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Restoring Sanity to Our Tort System

E. Calvin Beisner

A man trespasses on his neighbor's property and dives into the pool -- at the shallow end -- despite a clearly posted sign warning "Do Not Dive." He suffers serious injuries. A lawsuit ensues. By the property owner against the trespasser? No, by the trespasser against the pool's maker. And the New Jersey Supreme Court rules that the trespasser can prevail if he can convince a jury that the "risk posed by the pool outweighed its utility" -- even though his attorneys admitted that he could not show that the pool could have been designed more safely.[1]

Another man stands in a phone booth, fifteen feet from a street. A drunk driver's car veers off the road, careens over the curb, jumps the sidewalk, crosses a parking lot, and slams into the booth, injuring the man inside. The injured man sues -- not the drunken driver, but the companies that designed, installed, and maintained the phone booth! His attorney argues that they should have foreseen the possibility that an out-of-control car would hit the booth and so should have designed, placed, and protected it better. Former California Chief Justice Rose Bird, writing for the majority, agrees, saying, "there are no policy considerations which weigh against imposition of liability...even though the defendant's conduct may have been without moral blame. . . ."[2]

Liability Without Blame: A Fit of Madness

Hundreds of similar cases could be cited in which America's courts have succumbed to what can only be explained as a fit of madness, holding individuals and businesses liable for injuries to others without asserting even the vaguest hint of blame, much less willful or malicious disregard for others' safety.

While the awards assessed in such cases can be huge, mounting into the millions of dollars, they are minute compared with the widespread impact of the liability explosion on the rest of society. Rising product liability judgments frighten manufacturers out of developing, producing, and marketing new products and sometimes even result in the removal of dependable, time-tested products from the market. As a result, consumers wait longer and pay higher prices for improved products and services -- if they ever get them at all. [3]

One time-tested product that disappeared from the American market was Bendectin, a drug administered to over 33 million pregnant women to reduce nausea. Bendectin had been approved as safe in repeated tests by the U.S. Food and Drug Administration. But some lawyers, realizing that roughly three percent of all children are born with some birth defects, however major or minor, persuaded the parents of some of the birth-defective children whose mother had used Bendectin to sue its manufacturer.

The company eventually removed the product from the market. Why? Because the drug was proven unsafe and causally related to the birth defects? No. In fact, at the time Merrell-Dow Pharmaceuticals removed Bendectin from the market, it had won every lawsuit involving the drug but one, and that one was on appeal.

But Merrell-Dow couldn't afford to keep fighting the suits. Its legal and insurance costs in defending against Bendectin suits were approaching $18 million per year, compared with the drug's sales of $20 million per year (from which production, marketing, and distribution costs had to be deducted). Not only that, but also, in one of the suits, though the jury ruled that the drug was safe and Merrell-Dow was not negligent, it still awarded the plaintiff $1,160,000.

So Merrell-Dow stopped marketing Bendectin. Yet, according to Paul F. Oreffice, president of Merrell-Dow's parent company, Dow Chemical, twelve thousand doctors officially protested, saying that Bendectin was a useful drug.[4]

The Cost to Society

And so, millions of women suffer morning sickness without the once effective, safe, and inexpensive remedy. Not only Dow Chemical but also consumers pay the price for the courts' fit of tort law madness.

The story could be repeated again. Monsanto Corporation developed a new phosphate fiber that it believed was safer and more effective than asbestos as an insulator, but it decided not to market it; it expected the legal and insurance costs of fighting the inevitable (even if unfounded) product liability lawsuit to outweigh prospective profits. So Americans go without the safer, more effective insulation.

Unison Industries, Inc. developed an electronic ignition system for piston aircraft engines, but dropped it before marketing; Unison was named in lawsuits following crashes of aircraft that didn't even have its system, and costs of extracting itself from the suits were so high that it figured future liability costs in suits involving planes that would have the system would outweigh potential profits.[5] Hundreds of doctors nationwide stopped delivering babies because of skyrocketing malpractice insurance rates that reflected skyrocketing liability judgments -- judgments not paralleled by any deterioration in the quality of obstetrical care.

