Victim pays damages to tortfeasor: the when and wherefore.

• Author: Shmueli, Benjamin
• Position: Abstract into III. Ex Post Version of Rule 4 B. The Ex Post Option Alongside the Ex Ante Option: A Comparative Perspective 1. The Talmudic Ex Post Model p. 275-303

Is there a reality in which the victim pays damages to the tortfeasor? This article analyzes Calabresi and Melamed's liability rule for the damaging party (Rule 4), where the damaged party has the right to prevent pollution if the polluter is compensated first. Under the conventional application of this rule, the victim first collects the money and compensates the injurer, and only then is the injurer required to eliminate the nuisance (ex ante). There is no reference to a possibility of the injurer first eliminating the nuisance and only then receiving compensation (ex post). We argue that the timing of the payment should be changed when the activity causing the nuisance has social and economic value. Each version of the rule advances the aggregate welfare in some sense, but also harms it in another.

The primary aim of the present article is to introduce a new model for Rule 4 that would guide legislators, regulators, and judges in deciding when to order compensation as a condition for eliminating the nuisance and when to order the injurer to remove the nuisance first and only then collect the funds.

This article also introduces a comparative perspective that reveals the potential use of the ex post version of Rule 4, as manifest in sources of the Jewish legal tradition. This comparison further bolsters our proposal in favour of a division between ex ante and ex post versions of the rule.

Ultimately, offering two versions for the implementation of Rule 4 would better enable the adaptation of a suitable solution according to the circumstances and thus would widen the possibilities for the rule's use.

Existe-t-il un monde oU la victime d'un prejudice indemnise le responsable? Cet article analyse la regle de responsabilite de l'auteur du dommage de Calabresi et Melamed (Regle 4), oU la victime a le droit d'empecher une activite polluante si elle compense d'abord le pollueur. Selon l'application conventionnelle de cette regle, la victime collecte l'argent et compense le responsable, qui doit alors eliminer la nuisance (ex ante). Il n'y a aucune reference a la possibilite pour le responsable d'eliminer d'abord la nuisance et de recevoir ensuite une compensation (expost). Nous soutenons que le moment du paiement doit etre change quand l'activite causant la nuisance a une valeur sociale et economique. Du point de vue du bien commun, les deux versions de la regle presentent a la fois des avantages et des inconvenients.

L'objectif principal de cet article est d'introduire un nouveau modele de la Regle 4 afin d'aider legislateurs, agences reglementaires et juges a determiner quand la compensation devrait etre exigible comme condition d'elimination d'une nuisance et quand le responsable devrait eliminer la nuisance avant d'etre compense.

Cet article introduit une perspective comparative qui revele l'utilisation potentielle de la version ex post de la Regle 4, rendue manifeste par la tradition juridique juive. En fait, notre proposition en faveur d'une division entre les versions ex ante et ex post de la regle est renforcee par cette comparaison.

Offrir deux modes d'implementation de la Regle 4 faciliterait l'adaptation d'une solution appropriee aux circonstances et elargiraient donc les possibilites d'utilisation de cette regle.

Introduction I. Liability Rule for the Damaging Party (Rule 4) A. Foundations and Justifications B. Problems 1. The Problem of Determining Which Party Values the Entitlement More and the Information Problem 2. Moral Hazard 3. The Collective Action and Free-Rider Problems II. Ex Ante Version of Rule 4: Advantages and Drawbacks III. Ex Post Version of Rule 4 A. Advantages and Drawbacks B. The Ex Post Option Alongside the Ex Ante Option: A Comparative Perspective 1. The Talmudic Ex Post Model 2. Post-Talmudic Applications IV. Intermediate Versions A. Between Ex Ante and Ex Post: Distributing the Financing of the Cost of the Removal of the Nuisance B. An Ex Ante Version Combined with a Preliminary Injunction V. A Sketch for a Proposed New Model for the Application of the Rule: The Parameters A. Individual Versus Individual and Individual Versus the Public in Regard to Administrative Costs B. The Number of Uses that Needs to Be Evaluated C. The Nature of the Activity to Be Eliminated D. The Urgency and Imminence of the Danger of the Nuisance E. The Cost of Eliminating the Nuisance and the Cost of Mistakes F. Distributional Considerations G. The Economic Resilience of the Injurer and the Fear of Its Collapse H. Information and Evaluation Conclusion Introduction

