Doing Away with Tort Law
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Doing Away with Tort Law Stephen D. Sugarman TABLE OF CONTENTS PAGE INTRODUCTION ................................................ 558 I. THE FAILURE OF TORT LAW ............................. 559 A. Avoiding Undesirable Accidents: The Ineffectiveness of Tort as a Deterrent ................................... 559 1. The Basic Model: Rational Responses to the Threatened Imposition of Tort Liability ............ 559 2. Behavior Controls Apart from Tort Law ............ 561 3. Why the DeterrentPotential of Tort Liability Is Undermined ...................................... 564 a. Ignorance-ofLaw and Facts .................. 565 b. Incompetence-Individualand Organizational... 568 c. Discounting the Threat ......................... 569 d. High Stakes in Behaving Dangerously .......... 570 e. Small Penalty ................................. 570 4. Liability Insurance and Deterrence................. 573 a. Insurance Pricing.............................. 574 b. Nonrenewal Threats ........................... 579 c. Safety Requirements ............... ,........... 579 5. Socially UndesirableResponses to Tort Law ........ 581 6. Victims' Incentives: More Bad News ............... 586 7 Final Doubts: Empirical Evidence ................. 586 8. Conclusion........................................ 590 B. Making Victims Whole: Tort as a Bizarre Compensa- tion System ........................................... 591 1. The Intoxication of Compensation .................. 591 2. The Failure to Compensate Sensibly ................ 592 a. Uncompensated and Undercompensated Victims. 592 b. Arbitrarinessof Tort Compensation ............. 594 c. Excessive Compensation ........................ 595 d. Extravagant Administrative Costs ............... 596 3. "Mass Tort" Cases ................................ 596 a. Agent Orange ................................. 597 b. Bendectin ..................................... 599 c. Asbestos ....................................... 600 CALIFORNIA LAW REVIEW [Vol. 73:555 d. IUD .......................................... 601 4. Conclusion........................................ 603 C. Corrective Justice: The Mirage of Compensation of the Deserving ............................................. 603 D. Punishment, Vengeance, and Peacekeeping: Bungled Strivingfor Satisfaction and Accountability ............ 609 E. Signaling: Setting Meaningless Standards .............. 611 F. Cost Internalization: ProperAllocation of Resources to What? ................................................ 613 G. Conclusion to PartI .................................. 616 II. TORT REFORM ........................................... 617 A. Doctrine, Damages and Process Reform ................ 617 B. Insurance Reform .................................... 621 C. Conclusion to Part I ................................. 622 III. TAILORED COMPENSATION PLANS, GENERAL ACCIDENT PLANS, AND COMPREHENSIVE DISABILITY PLANS ......... 622 A. TraditionalStrategies: Tailored Compensation Plans ... 622 B. Newer Strategies: Accident Compensation Plans ........ 628 C. BroaderHorizons: Comprehensive Disability Plans ..... 633 D. Critique: Misconceived Reliance on Cost-Internalizing Strategies ............................................ 636 E. Conclusion to Part III ................................ 641 IV. PROPOSALS ............................................... 642 A. Compensation of Torts Victims Through Regular Income Protection Mechanisms. ....................... 642 L The Proper Conception of the Compensation Problem .......................................... 642 2 The Current Status of CollateralSources for Tort Victim s ........................................... 645 a. Income Replacement ........................... 645 b. Medical Expenses .............................. 647 c. Other Damages ................................ 648 d. Summary ..................................... 648 3. Recommendations ................................. 648 a. Income Support ............................... 649 i. Employer and government responsibilities: mandatory, uniform and simplified........ 649 ii. Short-term income protection ............... 649 iii. Long-term income protection ............... 650 iv. Financing ................................. 650 b. Medical Expenses .............................. 650 c. Other ......................................... 651 1985] DOING AWAY WITH TORT LAW 557 B. Accident Prevention Through Regulatory Strategies, with the Increased Involvement of Citizens, Victims and Citizen Groups ........................................ 651 1. The Limited Nature of My Claim .................. 651 2. Global Perspectives on Agencies in a World Without Tort .............................................. 