Over on Cato@Liberty, Walter Olson joins the discussion on federalism and medical malpractice reform started by our own Randy Barnett and continued by Ilya Somin.
Olson makes the important point that federalism is not about keeping as much authority as possible in state hands, nor does a commitment to federalism require leaving state courts alone across-the-board. The federalism embodied in our Constitution’s structure expressly provides for federal primacy in certain spheres and authorizes federal supervision of state courts in certain circumstances. The question is rather whether a particular exercise of federal supervision — here, federal limits on state court medical malpractice judgments — is consistent with the federalist scheme. Olson writes:
Again and again, the Constitution contemplates federal supervision of state courts when they reach out to assert power over transactions and litigants outside their own boundaries. It has far less to say about intruding upon the authority of those courts over disputes that arose between their own residents and are unmistakably under their own law. That general game plan—oversee the interstate but mostly not the intrastate doings of state courts—comports well with the insight of public choice scholars who point out that states face an ongoing temptation to stack liability proceedings so as to enrich their own citizens at the expense of out-of-state litigants obliged to appear in their courts.
Where does this leave federal-level liability reform? It suggests a very real difference between areas like product liability and nationwide class actions—in which suits ordinarily cross state lines, and the majority of runaway verdicts are against out-of-state defendants—and more conventional kinds of tort litigation arising from car crashes, slip-and-falls, and medical misadventure, where cases are mostly filed against locally present defendants. As a rough rule of thumb, it’s worth presuming that most of the local suits do not externalize heavy costs across state lines and should accordingly be left alone by Congress unless it is itself vindicating some constitutional right or coordinating the functioning of some constitutionally authorized federal government activity.
Olson is anything but an opponent of tort reform generally. Indeed, he’s been one of the litigation explosion’s most prominent critics. But he recognizes that support of a particular policy goal does not require abandoning a principled commitment to the broader federalist scheme.