Such decisions appear warranted in light of major trends in liability litigation in the United States. The Rand Corporation's Institute for Civil Justice recently reported that average malpractice awards granted by juries in Cook County, Illinois, rose (in constant 1979 dollars) from $52,000 in the 1960s to over $1.1 million in the early 1980s, an increase of 1,167 percent. During the same period the average product liability award in San Francisco jumped from $99,000 to $1.1 million, or 1,016 percent, after adjusting for inflation. At the same time the percentage of cases won by plaintiffs rose dramatically.[6]

Social Engineering in the Place of Justice

What lies at the root of this phenomenon that reduces American economic productivity, drives up prices, and drives down availability of useful products and services?

Former U.S. Assistant Attorney General Richard K. Willard recently cited several guesses by commentators: "Many . . . have tried to find an explanation through psychoanalysis; Americans have become `soft' and averse to risk; people increasingly seek to blame others for their own shortcomings." While he agreed that there might be "a bit of truth in such explanations," he added, "I also doubt that human nature has changed that much in the last 20 or 30 years (if even in the last few thousand years)" -- which is the same reason he rejects the idea that juries have become increasingly sympathetic to plaintiffs.[7]

Instead, Willard says, "In my opinion, the principal cause of the liability explosion is judicial activism . . . [by] a generation of judges engaged in social engineering." He traces much of the trouble to the rise of the theory of "no-fault tort liability," under which someone can be found to be without fault, either of willful malice or negligence, yet still be assessed damages when someone is injured.[8]

"The assault on traditional fault-based tort law," Willard says, "was led by Yale Law Professor Fleming James in the 1930s and 1940s . . . [who] felt that since accidents were inevitable, employers, manufacturers, and society as a whole, ought to bear the cost. They were, in effect, obligated to compensate victims regardless of who was at fault. `Social insurance,' not fault, was to be the focus of the new tort law."

What this amounts to is, in Willard's terms, "risk-spreading as social policy," backed up by legal judgments that frequently look more at a plaintiff's financial distress and a defendant's ability to pay than at real or imagined fault in someone's loss. [9] A defendant with large financial resources -- a wealthy doctor, a large business, a school board, or a municipality -- has what lawyers call "deep pockets." Such defendants are "generally assessed much more in damages than others," according to lawyer and Heritage Foundation policy analyst James Gattuso.[10]

Gattuso says the "problems in the tort system stem from its failure to differentiate between meritorious and unmeritorious claims and to allocate costs fairly." He suggests eight reforms that might bring about a more just tort liability climate in American courts:[11]

(1) "Give more weight to manufacturer's warnings to plaintiffs." If an injury results from ignoring a manufacturer's clear warnings, the manufacturer's liability should be significantly reduced or even negated.

(2) "Restore abuse, alteration, and misuse of a product as sound defenses in product liability cases." When a bodybuilder ties a refrigerator to his back, runs a foot race, and suffers injury when a strap comes loose, the refrigerator and strap manufacturers should not be held liable (as they were in one case!) for the injury stemming from misuse of the products.

(3) "Define `foreseeable' injury in a more rational manner." It makes no sense to hold a college liable (as one court did) for a student's injuries when someone hides in campus shrubbery, jumps out, and attacks him, merely because, with 20/20 hindsight, one can allege that the college should have foreseen that the shrubs might provide a good hiding place for a mugger. Neither does it make sense to hold a hospital liable (as another court did) for injuries a doctor sustains when mugged in its parking lot -- particularly when no other mugging had ever occurred there.

(4) "Limit `noneconomic' damages." Require full compensation for economically measurable damages, but put some standard limits on damages for "grief" or "pain and suffering," which in some cases far exceed the economic damages awarded by juries.

(5) "Pay punitive damages to the court." Presently many juries award "punitive damages," supposedly on the grounds that they deter future negligence, out of sympathy for a needy plaintiff. Making such damages payable to the court would remove the sympathy motive for higher-than-reasonable penalties while still ensuring that the plaintiff received just compensation for his loss.

(6) "Modify `joint and several liability' rules." When several defendants are found jointly liable for an injury, they should be assessed in proportion to the degree of their fault and the degree to which their action (or product) contributed to the plaintiff's loss. Presently, if a defendant with small resources is found 90 percent at fault and one with huge resources is found 10 percent at fault, the latter can still wind up paying most or even all of the damages merely because it has "deep pockets."

(7) Modify `comparative negligence' rules." Under current practice, someone might suffer injury due primarily to his own negligence but still be compensated for the entire loss by someone else whose very slight negligence contributed ever so little to the loss. "The problem with the comparative negligence standard could be reduced by the adoption of a new rule under which a plaintiff is not to collect from a defendant less at fault than the plaintiff himself," Gattuso suggests.

