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Soda Suit:

The Washington Post reports that the long-anticipated lawsuit against soft drink manufacturers for contributing to children's obesity is expected to be filed in the near future.

Accroding to the article, the target is vending machines in schools and the legal theory is one of an "attractive nuisance." The suit is expected to be filed in Massachusetts as an "unfair practice" under that state's unusually liberal consumer protection law. According to Victor Schwartz, "Massachusetts is one of the few states in the country where plaintiffs do not have to demonstrate actual damage in a consumer-protection case -- just that a violation occurred."

The lawyers behind the suit are the ones who fashioned the successful tobacco litigation. Although the the defendants and the legal theory have been identified, the article suggests that the lawyers don't have a plaintiff yet:

Daynard said that while the legal theory is ready, the challenge is finding the right set of parents to sign on as plaintiffs for the class-action case. "It's taking us longer than we expected," he said.

Nobody Special:
Nothing quite like treating clients as the tool of the attorneys, rather than the other way around, is there?

It reminds me of the (in)famous Bill Lerach's quotation about his securities class action practice: "I have the greatest practice of law in the world- I have no clients!"
12.2.2005 3:10pm
Steve:
Someone already beat me to the Lerach quote. It truly takes a stupid plaintiffs' lawyer to go around talking to the press about the process of finding a named plaintiff, although we all know that's how the system operates. Lest we forget, Lerach's quote was a primary selling point of the PSLRA, a statute which surely cost his firm millions of dollars in revenue. That can't feel good.

Back in my class-action days, someone tried to pitch a lawsuit to us suggesting that the soda companies only put caffeine in their drinks for its addictive qualities, and that this harms kids, etc. We basically decided that the world wasn't ready for that case yet.
12.2.2005 3:15pm
Some Guy (mail):

"It's taking us longer than we expected," he said.

No problem, take your time. There's no expiration date on the state rule 11 motion that's already drafted up.
12.2.2005 3:23pm
Michelle Dulak Thomson (mail):
I still don't understand why the schools can't just require that the machines be stocked entirely with diet sodas.
12.2.2005 3:29pm
Anderson (mail) (www):
FAT KIDS WANTED.
12.2.2005 3:41pm
JohnAnnArbor:
Michelle,

That would be the obvious solution. You'd think the pop companies would want to do that to avoid the perception of loading the kids with empty calories.

Perhaps they think their sales would plummet.
12.2.2005 3:47pm
Been There, Done That:
what parent would say, "I gave my kid money to buy soda at school and it is the soda machine's fault for making the kid fat."

is contributory negligence an issue here? is massachusetts a contrib or comparative state? who had the last clear chance to avoid the soda machine?
12.2.2005 3:50pm
The Original TS (mail):
Wait a second. If the theory is "attractive nuisance," wouldn't they have sue the schools? After all, the schools are in possession of the real estate on which the vending machine is sitting. They're the ones who allowed the machine onto their property.

Under the attractive nuisance doctrine, it's the person who's in possession of the land that's responsible.
Suing a soft drink manufacturer for a "dangerious" vending machine is akin to trying to sue a swimming pool manufacturer because some kid got injured in an unfenced swimming pool.
12.2.2005 4:20pm
alkali (mail) (www):
According to Victor Schwartz, "Massachusetts is one of the few states in the country where plaintiffs do not have to demonstrate actual damage in a consumer-protection case -- just that a violation occurred."

Note that in such cases, damages are set at $25 -- or $75 if the violation is found to be particularly egregious. See M.G.L. c. 93A, sec. 9(3). Query if that would be per person in a class action, however.

is contributory negligence an issue here? is massachusetts a contrib or comparative state? who had the last clear chance to avoid the soda machine?

Mass. is a modified comparative negligence state: if the plaintiff is more than 50% negligent, he/she recovers nothing; if he/she is less than 50% negligent, he recovers proportionate to fault. M.G.L. c. 231, sec. 85. However, a violation of 93A is generally an intentional act, I think, so that rule wouldn't apply.
12.2.2005 4:30pm
Jack John (mail):
It was in an unreasonably dangerous condition when it got there, so everyone in the chain of distribution can be sued. They sue the schools after they win against the manufacturer.
12.2.2005 4:31pm
JohnAnnArbor:
I guess I'm naive, but lawyers looking for people to be plaintiffs so they can sue somebody seems to be not how things should work.
12.2.2005 4:36pm
guest:
Isn't that called barratry?
12.2.2005 4:59pm
Anderson (mail) (www):
Isn't that called barratry?

It used to be, before the Supreme Court held that commercial speech protections apply to the legal profession.

Now the local newspapers are virtually kept in the black by running mass-tort ads.
12.2.2005 5:06pm
Jonny's_Light:
so now will we see the pepsi company lobby for a bill to be passed to protect them from claiming this which is much similar to the "Cheeseburger Bill" which protects fast food restauraunts..
12.2.2005 5:08pm
Bruce Hayden (mail) (www):
One problem with replacing regular sodas with diet sodas is that a certain percentage (I have heard 10 percent) of the population is apparently sensitive to Nutrisweet, the predominent artificial sweetener.

Lest you think this total malarky, I am in the population that is sensitive to that sweetener. It works on me like caffeine, only much more so. I get a "rush", followed by a speed high, followed by a crash. Then, 12 hours later, I have problems falling asleep at night. For those of us sensitive to it, it is nasty stuff.
12.2.2005 5:12pm
Steve:
What's wrong with this story is not really the fact that the lawyer is out looking for a client, but the fact that it's a silly lawsuit.

Where the case has merit, there's nothing wrong with the attorney being the one to do the investigation and then to find a plaintiff and let him know how he's been ripped off. The whole premise of, say, a consumer rip-off is that the consumers may not realize they've been ripped off. Or in the context of a securities fraud case, it's the attorneys who are the experts and have the ability to investigate a company and find out if the stock price dropped because of fraud, or for an innocuous reason.

Of course, frivolous consumer and securities cases get brought, and that's the fault of the lawyers who bring them. But that doesn't mean we should criticize the lawyers in a meritorious case just because they found the plaintiffs, rather than vice versa. The important thing is that a wrong is being righted.
12.2.2005 5:14pm
Anderson (mail) (www):
One problem with replacing regular sodas with diet sodas is that a certain percentage (I have heard 10 percent) of the population is apparently sensitive to Nutrisweet, the predominent artificial sweetener.

