Harry Potter and the trouble with tort theory.

• Author: Hershovitz, Scott

INTRODUCTION I. HARRY POTTER AND THE COSTS OF ACCIDENTS II. HARRY POTTER AND THE DUTY OF REPAIR III. HARRY POTTER AND THE NATURE OF TORT LAW IV. HARRY POTTER AND THE TROUBLE WITH LEGAL THEORY CONCLUSION INTRODUCTION

The last several decades of tort theory have left us with competing visions. Economists tell us that tort law promotes efficiency by giving people incentives to take account of costs they impose on others. (1) Philosophers tell us that tort law dispenses corrective justice by requiring wrongdoers to repair the wrongful losses they cause. (2) There is much to recommend both views, but there are also reasons to think we cannot have it both ways. My sympathies, I should say up front, lie with the philosophers. However, the aim of this Article is not to defend the claim that tort metes out corrective justice. Rather, the aim is to show that the leading theories of tort are radically incomplete and for roughly the same reason.

A tort theory ought to explain tort law, of course, and in a sense, that is what both economists and philosophers set out to do. (3) They generate theories to explain the doctrines that first-year law students study in torts, or, more broadly, those that one might find in the Restatement of the Law of Torts, or in a torts treatise. But the institution of tort law is not exhausted by the rules that are distinctive of it. The doctrines in the Restatement are not self-executing. They must be applied by litigants, lawyers, judges, and juries. A law student learns how that is done primarily in civil procedure. The first-year curriculum has a certain sort of logic. For the most part, the procedural rules that govern tort claims also govern contract disputes and, of course, much else beyond. Thus, as a pedagogical strategy, it makes sense to segregate civil procedure from "substantive" courses, which focus on the distinctive aspects of tort, contract, property, etc. The trouble is that tort scholars have mistaken the subject of the first-year torts class for the institution of tort law. The leading tort theories are theories of tort's distinctive rules--roughly, who is entitled to tort remedies, when, and why. However, we cannot understand the contribution tort law makes to our lives if we restrict our attention to those aspects of it. To be sure, a theory of tort must explain what is distinctive about tort law, but if it explains just that, it runs the risk of missing much about the institution.

That is just what has happened with the leading accounts of tort law. Both economists and philosophers have missed much about tort, and worse yet, much of what they say may be wrong because they have not accounted for what they have missed. The primary aim of this Article is to expose problems with the leading accounts of tort. I shall argue that both the economic and corrective justice accounts are defective on their own terms. That is, economists must revise their account for reasons internal to their theory, not because of the philosophers' critique. The reverse is true too. A secondary aim of this Article is to explore how the leading theories might be fixed. Fixing the economic account will not be all that hard, at least in principle. There will simply be more costs and benefits to tote up. However, as we shall see, it is doubtful that we are capable of gathering the information necessary to put the economic account on firm footing. For philosophers, matters are more complicated. In fact, I shall argue that to generate an adequate corrective justice account of tort, we must revise our understanding of what corrective justice is. A final aim of this Article is to say something about the merits of the economic and corrective justice accounts. However, that will not be my main focus. This Article is an invitation to broaden tort theory, not an effort to end it.

We are now three paragraphs in and I have not yet mentioned the star of the show. What does Harry Potter have to do with tort law? Well, it is Harry's magic that will help us see the trouble with tort theory.

1. HARRY POTTER AND THE COSTS OF ACCIDENTS

   Imagine that upon graduation from Hogwarts School of Witchcraft and Wizardry, Harry Potter goes to law school. As a 1L, he takes torts from a professor with an economist's view of the institution. She teaches Potter that tort law aims to minimize the sum of the costs of accidents and the costs of accident prevention. (4) Tort law does this, she explains, by giving people incentives to take account of costs they impose on others.

