Framing and terminology
In order to frame the scope of our analysis, we should clarify some of the terminology that will be used in our analysis, distinguishing some interrelated concepts that are commonly associated with the notion of “burden of proof.” These concepts are operationally interdependent but theoretically distinct: “legal presumptions,” “burden of production,” and “burden of persuasion.” Legal presumptions are rules that allocate the initial burden of evidence production, specifying which party is required to “produce” the evidence (or, as Adler & Michael 1931, p. 63 put it, which party has the “burden of coming forward with the evidence”). A favorable presumption shifts the burden of producing evidence on the other party.Footnote 3 The concept of burden of persuasion, instead, defines how evidence should be weighted and how much probative evidence should be offered to convince the fact finders. Standards of proofs, such as “more likely than not,” “preponderance of evidence,” “clear and convincing evidence,” or “beyond a reasonable doubt,” are examples of standards that determine the applicable burden of persuasion.Footnote 4
In this paper, we compare the traditional rules that place the initial burden of producing evidence on the plaintiff (“presumptions of non-negligence”), to the alternative rules that place the burden of producing evidence on the defendant (“presumptions of negligence”). As it will be discussed in Sect. 3, an important effect of a shift in the initial burden of production is in (re)allocating the accident loss when parties face probatory difficulties. Presumptions of negligence (non-negligence) lead to a default judgment in favor of victims (injurers) when the party who bears the burden of proof is unable to provide sufficient evidence to overcome the legal presumption according to the applicable standard of persuasion. Under either presumptions, default judgments rendered in the absence of conclusive evidence may lead to inaccurate legal outcomes. Non-negligent injurers could face liability under a presumption of negligence, and negligent injurers could avoid liability under a presumption of non-negligence. These are not decision errors that can be attributed to a mistaken evaluation of the evidence by the court, but errors that result from the non-verifiability of the events. We examine the effect of alternative legal presumptions—and the effect of alternative default allocations of the accident loss—on parties’ care incentives.
Similar to what would occur in the case of unitary evidence considered by Hay and Spier (1997) and Gomez (2002),Footnote 5 we assume that under either presumptions when the burdened party is unable to prove the negligence of her injurer, there is no need for the other party to produce any evidence: the presumption entirely liberates the non-burdened party, without any need for him to offer contrary evidence to support his case. For example, under a presumption of non-negligence (negligence), when the victim (injurer) is unable to prove the injurer’s negligence (his non-negligence), the case will be decided in favor of the injurer (victim), without any need for him to produce evidence. Given this effect, following previous economic modeling of legal presumptions (e.g., Hay & Spier, 1997; Gomez, 2002), we will bracket off from our analysis the shifts in the burden of production that may occur between the parties during a tort case.
Presumptions of negligence: a brief survey
In the twentieth century, following the increase in accident rates triggered by the use of new technologies in the management of business and the rise of the automotive industry, some legal systems in Europe introduced presumptions of negligence in various categories of torts. Rules of presumed liability for enterprise liability were endorsed at the academic level by scholars such as Achille Loria (1857–1943) and other scholars belonging to the so-called “legal socialism,” which grounded the idea of presumed liability on what became known as the “risk theory of profit.” Their idea was that tort liability should be considered as a cost of running a profitable activity, and there should be a presumed attribution of liability on the person carrying out the activity or generating the risk, unless proven otherwise (Frezza & Parisi 2005). The 2005 “Principles of European Tort Law” identify presumptions of negligence as the recommended tort principle for the “harmonization, rationalization and innovation of tort law at national and EU level” in the field of enterprise liability. The recommended rule reads as follows: “Art. 4:202. Enterprise Liability. (1) A person pursuing a lasting enterprise for economic or professional purposes who uses auxiliaries or technical equipment is liable for any harm caused by a defect of such enterprise or its output unless he proves that he has conformed to the required standard of conduct.”
In the field of traffic accidents, Germany adopted a mix of strict liability and presumed negligence rules, as early as 1909. Specifically, the Liability Provisions of \(\S\)7 of the German Road Traffic Act (Strassenverkehrsgesetz, hereinafter StVG) provides the central rule establishing a form of semi-strict liability for the owner or keeper (e.g., lessor) of a motor vehicle, for the damage caused by the operation of the vehicle killing, injuring, or creating material damage to third parties. In such cases, liability can only be avoided showing that the accident was the result of force majeure, or the vehicle was used without the knowledge and permission of the owner.Footnote 6 When the driver is not the owner, the Traffic Act introduces a second ground for avoiding liability under \(\S\)18 StVG, allowing the operator to prove that the loss was not due to his or her fault.Footnote 7 Under this rule, liability can be avoided also by the owner and the keeper by showing that due care was exercised or that the accident was not caused by the failed adoption of non-negligent precautions.Footnote 8 Under the German Traffic Act \(\S\)17, when an accident occurs between two motor vehicles, a rule of presumed liability applies. In such cases, liability is apportioned according to the circumstances and the principles of comparative negligence, and can only be entirely avoided by the parties by proving they have acted with due care.Footnote 9
The Italian rules of presumed joint negligence in traffic accidents are a bit more elaborate. The Italian Civil Code of 1942 applies a rule of presumed liability for accidents caused by a motorized vehicle causing harm to non-motorized vehicle, persons, or things, and establishes a rule of “presumed joint liability” (or, “presumed joint negligence”) for accidents between motorized vehicles. Under the Italian rule, in the event of a collision between motorized vehicles, drivers are presumed jointly negligent.Footnote 10 Each party is presumed to have contributed equally to the accident and bears the burden of producing evidence to overcome the presumption and avoid their share of liability. If only one party can produce satisfactory evidence about their non-negligent behavior, the other party is held unilaterally negligent and bears the entire loss, as injurer (facing full liability) or as victim (facing the full loss, with no compensation). When neither party can prove his or her non-negligent behavior, the Italian rule leads to a sharing of the loss, similar to a rule of comparative negligence.
