Edgewater Motels: all of torts in one case
In Edgewater Motels, as you recall, a traveling salesman, working late after a night of heavy drinking, fills out his expense slips in his motel, smokes many cigarettes and throws them into the wastebasket. The motel burns down and sues the salesman's employer. The case appears in the textbook to illustrate respondeat superior, among other doctrines.
As in most tort cases, the first question to ask is whether this is the type of accident that can (or should) be prevented: whether we are considering how to make sure this never happens again, or whether we are simply debating about who is going to pay for the kind of mess that will necessarily happen sometimes in a civilized society. In either case, we will need to consider who is responsible for the accident and who could prevent such accidents in the future (or could best have prevented this one).
The relevant doctrines may determine the answers to these questions and will, in any event, help in exploring them. Indeed, one could even go straight to the doctrine - but without understanding the issues the doctrines are struggling with, it is often difficult to apply them, and even more difficult to determine which will govern in the (quite common) event that different doctrines suggest different results.
The accident seems to be one that should be prevented, but not at all costs. Presumably, for enough money, we could completely eliminate house/motel fires, but the cost seems likely to be more than is worthwhile. In some circumstances, society might be willing to ignore the price tag to prevent something that seems really terrible, but I will assume that this is not one. If you disagree, you will want to consider whether that changes the discussion at all.
Additionally, I will assume that no party behaved so badly that we should consider serious moral blame: criminalizing the act, or granting punitive damages. There is no evidence that anyone meant to cause the fire. Similarly, my assessment is that no widely shared norm of behavior in contemporary America is so offended by any party's behavior that the courts ought to slam that actor, saying that he/she/it has acted so unreasonably that we should call their behavior "willful and wanton" and blame them for the whole incident in a very strong manner. Again, if you disagree, you will need to tell a story explaining why someone has acted really badly, and then consider whether that changes the analysis.
So I proceed on the assumption that at most the various parties have been negligent: that is, not as careful as we expect a reasonable person to be under the circumstances. Moreover, I assume that society will be better off if we can develop an expectation of care that will reduce the likelihood of future fires of this sort, but that the level of care shouldn't be so high that the costs of being careful overwhelm the costs of the fires. Of course, determining the appropriate level of care that the various parties should take and determining the appropriate legal standards that will get them to that level are two different issues and must be kept separate in our minds: the law is an imperfect and blunt instrument and it is always sensible to think about unintended consequences and likely errors of judgment on the part of governmental and private, bureaucratic and individual decisionmakers.
A. Cause in fact
The available parties, each of whom share some responsibility or could have taken some action to lessen the likelihood of this fire or similar ones in the future, include at least:
- The motel or its construction company, which could have a better fire detection and extinguishing system, better ashtrays, or ban smoking. Smoke alarms radically reduce human injuries and water-based sprinkler systems nearly eliminate them; different construction methods can affect both how fast a building burns, how much damage is done, and how likely guests are to be injured. Simply having more or different ashtrays available would probably radically reduce the likelihood of patrons using the wastebasket as an ashtray.
- The fire department, which also have better fire detection and extinguishing systems or regulate smoking in motels.
- The building department, which could mandate different physical requirements via the building code.
- The cigarette companies, which could exit a dangerous business altogether or redesign cigarettes to make them less likely to cause fires. Smoking is associated with a very high proportion of house fires.
- Paper companies, which could make paper less flammable.
- Bars, which could monitor how much their customers drink.
- The salesman, who could use the ashtray or stop smoking.
- The salesman's employer, which could not send him on trips out of town, could ban smoking on the job, could reduce the stress on the job that invites smoking and similar 'self-medicating' responses.
Each of these parties, then is a cause in fact of the accident.
B. Duty and proximate cause
Duty and proximate cause are two ways of getting at the notion that some people who may have caused an accident are not morally responsible for it: this isn't the type of accident that they are obliged to think about and take precautions against. Or, alternatively, even if they are obliged, they aren't legally responsible for their failures.
