Fall 2017 – Hanson/Torts HLS

I. Introduction
A. Thesis: brief statement of the problem and solutions to solve
B. What’s moving tort law?
II. Legal Doctrine/Precedents:
A. Background Trends in American Tort Law
1. Big question in tort law: Why is negligence the rule and strict liability the exception?
a) Negligence Frame: why should someone behaving reasonably be “taxed” for
his activities? “Freedom to”
b) Strict Liability Frame: why should someone behaving reasonably be taxed
because of someone else’s activities? “Freedom from”
c) Negligence is the rule because:
(1) Dominant doctrinal answer of the late 19th century - Vosburg as
exception
(2) Idea that the “general principle of our law is that loss from accident
must lie where it falls” – Justice Oliver Wendell Holmes. Fundamental
principle of American law continues to be that when unclear, that
plaintiff usually pays. Fundamentally dispositionist because it argues
that the consumer has the ability to avoid harm by her choices.
(3) Dominant ideology is state interference is evil, U.S. is generally pro-
market, classically liberal
(4) But classical liberalism cannot fully explain why negligence is
the rule. (It is not moving the tort ball).
(a) Negligence rule is really equivalent to strict liability for the
plaintiff. Strict liability rule is really equivalent to negligence for
the plaintiff. Special definitions for this type of argument:
(i) Negligence: manufacturers are liable for all accidents
that they can prevent at least cost, otherwise
consumers are liable.
(ii) Strict liability: consumers are liable for all activities that
they can prevent at least cost. Assume contributory
negligence rule.
(iii) Preoccupation with one party(usually faultless
defendants) being held liable without regard to the fact
that someone else is going to be liable (faultless
plaintiffs).
(b) NY State Law’s evolution shows that intuitions, precedent and
ideology do not determine whether to use strict liability or
negligence.
(i) Rylands v. Fletcher (1868 - England): Strict liability for
man-made water on your land going onto someone
else’s property and damaging
 (ii) Booth v. Rome (1893- NY): adopts negligence.
Subsidization hypothesis: Move from concern about
plaintiff’s quiet enjoyment to concern about defendant’s
right to develop property.
(iii) Spano v. Perini (1969 - NY): Strict liability for
defendants blasting
2. Evolution of tort law → negligence → strict liability (expansion of tort law in the 60s
and 70s) → tort reform
a) 1955 - 1975: Situationism’s Zenith
(1) Changing conceptions of law and conceptions of person
(2) Previously marginalized groups push back against stereotypes,
customs, laws. Justifications for inequality are now gone.
(3) Accustomed by products liability expansion. Exception of strict liability
expands. (See Judge Traynor’s 1944 concurrence in Escola v. Coca
Cola)
b) 1980s - Present: Counter-Revolution (Tort Reform)
(1) Markets are more efficient than regulation. Tort law is regulation.
Therefore, markets are better than tort law. Tort reform is
deregulation.
(2) Tides shifting on all dimensions of tort law
(a) Shift from strict liability back to negligence
(b) Increased deference to warranties
(c) Reduced damages
(3) Counter-revolution stems from rise of Chicago school L&E and rise of
dispositionism - limit liability b/c of concerns about freedom.
3. Is the plaintiff in a doctrinal double bind?
a) Example #1: Kerans:
(1) If intentional tort → exception from worker’s comp for intentional torts
(2) Under respondeat superior → if intentional tort, then employer not
liable.
b) Example #2: JH Hypothetical on Sexual Assault
(1) Defendant in sexual assault case is judgment proof. Say defendant
has liability insurance. Insurance excludes coverage for intentionally
caused harms. Plaintiff is double bind: on one hand, need to minimize
intentionality in order to be able to collect against defendant that
committed intentional tort. But you also want a public airing of the
grievance, or third party to say it was wrong because it was
intentional. Plaintiff is in double bind to frame this case. I want to
emphasize it was intentional. Then I’m going to frame it that takes
intentionality out of it.
B. Stare Decisis:
1. Attack the argument that common law judges are overly bound by precedent. See
Tracey v. Solesky. The court changes the standard for pitbull attacks to strict liability
 based on dealing with many pitbull cases. See Kerans v. Porter Paint for relying on
one out of jurisdiction case instead of relying on numerous in jurisdiction precedents.
2. Common law courts have the ability to change precedent, no reason in any given
case why court would not be able to expand its argument.
3. Changes in social structure have always had impact on common law. See difference
in treatment between young immigrant victim in O’Brian v. Cunard (1891) and white
girl part of wealthy family in Carlisle v. Carnival Lines (2004)
4. Judges often say they are just “following the rules,” but actually many of the “rules”
judges fall back on are created by judges (not statutes) and can be changed by
judges. See Loser’s Rules by Nancy Gertner re: standards for motion for summary
judgment in sexual discrimination claims.
C. Products Liability Liability Standards: (If products liability tort)
1. Four liability standards: (can be mutable by contract or mandatory)
a) Absolute consumer liability: all costs of product accidents born by consumers.
(1) Winterbottom: need to have privity of contract with the manufacturer
to hold manufacturer liable.
b) Negligence: manufacturer is liable if and only if accident was preventable by
manufacturer at least cost. Determined by B < PL.
(1) MacPherson v. Buick: Cardozo creates tort duty independent of privity
of contract. Plaintiff buys car from dealer, who bought car from Buick,
but plaintiff still able to hold Buick liable.
c) Strict liability: manufacturer is liable except for accidents that are preventable
by consumers at least cost.
d) Absolute manufacturer liability: all costs of product accidents born by
manufacturers.

