Is Tort Reform Necessary?

For over a decade, debate has raged in Washington and across the country over the issue of tort reform. Supporters of reform argue that damage awards are grossly excessive, providing incentive to lawyers and laymen for even more lawsuits. Excessive awards also adversely affect the economy. Manufacturers and corporations forced to pay for damage awards, not to mention attorney fees, must find the money somewhere. This translates into higher prices for consumers and employee layoffs. For others, especially doctors, this also translates into higher insurance premiums for the entire profession, not just those who commit malpractice. Taken together, the cost of tort lawsuits creates an enormous burden on the economy calculated in the billions of dollars. Opponents of tort reform argue that limiting awards for damages is inappropriate. Tort law is the means by which citizens are compensated for injuries from defective products and medical malpractice. Moreover, the threat of suit provides a healthy incentive for companies and professionals to act responsibly.

On February 18, President Bush signed the Class Action Fairness Act of 2005 into law. Under the legislation, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, and more than $5 million is at stake, the case would go to federal court.

Though seemingly as victory, the new law has been widely criticized by tort reform advocates. “The national government is not empowered to dictate substantive rules of state tort law under the guise of the Commerce Clause. And Republicans, who are supposedly devoted to fighting federal bloat, should be on the front line in stopping the central government from worming its way into an area that has been left to the states for two-and-a-quarter centuries,” said Robert Levy , a senior fellow of constitutional studies at the Cato Institute. “To justify federal tort reform under the Commerce Clause, Congress must show that the reforms are both ‘necessary’ and ‘proper’ to ensure the free flow of interstate trade. When it comes to tort reform, neither criterion has been met. Substantive federal reforms are not necessary because the states are enacting their own reforms. Substantive federal reforms are not proper because they cannot be harmonized with traditional concepts of federalism,” Levy added. Instead, Congress should enact “procedural” rules while leaving substantive issues of tort law in state hands, Levy argues.

The debate rages on, but now with two key questions. First is whether tort reform is necessary. If so, what is the proper measure that can both bring needed changes to tort litigation but also not offend federalist principles? Michael Krauss, a professor at the George Mason School of Law, will help answer these questions and more in a lecture to be given on Thursday, October 20 at 12:35 pm in Room 135. A question and answer session will follow.

Restoring the Boundary: Tort Law & the Right to Contract

Restoring the Boundary: Tort Law & the Right to Contract
by Michael Krauss

Today courts regularly resolve disputes by applying tort principles when they should apply the law of contracts. When parties have an opportunity to negotiate the terms of their relationship, the resultant contracts ought to be enforced. Tort law is an acceptable substitute only if parties have no opportunity to bargain.

Over the years the boundary between tort and contract has shifted sharply toward tort. For example, physicians serving rural areas are often not allowed to contract with patients for a lower price in return for diminished care. And courts have allowed consumers who buy cars without air bags to recover from manufacturers for injuries that only air bags would have prevented. Sometimes courts even ignore compulsory arbitration provisions that waive the usual judicial procedures for resolving disputes.

Even worse, rules have sprung up that prohibit ordinary commercial contracts. A person forbidden to sell certain products—because a government agency has determined they are too dangerous—may also be forbidden to sell his own labor—because the state has determined that the wages he would accept are too low. Contracts once freely negotiated, and subject to private suit in the event of fraud or failure to perform, are increasingly replaced by regulation. Unhappily, once government has advanced a plausible rationale for prohibiting consensual behavior in one area, its tentacles inevitably extend to other areas as well.

Today's torts "crisis" does not exist because corporations are oppressing individuals, or because we need federal legislation to replace state tort rules. The crisis exists because our rights have been given increasingly less respect by government. The crisis exists because we have not allowed tort to be tort, and contract to be contract. We need to restore the boundary between contract and tort.

Framers' Corner: James Madison

On Saturday, October 15, the people
of Iraq went to the polls to vote on a new constitution. As we witness the Iraqi achieve this monumental and historic milestone in the history of their nation, and indeed their entire region, it is important to reflect upon its connection with our own journey.
When our nation was first conceived in liberty, it too was looked upon both with skepticism and curiosity. Emperors and kings in distant Europe scoffed at the idea that the people could (and should) govern themselves. Today, many share the same skepticism for Iraq. They scoff at the idea that Arab Muslims can see beyond ethnic and religious differences and embrace democracy.
But let us reflect upon the words, spoken by many, but perhaps most eloquently stated by our chief framer, James Madison, in a letter dated 1831: “We owe it to ourselves, and to the world, to watch, to cherish, and as far as possible, to perfect a new modification of the powers of Government, which aims at the better security against external danger and internal disorder, a better provision for national strength and individual rights, than had been exemplified under any previous form.” If the Iraqis embrace this sentiment, it will not only affect their own destiny, but also the region and, indeed, the world.