The shift in legal presumptions has not affected the standards of persuasion that apply to those areas of the law.Footnote 11 Regardless of who is burdened with the production of evidence, the evidence needed to rebut the presumption should meet the applicable standard of persuasion. For this reason, in our analysis we focus on the effects of changes in legal presumptions and burdens of production on care incentives, without considering the effect of hypothetical changes to the applicable standards of persuasion.Footnote 12
Related literature
The law and practice of evidence place an important weight on the role of legal presumptions. Although legal presumptions have spawned a vast literature within legal scholarship (e.g., Allen, 1981, 1994; Wilkinson, 1992), this topic has received surprisingly little attention within the literature of comparative law and economics. Only a few recent attempts to explore the theoretical quagmire of legal presumptions have analyzed their incentive effects (Hay & Spier, 1997; Daugherty & Reinganum, 2000; Bernardo et al., 2000; Gomez, 2002; Demougin & Fluet, 2006; Sanchirico, 2008; Talley, 2013).Footnote 13 The standard evidence rule—placing the burden of proof upon the victim, even though the required evidence relates to the activity of the injurer—rests on a variety of rationales often embedded in notions of procedural economy (Hay, 1997; Hay & Spier 1997; Shin, 1998; Sanchirico, 2000, 2001), reliability of evidence in the face of the risk of contamination (Sanchirico 2004, 2008), and more general concerns of procedural justice and the logical foundations of the law of proof (Talley, 2013).
One argument put forth for the standard evidence rule is that the burden of proof should be placed on the person making an assertion or claim because shifting the burden of proof to the other party would constitute a logical fallacy—it would presume the claim to be true unless otherwise disproven. In other words, the person defending against a tort claim would face the formidable burden of providing a negative proof showing a lack of negligence on his part.Footnote 14 Despite the logical soundness of this argument, the factual premises of the negative-proof fallacy do not generally hold in a tort setting, especially after the transformations brought about by new evidence technology. Proving a lack of negligence by the injurer (or, for this matter, proving that any other element of the tort was not present at the time of the accident) does not entail the proof of a universal negative, but instead simply amounts to proving that the injurer acted non-negligently. While at times it may be easier for a victim to prove the negligence of her injurer, at other times it may be easier for the injurer to prove his non-negligence.
Although there may be many ways in which an injurer could have been negligent, with modern technology parties can prove that they lived up to their duty of care and provide visual or electronic evidence that their activities complied with reasonable levels of non-negligence. New evidence technology provides users with instruments that can keep record of events, such as dashcams, black-box technology, and other instruments installed and carried on human bodies or vessels, which can record and track the activity of the owner or third parties in the event of an accident. These developments suggest that the conventional wisdom—according to which positive proofs can be more easily satisfied than negative proofs, and the burden of proof should therefore always be placed on the plaintiff making the assertion or claim (Adler and Michael, 1931)—no longer applies in the contemporary world of judicial discovery. Indeed, policymakers have argued that nowadays, injurers’ ability to prove that an accident was not caused by their negligence is greatly facilitated by these modern technologies.Footnote 15
Under U.S. tort law, the exceptions to the traditional presumption of non-negligence seem, at least as far as current case law goes, more limited in scope—though evidence is not systematic—and conventionally explained as instrumental to reducing the cost of discovery when facts are self-evident. One such exception to the presumption of non-negligence arises when the accident could not have normally happened absent the injurer’s negligence. Under this rule, known as the res ipsa loquitur doctrine (“the facts speak for themselves”), courts depart from the traditional presumption of non-negligence because the facts are so obvious that requiring parties to argue any further would seem redundant (Carpenter, 1934; Shain, 1943; Prosser, 1949; Grady, 1994; Porat & Stein, 2001).Footnote 16 In negligence trials, this doctrine de facto shifts the burden of producing evidence onto the injurer, leading to an implicit move towards strict liability (Demougin & Fluet, 2005; Cooter & Porat, 2008; Salvador-Coderch et al., 2009; Ulfbeck & Holle, 2009).
In this paper, we examine the effect of these two alternative legal presumptions, i.e., presumption of negligence (or, presumed liability) versus presumption of non-negligence, on parties’ care investments. Our analysis departs from much of the previous literature on burdens of proof which linked the choice of presumptions to parties’ relative cost of discovery, truth-finding by the court, and litigation incentives. Closely related to our paper is Hay and Spier (1997), which analyzed the effects of alternative evidence rules on parties’ care incentives within a complete-information accident model.Footnote 17 In a setting of full liability without judicial error, Hay and Spier (1997) have established their “neutrality result:” the injurer chooses efficient precaution independent of whether the injurer or the victim has the burden of proof. However, placing the burden of proof on the plaintiff is socially desirable because, in equilibrium, the costs of presenting evidence will be saved. A similar conclusion is reached by Demougin and Fluet (2008). This neutrality result is based on two crucial assumptions: (i) the peculiar shape of full liability with its discontinuity at efficient precaution; (ii) the absence of discovery errors. Relaxing those assumptions may yield different conclusions. In fact, Gomez (2002) has shown that the neutrality result may disappear when full liability is replaced by Grady-Kahan-liability. Here we further show that, in the presence of discovery errors the neutrality result may disappear even under full liability (with its discontinuity that drives the neutrality result of Hay and Spier (1997)). Our findings reveal that alternative allocations of the burden of evidence production do affect care investments and deterrence when parties face probatory difficulties. We contrast our results to those put forth by Hay and Spier (1997) and Demougin and Fluet (2008), showing the relevance of legal presumptions on the social cost of accidents.