Cover: Assigning Responsibility Following a Catastrophe

Assigning Responsibility Following a Catastrophe

Alternatives to Relying Solely on Traditional Civil Litigation

Published Nov 28, 2017

by Nicholas M. Pace, Lloyd Dixon

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Research Questions

  1. What legal regimes have been employed as alternatives to relying exclusively on traditional civil litigation to assign responsibility for the causes of a catastrophe believed to have a human origin and to determine the types of losses that a designated responsible party must reimburse?
  2. What insights can be gleaned from historical examples of instances in which statutory substitutes for the traditional tort system have been adopted for dealing with at least some of the consequences of widespread harm?
  3. How might policymakers respond after a major adverse event should they conclude that traditional civil litigation might not be the best way to assign responsibility?

The traditional U.S. civil litigation system might not always be the most effective and efficient means for assigning responsibility following a catastrophic event and providing just compensation to large numbers of affected individuals and entities. Some have argued that an approach designed to be better suited to handle the flood of claims that arise following a major disaster is needed, one that rapidly injects resources into affected areas and minimizes the generation of substantial legal and other transaction costs while extending liability protections to certain types of industries or economic activities.

This report reviews various alternatives to relying exclusively on traditional civil litigation to assign responsibility for the causes of a catastrophe believed to have a human origin and to determine the types of losses that a designated responsible party must reimburse. It reviews examples of circumstances in which statutory substitutes for the traditional tort system have been adopted for dealing with at least some of the consequences of widespread harm, describing the approaches taken and providing assessments of how these substitute systems have operated in practice. The authors' goal is to provide a resource that policymakers can consult when planning how to respond after a major adverse event should they conclude that traditional civil litigation might not be the best way to assign responsibility. The authors do not, however, address the underlying question of whether an alternative to ordinary litigation is actually needed for any particular type of adverse event.

Key Findings

Tort Law Has a Long Shadow

  • Congress has created various alternatives to relying exclusively on traditional civil litigation to assign responsibility for certain types of catastrophes, but significant levels of litigation can arise over matters related to the underlying adverse event. Policymakers should be less concerned with building an impregnable wall against ancillary litigation than on crafting a process that serves as an attractive alternative to tort. If stakeholders perceive the new process to be unfair, less certain, or a waste of time and money, they will either look elsewhere to adjudicate their disputes or refrain from conducting the types of activities the framework was designed to support.

Any Alternative to Traditional Tort Liability Must Be Sustainable

  • Changes in the traditional legal relationship between those who bear some responsibility for a disaster and those who have to endure its consequences must be designed to be sustained in the long run. When new rules are actually put to the test following a disaster and stories circulate of families and enterprises finding themselves without full legal recourse, the pressure to radically change or repeal the framework might be irresistible. To the extent that any of the frameworks reviewed were perceived as inadequate or flawed when implemented, it is often because their designers did not fully flesh out necessary details in their haste to change the status quo or because they did not consider how the program's features would play out under real-world conditions and when involving actual, rather than just theoretical, stakeholders.

Recommendations

  • Assess how well any proposed framework would operate in the context of a truly horrific incident.
  • Incorporate realistic means for claimants to seek redress of losses that are no longer available through traditional tort remedies.
  • Make sure that the program can operate effectively the moment the disaster first unfolds.
  • Provide adequate guidance to administrators to implement a program that accurately reflects legislative intentions and expectations.
  • Highlight the framework's primary goals and purposes.
  • Make sure government commitments to follow through on program infrastructure and funding are both realistic and firm.
  • Consider the possibility that the most attractive and obvious deep pocket might no longer exist after the dust settles.
  • Anticipate a potential for strong resentment from various quarters regarding the rules for liability limitations and compensation.
  • Plan for some sort of backstop solution to deal with a mass exodus from any alternative process.
  • From the start, design any responsibility-assignment framework to withstand almost certain appellate challenge.

This project is a RAND Venture. Funding was provided by gifts from RAND supporters and income from operations. The research was conducted by the Center for Catastrophic Risk Management and Compensation within RAND Justice, Infrastructure, and Environment.

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