652 3. The Idea of "Torts as Partner".................... 653 4. Agency Techniques and Their Enhancement ........ 654 a. Learning About Dangers ....................... 654 b. R ecalls ........................................ 655 c. Priorities ...................................... 657 5. Citizen Participationand Agencies Generally........ 658 6. Conclusion ........................................ 658 C. Abolition of Tort Actions for Accidental Personal Injuries .............................................. 659 1. Supplanting Rather than Supplementing Tort ....... 659 2. Intentional Torts and Punitive Damages ............ 659 3. Other Kinds of Tort Suits ......................... 660 D. Roads to Reform ..................................... 661 1. Broad Strategy .................................... 661 2. Narrower Strategy ................................. 662 a. Compensation ................................. 662 b. Tort Law ...................................... 663 c. Regulation .................................... 663 d. Transition ..................................... 664 CONCLUSION ................................................... 664 CALIFORNIA LAW REVIEW [Vol. 73:555 Doing Away with Tort Law Stephen D. Sugarmant INTRODUCTION In the 1960's and early 1970's legal scholars debated exciting pro- posals to replace sections of tort law with compensation systems tailored to classes of accidents. The most pressing concern was a no-fault scheme to supplant auto-accident law. Initial legislative successes encouraged reformers to grow increasingly bold in their proposals. However, they have not been able to retain center stage. In the political arena, the auto no-fault movement has ground to a halt. In academia, tort theory has captured the limelight. Although scholars have written on tort theory from various perspectives, the main thrust of their writing has been to defend tort law's commitment to decentralized private law solutions to accident problems, if not to support the details of the existing tort sys- tem. It is time, I believe, to focus academic and political attention once more on doing away with ordinary tort actions for personal injury.' The straightforward case against tort law rests on the argument that the costs of the tort system outweigh its benefits. Part I of this Article has that focus. It examines the justifications advanced in support of existing tort law and shows that stated goals are either unachieved or t Professor of Law, Boalt Hall School of Law, University of California, Berkeley. B.S. 1964, J.D. 1967, Northwestern University. Many of my colleagues have helped considerably with this Article. I wish especially to thank Dan Rubinfeld, Ed Rubin, Frank Zimring, Meir Dan-Cohen, and Connie Curtin. I owe a great debt to John Fleming, who has taught me so much about the law of torts and alternatives to it, and to Guido Calabresi, who inspired me to pursue this topic. I had the pleasure of collaborating with Professor Fleming in a report titled Perspectives on CompensatingAccident Victims for the President's Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research, in which a number of the points I make in this Article were raised. While I was fashioning this Article out of those thoughts, Professor Fleming published two extremely concise and effective analyses of the role of tort in today's world, which parallel this Article at several points. See Fleming, Is There a Futurefor Tort?, 44 LA. L. REV. 1193 (1984), and Fleming, Is There a Futurefor Tort?, 58 AUSTL. L.J. 131 (1984). 1. The American Bar Association's Special Committee on the Tort Liability System has recently released an enormous Report that is, on the whole, highly laudatory of tort law. SPECIAL COMM. ON THE TORT LIAB. SYS., AMERICAN BAR ASS'N, TOWARDS A JURISPRUDENCE OF INJURY: THE CONTINUING CREATION OF A SYSTEM OF SUBSTANTIVE JUSTICE IN AMERICAN TORT LAW (1984) [hereinafter cited as A JURISPRUDENCE OF INJURY]. The report offers some suggestions for reform, but concludes that the tort system is "vital and responsive" and that it "pro- duces a consistently high quality of substantive justice." Id. at 13-1. The Committee's Reporter was Professor Marshall Shapo; the Chair was former Attorney General Griffin Bell. While not written as such, this Article can be seen as a critique of that Report; my conclusions urge public policy to move in quite the opposite direction. I should note, however, that the most forceful analysis in the Report applies to its discussion of intentional wrongdoing, which is largely outside my attention here. 1985] DOING AWAY WITH TORT LAW inefficiently pursued. I offer a critique of several different kinds of tort apologists. They include devotees of economics who emphasize the deterrence goal, moral philosophy fanciers who