Tag Archives: comparative fault

TORT REFORM IS DESTROYING OUR JUDICIAL SYSTEM

I watched the HBO documentary “Hot Coffee” last night and it got me all fired up about¬† tort reform. For those of you who are less legally inclined- a tort is a wrongful act that results in some kind of injury, so a tort lawsuit can generally be considered to be an “injury” lawsuit.

I have a few major points to make on this issue, but for starters, I would like to provide some basic background facts on the most widely recognized (and widely misunderstood) tort suit in American history: the spilled McDonald’s coffee case (a full explanation is available here).

Stella Liebeck, at the time, was a 79 year-old New Mexico resident. She went to a McDonald’s drive through one morning, riding in the passenger seat of her Ford Probe, which at the time was a type of car that did not have cup-holders. Her grandson was driving the car. After purchasing some breakfast items, along with an extremely hot cup of coffee, her grandson pulled the car into a space in the McDonald’s parking lot and handed the coffee to his grandmother.

Liebeck, like many, takes her coffee with sugar and cream, and thus after the car was parked she went to remove the lid to put them in. Holding the cup between her knees, she went to remove the lid, and accidentally tipped the cup towards herself, spilling the entire cup of coffee between her legs. This was the result:

THESE IMAGES HAVE BEEN COMPRESSED TO LINKS DUE TO THEIR GRAPHIC AND UNSETTLING NATURE. THEY ARE NOT FOR THE FAINT OF HEART. YOU HAVE BEEN WARNED!

IMAGE 1/IMAGE 2/IMAGE 3

What you are seeing are full-thickness burns and the skin grafts that were required to treat them (real funny, right Seinfeld?). They were caused by the coffee that McDonald’s served to Liebeck. McDonald’s policy at the time was to keep their coffee at 180-190 degrees Fahrenheit. The machine that the coffee came from was in compliance with that policy.

People spill things, and accidents will inevitably happen. I’m sure you’ve spilled things on yourself before. This is the exact reason that McDonald’s should not be keeping its coffee at such high temperatures- it will eventually make contact with someone’s crotch. People can’t drink the coffee when it’s that hot, so there is no reasonable justification for keeping it at that temperature. This, my friends, is why McDonald’s was held liable for damages.

Now on the subject of legal damages, I have several points to make. Liebeck asked McDonald’s to settle with her for 20 thousand dollars, which would have been sufficient to cover her medical costs. All she wanted was to have her medical bills paid, and McDonald’s to consider using better lids on their cups (which they now have). McDonald’s refused, offering only $800. In response, Liebeck sought an attorney, and later settlements of 90 thousand and 300 thousand were requested on her behalf. No settlement was reached.

At trial, a theory of comparative negligence was argued. What that means in layman’s terms is that the jury was asked to assign percentages of fault to both the plaintiff (Liebeck) and the defendant (McDonald’s). Whatever the total compensatory damages are determined to be (as decided by a jury based on the evidence/arguments presented by counsel) would be adjusted and awarded accordingly. Thus if the total damages were $10, and each party was 50% at fault, the defendant pays $5 and the plaintiff is left to cover the remaining $5. This is the court’s way of acknowledging that multiple parties can be at fault and that it is not always fair to expect a defendant to cover the resultant damages in their entirety.

In the Liebeck case, the jury found that Liebeck was 20% at fault, while McDonald’s was 80% at fault. One of the reasons that the jury felt that McDonald’s was at fault to such a large extent is that evidence showed that over 700 reports of coffee burns had been made to McDonald’s, and no efforts were made to prevent them. This means that McDonald’s was well aware that their coffee could seriously burn people, they just didn’t want to expend the time or resources to replace or modify their equipment. They didn’t care how many people were harmed, because several claims for coffee burns that had been pursued in the past had been dismissed on the theory that coffee constituted an “open and obvious danger” that the customer was solely responsible for avoiding.