III. Law and Economics Analysis:

A. SHIFT: The doctrine is probably not what is explaining outcome. Law and economics is now
the dominant lens through which many influential judges, researchers and politicians
analyze the law. The scientific underpinning of the tort reform movement.
B. Important L&E concepts:
1. Coase Theorem: If transaction costs are low, the rule of law will not affect the
efficient allocation of resources. Distribution will be the same regardless of how the
law resolves the dispute. Private contracts and markets will ensure no unrealized
gains to trade.
2. Pareto Efficiency: A transaction is efficient if it leaves all parties better off or at least
not worse off after transaction. Assume a transaction is pareto efficient if parties
voluntarily participate
3. Kaldor-Hicks efficient:
a) Gains from trade are greater than losses from trade
b) Under Kaldor-Hicks efficiency, an outcome is considered more efficient if a
Pareto optimal outcome can be reached by arranging sufficient compensation
from those that are made better off to those that are made worse off so that
all would end up no worse off than before.
 c) As a result, policy or trade can leave some parties worse off, but those who
benefit, benefit enough to compensate those who are made worse off.
d) Often, however, do not actually compensate those who are worse off.
e) Especially when they are third-parties suffering externality
4. Tort law as a system for inducing people to behave in socially efficient ways
5. Positive L&E: uses economic analysis to predict the effects of various legal rules
6. Normative L&E: argues legal reforms such that the end results would be more
efficient
C. Attack L&E on inputs:
1. What are the facts focused on in the L&E analysis? What facts or costs are ignored?
(May be influenced by what facts judge does not even know about).
2. For B<PL analysis, attack assumptions about size of L or P.
D. Attack L&E on framework
1. Key assumption of L&E is that property rules are preferred because they will
encourage contracting between parties. The problem with property rules is that
market transactions will occur when parties demonstrate WTP. WTP reflects ATP, so
poor are disadvantaged.
2. Willingness to pay doesn’t equal a proper valuation, so resources are distributed in a
way that is not utility-maximizing. This is ultimately the problem with property rules
that encourage transactions between parties.
3. Even if assumptions held, arbitrary to say that economic efficiency is the goal of tort
law. (Distribution!!)
a) Polinsky: In choosing criteria to evaluate legal rules, we should look primarily
to efficiency and disregard equity/distribution. See also Kaplow and Shavell,
Distributive Justice: Legal rules are not sufficiently precise or comprehensive
to further distributive justice. Concern about distribution of income should
have no bearing on choosing property or liability rule.
b) No reason why the goal of tort law should only be the maximization of wealth
(making the pie larger) without considering the distribution of wealth (how the
pie is shared).
c) Tort law and legal rules ultimately influence distribution. Ignoring distributional
consequences in itself is a choice with distributional consequences.
d) Tax and transfer system does not work. See Public choice theory in solution
section.
e) Efficiency as “easy,” distribution as “hard.”
f) Legal rules do not, cannot, should not only be based on efficiency goals.
FRCP #1: The FRCP “should be construed and administered to secure the
just, speedy, and inexpensive determination of every action and proceeding.”
g) Equality matters to us - right now a hidden competition between distribution
and efficiency that should be in the open.
4. Behavior Economists - trying to keep tools of L&E by tweaking rational actor model.
Hanson: not sufficient.
E. Attack Outputs
 1. Even if you use an L&E analysis, can arrive at a different conclusion on what creates
the most efficient situation, or what is the most efficient situation at all: how can you
say decision not to hold D liable will increase rather than decrease the size of the
pie?
2. D (corporation) easier to pass the costs on and spread the cost of the socially
efficient outcome across a wide range of customers
3. If we take seriously the possibility that efficiency is the goal of tort law, then let’s do a
serious analysis of it. Landes & Posner claim efficiency based logic runs through
cases. Hanson: analyze this with a desire to show L&E does not run through cases.
With efficiency stories, you can make virtually any outcome efficient. In Wassell v.
Adams, you can make any jury determination reasonable if you want to. There is
nothing that you cannot make rational. L&E positions itself as an objective scientific
mechanism for reaching conclusions about the law. L&E scholars assure audience
we are scientists beholden to the norms and rigors of science, not motivated by
ideology or implicit motives. At the end of the day, Indiana Harbor is an example of
efficiency analysis gone wrong - Hanson thinks that American Cyanamide should be
strictly liable even on an efficiency analysis.