It's actually worse than that. Taking off on the rumors that NutraSweet causes brain tumors, the idea is to get all the schools to switch to Diet Coke to avoid the obesity suits, THEN nail them for giving the kids brain cancer. Sweet! Actually, NutraSweet!
12.2.2005 5:22pm
James Ellis (mail):
While they are looking for a plaintiff, they might want to keep looking for a legal theory.
12.2.2005 5:23pm
Le Messurier (mail):
It's appalling that the commenters here argue over "contributory negligence", "attractive nuscience", whether the pop company or the schools should be liable and so on. What's much more appalling is that there are lawyers out there inventing cases with which to line their own pockets and then hypocritically claim they are "protecting" society from evil corporations. They provide virtually no protection for society; they drag it into the mud of their unfettered greed. Today's Wall Street Journal editorial on the looting of corporate America by tort lawyers in the asbestos/silicosis cases points only to the tip of the iceberg of the legal profession's gross dishonesty and dishonor throughout. It is not just the tort lawyers (though they are central to this great crime) who are to blame, but all lawyers who remain silent, and who should be howling from the roof tops for tort reform... if they were honorable men.

Le Messurier
12.2.2005 5:29pm
Michelle Dulak Thomson (mail):
I thought that phenylketonuriacs had to stay away from NutraSweet (aspartame is basically a very short protein, IIRC, and if you have PKU troubles it can really mess you up), but I hadn't heard of its having effects such as Bruce Hayden describes.
12.2.2005 5:31pm
Anderson (mail) (www):
Daynard said that while the legal theory is ready, the challenge is finding the right set of parents to sign on as plaintiffs for the class-action case. "It's taking us longer than we expected," he said.

Parents who aren't themselves 300 lbs. each would be important from a proximate-cause perspective, I suppose.

(Why do I love this thread so?)
12.2.2005 5:36pm
Steve:
Even while they decry the frivolous litigation explosion, I hope people realize how much of a crime was committed in the manufacture and use of asbestos in the last 60 years.
12.2.2005 5:45pm
Le Messurier (mail):
To Steve:
how much of a crime was committed in the manufacture and use of asbestos in the last 60 years.

We will never know. But we now know that there are thousands upon thousands fewer "victims" and a much lesser crime (if one really existed) than before Judge Jack started the ball rolling to uncover the horrendous crime by the tort lawyers in these asbestos suits.
12.2.2005 6:00pm
Clayton E. Cramer (mail) (www):

to uncover the horrendous crime by the tort lawyers in these asbestos suits.
I thought lawyers preferred wool or synthetics. Or is that they better get used to wearing asbestos suits after they lose their Final Appeal?

Oh, you mean lawsuits. Never mind.
12.2.2005 6:14pm
Anderson (mail) (www):
Good one, Clayton.

Oh, and Le Mess, we DO know a great deal about the crimes of the asbestos industry, thanks to the wonderful world of pretrial discovery. It really is atrocious.

A better system would have imprisoned numerous executives for life, rather than creating a tort casino with a few big winners and plenty of un(der)compensated victims.
12.2.2005 6:19pm
Clayton E. Cramer (mail) (www):
I am actually a member of the class in the asbestos lawsuits. My father worked with asbestos during World War II when building warships--and then dismantling them, after the war. He had at least some of the symptoms.

I'm not sure that his life was substantially impaired by the exposure--almost certainly not as much as his smoking did. I object to a system where lawyers end up getting exorbitant amounts of money out of a settlement.

Some years ago, some lawyers filed a class action suit against Remington claiming that they had used substandard steel in their shotgun barrels. To my knowledge, there were no injuries to any users. At the end of this, my recollection was that the "victims" ended up with far less than the lawyers.

There's a sign on a business marquee here in Boise that overstates the number of ambulance chasers, but does capture how a lot of Americans feel: "99% of lawyers give the rest a bad reputation."
12.2.2005 6:23pm
Salaryman (mail):
Steve: I think it would be fantastic if the public were aware of EXACTLY how much (or little) of a "crime" asbestos manufacture, sale and use have been. Specifically, I think more people should be aware that one of the main "criminals" (your word, not mine) was the US Government, which, while knowing full well of the dangers of asbestos, put the kibosh on efforts during WWII to discontinue its use in shipbuilding or implement costly precautions that would have saved lives.

They should also, of course, know about the callousness of corporate officials at companies like Johns Manville and their lawyers as well. They'd also be well served to be aware that the culpability of many, if not most, of the defendants now currently being sued (many of whom are facing bankruptcy) does not stem from the kind of intentional disregard of risk that characterized the actions of the Roosevelt administration and asbestos manufacturers. And, as noted above, there is the further issue of whether many of the current plaintiffs are in fact injured at all.

(Note: to be fair, the Roosevelt administration's decision to sacrifice the lives and health of shipyard workers for the war effort must be understood in the context of the times. Clearly the government had made a decision to sacrifice the lives and health of thousands of American GIs to stop Hitler. It would have been difficult to justify threatening our battlefield success because of a concern that shipyard workers might die of mesotheiloma in 25 years when we were sending hordes of young Americans away to battle knowing many would perish within weeks or months. I don't have any expertise on whether reasonable precautions against asbestos-related illness would have significantly hampered war efforts.)
12.2.2005 6:41pm
Steve:
It's funny how the staunchest advocates of free-market capitalism are also the first people to call for tort reform. Lawyers are just about the only people in America who need to justify their paycheck; everyone else is simply earning what the market will bear, and ain't it grand?

Clayton alludes to one of the largest classes of asbestos victims, the folks who won us the war on the home front. In many cases, most notably at the Brooklyn Navy Yard, the government knew full well that asbestos was toxic but covered up that information because, after all, there was a war that needed winning. This is hardly the worst atrocity committed upon innocent workers in the name of the war effort; in some places, for example, workers were paid to roll uranium into nuclear bombs, never being told that they were working with radioactive, toxic materials.

Another great asbestos story involves a major fiberglass producer who, back in the 1930s, developed an advertising campaign to tell the public that asbestos was dangerous and that they should stick with safe fiberglass instead. Only, while these ads were in development, the company happened to merge with an asbestos manufacturer. Now that they were in the business of selling asbestos, the ad campaign, naturally, went in a drawer. Yet many people believe to this day that the harms from asbestos were completely unforeseeable and that no one knew it was dangerous until much later.

There are plenty of frivolous lawsuits but there are also a great many injustices that would never be remedied if not for enterprising lawyers. Today, it's hard to see how a lawyer deserves a massive contingency fee from an asbestos client for what often amounts to little more than filling out a form. But the lawyers who pioneered the asbestos litigation, who poured millions of dollars into investigation and pretrial discovery in order to prove that the manufacturers knew better, who had to defeat motion after motion in order to establish that their claims had merit, they certainly earned their fee. You never hear about the frivolous defense lawyers and how they don't deserve to make anything.
12.2.2005 6:48pm
wavemaker (www):
Tobacco, maybe -- there's not a smoker with a brain that hasn't been aware since the 1960's that they're risking their health. Asbestos, absolutely -- known dangers, hidden from innocent victims forced to be exposed either as workers or innocent homeowners.