A jury found 200 thousand dollars in damages in the Liebeck case, which was reduced by 20% (because Liebeck was found to be 20% at fault) to 160 thousand dollars. In addition, the jury awarded Liebeck 2.7 million dollars in punitive damages, a number arrived at by reasoning that a couple of days worth of McDonald’s’ coffee revenues would not be an overly burdensome penalty to impose. The judge reduced the punitive amount to 480 thousand dollars (3x the compensatory amount), bringing the total with the compensatory damages to 640,000 dollars. Afterwards, Liebeck chose to settle out of court for an undisclosed amount that was less than 600 thousand dollars. Her overall expenses are unknown, but several years of paying an attorney to fight a legal battle against McDonald’s can’t run cheap.

Now I know what some of you may be thinking- why give so much money to this woman? Her damages are supposed to be covered by the compensatory damages. Why should she receive three times that amount in punitive damages? She’s just getting rich! I would argue that this is a narrow perspective, mainly because having to experience something like that is surely deserving of less-tangible compensation, and even then that is not the real purpose of punitive damages.

Punitive damages are not imposed so as to allow plaintiffs to get rich quick. Punitive damages are imposed in order to punish the defendant, and thus incentivize them to do whatever they can to prevent such harm from occurring again. Knowing that coffee burn claims might now be upheld in court, McDonald’s has the option to just pay people’s medical bills when somebody reports a burn to them. If you remember, Liebeck initially asked for only 20 thousand dollars. McDonald’s generates over a million dollars a day in coffee revenues alone. This is, to McDonald’s, chump change. What might not be considered chump change, is the amount of money it would take to replace all of the coffee machines (which have only an on/off switch) in the thousands upon thousands of McDonald’s establishments around the world. Thus McDonald’s might simply choose to “pay as they go”, and just compensate people out of court whenever burns do in fact occur. This does nothing to prevent more burns, it means they’ll just pay for them when they happen.

20 Thousand? Sorry, all we have are hundreds, hope that's alright.

What punitive damages effectively do is send the message to McDonald’s that if they continue to neglect to address the issue of their coffee being so hot and burning customers, then they will be held accountable for the fact that they knew the risk existed. This is a valuable tool for our justice system, because it allows the system to not only make people whole, but prevent them from being harmed in the first place. It makes for a safer society, and it incentivizes large corporations with deep pockets to consider the safety of their customers to be important to their bottom line. Thus, though punitive damages may result in an individual plaintiff “profiting”, they actually serve a higher purpose.

It should be noted that punitive damages are the hardest damages to prove, and that once corporations are aware of them, they have the incentive to do everything they can do behave in ways that are undeserving of punishment. That’s a nice little system in my opinion.

Now, more broadly- tort reform. Tort reform is a phrase that has found wide usage among conservatives. In reality, tort reform seeks to limit the circumstances (which are based on well-established and reasoned case law precedents) in which a suit can be brought, limit the circumstances where a jury can serve as the decision-maker, and limit the maximum damages that a defendant can be held liable for (I will discuss capping damages in more detail later on). All of these are limitations on plaintiffs, and protections for defendants. Plaintiffs already bear the burden of proof. Thus a more fitting term might be tort deform, but that’s neither here nor there.¬† Most of the people who talk about tort reform ignorantly and erroneously cite the Liebeck case as an example of abuse.

In fact, shortly after the case hit the media, corporate PR operations have done everything they can to spread the word in a psuedo-grassroots way. You might think of such false activism “astroturf”, if it pleases you. Shameless efforts to make frivolous lawsuits a hot-button issue have gone on unabated for years now, with memberless front-groups and PR “activist” websites being funded by large corporations that want to do everything they can to convince the population that altering the tort system to disfavor individual complainants is not just common sense, but in the people’s interest. It is absolutely not.

Proponents of tort reform deceptively suggest that our judicial system is incredibly inept in terms of tort law. I, along with many tort attorneys and law professors across the country, can assure you that such is not the case. Our judicial system is based upon precedent, and when a precedent is set it may be overturned or modified by higher courts. The end result is a system that self-corrects and dynamically evolves when it is faced with new fact-patterns. This is a good system, and more importantly it is a system that is significantly more resistant to monetary incentives than the legislative and executive branches, whose relationships to campaign contributions have proven a major source of corruption and conflicts of interest.

