HOW GERMANY VIEWS U.S. TORT LAW: Duties, Damages, Dumb Luck, And The Differences In The Two Countries' Systems
By ANTHONY J. SEBOK
Monday, Jul. 23, 2001
In Germany, lawyers and the media look upon the American tort system with a mixture of fascination, envy, and horror. What is the root of this ambivalence? A comparative view of the two systems can provide some answers.
Conflicting German Views of U.S. Tort Law
From conversations with German friends and from reading the German press, I had always suspected Germany's view of the U.S. tort system was conflicted, to say the least. But this impression was driven home to me this summer, when I taught German law students a basic first year course in torts, the same course I teach in New York City.
The contrast between the German and U.S. systems begins with method: German law students are not used to the Socratic method employed in American law schools, nor are they used to reading cases. Instead, a typical German torts class consists of a professor lecturing, without interruption, about the contents of the German Civil Code. So my students were a bit surprised when I began my first class with the following sentence: "Frau Schmidt, what were the facts in Harper v. Herman?"
By the middle of the semester, a difference not only in process, but in substance, had also emerged. I had the distinct feeling that my students were being pulled in two directions. On one hand, many of them like many German lawyers, and virtually anyone who reads German newspapers saw the American tort system as a victim's paradise. At least three students asked me about the "woman who spilled coffee on herself and collected $2 million."
On the other hand, many of my students found the actual rules of American tort law surprisingly narrow and hard-hearted in comparison with those of German law. They could not believe, for example, that there is no general duty to rescue in America. Nor could they believe that the California Supreme Court held that a fast-food restaurant does not have a duty to hand over the money in its cash register in order to save the life of a customer held at gunpoint by a robber.
Which is it? Is American tort law a casino, where anyone can get a big settlement just by threatening to sue, or it a system of laissez-faire, where people are free to ignore each other's suffering and don't have to pay for the consequences of their actions except under very narrow circumstances?
The answer, of course, is that the American tort system is a little of both, and that is why it seems so bizarre to foreign observers.
Germany's Tort System and America's: More Similar than It Appears
Closer and more careful comparisons between the two systems reveal that tort rules in Germany and America are not so different. They have a concept of negligence, just as we do, and they even have a concept of strict product liability, just like us. (The absence of a general duty to rescue in the U.S. is an important exception, however, to this parallel.)
Where the two systems differ is not so much in what the rules require but in how the two systems explain their rules to their citizens, and how the rules are applied.
American tort law has historically evolved from a set of limited duties to a broader set of duties. This evolution is ongoing, and is the constant site of conflict between those who want to spread the costs of industrial and commercial activity through litigation (the plaintiffs' bar and its allies in the Democratic Party) and those who see tort litigation as a tax on business (the defense bar and its allies in the Republican Party). As a result of this struggle, American tort law has developed some strange, ad hoc compromises that, to a German, simply seem unprincipled.
For example, it makes no sense to a German that American tort law, until recently, allowed landowners to treat social guests more carelessly than business invitees. Or that a psychotherapist has a duty to warn the authorities if he discovers that his patient is planning to murder the patient's ex-girlfriend, but an electrician who discovered the same thing about a client would not have any such duty. Or that one can recover lost profits as a result of an accident if someone hit you, but not if they merely blocked your way.
German law would see this type of distinction as arbitrary, and would approach these questions differently, usually by expanding the duties in question to cover all foreseeable victims.
So, from one perspective, German tort law, which is based on the idea that everyone owes a duty to avoid foreseeable injury to everyone else, seems more progressive than American tort law.
Controlling Damages: A Sharp Contrast
On the other hand, the Germans control their damage awards in ways that would confound big-ticket American plaintiffs' lawyers. It is well documented that the scale of damages resulting from successful tort litigation in Germany is at least one order of magnitude lower than in the US. Thus, where a broken leg in a car accident in New York City might produce a jury award of $300,000, in Berlin it would produce an award of around $30,000.
Why is there such a striking contrast in these numbers? First, because Germans have very good health insurance, there is no need for victims of accidents to "sue first" and hope for reimbursement later, as is often the case for those Americans lucky enough to have private health insurance.
Second, while there are pain and suffering awards in Germany, they are much lower than in the U.S., where on average 50% of typical personal injury awards are comprised of compensation for pain and suffering.
