The Tools of Government
Workbook 4
* * * * *
Tort Liability Workbook
By Peter Schuck

---

Overview

This workbook is a companion to Chapter 15 on tort liability written by Peter H. Schuck in The Tools of Government: A Guide to the New Governance, edited by Lester M. Salamon. This workbook includes original source documents, in the form of litigation documents and state and federal statutes, that illustrate the operation of tort liability as a tool of government. It is designed to help the reader better understand the process for implementing and managing a tort liability-based program or policy.

Tort liability, as a tool of government, is the liability established when persons or other entities successfully sue in court for monetary compensation (or less commonly, injunctive relief) for harm that they have suffered and that was caused by the conduct of other persons or entities. Whereas administrative regulations establish legal prohibitions or restrictions on certain actions before they occur and then impose penalties for failure to comply, tort law relies on court actions brought by injured parties to seek redress for harms that they have already suffered. Tort liability is thus an alternative governmental mechanism for preventing harm.

Because tort liability results from lawsuits that are privately initiated and administered, it is the most decentralized policy instrument of all. Tort law is a relatively non-coercive tool because it relies on the deterrent effect of prospective liability; it is relatively indirect because its force comes from litigants and their attorneys; and it is generally a very low-visibility policy tool. Tort liability, however, relies entirely on existing institutions -- the court system, the jury, and lawyers -- rather than having to create new ones.

The legislative and executive branches of government also play significant roles in the operation of this tool. They enact statutes that directly affect the jurisdiction of the court, venue, size of financial awards, time within which complaints must be filed, and other aspects of tort case procedures. The statutes also authorize certain government officers to settle some tort claims before final court action on the complaint.

The basic mechanics of operation for the tort liability tool include the following steps in a case that goes all the way to trial, verdict, and appeal:

Filing of a complaint in a court that possesses personal and subject matter jurisdiction;

Further pleadings to identify and narrow the factual and legal issues in dispute;

"Discovery" in order to acquire factual information that supports the parties' claims or defenses;

Pre-trial dispositive motions asking the court to enter judgment without the need for a trial;

Pre-trial settlement or jury selection (if there is to be a jury trial);

Submission to the jury (if there is a jury trial);

Verdict by the jury (if a jury trial) or judge (if a bench trial);

Post-trial motions and appeals;

Execution of judgment (i.e., obtaining the money that the court ordered the defendant to pay the plaintiff); and

Litigation of subsequent cases involving similar or even identical claims.

Document Listing and Description

This workbook includes excerpts from eight state or federal statutes related to the operation of the courts in tort liability cases. It also includes 17 documents related to The State of Texas v. The American Tobacco Co., et al., a suit filed in 1996 by Dan Morales, Attorney General for the State of Texas, on behalf of the State. In this tort liability case, the State sought to recover money from cigarette manufacturers for the sums that the State had paid out under its Medicaid, retirement, and other programs for tobacco-related illnesses and deaths.

The documents are grouped into various categories, as outlined below. This section of the workbook first lists the documents in a category and then briefly describes those documents. The next section is a listing of study questions that could be used to enhance learning about the various aspects of tool operations. The documents dealing with The State of Texas v. American Tobacco Co., et al. can be found online at http://www.library.ucsf.edu/tobacco/litigation/tx/tx.html. Information about United States v. Philip Morris, Inc., including copies of relevant documents, can be found at the Department of Justice's official website: http://www.usdoj.gov/civil/cases/tobacco2/.

A. Tort Liability Statutes

1. Texas Statutes 82.001-006: Products Liability

2. Texas Statutes 16.001-045: Limitations of Personal Actions

3. Texas Statutes 41.001-013: Exemplary Damages

4. Federal Statutes 28 U.S. Code 1331: Judiciary and Judicial Procedure, Jurisdiction and Venue, District Courts: Jurisdiction and Federal Statutes 28 U.S. Code 1658: Judiciary and Judicial Procedure, Procedure, General Provisions, Time Limitations

5. Federal Statutes 28 U.S. Code 2672: Judiciary and Judicial Procedure, Particular Proceedings, Tort Claims Procedure, Administrative Adjustment of Claims

6. Federal Statutes 42 U.S. Code 2651: The Public Health and Welfare, Third Party Liability for Hospital and Medical Care

7. Federal Statutes 18 U.S. Code 1961: Crimes and Criminal Procedure, Racketeer Influenced and Corrupt Organizations, Definitions and Federal Statutes, 18 U.S. Code 1962: Crimes and Criminal Procedure, Racketeer Influenced and Corrupt Organizations, Prohibited Activities