IV. Mind Science Analysis:

A. Tilt paragraph: So the legal doctrine and L&E lead to multiple contrary conclusions, but
nevertheless, the judges conclude in a way that avoids imposing liability on D Why do that,
rather than not imposing liability on D?
B. Shift paragraph: Rules regarding liability reflect the society and the judge’s bias. Intro to
mind science analysis of the case.
C. Situationism v. dispositionism:
1. Dispositionism: Based on a model of human behavior that does not exist. The
dispositionist (rational actor) model argues that our preferences based on information
we receive determines our actions.
2. Situationism: Much research in the mind sciences has undermined dispositionism.
Look to mind sciences for a better understanding of the human actor.
D. Injustice dissonance
1. Injustice: “an undeserved or unfair allocation of privilege and hardship across
individualist groups.” - Hanson & Hanson
2. Injustice dissonance: discomfort from seeing salient suffering or inequalities,
because humans crave justice.
3. Options when we confront inequality
a) Implicit altruistic or egalitarian impulse
b) Find a motive to justify inegalitarian status quo
4. Lerner: People crave justice and actively work to eliminate injustice. re-enact
Milgram experiments.
a) Group 1: victim gets rewards for doing action correctly → positive view of
victim
b) Group 2: victim gets punished → negative view of victim. This is because we
need to justify to ourselves why they are getting punished. When we are
 unable to alleviate innocent suffering, we assign negative characteristics to
the victim to make them appear deserving of suffering.
5. Harmonizing: create an illusion of justice through assumptions, arguments,
stereotypes. Dissonance motivates our stereotypes.
E. Attributional Tools
1. Blame Frames: (Hanson & Hanson)
a) “Motivated attributions -- including the ultimate attribution error, the omission
bias, and system-justifying attributions -- produce a distorting frame that
allows us to perceive justice in the face of oppression, coercion and injustice.
This blame frame shields us from ugly truths, and for that reason,
perpetuates them.” - Hanson & Hanson
b) “Without knowing it, we construe our situation in a way that affirms our
behavior, thereby giving us a ‘truth’ we can handle.”
c) Blame frame narrative:
(1) We have good intentions, good dispositions, rewarded by invisible
situational force
(2) They have aberrant dispositions, punished by invisible situational
force.
d) Choice Frame: Attributes inequality to victims:
(1) Victims are victims because they choose to be in that situation.
(2) Choices reflect the fact that victim had information.
(3) Basically looking at rational actor model of the human animal where
actions based on preferences and information.
(4) When outgroup is harmed, excuses actions of powerful as determined
by market forces or autonomous individuals’ votes or choices.
e) Rational Actor Model: Undermined by Culpable Control Model - Mark Alicke
(1) The more control an actor is perceived as having over a result, the
more he or she is blamed.
(2) Shallowest of perceptions can influence how we determine whether or
not a person has control and is therefore responsible for their actions.
This is driven by our relatively unconscious spontaneous calculations
that include emotional and reactionary responses to events.
Attributions that people report (at naive level) are not really driving
people’s decisions.
(a) See O’Brien v. Cunard. O’Brien seen as having more control
than the ship owner.
(3) Reflected in juror perceptions of guilt based on physical attributes
such as sex and weight. - Schvey. When defendant was female, male
jurors were significantly more likely to determine she was guilty if she
was obese than if she was lean. (Natasha Schvey)