Third, Germans pay their lawyers much less than the 1/3 contingency fee collected by successful plaintiffs' lawyers (and they pay their lawyers whether they win or lose).
Finally, there are no punitive damages in Germany although punitives play a much smaller role in American damage awards than either the German or American media would have one believe.
The American System's Unpredictability
It is not just the scale of damage awards in the United States that surprises the Germans. They also suspect that whether a victim will receive damages, and how much she will receive, is extremely hard to predict, and seems to be a product of many ad hoc factors. The Germans suspect this, I believe, because in comparison with the German tort system the American system is wildly more unpredictable at every level.
First of all, the somewhat arbitrary line-drawing in the American system, discussed above, means that no one knows when a judge will decide, as a matter of policy, to expand or shrink the scope of duty.
Second, since it is juries, not judges, who often decide whether a duty has been breached, unpredictability is introduced at this level of the trial process as well. It is far more likely that the same facts will produce two opposite results in two neighboring courtrooms in the United States, than in Germany where judges are civil servants and have been hearing the same type of cases for years.
Finally, even if the definition of duty and the determination of the breach of duty somehow ends up being applied consistently in America (which is highly unlikely), there is still the not-insignificant matter of damages. Not only are damage awards in America much higher than in Germany, they are extraordinarily inconsistent.
This is especially true for pain and suffering awards, which are supposed to measure something that everyone admits is unmeasurable. Thus, it is no surprise that the same injury can produce pain and suffering awards of $1000 or $100,000, depending on who the plaintiff and the jury members happen to be. The variation in awards is difficult to explain. Most of it seems to be a product of pure statistical randomness, but some of it seems to be explained by the race and gender of the plaintiff.
Germany's Objection to Arbitrariness in U.S. Damages Awards
The Germans find the variation in our damages awards totally unacceptable. To them, the point is not that we give too much money for pain and suffering and they give too little. The point is that whatever amount we decide to give for 30 minutes of pain before death ($1000 or $100,000), we should give the same amount to people for the same kind of injury.
The Germans enforce a semblance of order with respect to pain and suffering damages by collecting together all the damage awards produced in every trial court in Germany in a given year. This book, called the Tabellen, is published and used by judges and lawyers to estimate what a damage award in a new case should be.
Oddly, there is no such book in America. Indeed, to my knowledge there is no mechanism in place in any state to collect this information (except for private jury reporters, whose accuracy varies). Furthermore, in many jurisdictions it is probably illegal to introduce comparative evidence from other trials to a jury in the course of presenting one's damages case. In America, therefore, we seem actively opposed to transparency and to a comparative approach when it comes to damages.
Through the Looking Glass?
So the Germans view our system as a something from Alice in Wonderland. Compared to their system, it is more difficult in the U.S. to hold someone responsible in tort, and it is very hard to predict if any given complaint will result in liability. To that extent, the system seems anti-plaintiff.
Yet once someone is held responsible, our damages system seems a little like a lottery: it produces awards that sometimes overcompensate the victim, and sometimes not. Moreover, whether an award is high or low seems to depend on mysterious factors, such as who is on the jury that day, the race and gender of the victim, the amount of money the victim could spend on the trial and on her lawyer, and just plain dumb luck. Certain huge (and well-publicized) awards seem extremely pro-plaintiff, while others seem insufficient.
In the end, the picture the Germans have of our tort system fits the picture they have of American culture in general. Stability and predictability are highly valued in Germany, as is social solidarity. The German view of America is that we are a nation that tolerates risk and uncertainty more than they do, and that we are individualistic and skeptical of social structures.
Thus, while the Germans find our tort system slightly strange, they suspect that it may not be strange given its context. I cannot say that I disagree with the Germans. Our tort system is somewhat random, unsystematic, nontransparent, and produces dramatic inequalities. One could say the same thing about our economic system, which produces far more inequality of income than Europe's, and our political system, which seems to value individual liberty, no matter how idiosyncratic, over almost everything else.
The truth is, as George Bush has recently discovered, the Europeans, while good allies, do not share our political culture, nor do they want to. Thus, even in tort law, the real source of European skepticism is not just that they do not want to pay the same "outrageous" judgements that American companies have become used to. Their skepticism is rooted in deep differences in how political culture is reflected in the everyday work of our judges and juries.