Did you know that you live in a judicial hellhole? Yes, according to the American Tort Reform Foundation in its 2011 to 2012 “Judicial Hellholes” report (and “Judicial Hellholes” has been registered as a trademark), the entire state of California is the number two (behind Philadelphia) judicial hellhole in the United States. It appears California remains friendly to consumer lawsuits, class actions and high awards—and this, apparently, is a bad thing.
The term “tort” is French for “wrong” and, in legal parlance, refers to a wrongful act, whether intentional or accidental, from which injury occurs to another. The tort system of holding parties liable for their actions is a critical societal tool for accountability that ensures a party acts in a responsible way with respect to the rights of others.
Critics maintain that the tort laws in California and most other states have been abused, and this is true. However, the abuses of the system are greatly exaggerated relative to the system’s overall effectiveness in ensuring parties act responsibly and are held accountable. Further, while certain lawyers may abuse the system, its very nature acts to disincentivize lawyers from bringing meritless claims, because there can be no damages absent liability. Lawyers who do bring unsupported claims will usually lose and, if acting on contingency (which is often the case), he or she will come away with nothing.
Critics also maintain that the tort system has a negative financial impact on businesses, which is also true. But if one wishes to hold businesses accountable for the financial harm inflicted on others and disincentivize bad conduct, then there must be financial repurcussions.
Reformers have repeatedly tried to limit damages in tort actions to actual damages, meaning out-of-pocket expenses as a result of the tort, while excluding or severely limiting damages for emotional distress suffered as a result of the tort or punitive damages intended to punish the acts of the defendant.
For many years, tort reform advocates pointed to the case of Liebeck v. McDonald’s Restaurants as the poster child of frivolous lawsuits. In that case, Stella Liebeck, a 79-year-old woman, purchased a McDonald’s coffee at a drive-through window and spilled it on her lap, causing third-degree burns on 6 percent of her skin and lesser burns on 16 percent. She was hospitalized for eight days and required two years of further medical treatment. She sought costs for her medical expenses and McDonald’s offered her a payment of $800.
At trial, Liebeck’s lawyers demonstrated that the coffee was required to be served at 180 to 190 degrees Fahrenheit, which can cause third-degree burns in two to seven seconds. It was also shown that competitors of McDonald’s sold their coffee at a lower temperature. In addition to Liebeck, McDonald’s was aware of more than 700 other people being scalded by its coffee, but testified that this number was insufficient to cause McDonald’s to change its policies.
The jury awarded $160,000 in compensatory damages and punitive damages of $2 million to Liebeck. The punitive damages were reduced on appeal and the parties ultimately settled out of court for an undisclosed amount. However, what’s perhaps most instructive is that, subsequently, McDonald’s voluntarily changed its policies, lowered the temperature of its coffee and began using sturdier cups that are less likely to spill. Therefore, the disincentives of the system had the desired effect in causing McDonald’s to change its conduct to increase consumer safety. To learn more about the very interesting details of this case and its use in the tort law reform debate, check out the HBO documentary, “Hot Coffee.”
While Liebeck’s injuries were certainly serious, the importance of the tort system is even more evident when one considers injuries caused to hundreds or thousands of people as the result of defective medical products. For example, over the past two years, thousands of lawsuits have been filed against manufacturers of metal-on-metal artificial hips. These hips have been shown to be failing in patients only a few years after implant, and at much higher rates than other types of artificial hips. Further, in addition to not working properly, it appears the metal-on-metal hips have also been generating debris within the implantees, which is causing tissue damage and, in some cases, crippling the implant recipients.
What’s also notable about these products is that, due to an exception in FDA rules, they were offered to patients without the testing that’s normally required by the FDA. Rather than testing the hips in patients or tracking their performance before releasing them to the mass market, the producers instead relied on the performance of earlier, similar models as a guidepost for future performance of the new models. It appears that producers also became aware of the defects inherent in the metal-on-metal hips, yet continued to let them be implanted in patients before ultimately recalling them.
Ask yourself this: How does one return an implanted artificial hip that’s been recalled? Just as you’d suspect: by going in for surgery and having the doctor remove the defective artificial hip and replace it with a different one. Surgery is always a risky process and many of these implantees have had further post-operative problems with the deterioration of bone and muscle supporting the artificial hips, as well as infection.
Should tort systems be reformed to prevent these parties from receiving pain and suffering or punitive damages? Should the producers of these artificial hips, which include multinational conglomerates that produce numerous other medical devices, be protected because their financial viability would be jeopardized by the potential financial damages? These are questions you must ask when you consider whether an entire system should be reformed. There will always be those who abuse the system, but, in my view, they are the exceptions rather than norm. Absent disincentives to deter bad conduct, parties driven by profit will usually choose the path that most increases the bottom line, regardless of the effect it might have on others.