F. Tools used to stick to your own dispositionist analysis, to avoid cognitive dissonance.
(In other words, Attack critiques of situationism on this).
1. Naive psychology: justifications people give to their own behavior. Common sense
psychology - the psychology that comes from asking people to explain what is going
on in their brain, as if they know. Contrast with modern mind sciences: trying to
figure out what’s going on behind it.
2. Naive realism: idea that people tend to believe their understanding of reality is
neutral, reasonable and correct. I see the world in an objective manner. I assume
other reasonable people view the world in the same way that we do. If you disagree
with me, you must be biased.
a) JH: Naive realism is the common tendency of humans to reason naively: I
have an accurate view of the world: my causal beliefs are accurate. I would
change them if they weren’t accurate, because I am a reasonable person.
When we meet someone we disagree with, they do not have an accurate
view of the world or are not reasonable. Let me tell you what information I
know about the world. If other people still do not agree, solve dissonance by
concluding that other person is unreasonable, has biases.
3. Naive cynicism: (Jon Hanson and Adam Benforado): Person is so convinced that
their beliefs are correct that anyone who disagrees with them must do so because
they are motivated by some other factor like corruption. Allows people to relieve
dissonance brought on by arguments or information that challenges a person’s belief
system. The other person’s information can be safely doubted or ignored because
they were motivated by something else. Naive cynicism allows people to ignore
dissonance instead of confronting it head on. Protects fundamentally flawed
attributions by attacking the disposition of sources of those attacks.
a) JH: Dispositionism as default view of attributions continues to have sway
despite evidence that dispositionism appears to be wrong. Naive realist
process: situationists trying to impose their views, coming after your freedom,
trying to get rich.
4. “Bias blind spot”: (Emily Pronin): People have a tendency to see bias in others but
presume our own objectivity. Disagreement between people lead to perceptions of
bias, which can prevent people from talking reasonably, which can even spiral into
violence.
5. Just world hypothesis: (Lerner): Individuals have a strong subconscious need to
live in a world where people generally get what they deserve. Desire to avoid
injustice dissonance, and fear that if world is in fact unjust, you yourself could
become a victim of the injustice. Closely related to SJT.
6. Injunctification: (Aaron Kay): People have a tendency to view the status quo as the
most desirable state of affairs. This is one reason why people who suffer under a
system continue to support it.
7. System Justification Theory: (Blasi and Jost): People tend to accept the legitimacy
of the “pecking order” and to perceive existing institutions and practices as generally
reasonable and just. “People are motivated to defend, justify and rationalize the
status quo.” Stereotypes are used to justify systems, with the hope of reducing the
dissonance between our egalitarian ideals and realities. SJT has a palliative effect.
 The very group that would be least-inclined to justify the system appears to actually
be most inclined to system justify.
a) In-groups: “I am deserving. My group is deserving. We live in a system that
has wisdom and justice to reward deserving people.” Deal with injustice
dissonance by thinking of losers as lazy, unintelligent, poorly educated or
irresponsible.
b) Outgroups: Even though disadvantaged, look for rationalizations (I never did
well in school ….)
8. Omission bias: no blame for non-actors/perpetrators. When individual action is
salient, we see choice (and sometimes intent) and attribute causal responsibility
accordingly, but where individuals fail to act, the omissions tend to fade into the
surrounding situation.
9. Outcome bias: Need to find someone or something to blame if something bad
happens. Expand on this.
10. Ultimate attribution error: attributing in-group positive outcomes to disposition what
should be attributed to situation. JH: Self-affirmation/self-affirming bias. When
something good happens to me, I attribute it to disposition. When something bad
happens to me, I attribute to situation. The reverse with the out-group.
11. Fundamental attribution error: Attribute outgroups’ negative outcomes to their
disposition, not situation. JH: Tendency to attribute to disposition that should be
attributed to situation. If you see situation, then it is not the fundamental attribution
error.

