Risk Perception and Categorical Liability

It’s an old story, but one that bears repeating again and again, this time by Discover Magazine. People don’t make decisions the way computers do. They don’t calculate risks and rewards and weigh them against each other.  They routinely think with their guts (the “affect heuristic”) and, even if they do some basic probabilities in their heads, they’ll still get them wrong:

Our hardwired gut reactions developed in a world full of hungry beasts and warring clans, where they served important functions. Letting the amygdala (part of the brain’s emotional core) take over at the first sign of danger, milliseconds before the neocortex (the thinking part of the brain) was aware a spear was headed for our chest, was probably a very useful adaptation. Even today those nano-pauses and gut responses save us from getting flattened by buses or dropping a brick on our toes. But in a world where risks are presented in parts-per-billion statistics or as clicks on a Geiger counter, our amygdala is out of its depth.

A risk-perception apparatus permanently tuned for avoiding mountain lions makes it unlikely that we will ever run screaming from a plate of fatty mac ’n’ cheese. “People are likely to react with little fear to certain types of objectively dangerous risk that evolution has not prepared them for, such as guns, hamburgers, automobiles, smoking, and unsafe sex, even when they recognize the threat at a cognitive level,” says Carnegie Mellon University researcher George Loewenstein, whose seminal 2001 paper, “Risk as Feelings,” debunked theories that decision making in the face of risk or uncertainty relies largely on reason. “Types of stimuli that people are evolutionarily prepared to fear, such as caged spiders, snakes, or heights, evoke a visceral response even when, at a cognitive level, they are recognized to be harmless,” he says. Even Charles Darwin failed to break the amygdala’s iron grip on risk perception. As an experiment, he placed his face up against the puff adder enclosure at the London Zoo and tried to keep himself from flinching when the snake struck the plate glass. He failed.

This blog gets a couple hundred hits a day, and odds are good that a couple dozen of you will die from heart disease, cancer, stroke, or a car accident, while the odds of any of you dying from a shark attack or a terrorist bombing are tiny, even lower than your odds of winning the lottery.

And yet more of you probably worry about sharks and terrorists than you do smoking or too many cheesesteaks. It’s human nature.

That’s probably not news for many of you, and it’s certainly not news for the legal community that people can be irrational. Judge Richard Posner wrote a book about risk perception and political planning for catastrophes. (Because we’re talking about Discover Magazine and catastrophes, I’d be remiss if I didn’t mention Phil Plait’s excellent Death From The Skies.)

But there’s an aspect of risk perception that doesn’t get enough attention: risk perception is part of why we need robust tort laws. I’ve mentioned the Coase Theorem several times before on this blog (e.g., discussing “tort costs”) because it’s one of the more important intellectual tools we have in the legal-economic policy toolbox. Tort liability does not, on its own, impose any cost on society, it merely determines who has to pay for damages when they occur. When we talk about what our tort laws should be like, then, we should consider which party – the injured plaintiff or the allegedly wrongdoing defendant – was in a better position to more efficiently avoid the risk of harm in the first place.

Consider a concrete example: power saws. There’s been a lot of discussion among the tort blogs over last week’s events in the (unfortunately large) world of power saw accidents; as Alan Crede relates, last week the Consumer Product Safety Commission voted to formulate new power saw rules, while the First Circuit affirmed a $1.5 million jury verdict for a worker injured by a Ryobi BTS-15 table saw, which the plaintiff alleged should have been equipped with a “SawStop” function that would have stopped the blade the moment it contacted with flesh. (More about SawStop here, and the main patent is here, though Stephen F. Gass has a heck of a lot of related patents covering the same general idea, more evidence of a broken patent system.)

I don’t mean to get into all of the details of the Ryobi verdict. George Conk rounds up the FineWoodworking coverage, and some of the impressive SawStop videos. TechDirt was critical of the case when it was filed, and Point of Law rounds up other coverage criticizing the case. Plaintiffs’ lawyers like me and Crede are obviously happier about it; on average there’s a table saw injury once every ten minutes or so, and we plaintiff’s lawyers see a lot of cases come in where someone lost a finger through no fault of their own, like if the machine jerked, the blade sped up, or the like.

Rather, I’m writing to address a particular part of Ryobi’s argument on appeal, the “categorical liability” argument. Ryobi argued, in essence:

Ryobi claims that Osorio’s suit is essentially an attempt to hold a manufacturer liable for injuries caused by its product in the absence of a conventional defect and despite the fact that a feasible safer alternative is not available, a “categorical liability” theory that courts have traditionally rejected. See, e.g., Kotler v. Am. Tobacco Co., 926 F.2d 1217, 1224-25 (1st Cir. 1990) (“The pivotal question . . . is whether, in the absence of a non-inherent defect, breach of warranty can be found based solely on a risk/utility analysis. We think this question must be answered in the negative.”), vacated, 505 U.S. 1215, aff’d on remand, 981 F.2d 7 (1st Cir. 1992).  …

The crux of Ryobi’s argument is that Osorio did not show that a feasible alternative design for an inexpensive, lightweight benchtop table saw like the BTS 15 existed. The alternative design Osorio proposed at trial, Ryobi’s argument continues, would drastically alter a saw like the BTS 15, resulting in a heavier, less portable, and more expensive product.

This “categorical liability” argument typically comes up in the context of alcohol, handguns and cigarettes. In essence, it’s an argument by the company that the product itself is so unsafe that you can’t make a safer version without making it essentially a different product.

I’ve never understood that argument — if a product is unreasonably dangerous then the maker should be held liable for the damage it causes, whether under negligence law, strict liability law, or both — and the concept of ‘risk perception’ is part of why I think it’s a bad argument anyway. Few individuals use a table saw or power saw with a thorough and rational evaluation of the risks involved. They turn it on and try to use it safely while getting the job done.

In contrast, the corporation that manufactures the saw has a detailed view of the actual risks of the saw and the behavior of its users. They, and only they, have the data to know if it’s really reasonable to sell a budget-rate table saw that would effectively double in price if a SawStop was added. Everyone (rightfully) complains about the Ford Pinto math — in which a corporation decides whether or not to do a recall of a dangerous part by comparing the cost of the recall to the cost of just settling wrongful death lawsuits — but, unfortunately, perhaps an even bigger problem is that many corporations don’t even go that far. They just keep shipping dangerous products, regardless of the potential for harm or even the cost. Anti-consumer “tort reform” further enables that callousness by precluding injured people from obtaining compensation.

Which is why we need robust tort laws, including “categorical liability.” The appellate court castigated the plaintiffs’ lawyer for letting slip at trial that the jury should “send a message” to Ryobi, but that “message” is part of the point of tort law: to ensure that responsible parties will act appropriately, and to ensure that the lowest-cost avoider — here the saw manufacturer — will recognize common dangerous in their products and react appropriately.

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