Showing papers on "Damages published in 1988"

Private Information and the Deterrent Effect of Antitrust Damage Remedies

Abstract: The private treble damages remedy for antitrust violations allows the victim to collect triple the overcharge from the antitrust violator. This remedy is intended to deter antitrust violations, compensate victims, and prevent the unjust enrichment of lawbreakers. Critics contend, though, that it deters the creation of joint ventures that would produce large social cost savings, and that the haphazard nature of compensation is unfair to victims as a class. In this article I evaluate systematically the allocative consequences of the set of possible private antitrust damages remedies, including treble damages, with a partial equilibrium model. Both buyer (victim) and seller (violator) are modeled as optimizing actors in a world where the prospect of a successful private antitrust damages action is uncertain. The model recognizes the importance of ancillary social benefits arising from anticompetitive actions. Anticompetitive seller behavior is deterred by the prospect of antitrust dam-

Measuring Damages to Marine Natural Resources from Pollution Incidents under CERCLA: Applications of an Integrated Ocean Systems/Economic Model

Abstract: Several pieces of federal environmental regulation establish strict liability for damages from spills of oil and hazardous substances. This paper discusses the Natural Resource Damage Assessment Model for Coastal and Marine Environments (NRDAM/CME), which is to be used for assessing damages from spills of oil or hazardous substances in coastal and marine environments under CERCLA and the Clean Water Act, as amended. The approach employs an integrated ocean systems/economic model to simulate the physical fates and biological effects of a spill and to measure the resulting economic damages. To illustrate application of the model, selected results are presented for hypothetical spills of a number of substances in a variety of environments. The results show that the damage function depends on the physical and chemical properties of the substance spilled, the season, and the environment in which the spill occurs.

The Political Economy of Product Liability Reform

Abstract: The present body of product liability rules has been fashioned by common law judges, with an occasional assist from legislatures. The key premise of the present system is that freedom of contact, even subject to the usual caveats of force and misrepresentation, has no place to play within the product liability system. That assumption makes good sense in the few cases in which defective products are responsible for injuries to bystanders. But it is far more dubious when suits are brought by injured product purchasers or users. To be sure, there is typically no direct contract link between the manufacturer and ultimate purchaser. The absence of explicit contracts, however, is itself a reflection of the present body of legal rules that regulate product use. These rules refuse to enforce a limitation on liability or damages created by contract, and occasionally impose punitive damages on firms bold enough to seek contractual protection. If the law were otherwise, then a manufacturer could-and would-designate a retailer as his agent so as to secure a direct contract with a purchaser and, where possible, a product user. Contractual quiescence today is not a sign of satisfaction with the legal rules as ideal default provisions. Nor is it evidence that transactions costs are so high that voluntary agreements cannot be formed. It is only proof that any effort to contract out of the present tort system has been effectively blocked by the judges and legislatures who have created the modern law. The present regime of legal rules has powerful social consequences. The conventional economic assumption is that rational, self-interested parties only enter into contracts that ex ante assure them of some joint gain. By that standard, the present system of public regulation of contract terms, whether by common law decisions or statute, imposes significant losses on both sides. Legislation to remore these barriers to private contract could generate some substantial overall gains. Whenever legislation could generate some allocative improvement, it should be possible to divide the gains thereby generated to leave all interested parties better off than before. If the costs of passing legislation and dividing the gains were zero, then inefficient substantive rules would never remain on the public books. Today's product liability rules do not fade, but grow stronger with each passing year. The remainder of this paper helps to explain why this trend is likely to continue. The barriers to needed legislative reforms are simply too great.

