Saturday, November 24, 2007


By Robert Shattuck

We the citizens know usually we can only expect to be taken advantage of by the politicians and the special interests. The electorate periodically needs to find one of those infrequent election situations where we are given a good collective chance to kick back at this or that politician or special interest group that has been particularly egregious in doing a number on the rest of us. The tort liability issue in connection with the Alabama Supreme Court justice elections next month is such an opportunity.

In order to avoid dealing in vague references, I will define what a "special interest" is. A "special interest" is any group for whom the making of election campaign contributions is nothing other than a rational and calculated business decision, that weighs the expected economic benefit to be derived from the influence over legislative votes or other governmental action that can be obtained, against the amount of the contribution. If the former is greater than the latter, the contribution will be made; otherwise not. While the certainty and amount of the sought after benefit cannot be calculated with definiteness, the telltale sign of a special interest group is that the complete explanation for its making a campaign contribution is that the group has, to the best of its ability, concluded that the expected economic benefit is greater than the amount of the contribution, in other words, your textbook profit maximizing, capitalistic, business decision. This is properly devoid of altruistic considerations, such as whether good government that maximizes our collective social welfare is being promoted.

Do not get me wrong. I am a fervent believer in capitalism, free markets and Adam's Smith's invisible hand. I generally place myself in strenuous opposition to socialistic or communistic things.

There is, however, a contradiction between representative democratic government and capitalistic behavior, and there is a area where a smidgen of socialism needs to creep in, in order for democracy to work decently. The contradiction is, unfortunately, central, and not peripheral, to the better working of government for our common good.

Quite simply, to a great extent we have bad government that is extremely wasteful because we have created an environment in which the most influence goes to special interests whose political involvement is capitalistic and who make their campaign contributions and support their candidates based exclusively on their profit making business calculation that the expected economic benefit to be derived is greater than the amount of the contribution. The special interests are presumably successful in ultimately extracting economic benefits that are greater than the campaign contributions. If not, they would be dumb businessmen who should be, and eventually will be, removed from their jobs for losing money in the transaction, instead of making money for whosever economic interests they represent and who pay them to make money and not lose money.

On the other hand, we can make significant progress towards achieving good government by increasing the influence of citizens who involve themselves in the political process for reasons other than profit and loss business calculations and who bring a desire to see the totality of government work better for all the citizens and not solely a desire to profit themselves from a narrow area of governmental activity that happens to be susceptible to their exploitation. That kind of talk is, of course, exactly the smidgen or more of socialism that is referred to above, i.e., political involvement that seeks the larger good of all and that does not relentlessly and narrowly look after the interests of old, number one, which is the hallmark of capitalism and the selfish virtue in the palm of Adam Smith's invisible hand.

Unfortunately, as most everyone knows, human nature being what it is, the impulse of capitalism, because it is always looking out for number one, is strong, and the impulse of altruism and socialism is weak. In the political arena, the stronger impetus of capitalism decimates the pathetically weak, good government seeking citizens and the overall social weal whose cause they seek to advance.

This triumph of capitalism in our representative democracy produces the government bazaar that we have today in the United States. Essentially, a gigantic federal budget of a trillion or two dollars, plus untold amounts not showing up in the budget but affected by the government's actions. is perpetually up for grabs. And grab and grab we send our Senators and Representatives to Washington to do. The same thing takes place on a smaller scale in our fifty state governments. In reality, just about all of us are part of one special interest or another in the big grab, as much as some of us would rather have our presence felt as altruistic, good government seeking citizens. That socialistic bent, as indicated, gets trampled day after day amidst the profit maximizing, capitalistic special interest elephants plodding the turf in Washington and in our state capitals.

In the big grab at our government bazaar, it is not as if the entire amount of the government budget disappears into a black hole from which no citizens benefit. In our free for all lunge at the government's goodies, the citizens collectively get benefits that are of value to them, and all is not waste. The price that we pay, however, is that there is enormous waste in the form of pork and the like in the budget itself, and large inefficiencies in areas that are outside the budget but that are nonetheless affected by government action. Also, there can be great unfairness because some of the patrons at the government bazaar (one could say snorfers at the trough) are much more successful than others in how much they are able to chow down for themselves.
None of us with aspirations for man's better potential can be happy with the government bazaar we have created, and many of us rightfully react with disgust and revulsion, if not shame, at our political handiwork. We are sad and disappointed, or perhaps cynical, that individual citizens believe they can do little about the monstrosity we have created.

