law of Torts (John Oberdiek ed., 2014).

For more than a decade, Mark Geistfeld has been developing an original and sophisticated theory of tort. Professor Geistfeld’s work has been characterized by a remarkable and admirable confluence of four characteristics. First, the work is attentive to, and respectful of, the fundamental commitments and nuances of tort doctrine and policy. Second, Professor Geistfeld’s writings display a deep knowledge of tort history and theory. Third, the work deploys a deeply sophisticated knowledge of economics but does so in language that is intelligible to those of us who are not legal economists. Fourth, the work is sensitive and responsive to the criticisms that legal philosophers have made of the economic analysis of torts. The result is an impressively original tort theory in the making. In Compensation as a Tort Norm, published in John Oberdiek, ed., Philosophical Foundations of the Law of Torts (Oxford, 2014) Professor Geistfeld both summarizes and extends his project.

The central claim of Compensation as a Tort Norm is vividly counterintuitive. According to Professor Geistfeld, all tort law—especially that part of the law which obligates actors to avoid harming others and thus demands the avoidance of actions whose occurrence triggers the payment of compensation—is compensatory. Quoting Frederick Pollock, who was himself quoting Justinian, Professor Geistfeld begins his paper with the claim that the law of torts “has for its main purpose nothing else than the development of [the] precept ‘Thou shalt do no hurt to thy neighbor.’” Elaborating, Geistfeld quotes Percy Winfield’s restatement of this precept as the principle that “all injuries done to another person are torts, unless based on some justification recognized by law.” The natural way to read these remarks, I think, is to take them to assert that the infliction of injury is presumptively tortious. Therefore, the infliction of injury presumptively gives rise to a claim for compensation.

In equating tort with compensation Professor Geistfeld, who has a Ph.D. in economics, is rejecting the core premise of his tribe. Orthodox law and economics takes it as axiomatic that the role of tort law is to deter harms that should not be inflicted. The payment of money damages serves primarily to induce appropriate precaution by others going forward, and only secondarily to repair harm wrongly done. It is therefore important to figure out just why Geistfeld thinks Pollock and Winfield are endorsing a compensatory conception of tort. Their epigrammatic remarks are subject to interpretation. One might, for instance, read them to say that the infliction of injury brings the law of tort into play. Professor Geistfeld, I think, interprets these epigrams to embrace a compensatory conception of tort law because he reads them to say that injury demands redress. The role of tort law, then, is to compensate for injury. Presumptively, all injuries give rise to claims for compensation, though that presumption may be defeated by showing that the injury in question was justifiably inflicted.

However we interpret Pollock and Winfield, Geistfeld’s first premise is clear. Compensation as a Tort Norm starts from the presumption that injury demands redress and sets out to explain and vindicate this presumption from an economic point of view. Taking to heart philosophical critiques of economic analysis, Professor Geistfeld accepts that tort law and tort theory must start with the specification of an initial entitlement. The choice we face, he explains, is a binary one: either people are entitled to the physical integrity of their persons or they are not. If they are entitled to their physical integrity, those who would impair it must pay for the right to do so. If they are not entitled to their integrity, they must pay others to respect their integrity. The correct choice is clear: people are entitled to the physical integrity of their persons. That right to physical integrity is itself part of a larger right of personal autonomy, a right to govern one’s own life so long as one does not violate the equal rights of others. An economic conception of tort is thus grounded in a liberal political philosophy.

Translating physical integrity and personal autonomy into economic terms, Professor Geistfeld extracts two lessons. The first lesson, which is specifically indebted to Ronald Dworkin’s writing on “equality of resources,” is that people must pay “the true cost of the lives that they lead.” In economic terms, this means that they must internalize the costs of (all) the injuries they inflict. Here, the affinity with Pollock and Winfield is clear. Because people must pay the “true cost of the lives they lead,” harm to others must be compensated. The second lesson that Professor Geistfeld extracts by translating autonomy into economic terms is that the cost-benefit analysis of risks of harm must proceed by adopting a “willingness-to-accept” measure of cost-justification. The alternative “willingness-to-pay” measure must be rejected. “Willingness to accept” casts potential victims as sellers of the right to endanger their physical integrity, whereas “willingness to pay” casts potential victims as buyers of rights to protection against dangerous risk impositions. Because they are entitled to their physical integrity, those on whom risks are imposed are entitled to set the price at which they will bear risk impositions by others. To put it differently, people own their own lives if they own anything and he right to endanger their lives must therefore be purchased from them. Here, Pollock’s assertion that all harm presumptively requires compensation is translated into the proposition that all risk imposition presumptively requires compensation.

With these theoretical premises in hand, Compensation as a Tort Norm turns to the basic features of tort law. Offhand, the premise that “people must pay the true cost of the lives they lead” seems to lead directly to strict liability. For a few pages, Compensation as a Tort Norm plays with this thought, but Professor Geistfeld eventually rejects strict liability in favor of negligence. The basis of this repudiation is twofold. First, and ingeniously, the paper argues that some harms are simply not compensable. Premature death is the preeminent case in point. Because some harms are not fully compensable ex post strict liability cannot make people pay the true costs of the lives they lead. When harm is not fully compensable ex post, only ex ante compensation will do, and ex ante compensation takes the form of money spent on risk reduction.

Here, Professor Geistfeld’s rejection of orthodox law and economics is evident. Orthodox economics takes deterrence of accidental injury going forward to be the raison d’etre of tort law. By revising standard damage measures to include an appropriate award for noncompensable harms such as death, strict liability might be made to deter as effectively as negligence. For example, under strict liability damages might be fixed at the price that a normal, average, or representative plaintiff would have had to be paid to bear the risk whose imposition regrettably resulted in the plaintiff’s death. Geistfeld does not tread this path, however, and I suspect it is because he sees damages under strict liability as not really compensatory, no matter how generously they are computed. The payment of damages under strict liability does not itself compensate a plaintiff who has died; premature death is the canonical noncompensable harm. The imposition of strict liability with generous damage awards for noncompensable harm would result in the compensation of the plaintiff in a particular wrongful death lawsuit only if it leads defendants to take precautions stringent enough to compensate potential victims in advance for being subjected to risks of death. And while strict liability might conceivably induce such precaution, it would not strictly require such precaution. What it would require is that damages be paid after the fact for harm done. And those damages could not compensate after the fact for non-compensable harm. According to Professor Geistfeld, only stringent precaution ex ante can compensate for suffering noncompensable harm. Because negligence insists on risk reduction ex ante, Professor Geistfeld sees negligence, not strict liability as the path forward.

When we consider negligence liability as it exists, however, we encounter a problem. In practice, negligence liability approximates a willingness-to-pay criterion not a willingness-to-accept criterion. Actors are free to impose risks without purchasing the right to do so from their potential victims. Our system of negligence liability imposes responsibility ex post; it imposes liability for harm wrongly inflicted. It does not insist that the right to impose risk on others be purchased from them. Potential victims who do not wish to have risks imposed upon them must search potential injurers out and pay them not to impose risks. Moreover, in cases where harm is not fully compensable ex post, negligence appears to suffer from the same defect as strict liability. People can be held liable for negligently inflicting harms which cannot be fully compensated but, precisely because some harms are not compensable, people cannot be made to pay the “true cost of the lives they lead.”