1. The Agencies
The two governmental regulatory agencies, the fire and building departments, clearly are required to think about these issues and should be doing precisely the kind of cost benefit analyses that the Learned Hand formula demands. That is, they should each think about the cost of increased fire/building regulation and whether stricter (or weaker) regulations will be more or less expensive than the decreased (or increased) likelihood of property damage and injuries from fire. It may be quite difficult to do that explicitly with respect to human lives: how much money should we make people spend on sprinklers in order to reduce the number of fire deaths? But if the statistics are available, the calculation will be fairly straightforward with respect to property damage.
However, governmental agencies also need to think about process failures. The agency doesn't know, and never will know, the "best" way to prevent fires: at most, it could discover the "best" way right now. If it mandates a particular method, it may be preventing the development of a new and better one. For example, if we mandate smoke detectors and sprinklers because they are currently the best way to save lives, we eliminate any market for newer, possibly cheaper, ways of achieving the same thing. Thus, for example, imagine if a smoke detector could be put on a chip: maybe it would be much cheaper and just as effective to have every cellphone and watch have a smoke detector and save the huge costs of wiring and plumbing. But if every house is required by law to have built in smoke detectors, no one would buy the new portable ones, and indeed, since any manufacturer could see in advance how limited the market would be, they'd never even be developed.
Regulatory agencies, then, are inevitably caught between a rock and a hard place. Mandatory rules are generally backward looking and can be quite counterproductive in a dynamic economy. Moreover, rules have a life of their own, and agencies must be concerned that once promulgated, a rule may well continue to exist beyond its useful life. On the other hand, more flexible rules are often hard to enforce and therefore easy to evade, may require exercise of judgment that is impractical to demand of line employees, and may produce just as perverse incentives. And no rules at all can encourage a race to the bottom, as bad quality drives out good in a market-for-lemons version of Say's Law.
Moreover, regulatory agencies generally are quite dependent on the industry they regulate. The regulated industry generally has the best available information about the existing technologies and new ones likely to appear. The industry is likely to be the main source of political pressure on the agency: as repeat (and rich) players, it is likely to be both concerned and organized, able to make its views count in the political process in a way that unorganized consumers cannot. There is no lobbying group for future fire victims, but the lobbying group for motels and construction companies is going to be present and unhappy about most regulations that potentially decrease profits by increasing costs or making a group of consumers less happy. And, of course, agencies are often staffed by people who hope to work for the regulated industry later in their careers, giving them some incentive not to make too many enemies.
Doctrinally, another factor is also important: separation of powers. Courts and regulatory agencies work quite differently and their imperfections are quite different. Courts should hesitate to remake agencies in their own mold. Doctrinally, this is expressed in the rule of sovereign immunity. Generally, one cannot sue the regulatory agency in tort for failing to promulgate the optimum (or even a reasonable) regulatory rule. Instead, attempts to reform agency rules must go through the agency's own processes.
However, the courts can recognize one clear reality: conscientious agencies, aware of the problems of over-regulation (and confronted with the ever-present realities of under-funding, under-prosecution, lobbying by repeat players, the revolving door and capture), will often under-regulate. Generally, indeed, regulations will represent a floor of minimally acceptable behavior, but it is rare indeed that a regulatory agency would even attempt to mandate "best practices" or even "reasonable behavior."
Doctrinally, then, we have two results: the agencies generally cannot be sued in tort. Agencies do not have a duty enforceable in tort to protect particular tort victims.
On the other hand, compliance with the regulations is normally not a defense to a charge of negligence against the remaining parties: private parties have duties that go beyond mere lawabidingness.
2. The Paper, Cigarette and Bar Companies
The paper companies are likely to be excluded from any tort action based on a judgment that they have no duty to protect consumers from fires, that making paper the way it is typically made today is reasonable even if an alternative less flammable method is imaginable, or that the contribution of the paper to the accident was too fortuitous - not a proximate cause. Whether they are dismissed under "duty," "breach," or "proximate cause", the underlying reasoning should be similar: of all the various ways to reduce fires, this one doesn't seem worth pursuing. Many things can burn; wastepaper doesn't contribute to enough fires that it makes sense to change how it is made.