Election time is a time to behold the monstrosity, and an occasion to look deep into the disgust we feel; and it is an opportunity perhaps to cast cynicism aside, and a vote that singularly registers how nauseous we are. Election time is when a little effort should be given to looking for and hopefully finding a particularly hoggish snorfer at the government bazaar. Locate a grabber that has the potential to really stir the ire of hordes of citizens, by how crafty and brazen and, ultimately indecently out of bounds, the pig has been in royally milking a situation and doing a super number on the rest of the citizens.

I will, in connection with next month's Alabama Supreme Court elections, examine tort liability law and plaintiffs' lawyers in subsequent parts of this series.

By Robert Shattuck

Imagine yourself and a number of other citizens sitting around a table as a lawmaking body. You are trying to decide what monetary payments should be made and how they should be made to persons or their families if and when the person dies or experiences bodily injury, or suffers mental or psychological trauma, or incurs financial or other economic losses.

In trying to determine the proper role for government and the law in this area, you and your fellow lawmakers first come to the conclusion that, no matter what ideas or system you come up with, if payments are going to be made when a person experiences physical or economic losses or harm, any payments to the person or his family, one way or the other, come out of someone's pocket. As an example, your lawmaking body considers the mechanism of private insurance for the making of payments to cover losses. With insurance, the many private parties who desire the insurance coverage pay premiums that create a pool of funds from which payments are made to cover losses. Payments deplete the pool of funds, which must be kept continually replenished from ongoing premiums for the pool. It is thus clear how, under private insurance, payments made to one person to compensate him for loss or damage come out of the pockets of other people.

If the government makes payments to compensate people for loss of life or for other harm and damage, the government uses the taxes it collects from all its citizens to make these payments. Accordingly, here, your imaginary lawmaking body is again confronted with the seemingly inescapable fact of life, namely, that if payments are going to be made to harmed individuals, those payments have to come out of someone's pocket. Moving along in your review, your group is also able to discern that, if a third party, such as a corporation, is called on to make a payment to a harmed person or his family, the payment again has to come out of someone else's pocket. It may be the pocket of the shareholders who own the corporation, or it may be the pocket of employees who are paid smaller wages and salaries in order to enable the corporation to make the payment. Alternatively, the pocket may be that of customers who are charged higher prices so that the corporation gets the money needed for the payment. The corporation could have insurance to cover the payment. In this case, however, your lawmaking body perceives that the payment still comes out of someone's pocket, including not only the shareholders, employees and customers of the corporation in question who bear the burden of paying the premiums for the insurance coverage, but also out of the pockets of shareholders, employees and customers of all the other corporations that also purchase the same insurance and pay the premiums that create the insurance pool from which payments are made.

In sum, your lawmaking body confirms to itself the adage that there is no free lunch and that, in any system you come up with to make payments to injured persons, the payments have to come from somewhere and out of someone else's pocket. Harsh as the reality of the "no free lunch" syndrome is, you and your fellow lawmakers swear that you will always keep it in mind no matter what governmental policy you decide on.

In proceeding forward on your policymaking mission, one of your group says that he is quite impressed by the attributes of private insurance arrangements. Private insurance, he argues, maximizes freedom of choice of individuals to decide what losses they want to insure against, and for how much, and what level of premiums they are willing to pay to be covered. If a person thinks his life is worth $10,000.000, well then, by God, let him buy that amount of life insurance, and more power to him if he makes enough money to pay the $50,000 or whatever a year premium it takes to buy that much insurance. This proponent of private insurance avers that, as we know, if a $10,000,000 death benefit is going to be paid, it has got to come out of someone's pocket. At least this guy (and others like him) are paying very substantial premiums into the pool of funds needed to make the payment. Leaving the matter to be handled through private insurance beats the hell out of some idea like having the government come up with the $10,000,000 death benefit from, say, an additional nickel ($.05) tax on each and every one of 200,000,000 citizens in the country (200,000,000 x $.05 = $10,000,000), or nicking the shareholders, employees and customers of the corporation where the guy happens to work for more substantial, but nonetheless manageable, amounts to cover the ten mill.

If people are worried about becoming disabled in an accident, the private insurance proponent says, let them buy disability insurance. Again, freedom of choice is maximized regarding how much disability insurance is obtained and how much one contributes of one's own funds to the pool that will be used to make the disability payments. No one is coerced into, say, paying taxes to the government in order to allow the government to make disability payments.

After not a great deal of discussion, your imaginary lawmaking body is quite impressed with the attributes of private insurance arrangements and concludes that they should play a very large role in the system you want to devise for your citizens for the making of payments to persons who experience losses and damages.

