When pondering the liability shield proposed by congressional Republicans to protect businesses against Covid-related claims by their employees, I find my attention drawn to the revolt of the restaurants. Across the country, eateries are in all-but-open rebellion against new shutdown orders. Here and there, enraged restauranteurs are at the barricades, refusing to shut their doors even if ordered to do so. This may not quite be the stuff of Paris 1848 (droit au travail indeed!), but just now it’s hard to view the sector as one paralyzed by fears of litigation.
With President-elect Joe Biden insisting that a new stimulus package will be his top legislative priority and congressional leaders back at the bargaining table, the notion that business ought to enjoy some level of protection against Covid-related lawsuits by employees and customers is front and center once more. The compromise package that Democratic leaders have endorsed as the starting point for negotiations includes a restriction on such lawsuits. A number of states enacted liability limitations early in the pandemic, particularly for medical personnel. Since then, many have broadened their rules to encompass businesses generally.
But is a liability shield a good idea? Not unless it’s truly necessary.
Let’s start with the basics. The US system of tort liability rests on the notion that entities should be forced to internalize the costs of their activities rather than imposing them on others. If your widget plant can pollute the river and not pay for the pollution, you’ll overproduce widgets because others are cleaning up your mess. You’ll also make a lot more pollution because you have no incentive to do anything else.
Thus an enterprise able to escape liability for the social costs of its operations is likely to take fewer precautions. That’s true not just for the polluting factory but for any business. If employees who contract the novel coronavirus on the job can’t sue their employers, the employers will have a reduced incentive to invest in safety precautions. The result will be more infections, and a greater social cost. That, in a nutshell, is the case against a liability shield for businesses, and tends to explain why legal scholars have tended to oppose such protections.
But there’s more than a nutshell here. It’s true that in general, US law hasn’t favored broad liability protections, even when the nation was entirely mobilized for war production during the 1940s. Nevertheless, even though we know liability shields increase reckless behavior, they surround us.
Consider qualified immunity, the controversial doctrine that protects government officials from most lawsuits for violating constitutional rights. That’s a liability shield, and opponents (myself included) argue that its net effect is to increase reckless behavior.
Or consider the doctrine’s scarier and tougher big brother, sovereign immunity, the near-total liability shield for the government itself. Few are proposing that we do away with it. Yet sovereign immunity also encourages the government agencies it protects to take fewer precautions than private businesses would — as for instance when the Environmental Protection Agency, freed from concerns about cleanup costs, accidentally polluted the Animas River in Colorado in 2015.
Government also creates liability shields through legislation, as in the partial protection afforded under the Support Anti-Terrorism by Fostering Effective Technologies Act, enacted in 2002, to encourage companies to create innovative anti-terrorism technologies. More recently, the Public Readiness and Emergency Preparedness Act, adopted earlier this year, largely shields pharmaceutical companies that produce Covid-19 vaccines from lawsuits for harm the vaccines may cause. (This protection, in a variety of forms, actually stretches back to 1986. The federal insurance fund that took the place of tort claims has paid out some $4.4 billion.) Some observers have suggested that US firms might be reluctant to ship their new vaccines abroad unless similar liability protection is provided.
What all these grants of immunity have in common is the belief that the institutions they protect would not operate optimally in their absence — that is, that the benefits of the protections outweigh their costs. If this is ever true, it’s likely to be so only in the short run. For example, the argument for a shield against terrorism-related lawsuits was stronger in, say, the fall of 2001 than it would be today. Similarly, the argument for shielding businesses from Covid-related liability claims was stronger last spring than it is now.
In the early days of the pandemic, all was awash in uncertainty, and nothing is worse for business. Today, by contrast, hiring is up, not down, and near-term future declines will likely be attributable more to further lockdowns than to a fear of liability. We know much more now than we did in March about how to prevent the spread of Covid-19. And the pendency of vaccines surely reduces the employer’s risk.
I’m not unsympathetic to worries from businesses, especially small ones, that coronavirus lawsuits could knock them out. But if they’re going to have a liability shield, and, presumably, a concomitant governmental insurance program for their employees, they should accept what others who’ve been shielded have learned to live with: a regulatory regime that substitutes strictly enforced administrative rules for judicial decisions in encouraging the levels of precautions that fear of committing torts might otherwise provide.
All of which brings us back to those restauranteurs at the barricades. Whatever their concerns about lawsuits, at the moment the larger worry seems to be new restrictions on their operations. The very fact that their businesses are hanging on by their fingertips might also drive the fear of litigation: Straw, meet camel’s back.
Litigation is always a risk of running a business. Perhaps employers would have less anxiety about the prospect if the government spent less energy shutting them down than helping them stay afloat.
Bloomberg