Effects of Lawsuit Abuse

Effects of Lawsuit Abuse
Facts About Tort Liability And Its Impact On Consumers
Overall Impact: The United States Economy

- The cost of the U.S. tort system for 2003 was $246 billion, or $845 per citizen or $3,380 for a family of four.
- U.S. tort costs increased 35.4 percent from 2000 to 2003.
- U.S. tort costs have exceeded the Gross Domestic Product (GDP) by 2-3 percentage points in the past 50 years.
- The U.S. tort system is inefficient; it returns less than 50 cents on the dollar and less than 22 cents for actual economic loss to claimants.

Tillinghast-Towers Perrin. U.S. Tort Costs: 2004 Update, (New York, New York, 2005)

(Reprinted from the American Tort Reform Association)

Looney Lawsuits

The following are some examples of absurd lawsuits recently filed in the United States. These excerpts were provided by the American Tort Reform Association.

Woman Sues Phonebook Company Over Botched Liposuction
A jury awarded $1.6 million to a woman who claimed a phonebook company published fraudulent data that resulted in her disfigurement from liposuction surgery. The woman found an ad under the plastic surgery section that indicated a physician was “Board Certified.” The doctor, however, was board certified in dermatology and anatomic pathology.
Source: Oregonian, February 25, 2005

Startled Neighbor Successfully Sues Teens over Cookies and Won
Two teens thought they'd surprise neighbors with a nighttime cookie delivery, but a neighbor sued, claiming the good deed caused a severe anxiety attack.
Source: Denver Post, Feb. 4, 2005

Alcoholism Worsened by Train Crash
A train conductor settled for $8.5 million from a railroad after claiming a collision between his commuter train and a freight train worsened his alcoholism.
Source: Associated Press Feb 2, 2005

Student Stressed Over Summer Homework Sues School
A student whose vacation plans were spoiled has sued to end summer homework in Wisconsin, claiming it creates an unfair workload and unnecessary stress.
Source: Associated Press, January 21, 2005

Woman Walking Track Sues Railroad
A woman who suffered minor injuries when she was hit by a train while walking along railroad tracks is suing the railroad for more than $30,000 because she says the railroad didn't warn people that trains were likely to travel on the tracks she was walking along.
Source: Associated Press, November 5, 2004

Hands Off My Property!

Last summer, many citizens were enraged by the Supreme Court’s 5-4 decision in Kelo v. New London. The suit was brought by homeowners whose neighborhood was condemned by the city of New London (CT) to make way for economic redevelopment by other private entities. The homeowners argued that, under the Takings Clause of the Fifth Amendment, eminent domain is reserved for public uses only and not mere public purposes, such as creating jobs and economic growth. However, the Supreme Court ruled that “public purpose” is indeed encompassed under “public use” and thus held in favor of the city of New London. In her dissent, Justice Sandra Day O’Connor argued that “[a]ny property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.”

However, the public backlash against the Court’s ruling is having far-reaching effects in our nation’s legislatures as lawmakers react to the anger of the electorate. Several states have already banned the use of eminent domain for “public purpose.” In Tennessee, lawmakers such as Sen. Jamie Woodson (UT Law graduate) are currently reviewing the state’s eminent domain laws with an eye toward reform. In Washington, several bills have been submitted in Congress that would prohibit the federal government from taking land for “public purpose” and would restrain states from such takings through the use of federal funds. Some are now even calling for an amendment to the Constitution.

An important issue such as this warrants serious discussion, and the Federalist Society will not disappoint! On Wednesday, November 2 at 12:15 pm in Room 132, Professor Michael DeBow of the Cumberland School of Law will confront the future of eminent domain in the aftermath of Kelo.

John Lott, Jr. To Speak On Judicial Confirmations

Set to visit UT Law this Thursday
News & Information
Please join the Federalist Society on October 6 at 12:30 p.m. in Room 135 as the Federalist Society hosts John Lott, Jr. of the American Enterprise Institute. Mr. Lott will present a lecture entitled “The Judicial Confirmations Process” followed by a Q&A session.

Mr. Lott’s wide-ranging research has appeared in scores of articles in leading academic journals such as the Journal of Political Economy, the American Economic Review, the Journal of Law and Economics, and Public Choice. Mr. Lott also appears frequently on the opinion pages of leading national newspapers, on public affairs television programs, and at legislative and oversight hearings of committees of the U.S. Congress and state legislatures.

A counterpoint to Lott’s presentation will be hosted by ACS on Friday during the free hour.

Finally, A Supreme Court Nominee Who Understands Real People

Perspectives
The following was today's Featured Article on OpinionJournal.com, the online editorial page of the Wall Street Journal.

HARRIET MIERS
Finally, a Supreme Court nominee who understands real people.
By John Cornyn

Although the ink is still drying on her nomination, the president's selection Monday of Harriet Miers to replace Justice Sandra Day O'Connor has already been met with praise from senators on both sides of the aisle. As one would expect, her nomination has also been met with questions by those who do not yet know her. But those of us who do know and have worked with Ms. Miers think very highly of her, and we believe she will make a valuable contribution to the Supreme Court.