At this point, another member of your group vouches that private insurance arrangements alone will not do all that is needed or appropriate. In some circumstance, she says, a person cannot afford to or should not be expected to purchase private insurance for a loss or damage in question, and that fairness and justice in certain circumstances cry out for a payment to funded other than pursuant to private insurance arrangements. For example, if and when America has the military draft, and young men and women are required to enter into battle on behalf of our country with the certainty that some of them will lose their lives or be physically maimed for life or emotionally traumatized, surely they and their loved ones are entitled to more than the opportunity to purchase private insurance to cover the loss and damage.

Yes, the entirety of your imaginary lawmaking body quickly agrees that justice and fairness require more than private insurance arrangements. Further, if ever the value of a single human life is priceless, it is the life of a young person who has laid it down for his or her country in the line of military duty, and, as priceless as that life is, an effort needs to be made to place an inadequate value on the life and to determine an amount of compensation to be paid to the loved ones of the person who has made the ultimate sacrifice for his or her country. As discomforting as the exercise is, your imaginary lawmaking body, after debate, decides that the loved ones of any person lost in the line of military duty should be paid $1,000,000 out of the government's tax revenues (equal to a one half cent tax on each of 200,000,000 citizens of the country).
Having persevered through the foregoing somber exercise of ascribing a value to the most priceless of commodities, that of a human life, your lawmaking group pauses to ask of themselves whether, with the espousal of private insurance arrangements and government payments to cover things like harmed military personnel and victims of natural disasters, the group has completed its policymaking mission related to devising a system for the making of payments to persons experiencing loss and damage, and the government's role therein. One of your group mentions welfare programs and says that welfare programs could be viewed as a system for making payments to persons who have experienced losses and damages and have therefore fallen into a category that qualifies for government welfare payments. With the mention of the welfare system, your lawmaking body first does a quick check of its adopted governing principle that there is no "free lunch" in the arena of making payments to persons experiencing loss and harm. Alas, unfortunately, welfare payments have to be paid from taxes (or from government borrowings that have to be paid from taxes) and, like all the other payment arrangements your group has considered, came out of someone's pocket. Once again it is confirmed there is no "free lunch" here either.

Although by this time only mildly disappointed in not finding a "free lunch" elixir in the welfare system, your group acknowledges that the welfare system needs to be considered as part of society's overall scheme in providing payments to persons who experience loss and damage. Welfare being such a morass, mess and difficult problem, your group chooses not to dwell exceedingly long on the exact role that the government welfare system should play in providing a source of payments to persons who experience damage and loss, although clearly it potentially plays an extremely large role. The size of the role is arguably measured in hundreds of billions of dollars a year.

"O.K., are we done now?" pipes up one of the quieter members of your group, who is getting hungry.

"What, are you a dummy or something?" interjects another of your imaginary august body, who has been lying low in the discussion up to this point. She continues, clearly experiencing no pangs of hunger whatsoever. "Not everything is pure accident you know. There are tons of people in our beloved country who are mean, vicious, dishonest, negligent and worse, and who cause untold amounts of harm and damage to millions and tens of millions of our citizens. They must be made to pay! They must be deterred! They must be punished!"

The hungry, quiet imaginary lawmaker slumps into his seat, despairing of a meal anytime soon.

To be continued.

By Robert Shattuck

Any good and just society of human beings wants to implement mechanisms and systems that, under appropriate circumstances, provide compensation or reimbursement to members of the society who experience physical or economic loss or damage in their lives. Also, such a society will seek to prevent such losses, harms and damages from occurring to begin with, by means of punishing persons who willfully or negligently cause them to happen. Punishment can conveniently dovetail with the first objective of compensation by making the perpetrator at least pay for the loss, harm or damage he causes. No one has any quarrel with the foregoing objectives of a society or with a society taking steps to implement mechanisms and systems that seek to advance such social goals.

As discussed in an earlier part of this series, a conscientious society will appreciate that there are no "free lunches" and, whenever you talk about compensation and payments to injured members of society, amounts that are paid to the injured party always come out of someone's pocket. That someone may be all the citizens who pay taxes to a government which might make the payment, or it might be the private parties who make insurance premium payments that create a pool of funds from which the payment in question is made. The someone else whose pockets can be gone into are a corporation's shareholders, employees and/or customers, who, by means of a less valuable ownership interest, or through reduced wages and salaries or higher prices charged for goods and services, become a funding source if a corporation is called on to make to an injured party.

In its repertoire of mechanisms and systems for providing compensation to members of the society who have suffered losses and harm, an intelligent society perceives the valuable and significant roles that private insurance arrangements and public welfare programs can and should play in the overall scheme for trying to achieve the social goals in question. In making compensation for damage and loss, it is sometimes becomes necessary for society to place a value on things that are priceless, such as human life. For example, society seemingly needs to decide how much the government should pay to the loved ones of a person who is drafted into the military and lays down his life in the line of duty to his country. Maybe society thinks $10,000 is appropriate, or $1,000,000, or $10,000,000. The citizens of the society, or their elected representatives, simply have to decide what they think is right and appropriate in these regards, and then levy the taxes needed to make the payments.

