Abraham on Free Speech and Liability Insurance

Ken Abraham has posted to SSRN Free Speech, Breathing Space, and Liability Insurance.  The abstract provides:

In New York Times v. Sullivan (1964), the Supreme Court began adopting First Amendment restrictions on liability for defamation and other speech torts (invasion of privacy and intentional infliction of emotional distress), so as to create “breathing space” -- additional protection against liability for speech that has no constitutional value in itself. The idea was that the threat of tort liability should not have a “chilling effect” on constitutionally protected speech.

Alongside the rules affording breathing space for the exercise of free-speech rights is a little-known but highly important liability insurance regime that also affords breathing space, by covering defendants against liability for harm caused by unprotected speech. The theory of constitutionally required breathing space, however, takes no account of the role that this insurance against speech-tort liability plays in the operation of free speech, in theory and in practice. There have been decades of extensive legal scholarship about the First Amendment’s restrictions on speech-tort liability. Yet this scholarship wholly ignores the fact that all of the liability for the speech torts that the First Amendment does permit can be and often is covered by liability insurance. In the last few years, Supreme Court Justices Clarence Thomas and Neil Gorsuch have separately criticized existing constitutional limitations on liability for defamation as too broad, without any mention of the widespread existence and availability of insurance protecting against liability for defamation. The Justices’ criticisms of defamation law garnered a lot of attention and a barrage of responses, which have also omitted any reference to the possible relevance and significance of liability insurance to the debate about the proper scope of defamation liability.

This Article takes insurance against speech-tort liability out of the shadows, bringing First Amendment theory and doctrine into the orbit of thinking about liability insurance and its operation in practice. The Article identifies and analyzes the sources and scope of the coverage that insurance provides against speech-tort liability, combining insights about the complex and intertwined consequences of the threat of speech-tort liability with what we know about how liability insurance both creates breathing space and attempts to mitigate excess risk-taking by those who are insured. Finally, the Article considers the relevance of liability insurance to analysis of the speech torts, arguing that, with an awareness of the breathing space that liability insurance provides on the table, we cannot avoid what would amount to a wholesale review of the proper scope of constitutional protections against speech-tort liability.