Just a few decades ago, the legal remedies available to a complaining individual in the American economy were few and constricted. If the individual was terminated and without a written employment contract, his only option was to look for another job. If the individual was injured on the job, his rights to compensation were restricted to a percentage of lost wages and payment of medical bills. If a product purchased by the individual was defective, he had to first overcome numerous hurdles, like assumption of the risk and contributory negligence, before becoming entitled to damage recovery. Remedies for workplace improprieties and discrimination were few.
In short, the legal environment far the individual as consumer and employee held few options. From the standpoint of individual power to determine workplace conditions and compensation, the legal world was a limited one. Most rights to make workplace decisions, however arbitrary they might have been, rested with the employer. Here was a legal world which matched quite closely the very old-fashioned concept of the "free market" – a market dominated by employer decisions on what to produce, whom to hire, and what to pay.
Today, the legal environment for the individual consumer and employee is dramatically different. A discharged employee has the option of pursuing an implied contract claim for wrongful discharge. An injured employee can recover for workplace injuries by claiming product defect or intentional tort. A consumer has the "right" to expect a perfect product, protecting the individual even from his own misuse or inattentiveness. Remedies in the workplace and the retail outlet have proliferated, with numerous statutes and new common law causes of action offering opportunities for litigation. In today's legal environment, individual rights to suit have taken a predominant place, limiting the options of the employer to decide on the nature of his product, the employees he will work with, and how those employees will be compensated.
Until quite recently, this shift in legal entitlements was viewed by the great majority of legal commentators and the many well-compensated lawyers who speak for the legal system as an example of "progress" – of good triumphing over evil. Indeed, since most of us are likely to see ourselves first as individual consumers and employees, our first reaction is more than likely to be one of approval for this growing legal ability of the "little guy" to stand up to the "big corporation".
Recently, however, new voices have come forward to question this presumption of legal "progress". These voices are pointing out that "we" as collective consumers and individuals are not necessarily always benefited from the growing ability of the few to sue and recover from the employer. These voices have recognized that the legal system and litigation is not an unalterable one-way progression toward more and more "rights" for individuals, but instead a delicate scale, in which the "rights" of all individuals are intertwined and kept in balance. This is not a simple struggle between individuals at one end and big corporate owners an the other, but instead a complex balancing act, in which employers often represent the collective interests of the broad consuming and working public.
From this point of view, the "free market" is not a harsh landscape where powerful corporate owners impose their self-interested will on workers and consumers. Quite on the contrary, the "free market" is an economy where all individual participants have maximized freedom of choice and minimized conflict – a balanced scale where individual rights to suit and employer rights to make basic economic decisions work hand-in-hand to provide the maximum collective benefit to all.
Is this "free market" scale in balance today? It is the purpose of this study to argue that the balance has been lost. Thanks to a concerted effort on the part of activist legislators, creative lawyers and ideologically-committed judges, the American legal system has fallen out of balance. The scale of legal rights is currently loaded too heavily in favor of individual remedy and against employer discretion, and this imbalance is having a profound negative impact on the ability of the American market economy to function freely. The development of numerous and easily accessible new causes of action and rights to damage recovery has had the practical effect of eliminating basic employer decision-making ability to such an extent that the market is in fact no longer truly "free".
Litigation has become too expansive in substance, and too prominent a component of the economy. There is simply too much litigation. There are too many legal remedies, too many high and uncontrollable damage awards, and too few mechanisms to control the length and expense of courtroom activity. This virtual legal explosion of rights, remedies and courtroom access has resulted in an artificial, socially-destructive limit on the market's ability to allocate resources efficiently and serve the interests of the collective public.
In the following pages, we will discuss the general nature and purpose of litigation within a market economy, and then look specifically at some of the impact of litigation on employer discretion within the market. We will begin by looking at how litigation has grown, particularly in the field of tort law, and how such growth has had an impact on the production of consumer goods. Specifically, we will look at how the increase in product liability has limited the ability of the employer to determine what products he will produce, and the availability of such products (with the resulting impact on the ability of the employee consumer to have a choice) in the market.
From the ability of the employer to chose what he will produce, we will then shift our attention directly into the workplace to show how the increase in litigation and individual remedies has affected the fundamental rights of the employer to choose whom to hire, whom to work with, how to run the workplace, and how to compensate his employees. We will use the state of Michigan as an example to show how the Judiciary has systematically increased the remedies available to complaining employees at the expense of employer decision-making, and how this pattern of judicial expansionism threatens stilt more erosion of employer discretion in the near future.
This study will conclude with a discussion of steps that can be taken to restore the balance between individual rights to sue and employer rights to make basic economic decisions. We will discuss ways to limit both the nature and the amount of litigation, looking at how to reduce the number of causes of action, put limits on the scope of remedies, and limit courtroom activity.
The purpose of this study, through the presentation of statistical and case law examples, is to raise awareness of the consequences that litigation and litigiousness have on the most fundamental economic rights we possess and to urge more extensive statistical analyses on how everything from where and how we work to what products we buy is being fundamentally altered by the judicial revolution of the past three decades.