The Liability Lottery; D. Bandow

Unfortunately, government has distorted this simple principle almost beyond recogni tion. One tactic has been to create faux rights, the "violation" of which make one liable for enormous damages. The most obvious exam ples are the civilrights laws,which bar private discrimination for any number of reasons, including disabilities that hamper job perfor mance. Mr. Bandow, a nationally syndicated columnist, is a senior fellow at the Cato Institute and the author and editor of several books, including Tripwire: Korea and u.s. Foreign Policy in a Changed World. Good people in a good society do not discriminate for malevolent reasons, such as race. But the fact that some bad people do doesn't mean the government should pro scribe such conduct. Indeed, in the case of race discrimination the government has trans formed the moral principle of nondiscrimi nation into invidious discrimination. Since it proved very difficult to prove that subjective hiring decisions were animated by racism, the government has made the process a numbers game, imposing liability for failure to meet an arbitrary quota, not for actual discrimination.

Agencies like the Equal Opportunity Employ ment Commission have actually advertised for people to step forward and claim that they might have been discriminated against, even if they never applied to work for the company charged with discrimination. In other cases discrimination is rational, rather than malign. Companies that depend on responsible employees will naturally shun an alcoholic or drug addict-yet to do so now risks liability under the Americans with Dis abilities Act. There are also rational reasons to consider age and sex in hiring decisions. For instance, some jobs create greater health risks for pregnant workers. People might prefer that employers not take such factors into account, but that doesn't justify govern ment imposing liability on them for doing so. Equally serious is the steady subversion of more traditional liability rules, eliminating the necessity of both requiring the plaintiff to act responsibly and finding the defendant to be at fault. Attorneys, judges, and juries have 357 358 THE FREEMAN • JUNE 1997 ranged throughout society looking for deep pockets from whom to transfer cash to per ceived victims. As the risk of large, meritless judgments has risen, so has the incentive to settle, rewarding plaintiffswho merely file suit in hopes of being bought off.

Cases involving irresponsible plaintiffs abound-the burglar who injured himself by falling through a school skylight (the Califor nia education district settled); the drunk who stumbled in front of a New York Subwaytrain (he exclaimed "what a great country" after winning a multimillion dollar jury award); the cigarette smokers suing the tobacco compa nies (the government has become a plaintiff, too). In all of these cases liability law is being used to reward irresponsible conduct, rather than to hold blameworthy people and com panies accountable for their actions. The pervasive belief in victimhood has led to excessivejudgments even when defendants are genuinely at fault. Millions for hot coffee burns and millions more for a mispainted BMW evidence juries acting like politicians, promiscuously giving away other people's money. Many jurors apparently believe that their job is not to assess fault and harm, but to redistribute wealth-in this case from con sumers rather than taxpayers.

More mundane but equally troublesome are cases where courts simply impose liability on the deepest pocket around, irrespective of the evidence regarding fault. This area has been enormously profitable for creative legal minds. Shareholder suits seek to hold liable a company's board of directors for falling stock prices; medical malpractice suits blame doc tors for birth defects. Indeed, lawyers once sued-and won judgments-claiming that bumps from a fall caused cancer. Equally bizarre have been massive lawsuits involving asbestos, Bendectin, electromagnetic fields, and so-called multiple chemical sensitivity. The point is not that plaintiffs in such cases sometimes aren't hurting. But they too often fail to prove that the person or company being sued is responsible for their ills. This is evident in the case of silicone breast implants. They came onto the market in the 1960s and were used by a million women one percent of America's adult female population. For years there was no evidence of harm, but some women, suffering from vari ous ailments, eventually blamed their im plants and sued. Bad publicity followed, along with a power grab by the Food and Drug Administration, which ordered implants off the market in 1992 even though it acknowl edged there was no evidence that they caused harm. Panic, inflamed by the trial bar, set in.

The result was a deluge of lawsuits, more than 21,000 encompassing nearly a half million women. The liability surge, not surprisingly, de stroyed the silicone breast implant industry. Even manufacturers of other silicone-based products, like cardiac pacemaker wires and artificial joints, became wary of their own businesses. But the primary victims are pa tients, especiallywomen who've suffered from mastectomies. (The American Cancer Society and eight other cancer groups have petitioned the FDA to lift the ban, contending that the agency's "basis for restricting access to sili cone breast implants no longer exists.") All of this havoc has resulted from minimal evidence. (In fact, roughly eight out of ten verdicts have gone for the defense.) Federal District Court Judge Robert Jones recently found that the case purporting to show a link between implants and "systemic" illnesses did not meet the scientific threshold justifying its presentation to a jury and dismissed 70 claims.

Overall, the research suggests that implants generate something between no and minimal risk. For instance, a 1994 Mayo Clinic study reported "no association" between implants and connective-tissue diseases. Similar were the results of a Harvard revie~w the following year. In 1996another Harvard study found no "large hazard" of disease. It noted a "small" increased risk, but the researchers empha sized any effect is "very small," and acknowl edged that this conclusion might reflect women overreporting disease simply because of the massivepublicitysurrounding implants; the researchers are now attempting to screen out this possible impact. This is not to denigrate the plaintiffs' fears. Explains Dr. Marcia Angell, executive editor of the New England Journal of Medicine, and author of the new book Science on Trial, THE LIABILITY LOTTERY: POLITICS BY OTHER MEANS 359 manywomen have "developed symptomsthat any woman over 25 could develop." The drumbeat of publicity convinced many of them that breast implants were to blame.

Additional research on the issue is war ranted, but it should be carried out in the laboratory, not the courtroom. Damages should be awarded based on probabilities, not possibilities, especially when those are highlydisputed. Moreover, evidence needs to be screened to ensure that it reflects science, not sympathy. A market system will work only if people who've been injured by the negligence of others are able to receive redress. But that doesn't mean turning American courtrooms into legal lotteries, where neither injury nor fault need be shown for the big prize to be won. Then the overall market economy suf fers, along with the defendants wrongly held liable. Whether it's the creation of fake rights or abandonment of traditional standards of negligence, law has increasingly been turned into a tool of politics. 0 p--------------------------------------~"Themost excitingnew intellectualjournalinmany years." -WILLIAMNISKANEN,Chairman,CatoInstitute rr'he INDEPENDENT REVIEW is the new, quarterly journal de I ~ voted to the political economy of liberty. Transcending the all too-common politicization and superficiality in public policy de bate, The INDEPENDENT REVIEW is superbly written, provoca tive, wide-ranging, and based on solid scholarship. Featuring pathbreaking studies by many of the world's finest economists and other scholars, The INDEPENDENT REVIEW boldly chal lenges the collectivization and bureaucratization of our world.

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