This is, of course, a political judgment and contestable. We do require that curtains and pajamas be made in ways that reduce their flammability, and there is no logical reason why we couldn't extend that principle, either through regulation or through torts, to paper as well. However, paper has a long history of being made in a highly flammable fashion, and courts, in particular, are likely to treat it as a background fact rather than something that is the result of a human decision to make it this way rather than another that should be evaluated and considered for reasonableness under the logic of T.J. Hooper.
A good lawyer might be able to convince a court to see paper as a cause of the fire, particularly if, for example, the lawyer were able to develop evidence of the contribution of paper to fires generally or some particularly gruesome one, or of (existing) alternative paper formulations that are less flammable. Most courts, however, will start with a strong assumption that whatever is customary is also proper - expressed doctrinally by using "reasonable" to mean "usual, ordinary" - and would quickly dismiss the paper companies.
Cigarette companies present an almost precisely identical issue, with perhaps a slightly greater chance that a court might be willing to intervene. A tremendous proportion of house fires begin with a burning cigarette. Cigarettes need not be seen as a fact of life: a court that saw them as the product of conscious design decisions could ask whether a reasonable cigarette company would make a product that burns down houses, and might, particularly if there were evidence of an alternative design less likely to continue to burn if thrown into a wastebasket, conclude that the cigarette company acted unreasonably.
Note that in any event, the issue is not empirical. The question is not whether these companies could "foresee" the events here. Of course they could. Everyone knows that paper is flammable, that cigarettes burn and that people, including cigarette smokers, are sometimes careless. The questions are, which one ought to change, and which ones are easier to get to change?
Dismissing the cigarette or paper companies from the case is, in the end, a political/legal judgment that those companies are entitled - have the right - to continue to produce products in the way they currently do, regardless of predictable misuse or dangers associated with them. Instead, they may plead with Cain that they are not their brothers' keepers - they do not owe a duty to protect potential fire victims from the effects of their products. That is someone else's problem.
On the other hand, if these companies are not dismissed out of hand, the court is then presented with an extremely difficult empirical question: how effective would changing paper or cigarettes be in reducing fire damage, and what would it cost to do it (including in costs not merely the dollars spent in developing and implementing the change, but also, for example, whether consumers would like the new cigarettes or paper as much).
The Hand Formula of Carroll Towing suggests that a court should in some rough way try to estimate the costs of those changes and compare it to the benefits and, if the costs are lower than the benefits, find that the companies did not act reasonably in making their product they way they did. On the Carroll Towing view, "reasonable" means not merely "ordinary" but also "sensible."
Strict liability for product defects reflects a similar sense, but with more humility about the competence of courts to apply the Hand Formula. Under strict liability doctrine, once the court made the preliminary determination that the cigarette or paper design was a proximate (i.e., legally significant) cause of the fire, it would simply hold the manufacturer responsible for the damage it caused. (The jury would have to allocate causation among cigarettes, paper, salesmen, motel, etc.)
Manufacturers, then, rather than courts, would be expected to apply the Hand Formula. If they concluded that paying judgments for the damage caused by their product is cheaper than changing the product, they'd simply pay the judgment (and increase the price of the product to cover the costs). As a legal matter, they'd be free to make a mess, but required to clean up after themselves. Strict liability makes no judgment about reasonableness: if the mess was made by the product, the cost of cleanup should be included in the price of the product. Consumers, not courts, will decide if the total package is reasonable.
Consumers, then, would look at the higher priced product and decide whether it was still attractive even including the costs of the damage it caused, or whether they should switch to a cheaper product (presumably cheaper in part because it causes less damage).
