The verdict against Monsanto

A California jury has awarded $289 million to DeWayne Johnson, a groundskeeper who has non-Hodgkins lymphoma and claims his disease was caused by glyphosate, Monsanto’s blockbuster pesticide marketed most prominently as Roundup.

Michael Hiltzik of the LA Times reviews the facts of the case and the scientific dispute surrounding glyphosate’s role, or lack thereof, in causing cancer. He points out, reasonably, that a courtroom is a lousy places to resolve scientific disputes; how many of the twelve jurors could define “statistical significance” or “type II error”? And the notion that non-experts can pick out the truth in a swearing contest between experts is simply laughable.

Hilzik notes that alternatives, including “bringing these cases before specialized tribunals or setting up public funds for victims of certain products,” “all have their own flaws,” and concludes with an expert’s view that the jury trial “is a highly imperfect process,” but that “like democracy, it’s the best we have.”

I doubt it.

Every discussion of this question ought to refer back to Guido Calabrese’s classic The Cost of Accidents (even if that discussion concludes, as I do, that Calabrese doesn’t get the answer quite right). Calabrese lays out three criteria for judging the tort system against its competitors:

  • Does it provide the efficient level of incentive to avoid accidents, or minimize damage, taking into account that the victim as well as the tortfeasor has opportunities for avoidance and minimization?
  • Does it serve the “insurance” function of reducing the uncertainties people face by reimbursing them for their accidental losses, especially when those losses increase the victim’s marginal utility of income?
  • Does it make decisions efficiently, minimizing the total transactions costs (legal fees on both sides, for example)?

Note that for tort litigation to serve its incentive function it is important that verdicts be technically accurate with respect to causation and as to which party had the least-cost opportunity to avoid or minimize. That is not the case for the uncertainty-reduction function; for that purpose, fault is irrelevant. Calabrese points out that, whatever its other merits or problems, the tort system is hideously inefficient, with only about one-third of the costs of tort defense and tort payouts going to compensate victims. That suggests moving to some sort of no-fault system. But that would leave the incentive-management problem largely unsolved. (And workers’ compensation, the biggest of the no-fault systems, has pretty serious efficiency problems of its own.)

The horrible thing about the tort system is how badly it does the insurance job. Inefficiency aside, it over-compensates a few losses (in the sense of going past the point of diminishing utility returns to income) while leaving others utterly uncompensated. Those victims can wind up destitute unable to pay the medical and rehabilitative care they need, let alone the long-term costs if they are permanently disabled and in need of continued care to lead even partly normal lives. No doubt many jurors are aware of this, and wind up rendering verdicts reflecting the victim’s needs as much as the tortfeasor’s fault. The inaccuracy of the tort system also makes it very bad at incentive management.

Calabrese’s work is often cited by conservative proponents of what they call “tort reform,” which mostly means tilting the playing field in favor of tort defendants. But the “tort reformers” seem quite indifferent to how to fulfill the incentive-management and insurance functions.

Europe, which has a tort system far less favorable to plaintiffs than the U.S. does, also has much, much tighter regulation when it comes to product and worker safety. (The U.S. is somewhat tougher on environmental damage, especially air pollution.)  Instead of telling companies to take whatever risks with other people’s lives and well-being they choose, subject only to the risk of lawsuit, the EU (and most non-EU European countries) carefully specify what companies may and may not do, and what they must do.

Europe also has, by and large, much more extensive social services, including one form or another of universal health coverage. That means that victims’ needs for services and income are largely met, independent of whether a deep-pocketed entity is found to be at fault for their losses. That’s not the same thing as making them whole, but on average European victims do far better than American ones in financial terms, even tough none of them collects a multi-million-dollar tort judgment.

So, it seems to me, the right answer to the “tort reformers” is that if we’re going to adopt European tort law we need also to adopt European regulation and a European social safety net.

And to get to European regulation you’d need something like European campaign-finance law and a reversal of Citizens United and other court decisions allowing virtually unlimited influence-buying by companies.

It’s quite possible that gyphosate is reasonably safe, or at least that it’s not a significant human carcinogen at the doses people are actually exposed to. But what’s certain is that, whether it’s safe or not, Monsanto (even now that it has become a unit of Bayer)  is going to keep spending lobbying dollars and public-advocacy dollars and dollars to buy scientific opinions to protect not only its pesticide business but its far more lucrative trade in selling “Roundup-ready” (i.e., glyphosate-resistant) seeds to farmers, with both contractual and technical measures to prevent them from taking next year’s seed from this year’s crop. That makes farmers permanently dependent on Monsanto. A market headlock that strong is worth a great deal of lying and legally protected bribery-equivalents to protect.

Footnote There’s much more in Calabrese’s book, including the argument that in some cases incentive management is best served by penalizing the tortfeasor without transferring all of the penalty to the victim.

 

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

9 thoughts on “The verdict against Monsanto”

  1. "The horrible thing about the tort system is how badly it does the insurance job."

    Really? With all the ambulance chasers we have? I think you should provide evidence or links to where you got this idea. We see a lot of healthy settlements for even the most dubious cases.

  2. A good insurance policy covers all, and only, legitimate claims, and does so with minimal transactions costs.
    Tort liability makes some big payoffs in cases that don't warrant it, misses lots of cases that do warrant it (especially those for thousands rather than millions of dollars or where causation is expensive to prove) and spends about two-thirds of the money litigating, delivering only one-third of what defendants pay to plaintiffs.

    That's a very bad version of insurance.

    1. It's easy to criticize the current system, especially if you are dismissive of its benefits. Not so easy to quantify the detrimental effects of the alternatives, such as your European "gold standard".

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