Soft drinks? Attractive nuisance? Nothing more than a (cash) remedy, looking for a (represented) victim , missing a (good faith) cause of action.

This represents the worst of our profession.
12.2.2005 7:58pm
The Original TS (mail):
Three cheers for Steve!

The people constanstantly kvetching about the evils of tort lawyers fall into two classes. 1) economic illiterates and 2) defendants.

The tort system fulfills a basic economic function -- it minimizes externalization and helps properly price goods and services in the market. Proper pricing is not only a good thing in a free market, it's an essential thing. Heck, it's what the free market is all about.

Let's take, for a moment, the infamous McDonald's coffee case, one of the favorite bete noires of the anti-tort-lawyer crowd. A jury did hit McDonald's with a multi-million dollar verdict for having its coffee too hot but there are a couple of salient facts that the nattering nabobs of tort reform never mention. First, McDonalds had had about 700 complaints of serious injury from their coffee. Second. McDonald's brewed their coffee at least 20 degrees hotter than other restaurants because it allowed them to brew slightly more coffee per pound of coffee beans. In other words, hotter coffee slightly increased McDonald's profits.

Absent the tort system, it's no skin off of McDonald's nose how many people are injured by McDonald's actions so long as those actions increase its profits. Let's say, hypothetically, that McDonald's hotter coffee increases its profits by 1 million dollars/year but causes injuries needing 2 million/year in medical care. Since McDonald's doesn't have to pay for this medical care, they'll keep making hotter coffee but that will cause a net loss of 1 million. If, however, McDonald's does have to pay for these extra medical costs, they won't make their coffee so hot.

Pretty much every time you hear some outrageous story about an outrageous tort verdict, you can pretty much bet that there's a story behind it like this one. Remember, a jury of your peers heard all the evidence on both sides before it came to its verdict. Chances are, if you'd heard all the evidence yourself, you'd have come to the same verdict.

There are certainly arguments to make in favor of a more efficient tort system. But in that case, there's plenty of blame to go around. For some reason, you never hear tort reformers complaining about scorched-earth defense attorneys, only rapacious plaintiff's lawyers.
12.2.2005 8:36pm
Free Marketeer:
I too think that free market advocates would support class action tort, and for a(n additional) reason other than externalization of costs.

(using low, easy, numbers)
If cell phone company X rips off 500,000 customers $0.50, it is then up $250,000 on all other cell phone companies. These other cell phone companies have an incentive to make up this $250,000 with a like ripoff. Indeed, in a perfectly competitive market, they must do so. Because no individual plaintiff has incentive to press their rights, this ripoff is governed only by whatever governmental regulations might be haphazardly imposed and enforced.

So, even if the plaintiff's attorney makes $125,000 off this litigation, and each class member only goes home with a quarter, consumers as a whole are still benefited: without class action tort, the entire competitive market would have had incentive to break their deals with individual consumers. The freedom and security of contract which underpins market transactions would be imperilled. People would start imposing risk premiums for ripoffs, and information and transaction costs would ensure that this would be relatively inefficient relative to secured expectations.

Class action litigation isn't simply a bonanza for plaintiff's lawyers (and defense lawyers, to a lesser extent), but a defense of the prerequisites for an efficient, competitive marketplace.
12.2.2005 8:56pm
Dick King:
Free Marketeer, I philosophically agree with you, and if this were the way it actually worked I would be happy, but there are some problems that should be addressed.

One serious problem is that frequently the plaintiff class members do not get cold hard cash, but some sort of coupon or discount that is worth considerably less than its face value. Most coupons go unredeemed, and even those that are redeemed are generally for that which the defendant sells or even a high-margin upgrade on that which the defendant sells, so even those coupons that get redeemed cost the company considerably less than their face value. Still, the attorneys get fees based on the total face values of all the coupons.

In cases such as this the plaintiff lawyers and the defendants share an interest in making the coupons worth as little as possible while having as high a face value as possible. This gave us, for example, the recent Netflix settlement, where the company has budgeted $3 million for the settlement -- $2.5 million for the attorneys, $2000 for the lead plaintiff, and an expected cost of $ 1/2 million to actually fulfill the upgrades that get requested. Note that Netflix may actually profit from this settlement, which gives a free one-month upgrade to each class member, and lets Netflix start charging the class member at the upgraded rate at the end of the month if they don't explicitly cancel.

Something is out of control here.

-dk
12.2.2005 9:48pm
Scott Wood (mail):
As a libertarian I have a good deal of sympathy for the tort action approach. But faith in the tort system is clearly damaged by the ability of people like John Banzhaf to impose their morality on the rest of us. Given that the system appears to allow an almost endless number of opportunities to find a sympathetic enough jury to set a horrendous precedent.
12.2.2005 10:18pm
Coke For Kickbacks:
As a former student of Prof. Banzhaf, I think I would be remiss if I did not give my two cents. While not entirely clear from the washpost article that it is a basis of the legal theory, I think there is something to the arguments against "coke for kickbacks" contracts in which "sugary soft-drink" producers pay big money to school districts in order to have exclusive--if not ubiquitous--presence in schools. These contracts are often rationalized as providing much-needed money for school programs--which they often do.

When we send children to school, teachers and administrators are entrusted with the responsibility to provide a healthy learning environment both in and out of the classroom--especially when dealing with young school age children. Granted, the argument that personal responsibility--both that of parents and children--increasingly comes into play as children age. But it is absurd to say that schools have no responsibility for the environment they create.

Finally, I think there is one area of parental responsibility that isn't mentioned. Why do school districts need to resort to these contracts in the first place? We all want better schools and better programs...so long as we don't have to pay for it. If we as a society value the health and education of our children, we need to pony up and start paying for it. Otherwise, schools will continue to "prostitute" our children's help...in the name of our children.
12.3.2005 1:08am
Coke For Kickbacks:
help health
12.3.2005 1:10am
Willard:
I think it's a little much for people who profit from a government enforced monopoly on access to the coercive power of the state to pose as libertarians. If lawyers worked in a voluntary mediation system, that would be different.

How about, o you dedicated libertarians, (i) removing all restrictins on the unauthorized practice of law and (ii) enforcing contractual provisions on mandatory arbitration, jury trial waivers etc. (including the kind of provision that says that if there is a waiver printed on the Coke can or the cigarette pack, then you are bound by it)? When you've done that, you can come back and defend plaintiffs' lawyers. Until then, your hypocrisy is rather blatant.
12.3.2005 7:48am
Steve:
First of all, contractual provisions requiring arbitration ARE routinely enforced. That doesn't mean a company should be able to avoid a class action by sending each victim to separately arbitrate their $0.50 claim, mind you.