(8) "Pay attorney's fees to the winning party." No one should be financially injured in a suit in which he is found not at fault. Neither should someone bringing suit have to devote a large part of his just compensation to the cost of litigation. The loser in liability litigation should have to reimburse the winner for legal fees.

Until these or similar reforms of America's tort liability practices occur, says Gattuso, the system will continue to have "more of the hallmark of a lottery to enrich plaintiffs and their lawyers, rather than of a means to right wrongs."[12]

Restoring Justice to Tort Reform

"A means to right wrong." That is the right and proper purpose of liability litigation. And it is another way of saying that liability litigation is a means of justice, for righting wrongs is one of the chief aims of justice.

Justice, both private and public, must always be among the foremost concerns of those who value the survival of society. It is, as Adam Smith pointed out, "the main pillar that upholds the whole edifice" of society. Though charity, or beneficence, is a higher virtue than justice, society can survive without it. But if justice "is removed, the great, the immense fabric of human society . . . must in a moment crumble into atoms."[13]

Yet it is precisely justice that is wanting in the growing crisis of our nation's tort system. If Smith is right, that lack of justice foreshadows the system's collapse.

Where can we turn for standards of justice that might set our tort system back on track? Biblical standards, important sources of early American law,[14] offer some wise ground rules for a just tort system. Stepping back from the complexities of American tort law and looking again at some of these basic and fairly simple principles could help us to restore justice to our tort system.

Impartial Application of Law

Underlying all specific rules we might apply in tort reform is the rule of simple justice. Justice, for the Bible, means rendering impartially to each his due in accord with the right standard of God's moral law (Romans 13:7).[15] Justice does not mean leveling out economic conditions; it means rendering what is due. Justice does not mean playing favorites with the rich or the poor; it means applying the same rules impartially to everyone. And justice does not mean enforcing some ideologically defined structure on society; it means acting in accord with God's moral principles revealed in Scripture and in the human conscience (Romans 2:14-15).

This fundamental principle of Christian ethics cuts to the heart of the judiciary's social engineering that Willard wisely recognizes as the root of the current crisis in liability law. It contributes to skyrocketing insurance rates, lost economic innovation, growth, and competitiveness, and rising prices, paralleled by diminished supplies, of products and services. The underlying ideology of the liability crisis is Marxist class warfare: the rich are so only because they exploit the poor; hence every opportunity must be grasped to erase the gap between rich and poor (or, as so often occurs in liability litigation, between rich and less rich).[16] Enormous liability judgments, far out of proportion to actual loss and actual contributory fault, are one means of erasing the gap.

The Christian ethic of justice condemns such favoritism. Rather than viewing riches as inevitably gained by oppressing the poor, it sees them ordinarily (though not always) as a sign of God's blessing on those who live righteously and prudently (Proverbs 14:24; 15:6) and as the just reward of labor (Luke 10:7). While Scripture insists on giving the poor man justice in his dispute (Exodus 23:6), it simultaneously forbids being partial to him (verse 3). Equality before the law, not equality of economic condition, is the hallmark of justice. As Gattuso puts it, "The assets of the plaintiff, as are those of the defendant, are irrelevant to the degree of damage."[17]

Five Principles of Liability

Justice, then, means rendering impartially to everyone his due in accord with Biblical standards. This general principle becomes concrete in tort law in light of particular rules that form the standard of justice in that field. The primary locus of law in Scripture, aside from the summarizing Decalogue, is the "Law of the Covenant," the fundamental body of law in Exodus 21-23. There we find five principles that -- though space permits only a brief look at them here -- can, by careful inference and application, serve well as a foundation for justice in liability law. [18]