Monopoly, Liability and Regulation

Abstract: Our society regulates the quality and safety characteristics of a large number of products destined for consumer use. In many of these cases, our legal system holds the producers of such regulated products liable for harm which is inflicted in the course of consumption. Examples of the joint use of liability and safety regulation include the cases of drugs, foods, pesticides, herbicides, and some aspects of consumer product design. This paper is concerned with cases where it is socially beneficial to regulate safety characteristics of products (or simply cases where we do regulate for whatever reason) and asks whether or not it is in addition socially desirable to impose liability on producers. As an alternative, we consider the rule of no liability and specifically ask whether in a regulated setting it makes economic sense to release producers of liability for harm done. In our analysis, the key determinants in the answer to this question are what we term "scale effects" with respect to the marginal probability of the product causing harm and the degree of ignorance on the part of the consumers of the risky product. The economic environment is that of a regulated monopoly producer of a risky product (e.g., the producer of a patented drug). While the regulator and the firm correctly perceive expected damages associated with the product, the consumer may underestimate risk. The regulatory authority controls the "care level" of the product but does not regulate the level of the firm's output. Both care level and output level affect the probability of the product harming a typical consumer. In addition, the firm's output level affects the marginal probability of the product causing harm with respect to output, and we term this phenomenon a scale effect. The provision for scale effects is an extension of previous work on products liability, [1; 2; 3] and [5; 6; 7; 8; 9; 10; 11], which assumes that the marginal probability of harm is a constant function of output. Scale effects can take the form of a locally rising or falling marginal probability of harm with respect to output. The former case corresponds to a product which does cumulative damage as more units are consumed. The latter case corresponds to a product to which a tolerance can be developed. Our principle findings are divided into two cases depending on whether or not the consumer misperceives expected damages. For the case in which consumers correctly perceive expected damages from the product, the desirability of strict liability in combination with regulation versus regulation with release of liability depends on the direction of the consumption scale effects. For the case in which the consumer underestimates the expected damages from the risky product, the

A Kind of Settlement of Damages (Apologetic Tendencies)

Abstract: National Socialists did with the single exception of the technical procedure of gassing had already been described in the extensive literature of the 1920s.... Did not the National Socialists, did not Hitler perhaps commit an "Asiatic" deed only because they regarded themselves and those like them as potential or real victims of an "Asiatic" deed? (Ernst Nolte, Frankfurter Allgemeine Zeitung, June 6, 1986)

Economic analysis of tort law

Abstract: Under tort law, once a physician–patient relationship has been established, it is the physician's responsibility to diagnose and treat the patient with due care. Failure by the physician to carry out his duty constitutes negligence, with the implication that the physician has engaged in malpractice. The injured patient can sue the physician under tort law and recover monetary damages. This chapter discusses a medical malpractice case, Helling v. Carey , that illustrates many facets and tensions within the field of medical malpractice in court and it reviews some reforms that took place from 1974 to 1975. The negligence law does not require the defendant to be altruistic in the sense of being self-abnegating. However, he or she is required to place the welfare of others and his or her own on an equal footing. Conduct that embodies a failure to do so leads to a judgment of negligence under the Incremental Standards of the Learned Hand formula. The chapter also discusses the concept of sovereign immunity and parole decisions. There is obvious merit in more carefully classifying parole decisions into discretionary and ministerial ones. Most decisions by parole agencies to implement those made by parole boards should fall into the second category. Removing immunity from many parole agency activities, though leaving individual officials and parole boards immune, is likely to lead to more carefully considered parole decisions.

Punitive Damages for Deterence: When and How Much

Abstract: An economic model of deterrence is used to derive two prescriptions for punitive damages that apply to economically motivated defendants, including businesses. To recover punitive damages, a plaintiff should have to prove a gross shortfall from the legal standard by the defendant that would be profitable if liability were limited to compensatory damages. In a word, "incentive inadequacy" should be proven. A key element in the proof is establishing the existence and extent of enforcement error. If the court finds that punitive damages are to be awarded, the punitive multiple should be set equal to the reciprocal of the enforcement error. These rules, if adopted, would provide incentives for efficient deterrence and would have significant consequences for current legal practice, including making the ratio rule more definite, lowering the ratios actually allowed, and largely eliminating a defendant's net worth as a consideration for setting punitive damages.

Money Damages and Corrective Advertising: An Economic Analysis

Abstract: In unfair competition cases, injunctive relief is the norm' for three reasons. First, it is difficult to prove and then calculate actual damages. Second, an injunction alone usually provides substantial relief.2 Third, the substantive law of damages in the field of unfair competition$ is uncertain and unstable. One commentator on the Lanham Act4 notes that, when courts grant money damages, the "confluence of evidentiary complexity and legal confusion has resulted in some plaintiffs receiving windfall recoveries while others find injuries uncompensated; meanwhile, defendants face uncertain liability and capricious penalties."5 This instability in the law has led to diverse attempts to address the damage issue. Perhaps the most troubling development in the search for an accurate, consistent rationale for awarding money damages in unfair competition cases has been the federal courts' adaptation of the Federal Trade Commission's ("FTC") injunctive remedy of corrective advertising. Federal courts have applied this rationale-usually used to justify corrective advertising injunctions-to

A Tale of Two Cases

Abstract: This paper examines some of the recent case law concerning the creation of a fiduciary relationship from negotiations toward a partnership or joint venture, and some of the remedies available for breach of fiduciary duty, particularly equitable damages and whether such damages should be awarded on a pre-tax or a post-tax basis.

