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SECTION TWO: INSTITUTIONAL DIFFERENCES & CONTROLS INSTITUTIONAL COMPARISONS FOR REDUCING RISK Statutes may allocate risk to (1) the market, (2) courts, (3) legislatures, or (4) agencies. Each institution has its own advantages and biases. Each also is limited by the extent to which it is controlled by other institutions, which is in large part due to history. I.
HISTORICAL BACKGROUND a.
The Traditional Framework in Constitutional Law - constitutional law before the New Deal sought to avoid redistribution and maintain autonomy, thus leaving the risk premium (and minimum health standards) as the only way to reduce risk of harm. i. Lochner v. New York, 198 U.S. 45 (1905) - 20
1. (Peckham, J.) New York passed "labor law" imposing 10 hour/day limits and providing for inspections of separate washrooms, sleep rooms, etc. Although states may protect safety, welfare, and morals of public, this law is redistributive. Since the link between workday limits and health is "shadowy," that part of law violates freedom of contract. Rest of law (inspections) okay.
2. (Harlan, J., dissenting) workers may not appreciate the risks to health from wheat flour by working beyond 60 hours/week; law is rightfully paternalistic, and burden should be on D to disprove connection to health.
3. (Holmes, J., dissenting) 14th Amendment tolerates different economic theories, not just Herbert Spencer's Social Statics. There is no pre-political market, and court should not subvert majority rule unless "fundamental principles" are violated. The Development of Administrative Law - in part because of court control, agencies were relatively weak until the New Deal; with the advent of the Administrative Procedure Act, courts resumed controlling agencies, albeit more leniently when it came to administrative procedure and statutory interpretation. i. Richard Stewart, The Reformation of American Administrative Law, 88 HARV. L. REV. 1669 (1975) - 416
APA. In 1946, Congress enacted the Administrative Procedure Act (APA) which forced agencies to conform to formal notice and comment procedure. Courts expanded standing for public interest groups to challenge rulemaking and emphasized interest group representation. ii. Notes
1. CBA. Since 1970s, presidents have required Cost Benefit Analysis with rulemaking, and both executives and legislators have distanced themselves from unpopular decisions by delegating them to agencies. Since 1990s, courts have responded by rachetting down of public interest groups' standing.
2. Legitimacy, discretion, efficiency, competence. Robert Rabin, Federal Regulation in Historical Perspective (1986): courts' principal concern with agencies before New Deal was legitimacy; after: discretion; in 1970s: efficiency; in 1980s: incompetence. Since agencies do not fit neatly into an ideological framework, revival of push toward tortlaw risk-reduction. c. Risk in the Modern United States - a problem with reducing workplace and environmental risk today is that its cause and solution is often unknown, and common law remedies may not work. i. ROBERT V. PERCIVAL, ENVIRONMENTAL REGULATION: LAW, SCIENCE, AND POLICY (2000) - 3
1. Modern risk more difficult to reduce. Early environmental problems were obvious and relatively easy to tackle. Now they are more difficult because: (1) there is an uncertainty between the mechanism of regulation and its effect; (2) a wrong decision could lead to potential catastrophe; (3) the risk is collective as opposed to concentrated; (4) there is the potential for an irreversibly bad outcome; (5) the harm may already be beyond control. ii. RACHEL L. CARSON, SILENT SPRING (1962) - 258
1. Access bias is a particularly acute phenomenon with environmental problems, since no one is harmed enough to incentivize companies to change. Root problem: introducing foreign plants and creating homogenous ecosystems. Leads to crazy diseases/insects and need for DDT. iii. David Barstow, A Trench Caves In; a Young Worker Is Dead. Is It a Crime? NEW YORK TIMES, Dec. 21, 2003 - 7
1. Patrick Walters. OSHA inspected a trench-digging company that violated safety rules, but the minor
fines did not stop Moeves Plumbing Co. from violating the rules. Patrick Walters' untrained superior disregarded the risk and Waters died. Walters' only remedy was Ohio Workers' Compensation. Moeves Plumbling illustrates several themes:
PROBLEM a. restricted choice b. insufficient knowledge c. bad choices d. externalities
general social safety net (redistributive) information provision (efficient if works) or substantive regulation (paternalist) restrict choice (paternalist) common law nuisance (efficient if works) or substantive regulation (paternalist)
General connection between remedies. The most interesting thing about this chart is the components are connected: providing information (b.) preserves worker autonomy, but it might be more efficient to impose compulsory terms into a contract (c.). If workers don't like this, then a social safety net might help (a.). And while that may be expensive, unaccounted-for externalities (d.) might justify it.
GENERAL INSTITUTIONAL STRENGTHS & LIMITS a.