Second, the idea that lawyers are some kind of cabal with monopoly power is just absurd. In case you haven't noticed, there are about a million more lawyers than anyone needs, and they are all in hot-blooded competition with one another. Indeed, if a society has more litigators than it has meritorious lawsuits, one effect you would predict would be an upswing in silly soda lawsuits.

The previous comment only served to strengthen my point that people who believe in free-market solutions to everything else in society will come up with excuse after excuse to explain why free-market principles don't justify lawyers' fees. I'm quite certain that lawyers are not the only profession licensed by the state, even if they are the most fun to demonize.
12.3.2005 9:20am
Salaryman (mail):
Steve: if you truly think that it is "just absurd" to suggest that lawyers as a class have monopoly power over access to the coercive [judicial] power of the state, try practicing law without a license and let us know how that goes.

Also I'm not sure what libertarians have disputed that free market principles justify lawyers' fees, or that I even know what that means. I'm moderately libertarian and I have no problem with Bill Lerach or Fred Baron or whoever taking advantage of the current state of the law to make gazillions of dollars. But what does their entitlement to profit from the current legal regime have to do with whether the law should be changed, either in the service of "tort reform" or otherwise?
12.3.2005 11:34am
Salaryman (mail):
Steve: if you truly think that it is "just absurd" to suggest that lawyers as a class have monopoly power over access to the coercive [judicial] power of the state, try practicing law without a license and let us know how that goes.

Also I'm not sure what libertarians have disputed that free market principles justify lawyers' fees, or that I even know what that means. I'm moderately libertarian and I have no problem with Bill Lerach or Fred Baron or whoever taking advantage of the current state of the law to make gazillions of dollars. But what does their entitlement to profit from the current legal regime have to do with whether the law should be changed, either in the service of "tort reform" or otherwise?
12.3.2005 11:34am
Automatic Caution Door (mail):
"The Original TS," remarking on the McDonald's/hot coffee case: "Absent the tort system, it's no skin off of McDonald's nose how many people are injured by McDonald's actions so long as those actions increase its profits."

I'm not a lawyer, but (or thus) I can tell you what intuitively bothers many of the layfolk out here about the McDonald's verdict and others like it. It's not some kneejerk antagonism toward lawyers or lawsuits or civil courts. It's the instinctive sense that such cases run roughshod over basic concepts of personal responsibility and free will.

When you characterize these coffee injuries as results of "McDonald's actions," you're begging the question. McDonald's didn't pour hot coffee onto anybody. McDonald's didn't tell anyone that its hot coffee could be poured onto human laps without consequence. McDonald's didn't mislead anyone by claiming that the stuff it labeled "coffee" was actually chilled water.

A woman spilled hot liquid on herself. Hot liquids can burn skin. The woman's skin burned. For most of us, that's where the whole thing starts and ends. We don't see the relevance of some other party's in-house "Coffee Temperature Brewing Standards," or their "profit" motivations. We see a woman who, of her own volition, possessed hot liquid in a cup. For most of us, the fact that there's a reflexive pronoun in the statement "She spilled it on herself" does all the explaining we need.

That's the difference between the McDonald's case and the cell-phone hypothetical outlined in the post below yours. The latter involves active fraud, deception and breach of contract. The McDonald's case -- or, say, the prospective Coke case -- is nothing like that. You can make it become like that only by convoluting the language. "Fraud," for instance, becomes "Well, arbitrary group X brews coffee at arbitrary temperature Y, and McDonald's brews its coffee Z degrees higher than that for arbitrary reason Q," etc. Or you employ the passive voice so that plaintiffs, rather than committing injury, now "are injured."

That sort of verbal trickery and appeal to emotion may work wonders when delivered live in front of a captive jury. But you can't expect the rest of the world not to scratch its head and say, "Hold up... What does McDonald's have to do with some person spilling hot coffee on herself?"
12.3.2005 12:28pm
justanotherguy (mail):
Since when have trial lawyers really needed a legal theory? What they need is just enough hookum to get to a jury where the charismatic wringing of hands appeals to a sense of fairness and poof: some company goes bankrupt, everyone's prices go up by a small amount and the Plaintiff’s bar gets richer to fund the next assault. Causation? no need to show that, we have plenty of expert witnesses ready to say anything to make $.

Judges and “the system” used to limit such piracy... but unless the judges, elected in the plaintiff friendly counties stop this, one can always go through several juries until one finds one that the crying, channeling, trial lawyer connects with. It really only takes one good (or bad) jury when the rest so the system has abrogated it responsibility. Trial Lawyers Inc is alive and well and one the biggest industries we have. How do we export it?
12.3.2005 12:37pm
Le Messurier (mail):
To The Original TS
McDonald's brewed their coffee at least 20 degrees hotter than other restaurants because it allowed them to brew slightly more coffee per pound

Am I missing something here? Coffee is brewed with boiling water; boiling water is 212 degrees. Water doesn't get any hotter than that; it becomes steam. Logic tells me that all coffee is brewed at the same temprature of 212 degrees. So what hokum did the lawyers use to convince the jury that MacDonalds brewed their coffee at 232 degrees?

Le Messurier
12.3.2005 2:16pm
Wac Arnolds:
Some thoughts on brewing temperature:

http://hypertextbook.com/facts/2003/DianaGendler.shtml

http://www.virtualcoffee.com/April_2000/decaf.html

Doesn't look like everyone brews at 212.
12.3.2005 3:18pm
byomtov (mail):
Am I missing something here? Coffee is brewed with boiling water; boiling water is 212 degrees. Water doesn't get any hotter than that; it becomes steam. Logic tells me that all coffee is brewed at the same temprature of 212 degrees.

You are missing a lot. Coffee can be brewed with boiling water, but it won't taste very good. It is generally brewed at lower temperatures than that. In fact, one not uncommon method has it "brewed" at room temperature, with the resulting concentrate diluted and then heated.

More often, it is brewed at something under 200 degrees. Temperatures in the low 190's are considered ideal according to some sources, but it would hardly be surprising if many restaurants used lower temperatures than that, leaving plenty of room for McDonald's to brew its coffee at a temperature 20 degrees higher.

The "hokum" used by the plaintiffs lawyer is something known as "facts."
12.3.2005 3:26pm
devil's advocate (mail):
in all our mocking of soda pop class action torts, lets not forget we are all paying for these fat kids. when they get diabetes, your tax dollars go to medicaid and their expenses drive up your insurance.

If you don't like trial lawyers, then join me, along with The Economist, and support a fat tax! you are paying one anyway, just indirectly and after the fact. An "ounce" of prevention of a fat tax is worth a "pound" of class action cure.

