Tort Reform

History of Tort Reform

As a developing United States sought economic stability, caveat emptor(let the buyer beware) was the guiding legal principle in civil liability cases. The Industrial Revolution, with its ability to distribute products to a vast array of consumers, required a rethinking and extension of product liability laws through warranties in contract theory and under the doctrine of negligence in tort. The latter proved significant in that privity of contract was not required so that nonpurchasing users and bystanders could recover for injuries caused by a certain product. In the early 1960s, strict liability in tort was recognized and led to an explosion in lawsuits, including class actions in relation to asbestos and other products. As the economy and particular industries such as insurance struggled during the 1980s, affected businesses, doctors, insurance companies, and their political representatives called for tort reform as a remedy. Subsequently, legislative debate and reform has occurred at both the state and federal levels in a number of areas of concern in tort actions.

Current Legislation

Current tort reform legislation exists at both the state and federal levels. The American Tort Reform Association provides an updated sampling of state reforms in the primary areas of punitive damages (32 states), noneconomic damages (23 states), joint and several liability (40 states), collateral source rule (23 states), prejudgment interest (15 states), product liability (16 states), class action (8 states), attorney retention (7 states), appeal bond (33 states), and jury service (12 states).

Federal legislation has focused on civil liability protections (via limited liability and federal jurisdiction) for industries most susceptible to economic risk. For example, the insurance industry, air security companies, air transportation businesses, the financial securities industry, medical device providers, Amtrak, credit unions, vaccine providers, the nuclear power industry, and coal mining companies all receive some sort of federal protection. The federal government seems to justify the legislative shelters granted these specific industries because of their significant economic vulnerability in the current commercial climate. For example, insurance companies (mid-1980s), air transportation (post 9/11), and the financial securities industry (early 21st-century accounting frauds) have each faced a major financial crisis recently. The federal legislation was enacted to ensure that these industries would not be completely devastated by their respective predicaments and could continue providing their invaluable services to society. Other federal laws protect teachers, principals, volunteers, donators of food, and federal drivers to make certain that they may keep on offering their socially desirable and essential services without interruption. The economic rationale for these legal safeguards is to compensate for the inability of the listed service-oriented enterprises to generate any significant self-protecting income, more than it is to address any extreme crisis. Stricter controls on class-action suits is the most recent tort reform to find favor in Congress as of 2005.

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