Date: Fri, 25 Jul 2003 11:34:50 -0600

From: Lewis Klar

Subject: Insurance/Principles/Policies

Re: Insurance

I find Jennifer's distinction between courts not allowing the existence of insurance to influence results of particular cases but courts taking into consideration "insurance practises" in designing general rules difficult to understand.

Surely when the SCC said it would not find auditors liable to a wide class of investors because it would make their liability insurance too expensive they were allowing the issue of who actually pays the plaintiffs a factor in deciding the case. After all, why should the SCC care about how expensive insurance is? Only because if it is too expensive auditors might presumably not insure themselves adequately which might affect the issue of who pays the plaintiffs. Insurance is either relevant to deciding tort cases or it is not * saying it is not relevant in affecting the outcome of a particular case but relevant in designing general rules ( which will of course affect the outcome of a particular case) seems to me to be splitting hairs.

Re: Income Assessments

I totally agree that correct data should be used in calculating earning capacity and if the data which is now used is biased, too crude, or otherwise inaccurate, it should not be used. Thus assumptions courts may be making about a female plaintiff's earning capacity may be wrong and if so courts should make better assumptions.

The point however is when the court know what the figure is but does not agree that it is a "fair" figure, what should the court do? Should it say: I do not think it is fair that the CEO of the company makes so much money compared to the janitor and I am going to fix it by awarding a fair amount. Or should it just make the award and leave it to others to adjust salaries in society. I would doubt that many would favour the former solution.

Re: Politics/Principles

We all agree that law is influenced by policy. Also that judicial openness is a good thing. My struggle has been to explain why I do not think the effect on the insurance premiums on auditors if ordinary negligence law is applied to them ought to matter one fig to the court. I guess I am still attracted to Dworkin's distinction between policies and principles (the former relating to goals and the latter to values) as explaining my unease. What value is achieved by keeping auditor's premiums low, even if that is a good policy?

Lewis

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