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OCR for page 111
Hazards Equity: A Perspective
on the Compensation System
DANIEL S. HOFFMAN
A natural focus for discussion of hazards equity is the system of compen-
sation under our common law that is, law created by judicial decision
rasher then legislation. Many people would accept the principles of common
law compensation as not only being ethical, logical, and reasonable, but also
as universal in application. The argument in this paper, however, is that the
traditional legal principles of compensation are simply one set of socially
responsible views applicable in most, but not all, settings.
Because of the unevenness with which those legal principles have been
applied, it is doubtful whether they are the best approach, or are suitable at
all, to major hearth and environmental problems. The traditional approaches
of the law may be particularly inappropriate where there has been a cata-
strophic public consequence that had a relatively remote chance of occur-
rence and where little, if anything, was known about cause-and-effect rela-
tionships during the formative years of the underlying hazard.
This paper discusses two of the cornerstone principles of the compensa-
tion system at common law. The two principles are (1) that foreseeability
defines duty and limits responsibility and (2) that the victim may recover
total compensation from one, any, or all of the liable parties, who, in turn,
may not obtain proportionate contribution from each other.
THE PRINCIPLE OF FORESEEABILITY
First, let us take a look at the compensation principle that foreseeability
defines duty and limits liability (Keeton and Prosser, 1984, sec. 431. One has
111
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DANIEL S. HOFFMAN
a duty to do or refrain from doing only that which foreseeably may harm the
person or property of another. Put in other words, liability should not extend
beyond the consequences that a person reasonably would expect to flow
from his or her conduct. The problem perhaps understandably lies in the
varying judicial interpretations of foreseeability. Foreseeability, after all, is
a public-policy mechanism to limit liability. Foreseeability frequently is not
an objective conclusion deduced from the facts at hand.
Mental Suffering Cases
Assume a mother looks out the window of her home and watches her
young child begin to cross the street in the cross walk with a green light in his
favor. Suddenly a drunk driver drives his automobile through the intersec-
tion at high speed and against the red light and runs over and kills the child.
Also assume that everyone concedes the mother has a nervous breakdown as
a result of witnessing the child's death.
Can the mother recover damages for her nervous breakdown from the
negligent driver? In California-yes (Dillon v. Legg); in Colorado an open
question (Towns v. Anderson); in New Hampshire no (Jelley v. La
Flame). And so the story goes from state to state. What if the mother (who
can recover damages if she witnessed the death in California) did not witness
the death, but was told about it by telephone and suffered the same nervous
breakdown? She probably could not recover in California or elsewhere.
What if the eyewitness in California was a stranger, rasher then the mother of
the victim, and also suffered a nervous breakdown? The stranger probably
could not recover in California or elsewhere (Keeton and Prosser, 1984, pp.
365-3661. What if the mother who looked out the window in Colorado and
was not allowed a recovery for her mental distress had, in fact, been in the
crosswalk with her child, but had jumped out of the way and avoided being
hit by the car that killed her child? Here, the Colorado court would allow a
recovery for her nervous breakdown on the ground that she was in the
"apparent zone of danger" (Towns v. Anderson). In each of these situations,
the court in question will rationalize its decision in the name of foreseeabil-
ity. The important point is that the court will not create a duty running from
the drunken driver to the mother in absence of a determination, albeit often
in nature of lip service, that it was foreseeable that the mother of the child-
victim would suffer as a result of the driver's conduct.
Fire and Wind Cases
The fire and wind cases are another interesting example of irreconcilable
conflict in the application of the foreseeability principle in law. New York
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HAl7~RDS EQUIP: THE COMPENSATION SYSTEM
113
has a long-standing line of cases that limit the property damage liability of a
person who negligently starts a fire to the first affected property of another
person (Ryan v. New York Central R.R. Co.; Homac v. Sun Oil Co.~. The
New York cases, which represent an attempt to place a space limitation on
liability, refer to the unknown vagaries of the wind which carries the fire.
On the other hand, Kansas has allowed property owners to recover for
damage to wheat fields where the source of the negligently started fire was
several miles away and crossed other wheat fields (Atchison, Topeka, &
Santa Fe R.R. Co. v. Stanford. And distance has been no factor in the
Oregon forest fire cases (Silver Falls Timber Co. v. Eastern & Western
Lumber Co. ). The wind was viewed as foreseeable in Kansas and Oregon.
It would appear that the predictability or the nonpredictability of the wind
in each of these cases simply was a rationalization of the foreseeability rule
to set a public policy limit on liability.
Product Liability Cases
Now let us turn to an example in the area of product liability, where the
doctrine of foreseeability is more relevant to the issues under consideration
here. What is the liability of a manufacturer for a product whose adverse
effects were beyond the body of human knowledge at the time of the use that
caused the injury at hand?
Many, if not most, commentators argue that the focus should be on the
characteristics ofthe product at the time of use, rasher then on the knowledge
and conduct of the manufacturer. These commentators urge the rejection of
the foreseeability test in the products liability setting. They argue that the
manufacturer is in a better position to bear and redistribute the burden of the
harm (Escola v. Coca-Cola Bottling Co. ofFresno).