One way out of this predicament is to suppose that risks which cannot be adequately redressed ex post can be compensated for by insisting that potential injurers take especially stringent precaution ex ante. Professor Geistfeld has developed at length an argument that due care requires injurers to take twice the efficient level of precaution when the lives of strangers are put at risk of non-compensable harm. Compensation as a Tort Norm briefly revisits that argument. The efficient component of this supra-efficient precautionary spending compensates ex ante for compensable harm. By appropriate discounting, the efficient level of precautionary spending for compensable injuries can be backed out of the damages awarded ex post for the infliction of such harm. By definition, however, ex ante compensation for bearing risk of compensable harm does not compensate for bearing risk of non-compensable harm. Here, Geistfeld’s solution is to insist on a supra-efficient level of precautionary spending equivalent to the efficient level, so that total spending on precaution is twice the efficient amount.

Compensation as a Tort Norm elaborates this argument by explaining that this supra-efficient precautionary spending rectifies a distributive injustice. Potential victims have a right to the integrity of their persons and that entitlement requires the use of a willingness-to-accept criterion. If injurers take merely efficient precaution, however, they act as though they own an entitlement to impose risk. By so acting, injurers appropriate to themselves the right to impose risk and thereby instantiate a willingness-to-pay criterion. To rectify this distributive injustice, potential injurers must spend twice the efficient amount on precaution. They spend the efficient level once to minimize compensable harms efficiently and a second time to buy the right to impose risk. Compensation as a Tort Norm then explains that this requirement of supra-efficient precaution only applies to accidents among strangers, and when risks are not reciprocal. When the parties are contractually related, they are free to price their lives however they see fit. When risks are reciprocal, the parties are identically situated and the choice faced by one is the choice faced by all. In these two circumstances, there is no question of risk imposition, there is only risk assumption.

Compensation as a Tort Norm thus develops a deeply meditated and original tort theory. Even so, one might think there is some work to be done. Putting to one side the question of whether contract changes everything, three concerns come to mind. First, the choice of two times the efficient level of precaution seems arbitrary. Why aren’t victims free to demand any level of compensation they like? That, after all, is how bargains in markets work. What makes a second round of spending on precaution at the efficient precaution price for compensable harm the correct purchase price for every potential victim’s entitlement to the physical integrity of his or her person? It’s difficult to see why the “two times the efficient level for compensable harm” criterion isn’t plucked from thin air.

Second, the term “compensation” is being used here in a decidedly odd way. The tort system compensates for harm—for “injuries” or “hurts” in Winfield’s and Pollock’s terms. In Professor Geistfeld’s theory risk is being compensated for, and it’s being compensated for by being eliminated. This is odd twice over. Risk imposition itself is almost never a compensable event in tort law and it’s not clear why Professor Geistfeld thinks that the mere imposition of risk violates a right to the integrity of one’s person. Harm, not risk, does damage to one’s physical integrity. Risk that does result in harm leaves those exposed to it with their physical integrity intact. And it seems odd to describe risk elimination as compensation for suffering the imposition of risk. Compensating for a risk imposition requires that the risk be imposed. If I eliminate a threat that I am posing to Professor Geistfeld’s health, there is no risk imposition left for me to compensate him for; elimination removes the circumstance that might occasion compensation. Professor Geistfeld’s argument here needs more defense and development.

Third, why do reciprocal risks define a circumstance where the distinction between persons disappears? Reciprocity of risk defines an interpersonally fair situation—everyone imposes on everyone else risks roughly equivalent in magnitude and probability1—but those who impose risk and are reciprocally exposed to it remain distinct persons with diverse ends. Geistfeld’s claim that the distinction between persons vanishes in cases of reciprocal risk imposition seems simply wrong. And if the distinction between persons persists, a fundamental asymmetry between taking risk upon oneself and imposing it on others also persists. People may be free to value their own lives however they choose but they are not free to value others’ lives in that way. They must respect others’ rights, including their rights to the physical integrity of their persons. The conditions that lead Professor Geistfeld to insist on supra-efficient precaution in the case of accidents among strangers continue to obtain.

Even if these reservations are justified, however, Professor Geistfeld’s burgeoning tort theory, extended and exemplified in Compensation as a Tort Norm, is an important, distinctive and admirable achievement. All serious tort scholars should pay it serious attention. When they do, they will find their attention richly repaid.



  1. I should say that I think reciprocity of risk only defines an interpersonally fair situation when everyone imposes risks of equal magnitude and probability for equally good reason. It is not fair for you to impose the same risk on me by speeding if you are merely in a hurry to get to the beach whereas I am in a hurry to get a heart attack victim to the hospital. In the text I omit this third condition because I don’t think Professor Geistfeld recognizes it. []
 
 

A Map Through the Punitive Damages Forest

Yehuda Adar, Touring the Punitive Damages Forest: A Proposed Roadmap, 1 Osservatorio Del Diritto Civile E Commerciale [The Civ. & Com. L. Observer] 275 (2012), available at SSRN.

The questions raised by punitive damages are numerous and varied: Should punishment be a part of the civil system? Are punitive damages awards “out of control”? Should a punitive damages award be split between the State and the individual plaintiff? Should caps be placed on punitive damages? Indeed, the topic of punitive damages has been examined from competing empirical perspectives, from a comparative law analysis, from a historical angle, and the list goes on and on and on.

Enter a new article by Yehuda Adar. In this thought-provoking piece, Adar offers a framework for organizing these various debates about punitive damages. In so doing, Adar provides a convenient and helpful synthesis of both the current objections to punitive damages, and the counter-arguments in support of punitive damages’ place in the civil liability system.

Adar contends that three central issues frame the debate regarding punitive damages: (1) Are punitive damages ever appropriate, and if so, for what conduct?; (2) Why are punitive damages part of the civil-private law system, rather than the public law system (either criminal law or administrative law)?; and (3) Why should punitive damages be awarded to the individual plaintiff? Adar initially disclaims that he will advance a specific position on these questions and asserts that his intent is to simply outline the issues. (P. 302.) Nevertheless, Adar ultimately does endorse the role of punitive damages within the civil law system, although he equivocates somewhat on the final question suggesting that “at least a substantial part” of a punitive damages award should be awarded to the individual plaintiff. (P. 347.)

Before exploring the three-part framework, however, Adar begins with a central question: Are punitive damages a form of punishment or are punitive damages merely extra-compensatory? In this part, Adar dives into the compensatory theory debate among punitive damages scholars. Compensation theories of punitive damages assert that punitive damages reflect payment for losses generally suffered by society, or alternatively, payment for harms suffered by others who did not choose to sue. Adar rejects these theories, and instead takes the position that punitive damages are punishment from a practical, descriptive perspective. Adar concedes that compensatory theories of punitive damages may be “normatively attractive” (P. 310), but concludes that the actual practice of awarding punitive damages reflects a judgment about the blameworthiness of the defendant’s conduct.

