re law and economics i m going to be mixing together here stuff from two of ted frank s articles apr midway uchicago edu which was a response to me and apr midway uchicago edu a response to tim smith yes i know the boomer court didn t call it eminent domain but if it walks like eminent domain and swims like eminent domain and quacks like eminent domain wdstarr are all tort cases really eminent domain cases then what about bankruptcy contract eminent domain is a state mandated transaction in which one party is required to sell a piece of property which it owns to another party regardless of whether the first party wishes to sell at all at a price which is set by the state i fail to see how this doctrine can be found in tort bankruptcy or contract cases in general well okay sort of in bankruptcy if so so what since when are the courts supposed to be in the business of preventing parties from reaping windfall settlements from other parties when those settlements arise from wrongful acts by those other parties wdstarr since you said that boomer s reliance on economics led to an unjust result i m pointing out that your alternative is far more unjust in the traditional sense of the world atlantic cement s act was not wrongful it did something that we as a capitalistic society should want them to do build a factory create industry and jobs the cost of compliance was grossly disproportionate to the damage faced by plaintiffs bang here s one of the places where we widely diverge you believe that the courts in deciding a civil dispute between two parties should consider as a factor perhaps as an overriding factor issues which i believe the court should ignore as being irrelevant to the dispute boomer v atlantic cement co was an action brought by one party boomer whose property rights were being violated on an ongoing basis by another party the atlantic cement company the facts supported boomer s contention that atlantic cement was wrongfully damaging his property and boomer asked the court to order atlantic cement to stop doing so end of story there was no reason for the court to consider such issues as what a capitalistic society would want atlantic cement to do or whether the cost of compliance was disproportionate to the damage faced by the plaintiffs those issues had nothing to do with the case before the court bill if the government had stepped in and the epa made a regulation requiring multi million dollar cement plants to be shut down because of a smattering of cement dust at a cost benefit ratio of you d be up in arms why is it okay for the judicial branch to interfere this way but not the legislative or executive branches i d be up in arms why do you assume that quite the contrary i d probably support the action since it would be based on the same general doctrine as the decision that i believe would have been correct in boomer the idea that people s property rights should not be violated for reasons of economic efficiency in boomer it was boomer s property rights which i believe the court should have protected in the hypothetical epa ruling you ve presented it s the american people s collective property rights in a healthy physical environment what good is cost benefit ratio of if you wind up with cement dust in your air your rule makes it per se illegal to ever operate a cement plant if the state of massachusetts came up with a similar regulation you d be up in arms and complaining about interference with property rights and fifth amendment violations once again why is it okay for the judicial branch to interfere this way but not the legislative or executive branches or are you not the libertarian you present yourself as being ted frank how would it be per se illegal to operate a cement plant wouldn t it just mean that when buying land for a cement plant you would have to either buy enough land so that most of the pollution would stay on your land or buy pollution easements from the surrounding landowners tim smith all it takes is one holdout out of hundreds of neighbors to scrap the plant furthermore each of the neighbors is going to want the full benefit of the bargain under the resulting bilateral monopoly a bonanza for lawyers to be sure who get to negotiate each of these agreements a windfall for homeowners who can extort away any profits the plant would make but not particularly good for society yes so what the courts are supposed to protect the specific rights of individuals not the general interests of some nebulous society if society can have its cement plant without violating anyone s rights fine otherwise society will somehow have to limp along with one less cement plant see ted i really am a libertarian after all that s the whole point behind the coase theorem in a world without transactions costs the land will automatically be put to the best use as it is transferred from person to person instantaneously without friction the legal regime will not matter because the result will be the same in a world such as ours one with transactions costs one wants the legal regime to approximate the end result to begin with in order to minimize the transactions costs one wants the legal regime to approximate the end result to begin with in order to minimize the transactions costs which one are you speaking of i want the legal regime to protect people s rights besides coase s theorem only has real application in the never never land of perfectly rational actors in the real world some people are going to be stubborn ornery spiteful or otherwise irrational from a economic point of view and the purpose of the courts is to protect their right to be so i don t care if you can show me logically that your