Rich, connecting to us from his NetZero account, takes Mark King to task for not doing research before complaining about some of the actions of the Bush Administration.

Because his comment is reminiscent of Rush Limbaugh and other Republican mouthpieces in terms of the specific accusations made against “liberals,” the (lack of) depth of the research and reasoning supporting the accusations and in twisting what minimal research is done, I thought it was time to revisit some of those issues in a series of full posts.

After all, Mark King, who wrote the original post to which Rich was responding, is a liberal and a Democrat. And although I’m not a Democrat, like Mark, I am one of those dirty-stinking liberals like the group that founded the United States of America, so I often like to defend the ideals they inscribed into the Declaration of Independence and, later, our Constitution.

I should warn you in advance that some of this series of articles (like this one) will be longer than most of my articles. If you’re concerned about the responsibility of trial lawyers for high jury awards, you’ll probably get a lot for your time investment, but it’s not a subject that lends itself well to a short, pithy article.

It’s not necessary for understanding this article, but you may wish to read Rich’s comment here.

Taking Responsibility

In common with a lot of liberals, I believe people should take responsibility for their actions. Today, I’m going to talk about that in regards to one issue, because it has received a lot of press attention in the current presidential campaign and because — although I won’t be practicing the type of law being maligned — I will soon be a lawyer myself. The issue, of course, is those evil rotten trial lawyers who are ruining our country by forcing corporations to stop hurting and killing consumers.

For example, it really irks me when people who don’t research the facts before accusing others of not researching the facts fail to point out that McDonald’s was aware that more than 700 people, in addition to Stella Liebeck, were seriously burned by McDonald’s coffee between 1982 and 1992. It bugs me when people use this story to badmouth the lawyers who try to recover people’s medical expenses, or influence companies to change their harmful practices. I think those folk should stand up and publicly reconsider some of their statements. After all, most are based upon false stories and their beliefs about those false stories have caused them to not only spread those false stories, but to add to the harm by maligning those who have done their research. This includes, but is not limited to, trial lawyers. (Somehow, though, I don’t think Rich — or any other Republican — is going to take me up on that, so don’t expect to see his apology here anytime soon.)

Details of Liebeck v. McDonald’s Corporation are available online. It would have thus been easy for Rich to find out that McDonald’s required franchises to keep their coffee so hot that it was capable of producing third-degree burns in between two and seven seconds. Third-degree burns are burns which go practically all the way through the skin, into the deeper tissues. They cause blackened skin and, assuming you live long enough for them to heal — because they can kill you — they cause permanent scarring.

McDonald’s was not only aware that this had happened to other people, but failed to warn anyone that serious burns were a possibility from their coffee. Few people heat their coffee to between 180 and 190 degrees. At that temperature, it’s actually undrinkable. In fact, McDonald’s does not heat it that much anymore, either, even though they told the jury they had no intention of changing their policy just because almost 100 people per year were being seriously injured. And that’s one of the good things that trial lawyers — and punitive damages — bring to consumers in general.

There are numerous other facts that are not reported about the McDonald’s Coffee Case, because if they were reported the story would just not be as sensational. And it would not inspire people to willingly vote for the creation of laws that would return us to the days when workers and consumers not infrequently died from corporate negligence. Because trial lawyers have been so successful at correcting some of these egregious public ills by giving corporations incentive to do a better job, many people today are too young to remember the disasters of the type that attended thalidomide or the harm over a million Americans suffered from asbestos exposure. And those are fairly recent examples of what happened before corporations that didn’t care about hurting, maiming and killing people for profit learned that hurting, maiming and killing people could take a bite out of profits in the form of lawsuits.

Yet, even today, as Lawrence Lessig recently noted,

More than 150,000 people die each year from healthcare mistakes. The Republican solution to this problem is to increase immunity for those who make those mistakes. Lawrence Lessig, “A Trial Lawyer for Vice President?” (September 20, 2004) Legal Affairs Debate Club, col. 2, ¶ 7 [This “article” is actually a debate between Lessig and William Tucker. Note that this quote comes from ¶ 7 counting from the start of the column; not just Lessig’s portion].

Large Punitive Damages Awards

Although I’m writing this to defend trial attorneys, my comments are not intended to support the idea that no tort reform is needed. I just happen to think that we’re aiming at the wrong target — and the reason we’re doing that is the corporate interests that own the Bush Administration do not want you to see the real problem.