Or I guess we could allow the soda companies to export the costs of their products onto society, but cut the kids of medicaid (or insurance). Unfortunately, then we pay even more in local property tax when they go into diabetic shock and go to the emergency room and stay overnight at the county hospital.

Hmmm, can we get rid of the hypocratic oath and allow hospitals to turn away emergency room patients who don't have enough money? what would jesus do?
12.3.2005 3:52pm
Hippocrates:
support a fat tax!

Talk about a slippery slope!
12.3.2005 4:04pm
Daniel Chapman (mail):
Anything unconstitutional about this? Equal Protection? Fundamental right to be fat?

Seems like a good idea to me... saves money and encourages good health at the same time. Good incentive for parents to encourage healthy eating and exercise habits in their children which are sadly lacking these days.

Was that meant as a joke? Did the Economist really promote the idea? Do you have a link or citation?
12.3.2005 4:36pm
Brett Bellmore (mail):
IIRC, the tobacco lawsuits were only successful when the tort lawyers got state legislators into the act, passing laws that effectively prohibited the tobacco companies from raising any of the defenses which had formerly been effective. Somehow I don't see them shafting the softdrink industry that way... Not enough loot to share, I expect.
12.3.2005 5:03pm
therut (mail):
I've got a better idea. The government needs to leave everyone alone. Yeah imagine that. Freedom and Liberty and all those ideas. Let the government get out of the business of health care. That is what I want. I get tired of because the government now pays for such and such let's just let them start telling us even more how we should live. After all they are now our nannies. When is the government going to start telling all those malnourished, drug using hollywood actors and models how to eat and live or is it only the peasants they will rule over.
12.3.2005 5:09pm
Le Messurier (mail):
The "hokum" used by the plaintiffs lawyer is something known as "facts."

VS

...verbal trickery and appeal to emotion may work wonders when delivered live in front of a captive jury. But you can't expect the rest of the world not to scratch its head and say, "Hold up... What does McDonald's have to do with some person spilling hot coffee on herself?"

'"Hokum" is a stock technique for eliciting a desired response from an audience.' Hokum is something either 'untrue, insincere or nonsense' that appears impressive.
12.3.2005 6:45pm
Free Marketeer:
Automatic caution:

"That's the difference between the McDonald's case and the cell-phone hypothetical outlined in the post below yours. The latter involves active fraud, deception and breach of contract. The McDonald's case -- or, say, the prospective Coke case -- is nothing like that. You can make it become like that only by convoluting the language. "Fraud," for instance, becomes "Well, arbitrary group X brews coffee at arbitrary temperature Y, and McDonald's brews its coffee Z degrees higher than that for arbitrary reason Q," etc. Or you employ the passive voice so that plaintiffs, rather than committing injury, now "are injured."

I don't remember the facts of the McDonald's coffee case too well, but didn't she suffer 2nd and 3rd degree burns, requiring hospitalization and surgery? Nobody expects that if they spill their coffee, they're going to end up needing skin grafts. (or whatever.) Can you honestly say that the injuries sustained in this case are simply ones invented by convoluting language?

I think that some of the backlash to the McDonald's case isn't so much a matter of the plaintiffs convoluting language, as it is a case of selective memory.
12.3.2005 6:50pm
The Original TS (mail):
Le Messurier,

As someone pointed out above, American style coffee is not brewed at boiling. Temperatures for home drip coffee makers are about 140 degrees F. IIRC, McDonalds was brewing their coffee at about 180 degrees F.

Automatic, you're not really getting the point.

You have this idea that the tort system is there to punish people for being bad. That's not really what it's about at all. It's really and truly a system designed to make the free market more efficient. "Negligence" isn't really about someone being morally culpable -- and strict liability certainly isn't! Under the tort system, the market players are free to conform their actions to whatever is the most profitable for them. What they can't do is effectively force society to subsidize their profits by externalizing the costs of their activities and engaging in activity that, when viewed as a whole, does more harm than good.

Once again, "fault" isn't really the issue. If you get in a car accident, it's not the car maker's fault. Nonetheless, if the car maker intentionally designs a car that has a 10% chance of exploding on impact because it's 1$ cheaper than one that doesn't, we hold the car maker liable. We hold the car maker liable because it's good economic policy to do so. Everybody, except the car maker, will agree that, under the terms of this hypo, this really is a good thing.

Once again, you can argue that the tort system can be made more efficient but it's absurd to argue that the tort system is bad.
12.3.2005 7:12pm
Hugh59 (mail) (www):
I have assisted (in a very minor way) in defending corporations from these types of class action suits. I believe that many of these cases involve efforts to punish corporations TODAY for behavior that may not have been immoral, wrong, or grounds for liability 100 or even 50 years ago.

I think we need to find an alternative to litigation for these types of public harms: for lead paint exposure, tobacco, asbestos, and the like. The amount of money from these types of cases distorts the whole process.
12.3.2005 7:35pm
Hippocrates:
Hugh 59:

A few problems here. One, these types of cases often deal with disparity in available information. As alluded to above, it is quite clear that asbestos producers (and for that matter the government) knew a lot more about the consequences of using that product than did those who were exposed to it. Two, these types of exposure cases deal with injuries with very long latency periods.

So, you have a bunch of individuals who knew little--if anything--about what harm they were exposing themselves to who realize later (after information can no longer legally or realistically remain unshared) the source of their injury. That is why the tort system in these cases is most often backward looking. Why not hold a company liable that knew of a risk that its product posed, but chose not to disclose or protect against it for the sake of keeping costs down and profits up?
12.3.2005 7:44pm
Automatic Caution Door (mail):
Free Marketeer wrote: "Can you honestly say that the injuries sustained in this case are simply ones invented by convoluting language?"

That's not what I wrote or implied. For all I know, the entire bottom half of her body is gone because it melted. What I wrote is that only by convoluting language can McDonald's be blamed for injuring her in the way your cell phone firm can be (legitimately) blamed for harming its customers.
12.3.2005 8:09pm
Free Marketeer:
Automatic Caution: (I'm agreeing with TS here)
Re: assignment of liability, rather than injury, in the McDonald's case. (I wanted to make this point in the last post, but I was sidetracked by the "injury" point.) The assignment of costs in a product liability case has much to with pricing an efficient amount of risk.

One way that the tort system tries to accomplish this is to place the cost of minimizing risk with the party who can minimize risks cheapest. (Otherwise, risk would be overly expensive, and we would have too little risk.)

In the McDonald's case, you could allocate the cost of risk to:
1. Everyone exposed to the risk.
2. Everyone whose risk materializes into injury. )
3. Everyone who imposes risk.