In addition, this notion that there are an overwhelming number of claims that are, at their heart, groundless is fundamentally flawed. Why would someone who knew they had a baseless claim spend money on an attorney? I can assure you that I wouldn’t take a case that I knew to be frivolous. It wouldn’t be worth my time. Its chances of success would be negligible. I would feel ethically disgusted that I was putting another person’s money to waste while giving them false hopes of success. Those are the kinds of practices that malpractice suits are won over. It’s unsustainable on every side and thus it doesn’t happen often. The system disincentivizes frivolous suits, and thus there is no need for legislation.

Papercut? Who do I sue?

Now to get back to the specifics of what tort reform really means. You may wonder why limiting the amount of damages in tort cases might be considered a bad thing. Such a limit would mean that people with frivolous claims (that somehow manage to penetrate the heavy scrutiny of our courts) would not be able to get their multi-million dollar payday, and therefore caps on damages are a good thing, right?

Wrong, on two points. First, the number of multi-million dollar “paydays” that occur is extremely limited (and when they come, they are rarely paid out all at once, they are paid in annuities). Second, although caps theoretically prevent people from scamming the system, in reality they prevent justified claims from being fully compensated. It turns out that our system is actually pretty good at justifying damages. Say your kid chews on a toy and it happens to be coated in lead paint, and he ends up with brain damage as a result. Maybe he needs a wheelchair and will never be coherent enough to talk. How do you value damages?

The kid will need constant care for the rest of his life, and constant care means constant cost. Either a parent will have to permanently tend to the child, or more likely a professional nurse or caretaker will be required. Also, brain disorders require medical care. Frequent brain scans, developmental monitoring, and treatments may be necessary. Consultation with specialists will be inevitable. Speech, physical, and psychological therapies may be needed. The kid was going to go on to be a productive, wage-earning member of society, or maybe not. You have to use statistical averages to determine how much he could reasonably have been anticipated to have earned. Damages might also reasonably include loss of consortium (companionship, friendship, inability to meaningfully interact with parents, etc.). Serious injuries can decimate families in ways the average person can’t even imagine. People tend not to realize these things until it happens to them.

All of these factors and many, many more must be considered at the time the damages are awarded. There are no do-overs. The money you award to such a plaintiff has to anticipate how long the plaintiff will live, how inflation will effect the value of the judgement, along with all of the possible costs that are likely to be incurred over the course of a lifetime. Not all tort cases only involve spilled coffee and one-time costs, and those who support capping damages like to pretend that they do.

No matter where it's damaged, it's bad, bad news.

There are other problems with a cap. In states where there are caps in place, we have seen what the end result really is. If a person has 10 million in legitimate damages and the cap is 1 million, what do you think happens? The person gets their million, and they use it for the care or continuing care of their injury. Then when they require additional money they turn to medicare/medicaid/welfare to receive treatment and pay their bills (many injuries render the individual or their guardian unable to work and earn income), thus passing the cost along to the taxpayer. In effect, the corporation is abusing our safety net of entitlement programs by proxy. Does anyone else find it ironic that a conservative policy results in the abuse of entitlement programs?

Big corporations are money-making enterprises. The people who head them, and the markets they are bought and sold on, are driven primarily by the bottom line. This means that the true impetus at work in a large-scale corporation is profit. Profit is the lifeblood of a corporation, and I am willing to concede that a corporation is entitled to making a profit- they have to to survive and thrive to stay in business. On the other hand, paying people who are injured as the result of the negligence of the company, though it cuts into its profit, isn’t going to bankrupt billion-dollar entities like McDonald’s.

A corporation is (often) a very large, unresponsive, intimidating amalgamation. One of the most common tactics employed by large corporations is to play down their responsibility or ability to provide redress. Betting that people will be too intimidated or lack the financial means to pursue a drawn-out legal battle has been proven time and time again to be a winning bet. The odds are only improved when there is an attitude among the population that most suits against corporations are frivolous. Tort reform is the deception that has created that attitude.

