Tort Reform and Federalism:

I thought I’d chime in with a few thoughts on Orin’s questions below, which is whether conservatives, who tend to support state autonomy, are hypocritical for favoring tort reform.

1. Tort liability for commercial activity is a form of regulation of commerce. As economists have pointed out, tort liability is another way to regulate behavior. Congress can require that all fans have certain safety screens, and fine manufacturers who don’t comply. (I mean the rotating fans that make breezes, not the basketball fans who want to get into fights.) Or Congress could empower the Consumer Product Safety Commission to enact regulations to this effect. Or states could do the same. Or state or federal courts could allow product liability lawsuits against fan manufacturers, which may lead to liability awards for fans that lack such screens. There are pluses and minuses for each approach. But all approaches are forms of regulation.

2. Conservatives as well as liberals believe Congress should have pretty broad powers. The debate isn’t between 100% Congressional power and 0%; rather, it’s more like between 100% and 95% (as a constitutional law matter) and maybe 60% and 30% (as a matter of what the policy ought to be). In particular, conservatives do believe that Congress should have and use the power to regulate interstate commerce — which includes the power to deregulate (“regulate” here meaning “make up rules,” which may be more laissez faire than state rules). Many also believe that Congress should be able to keep states from regulating even intrastate commerce in ways that cause serious harmful effects in other states, though that is somewhat more controversial.

3. Product liability does have substantial interstate effects. The Ninth Circuit decision in 2003 holding Glock potentially liable for violating California law by its sale of products in Washington State is a great example. California law was applied in a way that would lead reasonably cautious distributors to have to change their behavior throughout the country, not just in California; California law was thus in effect regulating commerce in other states. (The federal court was purporting to apply California law, since in this case the court’s jurisdiction stemmed only from the parties’ being citizens of different states, not from the lawsuit’s being based on federal law.) It thus makes sense for Congress to step in, in order to keep state law from having such extraterritorial effects.

The same is often true in other product liability cases. First, product distributors can often be held liable in state A based on sales in state B. Second, local juries may prefer to redistribute wealth from out-of-state corporations to in-state consumers, which also interferes with interstate commerce.

Now this argument doesn’t always work. The case for federal regulation is weaker as to medical malpractice, for instance, since much medical care is provided intrastate. Likewise, some hard-core federalists would argue that Congress should only preempt product liability when the lawsuit is based on out-of-state sales (or possibly when the lawsuit is against an out-of-state distributor). But softer-core federalists might conclude that it’s enough that product distribution is generally a national business, just like transportation and communications (which are primarily federally regulated) are national businesses, and that it therefore makes sense for the regulations of the entire sector to be basically federal rather than state.

4. Federalists don’t care just about federalism. As I mentioned, even people who care about maintaining state autonomy do think that Congress should have some power, and should exercise some of the power that it has — they just take a narrower view of it than people who don’t care as much about state autonomy. This means that, so long as Congress has the constitutional authority to enter a field, federalists care both about state autonomy and about other values that might lead them to favor federal action.

One of the values that conservative federalists tend to like, alongside state autonomy, is relative deregulation of economic transactions (not zero regulation, but generally less regulation). They might not be wild either about administrative regulation of product features or about jury regulation. Another value is the rule of law, in the sense of having relatively clear and predictable rules about what people ought to do. This might make them conclude that if any regulation is proper, it should indeed be clear rulemaking by the legislature or by administrative agencies, and not ad hoc application of vague “reasonableness” standards by juries.

So some conservatives might reasonably say: “We do prefer state autonomy over federal power. But when Congress has the constitutional power, as it does with regard to interstate commerce, and even as to commerce generally, given the current state of constitutional law, we may conclude that the values of deregulation and legal clarity should trump state autonomy.”

Incidentally, principled people on all sides of the political debate sometimes have to make such judgments. Liberals may care both about liberty and equality, and so long as they think the Constitution allows certain restraints on liberty, they may favor such restraints (for instance, on freedom of association) in the name of equality. They may be morally mistaken in doing so; but they may well be quite true to their principles, even when they err in figuring out how to reconcile those principles.

So for all those reasons, I think there’s ample justification for conservative calls to limit product liability, since this would generally involve Congress changing the regulatory scheme for interstate commerce to make it less restrictive and more predictable. There is less justification for conservative calls to limit medical malpractice liability, but there is still some, given that medical care does have important interstate dimensions. I agree — as one who does value state autonomy quite a bit — that it would be good if all these preemptive schemes were crafted to minimize the effect on purely intrastate commercial transactions. But the big picture project of restricting the regulation of interstate commerce imposed by the tort liability system strikes me as quite proper for federalist conservatives.

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