October 21, 2007
Third-Party Liability?
Third-Party Liability? Becker
I agree with Posner that third party liability is desirable in some cases, but that class is narrow. One appropriate case is where a firm makes a device whose only purpose is to steal satellite signals. The firm should be held liable when one of its devices is purchased and used for that illegal, and only, purpose. In addition to the obvious advantages of discouraging the production of goods that have no or few legitimate purposes, there are gains from holding a manufacturer liable rather than having to find and sue the many users of his good.
A little more complicated case is whether parents should be held responsible for the harmful acts of their teenage children. Surely, parents should be responsible for a sixteen-year old son who gets into an automobile accident while drunk at 2AM. Parents should be able to exert enough control over their teenage children to prevent them from driving at that hour while drunk. Less apparent is whether parents should be responsible for their son's actions if he gets into an accident while drunk at 8pm while driving a friend's car without his own parents knowing. The son should surely be responsible, but even parents who exercise significant and sensible discipline over their children may not be able to prevent such accidents, although of course they can punish him afterwards.
Consider now the case mainly discussed by Posner, of liability by bars for the drunk driving accidents of their patrons after leaving a bar. Accidents due to drunk driving are a very serious problem in many countries, and the United States in particular does not do enough to deter these accidents. Yet I am skeptical whether holding bars, restaurants, or party-givers responsible is the right approach. The rationale behind holding say bar owners liable is that they would then control drinking by patrons who are obviously drunk, and that this would limit the number of automobile accidents by patrons after they have left a bar.
I am dubious about this approach because of the difficulty of effectively enforcing such third-party liability. Only a small fraction of patrons of most bars both drink heavily and then drive afterwards. Waiters and other bar employees would have to keep track not only of how many drinks patrons have had, but also of how drunk they are, and whether they would be driving afterwards. I do not see how many bars could ever hope to have accurate information about all three stages involved in producing drunk drivers, especially whether patrons would be driving afterwards, particularly when they do not know their patrons well.
To be sure, if they were liable, bars might have rules that no patron may have more than I or 2 drinks, which would be the limit in most states before most drinkers would fail the usual sobriety tests. The problem with such a rule is that it does not focus on the behavior of patrons who are potential drunk drivers. It punishes patrons who want to drink more than that and have no intention of driving while under the influence. Moreover, such a rule is ineffective against patrons who go from bar to bar and only have one or two drinks at each one. It is also ineffective against patrons who drink at home first and then add a few drinks at a bar or restaurant. The same considerations apply if bars get insurance to cover these liabilities, and then raise the cost of drinking to everyone to cover the additional costs.
It could be claimed that while holding bars liable would not work perfectly, such third-party liability would cut down on the number of drunk drivers. It probably would, but would the effect be large, and how much costly and inefficient litigation would be stimulated against bars and others held liable who are not in any important way responsible for the drunk driving of persons who been at their establishments? Why not also hold friends liable who did not stop a drunk driver from drinking so much, or did not force him to take a taxi home? The ultimate question is whether the general and specific harms from imposing liability on bars to innocent patrons, friends, and others exceed the gain from cutting down drunk driving? I believe it does, especially because better approaches are available.
A far more effective way for states to deter drunk driving is to target drunk drivers more closely and punish them more severely. Posner is doubtful that people who drink heavily and become a menace to others make rational decisions. Yet Scandinavian countries have found that imposing severe punishments on drunk driving, including roadblocks to detect drunk drivers before they get into accidents, has induced heavy drinkers generally to avoid driving. When individuals in these countries go out to party, they either designate someone in their group to drive without drinking, or they take public transportation to get home. Such policies may not work as well in other countries, but certainly much more can be done in the United States to discourage drunk driving. I believe that the evidence cited by Posner on the substantial decline during the past 25 years in the fraction of fatal accidents in the United States that involve drunk drivers in a significant way is in fact due to tougher policies toward drunk drivers themselves. Still, the punishments are generally not yet tough enough.
I began thinking about third-party liability after the recent Chicago marathon race on a day that was unusually hot and humid. About 10,000 registered runners did not show up, presumably mainly because they knew how uncomfortable and possibly dangerous running on that day would be. The organizers added more water and medical facilities than usual in recognition of the toll running under such conditions would take. After about some 17 miles they also stopped the race for about 10,000 of the slowest runners. Nevertheless, several hundred runners had to be hospitalized, and many others became severely dehydrated.
I am confident that some of those who became ill will bring lawsuits against the organizers for allowing the race to proceed, and/or for not supplying enough water and medical help. This would be a kind of third party liability by the organizers for the harm done by runners to themselves. Surely, however, the runners could know as easily as organizers what the weather would be, and know better than the organizers about their physical condition, their tendency to dehydrate, and other relevant considerations. For these reasons, individuals themselves should be responsible for whether it is wise to run under these conditions. "Third-party" liability in this case would be a mistake, and in the litigation atmosphere in the US, it is likely that some of the lawsuits could result in judgments against the marathon organizers or sponsors.