A couple of options:
a) Do nothing. The cost of risk is borne by people whose risk materializes into injury. (i.e. the woman in the burn unit.) Persons with knowledge of such a risk will then adjust their demand price by this cost, discounted by the probability that this risk will materialize into injury. (thus my point about whether people may expect a coffee spill to land them in a burn ward.)
b) Imposing the cost of risk on McDonald's. McDonald's can then, to the extent that the market allows, pass this cost onto consumers of risk. The cost of risk is allocated to both the imposer of risk, and all those who are exposed to risk, whether or not they know of the risk.

Option (b) is a more efficient mechanism to govern risk for 2 reasons:
1. Information costs. Consumers who happen to know the probability of such an unforeseeable event (i.e. spilling coffee may land you in a burn ward) will put this cost, discounted by its probability, into their demand price. The information costs of this pricing mechanism are greater than by having McDonald's put this risk premium into the price of the coffee, because McDonalds can collect such information of the costs of such risks more cheaply.
2. Of all three categories (imposer, exposed, victim), the imposer can usually minimize the risks that an activity creates most cheaply. Because McDonald's makes and sells the coffee, it can more cheaply minimize the likelihood that a spill might require skin grafts than can a person drinking their morning cup.
12.3.2005 8:26pm
Salaryman (mail):
Hippocrates: while asbestos PRODUCERS clearly did know a lot more about the dangers of asbestos than those exposed to it, guess what? They're all bankrupt and deservedly so. The defendants being sued now are increasingly companies who had substantially less knowledge than the manufacturers about asbestos' dangers.

TS: Surprisingly, many people (like Hugh) think "fault" actually IS the issue. They feel that it would be unfair to hold them liable for doing something that they could not have reasonably believed was wrong or harmful at the time they did it. Some of these, for instance, are CERCLA defendants who may now be liable for actions that were legal (even legally mandated) at the time they did them (I'm thinking of all those small businesses who diligently disposed of all manner of waste in landfills during the 50s and 60s because that's what the government said to do).

At any rate, I suspect that more people believe the tort system is (or should be) about righting wrongs than believe it should about increasing market efficiency. In fact most people think it's not only not absurd, but self-evident that persons shouldn't be required to pay over large sums in damages if they didn't do anything wrong. Indeed, the view that efficiency, not culpability, should drive such decisions is the kind of notion people think of when they hear the dictum (attributed to Orwell) that "some ideas are so ridiculous that only an intellectual could believe them."
12.3.2005 8:31pm
Free Marketeer:
"Indeed, the view that efficiency, not culpability, should drive such decisions is the kind of notion people think of when they hear the dictum (attributed to Orwell) that "some ideas are so ridiculous that only an intellectual could believe them."

Q: Why have tort, when you can have criminal law?
A: We already have criminal law. To make tort law into criminal law would be redundant.

Q: It wouldn't have to be redundant. It could be a new kind of criminal law, i.e. criminal law in the hands of private persons. What about that?
A: Our political theory has traditionally placed criminal law and the power to punish with the state. (This is, I believe, a main political tenant of why government rather than state of nature in theories of Hobbes, Locke.) But hey, what the hell.
12.3.2005 8:49pm
Free Marketeer:
At least it's not "intellectual." God forbid.
12.3.2005 8:50pm
Automatic Caution Door (mail):
The Original TS wrote:

If you get in a car accident, it's not the car maker's fault. Nonetheless, if the car maker intentionally designs a car that has a 10% chance of exploding on impact because it's 1$ cheaper than one that doesn't, we hold the car maker liable.


If my car explodes during the accident, you mean. But "liable" for what? Further, who is "we" -- and why do y'all care about a voluntary exchange conducted between some automaker and me? If my automaking pal had said, "This car doesn't explode upon impact," before I bought it, and then it exploded upon an impact, maybe I'd want to seek redress. But I certainly don't want any "we" attempting to read minds via a courtroom -- trying to guess if the reason a car exploded is that somebody you don't know was trying to save $1, etc. It seems weirdly arbitrary and selective.

If someone misrepresents a product, sure. I get it. You told me this cup of liquid you sold me wouldn't destroy my skin, and then it did; I'll sue you. You and I agreed I would pay $40 each month for the phone plan you sold me, then you charge me $42.30; I'll sue you.

Those are instances of clear misrepresentations. But the McDonald's/tobacco/Coke scenarios aren't at all. They rely on some subjective assessment of expectations (this thing called "coffee" should not scald X amount; this thing called "a soft drink" should not have X amount of addictiveness) to determine, after the fact, the level of "misrepresentation" that was in play.

Once again, you can argue that the tort system can be made more efficient but it's absurd to argue that the tort system is bad.


Well, I don't know who absurdly argued that the tort system is bad, but it wasn't me. In fact, in my post I pointed to a specific scenario and argued its legitimacy. If there's anything to be inferred from my post, it would be -- yes -- that that the tort system can be made more efficient.
12.3.2005 9:02pm
The Original TS (mail):
Free Marketeer,

Wow, this is really running far afield! You're talking about (as I'm sure you know!) about figuring out who's the "Least Cost Avoider." The only real disagreement I have with your post is that it's not always the imposer (in fact it's usually not the imposer) who's the LCA. Most often, "liability" is imposed on the person suffering the injury.

Some people have peanut allergies. It does not follow, however, that we require peanut manufacturers to compensate people injured by eating peanuts. People eating peanuts are the LCA and so the burden falls on them to avoid the injury -- if they get sick from eating peanuts, they've got to bear the cost.

Note that this could change at some point. If enough people acquire peanut allergies, peanut manufacturers will become the LCA and will be required to take all sorts of precautions to ensure that there is no inadvertant exposure to toxic peanut dust.

At its most basic level, that's what's wrong with the soda suit. The LCA is the fat kid who actually pays money for the privilege of sucking down flavored sugar water.
12.3.2005 9:08pm
Free Marketeer:

They rely on some subjective assessment of expectations (this thing called "coffee" should not scald X amount; this thing called "a soft drink" should not have X amount of addictiveness) to determine, after the fact, the level of "misrepresentation" that was in play.


There's two ways to argue with law's "subjective assessment of expectations" that a coffee spill will not put consumers in the hospital.
(1) Tort should not be in the business of assessing consumer expectations; or
(2) Tort should make the opposite "subjective assessment of expectations", i.e. consumers expect coffee spills may put them in the hospital.

I assume that your point is (1).

(a) Both tort and contract set up legal liability (i.e. risk allocation) rules that secure expectations of voluntary transactions, allowing free markets to function efficiently. (contract: pre-transaction, tort: post-transaction.)
(b) Much of contract law is explicitly based upon assessments of market expectations (e.g. obligations of good faith and fair dealing, implied warranties of merchantability, habitability, etc.)
(c) Why should tort law not likewise make such assessments?
12.3.2005 9:17pm
The Original TS (mail):
But "liable" for what? Further, who is "we" -- and why do y'all care about a voluntary exchange conducted between some automaker and me? If my automaking pal had said, "This car doesn't explode upon impact," before I bought it, and then it exploded upon an impact, maybe I'd want to seek redress.