However, most courts still apply the foreseeability test and will not allow a
recovery against the manufacturer where the harm is found to be beyond
discoverability at the time of the injury in question (Keeton and Prosser,
1984, p. 6971. The so-called cigarette-cancer cases provide one example
(Wegeman, 19664. Recovery has been denied to most elderly lung cancer
victims with long histories of cigarette smoking on the grounds that the
cause-and-effect relationship was unknown and not foreseeable in the dam-
aging and early years of the smoking habit for this group of victims. Con-
versely, the newer generations of smokers have no claim against the manu-
facturer despite the foreseeability factor, because they are on notice about
the dangers of cigarette smoking. (Of course, cases that truly involve the
element of nondiscoverability must be distinguished carefully from the
"smoking gun" cases, such as those involving asbestosis and the Dalkon
shield.)
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DANIEL 5. HOFFMAN
The CERCLA Statute and Absolute Liability
The Comprehensive Environmental Response, Compensation, and Lia-
bility Act of 1980 (CERCLA) presumably obviates the foreseeability con-
cept in cases involving inactive hazardous waste sites (42 U.S.C. 9607~.
The CERCLA approach could become a milestone in abrogation of the
foreseeability principle as the dominant factor in the creation of duties and
limitations on liability in environmental and public health cases in both
statutory and common-law settings.
THE PRINCIPLE OF JOINT AND SEVERAL LIABILITY
WITHOUT CONTRIBUTION
Let us move on to a second cornerstone principle of the injury compensa-
tion system, which has been accepted as part of the common law in most
jurisdictions. The principle is that the injury victim may sue and recover
from one, any, or all of the liable parties. He may then satisfy a judgment in
his favor from the liable parties without regard to the relative degrees of
responsibility for the harm. These liable parties, in turn, may not seek to
apportion the settlement among themselves on the basis of proportionate
responsibility in the absence of an enabling statute in the jurisdiction in
question. This is the principle of joint and several liability without contribu-
tion.
Most states have, in fact, adopted "comparative fault" statutes for use in
negligence end products liability claims. However, such statutes are far from
uniform (Keeton and Prosser, 1984, sec. 504. And most states have retained
the rule that the injured party may sue and satisfy a judgment against one,
any, or all of the liable parties even when the state has adopted a contribution
statute to aid a liable party that has paid more than its pro rata share to the
injured party.
The historical rationale for this principle has no relevance to the vast
majority of present-day injury compensation cases. The rule of joint and
several liability without contribution among liable parties arose in the con-
text of concerted and willful acts among wrongdoers at English common law
and long before the emergence of negligence and strict liability as bases for
claims. English courts took the position that the willful conspirator was not
entitled to the assistance of the court to obtain reimbursement from other
conspirators for amounts he paid to the injured party in excess of his propor-
tionate responsibility. The rule has persisted in this country despite the fact
that liable parties may neither have acted willfully nor in concert with each
other.
In an interesting and important recent development, a number of federal
judges have construed CERCLA to permit contribution among responsible
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HAZARDS EQUITY: THE COMPENS'IOI!! SYSTEM
115
parties where there is, at least, a factual basis for divisibility (State of
Colorado v. Asarco, Inc.~. Some of these courts have applied the "Gore
amendment" test as the standard of contribution (U. S. v. A & F Materials
Co., Inc. ). The Gore amendment refers to Congressman Gore's amendment
to H.R. 7020 as passed by the House of Representatives but rejected in the
final CERCLA bill. The Gore amendment includes six factors that the court
"balances" in arriving at an allocation of damages among generators, trans-
porters, and those who operate hazardous waste sites. The six factors are
(1) the degree to which the hazardous waste associated with a particular spill
or release can tee specifically tied to a given responsible party, (2) the volume
of hazardous waste in question that can be traced to a given party, (3) the
degree of toxicity of the waste that can be traced to a given party, (4) the
degree of fault that can be laid at the doorstep of a given party, (5) the degree
of active involvement of a party in the generation, transportation, treatment,
storage, and disposal of the hazardous waste in question, and (6) the degree
of cooperation of a party with federal, state, and local officials to prevent
harm to the public (U.S. Congress, 1980~.
However, even those courts that apply the concept of contribution to
CERCLA, negligence, products liability, and other common-law and statu-
tory damage cases generally allow the claimant to collect all or any part of a
judgment against any liable party. It makes no difference that the liable party
can demonstrate that its overall responsibility is limited to 1 percent or any
determined percentage of the total responsibility among all parties (Keeton
and Prosser, 1984, sec. 48; State of Colorado v. Asarco, Inc. ). Such a party
may seek contribution from other liable parties only for the amount it has
paid over and above its proportionate share (and hope that the other liable
parties are sufficiently solvent to beer their "fair shared.
MODIFYING THE APPLICATION OF COMMON LAW
PRINCIPLES
New Determinants of Duty
The foreseeability doctrine does not serve its intended purpose of defining
duty and limiting liability in a predictable and evenhanded way. The doctrine
also leads to the superficial application of the principle of foreseeability in
the face of contrary reality in many cases (as in the mental suffering and fire
and wind cases).
