Most legal scholars agree that the scope of liability in the U.S. legal system has expanded dramatically in the past three decades. That expansion began early in the 20th century with a growing acceptance of the notion that more extensive tort liability would serve to compensate injured parties and reduce the level of accidents. Although no complete set of data is available, limited data call attention to several prominent features of the current tort litigation landscape
that the vast majority of tort claims are settled out of court, that state courts handle the bulk of torts, and that different types of torts have different impacts on litigants and on the tort system.
The Expansion of Tort Liability in the United States
U.S. tort law is based primarily on common law
in which judicial rules are developed on a case-by-case basis by trial judges
rather than on legislation. Tort liability is assigned using two basic standards: strict liability and negligence. Under strict liability, injurers are held fully liable for their victims' losses without regard for whether they were actually negligent or intended to harm anyone. Under a negligence standard, by contrast, injurers are held liable only if they failed to meet a certain standard of care. According to legal scholars, a number of important developments have increased the scope of liability for torts in the United States.
Early English tort law, the antecedent of U.S. tort law, was chiefly concerned with making injurers pay for the losses of their victims, with little emphasis on fault or negligence. That standard was used in the United States until the 19th century, when U.S. common law established negligence as the basis for tort liability. However, strict liability continued to apply in certain cases, such as injuries caused by wild animals kept as pets or damage to crops caused by trespass of domestic animals. Some scholars argue that the requirement for plaintiffs to show that defendants had been negligent effectively limited the scope of the U.S. tort system.
The turn of the 20th century saw public policy increasingly emphasize victim compensation and accident reduction. The enactment of workers' compensation laws
which established a public insurance system aimed at lowering employers' payments while making workers' recovery of damages automatic
played an important role in the evolution of tort law and policy. Before workers' compensation programs, the only remedy that injured workers had was to prove their employers negligent through the tort system. Workers favored legislation instead because they often had been unable to recover damages or had experienced delays or high costs when they had been successful. For their part, employers favored legislation because it limited their liability and made payments predictable. That shift away from tort law to a public compensation system led to more thought about how tort liability could be improved or better applied in other types of cases.
By the 1940s, legal scholars had begun to think about two ways in which the tort system could serve the wider goal of enhancing social welfare. First, they saw the economic concept of "cost internalization" as a tool for reducing accident rates: if potential injurers know they will be held liable for accidents, they will take appropriate action to avoid liability. In that view, by awarding damages to compensate victims, tort law would serve as a mechanism to ensure that potential injurers faced the appropriate future costs of their actions. Second, some scholars argued that the tort system could provide a kind of accident insurance for victims. They did not focus on the possibility that an expanded liability system could increase carelessness on the part of potential victims, nor did they adopt any of the methods that traditional insurance policies use to deal with that problem. Rather, they focused exclusively on the distributional goal of relieving victims of the burden of accident losses and spreading that burden across a broader population.
One area in which those concepts proved appealing in practice was product liability. Historically, product liability was dealt with either as a breach of warranty under contract law or as a tort subject to the negligence standard. Under contract law, recovery in such cases was limited to repair and replacement of the product; under tort law, recovery was limited by the difficulty of proving negligence. In the 1960s, the courts moved rapidly toward a standard of strict liability for defective products; in 1964, that standard was accepted and recommended by the American Law Institute in its second Restatement of the Law volume on torts. By the mid-1970s, most states had adopted provisions that were either identical or similar to those in the Restatement.
In addition, the concept of negligence has undergone significant reinterpretation over time, according to legal scholars. The law now takes into account the fact that manufacturers often have more ability than consumers to avoid accidents; thus, it is more likely to view failure to take inexpensive action as negligence or to attach liability to indirect or partial contribution to an injury.
Characteristics of the Tort System Today
Getting a complete picture of the state of the U.S. tort system is difficult because no data are available that cover all of the tort cases brought in the various jurisdictions across the country. However, the National Center for State Courts (NCSC) provides some data on trends in civil filings in general-jurisdiction courts in several states. It also conducts periodic surveys of civil trials in the nation's 75 largest counties for the Bureau of Justice Statistics (BJS). In addition, data about cases disposed of in federal court are available from the Administrative Office of the U.S. Courts.
In 16 states consistently tracked by the NCSC, tort filings in general-jurisdiction courts grew from 189,520 in 1975 to 260,745 in 2000, which appears to support the common view that the number of tort cases is rising. But controlling for population growth in those states indicates that tort filings relative to population declined by 8 percent over that period
from 230 per 100,000 residents in 1975 to 212 in 2000. Additionally, total tort filings in those 16 states were relatively constant from 1986 to 1996 and have shown a downward trend since then, falling from 320,976 filings in 1996 to 260,745 in 2000.
In drawing inferences about the tort system as a whole, however, it is important to note several limitations of the available information.
Settlement Versus Trial
- Data do not exist for those tort disputes that do not go to trial, because the details of settlements are usually private.
- Collecting consistent data between the various jurisdictions is difficult. The overwhelming majority of tort filings occur at the state level, and the structure of state courts and the laws under which they operate differ from state to state. Moreover, those courts have not tended to view keeping records on the details of case outcomes as being central to their mission.
- Both anecdotal and statistical evidence about damage awards can be misleading because the amount of damages actually paid can be reduced after a trial.
- Overall trends can be misleading because various categories of torts have different economic impacts, and the timing and disposition of mass torts (cases involving large numbers of people) can significantly skew the numbers.
