Torts - Cases, Principles, and Institutions Fifth Edition, 2016a

Witt & Tani, TCPI 4. Negligence Standard
Notes
1. Learned Hand’s formula. The so-called Hand Formula for determining negligence rounds
out the considerations cited in the opinions from Stone v. Bolton, and it adds an additional factor:
the burden of adequate precautions. But the algebra doesn’t by itself supply all the elements
needed to make the negligence inquiry. For example, to estimate the probability of the injury’s
occurrence, we need to know something about the temporality of the Hand Formula. Is it the
probability ex ante or ex post—before or after the fact? The typical Learned Hand test adopts an
ex ante perspective, comparing the cost of a precaution with the risk of loss at the time the
decision about whether to take the precaution in question ought to have been made. Ex post, the
probability of injury is typically 100%, since we only have a torts question if there has been some
injury. (Though note that we will see an ex post version of the Hand Formula when we get to
products liability in Chapter 9.)
Another element needed to operationalize the Hand Formula is to identify the kind of
person making this ex ante analysis. An expert with perfect information will often come to a
different conclusion than a layperson about the reasonableness of a particular course of conduct.
Typically, however, the Hand Formula imposes no such obligation of perfect information.
Instead, it asks what a reasonable person in the position of the party whose conduct is under
evaluation would have thought about the likely costs and benefits in question; in other words, it
asks what values the reasonable person would have inserted into the equation.
Two additional points round out our first pass at the Learned Hand approach. The first is
to observe that in the common law’s adversary system it is the party charging negligence—often
but not always the plaintiff—who sets the agenda by identifying the precaution that the defendant
allegedly ought to have taken. Judge and jury need not comb the world for precautions that might
have been taken in any given situation. They need only consider precautions that the party
charging negligence contends ought to have been taken. The second is that the cost-benefit
calculations required by the Hand formula are social cost benefit calculations, not private ones.
The question is whether the social costs of the precaution at issue seemed at the time to a
reasonable person in the position of the relevant party greater or less than its social benefits. We
are interested in the costs and benefits to society of taking any given precaution, not merely the
costs and benefits borne or captured by the decision-maker.
So there we have it! Taking a deep breath we can say that the Learned Hand test is an ex
ante, reasonable person formula for evaluating by reference to precautions identified by the parties
the social advisability of risky conduct. Whew!
The test has been influential in part because, as Judge Richard Posner observed in one of
his early articles, it can be read to embody an economic approach to tort law:
Hand was adumbrating, perhaps unwittingly, an economic meaning of negligence.
Discounting (multiplying) the cost of an accident if it occurs by the probability of
occurrence yields a measure of the economic benefit to be anticipated from
incurring the costs necessary to prevent the accident. The cost of prevention is what
Hand meant by the burden of taking precautions against the accident. It may be the
cost of installing safety equipment or otherwise making the activity safer. . . . If the
cost of safety measures . . . exceeds the benefit in accident avoidance to be gained
164