De Mot and Stein, ‘Allocation of Errors and the Architecture of Liability’

Our civil liability system affords numerous defenses against every single violation of the law. A successful assertion of one of the many defenses by a defendant guarantees her a victory in court. This architecture of civil liability is fundamentally incompatible with the fact that courts are not immune from errors. When a court erroneously strikes out a meritorious defense, it might still keep the defendant out of harm’s way by granting him another defense. A rightful plaintiff, for her part, must convince the court to deny each and every defense asserted by the defendant. By erroneously granting the defendant one defense out of many, the court will doom the plaintiff’s meritorious suit. Any rate of adjudicative errors — random and completely unbiased — increases the prospect of losing the case for meritorious plaintiffs while decreasing it for defendants, both rightful and opportunistic.

This profound inequality forces plaintiffs to settle suits below their expected value. Worse yet, under the current system, defendants can unilaterally reduce the suit’s expected value and extort a cheap settlement from the plaintiff through a frivolous addition of defenses.

We offer three alternative solutions to this problem: a procedural solution, a compensatory solution, and a substantive solution. Each of our proposed solutions would eradicate the defendants’ anomalous advantage. Our procedural solution would limit defendants to one line of defense against each claim asserted by the plaintiff. Our compensatory solution introduces a damage multiplier for defendants who lose the case. This multiplier increases the compensation duty for liable defendants in proportion to the number of defenses they choose to raise. Our substantive solution replaces the violation/defenses architecture by a comprehensive comparative fault regime, authorizing courts to apportion parties’ responsibility on a scale of 0% to 100%. Under this regime, each party would be free to assert and develop any number of claims about how her fault measures against her opponent’s fault. We show that this solution dominates the other two in tort and contracts cases where individuals’ entitlements and obligations are bilateral, fault-based, and monetized. For differently structured obligations and entitlements, we recommend the procedural and compensatory solutions.

De Mot, Jef and Stein, Alex, Allocation of Errors and the Architecture of Liability (September 11, 2013).

First posted 2013-09-22 08:39:43

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