Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

تمرين 6

Tort Reform
The question of whether our tort law system is in need of reform has aroused heated debate. While some argue that the current system imposes excessive costs on society, others contend that the system protects consumers from unsafe products and practices.
"End the Tort Tax and Frivolous Lawsuits," Say the Critics
Critics of the current tort law system contend that it encourages too many frivolous lawsuits, which clog the courts, and is unnecessarily costly. In particular, they say, damages awards are often excessive and bear little relationship to the actual damage suffered. Such large awards encourage plaintiffs to bring frivolous suits, hoping that they will "hit the jackpot." Trial lawyers, in turn, are eager to bring the suits because they are paid on a contingency-fee basis, meaning that they receive a percentage of the damages awarded.
The result, in the critics' view, is a system that disproportionately rewards a few lucky plaintiffs while imposing enormous costs on business and society as a whole. They refer to the economic burden that the tort system imposes on society as the "tort tax." According to one recent study, more than $300 billion per year is expended on tort litigation, including plaintiffs' and defendants' attorneys' fees, damages awards, and other costs. Most of the costs are from class-action lawsuits involving product liability or medical malpractice. a (A class action is a lawsuit in which a single person or a small group of people represents the interests of a larger group.) Although even the critics would not contend that the tort tax encompasses the entire $300 billion, they believe that it includes a sizable portion of that amount. Furthermore, they say, the tax appears in other ways. Because physicians, hospitals, and pharmaceutical companies are worried about medical malpractice suits, they have changed their behavior. Physicians, for example, engage in defensive medicine by ordering more tests than necessary. PricewaterhouseCoopers has calculated that the practice of defensive medicine increases health-care costs by more than $100 billion per year.
To solve the problems they perceive, critics want to reduce both the number of tort cases brought each year and the amount of damages awards. They advocate the following tort reform measures: (1) limit the amount of punitive damages that can be awarded; (2) limit the amount of general noneconomic damages that can be awarded (for example, for pain and suffering); (3) limit the amount that attorneys can collect in contingency fees; and (4) to discourage the filing of meritless suits, require the losing party to pay both the plaintiff's and the defendant's expenses.
"The Current System Promotes Fairness and Safefy," Say Their Opponents
Others are not so sure that the current system needs such drastic reform. They say that the prospect of tort lawsuits encourages companies to produce safer products and deters them from putting dangerous products on the market. In the health-care industry, the potential for medical malpractice suits has led to safer and more effective medical practices. Imposing limits on the amount of punitive and general noneconomic damages would be unfair, say the system's defenders, and would reduce efficiency in our legal and economic system. After all, corporations conduct cost-benefit analyses when they decide how much safety to build into their products. Any limitation on potential damages would mean that corporations would have less incentive to build safer products. Indeed, Professor Stephen Teret of the Johns Hopkins University School of Public Health says that tort litigation is an important tool for preventing injuries because it forces manufacturers to opt for more safety in their products rather than less. b Limiting contingency fees would also be unfair, say those in favor of the current system, because lowincome consumers who have been injured could not afford to pay an attorney to take a case on an hourly fee basis-and an attorney would not expend the time needed to pursue a case without the prospect of a large reward in the form of a contingency fee.
Tort Reform in Reality
While the debate continues, the federal government and a number of states have begun to take some steps toward tort reform. At the federal level, the Class Action Fairness Act of 2005 (CAFA) c shifted jurisdiction over large interstate tort and product liability class-action lawsuits from the state courts to the federal courts. The intent was to prevent plaintiffs' attorneys from shopping around for a state court that might be predisposed to be sympathetic to their clients' cause and to award large damages in classaction suits.
At the state level, more than twenty states have placed caps ranging from $250,000 to $750,000 on noneconomic damages, especially in medical malpractice suits. More than thirty states have limited punitive damages, with some imposing outright bans.
Large damages awards in tort litigation have to be paid by someone. If the defendant is insured, then insurance companies foot the bill. Ultimately, though, high insurance rates are passed on to consumers of goods and services in the United States. Consequently, tort reform that reduces the size and number of damages awards ultimately will mean lower costs of goods and services to consumers. The downside of these lower costs, though, might be higher risks of medical malpractice and dangerous products. Do you believe that this trade-off is real Why or why not
a. Lawrence J. McQuillan, Hovannes Abramyan, and Anthony P. Archie, Jackpot Justice: The True Cost of America's Tort System (San Francisco: Pacific Research Institute, 2007).
b. "Litigation Is an Important Tool for Injury and Gun Violence Prevention," Johns Hopkins University Center for Gun Policy and Research, July 15, 2006.
c. 28 U.S.C.A. Sections 1711-1715, 1453.