When the U.S. Supreme Court faced a novel tort law issue in 2019 in Air & Liquid Systems Corp. v. DeVries1×1. 139 S. Ct. 986 (2019). — namely, whether the manufacturer of a “bare-metal” product such as a turbine, blower, or pump has a duty to warn of dangers that arise from the later incorporation of asbestos-laden parts into the product2×2. Id. at 992. — the Justices turned to first principles from tort theory. In a 6–3 decision, Justice Brett Kavanaugh, drawing heavily from Judge Guido Calabresi’s “cheapest cost avoider” theory,3×3. See Guido Calabresi, The Costs of Accidents 155 (1970) [hereinafter Calabresi, Costs] (“[T]he search for the cheapest avoider of accident costs is the search for that activity which has most readily available a substitute activity that is substantially safer. It is a search for that degree of alteration or reduction in activities which will bring about primary accident cost reduction most cheaply.”); see also Guido Calabresi, Concerning Cause and the Law of Torts: An Essay for Harry Kalven, Jr., 43 U. Chi. L. Rev. 69, 84 (1975) (“[T]he chosen loss bearer must have better knowledge of the risks involved and of ways of avoiding them than alternate bearers; he must be in a better position to use that knowledge efficiently to choose the cheaper alternative; and finally he must be better placed to induce modifications in the behavior of others where such modification is the cheapest way to reduce the sum of accident and safety costs. The party who in practice best combines these not infrequently divergent attributes is the ‘cheapest cost avoider’ of an accident who would be held responsible for the accident costs under the market deterrence standard.”). held for the majority that the bare-metal product manufacturer did have a duty to warn, reasoning that “the product manufacturer will often be in a better position than the parts manufacturer to warn of the danger from the integrated product.”4×4. DeVries, 139 S. Ct. at 994 (citing Calabresi, Costs, supra note 3, at 311–18). Justice Kavanaugh elaborated further: The product manufacturer knows the nature of the ultimate integrated product and is typically more aware of the risks associated with that integrated product. By contrast, a parts manufacturer may be aware only that its part could conceivably be used in any number of ways in any number of products. A parts manufacturer may not always be aware that its part will be used in a way that poses a risk of danger. Id.
This type of reasoning on the part of the majority is a main target of Professors John Goldberg and Benjamin Zipursky (hereinafter GZ) in their new book, Recognizing Wrongs. Such bald instrumentalism, they argue, reflects the worst kind of “social engineering” (p. 215)5×5. The authors quote William L. Prosser, Handbook of the Law of Torts 15 (1941). on the part of judges.6×6. See also p. 208 (“[T]he wrongs recognized by tort law are, in their substance, drawn from everyday life rather than constructed de novo by judges in aid of some sort of social engineering project.”). This “bad tort theory” (p. 318) is GZ’s call to arms.
GZ might instead endorse the DeVries dissent’s view that “the traditional common law rule still makes the most sense today.”7×7. 139 S. Ct. at 997 (Gorsuch, J., dissenting). But herein lies the rub. Justice Neil Gorsuch, for the dissent, likewise built his analysis around Judge Calabresi’s cheapest-cost-avoider theory, but reasoned that the subsequent part manufacturer “is in the best position to understand and warn users about its risks; in the language of law and economics, those who make products are generally the least-cost avoiders of their risks.”8×8. Id. According to Justice Gorsuch, the duty to warn should be placed not on the bare-metal product manufacturer but instead on the subsequent parts manufacturer to “force it to internalize the full cost of any injuries caused by inadequate warnings.” Id. (citing Steven Shavell, Economic Analysis of Accident Law 17 (1987); Calabresi, Costs, supra note 3, at 135 & n.1; Italia Societa per Azioni di Navigazione v. Or. Stevedoring Co., 376 U.S. 315, 324 (1964)). Moreover, assigning liability to the bare-metal manufacturer “dilute[s] the incentive” of the product manufacturer. Id.
Thus, while the majority and dissent disagreed as to which party — the bare-metal product manufacturer or the subsequent parts manufacturer — was in fact the cheapest cost avoider, they were unanimous in using the lens of law-and-economics, incentive-driven tort theory.
The law and economics–inspired view of tort law is ascendant, not only in the legal academy but also in the decisions of influential state and federal courts, including the U.S. Supreme Court.9×9. The U.S. Supreme Court is a relevant progenitor of products liability law. See Anita Bernstein, Products Liability in the United States Supreme Court: A Venture in Memory of Gary Schwartz, 53 S.C. L. Rev. 1193, 1197–98 (2002) (“Along with the highest courts of California, New Jersey, and New York and perhaps a couple of the federal courts of appeals, the United States Supreme Court is a products liability court.”).
An apt example is provided by the New York Court of Appeals decision in Liriano v. Hobart Corp., 700 N.E.2d 303 (N.Y. 1998), where the court, reasoning in explicitly cheapest-cost-avoider terms, held that a manufacturer could be held liable even where its product had been substantially modified: “This responsibility derives from the manufacturer’s superior position to anticipate reasonable uses of its product and its obligation to design a product that is not harmful when used in that manner.” Id. at 306; see also id. at 307 (“Compared to purchasers and users of a product, a manufacturer is best placed to learn about post-sale defects or dangers discovered in use.”). So, at the outset, GZ face an uphill battle, given that their “civil recourse theory” self-consciously attempts to recalibrate tort theory as an apt description of how judges reason: “[W]e think recognizing wrongs is what courts do” (p. 257).10×10. Emphasis has been added and emphasis in original has been omitted. Aspirationally, they proclaim that “[e]xponents of the view that tort law is about wrongs, duties, and rights are not the ones who should be on the defensive” (p. 108). But, notwithstanding their protestation to the contrary, GZ adopt a fairly defensive tone throughout, recognizing (time and again) that their ideas in tort go “against the grain” (pp. 52, 68); alas, perhaps a more apt metaphor would be “against the tide.”
Should they necessarily bemoan the current state of affairs? They lament that “the lawyerly capacity to recognize wrongs has atrophied” (p. 290). But might not modern tort law theory enable judges not only to recognize wrongs, but altogether prevent them? My claim in this Review is that economic deterrence–based “cheapest cost avoider” reasoning permeates judicial decisions, especially in the realm of products liability; moreover, this is cause for celebration given its ability to handle the most urgent modern torts issues concerning the interface between tort and federal regulation and widespread societal harms.
Part I reframes Recognizing Wrongs as, first and foremost, a sustained critique of the law-and-economics, deterrence-focused view of tort law, rather than (as GZ set forth) the affirmative case for the “wrongs and redress” account of tort law. “Cheapest cost avoider” tort theory (as my chosen stand-in for instrumentalist, deterrence-based theories) plays the role of an antagonist, against which GZ construct their theory of wrongs and redress. Part II inverts the role of “cheapest cost avoider” as the protagonist of some of the most significant developments in contemporary tort law, focusing on its central role in the rise of strict products liability in tort and especially its extension to cover bystanders. Part III argues that law-and-economics, deterrence-based theory holds the most promise for judges facing two primary challenges of modern tort law: (1) containing risks at the cutting edge of the regulatory state and (2) addressing widespread harms.
* Crystal Eastman Professor of Law, New York University School of Law. I was honored to take part in a book launch/festschrift for Professors Goldberg and Zipursky at Fordham Law School on February 5, 2020. I celebrated them as generous colleagues and exemplary scholars — and herein offer what I hope is considered an even higher form of praise, namely, my sharpest critique. Thanks also to fellow panelist Professor Jed Shugerman for his comments and perspective and to Stephen Profeta (NYU 2021) for superb research assistance.