In the first place, the idea that such high awards as the press frequently reports are commonplace is patently false. In a moment, we’ll get to the question of where the idea of high awards comes from, but for now what I want to point out is that seldom do plaintiffs receive even the awards that might support this belief. This is because our tort system has a series of checks and balances to ensure that some modicum of justice prevails.

Punitive damages are rare, especially in products liability cases. A Rand study showed that 47 percent are awarded in business-against-business litigation, versus less than 5 percent in products cases. And according to a study by Suffolk University law professor Michael Rustad, punitive damages were awarded in only 353 products liability cases (91 of them asbestos) between 1965 and 1990 — an average of 14 per year or one per state every four years. Howard Twiggs, “How civil justice saved me from getting burned” (June 1997) Association of Trial Lawyers of America.

For another thing, courts nearly always reduce jury awards, particularly, but not exclusively, when they are “clearly excessive.”

One of the more famous cases in this respect — present in several of the textbooks used in every law school — is BMW of North America, Inc. v. Gore (1996) 517 U.S. 559. In that case, a jury had awarded Gore (not the Vice President) $4 million in punitive damages after he had purchased a damaged BMW. The car had been damaged by acid rain (which the Bush Administration apparently thinks doesn’t exist) while in transit from Germany to North America. After it arrived here, it was repainted to cover the damage. An expert testified that this reduced its value by $4000. BMW had hidden the fact of the damage and the subsequent repainting from Gore. The Alabama Supreme Court in that case reduced the award from $4 million to $2 million, because the determination of the award had been based on all the cars BMW had done this to throughout the United States. The Alabama Supremes thought only BMWs sold in Alabama should count.

The United States Supreme Court later vacated (erased) the entire award. They laid out several factors that were to be considered in determining punitive damages, including severity of the offense, the wealth of the company and the amount of civil fines and penalties BMW might have been subject to under Alabama law. The case was remanded (returned) to the Alabama Supreme Court with instructions to reconsider the case based upon these factors and they subsequently reduced the award to $50,000. Guess which numbers get reported when someone wants to talk about tort reform?

Subsequent cases have followed similar paths. The McDonald’s Coffee Case discussed above, for example, resulted in an initial $2.7 million punitive damages award which the trial judge reduced by 75% to $480,000. (See “Revisiting the United States Application of Punitive Damages: Separating Myth from Reality” in the “Related Articles” section below.)

Trial Attorneys Don’t Cause Lawsuits

Even if high punitive damages awards were as frequent or problematic as the Bush Administration wants you to believe, attorneys neither cause the lawsuits nor grant the punitive damages awards. Blaming attorneys for lawsuits is a little like blaming your dentist for cavities or orthodontia. Just as the dentist didn’t cause the cavities or orthodontia, but only filled the cavity or sold you some braces, so, too, lawyers do only what they’re hired to do. If medical malpractice were not occurring, if negligent corporate activities were not injuring, maiming, or killing people, there would be no work on those cases for attorneys.

Attorneys do not — contrary to popular belief — invent lawsuits out of thin air. In fact, attorneys who try to invent lawsuits out of thin air risk losing money or even their right to practice law. Rule 11 of the Federal Rules of Civil Procedure, for example, require attorneys to certify that the lawsuit has merit and is not frivolous. Serious sanctions can be placed on the attorney if the lawsuit is frivolous, or if it’s filed to harass, create delays or increase costs to the parties. The other side can file a motion with the court to have rule 11 enforced, or the court can decide to do it on its own. State courts and the State Bar have their ways of handling such things as well.

Furthermore, attorneys don’t get to decide how much money is awarded in punitive damages. Juries made up of non-lawyers decide such things. Usually they’re guided by the idea that punitive awards are supposed to punish those against whom they’re awarded. Looking at the McDonald’s Coffee Case again, the jury there was apparently angered because several McDonald’s representatives essentially said, “Well, we know people are being significantly injured and scarred for life by our practice, but we think this isn’t important. It’s just about one hundred serious injuries per year out of all the coffee we sell.”

