Setting Our Priorities

An industrialized society is a dangerous one. It is, in fact, a toxic society. This has always been true, and was true before we developed certain chemicals and learned of the dangers they produced. Yet, many of the activities involved are exceedingly important socially. Some toxic substances are the by-products of processes that society at large desires, or may even require.

From that point of view, it is obvious that our primary concern is cleanup: cleanup of the various waste sites which are lethal and which lack any social justification. But cleanup does not rid us from considering compensation. When it comes to the question of reimbursing persons for injuries, I am a radical. If our society can afford it, we should care for every human being who cannot afford to pay for his own disabilities or illnesses, or for the consequences of his death, such as leaving dependents.

When we speak of ability to pay, we also mean ability to insure. Insurance is that wonderful arrangement that permits our businesses to continue to be productive. Bear in mind, however, that a firm's, industry's, or society's ability to carry these costs is limited. It is limited by competition, both domestic and international. We can even reach a point at which insurance will be unavailable, and this threshold must be kept in mind. But without this coverage, the scope of enterprise is inhibited, with consequent limitation or elimination of the fruits of progress.

This brings to mind a true story. A physician from Brazil came to Rockefeller University to conduct advanced medical research on a leprosy-related disease. When asked why she did not research the more universally dreaded cancer, she replied that in her country people did not live long enough to die of cancer. The moral of this anecdote is that, by limiting the scope of enterprise, we limit the good as well as the bad aspects of progress. Consider, for example, how many lives may have been saved from burning with the help of asbestos, before we found substitutes. If we impose limits excessively, we may be able to dismiss risks such as cancer as did the Brazilian physician because we, too, may not live long enough to die of cancer.

I strongly believe that those who are responsible for unnecessarily introducing toxic harm into our society should bear classic full tort liability. On the other hand, those who create such a risk and yet can point to a socially important reason for doing so should pay a tax. The consumers of the products ultimately will have to pay for the tax.

There is, of course, the alternative solution of a general tax, meaning that all taxpayers will help support cleanup and compensation. But this approach should only be available for activities that we regard as important enough to continue and also to justify these costs. Whatever the source of funds, it is important that we do not make the victims serve the public good by their misery.

Strict Liability in Tort Versus Compensation Schemes

The tort system serves a purpose of both deterrence and compensation. The two functions are correlated in the tort system through the hundreds of years of development of the common law. Tort liability is based on some kind of "fault," even when it is "no-fault." This means that a person becomes liable if he intentionally, recklessly, or carelessly causes harm — or even when none of these qualify his conduct, if he engages in an activity that is hazardous with little or no social value. The no-fault, strict, or even absolute liability categories include activities such as keeping wild animals, driving a car, or producing a defective product; all of these contain an element of "fault" or "responsibility."

We also have a different kind of system, a compensation system, such as workers' compensation, the spirit of which is truly no-fault because it focuses on activities that are recognized as socially important and useful. It is this sort of system that should be used in connection with injuries caused by toxic substances judged socially necessary.

One aspect of compensation systems is that, in varying degrees, they do not try to match in dollars the level os recovery that is available under the traditional tort system. This is done for good reason. First, we do not find the kind of fault-laden activity to be deterred as would be typical in a tort adjudication. Second, the situation is such that victims have no remedy in the first place, so the compensation system is designed to give them something more than would the barest social insurance such as Medicaid or disability insurance. Hence, the 301(e) Study Group recommended a higher level of compensation. Whether it is the right range or not is a matter of personal judgment.

Presumptions and the Need to Cut Transaction Costs

Now let us turn to presumptions. This term carries a variety of meanings and I am certainly not the first one to have made that observation. Some presumptions are really statements of flat law. The rebuttable presumption sometimes is a way of making a prima facie case; sometimes it is not. At times a presumption simply permits the factfinder to make an inference without further evidence. Those varieties, by the way, should not even be termed "rebuttable" because they have closed off the adversary from proving other facts that would give rise to a contrary inference.

One of the evils of the tort system is its extremely high transaction cost. An interesting point about our Study Group was that the plaintiffs' lawyers did not really want us to make recommendations on presumptions because they were interested in trying cases. They would hope in due time to change the rules as they have in many ways before. Although plaintiffs' attorneys render an important social contribution, the transaction cost from such litigation mounts. The plaintiffs' bar was willing to support Tier 1, because those are not the kinds of cases for which they would be retained. And if by accident the kind of case for which they could be retained sneaked into Tier 1, they sought an easy exit to bring it under Tier 2.

A noteworthy model for reducing some transaction costs [14 ELR 10141] may be the so-called book entry rule. That rule permits an inference that the entries in books of account are correct and may be relied upon. The opposing party, of course, may show, by cross-examination or direct proof, that the entries are not reliable, especially in connection with the foundation that was laid to introduce them. We certainly should have that kind of "presumption" to establish medical or scientific conclusions based on complicated statistics in evidence by medical, scientific, and epidemiological experts, instead of going through a detailed, tortuous and repetitious traditional evidentiary process, especially in relatively small cases.

These transaction costs are a serious concern. I have wondered if the whole tort system should be transferred to some other kind of dispute settlement administration. I am not sure that I agree with that alternative, although I understand all of the arguments supporting it.

In closing, I would like to reiterate that a civilized, industrial society is a very dangerous place. Yet, it is a society that has produced countless benefits that most would not find tolerable to lose.