In the rest of the paper, Adar develops his tripartite taxonomy. In doing so, Adar identifies relationships between the many troublesome aspects of punitive damages and a number of secondary, related questions that he fits within the three-part framework.

First, Adar identifies the type of conduct that warrants punitive damages. In language familiar to any first-year law student, he runs through the litany of words used to describe this conduct such as “outrageous,” “reprehensible,” “malicious,” “willful,” and “reckless,” among others. Adar identifies a two-part test within this vague vocabulary. In Adar’s view, punitive damages require a threshold of a “very bad act” and a “very bad mind” together with an overall evaluation that the defendant’s conduct was an extreme departure from reasonable standards. (P. 314.) Given this traditional description of the defendant’s conduct, Adar turns to whether the imposition of punitive damages can be justified. Adar examines retribution and deterrence as rationales for awarding punitive damages. Adar posits—and ultimately rejects—the notion that punitive damages violate fairness principles, either by punishing defendants who are not truly blameworthy, by imposing punishment that does not “fit the crime,” by punishing the defendant multiple times for the same conduct, or by failing to give the defendant adequate notice of the potential punishment. Adar argues that punitive damages succeed under a deterrence rationale and that any potential over-deterrence is outweighed by the societal good of preventing reprehensible conduct. By deterrence, Adar means whether punitive damages achieve a moral deterrent effect of discouraging the defendant’s behavior by imposing a sufficiently high monetary penalty on the conduct. Notably, Adar does not consider the law and economics optimal deterrence rationale of cost-internalization because it does not reflect “real life cases.” (P. 323.)

Adar then considers whether punitive damages belong within the civil/private law system. Adar clearly synthesizes the objections to allowing punishment within the private law/civil liability framework. He spends the most time on whether imposing punitive damages without the procedural protections of the criminal/public law system undermines the moral legitimacy of punitive damages’ existence within the civil framework. Specifically, Adar notes the possibility of multiple punishment for the same conduct and the use of a preponderance of the evidence standard, not a reasonable doubt standard. Relying on two “important distinctions” between criminal and civil punishment, Adar ultimately rejects the underlying premise that punitive damages are sufficiently similar to criminal punishment to warrant these additional protections. First, Adar points out that the civil system does not risk a defendant’s liberty interests, nor entail long-lasting restrictions on the defendant’s civil rights. Second, Adar notes that punitive damages do not involve any imbalance between the prosecutorial forces of the State against the individual. Moreover, Adar identifies three advantages to civil punishment: (1) it supplements the efforts of the State, which are subject to budget limits, (2) punitive damages reach anti-social conduct that does not rise to the level of criminal conduct, and (3) punitive damages may be a preferable method of punishment precisely because they are less stigmatizing than incarceration or even a criminal charge.

Finally, Adar addresses the “windfall problem,” namely enriching the individual plaintiff with an extra-compensatory award at the expense of the defendant or society. Adar again canvasses the counter-arguments—the plaintiff provided a public service by bringing the lawsuit, the private award is justified under a private retribution theory, and practically, punitive damages provide an incentive to sue where the costs of litigation are high. Adar believes that the “accumulative weight” of these arguments supports awarding “at least a substantial part” of a punitive damages award to the individual plaintiff. (P. 347.) The natural segue at this point would be to examine the issue of splitting the punitive damages award with the State. Although Adar does not explore this area, he does note the topic of split-recovery statutes for the reader.

Adar’s framework provides a useful primer on punitive damages, and a good synthesis of the current contentious debates raging in this controversial area. I recommend it as a great introduction to the topic to those new to the field, and a useful synthesis to those scholars well-versed in punitive damages scholarship.

 
 

In Defense

James Goudkamp, Tort Law Defences (2013).

Who cares about tort defenses, or as Australian turned Englishman James Goudkamp spells it, “defences”? The decline in the potency of tort defenses over the last century, their only occasional use in actual litigation, their atrophy in contrast to the robust elements of negligence law, their lack of specificity to tort, their definition as second-tier questions, and their frequent specification by statute rather than common law—all have resulted in a fairly undersized group of interested scholars, according to Goudkamp.1 But for those of us who, nevertheless, maintain an interest in the topic, Goudkamp’s book is a must read.

At the start, after considering rival definitions, Goudkamp defines a tort defense as a device which “relieves the defendant of liability even though all the elements of the tort in which the claimant sues are present.”2 Then, through a vivid series of case examples, Goudkamp differentiates defenses from denials of an element of plaintiff’s prima facie case. Once separated, Goudkamp divides defenses into two mutually-exclusive sets: justification defenses and public policy defenses. In the first group “the defendant acted reasonably in committing a wrong.”3 Included within this group are defenses such as self-defense, consent, and public necessity. In the second, the defendant “makes no claim whatsoever about the justifiability of his acts,” but should not face liability anyhow.4 To this category, Goudkamp assigns defenses such as absolute privilege, various immunities and limitation bars. In addition to this dual taxonomy, Goudkamp ultimately argues for a third category which he terms “denials of responsibility,” and distinguishes them from excuses, for infancy and insanity.5

In support of this taxonomy, Goudkamp cites cases and arguments from a wide variety of common law courts and scholars. Indeed, the book asserts that its analysis is “not specific to any jurisdiction,” and is instead “intended to be relevant to all legal systems that are based on the common law.”6 It’s an audacious claim, particularly in light of the statutory and common law fragmentation of traditional defenses that Goudkamp himself later notes.7 Nevertheless, the book delivers on this promise of relevance across borders, at least from an American point of view.

One illustration that comes immediately to mind concerns the current Restatement. Reporters for the Restatement Third: Intentional Torts are just now deciding whether the concept of apparent consent constitutes an element of the battery cause of action, or rather a defense to it. The Restatement Second took the latter view. It subjected an actor to liability for battery if “he acts intending to cause a harmful or offensive contact,” and a harmful contact “directly or indirectly results.”8 The Restatement Second then addressed consent within its division on defenses, under the chapter on “justification and excuse.” By contrast, the current draft of the Restatement Third treats the absence of consent as an element of battery. Section 101 of the draft Restatement Third requires that “the actor intends to cause a contact with the person of the other,” “causes such a contact,” the contact “(i) is offensive or (ii) causes bodily harm to the other,” and “the other does not actually consent to the contact.” Absence of consent is a constitutive element of the plaintiff’s prima facie case.

Should consent be an element or defense? Goudkamp’s work, though ultimately directed at the somewhat different question of how to classify defenses once defined, provides valuable insights. First, Goudkamp discusses the transposable nature of tort law elements and defenses.9 Issues can be placed in either category. However, “torts generally specify acts that one has prima facie reasons not to commit.”10 Once the Restatement takes a broad view of the intent required to commit battery—an intent to contact—adding to the elements the absence of real or socially implied consent seems consistent with an admonition to draw elements in a way that proscribed conduct be wrongful. However, another route to bar only socially-undesirable contact would be to define the intent requirement more narrowly. If battery law proscribes harmful or offensive contact that is intended to be so, consent could be assigned to the defense side of the ledger.