In terms of preventing or trying to prevent injury from occurring to begin with, society has at its disposal several tools. One is the tool of governmental regulation. This can extend to virtually any area of human activity whose regulation is thought needed to lessen the occurrence of harm and injury to members of society. A society also has the tool of the criminal law for throwing people in jail who deliberately do things that harm others. Further, society has its civil liability system under which persons who do things that harm others can be forced to pay for the loss or damage that occurs and who may be subjected to punitive damages as a special possible deterrent against the doing of things that society does not want done.

The tool of regulation entails a government agency spelling out permitted conduct and prohibited conduct on the part of the persons being regulated and the use of fines and other sanctions in order to try to obtain compliance with the regulations that have been promulgated. Three things are noteworthy in this arena. First, to curtail zealotry on the part of the regulators and to promote even handedness and objectivity in how the regulators pursue their mission, employees of the agency are not compensated on the basis of the dollar amount of fines they are able to collect from the regulated parties. Second, fines that are collected generally go into the government's coffers for use in carrying on its regulatory activities or for other government purposes and do not go to enrich any particular private persons. Third, the regulators are generally enjoined, in prescribing permitted and prohibited behaviors, to employ cost/benefit principles and to try to promulgate regulations compliance with which will overall have a greater benefit to society than the overall cost that is involved in complying with the regulations.
In the realm of the criminal law, it is worthy of similar note that prosecutors are not paid according to how many convictions they obtain or how many years they throw people in jail for. As in the area of governmental regulation, the reason for this is presumably a belief that too great a price would be paid in terms of fairness, justice and evenhandedness if we paid our government prosecutors according to their sentencing record for the year. In other words, even though there is a neutral judge in the courtroom, when it comes to punishing people, society is very skittish and thinks the prosecutor (like the regulator) has a duty to be evenhanded and it is intolerable to undermine that duty by providing any financial incentive to the prosecutor (or regulator) to seek higher levels, in preference to lower levels, of punishment.
Let us now turn to our tort liability system.

I start out by asking about the appropriateness of plaintiffs' lawyers receiving any compensation based on the amount of punitive damages awarded to their clients. The purpose of punitive damages is not to compensate for the plaintiff's loss or harm but rather to achieve the deterrent effect that is connoted by the term punishment. In order to deter you from doing such and such, we will throw you in jail, or make you pay a fine, or make you pay punitive damages, if you do such and such. As indicated above, society is very squeamish and sensitive about government regulators and government prosecutors getting carried away in their respective missions of punishing people for doing things that society says they must not do, and as result we adamantly decline to compensate government regulators and prosecutors on the basis of how much in fines they collect from regulated parties or based on how many convictions they obtain or how many years they get people thrown in jail for. This being so, I ask, what is special about plaintiffs' lawyers and the punitive damages that they seek to impose on the defendant solely for purposes of punishment and the deterrent effect of punishment? If justice, fairness and evenhandedness are at risk of overly zealous regulators and prosecutors if they are paid according to fines, convictions and years in jail obtained, who on earth could not think that justice, fairness and evenhandedness of punishment are not severely jeopardized in the hands of plaintiffs' lawyers lusting after million dollar and ten million dollar and hundred million dollar legal fees to be gained by swirling into hurricane force the untrammelled emotions of twelve jurors, oh so scientifically picked, to slap this particular huge and faceless corporation with untold millions of dollars of punitive damages?

