Torts I

2 December

• On the papers, everybody introduced duty of care relying on Harper. You don't even need to go that far; it's not wrong, but the basic duty of care is simpler.
• This year's exam will be a bit shorter than previous ones, with the expectation that our analysis will be slightly deeper. But you can be sure that there will be multiple defendants and multiple plaintiffs.
• The underlining and marks on the sample exam are someone elses. There are two answers-- figuring out where one ends and the next begins is our problem. There are very few comments, but that's the nature of strong exam answers.
• Final is 3 hours.
• We already know some about damages. Three components of compensatory damages:
  1. Medical expenses. Most straightforward to calculate. Of course estimates of future outlay are never easy. There might be new therapies, and they may or may not work, etc. And will there be a relapse, or an unanticipated deterioration? After judgment has been entered, there is no further recovery.
  2. Lost income. There's potential for advancement, the the discount rate, etc. That's in addition to current earning power. See note 3 on p, 708. We don't want unjust enrichment-- a prudently invested judgment might far exceed expected future income. And we need to adjust for inflation, too. Now, does this make sense? The sum that they're going to get is never going to be an accurate reflection of earnings-- there is just too much variability. Why not get annual reports, like we do with child support? Because we want to save, time, administrative costs, jurisdictional issues, endless haggling, and always holding defendants on the edge of their seat. Adjustment can be tricky; see note 2 on p. 708 (Snow): loss of opportunity is a permissable kind of adjustment. So you can be creative in these arguments.
  3. Pain and suffering. Seffert. The general consensus is that this is not so vague that it needs to be elimiated altogether, but it is certainly hard to put a monetary value on it. How, for example, do we compare even between similar injuries? And in some cases, this may be the most tangible component of the injuries. Plus, 30% of all awards go to the attorneys, and if we didn't have this award, plaintiffs wouldn't even get all of their economic damages back.
• Medical + Lost income = "special damages." Pain and suffering = "non-economic."
• Seffert v. Los Angeles Transit Lines
  So basically we don't get much guidance from the court-- awards just need not to shock the conscience.

  Traynor's dissent: we should stay consistent with previous awards.

  That's not wholly helpful. Consistency is an important ingredient in justice, but it's still hard to know what to be consistent with.

  Note that pain and suffering usually looks to the past.

• See, e.g., Epping in note 5a on p. 711. Here $9M doesn't shock the conscience.
• McDougald v. Garber
  So what are we trying to compensate for, with pain and suffering? If a person has lost awareness, should there be pain and suffering recovery?

  What are the purposes of the pain and suffering award? To compensate, of course, but also to deter. We don't need the plaintiff to be aware in order to deter, so why does the court insist on it? Well, the loss is completely not quantifiable: it has no quantitative relation to the injury itself-- it's a legal fiction. And our willingness to engage in that fiction ceases when the award ceases to compensate: the award will provide no solace to the comatose person. It would be punitive in that sense.

  So how much awareness does a plaintiff have to have? "Some degree." So the more your brain is damaged, the less your recovery. Paradoxical, to say the least.

  Not all courts forbid the separation of "loss of enjoyment of life" from "pain and suffering." They are separate, conceptually, but they're equally not qualtifiable.

  Keeping them separate: it's more accurate to treat each idea individually. Note that a comatose patient isn't experiencing a loss of enjoyment.

  Disadvantages of keeping them separate: well, they're both nebulous-- there's no point in endlessly creating new categories that can't be quantified. This will just result in higher awards: more categories seem like more guilt and more opportunities to give money to the suffering plaintiff.

  Why did this need a new trial? At trial, the jury had awarded separate sums for each, and jury instructions (quoted in the text) were muddly, and then the awards got collapsed into a single lump sum.

  This is a nice issue, exam-wise, for differentiating between plaintiffs and defendants, because they have different agendas.

• OK, so punitive damages. Why have them if tort law is about compensation? Deterrence, basically. Sometimes a case is outrageous, but the compensatory damages are slight. Basically, outrage is the hint that there will be punitives, and not only against a defendant but also perhaps against the system that has failed to deal with a problem (e.g., drunk driving, corporate liability). "Someone must step in to take action."
• Taylor v. Superior Court
  Intent need not be an element for punitive damages; we need only find that the defendant had a conscious disregard for the safety of others..

  We now see punitive damages even in cases where negligence isn't gross, but we want to deter. So we get the argument with the floodgates and the slipping and the slopes. The dissent makes 6 arguments against punitives in this case.

