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Judge and Jury: American Tort Law on Trial (Book/ Paperback)

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Is the U.S. tort system in crisis? CBS television’s 60 Minutes has said the tort system metes out “jackpot justice,” and Newsweek has called America a “Lawsuit Hell.” Other observers of the legal system, however, argue that the tort crisis is a myth. Although both sides of the debate rely primarily on anecdote and the selective use of evidence, a sound diagnosis of the tort system requires a rigorous analysis of hard data, not a retelling of sensationalistic sound bites.

In Judge and Jury: American Tort Law on Trial, economists Eric Helland and Alexander Tabarrok present their study of tens of thousands of tort cases from across the United States. The result is the most complete picture of the U.S. system of civil justice to date. Examining three of the key players of the tort system (juries, judges, and lawyers), Helland and Tabarrok conclude that the tort system is badly broken in some respects but functions surprisingly well in others.

The Tort Boom: Causes and Effects

The U.S. tort system has expanded significantly since the 1970s, whether measured by tort expenditures, awards, settlements, or filings, Helland and Tabarrok show. As a percentage of U.S. gross domestic product, tort costs nearly doubled between the early 1970s and the late 1980s. Tort costs declined somewhat in the early 1990s (due to reforms enacted in Florida, California, and elsewhere), but tort costs are still high historically.

Traditionally, the tort system dealt with claims of personal injury caused by strangers, such as the manufacturers of automobiles or consumer products. Contract law, rather than tort law, dealt with injuries incurred when the parties had a preexisting relationship, such as doctors and patients. This tradition broke down in the 1960s, as the courts moved increasingly from a negligence standard (Did the defendant fail to exercise reasonable care?) to a strict-liability standard (Did the defendant contribute to a harm whether or not one was direct or foreseeable?). Medical malpractice, now the province of the tort system, still uses the negligence standard, albeit a broader version than what prevailed before the 1960s. Also during the 1960s, the courts began to hear claims that they would not have considered previously—even claims they would earlier have laughed out of court.

Race, Poverty, and American Tort Awards

In his novel The Bonfire of the Vanities, author Tom Wolfe portrays a plaintiffs’ lawyer who files malpractice claims in poor, predominantly minority communities in the Bronx because, as the character put it, “the Bronx jury is a vehicle for redistributing the wealth.” Is the Bronx effect real? Do jury awards vary by such characteristics wealth and race?

Helland and Tabarrok show that jury demographics do indeed affect awards. Jury awards increase as black and Hispanic poverty rates increase in a county—even after controlling for other potential causes such as injuries, population densities, and case types. Settlement amounts also increase with increases in black and Hispanic county poverty rates. Surprisingly, however, as white poverty rates in a county increase, awards actually fall (or, in Federal cases, increase only moderately). For better or worse, lawyers have a sound reason to “forum shop” in the hope of finding a more sympathetic jury: it pays.

To arrive at these conclusions, Helland and Tabarrok examined three data sets that covered tens of thousands of trials. From the JVR Personal Injury Verdicts and Settlements data set (1988–96), they examined 42,315 trials, from 1,803 counties, that resulted in plaintiff victories. The wide range of cases (51% are auto accident cases, 14% are premises liability, 7% are medical malpractice, and 4% are product liability), allowed Helland and Tabarrok to control for several factors. The Civil Justice of State Courts data set (1991– 92) gave Helland and Tabarrok data on fewer trials with awards (3,199), from 45 populous counties, but it had the advantage of depicting a

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