|What Is Tort Reform, and Why Is It Bad?
||[09 Jul 2003|05:06pm]
There’s an interesting dichotomy regarding the public’s perception of lawsuits in America. On one hand, we love the little guys, the Erin Brockovich’s, and the myriad characters in John Grisham’s novels. We hate “big tobacco”, and cheer the multibillion dollar settlements in the tobacco litigation. Americans, as a general rule, are distrustful of big corporations. The accounting scandals on Wall Street have left the public with the perception that the bigger the company, the deeper the corruption. We get enraged when we hear about companies putting the bottom line ahead of the safety of their customers. Yet, despite our predilection to root for the underdog, many Americans support tort reform.
What is a tort, and what is a tort reform? The classic legal textbook about Torts is called Prosser and Keeton on Torts. In that book, one definition offered of a tort is a “civil crime”; an act that is illegal, but is not criminal. The most common type of a tort is an auto accident. Medical malpractice claims are also torts. Tort reform is the efforts of some – usually corporate entities – to “reform” lawsuits so as to prevent “runaway verdicts” that range into the millions, and in the case of big tobacco, the billions of dollars.
Often, tort reform, or “tort deform” as its detractors call it, revolves around damage caps. These damage caps generally refer to what are called “noneconomic damages”. Noneconomic damages include things like pain & suffering, mental anguish, and the like. To better illustrate, let’s say you’re in a car wreck and your car receives $5,000.00 in damage, and you need $5,000.00 in medical treatment. You would have $10,000.00 in economic damages. If you were to receive another $7,000.00 for pain & suffering – maybe you broke an arm and couldn’t use it for a few months – that $7,000.00 would be your noneconomic damages.
When you hear about multimillion dollar jury verdicts, they usually involve what are called punitive, or exemplary damages. Let’s take a look at what punitive/exemplary damages are, and are not.
First, punitive/exemplary damages are not intended to compensate or reward the individual who was wronged. The definition of exemplary, in this context anyway, is “to serve as a warning. The definition of punitive is “inflicting or aiming at punishment.” That means that p&e damages are to punish a party who did something that the jury wants to make sure never happens again. Over time, its been found that the most effective way to punish a company for engaging in unethical or illegal behavior is to make them pay money, kind of like a fine. Of course, that fine happens to go to whomever brought the lawsuit. In some cases, a Plaintiff in a lawsuit might get a really large amount of money. Perhaps that award may far exceed any reasonable amount of compensation for how much that Plaintiff could have really suffered. Those large verdicts and seemingly greedy Plaintiffs are what the public sees.
Let’s take a burn case for an example. What if a company was making $1.3 million dollars a day selling a product that they knew was causing second and third degree burns to their customers? What if during the ten years they offered this product, over 700 people had been badly burned – some permanently disfigured – by this product? What if this product was sold as something harmless, even common, but that company knew that their product would cause third-degree burns to the skin within two seconds of contact with that product if you were to accidentally drop it? Finally, what if that company called those 700+ burn victims “statistically trivial” and had no intention of fixing the product? What would a fair award be for the callous indifference of a multibillion dollar corporation that made $1,300,000 per day - $474,500,000.00 per year - by selling a product that horribly burned over 700 men, women, and even infants? This isn’t a fictitious case. This was the famed “McDonalds coffee case”, and in that case, six men and six women found that an appropriate punishment for their behavior was to “fine” them the profit from just TWO DAYS of coffee sales.
McDonalds sold their coffee at 180-190 degrees, a temperature that no human could drink, as it would cause third-degree burns within 2-7 seconds of contact with skin. Over 700 people had been burned within the ten years prior to the McDonald’s coffee case, yet McDonalds wouldn’t lower the temperature of their coffee.
The important fact of the case is that the day after the verdict, McDonalds lowered the temperature of their coffee to 158 degrees, a temperature that takes about a minute to cause severe burns.
The other fact you probably don't know about the case is that the judge reduced the $2,700,000 award to $480,000. Proponents of Tort Reform ignore that safety valve inherent in the system: A judge can reduce a verdict he finds excessive.
Stella Liebeck was the woman who was burned. She was a 79 year old grandmother who received third-degree burns to her legs, thighs, and genitals when the cup accidentally spilled in her lap. The 190 degree coffee immediately soaked into her jogging pants, and she was unable to do anything to prevent her burns. She had to go through painful debridements (scrubbing with wire brushes), skin grafts, and her treatment lasted two years. Of course, at the end of the treatment, she was left with permanent scars. For more information, visit the website of S. Reed Morgan, Stella's attorney.
But America, the country who loves the little guy, has turned a 79 year old woman who received third-degree burns to her genitals into a ridiculed joke; ever receive a piece of e-mail called “The Stella Awards”? The “Stella Awards” are supposed jury verdicts that are supposed to showcase how broken the justice system is. None of those verdicts are real. At least, not as far as I can tell. I’ve used Westlaw, an expensive online legal service that reports virtually every case in America, and none of the supposed “Stella Awards” cases I’ve looked for ever seem to appear.
Every laugh at the “Stella Awards” is a laugh at a severely burned, permanently disfigured, 79 year old grandmother.
If the $250,000.00 damage caps that some people argue for were in place when Stella was burned, McDonalds would have simply settled the case for $250,000.00 and went on continuing to make half a billion dollars a year burning roughly 70 people a year.
The real effect of tort reform will be that human life will be reduced to a value of $250,000.00, and no matter how many times a company hurts, maims, or even kills a consumer, they’ll know they’ll never be punished with a multimillion dollar jury verdict. Without those verdicts to deter corporations from acting irresponsibly, unethical corporate executives will put the bottom line ahead of public safety, and perhaps it will be your grandmother who gets burned next.