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March 2006 Archives

By Walter Olson

Originally appeared in the Wall Street Journal, Dec. 24, 2005 (subscriber-only).

When government leaves us exposed to criminal violence, do we have a right to sue it for damages? The law's traditional answer (roughly speaking) has been "not unless a legislature says so"—an answer confirmed by the U.S. Supreme Court in 1989's DeShaney v. Winnebago County Department of Social Services, which arose after a county failed to protect a boy from his brutal father.

The opinion drew a famously emotive dissent ("Poor Joshua!") from the late Justice Harry Blackmun, accusing the majority of a "formalistic" distancing of itself from "natural sympathy" in refusing to recognize a right to sue. DeShaney—and this summer's related case of Castle Rock v. Gonzales—were decided on somewhat technical constitutional grounds. Yet lurking in the background is a policy question about how much deference ought to be given to the old principle of governmental or sovereign immunity.

What would life be like had Blackmun's view prevailed in DeShaney? Consider Washington state, whose courts have opened the door more widely than any other to failure-to-protect lawsuits. The result: a series of costly verdicts and settlements disrupting state budget and operations, and touching off a public uproar across party lines. Now freshman GOP Attorney General Rob McKenna is readying a bill that would roll back public liability to a level more like that prevailing elsewhere.

Many popular accounts misleadingly describe sovereign immunity as rooted in a hoary monarchical precept that "the King can do no wrong." In fact all sorts of nations have embraced the immunity principle over the centuries. It reflects in part a recognition that taxpayers too count as an innocent party, and that their representatives deserve a say regarding the measure of burdens heaped on them. As Prof. Greg Sisk of the University of St. Thomas School of Law has noted, immunity "may be appreciated as but a species of separation of powers, under which the courts defer to the elected political branches of government" on purse and policy.

Nonetheless, sovereign immunity by the 1950s was deeply unpopular in progressive legal circles, and by the 1960s and 1970s both legislatures and (more controversially) courts nationwide were revamping the old rules to make it easier to sue. More fairness, better spreading of the risks of injuries, more accountability in high places: Such were the promises.

Part of this revolution is widely accepted, namely taxpayer liability over routine mishaps analogous to those in the private sector. Nearly every state accepts liability for crashes of public delivery vehicles or slip-falls in office buildings. But most carefully limit their exposure, usually capping the damages payable and sometimes steering the cases into special courts or claims panels without juries. And most states refuse to accept liability for injuries arising from distinctively governmental ("discretionary/policy-making") functions. Most, for example, do not consent to expose themselves to suits after a doctor improvidently licensed by their medical board harms patients, or after a short-staffed inspection bureau fails to notice a hazardous condition at a regulated business.

In the mid-1970s, however, Washington state courts began giving a green light to suits that would have failed in most other places—over family violence that state social workers might have prevented, for example, and above all, over negligent supervision of parolees who commit further crimes. Payouts began to rise, from a few hundred thousand dollars a year to tens of millions today, with annual defense costs alone amounting to $15 million. (The state employs 50 defense attorneys.)

Although its high court has backtracked a bit, Attorney General McKenna says Washington is still "the most exposed state in the country." With colleague Michael Tardif, Mr. McKenna has published an analysis of public liability in the Seattle University Law Review. Among its findings: The great bulk of growth in payouts arises from novel rather than traditional areas of liability, specifically from cases involving criminal misdeeds that the state is sued for failing to prevent.

Some examples: $8.8 million paid to a woman abused by her husband, who was receiving checks from the state to take care of her; $6 million after a parolee killed a teenage girl; $4 million after a toddler was injured in a day-care facility whose license the state allegedly should have revoked. In the latest high-profile case, a paroled, first-time assault offender stole a car and fatally crashed it into the vehicle of a Tacoma woman. While the state high court in September ordered a retrial of the $22.4 million verdict, it reaffirmed the broad principle that left the state liable.

Trial lawyers say such decisions create an incentive for the state to be more careful in its handling of dodgy parolees, bad parents and other miscreants. But what does "careful" mean? Jumping in earlier to yank kids out of families? Keeping offenders locked up unless their chance of recidivism equals zero? Loading regulatory burdens onto licensed day care at the risk of encouraging the unlicensed kind?

Maybe there's some plausibility to the view that big businesses precisely adjust their behavior to reflect the expected outcomes of the litigation system. But friends and foes alike seem to agree that state agencies ignore the policy signals sent by many of the large payouts, whether because they disagree with those signals or because they view them as incoherent.

What to do? One possibility would be to adopt limits on payouts per case, as other states have done, but that would require overcoming the united opposition of trial lawyers, a key lobby in Olympia. "It's always interesting to watch a trial attorney when you say caps," former Sen. Betti Sheldon (D., Bremerton) told the Tacoma News-Tribune. "They lift right out of their chair."

Instead of caps, Attorney General McKenna favors revising the law so that the state no longer would pay for the wrongdoing of third parties unless its acts were a direct cause of the injury. Since third-party crime cases appear to dominate the docket as a financial matter, that might end the state's budgetary plight right there.

With all respect to the late Justice Blackmun: It's a good thing this experiment was confined to one state, and not imposed on all 50.

By Jonathan B. Wilson

"High Court Overturns Part of Tort Reform Law" trumpeted the Atlanta Journal Constitution the other day, when the Georgia Supreme Court struck down (PDF) one of two venue-shifting provisions enacted by the legislature in 2005 as part of a wide-ranging liability reform package. Many readers doubtless assumed—whether with dismay or pleasure, according to their predilections—that the Georgia high court had signaled an essentially ideological hostility to the whole project of tort reform, and was making use of whatever constitutional materials came to hand toward that end. After all, that has essentially been the modus operandi of high courts in a number of other states, where jurists have resorted to strained if not acrobatic readings of state constitutional language to do away with legislated limits on liability.