Two General Accounts of Institutional Differences - courts, legislatures, and agencies all have institutional biases that shape the problems they are effective at addressing as well as the remedies they offer. i. Clayton Gillette & James Krier, Risk, Courts, and Agencies, 138 U. PA. L. REV. 1027 (1990) - 205
Access (mobilizatio n)
P must be injured and have standing, and resources to afford lawyer. Damages depend on severity of legally cognizable harm.
Depends upon entrepreneu rial politicians; access via vote may be corruptible.
Depends on complaints from individuals/inter est groups; differential access as corps. read Federal Register and individuals do not.
Ps require reasons, "the law," and judicial authority only extends to Ps in suit.
Politicians are generalists; care about votes and maybe public interest.
Experts have their own ideas about the "public" interest; have incentives to maximize agency budgets too.
Neil K. Komesar, Injuries and Institutions: Tort Reform, Tort Theory, and Beyond, 65 N.Y.U. L. REV. 23 (1990) - 221
1. Three different institutions---market solutions, the tort system, and agencies/prosecutions:
HOW REDUCES RISK consumer demand patterns imposes tort liability for harm fines or incarceration even when no harm
These institutional variables influence their relative efficacy depending on the type of problem:
POTENTIAL FOR INJURY
Car accidents. The market in this situation will not accomplish much, since while consumers might pick among different brands for safety, low risk of actual injury. Torts system will lead to active prosecution after injury, but few disincentives since ex ante probability of harm (by injurers) is low. Agencies and prosecutors could pursue broader, more defined standards to incentivize preventative behavior. SCENARIO #2
POTENTIAL FOR INJURY
Products liability. The market will again accomplish little since consumers will undervalue injuries. The torts system will create high incentives for producers to change since they have a high chance of injuring someone. Because of this high risk, agencies have a high chance of being captured.
POTENTIAL FOR INJURY
Pollution. None of the institutions are well-equipped for this problem. The public has little incentive to organize since risk/harm from injury are low. Torts would be ineffective because of low damages unless plaintiffs organize (e.g. class action). Agencies might recognize problem, but there is little incentive to enforce. The Sociology of Claiming Legal Rights - the process by which harms become disputes is sociologically variable; even though lawyers tend to view "injuries" as what may be legally remedied by a court, in fact a number of variables determine when individuals decide they've been injured and how they believe they can address their problem. i. William L. F. Felstiner, Richard Abel, & Austin Sarat, The Emergence and Transformation of Disputes: Naming, Blaming, Claiming . . ., 15 LAW & SOC'Y REV. 531 (1980-81) - 231
Naming, blaming, claiming. Not all injurious experiences turn into disputes. The process goes from (1) "naming" - deciding what counts as an injury ? (2) "blaming" - attributing the injury to the fault of another ? (3) "claiming" - asking for remedy ? (4) "disputing" when person with Perceived Injurious Experience is rejected.
2. Dynamic nature of disputes. Social position affects (1)-(3). Any reform to access should focus on these, not just turning disputes into lawsuits. Why?
Because disputes are (A) subjective (not necessarily accompanied by observable behavior), (B) unstable (feelings change, even in litigation), (C) reactive (even before litigation), (D) complicated (D may have feelings or feel bad), and (E) incomplete.
3. Not every injury is recognized by every institution. What this means is reformers should not think of disputes in static terms since (a.) parties, (b.) assigned causes of injury, (c.) scope of conflict, (d.) choice of mechanisms, (e.) objectives sought, (f.) ideology, (g.) choice of individual or collective action, (h.) definers of needs or public services, and (i.) choice of dispute institutions are all variable. Do NOT require courts, but courts often decide merits of "claiming."
4. Courts not always used to redress injuries. Example: study by Frank Sloan and Chee-Ruey Hsieh who found that malpractice claims more often brought when (A) doctors kept patients in dark, (B) patient was white, and (C) patient had high socioeconomic status. People used courts to gather information about their injury, not just get money. How Real-World Problems Become Social and Legal Problems - not all harms count as "injuries"; courts and agencies routinely decide what counts as a harm they can remedy, and access bias is a persistent problem. i. Gerald Markowitz & David Rosner, "The Street of Walking Death": Silicosis, Health, and Labor in the Tri-State Region, 1900-1950, 77 J. AM. HIS. 525 (1990) - 245
1. Silicosis case study. Silicosis was major problem in Mo./Kan./Okla. First, union organized around it and got Bureau of Mines to investigate. Company manipulated statistics by firing sick workers so BOM thought there was improvement. Union grew in 1930s and silicosis became nationally known problem, but once union died after WWII, it was not until OSHA intervened in 1970s and agreed that company should manage disease and safety, with
regulatory inspections. Lesson: silicosis consistent problem, but understood differently.
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