The Theory of Enterprise Liability and Common Law Strict Liability

Abstract

The proposed Restatement Third, Torts: General Principles takes the position that there is no general conception of strict liability, only special instances of such liability. This paper argues that there is indeed a general conception of strict liability, namely, enterprise liability, and that enterprise liability is a conception of responsibility for harm done equal to and competitive with the fault principle. Enterprise liability emerges early in the 1900's and expands in influence throughout most of the twentieth century. At the very moment when fault theorists like Ames and Jeremiah Smith were proclaiming the triumph of the fault principle in the common law of torts, enterprise liability burst full-blown on the legal landscape, with the enactment of the first Worker's Compensation Acts. These Acts, as Jeremiah Smith saw, were "founded largely upon a theory inconsistent with the common law of torts." That theory - the theory of enterprise liability - went on to spread throughout the tort law of accidents, reshaping preexisting forms of strict and vicarious liability and blossoming in the products liability regime inaugurated by Section 402A of the Second Restatement. Enterprise liability played an important role in tort accident law throughout the twentieth century, expanding the domain of strict liability relative to negligence and increasing the strictness with which certain doctrines (such as res ipsa loquitur) were interpreted. Even during the current renaissance of negligence liability, enterprise liability continues to exert a powerful subterranean influence on the way negligence doctrine is formulated in such disparate areas as medical malpractice, special relationships and duty. The proposed Restatement, Third's portrayal of strict liability as a set of isolated exceptions to a general regime of fault liability is thus untrue to the history and theory of the tort law of accidents as it has come down to us at the start of this century. More disturbingly, this slighting of enterprise liability and celebration of fault liability covertly contributes to its own realization. By writing enterprise liability out of our law and treating all instances of strict liability as special cases with particular histories and peculiar rationales, the proposed Restatement, Third fosters the triumph of negligence over strict liability, a triumph it purports merely to find.