Georgia's situation, however, is quite different. The latest ruling should be seen not as an ideological victory for anti-tort-reform forces, but as a narrow decision driven by specific provisions in Georgia's Constitution and reflective of ill-considered drafting choices by some reform advocates.

The 2005 Tort Reform Act contains two separate venue-shifting provisions, which reached the Georgia Supreme Court in the cases of EHCA Cartersville, LLC v. Turner and Garland v. Earle, resolved together in one ruling (Feb. 13, 2006, Sears, C.J.). Both of the provisions were intended to prevent venue-shopping by plaintiffs; one survived judicial review and the other did not. The differences between the two are revealing.

In the past, some have criticized industry-specific tort reforms as a less than ideal method of reforming our litigation system. The present case could serve as an excellent example of what they are talking about. Georgia's 2005 tort reform campaign was largely a creature of the Medical Association of Georgia, a coalition of doctors and health care providers. As a result, many of the reform provisions were narrowly tailored to specific medical malpractice situations. One of the med-mal-specific provisions wasAmong them were the venue reform that failed to pass constitutional muster.

Codified at O.C.G.A. 9-10-31(c), it provides that, in a medical malpractice action, "a nonresident defendant may require that the case be transferred to a county of that defendant's residence if the tortious act upon which the medical malpractice claim is based occurred in the county of that defendant's residence."

Whether or not that Section 31(c) makes sense as a policy matter, it runs into a problem in light of Article VI, Section II, Paragraph IV of the Georgia Constitution, which provides that "[s]uits against . . . joint-tortfeasors . . . residing in different counties may be tried in either county." In the Cartersville case, a trial court had held Section 31(c) to be unconstitutional in light of that provision, and the Georgia Supreme Court agreed, reasoning that by giving one of the defendants a vested power to change venue it effectively overruled the Constitution's provisions holding open the option of venue in the county of either tortfeasor's residence.

The other venue-shifting provision in the 2005 Act, by contrast—O.C.G.A. 9-10-31.1(a)—provides that a trial court may decline to exercise jurisdiction and instead transfer a case to "a different county of proper venue within this state" if the court determines that "the interest of justice" and "the convenience of the parties" warrant that course of action. The provision sets forth seven factors for the trial court to consider in determining whether to transfer venue. The trial court in the Garland case had upheld the constitutionality of Section 31.1(a) and approved a transfer of venue over the plaintiff's objections. On appeal the plaintiff contended that Section 31.1(a) violated Georgia's constitutional venue provisions and was further unconstitutional because it was improperly applied to have retroactive effect.

In Garland, the Georgia Supreme Court upheld the statute and the trial court's conclusions, reasoning that the law was consistent with the Georgia Constitution's having vested questions of venue in the court and simply added considerations for the court's review in making such decisions. The Supreme Court also rejected the argument that the provision's retroactive effect was unconstitutional, holding that the reform was "procedural" rather than "substantive" and therefore could be given retroactive effect without offending the Constitution.

Anti-reform groups tried to make lemonade out of what was, at best, a lemon peel. Hyperbolic Allie Wall of the consumer watchdog group, Georgia Watch applauded the decision, saying "Big insurance companies were trying to convince us that the innocent plaintiffs were shopping for venue . . . But the way they wrote the law was to give insurance companies and their defense attorneys the right to shop for the most lenient, friendliest courtroom."

The local bar, however, provided a measured response and properly saw the decision as a reasoned analysis of the statute and the state constitution. Daniel S. Reinhardt of the Troutman Sanders firm represented the defendant hospitals in both cases and was quoted saying that the Court's decision on Section 31.1 upholding its retroactive effect "should help foster the goals of fairness in venue."

In a similar vein, Senate President Pro Tem Eric Johnson said that the ruling was not unexpected and that many legislators had questioned the constitutionality of the venue-shifting provisions in the debate surround the 2005 legislation.

In all, the Court's ruling was a measured ruling that hewed carefully to specific provisions of the Georgia Constitution and, not an yideological exercise in judicial activism. It also conveys a cautionary lesson for some reform advocates who might be temptedinclined to be careless about avoiding conflict with constitutional language, namely that you'd better not count on courts to rescue you from the resulting collisions. In any case, it will have at most a limited effect, as the stricken reform involved only medical malpractice cases and any defendant who might have utilized the mandatory venue-shifting provisions of Section 31(c) may still request the court to exercise its discretion under Section 31.1(a).

The more interesting constitutional questions surrounding the 2005 Tort Reform Act are yet to be decided. Among those are a constitutional challenge to the Act's attorney fee-shifting offer of judgment rule. One trial court declared that provision unconstitutional in a 2005 decision, but the parties settled the case before an appeal was taken. The local trial bar has written a generic brief that makes a constitutional challenge to the offer of judgment provisions but no other trial courts have yet made a ruling and the Court of Appeals has not yet had an opportunity to consider the argument.

Friends, in short, should relax, and foes have scant cause to jubilate. Both tort reform and the rule of law are alive and thriving in Georgia.

* * *

Jonathan B. Wilson is an attorney in Atlanta, Georgia and the author of Out of Balance: Prescriptions for Reforming the American Litigation System. He blogs at Point of Law as well as at



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.