"There are only two ways of telling the complete truth—anonymously and posthumously."Thomas Sowell

Tuesday, September 12, 2006

Whither Justice In Transaction?

As our technologies have ramified, certain aspects of knowledge have become more, not less, problematical. Much of this stems from the recognition that a new device or practice can have long-range effects that might not be visible in the near term. Much of the rest arises from the entirely excusable ignorance of the average citizen about, well, just about everything.

The extremely simple legal environment of the nineteenth century was founded on a set of extremely simple principles, which are no longer honored. One of these, the doctrine of assumption of risk, undergirded all commercial transactions. It made it possible for employers and employees to contract for any sort of labor, under any sort of conditions, and for vendors to sell potentially harmful products to customers, without fear that a lawsuit might reverse their a priori agreements to indemnify / hold harmless. But assumption of risk came under heavy fire in the early twentieth century, and began to be displaced by the doctrine of informed consent: the principle that a man could not be bound by a contractual agreement of any sort unless he had been fully informed of all the pertinent risks and had explicitly consented to them.

Informed consent has been taking a beating these past few decades, mostly because of Calabresian "legal positivism" and "deep pockets" liability theory. In essence, the prevailing view in American civil courts today is that, given the complexity of technology and society, no one is sufficiently well informed of the risks pertaining to anything to enter into a binding agreement to indemnify or hold harmless any other involved party under any conceivable set of circumstances. In consequence, such agreements, wherever we may find them -- and they're more numerous than one might imagine -- are considered "flypaper," and are dismissed or rewritten by judges at whim. The same is true for every sort of contract, for, once accepted, the assumption that only judges have the insight required to write a binding agreement knows no bounds.

The rot in our tort law proceeds directly from this absence of contractability. Without the ability to enter into a binding contract, persons desirous of transacting with one another must commit to a sequel of infinite uncertainty. Each is at the mercy of the intentions and character of the other. Under these circumstances, the most valuable thing a man can have, the sole protection he can offer a would-be partner in commerce, is an unstained reputation...the very thing one can most easily lose in a milieu where law is infinitely luxurious and infinitely elastic, slander is commonplace and usually escapes punishment, and no standard of proof can free a man from the invidiousness of the lumpenproletariat or the Fourth Estate. It puts one in mind of a passage from Atlas Shrugged:

Rearden, that evening, his coat collar raised, his hat slanted low over his eyes, the snow drifts rising to his knees, was tramping through an abandoned open-pit coal mine, in a forsaken corner of Pennsylvania, supervising the loading of pirated coal upon the trucks which he had provided. Nobody owned the mine, nobody could afford the cost of working it. But a young man with a brusque voice and dark, angry eyes, who came from a starving settlement, had organized a gang of the unemployed and made a deal with Rearden to deliver the coal. They mined it at night, they stored it in hidden culverts, they were paid in cash, with no questions asked or answered. Guilty of a fierce desire to remain alive, they and Rearden traded like savages, without rights, titles, contracts, or protection, with nothing but mutual understanding and a ruthlessly absolute observance of one's given word. Rearden did not even know the name of the young leader. Watching him at the job of loading the trucks, Rearden thought that this boy, if born a generation earlier, would have become a great industrialist; now, he would probably end his brief life as a plain criminal in a few more years.

However, few legal scholars -- Thomas and Epstein are exceptions -- are willing to consider returning even to an informed-consent standard, much less the sterner assumption-of-risk rules that governed the Nineteenth Century.

From where is the next fundamental principle of justice-in-transaction to come? Will it be some product centuries in the making, slowly turned by jurists from Blackstone through Holmes on the lathe of our legal system, or will it arrive all at once, a jewel unearthed by a single brilliant mind in a flash of unprecedented insight, as the theory of property rights occurred to John Locke?

More important, with the costs of human interaction mounting steadily in consequence of the mounting uncertainty of all dealings, what, apart from our sterling characters, shall we use in the meantime?


Tom Van Dyke said...

Fascinating, FWP, and as is your custom, startlingly accurate.

The pregnant woman who insists on her "right" to work at a battery factory although the potential for harm to her fetus/child is measurable (and the resultant lawsuit) illustrates the madness that any society based on law alone is vulnerable to.

Is working in a coal mine a danger to your health? Well, duh.

I would enter as an objection that employers are often aware of risks that the fellow hired off the street might not be aware of. The concept of informed consent is surely not spurious.

And as we move forward, what is the obligation of the employer to not only disclose, but continually research the potential harm to his employee in a given line of work? Surely this is an affirmative obligation, both tortiously and morally.

I have no brief for a lawsuit on behalf of an employee vs. his employer that the employer "should have known" some unanticipated thing, on the basis that only the employer has the means and wherewithall to determine risk.

But as a potential juror in a big-money litigation, I would be forced to find against the employer if he exhibited an indifference to investigating the risk.

There is a moral contract between employee and employer---I work as hard as I can for you, and you in return do your best to keep me safe.

Your best. Not some level of plausible ignorance and deniability. That is a breach of contract.

Matt Huisman said...

Your closing question is spot on Fran – how will we cope with the mounting uncertainty of all dealings? For all of our fondness for the rule of law, we find that the logical outworkings of societies content to resort to it to be unlivable. Beyond a few necessary administrative/infrastructure related adjustments to our legal system, our only real hope lies in the amount of attention we pay toward that sterling character you’ve alluded to.

Doug said...

The current disarray of tort law in the United Staes comes from, I believe, an abrogation of personal responsibility in our society. As our society stumbles along more and more individuals are convinced that they have no need for personal responsibility. A young girl gets pregnant out of wedlock? The government will step in and make the young man who impregnated her responsible. Failing that, the government will extend an entire range of services to her so that she will have the consequences of her actions ameliorated. Should you leave a soiree a bit inebriated and slip and fall on your neighbor's ice covered walk, no worries, your neighbor is at fault. Should your child be disruptive in school and not attend to his or her studies, not a problem, it is the schools fault. You have no responsibilities as a parent.

As long as this trend continues, the legal precepts of "assumption of risk" and "informed consent" will be simply fond memories.