Should Hosts Be Liable for Serving Liquor to Guests Who Cause Accidents While Driving under the Influence?--And Other Issues of Third-Party Liability--Posner
Some 40 percent of the roughly 40,000 fatal traffic accidents a year in the United States involve a drunk driver, but this figure is down from almost 60 percent 25 years ago, although the number of fatalities has not declined (unsurprisingly, since there are more drivers). I do not know what contribution if any "social host liability" has made to the decline. The term refers to laws (statutes or, less commonly, common-law--that is, judge-made--doctrines), now in force in a majority of states, that make an employer, a bar or restaurant or liquor store, or a purely social host, liable in tort for a guest's (employee's, customer's, etc.) injuring someone while driving under the influence of alcohol (or it might be drugs), if the host knew or should have known that the guest was drunk and would drive, yet served or continued serving him liquor. Actually, the liability of commercial establishments that sell liquor to obviously drunk patrons is nothing new; it has long been imposed by state "dram shop" laws. The extension to other hosts is novel.
Social host liability raises the interesting general question of when someone who has not inflicted an injury should be punished for having failed to prevent it. In general, such liability is not imposed. For example, it is not a tort to fail to rescue a stranger in distress even if you could do so without incurring any danger, or other significant cost, to yourself. I am not my brother's keeper. Or, as the courts say, there is no "good Samaritan" duty enforced by the law (it is different of course if one has agreed by contract to undertake a duty of rescue). One reason not to impose such liability is that it might induce potential rescuers to steer clear of any situation in which they might be punished for failing to attempt a rescue; so strong swimmers might avoid beaches at which poor swimmers congregate. In addition, adjudicating cases of third-party liability for failing to prevent an injury would often be plagued by uncertainty--who was actually in a position to attempt a rescue, what would the risk to him (or to them) have been, and how likely is it that the attempt if made would have succeeded?
These do not seem serious problems with regard to social host liability, even when the host is an individual rather than a bar. Of course, there may be tricky questions regarding whether the host should have known that the guest was drunk and would drive, but these are not much more difficult than other factual questions in tort cases. Still, it might seem superfluous to impose liability on a third party when there is a clearly liable second party (as often there will not be in a rescue case)--the drunk driver. (The victim is the first party.) If he is punished whether civilly or criminally (or both) should he cause an injury because of his drinking, why should a third party be liable too? It is only a partial answer that the injurer may be judgment proof (even if he carries liability insurance, as he may be required by law to do, his insurance may not cover the full extent of the harm that he causes), because criminal law enables severe punishment to be inflicted on judgment-proof wrongdoers. It is true that criminal punishment does not compensate the wrongdoer's victim, but people can protect themselves by first-party insurance from the financial consequences of being injured in a traffic accident. The focus of policy should be on deterrence and other means of prevention.
A possible explanation for social host liability is that the combination of tort and criminal sanctions for dangerous behavior is not thought an adequate deterrent. More than a million drivers are arrested every year for driving under the influence, and there are those 16,000 or so annual deaths in accidents involving a driver who is driving under the influence. These figures in themselves do not prove anything, because it is necessary to weigh any benefits of an activity that causes potential harms, even potential fatalities, against those costs. But there is skepticism that people who drink so heavily and uncontrollably as to become a menace to other drivers and court arrest and prosecution for drunk driving are making utility-maximizing judgments. Suppose we think they are more like children than competent adults, and agree that parents should be liable for their children's vandalism if knowing their children's propensity to vandalize they fail to take reasonable steps to control them. Then there would be a strong argument for social host liability, provided the costs are not excessive. It would be akin to accomplice liability for selling a gun to a person who one had reason to think would use it to commit a crime. One would not want in a case such as that to rely on the existence of heavy criminal penalties to deter the buyer from using the gun to commit a crime.
Another way to think about social host liability is to imagine that an off-duty policeman is at a bar and sees an obviously drunk person leave and get it into a car and start to drive off. The policeman could arrest him. In effect, social host liability makes bars and other hosts a kind of auxiliary police force, though conscripted, rather than hired, to prevent criminal activity.
Third-party liability is so common that it is hard to believe it has no economizing features. The doctrine of respondeat superior, which makes an employer liable for the torts committed by his employees in the course of their employment for him, is the most common example. It is more extreme than social host liability, because it does not depend on the employer's knowing or having reason to know that the employee was careless or irresponsible. The economic rationale is that we want the employer not only to be careful in selecting, training, and monitoring his employees, but also to consider substituting capital for labor inputs and making other adjustments that might reduce the incidence of employee torts; in other words, we want him to consider making changes in activity (his use of inputs, perhaps the scale of his production) and not just changes in his care.
All these are examples of collective punishment, a term that simply means threatening to punish those who fail to prevent a harm that cannot be as efficiently prevented directly. It is a question of fact rather than (I think) of principle whether in particular circumstances collective punishment is an efficient method of minimizing harm.