Above all, we can probably predict that the cause of harm will be beyond
our state of knowledge in the formative years of a given harm in countless
situations yet to unfold in the environmental and public health areas. Thus,
the lack of foreseeability of the long-range consequences of apparently
OCR for page 116
116
DANIEL S. HOFFMAN
benign conduct in the environmental and public health areas is foreseeable.
We should therefore modify the application of the principle of foreseeability
in environmental and public health cases in particular.
If foreseeability is removed as the underpinning of duty and limitation on
liability in certain kinds of cases, we still can limit responsibility in more
acceptable and realistic ways. Duty and liability can be and are limited in
many ways as expressions of public policy without resort to lip service in the
application of foreseeability as an underlying test. For example, duty often
is limited by the relationship between parties. This would be a more objec-
tive explanation of why the mother, as a member of the victim's immediate
family, could recover for her mental suffering after witnessing the death of
her child at the hands of the drunk driver, but a stranger would be precluded
from such a recovery. One could reasonably suggest that the close family
relationship between the mother and child created a duty running from the
driver to the mother, but that the lack of a relationship between a stranger and
the child justified the absence of a duty from the driver to the stranger in
terms of a claim for mental suffering.
Responsibility can be limited in other ways; for example, the passage of
time serves as a potential bar to a claim for the violation of a duty, and the
expiration of a statute of limitations can bring an end to an otherwise viable
claim. Lack of personal knowledge of certain facts and conformity to busi-
ness and professional standards may also limit duty.
The nature of the conduct in question often shapes duty. Conduct that is
intentional in a given setting may create a duty, whereas conduct that is
beyond one's control may not create a duty in the same setting. Therefore,
one is a trespasser if he deliberately enters another's property, but not if he is
shoved onto the property.
The dollar amount of liability can also be controlled without having to
push the meaning of foreseeability beyond logic and reality. This was done
in the CERCLA statute with regard to natural resources damage (although
there appears to be a need for judicial interpretation of circumstances to
which the dollar limitation applies). It is done routinely in many other
statutory schemes, such as wrongful death statutes. Dollar limitations
enhance insurability, so that a responsible party is less apt to be judgment
proof.
Mandatory Allocation of Damages
Among Responsible Parties
The principle of joint and several liability without contribution puts an
unfair burden on liable parties whose financial responsibility for their con-
duct often exceeds theirjudicially determined pro rata responsibility.
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HAZARDS EQUITY: THE COMPENS^lON SYSTEM
117
One reasonably can argue that liability to the injured party should be
allocated among responsible parties on the basis of available facts at the time
liability is determined. It may well be equitable and appropriate to determine
a percentage of overall responsibility on the basis of multiple factors as in the
Gore amendment approach under CERCLA. Foreseeability and fault,
among other considerations, would influence but not define the allocation of
damages. The extent of allocable liability of a given party would be the result
of the balancing of relevant factors among liable parties.
If the extent of the liability of a responsible party was limited through
allocation, there would be no need for one responsible patty to seek contn-
bution from other responsible parties. No one would pay more than his
allocable share of damages in the first instance.
CONCLUSION
An appropriate starting place for an equitable modernization of the Amen-
can system of compensation is to remodel the application of the principles of
foreseeability and joint and several liability. Environmental and public
health matters provide a logical starting point because of the potentially
catastrophic burden on one liable party who alone must bear the financial
responsibility for damages and may have no realistic hope for allocation of
damages among other liable parties.
REFERENCES
Atchison, Topeka, & Santa Fe R.R. Co. v. Stanford, 12 Kan. 354, IS Am. Rep. 362 (1874).
Dillon v. Legg, 441 P.2d 912 (Calif. 1968).
Escolav. Coca-ColaBottlingCo. of Fresno, 150P.2d436(Calif. 1944).
Homacv.SunOilCo., 180N.E. 172(N.Y. 1932).
Jelley v. La Flame, 238 A.2d 728 (N.H. 1968).
Keeton, W.P., and W.L. Prosser. 1984. The Law of Torts (Sth ed.). St. Paul, Minn.: West.
Ryan v. New York Central R.R. Co., 354 N.Y. 210 (1866).
Silver Falls Timber Co. v. Eastern & Western Lumber Co., 40 P.2d 703 (Ore". 1935).
State of Colorado v. Asarco, Inc., No. 83-C-2388 (solo. 1985).
Towns v. Anderson, 579 P.2d 1163 (solo. 1978).
United States v. A & FMaterials Co., Inc., 578 F. Supp. 1249, 1255-57 (Ill. 1984).
U.S. Congress, House. 1980. H.R. 7020, 96th Cong. 2d Sess. sec. 3071 (126 Cong. Rec.
26,779)
Wegman, R. A. 1966. Cigarettes and health: A legal analysis. Cornell Law Quarterly S1 :678.
Representative terms from entire chapter:
common law