  But still, eliminating punitive damages would be a loss overall. Punitives fill a gap for us where the system would otherwise come up short.

  Important things about punitive damages:

  Punitive damages really are awarded for misconduct coupled with some sort of bad state of mind. Reckless disregard or some such. It's not the act itself-- it's the egregiosity of it.

  Also, they are not a separate cause of action. They are only there if there's also some other recoverable damages.

  Stated reasons: punishment, deterrence, paying for useful litigation (i.e., compensating the lawyers for this suit).

  If the facts are such that the judge instructs the jury about punitive damages, it's the jury's discretion whether to award them, and if so, how much. And the court can review the amount.

  Punitives aren't per se unconstitutional, but extreme awards without appropriate instruction to the jury or suitable review by the judge will be overturned.

  Typically, the jury is allowed to hear evidence about the defendant's wealth. So it can be, like, punitive.

  A defendant whose wrongs have caused many harms to many people may be subject to many punitives.

  Traditionally we have three factors:

  1. Reprehensibility of the conduct.
  2. Wealth of the defendant (trial is often bifurcated to avoid prejudice)
  3. Ratio rules. There should be some reasonable relation to compensatory damages. Some say that last rule is unnecesary. Example of negligent random gunfire: the actual damages might be very slight (damage to sunglasses).
• BMW of North America v. Gore
  Super important. Refernced in State Farm. The issue was what constitutional limits, if any, constrain punitive damages. Holding: we may limit the damages if they are excessive. Here there were $2M punitive and $4K compensatory. How do we determine excessive? The three guidepoints: reprehensibility, ratio between compensatory and punitive damages, and ratio between this award and those in similar cases.

  But there's no indication of what the ratio should be. It just clues us into factors to scrutinize for blockbuster mega-awards.

• Current hot issue: should HMOs be subject to punitive damages for negligently failing to prescribe proper care? Well, sometimes people whose lives might be worth little in a compensatory sense might not get good care. But punitives would provide a proper incentive. Of course, it would also have the potential to bankrupt HMOs. And punitives make tort actions into quasi-criminal prosecutions, without the safeguards that exist in criminal law.
• Note, from a consumer protection perspective, punitives look attractive, but the fees are ultimately passed on to the consumer.
• State Farm Mutual Automobile Insurance Co. v. Campbell
  An interesting, but not easy case. State Farm shafts its client by declining to settle a case, and then winding up with a jury verdict beyond the policy limit. Perhaps acting in bad faith: fraud and infliction of emotional distress.

  UT SC reinstates the jury's award of $145M in damages. SCOTUS says that this was error. Note the reliance on BMW v. Gore: they outline the Three Factors™.

  The court doesn't find this to be so terribly reprehensible. That's one factor down. On the second, there's still no bright line, but ratios beyond single digits should be very rare (and obviously since this wasn't so reprehensible, certainly not here). And third, there was a criminal penalty, and it was minor.

  The three dissenters are the same who dissented in BMW v. Gore.

  So on remand, UT finds the conduct to be more reprehensible. So they max out the single digits.

• Once in a while punitives don't go straight to plaintiffs, but to fund research/charity/something_related_to_the_harm.
• Legislatures like to qualify punitive damages: has to include malice, etc. There are statutes in many states about how they should be handled.
• Exxon v. Baker
  June 2008 decision. The Valdez spills oil over 1,200 miles of coastline or so in 1989. Plenty of blame for Hazelwood. of course. Class action against Exxon by about 33K plaintiffs: fishermen, landowners, local governments, native americans, etc.

  So Exxon has paid $3.4B in cleanup costs (initial award was $5B, reduced to $3.5B). The largest punitive damages award of its kind in the US.

  So was this too high, based on previous cases?

  Plaintiffs: these guys have huge financial resources, this is only 3 weeks of their profits. Their annual profit last year was $40.6B.

  There were lots of legal questions (e.g., does the clean waters act preclude punitives?). So how did SCOTUS go about limiting the punitive award? They said it was excessive, and it should not go beyond matching the actual damages. So now we're back to re-calculating the damages, with interest, etc., because those were found to be about $507M last time around.

  So is this maritime law? Can we distinguish further cases for it? Maybe, but it's important nevertheless: punitives are limited to the size of compensatories. This might extend quite far, even to small cases.

  Very pro-business: business hate unpredictable unfair awards. The US Chamber of Commerce applauds it.

  So for now, we are matching awards on a 1:1 ratio.