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A Solution to the COVID-19 Liability Problem

A Solution to the COVID-19 Liability Problem

Tuesday, 5 May, 2020 - 08:00

Whenever we’re ready to re-open COVID-closed businesses, we’ll have to resolve some important questions about how to do so safely. One of them: what kind of measures should businesses take to keep employees and customers safe, and how should business owners be held accountable if they play fast and loose with others’ health?


This debate over limiting liability has just begun, and it’s already taken a partisan turn. That’s unfortunate, because there’s a straightforward middle-ground solution available.


Republicans have called for federal legislation to render businesses immune from lawsuits; Democrats are skeptical of the whole idea. Both sides are on to something important. The risk of being sued — and having to pay outsize damages if people become sick — is real. But so is the risk that complete immunity from lawsuits would lead to lax safety standards that endanger public health.


Congress should direct the CDC to issue a specific protocol designed to keep workers and customers safe. Businesses that follow these federal rules should have a safe harbor from liability, even if some people get sick on their premises. Those who break the rules should be able to be sued for breaches that lead to infection.


This approach would follow the basic rule of tort law, which is that if you make “reasonable” efforts to avoid accidents, you shouldn’t be liable; if you don’t, you should pay the costs of damages that ensue.


At the same time, linking liability a clear federal guideline would solve the most serious problem associated with potential Covid lawsuits: uncertainty about which preventive measures would count as reasonable, creating disincentive for businesses to take the risk of reopening.


Ordinary tort liability won’t work very well here, because it relies on after-the-fact judgments by juries about what counts as reasonable precautions. The great Judge Learned Hand proposed that reasonableness should be quantified by measuring whether the cost of the burden of accident prevention (known as B) outweighs the expected value of the accident — the probability of the accident (P) multiplied by the gravity of the loss (L). That’s more predictable than a jury’s instinct. But it still relies on a business owner’s capacity to predict the probability of an accident and the magnitude of its costs. Doing so is inordinately difficult during a developing pandemic.


If business owners cannot know reliably how likely it is for employees to get infected and how costly their infections will be, then there’s no simple way for the business owners to set the correct level of prevention. Consequently, business owners might stay closed for weeks or months longer than they need to.


Yet opponents of a complete liability waiver are also correct to worry that it would create the wrong incentives for businesses, allowing them to ignore even the most basic life-saving safety measures. Most workers shouldn’t be thought of as willingly assuming the risk of infection by coming to work. Most aren’t truly free to decide whether to come back to work; they’re constrained by the threat of losing their jobs, not to mention the imperative to feed their families. And anyway, modern tort law imposes a duty of reasonable care on employers when workers come to work even under ordinary, non-pandemic conditions.


The solution in this situation is to specify the content of reasonable care — in advance. The way to do that is not state by state (as tort law typically operates) but nationally, with a single standard that will apply everywhere. That way businesses won’t have to guess what reasonable precautions are. They will know the rules. So long as they follow the rules, they will be safe from liability. If they break the rules, they will have to pay.


Congress probably shouldn’t lay out the exact prevention rules itself, since members of Congress don’t have any special expertise in viral transmission. Congress should therefore do what it typically does when it needs expert judgment to become part of a law: delegate that part of the decision to an expert agency like the CDC.


The CDC protocol would have to have some specifics for what is safe in different kinds of workplaces, from factories to restaurants to offices to construction sites.


Once in place, however, the protocols could all be made to work the same way by a congressional mandate specifying that the new federal rules preempt state tort law. Congress could also specify what the damages would be for breaking the rules. They might not have to include all the costs of sickness and death; although the damages should certainly be high enough to deter rule breaking.


You might wonder why all tort law isn’t nationalized in this way. The answer is complicated, and involves structural conflict between management and labor, plaintiffs’ attorneys and business interests. But one simplified answer is to say that there are so many different life situations where accidents can arise that it may not be practicable to create bright-line rules for all of them.


COVID-19 isn’t like that. The CDC can make rough and ready judgments about prevention standards that could be followed with clarity and confidence. This isn’t an argument for upending our tort system in general — just for meeting its most basic objectives in a crisis.


Bloomberg


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