G. Looking for Attributions

1. Look at how facts are portrayed. Compare with:
a) Buck v. Bell: Justice Oliver Wendell Holmes presents sterilization as
necessary because of three generations of “feeble minded” individuals.
Alternative version of facts: child doing very well in 1st grade. Mother was
victim of rape and family did not want to take responsibility for the child.
b) Indiana Harbor: Judge Posner focuses on the rather banal uses of leaked
acrylonitrile: “fibers, dyes, pharmaceutical chemicals,” also says “acrylonitirile
is one of a large number of chemicals that are hazardous in the sense of
being flammable, toxic or both.” Posner goes on to list the chemicals that are
more dangerous than acrylonitrile, in arguing that strict liability would be too
onerous. Alternative version of facts: Judge Moran: acrylonitrile is so
dangerous that any concentration of over 10 ppm in soil or ground water is
considered unsafe. Initial readings taken the ground water … indicated a
concentration of 8,000ppm.”
2. Look for the victim being portrayed as having more control than she does.
a) See O’Brien v. Cunard. Mary O’Brien portrayed as giving consent by holding
her arm out -- but what about her situation?
3. Look for defendant as having less control, or having acted within reasonable
boundaries.
 a) See O’Brien v. Cunard - physician just doing what is reasonable. Ship line
cannot be held responsible for the performance of a surgeon it hires.
Customers on boat may choose to not avail themselves of services.
4. Hints that court/society is making attributions:
a) Analyze word choice
b) Plaintiff’s background -- anything to insinuate that plaintiff should have been
more careful.
c) Facts omitted -- choices D might be making
d) Fact suggesting series of individual choices made by P
e) Judge’s language reflecting his perception of P or D as his in-group or out-
group
H. Strategies on Exam
1. Replace actors in the case with other actors. Put different identity groups in the role
of the plaintiff or defendant, then see if reasoning or analysis might change. If that’s
true, then reasoning is predicated on starting points about who the actors are, not
underlying principles of laws.
2. Look for standards that set up a foregone conclusion.
a) Judge Sweet in Pelman v. McDonalds: “If plaintiffs can allege that McDonalds
products’ intended use is to be eaten for every meal of every day, and that
McDonalds is or should be aware that eating McDonalds’ products for every
meal of every day is unreasonably dangerous, they may be able to state a
claim”
3. Change the location of where the incident occurred. For example, change the motel
in Wassell v. Adams with the Four Seasons.
4. Look for how biases must be justified through different types of authority:
customs/laws/principles/reasoning
5. Look for a “tilt”: are all biases pointing in a similar direction

I. S.L.A.P.: Predicting the Success of Attributional Stories (including L&E)

1. Simplicity: plausibility: makes complicated problem simple.
2. Legitimacy: scientific: Seems objective, removes actor from determination.
3. Affirmation: system-affirming, important for SJT, reduces dissonance
4. Power: supports the group in power.

