Promoting a Fair Economy Through Civil Justice

Compensation for Victims, Accountability for Wrongdoers

The United States was founded on the ideal of a nation ruled by law, rather than by individuals wielding arbitrary power. That principle means we enjoy individual rights along with responsibilities to others. We all will inevitably suffer risk and loss at some point in our lives, but the law enables us to share protections and institutions that foster a fair economy, one that offers stability and support so we can better respond to life’s diverse challenges.

The traditional core principle of tort law – namely, that the freedom to advance one’s own interests does not include the right to indiscriminately injure others or to otherwise gratuitously deny others’ freedom and opportunity – is a cornerstone of a fair economy. This basic duty of reasonable care applies to everyone, regardless of their power or status. As individuals living in a complex society, we are inevitably subjected to risks of harm from others’ activities. While civil justice does not guarantee protection against all injury and loss, it does provide a means for holding people and businesses accountable by preventing or mitigating unreasonable harm to others.

The ideal of a nation ruled by law led the Founders to enshrine meaningful access to the civil courts for all Americans as a constitutional guarantee. This guarantee comes through the Seventh Amendment, which provides that in civil cases, “the right of a trial by jury shall be preserved.”[i] In introducing the Bill of Rights, James Madison explained the necessity of the Seventh Amendment by remarking, “Trial by jury in civil cases . . . is as essential to secure the liberty of the people as any one of the pre-existent rights of nature.”[ii] And many states followed suit with a provision in their respective constitutions that guarantees access to the courts for civil lawsuits.[iii]

The ideal of a fair economy was well stated by President Abraham Lincoln as “a fair chance in the race of life.”[iv] Lincoln meant that a fair economy is one that allows all Americans a reasonable opportunity to achieve their full potential, and our nation has been committed to this principle ever since. To be sure, reality has fallen well short of this ideal – often considerably so – as massive inequities in opportunity remain an indelible feature of our society, particularly for low-income communities, communities of color, and women. But the nation’s history also includes many examples of progress in ameliorating inequalities, even if that progress has been grudging, episodic, and frustratingly incomplete. Moreover, embedded within this shared national commitment is the principle that individuals and families should not be pushed over the edge into inescapable poverty due to circumstances of tragedy or misfortune beyond their control, including injuries caused by unreasonably dangerous products or other irresponsible corporate behavior.

When the law supports people’s pursuit of civil justice, it promotes a fair economy by ensuring that those who are harmed through no fault of their own are not forced to bear the economic costs of their injuries. Far too often, those individuals are at a significant power disadvantage relative to those who have harmed them. When they are not fairly compensated because their access to civil justice has been limited by legislation or other roadblocks, those who have been harmed must instead pay for the consequences of others’ unreasonable behavior themselves. They bear the health consequences of a company’s decision not to clean up its pollution, and the bills that go with it. They bear the burden of lost dollars and a poor credit rating, because their bank cheated them and then refused to make them whole. They suffer death and incapacity because the medical professionals on whom they relied were indifferent to the addictive nature of the drugs they marketed and prescribed them. Or they suffer profound health problems and loss of property values because a company with a facility bordering their community chose not to spend what was necessary to protect against the discharge of toxic chemicals.

In the absence of a robust civil justice enterprise, the harm caused to individuals effects a wealth transfer between the victims to those who harm them that is not only unjust but usually regressive in nature. For individuals and families struggling to make a living, put food on the table, and educate their children, the inability to recover compensation can be a body blow to economic stability and too often to economic survival.

The Wells Fargo fake accounts scandal and industrial hog farm nuisance cases illustrate the importance of compensating victims as a component of pursuing civil justice. While this function has been undermined in both cases by limited access to courts, the compensation that was achieved still helps offset some of the harms the victims suffered and thus positions them to better tackle future challenges. Likewise, the individuals harmed by the opioid epidemic and Arkema chemical plant explosion deserve compensation to ensure that they will not bear the costs of corporate wrongdoing on their own, a result that would be especially unjust for those who were already disadvantaged.

