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

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Witt & Tani, TCPI 1. Introduction long drawn-out proceedings. Settlement minimizes their workload, allows them to take on additional claims, and often allows them to maximize their imputed hourly wage. Given the incentives for the parties and for the plaintiffs’ lawyers, why is it then that some parties like the Vosburgs and Putneys don’t settle? Looked at this way, the question is not why there are so few trials. The question is why there are any trials at all! Why doesn’t everyone settle? One especially influential view is that where a case proceeds to judgment, at least one of the two parties, and perhaps both, must have incorrectly estimated the likely value of the claim. In this account, which was first offered by George Priest and Benjamin Klein, trials are errors. See George Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984). Consistent with this view, some observers suggest that the trend toward settlement since the middle of the twentieth century, at least in the federal courts, has been driven by the enactment of the Federal Rules of Civil Procedure (FRCP) in 1938, which authorized pre-trial discovery and deposition procedures that allow each side to learn virtually everything about the facts of the case in advance of the trial itself. Lawyers are thus able to develop quite accurate estimates of the value of the claim—much better estimates than pre-FRCP lawyers were able to form—which in turn allow the parties to settle their cases before trial. Another view is that parties do not settle because there is something other than dollars and cents at stake in tort disputes. Parties persist, in this view, as a matter of principle. And many argue that we should encourage them to do so. In this latter view, articulated memorably by scholars like Owen Fiss and Judith Resnik, trials are not errors. They are the public forums in which we work out our social commitments and hold our ideals up for testing. See Owen Fiss, Against Settlement, 93 YALE L.J. 1073 (1984); Judith Resnik, Whither and Whether Adjudication?, 86 B.U. L. REV. 1101 (2006). Of course, if trials are intrinsically valuable as public fora, then settlement rates are startlingly high. For it appears that something about the tort system—and indeed, civil litigation generally—produces vast numbers of settlements and very few judgments. 4. The Size of the Tort System One way to glimpse the tort system in the aggregate is to look at the total amount of money passing through the American tort system each year. It is here that little cases like Vosburg connect up to the heated political controversies over tort law in the past several decades. Insurers estimate that the money transferred in the tort system amounts to more than $260 billion per year. This is a huge amount of money, comparable to the amount the United States spends annually on old age pensions in the Social Security system. Moreover, if we look at the amount of money flowing through the tort system, we can see that it has increased sharply over the past sixty years, though that growth has slowed (and by some measures has been reversed) since the middle of the 1990s. 10
Witt & Tani, TCPI 1. Introduction United States Tort Costs Year U.S. Population (millions) Adjusted Tort Costs (billions) (2010) Tort Costs as Percentage of GDP 1950 152 16 0.62% 1960 181 40 1.03% 1970 205 78 1.34% 1980 228 113 1.53% 1990 249 217 2.24% 2000 281 227 1.80% 2010 309 265 1.82% Source: Towers-Watson, 2011 Update on U.S. Tort Cost Trends, https://perma.cc/4EGK-VXBY. Tort Costs (billions) Adjusted for Inflation 300 250 200 150 100 50 0 1950 1960 1970 1980 1990 2000 2010 Source: Towers-Watson data, adjusted by the Consumer Price Index. 11
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