cattle are only doing of damage to my property per head so i should rationally sell you grazing rights to my land for say per head i still retain the right to tell you that i just plain don t want any damned cattle on my property not at any price and then you say everyone s property rights were protected the plaintiffs were made whole unnecessary settlement costs were avoided as above i dispute your claim that the plaintiffs were made whole they were in fact by court action deprived of their rights as owners of property to choose to sell or not sell that property at a price acceptable to them wdstarr then by your argument no tort plaintiff is ever made whole because the award of damages in involuntary why should we treat a nuisance plaintiff any different than any other tort plaintiff we don t require specific performance in the analogous contractual situation why in tort last question first for the same reason as in contract law because to do so would come dangerously close to treading on the thirteenth amendment as to your then by your argument no tort plaintiff is ever made whole because the award of damages in involuntary claim you re at least partially right faced with situations in which the wrong has already been done and the damage to the victim has already taken place and cannot be reversed or undone courts will try to set an equitable price tag on the loss suffered by the victim and require the wrongdoer to pay this price rather than an inflated price which the victim might prefer in these cases the sale has already taken place and is irreversible and the court simply tries to ensure that a fair price is paid under the doctrines that a only in certain circumstances should even a civil wrongdoer be forced to pay punitive or excessive prices and b even a genuine victim should not profit in an unjustified or inequitable manner from his victimhood both of these doctrines may be worth discussing or debating elsewhere but neither is relevant to cases like boomer in which the wrongful act and the loss stemming from it are still in the future and can be reversed undone i e prevented from happening at all by order of the court in these types of cases all the court has to do is require that the potential victim s property rights are protected until and unless he agrees to sell them at a mutually acceptable price there is no need for the court to guess at the equitable value of the loss and force both sides to accept its finding it can leave that operation up to the parties themselves and again i ask since when are the courts supposed to be in the business of ensuring that unnecessary settlement costs are avoided if so i ve been miseducated i always thought that the courts were supposed to be in the business of ensuring that justice is done unnecessary settlement costs are unjust because they are punitive in cases like boomer they re simply a cost of doing business the fact that the proprietors of the atlantic cement co got themselves into a position in which they found themselves over this barrel is simply a result of their own poor business decision to start up a cement plant without first trying to negotiate with boomer and everyone else whose property rights they d be violating via the operation of their plant there s nothing punitive or unjust about it it is completely sensible only if you believe that the alleged right of the owners of atlantic cement to stay in business and avoid losing a lot of their own money due to their own wrongful act and the alleged right of several hundred atlantic cement employees to not have their jobs disappear should trump the rights of people who own property which was damaged by atlantic cement s wrongful acts wdstarr anybody who ever commits a wrongful act should disgorge their entire set of possessions to wronged person weren t you complaining about excess punitive damages before anybody who wants to commit a wrongful act in the future should be required to buy the right to do so from the victim in advance and the seller should be allowed to set his or her price for the privilege no injustice no punitive damages you d like posner bill he s a libertarian really i didn t know that what if anything has he had to say about cases like boomer wdstarr in eal he cites it as an example of bilateral monopoly that the court correctly avoided i m sure its covered in the landes and posner book on tort law presumably favorably but i don t have that book in front of me doesn t sound very much like a libertarian to me libertarians tend to believe in the rights of individual people not societies i ve admitted that my understanding of the field generally referred to as law and economics is weak if it advocates the use of economical analysis as one of many tie breaker factors which courts may use to help them reach decisions in cases in which the dispute as measured by the scale of justice is evenly balanced fine but as illustrated by boomer it is not fine when the courts start viewing the economics of a case as being more important than the justice of a case wdstarr in this case the justice of the case was intricately tied up with the economics of the case atlantic cement committed a tort causing k of damage should it pay in the millions or just compensate for the damage it committed as stated above the tort was ongoing atlantic cement wanted to be able to continue to violate boomer s rights while the court may have been justified in setting an equitable price tag on the damage already committed it had no reason and no need to set a price tag on the future violations of boomer s rights and to then force boomer to sell at that price william december starr wdstarr athena mit edu