With two viable definitions of the battery elements, Goudkamp’s thoughtful discussion of rationales for not locating all issues into the elements category is of real use. For example, it would be inefficient to require a plaintiff to anticipate and disprove, at the outset of a case, multiple defenses that might never be pleaded. In addition, the placement of an issue as a tort element or defense is “one way in which the law gives expression to the relative strength of the parties’ interests. By assigning an issue to the ‘tort’ element category, the law gives greater weight to the defendant’s interests…”11 In the case of the Restatement, a shift of the consent issue to the plaintiff’s prima facie case is likely to place a greater burden on plaintiffs with respect to the matter. Moreover, as Goudkamp counsels, the choice of placement has moral significance.12 It affects the substantive entitlement. If plaintiffs have to prove lack of consent in sexual battery cases, consent is being presumed implicitly. In addition, the litigation pressures on victims from shifting focus away from defendants’ intent toward plaintiffs’ consent, have been criticized in criminal law battery litigation.

But Goudkamp does not take a direct position on the most useful way to treat consent—as an element or a defense. Indeed, he discusses significant doctrinal ambiguity on the issue in the common law world.13 Still, his thoughtful discussion of the various doctrines in common law jurisdictions, and his outline of rationales for classifying issues as defenses rather than elements, provides important insight for the conversation. Even if the audience for Goudkamp’s weighty analysis is small, one can only hope that his work begins a larger discussion of defenses based on justification and public policy throughout the common law world.



  1. PP. 8-9. []
  2. P. 7. []
  3. P. 27. []
  4. P. 104. []
  5. PP. 164-92. []
  6. P. 6. []
  7. PP. 191-98. []
  8. Restatement of the Law (Second): Torts § 13. []
  9. P. 34. []
  10. P. 44. []
  11. P. 38. []
  12. P. 42. []
  13. P. 65. []
 
 

A Doctrine in Distress

Aaron D. Twerski & James A. Henderson, Fixing Failure to Warn, 90 Ind. L.J. (forthcoming, 2014), available at SSRN.

A major accomplishment of the American Law Institute’s 1998 Restatement Third of Torts: Products Liability project is its disaggregation of product defects into categories warranting distinct legal treatment: manufacturing (or construction) defects, design defects, and failure to warn. Indeed, this tripartite approach is at the core of the Restatement Third project, which was touted as “an almost total overhaul of Restatement Second as it concerns the liability of commercial sellers of products.”

It may then seem surprising that James Henderson and Aaron Twerski—joint reporters for the Restatement Third project—have second thoughts about the categories they so adeptly forged.

In “Fixing Failure to Warn,” Henderson and Twerski “now believe that too much has been made of the difference [between design defect and failure to warn]” and propose a simple, albeit powerful fix for a “doctrine in distress.” Namely, the former reporters would import the “reasonable alternative design” requirement from the design defect test into the realm of failure to warn, requiring plaintiff to propose a “reasonable alternative warning” in order to make out his prima facie case.

Henderson and Twerski’s proposed reform is best understood in the context of the “Tale of Two Restatements” in products liability law. Before the Third Restatement: Products Liability was adopted, the Second Restatement’s Section 402A (and extensive comments) was the basic text of modern products liability law. Issued in 1965, Section 402A adopted a broad strict liability rule for product defects, governed by the consumer expectations test. The issuance of this Restatement section coincided with an expansionary era in tort liability; an era marked by such developments as the rise of crashworthiness theories, the decline of the open and obvious defense, and expansive definitions of product defects. Tort litigation soared during this period, which lasted until the early 1980s.

In many ways, the Third Restatement reflects the transformation of products liability law after this period. And, in equally significant ways, it facilitated that transformation. By defining a distinct liability rule for each type of defect (manufacture, design and warning), it helped contract the heretofore expansive liability. It maintained the strict liability rule for manufacturing defects, but imposed a lower, “reasonably safe” standard in the realms of product designs and warnings. It also rejected the consumer expectations test, which it perceived as a vehicle for excessive liability, in favor of the negligence-inflected risk-utility test.

Henderson and Twerski do not revisit these standards; their revisions target how those standards are met.

The Third Restatement requires design defect plaintiffs to show that a “reasonable alternative design” exists that would have made the product at issue less dangerous. This requirement is embedded in the very definition of what a defective product is; namely, one where “the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller . . . and the omission of the alternative design renders the product not reasonably safe.”

Unfortunately, the definition of warnings defect is less clear. The Third Restatement defines such defects as “when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller . . . and the omission of the instructions or warnings renders the product not reasonably safe.”

This standard, which has bedeviled courts and commentators alike, is in the crosshairs of Henderson and Twerski’s revision campaign. They argue, persuasively, that the inclusion of a “reasonable alternative warning” requirement—akin to the successful “reasonable alternative design” requirement—is a move in the right direction.

The ultimate goal in products liability law—i.e., “optimal levels of safety”—is easy to state but far more difficult to map out. The Third Restatement aimed to give manufacturers the “incentives . . . to achieve optimal levels of safety in designing and marketing products,” but further recognized that “optimal” does not mean “as safe as theoretically possible.” Because of the costs associated with increasing product safety (costs that might include keeping a potentially salutary product off the market altogether), “[s]ociety does not benefit from products that are excessively safe . . . any more than it benefits from products that are too risky. Society benefits most when the right, or optimal, amount of product safety is achieved.”

In their article, Henderson and Twerski insightfully highlight an important similarity between design and warnings: both are “untaken precautions that would have increased the safety of the product use and consumption and reduced or prevented plaintiffs’ harm.”

The alternative design test is well suited to achieve optimal product-design safety, assuming courts can properly weigh the costs and benefits of the alternative proposed design. Redesign, though more costly than warning modifications, is more effective in achieving enhanced safety, as it relies entirely on a manufacturer that is, relative to end users, far better equipped to assess the risks of one design as compared to another.

Failure to warn cases are more complicated because the efficacy of warning labels depends entirely on an end user’s difficult-to-predict behavioral response to the instructions or warnings provided. Judges and academics often incorrectly assume that more information is always better, yet studies confirm the existence of “information overload” and “warnings dilution” where consumers make poorer choices as the amount of information increases.

Henderson and Twerski’s “fix” would focus attention on the notion of an “optimal” amount of information. They argue persuasively that “requiring the plaintiff to identify specifically what, how, and to whom the defendant distributor should have communicated additional risk information would contribute significantly to achieving a sensible, realistic assessment of the costs and benefits associated with providing allegedly better warnings.”

The authors believe their proposed revision will not only clarify the definition of defect but will also “add significantly to the clarity of the analysis necessary to determine but-for specific causation.” At the same time, Henderson and Twerski are realistic about their proposed revision’s ability to overcome the crucial “heeding presumption”—the presumption that had there been a sufficient warning, the plaintiff would have heeded the warning and avoided the harm. This presumption, which allows a plaintiff to get to the jury on a warnings case once a warning defect is established, essentially shifts the burden of proof to the defendant to rebut the presumption of causation. The heeding presumption has been overcome with such evidence as “the user was blind, illiterate, intoxicated at the time of use, irresponsible or lax in judgment,” but is typically extremely difficult for the defendant to rebut.

