Should Tort Rules Be Set at the Federal or State Level?
Although tort cases are primarily governed by state law, the Congress has broad Constitutional authority to change tort rules under its power to regulate interstate commerce.14 Federal intervention in tort law can have two main benefits. First, it can lower costs by giving manufacturers and other nationwide businesses a single set of standards under which to operate. Advocates of greater federal involvement argue that state preeminence may have been appropriate when most goods were produced locally, but it is inefficient now that firms typically manufacture products in a few locations to sell nationally. Second, whereas state legislatures and courts have an incentive to favor state residents, and thus to design or interpret their legal rules to benefit in-state plaintiffs at the expense of out-of-state defendants, the federal government can potentially take the broad view (in economic terms, “internalize the externality”) and craft rules that take equal account of the interests of all parties nationwide.
Supporters of a more decentralized approach argue that federal involvement in state tort law may not provide equal treatment of all costs and benefits. Rather, it may reflect concentrations of political influence, which can tilt toward plaintiffs at one time and defendants at another. In that view, maintaining state preeminence in tort law reduces the risk of nationwide errors in policy. It also allows greater scope for state innovation and experimentation and a wider range from which people can choose the type of liability regime that appeals to them—one with more extensive protection of injured parties or one with lower costs for businesses (and hence, presumably, lower prices for consumers).
14. For a discussion of that general authority and some exceptions to it, see Henry Cohen, Federal Tort Reform Legislation: Constitutionality and Summaries of Selected Statutes, CRS Report for Congress 95-797A (Congressional Research Service, updated May 2, 2003).