Oddly enough, all these concepts are incorporated into the tort system. The tort system, which is almost entirely a creation of the common law, is actually a pretty impressive intellectual edifice.

For example, if the the car manufacturer made full disclosure about the risk of the car blowing up and gave you a choice (or at least told you it could be) of mitigating it for 1$, you'd probably have no case. But absent an express disclosure, you have to look at what a reasonable consumer would expect. None of this, "Well, we didn't tell you it wouldn't blow up, either!" In other words, if you voluntarily and knowingly assume the risk, you're on your own. This does not, of course, prevent us from having a discussion on the meaning of "voluntarily" and "knowingly."

Second, your assumption of risk does not, of course, extend to third parties. If you get in an accident and the car blows up, injuring half-a-dozen innocent bystanders, it's only fair that they come after you, for knowingly driving this ticking bomb and the manufacturer for knowingly building it. After all, they never agreed to accept the risk that you did so why should they by exposed to it?
12.3.2005 9:21pm
Free Marketeer:
"At its most basic level, that's what's wrong with the soda suit. The LCA is the fat kid who actually pays money for the privilege of sucking down flavored sugar water."

Yeah, I haven't made up my mind about the soda suit yet. If it were adults involved, I would absolutely agree with you. The confounding factors here are (a) that they are children (who we hold to different expectations in contract); that they are (b) legally required to be in the building; and that (c) such contracts are often exclusive, stocking the building with the (d) sugar. Right now, I'm a little more on the side of holding parties responsible (if anyone) for (b) and (c), rather than (d). But again, I haven't made up my mind.
12.3.2005 9:26pm
vic:
I have a free market solution

If the plaintiff"s lose - let the plaintiff"s artornies pay the defendants costs (and let us compute costs acurately including mental torure- pain and suffering, loss of consortium cause i was so worried i couldnt do it). And of course if the plaintiffs have deep paockets they can pay too. but let us level the playing field here a little bit. Let us impose some costs on our litigators.

plaintiffs attornyes get a free ride at times. let us not confuse thier own sweat equity with real equity.
12.4.2005 5:41am
Brett Bellmore (mail):
Given, as the original story made perfectly clear, that the "plaintifs" are actually the lawyers, and the nominal "plaintifs" are just some schmucks the lawyers are looking to round up up in order that they can get into court... Given that it's the lawyers, and not those nominal "plaintifs" who ought to have the expertese to understand what is and isn't a frivolous lawsuit... What we need is not "loser pays", but "loser's lawyers pays".

A pity laws are written by lawyers, and judged by lawyers, and argued by lawyers, so that it's essentially impossible to get any law passed or upheld that's detrimental to the interest of lawyers. Quite the closed system they've constructed, isn't it?
12.4.2005 8:49am
vic:
exactly

let the lawyer pay

frivolous lawsuits at present have NO cost associated to them by these damn plaintiff lawyers

lets us send some of these guys into bankruptcy too
12.4.2005 11:30am
Free Marketeer:
I have a free market solution

(ignoring the fact that this "solution" is no more "free market" than is having each side pay...)

frivolous lawsuits at present have NO cost associated to them by these damn plaintiff lawyers
(ignoring the entire economics of prosecuting a lawsuit...)

The mere fact that lawyers have an incentive to find clients doesn't seem like such an abnormality in a free market system. Perhaps you would like to place (further) restrictions on their ability to advertise, etc. Which might be fine, but don't dress it up in libertarian garb. That emperor has no clothes.

More generally, before you give a "solution", you're going to have to give an account of what the problem is. And, before you say "too many frivolous suits", tell us from what standard you measure "too many" from, and what standard you measure "frivolous" from. If not market allocation of risk, what would you propose the purpose of tort should be? If it would actually be more efficient to have a "loser pays" system, I'm open to it. Perhaps the current system is wrong with respect to market efficiency. But, somehow I doubt that you'll come to this conclusion once you give a realistic assessment of the business side of plaintiff work. (And if you're not privy to this kind of info, just think about the number of big defense firms relative to big plaintiff firms; think about how many kids coming out of lawschool, looking at their potential earnings, choose plaintiff work over defense work; think about how many rich defense lawyers you know relative to how many rich plaintiff lawyers you know.)
12.4.2005 12:16pm
The Original TS (mail):
"Loser pays" is, in fact, the system used in the UK and a number of U.S. statutes have cost-shifting provisions. But this is not the general rule in the U.S.

Free Marketeer has pretty much nailed it. Before you can decide that cost shfiting is the solution to the problem you need to decide what problem it is you're trying to solve.

The fact is that legally frivolous lawsuits are pretty inexpensive to deal with. There are several mechanisms for sifting out truly frivolous claims and for shifting the costs associated with them.

The problem is, of course, that people who want tort reform aren't complaining about legally frivolous lawsuits. They're complaining about legally meritorious lawsuits that they don't like, the McDonald's coffee case being Exhibit 1.

I think you'll find that the number of actually frivolous suits, especially class action suits, filed by plaintiffs is quite small. I think you'll also find that class action suits that get filed are, on average, far more likely to be meritorious (i.e. winners) than the average lawsuit.

There are a couple of reasons for this. First, in a big class action suit, the facts are typically pretty easy to prove given that whatever you're complaining about happened to thousands or even millions of people. Second, market forces dictate that it be so. Plaintiff's lawyers look on big class action suits as a business proposition. They will be required to invest considerable funds and considerable time and effort in prosecuting the suit. If they lose, they get nothing. Since they're putting their own money on the line, they have a considerable personal interest in ensuring they're bringing a solid legal claim.

You don't hear tort reformers complaining much about frivolous lawsuits that get thrown out of court. You only hear them complaining about "frivolous" lawsuits that the plaintiffs won. Cost shifting would do nothing to alleviate this problem, if problem it is. Rather, it would make it that much worse for defendants.
12.4.2005 1:25pm
Free Marketeer:
The basic propositions outlined in the posts by TS and me are generally accepted (though perhaps not without dissent, nothing is) as basic propositions undergirding products liability and/or class action tort.

But I can't really tell what Todd Zywicki's take on all of this is. I would be interested if he agrees with these basic propositions and believes their application to the present soda-in-school case argues against suit; or if he takes issue with them at large.
12.4.2005 3:19pm
Brett Bellmore (mail):
The basic propositions outlined in the posts by TS and me are generally accepted (though perhaps not without dissent, nothing is) as basic propositions undergirding products liability and/or class action tort.


