I've mentioned to friends I've known before law studies the plethora of
suits involving electric space heaters -- apparently a sort of a
chew-toy for tort lawyers.
There is an implied (depends how you read it) "acceptable death rates"
formula in tort. That "Learned Hand Formula?" Anyone read about that,
other than Andy Nachos (to whom this will be elementary)?
An AP story crossed the wires of late (attached at bottom) that made me
think again about this nexus of social utility and economic fairness.
Hand's Formula is more formally known as the "aggregate-risk-utility
test" and seeks to establish when a manufacturer is negligent in product
(or service or whatever). Works like this:
If
P = Probability of injurious event
L = Gravity of the resulting injury
B = Burden, or cost, of adequate precautions
Then
Injurer is negligent only if B < P x L
Biz (ostensibly) should show that B > PL —- in other words, minimizing P
or L, or both -- to avoid losing tort claims of product negligence.
Another, more heartless, way of expressing this would be "allowable
losses" through manufacturer negligence. (In pop culture, we saw this
sarcastically referred to in the movie Fight Club, where the narrator is
talking about his job with a black woman sitting beside him on a air
flight and explaining why he, as a claims investigator, helps car
companies decide if they should settle death suits or make a general
recall.)
Calculate the number of deaths resulting from, say, a space heater (P)
and multiply that by the average out of court settlement (P). If those
estimated losses from defective products are less than the cost of
removing those deaths through product improvement (B), then do not make
those improvements.
Simple math and business measurement of costs of human death.
With a product like a space heater, the consumers are usually not
wealthy, lacking resources to fight a large suit and lacking the sort of
serious earning power that would increase the L (and a death is usually
measured in lost earning power).
In the case of space heaters, the drastic reduction in the L (lower
income demographic, etc.) means there can be an increase in P (number of
deaths) without disturbing the balance of B.
* * *
Seems the most famous judicial exposition on this was by Yanqui Second
Circuit Judge Learned Hand in a series of opinions that began in 1938.
The concept first appeared in 1934 in the first Restatement of Tort Law.
Hand helped draft the first Restatement. His follow-up decisions were
perhaps an attempt to "popularize" the test.
It appears to have not been used. Hand himself, in service as a federal
judge until 1961, mentioned it in 11 opinions. After 1949 (last
reference), it seems to have died.
It was resurrected by a series of publications by Richard Posner. Posner
contends the test is imbedded in decisions on "economic efficiency
interpretation of negligence."
Critics have said Posner's arguments are
composed of speculative and implausible assumptions, overbroad
generalizations, and superficial descriptions of and
quotations from cases that misstate or ignore facts, language,
rationales, and holdings that are inconsistent with his
argument. None of the cases discussed by Posner support his
thesis. Instead, the reasoning and results in these cases
employ varying standards of care, depending on the rights and
relationships among the parties, that are inconsistent with
the aggregate-risk-utility test but consistent with the
principles of justice.
See: Wright, Richard W., "Hand, Posner, and the Myth of the
'Hand Formula'". Theoretical Inquiries in Law, Vol. 4, 2003
http://ssrn.com/abstract=362800
Once made a federal judge, Posner began applying the Hand formula. Frank
Easterbrook, a like-minded former professor who joined Posner on the
Seventh Circuit, has also endorsed the Hand formula. However, neither of
them has been able to employ the Hand formula to resolve the negligence
issue in any case, and none of their fellow circuit judges has attempted
to do so.
* * *
Thought I'd pass along this news item below. Yet another space heater
problem. The manufacturer would likely not have issued the recall,
regardless of what the B < PL calculation yielded. It needed a
government agency to force it.
Ken.
--- cut here ---
One Million Electric Heaters Recalled
WASHINGTON (AP) - A Kansas company is recalling 1 million electric
heaters after receiving two dozen reports of fires caused by
overheating.
Vornado Air Circulation Systems Inc. of Andover, Kan., is not aware of
any injuries caused by the portable electric room heaters, the Consumer
Product Safety Commission said Tuesday.
A faulty electrical connection can make the indoor heater overheat and
stop working, posing a fire hazard, the commission said.
Standing about a foot tall and weighing about 6 pounds, the recalled
product bears model numbers 180VH, VH, Intellitemp, EVH or DVH, located
on the bottom of the heater.
Retailers, distributors and the company's Web site sold the heaters
nationwide from July 1991 through January 2004 for between $50 and $120.
The government advises consumers to stop using the heaters and contact
the company for free shipping and repair at (888) 221-5431, weekdays 9
a.m. to 6 p.m. EDT.
---
On the Net:
Consumer Product Safety Commission: www.cpsc.gov
Vornado Air Circulation Systems Inc.: www.vornado.com
2004-08-03 10:29:39 GMT