Prevention of Harm

Plaintiffs’ pursuit of civil justice further helps to promote economic fairness by creating incentives for people and corporations to prevent harm before it occurs, thereby avoiding the injuries and costs of fair compensation. Facing a credible threat of tort liability, most companies will opt to act cautiously or put safe products on the market.[v] Wells Fargo settled litigation in the wake of its fake accounts scandal with a payout of $143 million. The settlement will likely deter other banks and financial institutions from taking advantage of their customers by misusing their private information or by tricking them into paying for services they do not want or need.

In the absence of this deterrence, however, there is little to discourage those with the most power and wealth from systematically injuring others. Left unchecked, this dynamic could lead to a “race to the bottom” of increased loss and inequality. While the social safety net and other social systems might be available to pick up the pieces and repair the harms left by those who seek to profit from their irresponsible and destructive behavior toward others, that dynamic is wasteful, economically inefficient, unfair, and ultimately ineffective. Among those victims who happen to belong to historically disadvantaged groups, their ability to pursue their full potential, including by participating in and benefiting from economic opportunities, is likely to be only marginally improved, if at all.

The value of harm prevention through civil justice litigation is especially crucial when government regulation fails to serve its primary function of preventing harms to public health, safety, financial markets, and the environment. Indeed, the pursuit of civil justice can make regulation more effective. For example, discovery in civil litigation can uncover new information about the risk of products or actions that are subject to regulatory programs. Armed with this information, regulators can then make any necessary changes to strengthen or improve the protections those programs deliver.[vi]

This function was on display in civil litigation brought by residents near the DuPont chemical manufacturing plant in Parkersburg, West Virginia, who claimed that the company had fouled their drinking water. During the course of discovery in the case, the plaintiffs uncovered evidence that one of the main contaminants, PFOA, was more dangerous than DuPont had previously disclosed to federal environmental regulators. This revelation prompted the EPA to take a more protective stance on the chemical, including pressuring manufacturers to study its effects on human health more closely and to phase out its production.[vii]

The pursuit of civil justice can also serve as a partial antidote to the problem of regulatory capture, which often results in inadequate public protections. Regulatory capture occurs when the industry that is the target of a regulatory program – such as permitting requirements for hazardous waste storage or safety standards governing the design of cars – exerts undue influence over the implementation of that program such that it ends up being more attentive to the concerns of the industry than to protecting people or the environment. Motivated in part by these kinds of concerns, courts tend to treat regulations as providing the minimal level or “floor” of protections. When justice requires, these courts can hold individuals and businesses to higher standards of conduct embodied in tort claims.[viii]

In each of these ways, civil justice litigation can help protect us from harm before it occurs. The resulting protections help to promote a fair and strong economy for all Americans, but they are crucial for the most the marginalized members of our society. For example, residents of eastern North Carolina will be able to focus on pursuing greater economic opportunities if they are not forced to worry about things like missing shifts at work because of chronic health conditions stemming from nearby industrial agriculture. Residents of fenceline communities like those located closest to the Arkema chemical plant might not in the future bear so many burdens in the form of illnesses, mental anguish, and property damage if litigation following Hurricane Harvey brings them relief. And better government oversight of the pharmaceutical industry might be a lasting consequence of litigation surrounding the opioid epidemic, ensuring that in the future, sick and injured people get better faster.

These consequences underscore the need to ensure that civil justice is able to function as effectively as possible, free of undue constraints. One of the biggest challenges is restricted citizen access to the courts. Fixing this and other problems will go long way toward helping all of us, but especially those toward the bottom of socioeconomic ladder, by providing protections that serve to enhance our opportunities to thrive.

Select ChapterEntire Report (PDF)Executive SummaryIntroductionFour Case StudiesThe Opioid EpidemicIndustrialized Hog Farm NuisanceWells Fargo Fake Account ScandalFenceline Communities After Hurricane HarveyPromoting a Fair Economy Through Civil JusticeThe Ongoing Assault on Civil JusticeA Better Path ForwardConclusionEntire Report (PDF)