I next ask another simple question. In the punitive damages arena, how and why are justice and society appropriately served by the plaintiff receiving a punitive damages award in lieu of the government and the citizens as a whole being the beneficiary of the award? Keep in mind that, by definition, the plaintiff's compensatory damages are supposed to cover the plaintiff for his loss and damage to the extent the law determines he is entitled to be so compensated, and punitive damages are intended solely to achieve the standard deterrent effect that punishment as a lesson to the defendant and to others is supposed to have. Keep also in mind that in other instances where financial punishments are imposed, such as in the levying of fines in the governmental agency regulatory arena, the fine is received by the government and available to benefit the citizens as a whole, such as being used to fund the government agency's enforcement activities against others and thereby further advance the reason for the fine to begin with, to wit, getting the regulated persons to do what society says they should do and not do what society says they should not do. Thus, a plaintiff, who has been compensated for his loss through compensatory damages, is simply not entitled to the windfall of punitive damages as well, instead of such punitive damages going to the government for the benefit of the citizens as a whole and used, in particular, in one or more ways directly to try to prevent in the future, by the defendant or others, the behavior in question that triggers the punitive damages to begin with.
Besides the foregoing practical observation that punitive damages, like fines levied by a regulatory agency, should be paid to the government and benefit the citizens as a whole by being used to combat future behavior like the behavior which is the subject of the punitive damages imposition, there are equally significant, but more abstract, considerations of what justice under the law is supposed to be about. Most of us sort of know that our tort law liability system has become a gigantic lottery. If you are lucky, your son dies in a fiery, side on crash of a GM pick up truck with fuel tanks mounted on the side, and not only can you collect two or three million dollars compensatory damages, but you can hit the super grand jackpot and collect $100,000,000 punitive damages. If you are unlucky, your beloved son has been drafted into the army, sent to Vietnam to fight for his country, and dies a horrible death in a horrible battle, and you collect, what, maybe nothing, maybe $10,000. Or maybe your daughter gets carjacked, raped, and killed, and no "deep pocket" anywhere or anyhow can be found, and you get nothing.
I know Americans love a lottery, and maybe that love is so deep that our citizens want our tort liability system also to be the lottery it is. If so, God help us in trying advance any cause of reasonable justice under our tort law or in any other realm where justice, which is inherently antithetical to random chance, must compete with having to appease a thirst for the thrill of a gamble and outcomes based on chance.

Up to this point, I have not had much good to say about our tort liability system. I will try to speak more favorably in the next part of this editorial.

By Robert Shattuck

Our tort liability law has the dual purpose of compensating persons who have experienced loss and damage caused by other members of society and of punishing the defendant in order to try to achieve a deterrent effect by means of a lesson that either a person must not do what the defendant did or else the person will pay a price.

We can fervently wish that every loss or damage under the sun will be compensated for, and handsomely too. If your son goes into the army to serve his country and gets killed in Somalia, we can very fervently wish that you should be paid $10,000,000 to try to compensate you for that which is priceless and has been lost. If your mother gets cancer and dies at age 30, we would fervently wish that a trust fund of $5,000,000 could be set up for you to provide potential recompense to you in your upbringing for having lost that which is irreplaceable.

Alas, for every payment made to somebody, there needs to be somebody else who must come up with the amounts needed to make the payment and to put in a hard day's work to do so. We did not pay $10,000,000 to the family of each solder who was killed in Vietnam, and a tax bill levying an income surtax on wages and salaries in order to do so would not have gotten very far in Congress. At the same time, the country has fulfilled and continues to fulfill significant obligations, such as Veterans' Administration hospitals for survivors, regardless of our unwillingness to take it upon ourselves to make large payments to families of the dead. Similarly, our government, in its social security program, makes limited payments to help provide support to those who become disabled, possibly quadriplegic, but we generally do not think we can afford to set up trust funds that will cover any and all possible medical needs for the rest of the entire possible length of a person's life, including an inflation hedge. Our heart wishes we could, but our head tells us we cannot afford to do it. We try to make reasonable decisions to do what we think we can afford to do, but losses, harm and damage in life, alas, are too universal and too widespread (after all, everyone dies in the end) to allow for much extravagance if even significant generosity in reaching into our tax coffers to provide compensation.
As for getting people to do what society thinks they should do and not do what they should not do, we have criminal laws and we have governmental regulatory agencies. Our criminal law system has become pathetic. Far too few murderers, rapists, burglars, con men, environmental polluters, tax cheats and medicaid and medicaid fraud abusers are caught in their crimes, a seemingly infinitesimal number are sent to jail, and those who are imprisoned seem to be put away too slowly and get released too soon in order to teach them and others an effective lesson that crime does not pay. As a result, many in the country are near giving up on our criminal law system as a means to get people to do what they are supposed to do and not do what they are not supposed to do.

We also employ ever more massive and pervasive governmental regulation to try to get people to do what society thinks they should do, such as build safe products, have safe workplaces, not pollute the environment, adequately test new drugs and medical devices, and so on, and so on. Ongoing policy debate transpires year after year among legislative bodies, government regulators, the regulated parties, and affected citizens as to what is cost effective in terms of the costs involved to achieve various levels of safety or protection in the environment, in consumer products, and in the workplace. There are those who advocate, in certain circumstances, that very high levels of costs should be paid in order to achieve very small incremental
improvements in the level of safety or protection, say, against the presence of cancer causing agents in a pesticide (e.g., one part per one hundred million is not acceptable and it must be one part per billion). Creative ideas get proposed, such as allowing rights to pollute the air to be bought and sold in order to achieve the best cost/benefit results, and some are appalled by such a notion. Many consumers argue that the regulators are too lax, and industry frequently thinks the regulators go too far. There is always the risk of corruption of the regulators, and oversight is needed to make sure out and out bribery does not take place, as well as to address the more subtle problem of the "revolving door" between industry and the regulatory agencies. In short, governmental regulation is a massive, but far from perfect, attempted solution to society's age old quest of trying to get people to do what society wants them to do and not do what society does not want them to do.