Henderson and Twerski make a persuasive case that “the heeding presumption cannot operate fairly unless plaintiff provides a [reasonable alternative warning] since defendant cannot rebut the presumption without knowing the content of the warning.” Their fix would presumably arm defendants with (slightly) better odds at rebutting the heeding presumption.

Henderson and Twerski “hope that this essay serves as the beginning of a dialogue on this issue.” I am persuaded that this provocative article will achieve that goal.

 
 

Do No Harm: Misdiagnosing Informed Consent

Erin L. Sheley, Rethinking Injury: The Case of Informed Consent, BYU L. Rev (forthcoming), available at SSRN.

For quite some time, the large majority of informed consent cases have been handled under a negligence rubric, the central issue being whether the physician’s disclosure of risks to the patient was reasonable, as measured either by the reasonable patient standard, or in some jurisdictions, the standard of the profession. The battery cause of action has now been relegated to a minor role. It only surfaces in cases in which the physician does not simply fail to give adequate information about the costs and benefits of an agreed-upon procedure, but has completely failed to secure the patient’s consent, for example, by operating on another body part or performing a tubal ligation following a C-section. The battery claim is so marginalized that the A.L.I., in the Restatement (Third) of Intentional Torts to Persons, is currently debating whether to limit the scope of battery/informed consent claims even further, perhaps requiring the patient to prove that her doctor knowingly exceeded her consent before allowing recovery for battery.

Going against the grain, Erin Sheley’s new article argues that the negligence framing of informed consent claims loses sight of the dignitary aspects of the claim that the battery cause of action captured so well. This overreliance on the negligence framing of consent claims creates “a class of factually injured patients who have no remedy under current law.” Sheley starts with an example of a breast cancer patient who was under the impression that she was to receive a biopsy on a lump in her breast. However, when the physician determined that her tumor was malignant, he decided to go ahead and perform a mastectomy in an effort to stop the cancer from spreading. Putting aside whether such a patient might possibly recover for battery under the current restrictions, Sheley argues that the patient in such a case has suffered a real injury, even if it turns out the physician made the right call from a medical point of view. The problem with proceeding under the negligence theory is that the plaintiff’s claim will likely fail because she cannot prove that she suffered a physical injury, a necessary element of a negligence claim predicated on lack of informed consent.

I expected Sheley either to argue in favor of shoring up the battery cause of action or to make the case for allowing negligence claims for pure emotional distress in the informed consent context. Instead, she makes a novel argument that draws upon the newly developing field of narrative medicine. Her claim is that the loss of control many patients experience when they have not been fully advised of the risks of surgery can itself lead to physical harm. In this interesting twist on the mind/body connection, the loss of control and autonomy generated by a lack of crucial information from one’s doctor, Sheley tells us, interrupts the patient’s individual “narrative” about his own illness. In this account of the healing process, it is not only the physician’s knowledge and skill that determines the success of a medical intervention but also the degree to which the patient is able to repair the damage the illness caused to his sense of self and “to find a way to integrate his potentially diminished bodily state into a new subjective identity moving forward.” There is evidence that patients improve their chances, for example, if they can adapt to the crisis of control by maintaining a “fighting spirit” ( “I can beat this disease”) or by meeting the suffering head on, and using it to create a new chapter in their life (“my illness is a journey that has become a quest”). Sheley maintains that when a physician “coopts a patient’s subjective knowledge about and control over his body,” it generates feelings of helplessness, powerlessness, and a sense of chaos that heightens the risk of physical injury.

In Sheley’s reconceptualization of the informed consent tort, the harm suffered by the patient is a special kind of a dignitary harm that resides in the physician/patient relationship: the physician’s failure to inform impedes the patient’s autonomy and free choice but also affects the quality of care that the physician provides to the patient. Although she never uses the “f” word, Sheley draws upon feminist philosopher Jennifer Nedelsky’s concept of “relational autonomy” that regards an individual’s exercise of autonomy as socially embedded in a web of human relationships, relationships that are necessary to support autonomous decision-making. Sheley points out that the famous maxim in the Hippocratic tradition of medicine should be more precisely formulated: “help, or at least do no harm,” rather than the familiar, “above all, do no harm.” This slight but significant re-phrasing supports Sheley’s view that physicians should strive affirmatively to help their patients, to the point of recognizing the importance of the patients’ subjective reactions as integral to the healing process.

However, it is not easy to translate this nuanced relational view of autonomy into elements of a tort cause of action. Sheley admits that there is no way to tell in an individual case whether a patient’s lack of control over his illness narrative caused any negative physiological symptoms that the patient might experience. At best, one can only say that patients’ lack of control in general can lead to enhanced physical injury. Analogizing to loss-of-chance cases, Sheley proposes that we dispense with the physical harm requirement in informed consent cases, provided that the patient can prove that she would in fact have foregone the particular treatment had she possessed all the relevant information. Unfortunately, Sheley does not further examine this knotty issue of causation that has also bedeviled courts in informed consent cases, namely, whether to apply a subjective or an objective standard of causation. Thus, getting rid of the physical injury requirement may simply put pressure on this other element of the informed consent claim that also implicates the balance between patient autonomy and physician duties. Finally, Sheley’s suggestion for measuring damages is quite unusual, even bizarre. She would allow the patient only to recover the “gain” the doctor derived from usurping the patient’s right to decide, presumably requiring the doctor to give up any fee or profit he derived from the unauthorized procedure. In my view, this measly recovery does not match up to the seriousness of the dignity harm Sheley so aptly describes and undercuts her central argument. If we want reform, we might be better off adopting the more conventional remedy of simply allowing informed consent plaintiffs to prove damages for their emotional harm, like other victims of negligent infliction of emotional distress.

 
 

Patching Things Up

Linda Radzik, Tort Processes and Relational Repair in Philosophical Foundations of the Law of Torts (John Oberdiek ed., 2014).

Imagine you are trying to write a mission statement for tort law. What aspiration would you put on paper? Tort theorists will find Linda Radzik’s answer at once familiar and foreign. In Tort Processes and Relational Repair, Radzik suggests that tort should pursue corrective justice. But she rejects the familiar Aristotelian conception of corrective justice, on which wrongdoing calls for compensation that offsets the harm caused. Instead, she suggests that corrective justice requires reconciliation. According to Radzik, tort should aim to repair the relationships ruptured by wrongdoing, rather than the harms that result from it.

The problem with the Aristotelian picture of corrective justice, Radzik says, is that it mistakes what’s wrong with wrongdoing. If you think that corrective justice consists in compensation for harm done, Radzik explains, then you are apt to think that what is wrong with wrongdoing is that it damages something that belongs to the victim, or deprives her of something she is entitled to have. But, as Radzik points out, there are wrongs that do not result in harms, and harms that did not result from wrongs, so it hardly seems like harm could be the essence of wrongdoing.

What is really wrong with wrongdoing, Radzik says, is the damage it does to relationships. The primary relationship in play is the one between the victim and her wrongdoer. A victim of a wrong, Radzik observes, has reason to feel insulted and threatened, as well as reasons to doubt that she can have a relationship of respect with the wrongdoer. But there are other relationships that are damaged too. A victim may feel that her standing in the community has been lowered, that other people think that she is a proper object of the treatment she received. Worse yet, she may come to think that of herself.

