Tort reform overview

Tort law is a body of civil law that sets forth the categories of injuries to people or property that can be dealt with in court, and provides the basis for remedying the wrong. In recent decades, plaintiffs in tort cases have increasingly been awarded substantial sums of money as compensation, most significantly in mass tort cases, called class action suits, filed against large companies. The movement to reform tort law stems from the belief in the United States that tort cases have spiraled out of control, and that the body of law governing torts must be changed to prevent rewarding ridiculous or meritless claims and to limit both the extent of liability and the amount of damages paid out.

Proponents of tort reform cite the modern trend that favors plaintiffs over big businesses, even in lawsuits that are considered frivolous. They argue that while the law must protect individuals, there should be limits placed on liability and damages. Unfairly favoring plaintiffs in civil suits erodes the legal system, places undue financial burdens on companies and stifles innovation. Individual responsibility, they contend, must be taken into greater account in tort cases. At its worst, tort lawsuits are manipulations of the judicial system for the unfair economic gain of plaintiffs and their lawyers.

Those who oppose sweeping tort reform argue that people need the protection of the law against large companies, which do not have their best interests in mind. Tort laws are viewed as the most reliable way to prevent companies from breaching the public trust and, in the event that such companies are liable for damages, to ensure that they pay compensation to those that they have injured. Tort reform is widely viewed as a means to limit the culpability of businesses and to encourage behavior which is contrary to the public good.

Understanding the Discussion

Civil Law: The body of laws regulating the interactions between individuals as well as between individuals and companies.

Damages: Financial compensation awarded in a civil court case for loss or injury.

Frivolous Lawsuits: Lawsuits that do not have legal merit, but which are nonetheless filed.

Liability: The state of being legally responsible to another party; breach of a duty owed to another is considered negligence, and can result in a civil suit.

Litigation: The process of bringing and arguing a case in court.

Negligent: Lacking the necessary level of care or responsibility mandated by the law, resulting in harm.

Strict Liability: When an individual or company is liable to another person, even without a showing of negligence or the intention to do harm.

History

The earliest forms of tort law date back to medieval times. Originally, the distinction between tort law and criminal law lacked clarity, but over time they developed into separate, if often overlapping, systems. The earliest tort cases derived from instances of trespassing onto another's property, bodily injuries, hostage-taking and property damage, but grew early on to include instances of negligence, nuisance, fraud, violations of privacy, slander and libel. The purposes of tort law have also changed over time and have included punishment, deterrence and compensation.

In the US, contemporary tort law is grouped into categories on the basis of whether the tort is deemed intentional, negligent or is a case in which strict liability applies. Tort law does not cover contracts, which are dealt with in a separate body of law, and remains distinct from criminal law. Tort law and criminal law do intersect, however, and whether a crime was committed is often an important factor in deciding tort cases.

The expansion of the scope of liability was instrumental to the development of contemporary tort law. Previously, manufacturers were largely protected from liability for any adverse effects that their products caused, and employees had little legal recourse if they were injured as a result of poor working conditions. A few early tort cases broke with this tradition, however, and started a significant trend that persists today.

Tort law evolved considerably in the latter half of the twentieth century. The movement to reform torts was based on reactions to the trends toward personal injury and wrongful death suits during this period. One of the most important tort cases was Greenman v. Yuba Power Products, Inc. (1963), which held that the defendant company was responsible for the injuries caused by a defective product, a Shopsmith power tool that could be used as a saw, drill and wood lathe, even though the product had been assembled with due care. The plaintiff won significant damages, and lawyers and scholars thus consider this case to be a significant precedent in tort law.

One of the most significant books for tort law, The Cost of Accidents by judge and famed legal scholar Guido Calabresi, was published in 1970. It investigated the intersection of economy and law, and suggested a model for economic efficiency in which companies include the possibility of accidents in their determining the costs of their goods or services.

