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A number of the cap statutes, primarily medical malpractice damages caps, have been challenged under both state and federal constitutions.(n380) The specific grounds for these challenges have been the alleged grant of special privileges or enactment of special laws,(n381) or the failures to provide equal protection,(n382) due process,(n383) a remedy for wrongs,(n384) access to the courts,(n385) or an effective right to a jury trial.(n386) One recent decision claims that more of these challenges have been successful than not.(n387)

The medical malpractice scenario is generally quite different than that of third party claims against auditors. There is usually a single victim of medical malpractice, whereas third party victims of negligent auditing can be a broad class. When there is a class, it would have to be determined whether the cap would represent a single fund to be allocated to individual claimants, whether the cap should be applied to each individual claim, or whether both types of caps should be employed.(n388)

The principal justification for caps on auditors' liability, we think, is that auditors are relatively minor players in the scenarios that give rise to massive losses.(n389) Their "take" from the enterprises they audit is limited to a fee based on time spent in the engagement. Inasmuch as their gain is limited, arguably, so should their liability be limited. The third party who has suffered extensive loss, however, will argue that this result would be unfair because those with small losses might recover fully, while larger claims would be less than fully satisfied.(n390)

A statutory cap system for auditors was proposed for Australia in 1987.(n391) The proposal linked the maximum auditor's liability "to all persons" to a sliding scale based on the audit fee.(n392) This scheme impliedly recognized that there is a legitimate connection between the auditor's gain and her liability exposure. The proposal included a requirement to carry adequate insurance based on historical fee experience, and it provided for unlimited liability in the event of willful conduct.(n393)

The authors are receptive to the idea of statutory damage limitations. We think that United States tort law with respect to liability has been, on the whole, well developed; but we feel that our damages law is out of control. Although we can see the justification for assuring full compensation in the case of physical injury, we find such relief for pecuniary loss less compelling. This is particularly true for large losses. When an investor or creditor ponies up a large stake for an enterprise, he is on notice that special precautions are in order. If he is content to rely entirely on management's audited financial statements, he had better be prepared for serious risk sharing. On the other hand, a smaller investor or creditor is not as economically well positioned to make independent financial investigations - thus, there is a "rational basis" for a classification system that promises greater legal protection for smaller stakes than larger ones.(n394)

Having voiced support for something akin to the Australian plan, we are doubtful that the scheme has much of a future for the short term in the United States. Damage limitation proposals have met determined opposition in the medical malpractice area and are likely to meet similar resistance in this one. When state legislatures have been persuaded that insurance crises exist, the courts have found a surprising number of grounds for declaring damage cap legislation, even for noneconomic damages, to be repugnant to constitutional guarantees. One could anticipate that


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