1. Ordinarily, compensation should be neither more nor less than what is needed to restore the injured party, insofar as is possible, to the condition he would have enjoyed had the accident not occurred. "[I]f men have a quarrel and one strikes the other with a stone or with his fist, and he does not die but remains in bed;[19] if he gets up and walks around outside on his staff, then he who struck him shall go unpunished; he shall only pay for his loss of time, and shall take care of him until he is completely healed" (Exodus 21:18-19). "[I]f a man opens a pit, or digs a pit and does not cover it over, and an ox or a donkey falls into it, the owner of the pit shall make restitution; he shall give money to its owner, and the dead animal shall become his. And if one man's ox hurts another's so that it dies, then they shall sell the live ox and divide its price equally; and also they shall divide the dead ox. Or if it is known that the ox was previously in the habit of goring, yet its owner has not confined it, he shall surely pay ox for ox, and the dead animal shall become his" (21:33-36). Notice that if the damage was unforeseeable, because without precedent, the victim and the owner of the ox (or, in today's terms, the maker of a defective product) were to divide the loss evenly. And even if the damage was foreseeable because of precedent, still its accidental nature meant that compensation was only to be equal, not multiple, as it was to be in case of intentional harm by theft (compare Exodus 22:4).

2. Culpable negligence exists only when past experience (including that embodied in statute law, like laws requiring railings around balconies [Deuteronomy 22:8], fences around swimming pools, or leashes on dogs, or laws prohibiting trash burning, drunken driving, or inadequate disposal of toxic wastes) has established the dangerous nature of an object or activity in someone's control, and without culpable negligence, compensation is limited to dividing the loss evenly. Nonetheless, if there is culpable negligence, the negligent person is as liable as if he had committed the act intentionally: "[I]f an ox gores a man or a woman to death, the ox shall surely be stoned and its flesh shall not be eaten; but the owner of the ox shall go unpunished. If, however, an ox was previously in the habit of goring, and its owner has been warned, yet he does not confine it, and it kills a man or a woman, the ox shall be stoned and its owner also [may][20] be put to death" (Exodus 21:28-29). Notice that culpable negligence does not exist without clear historical precedent (either in personal experience or in statute law); what can only be seen to have been "foreseeable" through hindsight must not be confused with what was reasonably foreseeable prior to an accident.

3. The state cannot set a monetary value on a human life. Someone who is legally liable for another's death must pay with his own life unless the survivors of the victim offer to accept a ransom instead -- however high it might be, including the person's perpetual slavery. "If a ransom is demanded of [the negligent owner of the goring ox], then he shall give for the redemption of his life whatever is demanded of him" (Exodus 21:30), since of course any payment would be preferable to death.

4. One is only liable for persons and things over which he has -- or at least should have -- control, and then only if others do not interfere with his control so as to negate it. He is not liable for others' acts outside his authority. If someone opened a gate and let the goring ox out without its owner's knowledge, and the ox killed a neighbor, the person who opened the gate, not the owner, would be liable. Similarly, a manufacturer must not be held responsible for the consequences of misuse or alteration of his product, particularly if he has taken reasonable steps to instruct buyers of the proper use and warned against improper use. Scripture forbids punishing someone for an act he did not commit and for which he had no responsibility (Deuteronomy 24:16).

5. "Punitive damages" should be added to equal compensation in liability cases only if property damage resulted from deliberate sabotage, and even then the value of the "punitive damages" should be small compared with the actual compensation. "When a man causes a field or vineyard to be grazed over, or lets his beast loose and it feeds in another man's field, he shall make restitution from the best in his own field and in his own vineyard" (Exodus 22:5). No "punitive damages" should be assessed atop equal compensation without proof of malicious intent: "When fire breaks out and catches in thorns, and shocks of grain, or standing grain, or the field is consumed, the one causing the burning must most certainly make the situation whole" (Exodus 22:6). In each case the person whose action led to the loss was to restore the injured party's property, but in the former case he was to do it "from the best in his field or vineyard."

Warning Against Frivolous Suits

Clearly one of the greatest problems in our present tort system is the filing of frivolous lawsuits. In addition to their adding unnecessarily to the courts' already overburdened dockets, such lawsuits can cost their targets millions of dollars in legal fees, even when the defendants are completely innocent of any wrongdoing and eventually are ruled so by the courts.

Scripture has a clear and simple solution to the problem, and it goes beyond forcing frivolous plaintiffs to pay the winners' legal fees:

If a malicious witness rises up against a man to accuse him of wrongdoing, then both the men who have the dispute shall stand before the Lord, before the priests and the judges who will be in office in those days. And the judges shall investigate thoroughly; and if the witness is a false witness and he has accused his brother falsely, then you shall do to him just as he had intended to do to his brother (Deuteronomy 19:16-19).

