The Principle of Misalignment: Duty, Damages, and the Nature of Tort Liability

Article excerpt

ESSAY CONTENTS

INTRODUCTION

I. THE ALIGNMENT OF DUTY AND DAMAGES

II. THE PRINCIPLE OF MISALIGNMENT

    A. The Problem of Irreparable Injury
    B. The Misaligned Negligence Rule, Punitive Damages, and Criminal
       Negligence Liability
    C. Misalignment and Differences in Individual Wealth

III. MISALIGNMENT AND THE NATURE OF TORT LIABILITY

    A. Allocative Efficiency
    B. Corrective Justice
    C. Misalignment and Compensation

CONCLUSION

INTRODUCTION

A point that seems to be self-evidently true can be mistaken, although these types of mistakes are often quite valuable for shedding light on something that had not been adequately recognized. A good example is provided by the tort of negligence, which is easily characterized in an apparently unobjectionable manner that turns out to be wrong. Identifying the source of that mistake reveals something important about the nature of tort liability.

Like other forms of tort liability, negligence is defined by a set of elements that must be satisfied for the legal system to enforce the liability rule against the defendant. The first element of any tort claim--duty--specifies the legal obligation owed by the dutyholder to the correlative rightholder. (1) Negligence liability is based on a duty to exercise reasonable care, the breach of which establishes the second of four elements. The duty to exercise reasonable care involves safety precautions that must be taken by the dutyholder in order to avert threatened harms faced by the rightholder. The element of duty, therefore, determines which risks or threatened harms must factor into the negligence calculus, while the standard of reasonable care determines how the dutyholder should behave in light of those risks. Anything outside the scope of the duty is not part of the dutyholder's legal obligation, and so other elements of the tort must ensure that liability is limited to only those harms that are governed by the duty. Within the tort of negligence, the element of proximate cause (element three) aligns the element of duty with the (final) element of damages, thereby limiting "[a]n actor's liability ... to those harms that result from the risks that made the actor's conduct tortious." (2) From these well-established rules of tort law, it would seem to follow that negligence liability recognizes an "alignment principle" that fully "aligns the standard of care with compensable harms," (3) the claim made by Ariel Porat that turns out to be mistaken for interesting reasons.

Tort law aligns these elements to ensure that a defendant's liability is limited to the harms encompassed by the duty. Liability cannot be predicated on harms outside of the duty, as there is no legal basis for the imposition of such liability. The elements, therefore, must be partially aligned in the sense that the duty must encompass a harm in order for it to be compensable with the damages remedy. It is a separate question whether all harms within the duty must be fully aligned with the other elements, requiring a valuation of harm in the duty to exercise reasonable care that equals the valuation of harm in the damages element. The elements would not be fully aligned, for example, if a harm that is positively valued within the duty is not otherwise compensable with the damages remedy, a formulation involving issues of compensation that are obviously distinct from the need to ensure that liability is limited to the harms encompassed by the duty.

Tort law often fully aligns the elements, but there is no principle requiring the complete alignment of elements in the negligence rule. For example, a rule of strict liability fully aligns the damages award with the valuation of harms within the duty, but only because strict liability entails a single obligation to pay compensatory damages for the harms governed by the duty. A duty formulated entirely in terms of the compensatory damages remedy necessarily values harm equally across the elements of duty and the damages remedy. …