A kind of settlement of damages

Abstract: It is a notable deficiency of the literature on National Socialism that it does not know or does not wish to ascertain to what extent all that the National Socialists later did — with the single exception of the technical procedure of gassing — had already been described in the extensive literature of the Twenties. … Did not the National Socialists, did not Hitler perhaps commit an ‘asiatic’ deed only because they regarded themselves and those like them as potential or real victims of an ‘asiatic’ deed? (Ernst Nolte in the Frankfurter Allgemeine Zeitung, 6 June 1986)

The Sydney Floods of 1986: Warnings, Damages, Policy and the Future

Abstract: Following the August 1986 flood, detailed surveys of flood-prone properties in the Georges River, Prospect and Toongabbie Creek catchments of western Sydney were undertaken to: estimate tangible and intangible flood damage; estimate the damages averted by the actions of those flooded; and examine the flood warning system. The damage data and analysis of the flood warning system will be presented together with the implications and recommendations for urban floodplain management policy.

An alternative payment system for major ‘fast track’ construction projects

Abstract: In the UK, construction contractors are generally reimbursed on a monthly basis reflecting the value of work done on site plus payments for agreed offsite components. If the contractor is behind programme and even if he completes late he will still be reimbursed based on the value of work done calculated using the original itemized bid price. The only way clients can influence progress of the project is to claim from the contractor predetermined liquidated and ascertained damages in the event of late completion. These damages can only be charged after completion which may be a hollow compensation, most clients preferring their projects completed on time. This paper describes an alternative payment system for use on major fast track projects in which the contractor is financially motivated to achieve satisfactory progress throughout the period together with completion on time. The system is based on the concept of predetermined percentages which are applied on a monthly basis to each major section of the p...

The death of labour law

Abstract: Labour Law has taken a pasting in recent years-from the Executive, the Legislature and the Judiciary. These developments are well documented in the third edition of Lord Wedderburn's now classic study, The Worker and the Law. The book, which has almost doubled in length since the second edition, is impressive not only because of its size. It is written with passion, it displays a great depth of learning, and it reveals a breadth of knowledge across a range of disciplines which is remarkable. This is not to say that the work will find agreement and approval on the part of all those who read it. Some may question the emphasis given to the different subjects: almost as much space is devoted to Rookes v Barnard1 as to the law of unfair dismissal, and the seminal report of the 1968 Donovan Royal Commission on Trade Unions and Employers' Associations2 is dealt with in only a few pages. Some may be surprised at the rigour with which the judges are criticized, even where morsels are thrown from their table, such as the decisions of the High Court which indicate that the common law may be revived to offer some protection for workers.3 Still others may be shocked by some of the views expressed, as for example, the apparent endorsement of the fault system and the implied criticism of those who seek 'the abolition of workers' rights to sue in tort for damages'.4 None will, however, fail to be impressed by the learning which informs the chapters on the law of industrial conflict; by the highly original treatment of procedural law; and by the attention to detail in the interesting and informed account of legal issues arising out of the miners' strike of 1984-5.

Construction Law and Practice in Japan

Abstract: Construction law and practice in the United States and Japan is remarkably similar. One principal difference, rooted in Japanese societal mores, is that self-settlement of disputes is overwhelmingly preferred to third-party resolution through litigation. Japan has a three-tiered court system that includes trial courts, appellate courts, and a supreme court. There are no juries in Japan. The sources of Japanese law are principally the Japanese Constitution and statutes. To a lesser extent custom, reason, and precedent are also used. Trust and establishment of a long-term business relationship underlie most contract relationships. By law, construction contracts are required to be fair and just, based on a theory of basic equity. Disclaimers and exculpatory clauses are disfavored. Differing site condition clauses are common, but are interpreted as requiring a sharing of risk between owner and contractor rather than, as in the United States, requiring a shifting of all the risk from contractor to owner. Japanese practice regarding termination, damages, liquidated damages, and formal dispute resolution are similar to U.S. practice.