If John Doe sues Exquisite Foods for $10 million dollars and the suit is found to be frivolous, Exquisite Foods should be awarded $10 million -- plus legal fees -- from John Doe. It is hard to imagine any single rule that would more rapidly reduce the incidence of frivolous lawsuits.

Living with Reality

Perhaps, however, our best hope of restoring sanity to American tort law is a restoration of the old Christian notion of contentment under the providence of God. In a fallen world, each of us will, from time to time, suffer through no fault of his own. Accidents -- real accidents, in which the actors are devoid of all culpability, whether of malice or negligence -- are part of ordinary life. It is part of the wisdom of the Christian tradition to teach people to accept accidents without resentment, discontent, or anger toward others, and without demanding that others bear the brunt of our suffering.

In America, the growth of the welfare state, in which civil government promises to do the impossible -- to take care of everyone from cradle to grave -- undercuts the virtue of trusting contentment under God's providence. Roger Schultz, a historian teaching at Intermont College in Bristol, Tennessee, points out that one can see a clear correlation between the growth of government as provider and the deterioration of belief in the providence of God. That trend makes citizens imagine that the state can make everything right, can salve all their wounds, can restore all their losses.

So long as that view prevails, people will seek relief from all their troubles at the bar of justice, not at the fountain of God's grace. But to the extent that people regain faith in God's providential care over them, they will be less likely to seek relief through litigation. A few good sermons on the lilies of the field, the fowls of the air, and the hairs of the head might do more to reduce tort actions than any number of new laws.


E. Calvin Beisner writes and lectures on the application of Christian ethics to economics and public policy. His books include Prospects for Growth: A Biblical View of Population, Resources, and the Future (Westchester, IL: Crossway Books, 1990), Prosperity and Poverty: The Compassionate Use of Resources in a World of Scarcity (Crossway Books, 1988), Psalms of Promise: Exploring the Majesty and Faithfulness of God (Colorado Springs, CO: NavPress, 1988), Answers for Atheists (Colorado Springs, CO: Campus Crusade for Christ/Northstar, 1988), and God in Three Persons (Wheaton, IL: Tyndale House, 1984).

NOTES

[1] Richard K. Willard, "Liability and the Law: How the Courts Were Hijacked", Imprimis, Vol. 16, No. 9 (September 1987).

[2] Cited in Ibid.

[3] Carolyn Lochhead, "Liability's Creative Clamp Holds Firms to Status Quo", Insight, (August 19, 1988), pp. 38-40.

[4] Paul F. Oreffice, "The Year Tort Reform Must Happen", Imprimis, Vol. 16, No. 7 (July 1987).

[5] Lochhead, "Creative Clamp".

[6] Willard, "Liability and the Law", and James L. Gattuso, "The Liability Crisis: It's Not Over Yet", Imprimis, Vol. 16, No. 6 (June 1987).

[7] Willard, "Liability and the Law".

[8] Ibid.

[9] Ibid.

[10] Gattuso, "The Liability Crisis".

[11] Ibid.

[12] Ibid.

[13] Adam Smith, The Theory of Moral Sentiments, (Indianapolis: Liberty Classics, 1976), II. ii. 3, p. 176.

[14] See, for instance, the Massachusetts Body of LIberties (1641), the first code of laws established in New England. In addition to explicit and implicit dependence on Scripture in its earlier parts, the code cites Biblical texts explicitly to justify all but one of its twelve capital laws.

[15] I discuss Biblical and classical definitions of justice, especially as related to economics and civil government, at length in my Prosperity and Poverty: The Compassionate Use of Resources in a World of Scarcity, (Westchester: Crossway Books, 1988), chapters 4-5.

[16] Indeed, because so many large companies are owned by hundreds of stockholders, many of whom are middle class rather than wealthy, high liability judgments often result in transferring money from people with lower income to people with higher income. But perhaps it is asking too much of our judges to hope they will be able to make such simple economic analyses as this.

[17] Gattuso, op cit.

[18] The discussion here is restricted to civil liability in cases that are accidental. Outright theft, assault, and murder are, of course, different matters. While the Law of the Covenant addresses them, they are outside the scope of this discussion.

[19] If he dies, the death penalty is to be inflicted unless the killer clearly fought in self-defense (Exodus 21:12).

[20] The context of the following verse indicates that this is not a strict requirement but a permission: he may be put to death, but must be only if a ransom cannot be negotiated instead.


Copyright © by Covenant Community Church of Orange County 1991
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