Personal Injury Law - The 'Reasonable Person' Standard

Luis Millan for The Lawyers Weekly

April 30, 2010

So many people underestimate the odds that something bad will happen to them - even though they have received accurate information about average risks - that a law professor is calling for a reassessment of the reasonable person standard in tort law, particularly in the area of negligence.

Calling for a dramatic departure from traditionally-held views on tort law, Francesco Parisi maintains that it would be far more effective in many situations to "forgive" people with the so-called "optimism bias" than to penalize them by imposing liability.

Based on behavioral economics, optimism bias is the notion that people make decisions, forecasts, and predictions that overestimate the positives and benefits while underestimating the negatives and risks. Acknowledging that optimism bias is a problem in planning and budgeting, the Economics and Finance Ministry of the United Kingdom went so far as to publish a Green Book several years ago that provided a range of tools to prevent the "demonstrated, systematic, tendency for project appraisers to be overly optimistic."

In groundbreaking research that applies the notion of optimism bias to tort law, Parisi, and co-author Barbara Luppi of the University of Modena in Italy, argue that the unrealistic belief that risks are less likely to materialize leads individuals to inadequately react to legal threats and incentives.

"Threatening liability for mistakes that people don't think they will make becomes an empty threat," said Parisi, a law professor at the University of Minnesota Law School and an economics professor at the University of Bologna. "What we may not be able to accomplish with the threat of liability, we may be able to accomplish with forgiveness. It is a paradox. In a way, we are asking for a reassessment of the reasonable person standard and to forgive departures that are within a normal range of deviation."

That, to say the least, is a contentious position, notes Cherie Metcalf, a law professor at Queen's University. One of the underlying premises of tort law is that it addresses and provides remedies for civil wrongs, and is supposed to help deter people from tortious conduct. Though acknowledging that Parisi is not asserting that people with bad judgment should be subjectively let off the hook, Metcalf points out that he does not address the conundrum of "figuring out exactly when to forgive" if and when the issue of optimism bias arises. Determining limits is vital, adds Metcalf, otherwise there lies a danger of reducing incentives for people "to take care."

While contending that there are "lots of details" to be worked out and more research needs to be conducted to carefully think about the relationship between optimism bias and tort law, Metcalf believes that Parisi's standpoint has the potential of eventually making headway.

"Tort law really has a distributive and justice aspect to it," said Metcalf. "We're concerned about sharing the burden of liability and putting the burden on people who are, in a sense, at fault. A tort is in some sense conduct that is wrongful. But if people are cognitively limited in the sense that they are not actually voluntarily undertaking an action that is wrongful, then that relates to whether we think it is really just to impose liability on them."

Erik Knutsen, a law professor also at Queen's who teaches insurance and tort law, believes that optimism bias is already implicitly taken into account by the courts.

"In tort law, the standard everyone has to meet is that of a reasonable person, an objective standard of care," pointed out Knutsen, a member of the Research Advisory Board of the Law Commission for Ontario. "If we either explicitly as Parisi does, or implicitly as I argue, know that people have optimism bias, then the reasonable person test in tort law as it exists already accounts for this."

Parisi concurs, to a point. He acknowledges that in cases involving product liability, appellate courts, at least in the U.S., appear to consider optimism bias. In Sherk v. Daisy-Heddon, the court of first instance refused to determine that a BB gun with lethal power was unreasonably dangerous because the child failed to read the warning against pointing the gun at a person - a ruling that was overturned by the appeal court. The same thing happened in Skyhook Corp v. Jasper, when a court of first instance held that a crane manufacturer was not responsible for insulating its cranes against shock because crane operators failed to comply with warnings. That decision was also overturned.

"In between the lines, this is a consideration that juries and courts evaluate more prominently in product liability cases than other areas of law," Parisi told The Lawyers Weekly. "We're saying that this is an issue that doesn't only involve producers and consumers but in other situations as well."

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