8. Federal Statutes 18 U.S. Code 1964: Crimes and Criminal Procedure, Racketeer Influenced and Corrupt Organizations, Civil Remedies

The legislative and executive branches of government may employ the tool of tort liability in the policy process. They enact or amend statutes regarding substantive and procedural matters such as jurisdiction, limits on awards, and other matters and statutes regarding government as a party to a tort liability action. In A1 Texas placed certain limitations on the consumer's right to sue for damages caused by unsafe products. A2 is a statute that establishes the amount of time within which a plaintiff is allowed to file a claim. In A3 the state statute limits the amounts that can be awarded by the court as penalty or as punishment and defines certain standards of proof. Items A4 and A5 are federal laws that give the district court jurisdiction in civil matters, set time limits on the commencement of civil actions under federal laws, and grant authority to certain government officers to settle tort cases out of court. A7 contains two statutes that prohibit any enterprise, or part thereof, from engaging in actions which constitute racketeering. The statutes in A6 and A8 were important in the Texas case against the tobacco companies.Document ListingDocument Listing"

B. Complaint

1. The State of Texas v. The American Tobacco Co., et. al (first amended complaint) (5/96)

A party who believes that another has caused her legally compensable harm may file a complaint with a court with subject matter jurisdiction (i.e., the power to adjudicate that kind of dispute) and serve the defendant with a copy. This process formally initiates the use of the tort liability tool. The complaint may, at various times, be amended to include new counts or remove previous ones. B1 is a copy of the first amended complaint filed by the State of Texas in May 1996.

C. Discovery

1. Plaintiff's Initial Disclosure (6/5/96)

2. Plaintiff's Motion to Compel Disclosure (7/3/96)

3. Plaintiff's Memorandum in Support of its Motion to Compel Disclosure (9/20/96)

4. Court Order Compelling Disclosure (11/13/96)

5. Confidentiality Order (11/13/96)

6. Plaintiff's Request for Documents to Philip Morris, Inc. (2/25/97)

7. Plaintiff's Motion to Deem Privileges Waived for Failure to Produce Privilege Logs (3/13/97)

8. Court Order Granting Plaintiff's Motion to Deem Privileges Waived for Failure to Produce Privilege Log

9. Plaintiff's Motion to Compel Disclosure of Ingredient, Formula, and Manufacturing Processes (3/13/97)

10. Court Order Compelling Disclosure of Ingredient, Formula, and Manufacturing Processes

11. Plaintiff's Motion for a Temporary Restraining Order Enjoining Defendants from Interfering with Discovery Orders (3/24/97)

12. Court Order Granting a Temporary Restraining Order Enjoining Defendants from Interfering with Discovery Orders (3/24/97)

Both parties may engage in extensive "discovery" in order to acquire factual information that they can use as evidence to support their claims or defenses. Some of the most common methods of discovery include examining documents and databases in the custody of others, deposing and physically examining witnesses, and obtaining admissions of fact. Discovery is orchestrated by the attorneys; the court is only called in to resolve disagreements. In some instances, however, court intervention becomes necessary to compel disclosure from one or more of the parties.

Document C1 is the State of Texas' initial disclosure to the defendants. C2 is Texas' motion to compel an initial disclosure from the defendant tobacco companies. C3 is Texas' memorandum in support of its motion to compel adequate disclosure from defendants.

Documents C4 and C5 are court orders compelling disclosure from defendants and mandating confidentiality amongst the parties, respectively. C6 is Texas' request for certain documents from Philip Morris, Inc. C7 and C8 are Texas' motion to deem defendants' privileges for certain documents waived for failure to produce the relevant privilege logs, and the court's order granting the motion. Likewise, C9 and C 10 are Texas' motion to compel the disclosure of ingredients, formulas, and manufacturing processes and the court's order compelling such disclosure.

C11 is Texas' motion for a temporary restraining order enjoining defendants from interfering with discovery orders. C12 is the court order granting the restraining order and preventing defendants from interfering with discovery orders.

The period of discovery addressed in these documents began in June 1996 and lasted through March 1997.

D. Dispositive Motions

1. Memorandum Opinion and Order Regarding Defendants' Motions to Dismiss (9/8/97)

After discovery, one or both parties may file a motion asking the judge to enter judgment in their favor on the theory that no genuine, material issues of fact are in dispute and the judge can therefore decide the case purely as a matter of law, without any necessity for a trial. Such motions often take the form of motions for "summary judgment" or motions for dismissal of one or more of the counts in the complaint. Document D1 is the court's memorandum opinion and order regarding defendants' motions to dismiss counts 1-3 and counts 4-17 of Texas' second amended complaint, granting the defendants' motion in part, and denying it in part.