In Radzik’s view, corrective justice demands that we repair the relationships that wrongdoing ruptures. Of course, repairing harm may help. After all, harm is a constant reminder of the wrong. But repairing harm is not the only, or perhaps even the primary way, of repairing relationships in the wake of wrongdoing. A sincere apology aids reconciliation, in part because it distances the wrongdoer from the threat posed by his actions. And community members can help repair their own relationship with the victim, by coming to her aid, or otherwise making clear that they do not regard her as a proper object of the treatment that she received.

Radzik’s reconciliation picture of corrective justice is attractive. But one might wonder what it has to do with tort. The parties to a tort suit are often strangers, with no antecedent relationship that might be ruptured by wrongdoing. And nearly no one who has been involved in litigation would think of it as a mode of reconciliation. If anything, a lawsuit is apt to exacerbate tensions between parties, rather than relieve them.

Radzik is not moved by the first worry, as she thinks that strangers actually have relationships that can be ruptured. We may not know the person in the car next to us, but we trust that driver to take care for our safety, and regard ourselves as reciprocally responsible for the same. That trust is liable to be ruptured. Can tort repair it? I am more skeptical than Radzik. It seems doubtful that tort could do much to help an injured driver regain trust in the driver who negligently injured her. But it might, I suppose, reaffirm her standing in her community, by clearly signaling that her well-being matters, such that others are required to take account of it. So tort, we might think, has a role to play preventing a rupture in the relationship between the victim and her community, which would come about if the community did nothing to respond to the fact that she’d been wronged.

And what of the second worry? Radzik knows that litigation poses an obstacle to the kind of reconciliation that she thinks represents the ideal for corrective justice. But she nevertheless thinks that litigation has a role to play when the ideal is not attainable. If a wrongdoer is not interested in reconciliation, then we still have reason to repair the victim’s relationship with her community, and to restore her sense of her own social standing. By calling the wrongdoer to account and by requiring him to repair the damage he has done, we reject any thought that the victim was a proper object of the treatment that she received.

I find that suggestion very congenial. I have long been a critic of the Aristotelian account of corrective justice, on the ground that we can almost never do what it demands—put a victim in the position she would have been absent the wrong. In an essay that appears in the same volume as Radzik’s, I argue that that corrective justice, properly done, corrects the threat that wrongdoing poses to the victim’s social standing, a view that shares much in common with Radzik’s. Perhaps the most important difference is that Radzik thinks that justice demands more; it demands reconciliation between the victim and her wrongdoer, if we can achieve it. I am not so sure. Indeed, I doubt that reconciliation is always a worthwhile goal. To my thinking, there are ways you might wrong me that warrant my cutting you off entirely. Sometimes, holding open the possibility that we might reconcile sends a mistaken message about the gravity of the wrong.

In the big picture, that may be a small difference. But it has consequences for the way we think of tort. I am fully on board with the idea that tort should aim to vindicate a victim’s social standing. But I doubt that tort can do much repair the relationships between victims and their wrongdoers. And I think it might be misguided to try. Still, I find the approach in Radzik’s essay refreshing. She invites us to take a step back from tort law, to think through the way that we ought to respond to wrongdoing, and then to ask what role tort can play in that process. Her answer is familiar: tort should patch things up, as best it can. But it is also provocative, since she argues that what needs patching up is relationships, not people or property.

 
 

“The Only Thing We Have To Fear Is Fear Itself”: How Physicians’ Exaggerated Conception Of Medical Malpractice Liability Has Become The Real Problem

Myungho Paik, Bernard Black, & David A. Hyman, The Receding Tide of Medical Malpractice Litigation:  Part 1—National Trends, 10 J. Emp. Legal Stud. 612 (2013) available at SSRN.

Physicians continue to talk about the “Medical Liability Crisis” and physician-funded advocacy groups continue to push for additional and further-reaching liability-limiting reforms.  Yet although the prize advocates seek (tort reform!) has remained the same for decades, the justification for why tort reform is needed has undergone a subtle metamorphosis.  For a while, reformers argued that liability limits were needed because the problem of medical injury was grossly exaggerated—medical injury was a problem mostly ginned up by plaintiffs.  But then, the Institute of Medicine’s (IOM’s) groundbreaking 1999 study, To Err is Human, came along.  Estimating that between 44,000 and 98,000 Americans die in hospitals each year as a result of preventable medical errors, the IOM’s study took the wind out of that argument’s sails.  Undaunted, reformers changed their tune.  Tort reform was needed, reformers insisted, because, even if medical injury is all too real, medical liability is random, as decisions are untethered to the underlying merits of claims.  In 2006, however, that argument encountered a major setback.  David Studdert and co-authors published a groundbreaking study of 1,452 medical malpractice claims which convincingly debunked the litigation lottery story.  Some claims that don’t involve errors are indeed filed, they found.  But such claims do not typically result in payment.  Undeterred, another reason to resist medical liability has taken center stage:  the problem of defensive medicine.

Defensive medicine refers to instances when physicians, concerned about liability, test or treat despite the lack of medical necessity, as well as times physicians decline to provide particular services or accept certain individuals as patients for fear of liability.  A prototypical example might be a doctor who orders a CT scan, not because he believes it’s medically warranted but because he believes it’s prudent in light of the liability risk.  This behavior, some now say, imposes medical liability’s biggest cost.  Though numbers are hard to pin down (as it’s hard to discern whether that CT scan was really ordered to protect the physician from liability, as opposed to helping the patient or, perhaps, even padding the physician’s paycheck), defensive medicine appears to be widespread.  One recent survey found that 93% of physicians in high-risk specialties reported providing care that they thought was unnecessary.  And, respected academics suggest its price tag is high—roughly $45.6 billion per year.  Pointing to these statistics, some reason:  (1) defensive medicine is a huge problem, and (2) in order to rein in defensive medicine, we need to dramatically reduce medical malpractice liability—or, perhaps, dismantle the present system of compensation for medical injury.  That argument, in fact, appears to be gaining ground.

What’s puzzling, though, is that defensive medicine is caused mostly by fear—by physician’s fear of medical liability.  And, there are at least two ways to respond to another person’s fear of something.  One approach is to remove the menacing thing.  Another is to convince the person their fear is unfounded.  So, for example, when my son was four, he was terrified of lightning.  Confronted with his terror, I could choose to remove the lightning (perhaps by relocating to a sunnier clime) or I could convince him that lightning, while not without some danger, isn’t actually so threatening; his fear was totally overblown.  Not keen to move, I adopted the latter approach.  So, too, with medical malpractice liability.  Confronted with physician’s fear of medical malpractice (which via defensive medicine is causing demonstrable harm), we can, as some suggest, dismantle the liability system.  Alternatively, we can empirically assess and then convey to physicians the legitimate liability risk.

