The torts classroom is like a dystopian historical fantasy.
Or maybe a kind of morbid historical science fiction. Students and teachers gather to rehearse time-honored rituals around the Great Cases of human tragedy: Scott v. Shephard, Brown v. Kendall, Rylands v. Fletcher, Vosburg v. Putney, Leroy Fibre v. Chicago, Milwaukee, & St. Paul Railway, MacPherson v. Buick, Murphy v. Steeplechase Amusement Co., Palsgraf v. Long Island Railroad, and more. The cases tend to be old. They tend to involve railroads. We conjure up a bygone world on the rails or at old-school amusement parks, in coal mines or at small-town markets. We conjure a world of judges, juries and appellate opinions, too. But in the actual world outside the torts classroom, railroads have been in decline for a half-century and more. Amusement parks, too, though that’s a story for a different day. More importantly here: so have judges, juries, and appellate opinions. The spread of waivers, the rise of arbitration, the disappearance of the trial, and the prevalence of settlement have made the Great Cases almost literally things of the past.
What would it mean to bring the torts class into the twenty-first-century and connect it to actually existing problems?
The first move is to make clear that tort law is one of the best subjects for helping students see as a descriptive matter the distinctive ways in which American law allocates vast responsibility to private administration. American tort law as it is now constituted and practiced is essentially a field for the private administration of private rights and responsibilities. That is not inevitable, of course; it is a social choice to make it so. Very different arrangements in other legal systems can help us see the contingency of our private system of administration. But the torts course ought to be candid about the actually existing character of the materials it teaches.
Just think about what tort law actually looks like for most of those who engage with it. It is a world of far-reaching consumer waivers: consumers waive their rights tort when they buy a house with a homeowners’ association, when they go to the gym and the baseball game, when they hit the ski slopes and go out on the water, when they go to school and summer camp. Consumers who don’t waive their tort claims often find themselves in binding arbitration arrangements. And once an injury takes place, tort claimants whose claims have somehow survived the gauntlet of waivers and arbitration typically find themselves caught up in elaborate systems of after-the-fact, privately administered settlement schemes. Settlement rates are incredibly high. Trials are disappearing. And settlements take place with less and less attention to individualized features of particular claims, since the costs of individual inquiries are vast, and since repeat-play defendants and repeat-play plaintiffs’ lawyers have powerful interests in using averages and stylized classifications to resolve claims. This might not be altogether a bad thing. As Nora Engstrom, Sam Issacharoff, and I have tried to argue in different ways, there are some virtues in a private administrative regime that mimics in some respects the sorts of social-democratic compensation systems more common in other developed economies.[1] To be sure there are also grave difficulties with our system of private settlements. Discussion of the virtues and vices of tort law should be, in substantial part, a debate over the pluses and minuses of the privately administered system of settlement that has arisen in the now-distant shadow of the Great Cases.
The fact of private administration has at least two more implications for the torts classroom. One is that each torts case presents a choice between what we can call micro analysis and macro analysis. On the micro side, we attend to the particular claims of justice arising between the parties. The appellate opinions certainly call out for this kind of treatment, since they typically take individualized considerations very seriously. The whole structure of one-on-one litigation is organized in such a way as to invite micro analysis of the considerations between the particular parties in question. On the macro side, by contrast, we can try to anticipate the social consequences of doing justice in a particular case. Allocations of accident risks by the state – and the promise of such allocations in the future – will alter the state of the world. Private parties (especially powerful parties with the resources to make informed decisions about the future) will alter their behavior in light of the future costs they will or will not bear. The effects of each tort case will bounce around inside a system of myriad private actors, all with considerable discretion to make choices about how to behave in light of the new information produced by a new tort claim resolution. And so each torts case holds the danger of unanticipated consequences and boomerang effects.
This gets us to the much-discussed and often-feared Coase Theorem. The Coase Theorem holds that (absent transaction costs) entitlements will be held by their highest value users. Its torts variation proposes that (absent transaction costs) risks will be borne by their lowest-cost bearers. Now, one version of the Theorem – lets call it the Normative Coase Theorem or NCT – implies that we live in the best of all possible worlds. “There can be no objection to the genius of the marketplace,” says the proselytizer for the NCT, for all by itself it makes everything as good as it can be. Said this way, the logic of NCT proceeds precisely as left-leaning critics of law and economics contend. The NCT naturalizes the existing arrangements of the world and offers a justification of them. That much is true, for sure. My own inclination is to think that progressive students and scholars sometimes make too much of the denaturalization point. Revealing the constructed and political basis for a policy only goes so far. The better project does more: not merely reveal the fact of political choices, but make the case for better choices.
Here I want to make a different point. Let’s consider not the NCT, but a different version of the Coase Theorem, one we can call the Descriptive Coase Theorem, or the DCT. Here’s one true thing that the DCT illuminates: in our system of wide discretion for private parties in managing their affairs, private parties will respond to tort’s rules. They will redirect their efforts, make trades, and advance their own projects in ways that will alter and rearrange the rules of tort. If we want to anticipate how the world will react to any given tort rule, the basic logic of game theory is one of our very best models for generating predictions. To be sure, the fantasy version of these models will remain mere fantasies. But the basic intuition of the DCT is highly valuable for anyone wanting to make judgments about the effects of tort in the actually-existing world. Progressive students who eschew even the DCT because they distrust the market are sticking their heads in the sand.
Of course, the world in which the DCT is analytically useful is not a required world. The denaturalization point is valid here too, even if it only goes so far. We could have a world of less private authority. We could have a world with more mandates and less trading. We could have, in other words, a world of more regulation. The choice between the common law, with its attendant world of private authority, and regulation, with its attendant world of public bureaucracies, is and has been for many years a central choice for American tort law.
On this score there is excellent news out of New Haven. Beginning in the fall of 2019, after sixty years without a curricular reform in the first-year required courses, the Torts course will be restyled as Torts and Regulation. Many of the Torts courses offered here at Yale are already Torts and Regulation courses at heart. The aim of the change is to invite the kinds of conversations about private versus public administrative mechanisms that many Torts courses already entail, but to emphasize them and build on them for the brave new world of the twenty-first century. I can’t wait.
[1] Nora Freeman Engstrom, Sunlight and Settlement Mills, 86 NYU L. Rev. 805 (2011); Nora Freeman Engstrom, An Alternative Explanation of No-Fault’s Demise, 61 DePaul L. Rev. 303 (2012); Samuel Issacharoff & John Fabian Witt, The Inevitability of Aggregate Settlement, 57 Vand. L. Rev. 569 (2004); John Fabian Witt, Bureaucratic Legalism, American Style, 56 DePaul L. Rev. 271 (2007).