If either manufacturers or consumers decided that paying for accidents makes the product too expensive (that is, that the Hand Formula suggests the accident should be prevented or the process is unreasonable), they'd switch to an alternative product or process that would prevent the accidents.
Similar considerations apply to the bar. Releasing it from the suit means that bars will not monitor their customers - they will feel free to encourage them to continue drinking even beyond responsible limits. Of course, that is the same as saying that customers will have the freedom to decide for themselves how much to drink, without some officious stranger interfering.
3. The Salesman and the Motel
The salesman and the motel owe each other parallel duties: to reasonably protect the other's person and property. In my view, the key judgment to be made in this case is whether the salesman or the motel should have been more careful, which is almost the same as asking whether the salesman or the motel would be the cheapest cost avoider.
Is it more appropriate to demand that customers be careful when they smoke, or is more appropriate to demand that motels put in safety devices to protect against careless smokers? This is partly an empirical, economic question and partly a moral, political one.
Empirically, the first question is whether it is easier (cheaper) to change people's habits or to change the environment in which they act. Eliminating carelessness is impossible, but eliminating the effects of carelessness is often quite simple.
If we place legal responsibility for the fire on the salesman, we are in effect saying that the environment is fixed and he has to change or pay. I assume that human nature is unlikely to change, so this is not likely to be an extremely effective way of actually reducing the fire rate. It is hard to imagine the person who is so careless or risktaking that they are willing to risk their life in a fire, but will suddenly change their actions if they hear that they might have to pay for the fire too. However, it will have some effects at the margin: some people might actually care more about their estate than their lives and will be more careful about their cigarettes. Other people, knowing that they are unlikely to change their behavior, will change their finances, either purchasing insurance or making themselves judgment proof.
More productively, perhaps, holding the salesman liable sends a message (to whom?) that the courts (and perhaps society as a whole?) thinks that he did something wrong. This might have some impact on the general social image of smoking and thus increase the likelihood of youngsters seeing smoking as gross and anti-social rather than cool and anti-social. Or maybe it'll just make people who oppose smoking feel better, knowing that the smokers got theirs.
Doctrinally, to hold the smoker liable is not difficult. The court must take hotels without sprinklers or smoke detectors as a fact of life, which reasonable smokers will adapt to: the reasonable smoker has a duty to investigate the smoke detection system, to use more care than this one did in choosing ashtrays, and so on. All this is clearly correct - if people were more careful, fewer accidents would happen, and being careful always seems like a cheap and easy solution (especially after the fact). The problem is, rather, that it is ineffective in accomplishing any social goal other than expressing anger: people are careless and tort law will never change that.
Conversely, holding the motel liable means that as a legal matter, hotels will be responsible for preventing hotel fires or paying for them if they do not.
Leaving aside doctrine for the moment, this seems to me to be the correct answer: the owner of the building controls the most factors that contribute to fires and is most able to create an environment in which people, acting as people are wont to do, will not get hurt. If motels are legally responsible for fires, the incentives will likely reduce the number of fires and the resulting injuries. First, if the motel bears the cost of fire, it will be able to see the benefits of fire prevention. Rather than suing smokers, it will pay for alarms and sprinklers. Second, most motel owners will decide to insure: insolvency is a less attractive solution than it is for ordinary workers (50% of the population has a net worth of approximately zero, but it is hard to own a motel without some assets). Since insurance costs will be based on the insurance company's assessment of the risk of the motel burning down, insured motel owners will continue to have an incentive to install (cost-effective) safety measures. And to the extent that paying for the damage of fires is cheaper (for insurance companies) than paying for prevention (by reducing premiums to owners who install preventive equipment), insurance will ensure that the cost of fires is spread among all those at risk, not borne by unlucky individuals.
Doctrinally, in a lawsuit (or cross-claim) against the motel, this would be expressed as a judgment that the fire's damage was proximately caused by a lack of appropriate fire detection and extinguishing equipment. Careless smokers or other things that cause fires would be seen as an unavoidable or at least foreseeable fact of life, and the reasonable landlord would be held to have a duty to plan appropriately.