Of course, the latter tack will only prove fruitful if doctors’ current estimate of the risk is (like my son’s view of lightning) grossly exaggerated.  Evidence suggests it is.  Doctors substantially overestimate their risk of being sued.  Various studies suggest that, of patients who are negligently harmed, a very small minority—on the order of 2% to 3%—ever attempt to claim compensation for their medical injuries.  Yet, in 1989, researchers surveyed 739 New York physicians who estimated that 60% of negligent injuries led to lawsuits, while 45% of all iatrogenic injuries led to lawsuits, regardless of whether or not the injury was negligently inflicted.  Doctors, in other words, estimated the threat of liability to be some 20 times what it actually is.  Doctors’ views concerning the system’s accuracy are similarly out of whack.  The Studdert study (and a number of other studies, too) show that the medical liability system does quite a good job of sorting between meritorious and non-meritorious claims, and that, when errors are made, they tend to be made in favor of physicians (i.e., payment of claims not involving errors occurs less frequently than the converse form of inaccuracy).  Yet, in a 2002 poll, a full 83% of surveyed physicians indicated that, if sued, the current system of justice could not be trusted to “achieve a reasonable result.”  Given physicians’ apparent sense that lawsuits lurk everywhere and their concomitant distrust of the system once sued, it’s no wonder defensive medicine has come to the fore.  Indeed, a recent study puts the pieces together, suggesting that physicians who are most worried about malpractice liability are precisely the ones most apt to engage in costly “defensive” practices.  The same study looked to physicians’ actual liability risk (as measured by objective, state-level determinants, such as claims costs and tort reforms) and found these indicators counted for little:  “[I]t is perceived rather than actual risk, the authors found, “that determines how physicians behave.”

This all suggests that, if we want to curtail defensive medicine, there’s much to be gained by targeting perceptions—by assessing and conveying to physicians their legitimate liability risk.  This insight brings us to Myungho Paik, Bernard Black, and David Hyman’s recent, and important, work.  Relying on data from the National Practitioner Data Bank (NPDB), Paik and co-authors provide the first academic assessment of national trends in medical malpractice liability.  They show that, despite persistent and often panicked claims that the medical malpractice system is in “crisis,” in actuality, paid claims per physician dropped by 57% nationally from 1992 through 2012, while lawsuit filings (whether or not paid) are also in sharp decline.  Using data from Florida, Illinois, and Texas, they consider, and mostly refute, the possibility that the observed decline is explained by hospitals stepping in to pay settlements in order to shield practitioners from having to report payments to the NPDB.  By breaking states down into whether they have noneconomic damage caps, they show that, though tort reform is surely part of the story, it’s not the whole story, as there’s been a decline in per-capita physician payments even in non-cap states.  Finally, they consider, and cast doubt on, the possibility that “improvements in health-care quality” explain the observed drop—though, of course, they can’t wholly dismiss that possibility.  Nor, for that matter, can they disprove that an uptick in defensive medicine itself helps to explain identified trends.

Still, while the reasons for the precipitous decline aren’t entirely clear, the decline’s very existence adds an important coda to the true medical malpractice liability story.  We now know that few negligently-injured patients seek compensation, and when patients do seek compensation, payments generally track the quality of care.  Now, thanks to Paik, Black, and Hyman, we also know that, rather than facing a litigation “explosion,” physicians’ liability risk has (for whatever reason) dropped considerably over the past two decades.  Some contend that defensive medicine is the number one cause of “unaffordable health care in America.”  Stoked by fear, defensive medicine might be curtailed, at least in part, by ensuring doctors have a greater understanding of the real—rather than the imagined or grossly exaggerated—tort liability system.  The important work of empirical legal scholars over the past two decades ought to be deployed toward that end.

 
 

Federal Preemption and Products Liability

Daniel J. Meltzer, Preemption and Textualism, 112 Mich. L. Rev. 1 (2013).

Professor Daniel Meltzer’s article on federal preemption and statutory interpretation is not exactly a torts article. But for those of us who believe that federal preemption in products liability is among a handful of the most pressing and controversial tort issues today, Preemption and Textualism, is an essential read. One of the nation’s most admired federal courts scholars, recently back from a stint in the Obama administration, Professor Meltzer is an ideal commentator on contemporary debates about the proper scope of federal preemption doctrine.

Meltzer’s target is the interpretive method of textualism. Textualism, he argues, is not up to the task of handling the important preemption issues before the Supreme Court. In particular, Meltzer demonstrates that, while Justice Thomas denounced “obstacle preemption” as inviting unconstrained judicial lawmaking, neither Thomas’s reliance on statutory text nor his putative rejection of obstacle preemption holds up to close analysis.1 In the end, Justice Thomas, like his conservative brethren, inevitably turns to purposive analysis.

Three features of Meltzer’s analysis struck me as especially interesting and valuable. First, he argues persuasively that issues regarding the harmonization of state and federal laws are typically outside of the awareness of members of Congress who draft or vote for statutory text, even assuming they were within anyone’s awareness when a statute was passed. Add to this legislative gridlock and the unlikelihood of amendment, and the assumption that text reflects legislative will evaporates into thin air. Second, many of the words and concepts that must be analyzed in a preemption case are notoriously supple. This includes, for Meltzer, the interpretation of the word “requirement” in preemption clauses, and the concept of “logical impossibility” that (supposedly) undergirds the only form of implied preemption (impossibility) that Justice Thomas will tolerate.

A third and especially valuable feature of Meltzer’s article relates to the presumption against preemption, which has recently come under attack from Justice Thomas, relying upon important research by Professor Caleb Nelson.2 Nelson has claimed that the text of the Supremacy Clause was modeled after non obstante clauses commonly utilized by late 18th Century American legal draftsman. During that era, Nelson argues, such provisions were actually intended to displace the normal presumption that courts should strain to render existing statutes operative and viable in the face of later legislation that appears to repeal them. On this view, the Supremacy Clause should actually be interpreted to signal a rejection of any presumption against preemption. Meltzer’s cleverest criticism of this argument is that it proves too much: it entails that the Supremacy Clause is inconsistent with the Thayerian principle that statutes should be interpreted as constitutionally permissible, where possible. Most relevantly to tort law, Meltzer observes that the non obstante argument, even if it were justified historically and textually, addresses only the relationship between federal statutes and prior state statutes; it has no obvious implications for preemption of common law doctrine. Meltzer’s article concludes with a nuanced but confident defense of the presumption against preemption.

While Meltzer’s article is careful and illuminating, it seems to have been written without the benefit of a big picture of what has happened in products liability preemption litigation over the past two decades or so. Neither the text nor the legislative history of the federal statutes governing drugs, medical devices, or automobiles displays even a hint that Congress aimed to curtail products liability litigation (which was private, common law, traditionally rooted in compensatory goals, and often understood to be strict liability). By the mid-1980s, product manufacturers (and others) had pulled together a powerful movement that saw the attraction of federal tort reform, and, largely failing to persuade Congress, turned to the Court as a vehicle for national law reform. Combining an expertly honed litigation strategy with the ascendant law-and-economics conception of tort law as regulatory (which had never been a significant part of how judges or legislators understood torts), the tort reform movement convinced the Court to use preemption doctrine as a tort reform tool. As torts professors, we can see Geier and its progeny as of a piece with Daubert and BMW v. Gore and their progeny. Just as the Federal Rules of Evidence provided the means through which the Court could address ‘junk science,’ and the Due Process Clause of the Constitution anchored the Court’s critique of punitive damages run ‘amok,’ the Supremacy Clause is now the hook for softening what the Justices perceive to be unduly plaintiff-friendly liability standards.

