Toward a New History of American Accident Law: Classical Tort Law and the Cooperative First-Partyinsurance Movement

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Toward a New History of American Accident Law: Classical Tort Law and the Cooperative First-Partyinsurance Movement TOWARD A NEW HISTORY OF AMERICAN ACCIDENT LAW: CLASSICAL TORT LAW AND THE COOPERATIVE FIRST-PARTYINSURANCE MOVEMENT John Fabian Witt TABLE OF CONTENTS I. RETHINKING THE ORIGINS OF AMERICAN ACCIDENT LAW....................................... 699 A. Accident Law's Late Nineteenth-Century Origins........................................................... 699 B. Explaining the Development of American Accident Compensation Law..................... 704 C. Contingency and the Comparative Perspective ...............................................................707 D. The Comparative Perspective in Late Nineteenth-Century America ............ ...............710 II. AMPUTEE WORKINGMEN, DESTITUTE WIDOWS, AND THE CRISIS OF FREE LABOR................................................................ 713 A. The Late Nineteenth-Century Accident Crisis ................................................................713 B. Amputee Workingmen,Destitute Widows, and the Crisis of Free Labor .................... 72 2 i. The Multiple Ideals of Free Labor................................................................ 722 (a) The Liberal Ideal of Autonomy ................................................................ 723 (b) The Labor Ideal of Independence................................................................ 724 2. The Dilemmas of Free Labor................................................................ 725 3. Industrial Accidents and the Dilemmas of Free Labor............................................. 726 (a) Accidents and the Liberal Ideal of Autonomy...................................................... 729 (b) Accidents and the Iniquities of Competitive Wage Labor Capitalism.............. 729 (c) Accidents and the Crisis of the Family Wage.......................................................730 C. Alternative Legal Approaches and the Accident Crisis . ................................732 III. THE DILEMMAS OF CLASSICAL TORT LAw . ............................................................... 733 A. Classical Legal Thought and the Law of Torts. ...............................................................735 B. Elaborating Classical Tort Law ................................................................ 738 i. Damnum Absque Injuria: Defining the Bounds of Rights and Duties ................... 738 2. Contributory Negligence ................................................................ 743 3. Assumption of Risk ................................................................ 744 C. Pressure from Below: The World of Accident Litigation and the Rise of Faultless Injuries................................................................ 745 i. From Loss of Services to Loss of Wages: The Transformation of the Personal Injury Suit ................................................................ 746 2. Obstacles to Personal Injury Litigation (I): Persistent Patterns of Deference and Authority................................................................ 748 3. Obstacles to Personal Injury Litigation (II): The Law of Evidence ........................ 753 4. The Rise of Personal Injury Litigation and the Personal Injury Lawyer .............. 758 5. The Rise of Faultless Injuries and the Compensation Crisis................................... 766 D. The Dilemmas of Classical Legal Torts .............................................. 770 i. The Recessive Strains of Strict Liability................................................................. 770 690 200I] TOWARDA NEW HISTORYOF AMERICANACCIDENT LAW 69I 2. The Limits of Consent ..................................................................... 774 IV. THE FIRST FIRST-PARTYINSURANCE SYSTEM ............................ 7 7 7 A. Cooperative First-Party Insurance and Insurance Markets . 779 B. Insurance Associations and the Cooperative Strand of Free Labor Ideology ... 781 C. The Varieties of First-Party Insurance ............................................. 784 i. Commercial Life Insurance.................................................................... 785 2. Commercial Accident Insurance.................................................................... 787 3. Industrial Insurance .................................................................... 790 4. Trade Union Insurance Plans .................................................................... 