Wednesday, January 04, 2006

Ex post learned hand test

I think this whole issue is likely a red herring, but if it's true that there's going to be something about the ex post learned hand test, I guess we might as well get a good summary right from the herring's mouth: a Calabresi symposium comment (5 pp) summarizing New York v. Lord and the test. Check it out. (There's a short summary of it in the comments, as well; also, the entire symposium, referenced in the article, and the papers Guido mentions might be useful.)

58 N.Y.U.L. Rev. 939


Blogger Sean Strasburg said...

Ex Post Learned Hand Test (EPLHT) also called hindsight test.

EPLHT first appeared in NY v Lord: the city blew up store to form firebreak. Court saw three possible tests: taking (hold liable no matter what), fault (was it reasonable at time), and hindsight.

Of course, frequently EPLHT is useless: clearly it wasn't worth speeding ex post if you get in an accident. EPLHT applies more when it's causal link that forms a bigger part of establishing causation than but-for cause. EPLHT can generate knowledge for future buyers and sellers.

Assuming we're using fault (rather than strict liability with its "who's the better chooser" logic), can apply cost-benefit test at time of accident (applied by reasonable person) or afterwards (applied by a
societal institution). Don't forget: defendant isn't only one who can't know about a faulty product until it's too late. Plaintiff, also, is necessarily ignorant. So: who should bear costs of
unknowable-at-time-of-accident risk?

One answer to the who-should-bear-costs question is: who is more likely to take action to avoid even unknowable risks, and which party is less averse to these risks? Answer: entrepreneurs, so D should be liable. Because these costs are uninsurable, the cost of risky products to consumers will be high, but known. Innovation will only be deterred by this test if entrepreneurs can't charge high prices.

other comments in paper

Epstein says: sometimes private orderings (with privity) are efficient, sometimes ordering needs to be imposed from the outside (to protect bystanders). This is too simple, according to Coase: one could imagine situations where this is reversed (unequal knowledge between contracting parties, and easy of entering into contract with bystander).

As for the Tylenol scare, Guido doubts if manufacturers should have to go to the expense of tamper-proof packaging--simple packaging probably never failed either the LHT or the EPLHT, unless you include the emotional stress of being poisoned as a cost.

Finally, the EPLHT doesn't always work against defendants: suppose a doctor in 1960 negligently didn't take an X-ray of a patient. Now, it turns out that X-rays cause cancer, and so not having taken that X-ray lowered the plaintiff's risk. Ex ante the doctor was at fault; ex post he might have done the right thing. Hindsight works both ways.

5:21 PM  

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