Meltzer certainly succeeds in using preemption doctrine to demonstrate the shortcomings of textualism in action, but purposivism in action contains its own perils too, and Meltzer – coming from outside of tort law – may not be as alert to these concerns as one might wish. To be sure, his defense of the presumption against preemption (as against Justice Thomas and Professor Nelson) does indeed display an appreciation for federalist concerns. However, when Metlzer writes that “the task of fashioning a workable legal system—one that integrates state and federal law— will necessarily require a significant decisional role for the courts” he seems to be inviting just the sort of intrusion that rightly concerns Justice Thomas.

The Supreme Court’s most recent pharmaceutical preemption decision — Mutual Pharmaceutical Co. v. Bartlett, 133 S. Ct. 2466 (2013) — illustrates a tension that may be intrinsic to the sort of purposive preemption analysis Meltzer favors. In a 5-4 opinion penned by Justice Alito (and joined by Justice Thomas), the Court determined that a New Hampshire design defect verdict against a drug manufacturer must be struck down under impossibility preemption doctrine. The plaintiff conceded – indeed argued – that there was no way to have marketed the drug that would have protected the defendant from the jury’s categorization of it as “unreasonably dangerous,” notwithstanding the FDA’s having approved it for sale. And yet the plaintiff asserted that New Hampshire had the prerogative to impose strict liability for injuries inflicted by unreasonably dangerous drugs regardless of whether those drugs are permissibly sold under state and federal law. Justice Alito reasoned that if a manufacturer’s only way to avoid liability was to withdraw the drug from the market, notwithstanding the federal government’s designation of it as safe enough to market, then impossibility preemption applied.

While Meltzer does offer a nice critique of “impossibility preemption” (as mentioned above), and therefore cannot be assumed to accept Justice Alito’s analysis, his approach is nonetheless unduly receptive to the defense-side argument. That is because, whether or not it is correct to regard Mutual’s predicament as one rising to the level of “impossibility” preemption, there is surely real substance in the drug company’s complaint that the federal and state law in this case are poorly integrated. More generally, drug manufacturers are at least somewhat justified in complaining that it is costly and confusing for them to adjust their products and practices to the products liability law of fifty different jurisdictions as well as the FDA and federal law more generally, and uniformity of drug safety was undoubtedly among the goals of Congress in enacting the drug-regulatory statutes it enacted. Meltzer’s obstacle preemption seems well situated to accommodate these arguments; indeed, obstacle preemption arguably would have provided a more comfortable foundation for Mutual’s argument.

And yet, the Court’s decision in Bartlett should, I believe, be regarded as unacceptable from a federalist point of view that takes the common law of torts seriously. An authentic form of preemption analysis in Bartlett would begin by recognizing that states have chosen very different points on the spectrum between negligence and strict liability for their design defect law, and that they have also differed greatly from one another on the question of whether to subject pharmaceutical companies to a more defendant-friendly regime than other manufacturers (as Justice Sotomayor noted, in her powerful dissent). It would then ask whether anything in text or history of the FDCA or the Hatch-Waxman Act manifests a purpose of eliminating or even constraining these state choices in products liability law. I have never seen any evidence of such a Congressional purpose. Under these circumstances, I believe, drug companies’ preemption arguments should fail.

Meltzer’s purposivism straddles these two approaches. By arguing that textualism is unacceptably and artificially narrow, he seems to open the way to what I have just depicted as a form of preemption analysis faithful to a federalist recognition of the states’ entitlement to design their own tort law. But Meltzer also welcomes a form of purposivism that invites the Justices to sympathize with defendants’ descriptions of the legal thicket that results from this system. When the Justices do so, they are understandably tempted to think it is their job to prune away the state law that renders the whole system so burdensome.

Perhaps we should not be surprised that purposivism, like textualism, can be used on either side in preemption analysis, and perhaps we should be pleased that it has a higher degree of transparency. For now, I think, we should recognize that the plasticity of purposivism is not an unmitigated good in preemption analysis; serious federalist commitments regarding the integrity of state tort law can disappear all too quickly through the methododological prism of either textualism or purposivism.



  1. See also Catherine M. Sharkey, Against Freewheeling Extratextual Obstacle Preemption: Is Justice Clarence Thomas the Lone Principled Federalist?, 5 N.Y.U. J.L. & Liberty 63, 68 (2010). []
  2. See Caleb Nelson, Preemption, 86 Va. L. Rev. 225 (2000). []
 
 

Third-Party Financing of Litigation: Good or Bad?

Duty in the Litigation Investment Agreement: The Choice Between Tort and Contract Norms When the Deal Breaks Down, by Anthony Sebok and W. Bradley Wendel, addresses a topic of growing importance: third-party funding of litigation. In a third-party funding contract, a firm finances a lawsuit, and receives in return some portion of the judgment. Several finance firms have appeared recently, with Juridica and Burford perhaps the best known, that specialize in investing in large-claim lawsuits.

Third-party litigation funding is also known as champerty, and has been prohibited for a long time under the common law. The common law prohibition has been relaxed in recent years in some states, making the legal status of third-party funding agreements unclear as a general matter. The litigation investment firms have a large stake in the law changing in their favor, or at least remaining unclear.

The ancient prohibition on champerty seems to have been based on a desire to minimize external influence on judges. In the late Middle Ages, a wealthy landowner who funded a legal claim might pressure the judge to decide the dispute in a way that favored his investment. Although judges are not afraid of wealthy landowners today, the champerty prohibition emerged in a time when judges were not infrequently threatened and bullied by the wealthy and powerful.

There are several desirable and undesirable consequences that might result from expanded third-party funding of litigation today. Sebok and Wendel examine some of the risks facing the contracting parties and look at ways in which the law can minimize them. They conclude that the risks should largely be left to the parties to manage in their contracts.

In general, the types of claims that can be financed are, to borrow language from Robert Cooter, “matured” and “unmatured.” A legal claim is matured if the victim has already suffered (or is suffering) the injury and can sue for damages or an injunction based on what has happened to him. A legal claim is unmatured if the victim has suffered no harm at all; the claim is simply the right to sue for some wrong that may occur in the future.

Sebok and Wendel discuss matured claims, as do most of the most analyses of third-party funding. This is entirely reasonable because these are the only types of claim that are currently the subject of third-party financing.

The question that follows from their paper is whether their conclusions might also be applicable to markets in unmatured claims, should they ever arise. In comparison to matured claims, the risks associated with unmatured claims are a bit more difficult for the parties to manage. The informational asymmetry problems are an order of magnitude greater for unmatured claims. Markets in unmatured claims are not observed for the most part, but there are examples of such transfers. Patent trolls, for example, essentially purchase unmatured infringement legal claims.

Since many controversial legal relationships are designed primarily to solve the litigation funding problem – from class actions to patent trolls – the proper legal framework for third-party litigation funding is a topic with implications for several areas of the law. Sebok and Wendel are to be congratulated for calling attention to the topic.