E. Further Pleadings

1. Memorandum Opinion and Order Regarding the Issue of Bifurcation (9/29/97)

The initial complaint filed by the plaintiff(s) triggers a sequence of formal pleadings and responses by both parties designed to identify and narrow the factual and legal issues in dispute. In very complex cases, such pleadings serve to simplify, and in some instances separate, the various issues involved. The court, in furtherance of convenience, to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any claim or of any separate issue of any number of claims. Because of the complexity of The State of Texas v. American Tobacco Co., et al., the plaintiff requested that the trial be bifurcated (divided) into separate phases, each dealing with distinct issues.

Document E1 is the court's memorandum opinion and order regarding the issue of bifurcation.

F. Pre-Trial Settlement

1. The State of Texas' Settlement with Tobacco (1/16/98)

Most disputes involving tort liability are resolved informally, and approximately 95 percent of the tort cases that are filed are settled before the trial with little or no judicial involvement. The attorneys serve as third- parties through which this tool delivers its benefits to citizens. When necessary, however, the judge urges the parties to negotiate a settlement of the dispute and may even actively participate herself and/or through a special master in settlement discussions. Settlements are often comprehensive and resolve with finality all claims against all parties to an action relating to the subject matter which has been or could have been asserted by any of the parties. Document F1 is the January 1998 settlement agreement between the State of Texas and the tobacco companies and other defendants. At the time it was signed it was the largest settlement in the history of U.S. litigation.

G. Subsequent Cases

1. Initial Complaint for United States v. Philip Morris, Inc. et al. (9/22/99)

Many legal and factual issues that have been litigated must sometimes be litigated over and over again in subsequent tort cases. Even a defendant who prevails at trial is ordinarily subject to having to defend similar or even identical claims against new plaintiffs if they did not have an opportunity to be heard in the earlier case. This same principle applies when there is a pre-trial settlement: typically Document DescriptionsDocument Descriptions"settlements only affect the claims of parties to the action, and thus exclude other potential plaintiffs who did not have an opportunity to be heard. This is particularly true for the defendants in The State of Texas v. American Tobacco Co., et al. who were involved in similar lawsuits both before and during the course of this litigation, and have settled with most states.

G1 is the complaint filed against the tobacco companies by the United States Department of Justice in September 1999, thereby formally initiating another use of the tort liability tool.

Discussion Questions

1. Why might one use the tort liability tool rather than one of the other tools of public action, such as administrative regulation? In which instances do you think the tool of tort liability is superior to its alternatives? In which might it be inferior?

State and Federal Statutes

1. The legislative and executive branches exercise significant authority over some aspects of the tort liability tool. In what ways do the statutes at (A1, A2, A3, A4, A5, A6, A7, and A8) permit a broad functioning of the tort liability tool? In what ways do they limit the use of the tort liability tool?

2. Are the complaints in The State of Texas v. American Tobacco Co., et al. (B1) and United States v. Philip Morris, Inc., et al. G1 consistent with the intent of the statutes (see A1-A8)? Do you think the alleged actions of the tobacco companies are the sort of crimes that the legislature envisioned? Why or why not?

3. Review items A1, A2, and A3. For each document, classify the key provisions in terms of "who benefits." The options are the plaintiff, the defendant, and neither (i.e., the provision is neutral). What do your findings reveal about the relative influence the potential tort action parties have in the legislative process that defines some of the characteristics of this tool? Are potential plaintiffs or potential defendants more influential?

4. Compare the statutes in A7 and A8, counts 1 and 2 of the complaint (B1), and the court's decision on counts 1 and 2 (D1). Was the decision of the court consistent with the intent of the statutes? Do you agree with the decision ? Why?

5. Compare the Texas Statute on product liability (A1), counts 6-8 of the complaint (B1), and the decision of the court on those counts (D1, III B). Was the decision of the court consistent with the statutes? Do you agree with the decision? Why or why not?

The Complaint

1. The filing of a complaint with a court of jurisdiction initiates the operation of the tort liability tool. In crafting the complaint, the plaintiff must keep in mind her audience and her objectives.

a. Who were the potential readers of the The State of Texas v. American Tobacco Co., et al. complaint (B1)? How do you think the composition of the audience affected the manner in which the complaint was drafted? Do you think the tone of the document is equally effective in the district court and the "court" of public opinion?

b. Do you think that, overall, the plaintiff's complaint is an effective document? Why or why not?