Nonetheless, some have criticized the president because he did not select an Ivy-League-credentialed federal appeals court judge for the open seat. I think this criticism is misplaced. For one thing, there is no evidence that service on the federal court of appeals is a prerequisite for distinguished service on the Supreme Court: 41 of the 109 justices who have served on the Supreme Court had no judicial experience at all when they were nominated. These include several luminaries from the school of judicial restraint, including the late Chief Justice William Rehnquist.

Furthermore, Harriet Miers's background as a legal practitioner is an asset, not a detriment. She has spent her career representing real people in courtrooms across America. This is precisely the type of experience that the Supreme Court needs. The court is full of justices who served as academics and court of appeals judges before they were nominated to the bench. What the court is missing is someone who understands the consequences of its decisions on the American people.

This experience gap is a real one. With the exception of the newly confirmed chief justice, John Roberts, no justice on the court has been an advocate in a court of law in the past 25 years, and Chief Justice Roberts was involved only at the appellate level.

Harriet Miers, by contrast, has a long and successful career as a lawyer representing corporate and individual clients in a variety of state and federal courts. I am confident that this background provides her with an understanding of the burdens of modern litigation, a recognition of the problems with frivolous lawsuits and an appreciation for tort reform.

Others have criticized the president because Ms. Miers is a close confidante, implying that she would not be qualified but for their relationship. I could not disagree more. Of course, the president is going to be inclined to nominate someone he knows, likes and has confidence in. He is not going to nominate someone he does not know or someone he does not like. So long as she is otherwise qualified to the Supreme Court, Ms. Miers's long and valuable service to the president should count in her favor, not against her.

And, moreover, there is little question that she is up to the job. She has been a true trailblazer for women in the law. She was the first woman hired by her law firm--one of the most prominent in Texas. She was the first woman to serve as president of her law firm. She was the first woman to serve as president of the Dallas Bar Association. She was the first woman to serve as president of the Texas Bar Association. And her accomplishments do not end at the Lone Star border.

For the past five years, she has worked at the highest levels in the White House, including serving as the president's closest legal adviser. Few lawyers in America have a more impressive resume. And none have more of the president's confidence.

It is true that she was not educated at East Coast universities and has not spent her entire career inside the Beltway. This, again, is a plus in my book, not a minus. Anyone who has followed the Supreme Court in recent years knows that what the institution needs most is a dose of life beyond Washington. Last year, the court permitted a public display of the Ten Commandments in Texas, but not in Kentucky. It took nine justices on the court 10 different opinions to explain why this was so. The court is dangerously out of touch with America. Ms. Miers will help bring it back down to earth.

Ultimately, I think some people are uneasy about Harriet Miers because they are unfamiliar with her.

To some extent, this is understandable. She has worked outside the limelight her entire career, always serving others. But it is important to take a deep breath and not rush to judgment. As the confirmation process unfolds, Americans will learn a great deal more about Ms. Miers, and they will like what they see.

I have been fortunate enough to know Harriet for much of her career. I know that she believes, as I do, that judges should not legislate from the bench. I know that she believes, as I do, that judges are not some sort of elite anointed to impose their preferences on the rest of us. I know that she understands that unelected judges who serve in a democracy have a limited role--to apply the law as it was written by the people's representatives. She aptly described her judicial philosophy on Monday when she said, "It is the responsibility of every generation to be true to the founders' vision of the proper role of the courts and our society." The courts, she continued, have "obligations to strictly apply the laws and the Constitution."

I am confident that when the American people get to know Ms. Miers as I have, they will be as supportive as I am of her nomination.

Mr. Cornyn is a Republican senator from Texas and a member of the Senate Judiciary Committee. He served previously as attorney general of Texas, as well as a justice on the state Supreme Court.

Framer's Corner: Alexander Hamilton

Perspectives
On Monday, October 3, President Bush nominated Harriet Miers to the Supreme Court. Many citizens immediately cried foul and made accusations of cronyism. Why? Harriet Miers is President Bush’s lawyer and longtime friend. In light of this charge, and with all the present controversy over the proper role of the Senate’s “advise and consent” powers, it seems fitting to consult the wisdom of the Framers.

In Federalist No. 76, Alexander Hamilton wrote: “To what purpose then require the co-operation of the Senate? I answer, that the necessity of their concurrence would have a powerful, though, in general, a silent operation. It would be an excellent check upon a spirit of favoritism in the President, and would tend greatly to prevent the appointment of unfit characters from State prejudice, from family connection, from personal attachment, or from a view to popularity. . . . He would be both ashamed and afraid to bring forward, for the most distinguished or lucrative stations, candidates who had no other merit than that of coming from the same State to which he particularly belonged, or of being in some way or other personally allied to him, or of possessing the necessary insignificance and pliancy to render them the obsequious instruments of his pleasure.”

Have Hamilton’s worst fears been realized by President Bush’s recent actions? If so, the duty lies to the Senate to resist him.