Alternatively, (in a case, like this one, against the smoker) it could be expressed negatively, as a judgment that the smoker did nothing unreasonable: he acted as smokers do (or as smokers are entitled to do), and should not be held liable for the results.
In a comparative negligence case, of course, these two judgments need not be mutually exclusive: a jury could decide that motels should have fire prevention equipment and that smokers should use ashtrays, and split the damages between them.
4. The Salesman's Employer
The doctrine of respondeat superior holds that if the salesman is liable, and if he committed the tort in the course of his employment, his employer is also liable to the same extent. A plaintiff may choose to sue either the employee or the employer or both and may collect from either or both (but not more than the total amount of damages). Under ordinary agency rules, the employer may cross-claim against the employee to recover any damages the employer pays as a result of the employee's negligence or other wrongdoing.
Respondeat superior is best understood as a doctrine about the existence of organizations: organizations act by their members' acting. When an employee is acting within the scope of employment, his or her actions are the actions of the employer. Respondeat superior is just the application of standard agency law to this situation. Ordinarily, if an employee makes a representation, it is the company speaking. If an employee makes a contract, it is the company contracting. If the employee sells a product or accepts payment, it is the employer selling or accepting. If the employee makes something, it is the company making it (and the thing made belongs to the company). Respondeat superior simply applies these rules to the tort situation. The employee's tort is the employer's tort. Employers can't pick and choose retrospectively which employee actions they'd like to have as their own and which they'd prefer to disown.
Respondeat superior makes sense not only as a corollary to the simple existence of organizations. It is also essential to the proper regulation of firms. If a firm were not liable for wrongs committed by its employees, it would face extraordinary market pressure to pressure those employees (covertly, if necessary) to take shortcuts and otherwise skimp on safety. The profits from doing things the cheap way would belong to the firm, but the costs of the damage that results would be paid by employees (or, if employees were insolvent and not worth suing, by the random accident victims). This would make for a rather unpleasant, Dickensian, world.
In contrast, when companies are responsible for their employee's torts, they face incentives that are far more socially attractive. The market will reward them for correctly applying the Hand Formula: they will maximize profit by preventing every tort where the cost of prevention is less than the risk-adjusted cost of the tort damages. Any company that finds a novel or effective way to prevent a tort - whether by teaching its employees to be more careful, supervising them, or changing their incentives, or changing their tools or working environments or practices so that normal carelessness doesn't cause as much damage - reduces its costs and increases its profits by doing so. Private enterprise, rather than courts and regulatory agencies, can be the first line of defense against anti-social behavior.
In this case, the doctrinal issue is whether smoking in a motel room is "in the course of employment." That is, the issue is whether the salesman was an employee or not, was working or not, when he chucked his cigarettes into the wastebasket. A decision that he was acting "in the course of his employment" is a judgment that the employer has the right to tell him how to behave, how to go about doing the company's business, at that moment. If the company has such a right (regardless of whether it exercises it), the logic of respondeat superior suggests that it should be liable for his torts.
Holding the employer responsible increases the range of possible responses to the problem. The employee, of course, can always be more careful. If employers decide that this is the best way to avoid future problems, they can encourage care by training, selection, or charging employees for the damage they cause by carelessness (either through the wage system or through the tort system). But employers can also avoid the tort by other mechanisms not available to the employee: replacing traveling salesmen with telephone sales or resident employees; changing the reimbursement system so that it does not require late night work; reducing workplace stress; banning cigarette smoking or purchasing safer cigarettes in bulk; and so on.
Courts, however, generally need not decide whether the employee should be viewed as at work. Most of the time, this can be seen as an issue of fact: employees and employers negotiate this issue all the time, and all the courts need to do is to force them to be consistent. If an employer wants the employee on duty for purposes of the good, it should take them as on duty for purposes of the bad. If they are telling the employee what to do, they should be responsible for silence as well as speech.
--Dec. '04