3. The plaintiff's complaint is rather lengthy. Do you think that a shorter complaint, perhaps without the "Preliminary Statement" and "Factual Background" sections, would have been as effective with its different target audiences? Why or why not?

Discovery

1. Discovery is typically orchestrated by the attorneys. In some instances, however, court intervention becomes necessary to compel disclosure from one or more of the parties. As you read the discovery materials (C1, C2, C3, C4, C5, C6, C7, C8, C9, C10, C11, and C12), observe Judge Folsom and Magistrate Radford's level of involvement. In what ways does the court attempt to regulate the discovery process in Texas v. American Tobacco Co.? Do you think there is too much or too little control of discovery by the court?

2. Parties generally have the right to obtain information about any matter that is relevant to the subject matter of the lawsuit (as long as the information is admissible as evidence or is "reasonably calculated" to lead to admissible evidence). There are limitations, however, on what kind of information must be provided. For example, "privileged matters" and attorneys' "work product" are typically protected from discovery. How do the defendants use these limitations? What is the plaintiff's response? Is the State of Texas successful in overcoming these limitations? (see items C2, C3, C4, C5, C6, C7, C8, C9, C10, C11, and C12)

3. How might the Confidentiality Order (C5) work to the advantage or disadvantage of each party in court proceedings? In the "court" of public opinion?

4. A key issue in the discovery phase of the case was the disclosure of documents related to ingredients, formulas, and manufacturing processes. Review the documents in section C and summarize the actions of the state and the court in the state's effort to secure access to the documents.

5. Overall, does the discovery process facilitate the plaintiff's effective use of the tort liability tool, or does it hinder the tool's effectiveness?

Dispositive Motions

1. A party may file a motion asking the judge to enter judgment in its favor on the theory that no material facts are in dispute and the judge can therefore decide the case purely as a matter of law. In The State of Texas v. American Tobacco Co., et al., the defendants moved to dismiss various counts from the complaint. What are the justifications given by the court in D1 for the dismissal of the following claims:

a. violation of the federal and state antitrust laws

b. violation of the Texas Deceptive Trade Practices- Consumer Protection Act

c. restitution/unjust enrichment

d. public nuisance

e. negligent performance of a voluntary undertaking

Further Pleadings

1. In very complex cases, formal pleadings serve to simplify, and sometimes separate, the various issues in dispute. In The State of Texas v. American Tobacco Co. et al., the plaintiff requested that the trial be divided into separate phases, each dealing with distinct issues. Summarize the court's decision on this issue (E1). Did the ruling favor the plaintiff or the defendant? Explain your response.

2. Would a unified trial have offered any advantage to the plaintiff? Does the division of the trial into various phases strengthen the State's use of the tort liability tool? Why or why not? Pre-Trial Settlement1. More than nine out of ten suits alleging tort liability end in settlement. As you read the terms of the settlement for The State of Texas v. American Tobacco Co., et al. (F1), think about the goals of each party. How favorable are the terms to each party? Does either side get what it wants? Do both? Is the settlement between Texas and "Big Tobacco" comprehensive? Does it resolve with finality all claims against all parties to the action? What are the remaining issues, if any? (review B1 and F1)

3. How successful is Texas' use of the tort liability tool? Are there any other tools, such as administrative regulation, which would be more effective? What are the relative advantages and disadvantages of each?

Subsequent Cases

1. Many legal and factual issues that have already been litigated must sometimes be litigated over and over again in subsequent tort cases. Typically, settlements only affect the claims of parties to the action, and exclude potential plaintiffs who did not have an opportunity to be heard. In United States v. Philip Morris, Inc., et al. (G1), the federal government also seeks to recover money from cigarette manufacturers for the sums that it has paid out under various programs for tobacco-related illnesses and deaths. In what ways are the federal claims similar to those in The State of Texas v. American Tobacco Co., et al. (B1)? In what ways are they different?

2. This complaint separates its claims from those of individual smokers and the states. How does this benefit the federal government? Why is it important that the United States not tie its claims to those of previous plaintiffs?3. Is the United States' complaint a persuasive document? Why or why not? Is the case presented by the United States as strong as that put forth by Texas?

Return to The Tools of Government Introduction & Table of Contents

	LINK TO INSTITUTE FOR POLICY STUDIES
	LINK TO JOHNS HOPKINS UNIVERSITY
	© 2005 The Johns Hopkins University. Baltimore, Maryland. Center for Civil Society Studies Last updated 16May2005