Congress has the power to limit coronavirus liability while regulators develop rules to control contagion.
By J. Michael Luttig
and David B. Rivkin, Jr.
20 May 2020 in the
Wall Street Journal
considers another Covid-19 rescue bill, the usual partisan divide has
opened over limiting pandemic-related tort liabilities. Republicans
and business owners argue that litigation will hamstring recovery.
Trial lawyers, unions and Democrats counter that liability limits
would encourage businesses to endanger employees and consumers. The
Senate Republican leadership proposes immunity for all businesses
that comply with public-health guidelines except in cases of “gross
negligence” and willful misconduct.
approach is appealing in theory, but in practice it can’t be
implemented without detailed regulatory standards—which in the case
of Covid-19 won’t be written for some time. Rather than permanently
change liability standards based on incomplete information about the
virus, it would be wiser to enact an immediate but temporary
immunity. That would permit the economy to begin reopening while
allowing time for federal regulators to promulgate standards on which
long-term immunity could be conditioned.
The existing tort
liability system, which rests mostly on state statutory and common
law, has few virtues and many flaws. It is inefficient and often
arbitrarily imposes liability. Tort litigation, unlike regulatory
standards and enforcement, is largely unconstrained by due process
and other constitutional limits. The results can be crippling for
small businesses, which can’t afford protracted litigation, and
even large companies have to settle meritless or frivolous lawsuits.
The system is driven by jackpot-justice incentives.
This system is
particularly ill-equipped for dealing with Covid-19, which affects
the whole economy. Yet hundreds of lawsuits are already pending
against universities, processing plants, manufacturing,
mass-transportation companies and other businesses. Plaintiff lawyers
are petitioning legislatures to rewrite or courts to reinterpret
insurance policies, which specifically exclude pandemic-related
liabilities, in an effort to obtain large recoveries. While such
efforts are constitutionally suspect, these lawsuits won’t die
The notion that
businesses will act recklessly if Congress affords liability relief
ignores the good-faith compliance culture of American enterprises and
the regulatory environment in which they operate. Businesses have
strong incentives against even negligent behavior, which would cause
bad publicity and customer distrust. We’ve seen many announcements
in recent weeks about what businesses are doing to keep customers and
employees safe. Bad actors can and will be held to account by states
and municipalities using police and regulatory powers to fine, close
or even prosecute those that operate dangerously. An elaborate system
of federal and state workmen’s compensation provides additional
Tort law is
primarily a state matter, but it’s well-established that Congress
can intervene via its power to regulate interstate commerce. Federal
law has provided tort liability protections to firearms makers and
for nuclear power. Congress also enacted laws to limit liabilities
arising out of Y2K—like Covid-19, a specific event that was thought
to have potentially calamitous economic consequences.
The Supreme Court
has sustained congressional authority to sweep aside state policies,
statutes and procedures that impair interstate commerce, beginning
with Gibbons v. Ogden (1824), which affirmed federal pre-eminence in
regulating interstate navigation. In New York v. Beretta (2008),
which upheld the limitations on liability for firearms makers, the
Second U.S. Circuit Court of Appeals held that Congress’s authority
includes the power to ban state tort lawsuits that “are a direct
threat” to specific industries.
While there are
legitimate doubts—which we share—that the Commerce Clause’s
original meaning encompasses intrastate economic activities, the high
court has embraced this view since 1942, when it held in Wickard v.
Filburn that the federal government could ban growing wheat for
personal consumption because it impaired a wheat-production scheme
created by federal statute. The justices also asserted in Gonzales v.
Raich (2005) that the Commerce Clause allows Congress to regulate
intrastate activities that “substantially affect interstate
commerce.” Those precedents are enough to allow Congress to protect
businesses with local footprints, such as beauty salons or
restaurants, that buy products or supplies in interstate commerce.
should also propose to make protection against tort liability a
precondition for states and localities to receive nearly $1 trillion
in the new Covid-19 rescue bill. In National Federation of
Independent Business v. Sebelius (2012), the ObamaCare case, the
Supreme Court limited Congress’s ability to coerce states into
adopting new policies by threatening to withdraw money for existing
programs. Since this money is new, that won’t pose an obstacle.
Using its spending and Commerce Clause powers, Congress can
promulgate a variety of regulatory schemes that would replace current
federal and state statutory and common-law liabilities for Covid-19
and that would survive litigation challenges.
protection work will require regulation to evolve along with
scientific understanding of Covid-19. Current federal, state and
local guidelines, including those published by the Centers for
Disease Control and Prevention, are informed exclusively by medical
considerations and do not reflect traditional regulatory criteria
such as cost and feasibility of implementation, and are too ambiguous
and inconclusive to be a proper basis for imposing or limiting
Covid-19-related liabilities. New, industry-specific guidelines will
have to be developed by agencies such as the Occupational Safety and
OSHA and other
federal agencies have the expertise to evaluate scientific, practical
and cost-effective standards governing operations of a wide range of
businesses. What they need is new statutory authority to issue
safe-harbor guidelines for businesses that pre-empt tort liability
under state law. Companies and trade associations would work with
OSHA and propose industry- or business-specific guidelines to the
agency, such as for meat packing plants or package sorting
facilities. OSHA would promptly review each proposal, make necessary
modifications, and then issue it as an immediately effective
regulation with the legal force to override lawsuit liability.
Businesses that comply with these regulations can rest assured that
they’ve met their legal obligations.
Covid-19 liability reform—temporary immunity while businesses
reopen, followed by promulgation of comprehensive federal regulatory
guidelines—would be constitutional and consistent with federalist
values. It would protect public health while enabling a prompt and
full economic recovery.
Mr. Luttig is a
former general counsel of the Boeing Co. He served as a judge on the
Fourth U.S. Circuit Court of Appeals, 1991-2006. Mr. Rivkin practices
appellate and constitutional law in Washington. He served in the
White House Counsel’s Office and Justice Department under
Presidents Reagan and George H.W. Bush.