Remedies and the Psychology of Ownership

Abstract

I. INTRODUCTION It is surprising that there are cases like Boomer u. Atlantic Cement Co.1 The plaintiffs in Boomer were eight homeowners seeking injunctive relief against the dust and noise produced by a neighboring cement plant, the Atlantic Cement Company. The trial court declared Atlantic Cement a nuisance, but refused to enjoin the plant's operations.2 Instead, the court awarded monetary damages to the plaintiffs for the loss in value to their property attributable to the defendant's activities. The dissatisfied plaintiffs appealed, but ultimately New York's highest court declared that they were not entitled to injunctive relief.3 That the plaintiffs sued the plant is not surprising; Atlantic Cement's operations produced a tremendous amount of noise and dust.4 The striking aspect of the case is that the plaintiffs spent the time and money to appeal the type of remedy, even though they had won the right to substantial damages. Clearly an injunction had special value for the Boomer plaintiffs-but why? This Article presents evidence that people do not regard rights protected by damages remedies as being owned in the same way as rights protected by injunctive relief. The former can be taken by another without the right holder's permission, whereas the latter cannot be taken without the right holder's permission. The power to refuse to sell a right is a critical psychological component of ownership, and damages remedies do not include this power. When the trial court refused to grant the Boomer plaintiffs an injunction, it took away their power to refuse to sell their rights to Atlantic Cement, thereby undermining their status as owners. Law and economics has an alternative account of the Boomer plaintiffs' motives. Application of the Coase Theorem suggests that the plaintiffs were hoping to use an injunction to extract a large settlement from the defendant.5 According to Coase, parties regularly trade their legal rights, and so the homeowners might have been hoping to improve their bargaining position before ultimately selling their rights to Atlantic Cement. The right to shut down Atlantic Cement's plant would have been a valuable right, indeed, as the plant had cost $45 million to build and supported a payroll of 300 employees.6 The eight homeowners could conceivably have demanded a sizeable portion of Atlantic Cement's future revenue stream in exchange for allowing the company to continue operating. Furthermore, the homeowners had reason to be dissatisfied with the size of the damages remedy that the lower court provided. The Boomer plaintiffs, like most homeowners, probably valued their property at an amount greater than the market-price damages that the courts used as a measure of compensation. The present owner of a right is likely to be the party who most values it (or else they would likely have sold it). This suggests that the market-price damages would have undercompensated the plaintiffs. In this view, the plaintiffs were using the leverage that an injunction would provide either to extort Atlantic Cement or to recover the subjective value they had for their homes. Understanding the Boomer plaintiffs' motives is not a mere academic inquiry. Boomer is a paradigmatic nuisance dispute. As such, it plays a prominent role in debate concerning the appropriate allocation of and protection for property rights.7 Courts and legislatures must constantly decide how to allocate and protect rights, and Boomer squarely presents both of these issues. The court in the Boomer case could have given a right to pollute to Atlantic Cement or given the right to clean air to the plaintiffs. If the court had given rights to the plaintiffs, it could have protected them with monetary damages (a liability rule) or injunctive relief (a property rule).8 The Boomer plaintiffs' motives should matter a great deal to courts and legislatures as they make these choices. Their motives reveal what it is that property owners value, try to protect, and expect the law to protect. …

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