From the 1970s until the end of the twentieth century, the number of tort cases filed increased greatly, as did the damages that were awarded to plaintiffs. In Borel v. Fibreboard (1973), the United States Court of Appeals for the Fifth Circuit held that manufacturers of asbestos were strictly liable to workers who became ill as a result of asbestos exposure. This decision opened a floodgate of mass tort cases, which continue to this day, and which have awarded billions of dollars to plaintiffs; not surprisingly, asbestos claims comprise the largest category of case in tort law history.

Another massive tort suit was based on the faulty Dalkon Shield, a birth control device that caused harm to numerous women. Damages eventually led the fiscally responsible company to file for bankruptcy, though commentators have pointed out that the overall effect on the company was quite modest, and that its bankruptcy claims were part of a scheme to evade paying further monetary compensation to victims. This case led to the Medical Device Amendment, enacted by the US Food and Drug Administration in 1976, which required medical devices to be both tested and approved for safety.

One limit on liability enacted by Congress was the Private Securities Litigation Reform Act of 1995. It was enacted in response to what was considered abusive litigation on the part of lawyers and investors, and was designed to reduce frivolous lawsuits. Investors, however, can still pursue meritorious cases of fraud and seek financial compensation.

Another massive area of tort filings involved the US tobacco industry. While tort suits brought by aggrieved individuals who suffered health problems because of cigarettes generally did not hold up in court, states have been successful in suing tobacco companies with the aim of offsetting the costs of treating the health problems associated with smoking. In 1998, forty-six states reached a settlement with the tobacco industry for $206 billion, to be paid over a twenty-five-year period. Tort suits brought against tobacco companies in the latter half of the twentieth century also led to greater industry regulation and widespread public health campaigns.

Those who oppose sweeping tort reform point out that businesses are first and foremost interested in making a profit. As a result, they do not have the public welfare as their main priority and need to be regulated and held responsible when their products or services cause harm. Fewer cases are frivolous, they argue, than reformers cite. Opponents view efforts of tort reform as the wrongful pressure of businesses on the judicial system.

While granting that businesses should be held liable for harm in some cases, groups such as the American Tort Reform Association argue that the number of tort cases and the financial recompense that has been given to plaintiffs has grown out of proportion when compared to the amount of harm done; liability and the amount of compensation need to be limited, they contend. They point out that frivolous lawsuits have an adverse effect on the economy, having resulted in enormous hikes in insurance rates and product prices. This calculation of the increase in the price of goods and services that companies have passed down to consumers to compensate for costs and damages in tort suits are sometimes referred to as the "tort tax." For instance, it was estimated that the tort system imposes a total cost on the US economy of $865 billion per year, or, $9,827 for a family of four. Frivolous lawsuits can also ruin businesses, stifle innovation and discourage professionals such as doctors from practicing due in part to the increasingly high costs of malpractice insurance. Reformers point out that the current impasse has been reached due to a combination of avaricious lawyers, a lack of personal responsibility in plaintiffs and overly sympathetic juries.

Tort Reform Today

In the early twenty-first century, massive tort cases continue to make their way through U.S. courts and result in compensation payouts. The pharmaceutical industry has come under strong scrutiny. The arthritis drug Vioxx, for example, was pulled from the market in 2004 after it was revealed that the drug increases the risk of heart problems; numerous tort cases are pending based in part on evidence that the drug's manufacturer, Merck, knew or should have known about the health risk. Such cases have given both reformers and opponents of tort reform further arguments to support their positions.

Tort reformers won a significant victory with the passage in 2005 of the Class Action Fairness Act. President George W. Bush made tort reform a central issue of his public policy agenda, and the result may alter a major aspect of the US legal system for decades to come. The act has several provisions, including the shift of mass tort cases to federal courts and a cap on the cost of settlements and amount of attorney's fees that are recoverable. The shift from the state courts to federal courts for class-action suits was designed to limit plaintiffs' perceived success at the state level and to prevent so-called "forum shopping," where plaintiffs would strategically select state court jurisdictions that were viewed as especially plaintiff-friendly. Critics charge that the act was a triumph for large corporations, which now have even less incentive to protect consumers.