   Like many first-year students, Potter is enamored with economic analysis. He appreciates the elegance with which it accounts for central features of tort law, and he finds the normative theory underpinning it attractive. But the more enchanted Potter becomes with the economic account of tort law, the more disenchanted he becomes with tort law itself. "Tort law is awfully expensive," he thinks. "Surely, there must be a cheaper way to reduce the costs of accidents." Then, remembering that he is the world's most powerful wizard, he raises his wand. Potter casts a spell that works like this. Every time a person imposes a cost on another that would be compensable by the tort system (say, by flying carelessly and knocking someone off her broomstick), the spell transfers a sum of money equal to the cost from the bank account of the injurer to the account of the victim and dispatches a message informing the person of the debit to his account and the reason for it. Potter eliminates the administrative costs of the tort system with one swoop of his wand, and the results are impressive. The spell pushes accident costs nearer their optimal level than the tort system, because all and only those who are liable are made to pay, they are made to pay immediately, and they cannot avoid paying by investing in lawyers rather than safety.

   That is no small feat, yet Potter's professor will surely tell him he has cast the wrong spell. Tort's rules, she will explain, are shaped by administrative costs. Because Potter can dispense with them, he should not replicate tort doctrine blindly. Potter's professor will start by encouraging him to cast a spell that charges cheapest cost avoiders, rather than tortfeasors. (5) Tort law, she will tell him, does not hold cheapest cost avoiders liable consistently only because the cost of identifying them is high. (6) Potter does not face that constraint. He can cast a spell that effortlessly determines whether, for example, it is more cost-effective for a municipality to invest in accident prevention by installing a traffic light than it is for drivers at an intersection to take extra care. If the municipality faces lower accident avoidance costs, the spell will better reduce accident costs by charging the municipality for mishaps, whatever tort doctrine might tell us about the drivers' responsibilities.

   Potter's professor will also point out that the money taken from cheapest cost avoiders need not be given to victims. She will explain that tort requires defendants to pay victims primarily so that victims have an incentive to sue defendants. (7) No inducement to litigation, however, is needed once Potter casts his spell. Of course, other considerations may support transferring money to victims. If a defendant is in a better position to absorb a loss than a plaintiff, compensation may reduce the costs of bearing the costs of accidents. Moreover, compensating victims encourages them to take optimal care. (8) However, it is an open question whether these are the most productive uses to which the money the spell seizes could be put. Perhaps the money is better transferred to the state's treasury, or channeled to the poor, or spread among all those suffering physical infirmities, regardless of their source. (9) If Potter's spell can identify the cheapest cost avoider of an accident, surely it can determine the optimal recipient of seized funds.

   Potter's professor may continue to tinker. She might suggest that Potter's spell take money from those who create risk, whether or not the risks are realized. She might suggest that Potter adjust tort's mix of strict liability and fault where necessary to encourage efficient activity levels. Or that the spell hold people liable for causing pure economic loss. Or ... well, you get the point. As the professor revises Potter's spell, it will look less and less like tort law, but it will better achieve tort law's aims.

   The question what form Potter's spell should take boils down to this: what is the optimal legal regime if there are no administrative costs? That is an interesting question, even if it has limited practical upshot. However, I want to pursue a different question through this thought experiment: If Potter were here, right now, offering to eliminate tort's administrative costs by making its rules self-executing, should we have any reservations about accepting his offer? What, if anything, would we sacrifice by eliminating tort law in favor of such a costless scheme?

   That may strike you as a silly question. Potter's spell hardly seems to involve a sacrifice; it reduces accident costs at no cost to us. Yet even if we are concerned with nothing but welfare, the question is not silly. In addition to eliminating tort law's administrative costs, Potter's spell erases some of its benefits too. The primary benefit tort generates--lower accident costs--is preserved by Potter's spell. In fact, it is enhanced. However, tort law generates benefits beyond those that its substantive rules aim at. We can call these tort's collateral benefits. (10) The wrinkle here is that many of tort's collateral benefits (though not all) are generated by the process that implements tort's substantive rules, not by application of the rules themselves. Thus, in rendering tort's substantive rules self-executing, Potter sacrifices some of the benefits tort law produces.

   An example will help. Tort suits convey information...