Tort reform takes the power out of the hands of the jury (a power which you are constitutionally guaranteed access to, by the way) and puts it in the hands of legislators. This, in and of itself, makes a mockery of the separation of powers. We should be keeping our legislative powers in the legislature, and our judicial powers in the judiciary. Judges have the power to regulate jury verdicts that might be considered to unjustly enrich a plaintiff (as shown by the fact that the 2.7 mil in punitive damages from the Liebeck case was reduced to 480 thousand), but not even a judge has the discretion to permit damages to exceed a cap- that’s why it’s a cap. Apparently judges should be considered just as untrustworthy as juries. What a paranoid and self-defeating perspective to operate from…

The reason tort reform is championed by conservatives as a solution to our nation’s problem with frivolous suits (which remember, are not nearly as prevalent as they would have you believe) is that it isn’t really meant to be one. It’s meant to protect corporate interests, and unfortunately, today those interests are largely ensured through campaign contributions. That has been doubly guaranteed by the 2010 Citizens United SCOTUS decision that delimits corporations from contributing to political campaigns (not that they weren’t getting the money in the right pockets through PACs before, but now such techniques have been given the official stamp of approval and thus their use can only be expected to increase).

If corporations can’t get tort reform legislation passed in a certain state, they just throw tons of money at campaigns to elect pro-business judges (who will never uphold major decisions against corporations) to state supreme court positions. Thus, even if a jury finds on behalf of a plaintiff, when the corporation appeals they will eventually just arrive at a court that is biased in their favor. If their campaign fails, they’ll level bogus charges of tax fraud or corruption against the justice (regardless of if they’re evidenced), and thus remove them from the bench by forcing their suspension during the drawn-out proceedings.

I WANT YOU to hang tight while we deal with the irony of these allegations.

But wait! It gets better. In a preemptive effort to cut this entire judicial process out of the picture, hundreds of large corporations now include binding arbitration clauses in contracts, almost always hidden away in fine print. You have probably signed one. Many industries, such as cell phone or credit card industries, have these clauses no matter what company you choose to do business with.

What arbitration agreements do is either bar you entirely from pursuing a claim, or require that you pursue your claim through a company-employed mediator. Arbitration agreements that are signed by employees have been known to effectively waive the right to sue if, for instance, a person is raped on the job because the company failed to perform proper background checks on its employees and hired a convicted rapist. Rape is not the only type of injury that cannot be addressed in the courts as a result of such binding agreements.

The argument for this is that it will reduce the burden on the court system and save companies from having to spend money and time in court. However, if you think that a mediator that works for one of the parties (the corporation) is objective and acting in the interest of justice, you need to wake up. These arbitrations are secret, they’re non-transparent, and you have no route of appeal. They often require the person to keep silent about every aspect of the situation. In the example of a rape case, this means that if rape is in fact a common occurrence among female employees, women who have been raped are legally forbidden to inform their fellow female coworkers of the risk and the fact that it is going unaddressed.

There is no requirement that an arbitrator explain their decision, they simply say that one side wins (which do you think tends to win?) and the deed is done. Arbitrators are hired and fired at will by the corporation, and thus they will always rule in favor of the corporation because their job is on the line. Because binding arbitration agreements have saturated so many industries, most injuries that occur to consumers or employees where a signed contract is involved stand no chance of even making it to court these days.

Our system is corrupted. It is currently controlled by money and heavily influenced by corporate interests, rather than the interests for which it was designed- the people’s. Realize that corporations have shown themselves to act primarily in one interest- their own.

Vote. Vote! It’s the only thing we can do to resist these aggressors to our democracy. Reject candidates who support tort reform and the privatization of public services, because whether they know it or not, they are supporting corruption and the avoidance of justice. Such policies have led to some of the most agregious injustices ever to have occurred in American history.

Tort law is what keeps things fair. In a fair court, a 79 year-old woman has the same chance of winning as a massive, multi-billion dollar corporation. The tort law system is what keeps businesses from lying and cheating and stealing and making dangerous products. One of its major purposes is to force them to take their customers’ safety seriously, and thus a strong tort system is essential to the protection of the American people. Imposing caps and limitations will only result in the abridgment of that protection. Not only is tort reform unjust, it’s morally indefensible, and only through raising awareness (sharing this article will serve that purpose) do we stand a chance of abolishing such misdirected policies from our great American society. In doing so, we will make progress.

Painfully. Slow. Progress.