True sovereign immunity – the idea that the king can do no wrong – no longer exists for government, but the conditions under which those hurt by government action can be compensated often seem patchwork and capricious.
Consider two recent cases. In one, an appeals court ruled against a woman whose leg was amputated after she and three other people were injured when hit by a car whose driver was fleeing St Paul police. The court said that the city and the police officers involved cannot be sued by her for damages. But a day earlier, there was news of a jury award of $2.2 million to the family of a man wrongfully killed by Minneapolis police. This didn’t seem to make sense.
There were, however, important differences in the two cases. The injured woman was hit by a private individual, not a police car. Moreover, if she had simply been hit by a careless driver, she similarly would have had no recourse other than that driver’s liability coverage. Everyone would have said it was tragic, but there would have been no idea of municipal liability. And yet it seems unfair that when someone fleeing an active police chase hits an innocent party, the victim has no recourse.
Nor was there much recourse when a St. Paul Public Works crew dug into a gas line at Third Street and Maria Avenue in Dayton’s Bluff in June 1993, causing an explosion and fire that killed three, injured several others and destroyed numerous buildings. The city was liable, but the amount it had to pay was limited by a statutory cap so low that the victims each got very little from the city.
The same would have occurred in the Interstate 35W bridge collapse of 2007 if the Minnesota Legislature had not intervened with a law lifting the liability cap for that incident alone and appropriating $38.5 million to compensate 179 victims.
The upshot of all this is that the legal doctrine of sovereign immunity creates unfair outcomes. But are there feasible improvements?
What attorneys call torts, or “civil wrongful acts, whether intentional or accidental, from which injury occurs to another” are a form of what economists call “external costs.” These are costs of some economic activity of production or consumption that is not borne by either the producer or consumer of the good in question, but rather by a third party. Pollution is the classic example.
Economic theory is clear. Whenever external costs are allowed to occur, incentives are distorted and resources get wasted. To the extent an economy fails to control or remedy external costs, people have fewer of their needs and wants satisfied for a given use of economic resources.
The problem is that it costs money to control externalities, and it often requires information that is scarce and expensive. So it is not only necessary to correct for externalities, but to do so in a manner that causes less economic disruption than the external costs themselves.
One also should recognize that just as there can be cases that are unjust or economically distorting because the compensation required for externalities is too little, there are other cases where it can be too much, at least in economic terms.
These issues apply to nearly all torts, not just those done by government. And tort reform has proved to be a political as well as legal and economic quagmire in our country. So what hope is there for meaningful improvement in the subset of torts that involve government misdeeds?
Suing governments is a much smaller business than suing doctors, drug companies or manufacturers of consumer products. So constructive change may be possible because fewer people have an established stake to lose.
Certainly, the criteria or eligibility for compensation for those hurt by government misdeeds can be simplified and clarified. And there are measures beyond flat caps on liability per incident to protect the public purse.
Systems of compensation for workplace injuries may serve as a model. Workers’ compensation replaced traditional tort liability suits as a means of expediting payment for legitimate workplace injuries while lowering the administrative costs, both for those injured and for employers. Although the results in individual cases are not perfect, the overall system is an improvement over what went before.
The problems related to sovereign immunity may not have a high enough profile to motivate legislators to action. But it is an area where reaching some sort of bipartisan consensus should be easier than in the thorny issues of taxes and spending.
© 2011 Edward Lotterman
Chanarambie Consulting, Inc.