In the hometown of one of the authors, call it town B, a high-voltage electrical power line runs next to the author's apartment in a residential building, on a street with numerous skyscrapers. According to certain measurements, the cable emits radiation in excess of healthy limits in the vicinity of residential areas. The cable is owned by the Electric Company (EC) and was installed several years before the residential buildings were constructed. The line carries electricity not to town B itself but from town A to town C. Thus, residents of the street do not benefit from the nuisance in any way. Empirical evidence indicates a certain rise in the number of cases of cancer on the street in recent years, especially among children. The residents would like the EC to move the cable elsewhere or to bury it underground. The cost of either solution is in the hundreds of thousands of dollars. The EC is not willing to shoulder the costs because the cable preceded the residents and was placed there legally. Neither does the municipality regard itself as responsible for moving the cable, despite the fact that the topic was a hot one during the mayoral elections.

Several thousand residents of the street tried to organize. The residents established an action committee that attempted to hire a lawyer to file a claim or at least an initial pleading. The lawyer agreed to work in exchange for expenses only, as she herself is a resident of the street. To this end, a collection of one hundred dollars was required from every household. The residents understand that whatever solution will be reached, they will have to pay a significant portion of the cost of moving or burying the cable. Collection is sluggish, however, and every resident relies on others to pay at first. It is difficult, therefore, to collect the funds as a precondition for the elimination of the nuisance.

Using cases similar to the above, which was an actual case, this article attempts to elucidate the issues involved primarily from an economic point of view, as articulated in Calabresi and Melamed's writing on nuisance (known as the "four rules" or "the cathedral"), (1) as well as in other sources. Calabresi and Melamed's four rules, describing the distinctions between property rules, liability rules, and inalienability, are clearly applicable to the EC case. We focus our analysis on the challenging Rule 4--a liability rule for the damaging party, whereby the victim has the right to prevent the harm by stopping the polluting activities or demanding that they be done in a way that does not pollute, but the injurer must be compensated; if the injurer is not compensated, she may continue her activities.

In Calabresi and Melamed's article, as well as in later scholarship on that article, there is no detailed discussion of how the rule works in practice. Does the victim first collect the money and compensate the injurer, and only then is the injurer required to eliminate the nuisance--what we call the ex ante version of the rule? Or does the injurer first eliminate the nuisance, and only then is the victim compensated--what we call the ex post version of the rule? Calabresi and Melamed's article, as well as other theoretical literature and the applicable case law, seem to describe the conventional account of the manner in which the rule is applied in the order of events of the first, ex ante option, and there is no reference to the possibility of an ex post version. Moreover, the literature and case law contain no comprehensive discussion of any of the following questions: Which of the versions of the rule is preferable from a consequentialist perspective--the ex ante, the ex post, or maybe a combined intermediate version? What are the considerations to be used to determine which version should be used in any given circumstance? The present article aims to clarify these questions and to introduce a new model of Rule 4 that would make it more applicable and efficient. We argue that it is possible to alter the timing of the payment of compensation to the injurer for eliminating the nuisance, in cases in which the nuisance-causing activity has social and economic value, and to implement the rule in a different format rather than renounce it entirely.

In both the ex ante and ex post versions, the victim has the right to prevent the pollution by completely stopping the polluting activities--or demanding that they be conducted in a way that does not pollute--as long as the polluter is compensated. The key difference lies in when the polluter is compensated. The application of the two versions--ex ante and ex post (2)--in different cases can serve as a solid foundation for presenting the rule in a more complex light that can help with its implementation and broaden a court's ability to pursue beneficial social or economic policy. (3)

Consider again the EC case. The problems illustrated in this case pertain mostly to the difficulty of raising the initial amount needed to file the first claim by the lawyer, who charged only for expenses. But this issue suggests the greater difficulty of raising the larger amount that the residents must pay later in order to remove the cable, if the negotiation or the legal proceedings result in a compromise in which the EC, the city, and the residents must share the high cost of transferring the cable. In this type of situation, based on the ex ante version of...