The majority of tort disputes never reach a trial verdict. For example, of the 41,696 tort cases that were terminated in U.S. district courts in fiscal year 2000, only 3 percent were decided in trials. The NCSC similarly reports that "t
he vast majority of all state
tort cases are disposed through some form of settlement, with only 3 percent of all tort matters resulting in a jury trial." Litigants have mutual incentives to save on litigation costs by settling out of court. They avoid uncertain trial outcomes and delays and can agree to keep settlements confidential. In some cases, settlements may be reached through alternative methods of dispute resolution, such as voluntary arbitration or mediation.
Generally, details of civil disputes settled before a trial are not reported to the courts and hence are not included in publicly available data. Those data therefore show only part of the picture
there may be important differences between cases that go to trial and cases that settle out of court. For example, cases that go to trial probably involve larger dollar amounts, on average. Nevertheless, trial verdicts set precedents for all cases and thus affect the incentive to settle by signaling the value and probability of success to future litigants.
Where Are Tort Cases Heard?
The vast majority of tort filings occur in state courts. In 2000, more than 700,000 torts were filed in state general-jurisdiction courts, compared with only about 37,000 in federal courts, the Congressional Budget Office (CBO) estimates. Liability standards are not uniform among the various jurisdictions. For example, the extent to which damages may be reduced if the injured party contributed to the accident differs among states. In addition, a small number of local courts have been described as "class-action magnet courts" and criticized for being biased toward plaintiffs.
U.S. district courts have jurisdiction in civil cases when a case deals with a federal question, the federal government is either a defendant or plaintiff, or the case involves "diversity of citizenship." Of the tort cases that were terminated by trial in federal courts in fiscal year 2000, 72 percent involved diversity of citizenship, 18 percent involved a federal question, and 11 percent involved the U.S. government as a defendant or plaintiff. Many of those tort cases did not originate in federal courts: 28 percent were removed from state courts.
Categories of Tort Cases
Different types of torts pose different challenges for the goals of the liability system, so it is useful to track the trends in filings for important categories of torts. For example, overall statistics on torts can be substantially driven by developments in mass torts. The General Accounting Office found that asbestos litigation accounted for half of the growth in tort filings that occurred in federal courts between 1974 and 1986. Although tort filings as a whole have fallen significantly since 1996, that overall trend masks important developments in key categories of torts.
The major areas of tort litigation, based on their share of total tort trials completed in the general-jurisdiction courts of the 75 largest U.S. counties in 1996, are automobile-related torts (49 percent), premises liability (22 percent), and medical malpractice (12 percent). Many of the common categories of torts pose few policy problems. For example, automobile torts often have low awards: a median jury award of $18,000 for winning plaintiffs in state courts in the 75 largest counties in 1996, compared with a median award of $31,000 for all torts.
In contrast, torts that have received the most public attention
such as product liability cases (including asbestos litigation) and medical malpractice
cases--often involve larger stakes and have more significant effects on courts' resources, victims' compensation, the viability of businesses, and insurance premiums. Winning plaintiffs in state courts received a median award of $309,000 in asbestos cases and $286,000 in medical malpractice cases in the 75 largest counties in 1996. Moreover, about 20 percent of medical malpractice awards and 16 percent of product liability awards (other than in asbestos-related cases) were at least $1 million, compared with only 6 percent of state courts' awards for all torts. (Although punitive damages were infrequently awarded in medical malpractice and asbestos cases, they were also higher than the average for all torts: median amounts of $250,000 and $110,000, respectively, compared with $38,000 for tort cases overall.) At the federal level, medical malpractice cases terminated by trial in U.S. district courts in 1996 had a median final award of $252,000.
Policymakers and the business community have been concerned about the increasing costs of asbestos litigation. Researchers at RAND estimate that claims for asbestos-related compensation totaled $54 billion through 2000, with estimated future costs ranging from another $145 billion to $210 billion. They also identified 67 bankruptcies related to asbestos litigation through 2002, up from three through 1982. Adding to that concern is the latency that occurs in the onset of asbestos-related disease, which makes it difficult to predict firms' exposure to liability and to ensure adequate compensation for victims who have yet to file claims.
Asbestos cases also differ from other torts in the number of firms affected. The median number of defendants in asbestos litigation was 18, compared with a median of one defendant in tort cases overall. Over time, the targets of asbestos suits have expanded from the original manufacturers of asbestos-related products to include customers who may have used those products in their facilities. According to RAND, the total number of defendants in asbestos litigation rose from 300 in 1982 to more than 6,000 in 2000.
Recent data show no growth in the total number of medical malpractice tort claims, but the size of awards has increased. Median payments for medical malpractice claims at trial rose from about $100,000 in 1990 to over $300,000 in 2001, according to the Physician Insurers Association of America. (BJS data from the nation's largest counties show an increase in median awards in state courts from $201,000 in 1992 to $286,000 in 1996.) That rise coincides with increasing malpractice premiums for doctors, which critics blame for leading to a reduction in the availability of health care in some parts of the country.
Another set of tort claims that concerns policymakers is cases filed using the class-action procedure, in which a small number of plaintiffs represent a larger group of people who were similarly affected by the same product or tort. Class-action cases are designed to address relatively small but numerous losses for which individual suits would be impractical. However, when the class is large enough, even claims that are trivial individually can have a significant effect on particular firms and even whole industries. Limited data are available on class actions, but those cases are more likely than other torts to be filed in federal court. For example, a RAND study estimated that during the 1995-1996 period, 40 percent of reported class-action decisions arose in federal court, whereas CBO estimates that less than 5 percent of all torts are filed in federal court.Information Obtained Through the Congressional Budget Office.
- Tort Reform
- Federal Preemption