If criminal law and governmental regulation together fall short in terms of getting people to do what society wants them to do, it is time to bring them front and center -- the plaintiffs' lawyers, be they the solution from heaven or the parasite from hell.

If, as stated, our tort liability law system has the dual objective of compensating those who are damaged and of punishing anyone with any money who has anything whatsoever to do with a harm that has been inflicted, that system has succeeded in the most royal of royal spades. If anyone, anywhere, anyhow, has experienced any loss or damage, physical, financial, psychological or emotional, and if there is anyone with any money anywhere in the vicinity who could be said to have anything whatsoever to do with the loss or harm, the plaintiffs' lawyers have created the most phenomenonally successful system imaginable for maximizing the amount of money the person experiencing the loss can recover and socking the defendant with staggering if not fatal financial penalties that get more and more incredible.

The only question is, what defense can be mounted of what has been done in the name of sanity and rationality. Or, in other words, is this any way to run a candy store?

The plaintiffs' lawyers would say to us, look, all your criminal laws and all your governmental regulation are not adequate to keep Exxon from perpetrating the Valdez oil spill or to keep the breast implant makers from perpetrating their wrongdoing. You need us, the plaintiffs's lawyers (and our juries and judges), to sock it to Exxon for $10,000,000,000 (that's ten billion dollars) and to the breast implant makers for $4,000,000,000 and to whatever other deep pocket malefactor for whatever ungodly sum we can whip the jury into an emotional frenzy to deliver up to the court. Never mind that it is coming out of the hides of shareholders (which may include many widows and orphans)(remember it's only a small amount on each), or out of the hides of employees through reduced salaries and wages (or perhaps loss of a job if their employer, such as a general aviation aircraft manufacturer, is put out of business by the astounding success of us the plaintiffs' lawyers in working our magic with juries), or out of the hides of customers through higher prices. Never mind that all those individually small amounts that we the plaintiffs' attorneys successfully extract as punishment from all those taxpayers, shareholders, employees and customers, add up to a staggering amount going to a plaintiff who, admittedly deserving of sympathy, has been compensated with compensatory damages, and such money is not going to the government to help beef up the enforcement of its environmental, employee safety and consumer safety laws. We the plaintiffs lawyers are the greatest consumer safety law enforcers and environmental protectors the universe has ever seen, and you need to compensate us accordingly. If you could hire a hundred government prosecutors or government regulators for $75,000 a year apiece ($7,500,000), you are getting nowhere near the deterrent effect we the plaintiffs lawyers achieve when we knock up those shareholders, employees and customers for $100,000,000 in punitive damages and receive our holy one third contingency fee of $33,000,000 for our efforts.

That's what the plaintiffs' lawyers are saying to us. Do you buy it?

First, the taxpayers, shareholders, employees and customers who are ultimately paying the blood money in small amounts are generally innocent. The "guilty" employees who can reasonably be said to have responsibility for what has happened, be they the president of the corporation, or a project supervisor, or a plant manager, are probably only marginally punished if at all. America is notorious for what corporate presidents are paid when their corporations do not perform well, and it is unlikely their treatment will be severe simply because a large punitive damages verdict is won against their company. A project supervisor or plant manager may or may not be fired and may or may not deserve to be fired and may or may not find another job, the nature of his culpability and the precise deterrent effect as to future behavior both likely being murky.

While precise deterrent effect of the tort liability system is murky, the general in terrorem effect is clear. Everyone is petrified of the plaintiffs' lawyers but, like schizophrenic rats in cage, no one has any comfort about what can be done to keep them at bay. The benefits or detriments of the behavioral responses that are engendered throughout the nooks and crannies of our commercial, governmental and personal activities undoubtedly range across the board. I would not doubt that Exxon, as a result of the Valdez litigation, has implemented some oil spill readiness procedures that are desirable. I would also not doubt that there are drugs and medical devices that would be of net benefit to society but that are being kept out of the market because of possible legal liability exposure. I am sure hospitals have instituted procedures that lessen the chances of mistakes being made. At the same time, we have all heard about defensive medicine procedures that are unwarranted except for warding off legal liabilities and that have contributed to the country's health care cost problem.