Litigation on Behalf of Children in Adult Jails

Abstract: This article discusses the history of litigation on behalf of children held in adult jails, from the earliest cases in the 1950s until the present. The article traces three phases of this litigation. In addition to covering individual court decisions, the article describes factors contributing to the expansion of jail litigation, including (1) federal statutory developments such as the Juvenile Justice and Delinquency Prevention Act and the Civil Rights Attorneys' Fees Awards Act; (2) developments in case law concerning conditions of confinement, the “right to treatment,” liability of local units of government, availability of punitive damages, and entitlement of successful plaintiffs to attorneys' fees and costs; (3) increased public concern over abuses in jails; (4) availability of substantial damages for abuses of children; and (5) development of specialized legal advocates with expertise in juvenile institutional litigation.

Rethinking personal injury damages: compensation for lost capacities

Abstract: This article reexamines the debate about whether personal injury damages are awarded for loss of earnings or loss of earning capacity. It begins by analyzing the leading cases to see if a coherent approach emerges. Discovering none, it then turns to cases in three problematic areas-compensation to homemakers, for lost illegal income, and for lost business income. These areas reveal the unsatisfactory nature of both the loss of earnings and loss of earning capacity approaches. The author suggests a new conceptualization of the issue. It should be recognized that a tort victim frequently suffers the loss of a wide variety of capacities. Some of these have a market value, that is, people do commonly exchange their use for payment. These should be compensated as pecuniary losses. However, the loss of a capacity should be compensated, as a pecuniary loss, only to the extent that the plaintiff would have used it to perform economic activity. This approach is then applied to the three problematic types of case to achieve a more satisfactory solution.

Valuing Illiquid Pension Benefits

Abstract: Economists engaged in assisting attorneys in varying types of litigation are often presented with the problem of determining the present value of an employee's current or future pension. In both personal injury cases and wrongful termination cases the economic losses to the plaintiff usually includes the value of a future pension that, because of some tort action, may have been reduced in size or eliminated altogether. The present value of the loss (or reduction) of the pension's value should be computed and included in the plaintiff's claim of damages.

Pensions Replace Lump Sum Damages: Are Structured Settlements the Most Important Reform of Tort in Modern Times?

Abstract: settlements", extensively used in North America, have been introduced into this country. These substitute pensions for the lump sums traditionally paid to plaintiffs for their future losses. The pension derives from an annuity bought by the insurer covering the liability involved, and held for the benefit of the injured person. In contrast to the once-and-for-all award of lump sum damages, the pension can be varied and its payments "structured" over a period of time. Lump sums can only be replaced in this way if the parties agree out of court to do so. To encourage these private settlements the parties have been given a considerable financial inducement by the state. The result is that structuring will soon frequently be used for the most important cases in tort where the injury is so serious as to cause earnings and other financial losses to accrue into the future. A structured settlement enables an insurer to pay out less money than before, whilst at the same time allowing a plaintiff to draw a higher income from the damages obtained. These gains are made at the taxpayers' expense. From the perspective of the accident victim structured settlements offer at least two new advantages over the lump sum: first, the income generated can be guaranteed against erosion by inflation; and secondly, it is paid free of tax into the plaintiffs hands. This favourable tax treatment, recently conceded by the Inland Revenue, is the key to understanding the attractions of a structured settlement. In effect it increases by at least a quarter the value of the lump sum offered by the insurer. It therefore enables insurers to pay out less to generate the same income for the plaintiff. This fact alone should cause all personal injury lawyers and liability insurers to re-examine their traditional practices; they must change their negotiating tactics whenever a large award is contemplated. The financial package offered by a structured settlement is composed of two elements: the first - also found in the traditional award of damages - is a lump

Recent medical malpractice reform measures in eight key states.

Abstract: Over the course of the past quarter century, technological developments in medical science have made it possible for physicians to save the lives and preserve the health of countless patients. Unfortunately, it must be remembered that medicine is still as much an art as it is a science. As such, due to this human element, there is always the risk of occasional errors or failures in treatment. When these problems occur in bunches, the stage is set for a medical malpractice crisis. In an attempt to minimize the rising tort litigation and settlement costs associated with this crisis, eight states have responded with a variety of measures designed to limit the doctrine of joint and several liability, noneconomic damages, punitive damages, the collateral source rule, attorney's fees, and the number of complaints. Since the measures in these subject states apply to different areas of law, it is not the purpose of the authors to catalogue and explain in detail all of these changes, much less their impact on litigation and settlement costs. Rather, the intent of this article is to provide a general description and comparison of legislation in these eight states, a discussion of the specific changes that appear most important, and a description of the effect these changes are expected to have upon the costs of defending medical malpractice claims.