Jackson Free Press

Tort law is used to determine who is responsible when someone is injured and how much a guilty party should pay an injured person. Our current tort system is designed on the principle that the responsible party should be required to pay for the costs of an injury, including economic damages—lost wages and medical bills—and non-economic damages, such as "pain and suffering" damages. A jury can award a third type of damages, called punitive damages, when they feel that the damage is due to overt negligence.

Individuals are often held liable for the proportion of their fault in an injury, while corporations are generally held in strict liability (liable regardless of "fault") because they generally have more opportunity to understand the safety issues that their products represent.

The consumer-advocate group Public Citizen maintains that the current tort system is designed to internalize the costs of negligence. Knowing that you can be sued for a great deal of money if your product is defective will force you, ideally, to do more testing and design work to make the product safe. If the product cannot be made safe and sold for a price that the market will bear, your company will scrap it. Public Citizen calls "tort reform" caps on liability an attempt to shift the costs of negligence. The idea is that those costs of restitution should not be determined by a jury and assessed against the responsible party, but rather the costs should be shared by the injured and by society at large, perhaps via government assistance programs.

Economic damages are paid to normalize a person's life—pay for medical bills and lost wages—while "pain and suffering" damages are damages paid as compensation to someone because they can no longer live a healthy and normal life. Think of a healthy 40-year-old worker who is seriously injured by product negligence—his non-economic damages are meant to go beyond his medical costs and lost wages to make up for the fact that he is forced to live with an injury for which he was not responsible—he can no longer fish on the weekends with his children and/or his disfigurement might totally change the way people react to him

In practice, non-economic damages are often used to offset the cost of an attorney or team of attorneys to sue for tort damages. Such attorneys usually work on contingency (meaning they get paid only if they win) and often demand a high percentage of the non-economic award. This is an imperfect system that can lead to abuse; however, unlike criminal cases, there is no system of public assistance for poorer people who have been injured and need to sue under tort laws; for that reason, many injuries go untried. With caps, this can be even more dramatic, as litigating a tort case can cost tens or hundreds of thousands of dollars.

Sound excessive? It's true that "transaction" cost for tort cases are high for a variety of reasons. Since a landmark RAND Corp. study in 1985 it's been felt that these costs were excessive; the result has been judicial reforms in many states, some of which have lagged in Mississippi.

A plaintiff's attorney on contingency might spend a great deal of money to litigate a case without seeing any return. This leads those attorneys to seek cases that seem likely to return a lucrative verdict and, depending on the ethic of the attorney, the risks and rewards might convince him or her to file cases in a courthouse that seems particularly willing to pay out. When a verdict is very large—after all appeals have been exhausted—an attorney or law firm can do extremely well. And, conversely, a business that is found by a jury to have been grossly negligent—as have automakers and tobacco companies in the past—can be seriously hurt financially by a big verdict.

The main argument for caps, then, is to make doing business in Mississippi more "predictable" by limiting the ability of a jury to award large pain and suffering and punitive damage verdicts. This predictability is advantageous both to large corporations and especially to insurance companies, who make money by assessing risk. Tort reform advocacy groups such as Mississippians for Economic Progress say that expensive tort damage awards lead to fewer businesses locating in Mississippi not just because they fear the awards, but because states like Texas are willing to pass low damage caps that entice companies to locate in those states. That puts Mississippi at a competitive disadvantage because it hasn't limited awards. But is that a compelling enough argument to pass the lowest caps?

Making the costs of injuring people too predictable guts the purpose of tort law, say groups such as Public Citizen. Why? Because some companies may use cost-benefit analysis to determine if it's cheaper to fix a product or to pay the limited liability that they're exposed to if the product injures someone. This has happened in famous cases—the Ford Pinto, tobacco health claims, the Remington 700 series rifle—and so on. In such cases, the company marketed a product it knew to be dangerous because it felt it would cost less to compensate victims than it would to fix the problem—even when the repair cost was minor. If damage caps are too low, those companies can not only use cost-benefit analysis, but consumers, frankly, may find fewer attorneys that are willing to file suit because of the risk that they can't recover their costs and make money.