Tort Reform

The insurance industry and Chamber of Commerce have been resolute in the steady drum beat for tort reform. The “free-market think tank” Pacific Research Institute last March published a “report” assessing the annual cost of the American tort system at $865 billion per year. That’s a couple billion per day! (A number that wildly exceeds the sum of all tort judgments and is mostly attributable to “secondary effects.”) A month ago a Washington D.C. “nonprofit organization” the American Tort Reform Foundation, produced another “report” called Judicial Hellholes. This paper condemns judges and courts that have permitted high damage awards or are otherwise “unfriendly” to business interests. (Washington should be ashamed that it did not even register mention.)

These tort reform arguments are remarkably similar in that they do not make any serious effort to weigh competing interests or examine the nature of the the American people’s interest in inhibiting the action complained of in the lawsuits. It is presupposed that any harm done to business interests is a wrong to be avoided. This is propaganda not reasoning. This is one of those areas where the proponents take such an extreme position that discussion and dialogue cannot be pursued.

PRI’s “research” is a good example of how silly things have gotten. This report takes into account the amount of business lost as a result of lawsuits without considering what sort of business was lost, how the curbed business activities might have harmed society or how the absense of the business practices might have benefited people in general. The tobacco industry of course has lost a lot of money because of lawsuits but not everyone would call that wrong. This drop in profit by tobacco companies is offset by reduced health care costs and longer life spans, both of which are generally viewed favorably. Tort lawsuits have have resulted in a marked, measurable improvement in the environment, something that is favored in most circles. The tort of outrage has been used in Washington to abate racial slurs at work, a laudatory achievement in the eyes of many. Lawsuits substantially increased the safety of automobiles and reduced traffic deaths. Lawsuits are the means by which renegade corporations and corporate officers have been made responsible for criminal and fraudulent activity. They have been the means of recouping losses by stockholders and pension plan members.  There are countless other examples.

I hope some day these issues will be resolved by sane discussion of policy issues in which business interests will be seriously weighed against the interests of society.

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