The foregoing list of behavioral responses can be expanded ad infinitum. In judging our tort law liability system that has such a large impact on people's behavior, a very major consideration needs to be an overall evaluation of how members of society respond in their behavior. To the extent individual responses are counterproductive, disadvantageous or detrimental to the overall social good, the system needs a very close and very critical examination.
Like it or not, I think it is fairly clear and certain that the policy and decisionmaking process that is embodied in the plaintiffs' lawyers, twelve jurors and a judge in a courtroom, multiplied thousands of times over, is seriously deficient. For example, it is my understanding that the general aviation aircraft manufacturing business has been largely put out of business by the plaintiffs' lawyers. Maybe it should be and maybe it should not be, but I have no confidence that the right policy has been implemented in that regard through tort liability litigation, in which that policy question is out of bounds for debate by the parties. I think Congress should investigate and decide the matter, rather than the plaintiffs' lawyers, and their juries and judges. If Congress, after reviewing the pluses and minuses, decides the industry should not be closed down, in so doing Congress implicitly has concluded that the tort law liability system has imposed liabilities that should not have been imposed and Congress would then need to change the law concerning when liability will attach to the industry.

On a more global basis, because so much significance is attached in tort liability to what a corporation knew and when did it knew it, perhaps Congress needs to establish a mammoth repository of corporate information into which corporations could deposit all their studies and other information about products which government regulators could sift through to determine the known risks presented by a product. If, under appropriate administrative procedures, a product is concluded to present undue risks, its manufacture might be prohibited. If the regulators conclude that the benefits of the product outweigh the risks, and/or if the manufacturer makes disclosure of the risks to customers in a manner approved by the regulators, then no liability will attach if the risks in question come to fruition and, as a result, a loss or an injury occurs. I generally have immense antipathy to government regulation, but the foregoing suggestion seems to me far preferable to shareholders, employees and customers being responsible for $10,000,000 in compensatory damages and $100,000,000 in punitive damages because thirty years ago a member of a research team wrote a memorandum discussing a product risk and the corporation concluded the desirability and benefit of the product outweighed the risk.

I also think, if the behavior of a corporation or governmental entity is sufficiently wrongful as to warrant imposing a huge punitive damage award that is paid by largely innocent taxpayers, or shareholders, employees and customers of a corporation, we owe to those taxpayers, shareholders, employees and customers the obligation to target punishment against the persons who are the more responsible parties. If a plant manager knowingly allows his plant to violate environmental laws, and if this is serious enough to sock the innocent shareholders, other employees and customers of the corporation with a $100,000,000 punitive damages award, then surely it is serious enough to make sure you throw the plant manager in jail for a year or five years or something. I have previously suggested criminal law system is pathetically ineffective, and the plaintiffs lawyers may tell me I am naive if I think throwing plant managers in jail will stop him or other plant managers from allowing the environmental laws to be violated at their plants. The plaintiffs' lawyers may similarly contend that the only way Exxon will institute needed oil spill procedures is to stick them with ten billion dollars of punitives in the Valdez litigation. I will limit my response to saying that we should let Congress and our state legislatures debate and decide whether throwing plant managers (and company presidents where warranted) is a more cost effective deterrent or whether plaintiffs' lawyers running around getting $100,000,000 punitive damage awards (with $67,000,000 going in the plaintiff's pocket and $33,000,000 in the lawyer's) is more cost effective, or whether the government should get the $100,000,000 as a fine and spend it on its compliance activities.

By Robert Shattuck

We the citizens know usually we can only expect to be taken advantage of by the politicians and the special interests. The electorate needs to find one of those infrequent election situations where we are given a good collective chance to kick back at this or that politician or special interest that has been particularly egregious in doing a number on us. The tort liability issue in the Alabama Supreme Court justice elections next month is such an opportunity.
It is a great life for the plaintiffs' lawyers. Americans love a lottery, and in our tort liability law system we have gotten a humdinger. Say my child gets kidnapped by a vicious, sadistic child molester, hauled off to the woods, tortured and killed. There is a small probability that the perpetrator will be caught, brought to justice, and be thrown in prison for a long time or executed, but assume no governmental parole officer goofed, there is no one is sight I can sue, and that is the end of the story. In this case I have pulled a losing ticket in the lottery. Now, if I was lucky, I might have had a son who was driving a GM pickup with fuel tanks on the side and who got into a side on accident while drunk, in which the fuel tanks ignited and my son died in a horrible fiery death. In this case, I can hit the jackpot and collect a $50,000,000 punitive damages award against GM for putting the fuel tanks on the side of the truck.

