September 26, 2004

Torts and Socialism

by PG

In the introduction to Tort Stories, editors Rabin and Sugarman use the Palsgraf case, a thrice told tale, to illustrate some of the themes that run through their own volume. One of these is the socioeconomic context of the stories:

Noonan makes much of the fact that Mrs. Palsgraf was poor and that not only was the defendant railroad quite wealthy, but also the judges who then sat on the Court of Appeals themselves were from the upper middle class. Surely it is not the primary role of tort law to transfer money from the rich to the poor.
Because suits can be brought by the rich against the poor, certainly a more equitable distribution of wealth is not the theoretical purpose of tort law, even if it may be the practical tendency. But this made me wonder whether the perception and reality of economic inequality in the United States has led to our being a more litigation-prone culture than our European counterparts. Mrs. Palsgraf, making about $500 a year and unable to pay her $70 doctor's bill, may not have brought a suit against Long Island Railroad if she had not seen it as a way to solve her economic problems. In a modern EU country, however, the social safety net would have covered her health care and probably even supplemented her income, particularly after the disability caused by the accident prevented her from working. Although the majority of tort reform advocates probably would consider it a cure worse than the disease, greater governmental assistance might well reduce the American inclination to litigation when disaster strikes.

September 26, 2004 08:06 PM | TrackBack

My personal experience supports your idea that an effective social safety net might reduce the tendency to litigation. My wife was once injured through severe negligence by one of our landlords. (They installed a malfunctioning stove they found at the dump, which later exploded.) Since I was in the military, all of her medical expenses were covered and we eventually decided not to sue despite having a very strong case. Had I not had comprehensive medical coverage though, we wouldn't have been able to afford her treatment and would almost certainly have sued. As long as we were going to court anyway, we probably would have asked for compensation for her pain and suffering (severe burns) as well.

Posted by: Mojo at September 27, 2004 03:48 AM

The question is a little more complex when you insert third-party compensation for injuries into the equation, and I think PG's theory is revealed for its flaws as a result.

For one thing, if you have a socialist government welfare net to "catch" you when you're injured, the economic dispute is essentially shifting from one between rich (corporation) and poor (injured person) parties, to a more economically balanced conflict between two rich parties: the corporation, and the presumably well-funded social system. There is no reason the system may not pursue compensation for ITS damages against the corporation, and in fact that is exactly what happens in real life. Hundreds of lawsuits are filed every week by insurance companies against other insurance companies or other corporations under the doctrine of "subrogation," where the insurer compensates its insured, and then steps in the insured's shoes to seek compensation against the defendant.

Posted by: UCL at September 27, 2004 05:53 PM

Well, we were just discussing subrogation (and similar practices in other industries) at work. If everyone wrote risk the same way, subrogation suits would generally balance out, leaving the net loss of transaction costs.

If you have both collateral source doctrine and a safety net, many suits just don't get filed (and there isn't any subrogation). The question is whether or not it is worth the effort.

Worth the effort is a broad concept, btw, given that when my oldest daughter died from medical malpractice we had better things to do than sue someone, yet I'd quite cheerfully sue people over less.

Interesting starts at thoughts.

Posted by: Ethesis (Stephen M.) at October 2, 2004 05:26 PM
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