V. Solutions/Policy Argument:
A. Give the power of motivated attributions on the ability of the tort system to reach the fair and
just outcome, what can we do?
B. Tort System
1. Opening access to the tort system:
a) Procedural changes (See Loser’s Rules by Nancy Gertner)
(1) Employers settle the best claims, and let the more frivolous claims go
to court. As a result, law and precedents decided on cases that as a
result tend to favor employers.
 (2) Furthermore, courts write decisions at the summary judgment stage
when they grant an employer’s motion for summary judgment. They
hardly write decisions when they reject motion. Creates precedent
favoring employer at summary judgment stage.
(3) Judges believe that discrimination suits are frivolous, become very
concerned about looking for false positives.
(4) List of “rules” provides blueprint for judges to grant the defendant
summary judgment or to dismiss complaint. Judges just following the
rules.
2. Changing default rules:
a) Vosburg stretch: pro-plaintiff stretch in all four dimensions of intentional torts:
(1) Liability: negligence → strict liability
(2) Consent: if you intentionally harm someone, you are liable unless you
have their express or implied consent.
(3) Damages: defendants liable for both foreseeable and unforeseeable
consequences (egg-shell skull rule).
(4) Causation: In Vosburg, use medical expert to establish causation
even if kick was not the only cause.
3. Standard v. Rule- tort doctrine’s effectiveness is always limited by how a court
chooses to interpret doctrine
a) Rules easier to apply but can lead to absurd results
b) standards may be able to take situation into account, but are more complex.
May be more likely to achieve justice.
(1) Counter: giving a judge too much discretion with standard rather than
a rule could allow judge’s system justifying/attributional bias to lead to
an unjust judgment
4. Arguments against negligence; arguments for strict liability
a) high expense of bringing a suit → D undeterred, knowing that he will not have
to bear the full cost of his risky activity (See B <PL)
b) Administrative costs of determining what the reasonable level of care is
c) Manufacturers will internalize many of costs, may be passed onto customers
in the form of higher prices
(1) Manufacturers may not target certain groups that would increase their
costs
(2) Incentives for more actual safety
(3) Might kill off industries that produce dangerous products

C. Attack on Judges and Capture: (May be better for solutions section)

1. Modern system of electing state judges for state courts (including state Supreme
Courts) has led to corporate capture of judiciary, which had been independent area
that regular people could be heard and get a fair outcome.
2. Not clear if corporate interests are helping judges of a similar mindset get elected, or
whether it is actually impacting the decision-making of judges.
 3. States where judicial elections occur and corporate $$ affects judicial elections,
plaintiffs are disadvantaged.
4. 2012 Center for American Progress:
a) From 1992 to 2010, 6 states that have seen the most judicial campaign cash,
rule in favor of big business 70% of the time
b) U.S. Chamber of Commerce able to get 21 out of its 24 preferred judicial
candidates elected from 2001 to 2003.
5. 2013 Center for American Progress:
a) Illinois Supreme Court, during 2004 election year, voted for prosecution in
69% of criminal cases, up 18% from the previous year
b) A record $28 million was spent on high court judicial elections in 2012.
6. General tendency by pro-business groups to use pedophiles and criminals (“soft on
crime”) issues to get anti-regulatory justices elected to the court.
D. Attack on Public Choice Theory
1. Small public interest groups can influence government at the expense of the public
2. WTP reflects ATP, so wealthy actors are advantaged. Other things equal, wealthy
actors will be able to capture government regulators, government regulations will
favor wealthy.