The jury’s response to this callous attitude towards the pain, suffering and permanent disfigurement of human beings like themselves was “We know that $2.7 million is a lot of money, but we think that isn’t important. It’s just about two days worth of proceeds from all the coffee you sell.” (And, again, even that was reduced by the court to $480,000 — or just a few hours worth of coffee sales.)

Corporate Freeloaders & Lottery Winners

You’ll often hear people talk about how disturbing it is that the poor corporations suffer, while the people suing them are considered the Lucky Lottery winners. How ironic is that?

From 1982 to 1992, McDonald’s coffee seriously burned over 700 people. The elderly Ms. Liebeck had initially tried to get McDonald’s to pay just her $20,000 in medical expenses. McDonald’s offered her $800 to cover her eight days of hospitalization, her skin grafts, medications and everything else. They might as well have offered to replace her spilled coffee.

Prior to Ms. Liebeck’s lawsuit, McDonald’s had paid out about $500,000 over ten years to the more than 700 people their coffee burned. When you consider that they’re making over a million dollars a day from selling coffee, that means they spent about half a million for every $3.6 billion dollars in coffee they sold.

Meanwhile, the average burned person received about $700. And all they had to do was suffer a second- or third-degree burn. Such a lottery! You can see why people are lining up to sue!

And lining up is just what insurance companies — and the Bush Administration — want people to think is happening. Read any article and you’ll learn how the costs of such lawsuits are skyrocketing. Sort of.

For example, this June 2004 article from the Insurance Journal, like many such articles, talks in terms of percentages. It tells you that if you are sued for, say, exposing your workers to asbestos, you can expect to lose 50% of the time. And the “award median” is listed as $1 million. Sounds impressive until you remember that “median” as used here does not mean “average.” It means if you took all the jury awards — all the times a lawsuit was successful (which, remember, they said is about half) — then half the awards are less than $1 million.

Five-thousand dollars, by the way, is listed as “less than a million.” Do we need a reminder that asbestos exposure usually results in significant cancer therapy costs, loss of work and, ultimately, death? And the award figures in this article are not broken down; they appear to include any punitive damages.

More importantly, not once does the article cite any actual numbers. We don’t know if there are ten asbestos suits filed annually, or if it’s ten thousand. Similarly, when insurance companies talk about “dramatic increases” of, say, 14% on particular types of lawsuits, you don’t know if they’re talking about 14% of 10 lawsuits (which would be about one additional lawsuit for the year) or 14% of 100 (which would be about 14 additional lawsuits). There’s a reason for this. (Hint: If you knew the actual numbers, you might wonder about the real reasons for why insurance premiums are going up.)

Why Insurance Rates Are Rising

The reasons insurance rates are rising are not really connected to jury awards. McDonald’s can easily afford to lose a half million dollars in payouts to earn $3.6 billion for selling too-hot coffee. That’s why they refused to stop hurting people until a jury slapped them with a $2.7 million award (and remember, that was two days of coffee sales and ended up being reduced to a few hours of coffee sales, or $480,000). Heck, they don’t even need insurance for that.

The reason insurance rates are going up is because insurance companies are in business to make money. Additionally, since they’re in business to make money, one of their goals is not to pay out anything in damages.

One way they make money is by collecting insurance premiums and investing them. With the long-term plundering of consumers, though, there’s less money floating around. (Most of mine these days seems to be going for gasoline. How about you? I doubt the secret energy policy meetings oil executives held with Dick Cheney have anything to do with that, though.) Since there’s less money floating around, there are less people buying things. Since there are less people buying things, there are less companies doing well. Since there are less companies doing well, the stock market isn’t as good an investment as it used to be. So in order to continue making the kind of money they’ve been used to during the Clinton boom years, the insurance companies have to raise rates.

You can bet, if successful in hoodwinking Americans into capping awards, or somehow blocking certain lawsuits altogether, they aren’t going to lower the rates. They will, however, be successful in helping others — perhaps you, perhaps someone you know and love — go uncompensated for any injuries that result from negligence. And they’ll encourage companies that don’t have to worry about lawsuits, as well.

And we can all get used to the days of thalidomide and asbestos again.

Unless those stinking liberals and their lawyers get in the way.

Related Articles

• McDonald’s Scalding Coffee Case
• How civil justice saved me from getting burned
• Legal Affairs Debate Club: A Trial Lawyer for Vice President?
• Revisiting the United States Application of Punitive Damages: Separating Myth from Reality