Life is great for the plaintiffs' lawyers because they get to play the maestro of the lottery in ferreting out the "deep pockets" who are around, and collect 33% of the lottery winnings as a reward for their shakedown prowess. (Possibly the 33% compares favorably with the percentage a state that operates a numbers lottery withholds from the lottery ticket receipts before making the payout to the winner, but at least the takeout to the state can be used for the benefit of all citizens.) It's especially great because everyone is forced to buy tickets in the lottery. The prices for the involuntary participation in the lottery may be in the form of higher taxes if a woebegone municipality gets hit with a judgment, say, because an off duty policeman starts using his pistol in the wrong circumstances. Customers of a corporation can be forced to play through higher prices for goods and services that business must charge to cover liability insurance premiums or the legal judgments themselves if a business self insures. If plaintiffs' lawyers successfully hit a business for large punitive damages in, say, a sex discrimination lawsuit, perhaps other employees get to pay for their legal lottery tickets through reductions in pay that are needed to come up with funds to pay the plaintiff or plaintiffs and their attorneys. When you operating a gambling game, nothing is better than having a universe full of involuntary players.

Life is also fun for the plaintiffs lawyers in stoking juries to an emotional fever pitch to uncork a beaut of a damage award without any debate of what the consequences are of their jury verdict, combined with thousands of similar jury verdicts, year in and year out. The minds of the jurors can remain pure and need not be troubled by, hey, if big legal judgment after big legal judgment is piled up against general aviation aircraft manufacturers, maybe they will go out of business and a lot of decent people will lose their jobs. It would be no fun to talk jurors into a whopper of a punitive damages award and having to think about something like that.

And for God's sakes, keep Congress and state legislatures from meddling with the system. We don't want those guys asking why punitive damages should be a windfall to the plaintiff, instead going of to the government for product safety or work safety regulation activities, or why government regulators and government prosecuting attorneys are not paid according to the amount of fines they succeed in collecting or according to the number of years they can throw people in jail for, but plaintiffs attorneys are paid according to how much punitive damages they can hit a defendant for. We don't want legislators considering whether or not better criminal law enforcement or better government regulation is a preferable solution in trying to get corporations to conduct themselves the way society wants them to, as compared to the unpredictable in terrorem effect of the plaintiffs, attorneys and their gigantic, justice as a lottery game. We don't want legislative debate about whether or not the general aviation aircraft manufacturing business should be closed down.

In our government of the grab by the special interests (in which almost all citizens partake in one form or the other, regardless of the enormous waste and possible unfairness that some grabbers are better than others), it is to be expected that the plaintiffs' attorneys will be as formidable as any other special interest in exploiting and protecting their domain. We the citizens know and understand that they are only doing what every other special interest does.
But fair is fair. If a special interest cannot keep their legislators dumb and happy and instead have pushed too hard and too far that even their lawmaking friends cannot stomach the disgust they feel with the snorfing that has gone on at the trough, it is time for the special interest to back off. In such a case, the special interest is engaged in risky behavior if it decides to execute a snazzy "end around" to avoid a legislative body having acted against the group. An "end around" may get the citizens very, very irate.

Alabama's plaintiffs attorneys have recently taken overreaching to new heights. In 1987, our woeful, benighted, if not besotted, Alabama legislature actually took it into its hands and said enough is enough. Alabama's lawmakers concluded a stop sign was needed against an insane, out of control, tort liability law system of justice as a gigantic lottery, in which all citizens are forced to buy their lottery tickets, in order that Alabama plaintiffs attorneys may year in and year out rake in tens and hundreds of millions of dollars of attorneys fees. All had become too disgusting for our legislators to stomach, as nice as those plaintiffs' attorneys are to them. In an insane fit of rationality, our Alabama legislature passed a law that imposed a limitation on punitive damages.
Do you know what the plaintiffs' attorneys then did? Yup, got the Alabama Supreme Court do declare the limitation as unconstitutional, violation of the right to trial by jury or something. Just last year that was. See Henderson v. Alabama Power Company, 627 So. 2d 878 (Ala. 1993).
I mean fair is fair. If something is so rotten and so disgusting that the Alabama legislature passes a law against it, it is really rotten and disgusting, and its proponents should accept how rotten and disgusting they have been and plain back off. But not the Alabama plaintiffs' attorneys.
I know it's rare for we the citizens to be presented with much of an opportunity to really give politicians or a special interest group the real kick in the behind they deserve. But we have one in next month's Alabama Supreme Court justice elections. Give yourself a treat. Find out candidates lined up where in 1993 and lines up where now on the tort liability law issue and limitations on punitive damages, and let the plaintiffs' attorneys and their supreme court justices know that they have overreached just one too many times, that you have really gotten fed up and you are not going to take it anymore, and watch how you cast your ballot on election day in those supreme court justice elections.

Thank you for your immense patience and interest if you have stayed tuned through this multi-part editorial, and may you be rewarded for the same on election day next month.

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