E. Attempts to undermine S.L.A.P. for attributions

1. Media
2. Educate ourselves and others on attributions
3. Reduce ability of powerful players to shape attributions

F. Arguments for Enterprise Liability (mandatory absolute manufacturer liability):

1. If a products liability case, use these to argue for tort doctrine expansion:
a) Imperfect consumer information
(1) Consumer products are more complex
(2) Manufacturers try to make customers optimistic, tend to downplay risk
so customers tend to ignore risk
b) Exploitative manufacturer market power
(1) Manufacturer has experts, lawyers, marketers and operates on a
large scale
(2) Contracts between corp. and people are contracts of adhesion:
contracts not between two parties on equal footing.
c) Relative preventability (at least cost),
(1) Preventability: Who could prevent something cost justifiably and at
least cost?
(2) Preventability: manufacturer is the best party that can absorb costs
(3) Product caused accidents generally not preventable by customers
(4) Do we include information in “least cost” determination? Economists
usually do not. But if we do, clear that corporations have information.
(See point (a) above).
d) Deterrability:
 (1) Deterrability: Who is going to be responsive to tort law incentives and
who isn’t? Who would be responsive to tort signals? Which party
needs incentives to make products safe?
(2) Consumers have other motives to deter accidents. Consumers
already have substantial incentives to prevent accidents from
occurring. “Hot Coffee case” - plaintiff has no incentive to burn
yourself with coffee. Consumers also do not bear their own decision
costs - third-parties do. Consumers externalize their decision costs on
society.
(3) Company, on other hand, has no incentive to prevent unless tort give
victim damages. Company needs financial cues to change behavior.
(4) Consumers are not deterrable. Even if consumers could prevent
something at least cost, they probably will not. Consumers lack good
information. In a strict liability regime, manufacturers have a strong
incentive to mislead consumers about risks even if consumers could
prevent them at least cost. Tendency of manufacturers to want
consumers to buy product no matter how risky is not challenged in SL
regime.
(5) If courts adopt Enterprise Liability, courts will incentivize
manufacturers to prevent harm and inform customers. (See point f)
e) Risk distribution (tort law as a form of insurance):
(1) Manufacturers better placed than consumers to spread the losses
from product caused injuries
(2) Judge Traynor in Escola v. Coca-Cola: “Those who suffer injury from
defective products are unprepared to meet its consequences. The
cost of an injury and the loss of time and health may be an
overwhelming misfortune to the person injured, and a needless one,
for the risk of injury can be insured by the manufacturer and
distributed among the public as a cost of doing business.”

f) Why is enterprise liability (Box 8) preferable than strict liability with mandatory
default rule (Box 7). Box 7 - would include contributory negligence- seems to
make sense to incentivize customers to prevent accidents. Box 8 creates
incentives for the parties that need it. JH: Changes activity levels because
prices increase, creates incentives for corporate action to limit harm done by
products.

G. Analogize to Tobacco: “The Big Exception”

1. Three waves of litigation
a) 50s, 60s, 70s: Tobacco wins
b) 80s: Tobacco wins
c) 1990s: attorney tries to hide documents that industry knew about damages
and health risks. Caught trying to dispose of old documents and evidence.
 CEOs testify by Congress that they did not know of health risks. Documents
are leaked and force industry to admit responsibility.
2. First Strategy: Reassurance, doubt, and controversy
a) Industry using public relations to cast doubt on the connection between
cigarettes and health risks
(1) Edward Bernays: develops field of public relations - the conscious and
intelligent manipulation of the habits and opinions of the masses.
(2) If people like to do things, will hold on to any doubt to believe that it’s
not the cigarette. Non-smokers also prefer that doubt cuts the other
way, that people died because they chose to do so.
(3) Produce research that casts doubt on conclusions done by
independent scientists
b) Best way to manipulate is by engineering consent, making people believe
that they are dispositionists. Use credible third parties to help influence
people’s choices.
c) Tobacco tells a story about who we are - that our identity as a person is
comprised of things we want, buy and do (smoke cigarettes).
3. Second Strategy: Choice
a) Faced with overwhelming evidence that smoking is dangerous, Big Tobacco
changes focus from people’s health to people’s choice
b) Consumer sovereignty:
(1) Frame customers as adult, autonomous person.
(2) Conceive of smoker as dispositionist actor, whose preferences are not
impacted by advertising.
(3) Corporation is a ball, serving at the whim and pleasure of the
customer. Stable preferences of customer responsible.
c) Frame regulation as a threat to government interference in free choices.
Smoking is an individual choice. The debate about smoking is really about
free choice, Big Tobacco says they are being “lynched.”
d) Since general public knows about health risks, informed consumer story is
better.
e) Does not take externalities into consideration: 1) 2nd hand smoke, insurance
prices, intra-household costs, $133 billion in direct medical care, $156 billion
in lost productivity