In August 2012, the Missouri Supreme Court ruled that a cap on medical malpractice was unconstitutional, thus overriding the previous cap of $350,000 for noneconomic damages. This decision was based on the right of an individual to a trial by a jury of his peers, in which the jury decides on the damages. According to the National Conference of State Legislatures, twenty-four states, including New Hampshire, Washington, and Georgia, also ruled that capping medical malpractice is unconstitutional.

In 2012, the House of Representative passed a tort reform bill, H.R. 5 “Protecting Access to Healthcare Act,” that is in opposition to state laws that deem caps unconstitutional in healthcare cases. The new bill imposes a $250,000 cap for victims. This law, however, was controversial, as it infringed upon the rights of states and would eliminate damages awarded by a jury that exceed $250,000.

These essays and any opinions, information or representations contained therein are the creation of the particular author and do not necessarily reflect the opinion of EBSCO Information Services.

Bibliography

Books

Abraham, Kenneth S. The Forms and Functions of Tort Law. 4th ed. New York: Foundation, 2012. Print.

Bogus, Carl T. Why Lawsuits Are Good for America: Disciplined Democracy, Big Business, and the Common Law. New York: New York UP, 2003. Print.

Gordley, James. Foundations of Private Law: Property, Tort, Contract, Unjust Enrichment. New York: Oxford UP, 2006. Print.

Periodicals

Carroll, Aaron. “The Constitutionality of Tort Reform.” Washington Monthly. Washington Monthly, 3 Aug. 2012. Web. 11 Mar. 2014.

Ceder, Megan A. “A Dose of Reality: The Struggle with Causation in Toxic Tort Litigation.” Houston Law Review 51.4 (2014): 1147–75. Academic Search Complete. Web. 8 Jan. 2016.

France, Mike, Lorraine Woellert, and Michael J. Mandel. “How to Fix the Tort System.” BusinessWeek 14 Mar. 2005: 70–78. Business Source Alumni Edition. Web. 23 July 2009.

Haltom, Bill. “The Solution to Tort Reform.” Tennessee Bar Journal 51.6 (2015): 34–35. Academic Search Complete. Web. 8 Jan. 2016.

Kennedy, Andrew J. “Tort Reform Dealt Another Blow.” Litigation News Fall 2013: 22. Academic Search Complete. Web. 4 Dec. 2014.

Kern, Brian S. “Unconventional Warfare: Fighting the New Tort Reform Battles.” AAOS Now 9.1 (2015): 36–38. Academic Search Complete. Web. 8 Jan. 2016.

Lawrence, Rachel. “The Constitutionality of Caps: Upholding Missouri’s Right to Jury Trial and the Non-Economic Damages Debate.” Missouri Law Review 78.2 (2013): 601–36. Academic Search Complete. Web. 4 Dec. 2014.

McQuillan, Lawrence J., and Hovannes Abramyan. “The Tort Tax.” Wall Street Journal 27 Mar. 2007: A18. Academic Search Complete. Web. 23 July 2009.

Munro, Dan. “Tort Reform Arrives to Healthcare: Sue the Patient.” Forbes. Forbes.com, 27 Apr. 2012. Web. 11 Mar. 2014.

Shepherd, Joanna M. “Products Liability and Economic Activity: An Empirical Analysis of Tort Reform’s Impact on Businesses, Employment, and Production.” Vanderbilt Law Review 66.1 (2013): 257–321. Academic Search Complete. Web. 11 Mar. 2014.

Taylor, Steven T. “Tort Reform: For Defense Attorneys, Changes Would Pick Their Pockets.” Of Counsel Mar. 2009: 3+. Academic Search Premier. Web. 23 July 2009.

Trautner, Mary. “Tort Reform and Access to Justice: How Legal Environments Shape Lawyers’ Case Selection.” Qualitative Sociology 34.4 (2011): 523–38. Academic Search Complete. Web. 11 Mar. 2014.