791 V. COOPERATIVESELF-INSURANCE AND THE COOPERATIVECRITIQUE OF INDUSTRIALACCIDENTS.....................................................................................................797 A. Cooperative Associations as Accident Insurance Mechanism. ......................................797 i. The Incidence of Cooperative Insurance ....................................................................797 2. Cooperative Life and Disability Benefits ....................................................................799 3. The Structure of Cooperative Disability and Life Insurance: Moral Hazard and Adverse Selection .................................................................... 8oo 4. Ethnic, Racial, and Religious Segregation in Cooperative Insurance . .................804 B. Industrial Accidents, Cooperative Associations, and the Crisis of Free- Labor Citizenship..................................................................... 8o6 C. The Ambiguities of Cooperative Insurance . ................................................................... 8o8 i. The Thin Theory of Cooperation: Cooperative Insurance and the Responsible Self .................................................................... 8o8 2. The Thick Theory of Cooperation: Cooperative Insurance and the Cooperative Commonwealth of the Workingman.. ...................................................812 (a) The Cooperative Critique of the Wage System................................................... 812 (b) Cooperative Insurance and the Critique of the Accident Crisis....................... 8Is 3. The Ambivalences of Cooperative Insurance. ............................................................819 D. The Unraveling of Cooperative Fraternal Insurance. .....................................................82 1 i. The Shortcomings of Cooperative Insurance Societies: High-Risk Exclusions ... 82 1 2. Low-Risk Flight, Lapses, and Ponzi Schemes............................................................822 E. The Failure of English-Style Collectivization. ................................................................826 i. The Quest for 'One National Organization' . ......................................826 2. The Failure of Collectivization .................................................................... 828 (a) The Ideological Ambiguities of Cooperation ........................................................ 828 (b) The Law of the Cooperative Insurance Contract................................................ 829 (c) The New Immigrants.................................................................... 831 (d) The Transformation of Work, the Deterrence Problem, and the Decline of the First First-Party System ................................................................833 VI. CONCLUSION: A PATH NOT TAKEN . .............................................................................. 836 TOWARD A NEW HISTORY OF AMERICAN ACCIDENT LAW: CLASSICAL TORT LAW AND THE COOPERATIVE FIRST-PARTYINSURANCE MOVEMENT John Fabian Witt* There are two strange discontinuities in accounts of the history of American accident law. First, the historical literature's narrow fo- cus on the common law of tort contrasts sharply with the eclectic ap- proach of contemporary accident law scholars. Contemporary acci- dent law debates offer a wide array of policy alternatives to tort litiga- tion. To name only some of the most prominent, scholars have proposed increased reliance on first-party insurance,' various no-fault insurance schemes,2 markets in unmatured tort claims,3 and expanded state compensation plans for accidents beyond the sphere of work ac- cidents.4 Similarly, recent descriptions of our contemporary accident law system characterize it as made up of a number of different kinds of institutions, ranging from tort law to private and public insurance * Law Clerk to Judge Pierre N. Leval, U.S. Court of Appeals for the Second Circuit; Ph.D., J.D., Yale University. Many thanks to Miriam Aukerman, Ariela Dubler, Barry Friedman, Law- rence Friedman, Glenda Gilmore, Risa Goluboff, Bob Gordon, Henry Hansmann, Bill LaPiana, TIoy McKensie, Bill Nelson, Annie Murphy Paul, John Reid, Peter Schuck, Reva Siegel, Howard Venable, and the members of the N.Y.U. Legal History Colloquium for helpful comments and in- sights on various versions of this Article. Bob Gordon and Reva Siegel's legal history seminar and the Yale Law School Center for Law, Economics, and Public Policy summer brown bag lunch group helpfully entertained early drafts of this Article. The Samuel I. Golieb Research Fellowship in Legal History at N.Y.U. provided invaluable institutional support. 1 See, e.g., George L. Priest, The Current Insurance Crisis and Modern TortLaw, 96 YALEL.J. 1521, 1550-63 (I987) [hereinafter Priest, Current Insurance Crisis] (arguing that the source of the "liability crisis" of the late i98os was the shift from first-party insurance to third-party insurance); George L. Priest, Understanding the Liability Crisis, in NEW DIRECTIONSIN LIABILITYLAW I96, 207-09 (Walter Olson ed., I988) (same); see also Patrick Atiyah, Personal Injuries in the Twenty- First Century: Thinking the Unthinkable, in
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