A useful prop for bad legal reform
From time to time, we hear about a frivolous lawsuit, one that has no merit and is so absurd as to have little chance of prevailing. Such lawsuits are often filed as a form of harassment or retaliation, or as an attempt to get rich quick.
Here’s a few of the more ridiculous ones:
Richard Overton sued Anheuser-Busch for $10,000 over false advertising because he did not have visions of beautiful women on a beach after drinking Bud Light. He claimed the deceptive advertising caused him emotional and psychological distress.
Austin Aitken sued NBC for $2.5 million because a rat-eating scene on Fear Factor made him vomit and run into a wall. The rats were pureed in a blender and then served to the contestants. Aitken claimed that he was so traumatized by the scene that he became disoriented and ran into the wall as he tried to leave the room.
Cleanthi Peters sued Universal Studios for $15,000 because the Halloween Horror Nights haunted house was too scary. She claimed that as she exited the house, she was chased down by a character with a chainsaw who caused her to trip and fall. The event caused her to suffer emotional distress.
Dalton Chiscolm sued Bank of America for “1,784 billion, trillion Dollars” (which is more money than is actually on the planet), because he had to put up with frustrating phone calls to settle a problem with incorrectly deposited checks. He also asked that an additional $200 million or so be deposited into his account for his troubles.
Lauren Rosenberg sued Google for $100,000 because Google Maps gave her directions to walk on a freeway that had no sidewalks, causing her to get hit by a car. Rosenberg argued that Google should have known that this was not a safe walking area.
David Roller sued magician David Blaine for $2 million and David Copperfield for another $50 million because he claimed the two men “stole his Godly powers.” Obviously the man had psychological issues, but still it’s an interesting idea — since his powers were stolen, the defense had to argue that he didn’t have them to begin with.
Roy Pearson, a judge, sued a dry cleaner, claiming the owners misplaced his $800 pair of pants and tried to replace it with a cheaper version. Though the owner offered to settle, the judge felt he deserved a considerable amount — $67 million, when he figured in emotional damages, the cost of a rental car for driving to another dry cleaner, and legal fees. Not only did the judge lose the case, he also had to pay the dry cleaner’s legal expenses, and a committee refused to reappoint him as a judge because of his ridiculous behavior.
Robert Lee Brock, in jail for grand larceny, sued himself for $5 million, claiming that alcohol caused him to violate his own civil rights. Because he had no income in jail, Brock asked that the state pay the multi-million dollar settlement. The judge dismissed his claim but gave him an A for creativity.
The media gives a lot of airtime to these cases, but in doing so might have become the unwitting dupes of those in charge. To be sure, most of the various news organizations do great things, and they’re an essential part of a democratic society — they make sure we’re aware of the dubious behavior of those who have the power and the money.
But the publicity they give to frivolous lawsuits played right into the hands of legislators — they had permission to come up with some new laws to protect special interests groups by hindering your access to the courts.
One “frivolous” case stood out as the poster-child — the so-called “hot coffee” lawsuit against the McDonald’s Corporation. Using it as a prop, President Bush in various speeches argued that lawsuits such as this one hurt our economy by slowing job creation and business expansion. But the real push for legal reform was from corporate lobbyists, especially from the insurance industry. Their ultimate goal was to change laws in a way that would minimize the financial exposure of their clients.
And so today we have mandatory arbitration, which in effect limits our protection as consumers. You can read about Mandatory Arbitration here, but in a nutshell — instead of going to court, your case is handled by an arbitrator, usually selected by the company you’re suing, and this person makes a binding decision, meaning it can’t be appealed. Mandatory arbitration is so ubiquitous, there is almost no contract that you sign today that doesn’t include it.
Mandatory arbitration was supposed to speed up the courts and eliminate frivolous lawsuits, but the former hasn’t happened, probably because the courts were never log-jammed by crazy lawsuits to begin with. Tort cases (an injured person seeks damages against a negligent party) account for only 7% of all civil cases, and less than 1% are medical malpractice and product liability cases. And as few are they are, these are virtually all legitimate cases.
That’s one part of the myth — the other is people who bring on these cases get rich. In reality, only 5% of all tort cases pay out punitive damages, and these only average about $50,000. About 0.2% had judgments that exceed $500,000. The assumption that people sue and get millions is just not true.
But here’s a truth — through mandatory arbitration, corporations essentially have a free pass for any wrong-doing. They no longer have to worry about paying out exorbitant punitive damages. In fact, the odds of winning their cases is so tilted in their favor that they may be forced to pay out very little, if anything. In other words, they’re not quite as accountable for their bad behavior as they used to be, and that puts us all at risk.
And here’s what’s truly ironic — the hot coffee suit as portrayed in the media was completely distorted. Stella Liebeck, the 79 year old victim, was not greedy and the lawsuit was not frivolous. To summarize, Ms. Liebeck spilled coffee, suffered third degree burns and spent 7 days in the hospital. She asked McDonald’s to cover her medical bills but the company chose to go to court. The jury awarded $160,000 in compensatory damages and $2.7 million in punitive damages. Both appealed and they settled out of court for an undisclosed amount, and as part of the settlement, Ms. Liebeck was not allow to talk about the case or the settlement.
However, after Ms Liebeck passed away, her family was free to speak out, and they did so in the HBO documentary, “Hot Coffee”. Here’s the trailer, and we highly recommend you check out the film.