Agreed, they are. The problem being that that is less a defense of the tort system, than an indictment of the legal community.
12.4.2005 4:35pm
Free Marketeer:

The problem being that that is less a defense of the tort system, than an indictment of the legal community.


Just so long as we are straight that the current political strategy of denouncing plaintiff's lawyers is, in actuality, a broad-based attack on fundamental pillars of tort. (not, as it poses, a courageous stand against all-powerful lawyers.)

I'm open to new legal ideas, but I don't think that such is the goal of the political strategy.

The goal is to attack persons who give more to democrats than to republicans, and to defend people who give more to republicans than to democrats. Thus why both parties are so unprincipled in their approach to tort.

(e.g. Republican party, supposed to be for state's rights. Yet they take multistate class actions out of state courts and put them into federal court, even if they are based on state law. (so federal courts are chosen as the superior forum in which to adjudicate state law.) Then, claim this overburdens federal courts, so had better do something to get rid of cases. Politically easier than simply preempting state law in the first place, but with consequences that are nonetheless as philosophically dishonest.)
12.4.2005 5:01pm
Free Marketeer:
(Not even to mention that Republicans, not Democrats, are supposed to be the ones who are pro-market efficiency!)
12.4.2005 5:07pm
vic:
several points

1. let us take fre marketeers and that ts dudes arguments and dump them out the window. let us face it they are selfserving arguments from teo who profit immensely from this highway robbery.

2. the enormous amounts of moneyt flowing to the tort lawyers has essentially corrupted the system completely. the judges and the politicins especially of the dem variety are completely beholden to tort lawyers money. and therefore cannot and will not pass necessary legislation to even counter the obvious abuses. and the judges- the less said the better. Som you have a system bythe lawyers of tyhe lawyers and for the lawyers.

3.Class action: let me illustrate with an example. I once filled out the docs that i had got in the mail re a class action tort brought against a major ilfe insurer. eventualy i agot a letter asking me to call xxxxx to get my settlement. after wasting an not inconsiderable amount of time. here is what i learnt, I as a party/ plaintiff in the tort had recvd a coupon that gave ema discount if i purchased more life insurance at terms that were even more unfavorable than what i had origionaly purchased it at. the bloodsucking plaintiff attorney made out w 16 million. nowhow did this process benefit anyone other than this rapcious trial lawyer. the corporate entity got off cheap. the plaintiffs got screwed, any corporate costs got pasweed on to the consumer. grewat eaxple of the tort system at work.

2. med mal even worse. (and then you have what do you call it -joint and several lability.) great scam if you ask me just search for the deepest pocket to pick. a physician aquaintance of mine just went bankrupt. he is arguably the best surgen in his field in the midwest. he is the best surgeon because he is aggressive and brilliant. he takes cases noone else will touch and saves lives noone else could.

well he was operasting and due to an anesthsiologists error in judgement ( no malfeasance here an honest judgement error by the anesthesiologist- lawyers i think are the only ones who do not make mistakes)- no fault of the surgeon. pt had a bad outcome. anesthsiologist unfortunmatelky died before the trial. so my acquaintance got hit w a 6 million settlement.
well he is no longer as aggressive as he used to be, and so kids die without surgery. and atla and its denizems have blood on thier hands.

3. the judges: they too get so much miney and favors i presume from the atla types that they are unwilling to let the defense have alevel playing feild.

4. when these juries hand out those billion dollar settlements do theyu have any idea what amillion or a billion is , or do they just just keep adding zeros at the behest of ashark ina sharkskin suit.

5.ultimately the conclusion i have come to is that the mebers of the atla are the most corrupt and corrupting infuence in the us today. their tactics are no different from extortion.
12.4.2005 5:10pm
vic:
and let me restste i have no problem with tort in free market perspective. i just find that it has become abusive and with no checks and balnces on the reckless profiteering by the plaintiffs attornies.

loser pays would work great by me. and let us just have loser payments on the same scales as astronomical payments that these bottom feeders demand.

along with fortune 500 companies going into bankruptcy under the pressure of ridiculous sttlements, let us see some trial law firms go into bankruptcy too. then we would have market mechanisms coming into play. file BS lawsuit and lose -and go under.
12.4.2005 5:22pm
Free Marketeer:
touche.

Let me ask you a question. Suppose that every civil lawyer earned no more than $20,000/year, paid by the taxpayer. The taxpayer also picked up all costs of all suits. (all lawyers, and all suits, miraculously, remain the same in type and number.) All awards from all suits went straight from the defendant to the plaintiff. Everything else stayed the same. Would this be an acceptable compromise?

If so, what is your problem with lawyers, that you presumably do not have with other professions? (say, your own.)
If not, what is your problem with current legal liability rules? Do you think they are inefficient? If so, then you and I philosophically agree, and you can show me how I'm wrong. Or is efficiency simply the wrong criterion? (ignoring all other commitments of political philosophy that you presumably might have.)
12.4.2005 5:23pm
Free Marketeer:
I wrote that last post before I saw that you agreed with efficiency as the criterion of tort.
12.4.2005 5:24pm
Free Marketeer:
Apart from the Republican/Democrat strategy of protecting generous donors, I also think that this political strategy comes from the Rush L and Michael M of the world: The more they can convince people that they have enemies, the more product they sell. Lawyers have always been easy to make into the enemy, via our personalities. But this doesn't say anything about the merit of the argument itself.
12.4.2005 5:27pm
Free Marketeer:

1. let us take fre marketeers and that ts dudes arguments and dump them out the window. let us face it they are selfserving arguments from teo who profit immensely from this highway robbery.


And you're right, asking lawyers about the law is generally a bad idea. Actually, better not ask the consumers either: they also have a dog in the fight. The only safe path to knowledge is to ask people who don't care. They'll probably be pretty well-informed.
12.4.2005 5:46pm
David M. Nieporent (www):
It's funny how the staunchest advocates of free-market capitalism are also the first people to call for tort reform. Lawyers are just about the only people in America who need to justify their paycheck; everyone else is simply earning what the market will bear, and ain't it grand?
But the problem is that tort lawyers do not operate in the free market. They recover money for their clients by convincing the government to order another party to give them money. And in the case of many class action tort lawyers (as this thread points out) they don't even have clients, so there's no market check on them at all; their fees themselves are awarded by the government.


Let's take, for a moment, the infamous McDonald's coffee case, one of the favorite bete noires of the anti-tort-lawyer crowd. A jury did hit McDonald's with a multi-million dollar verdict for having its coffee too hot but there are a couple of salient facts that the nattering nabobs of tort reform never mention. First, McDonalds had had about 700 complaints of serious injury from their coffee. Second. McDonald's brewed their coffee at least 20 degrees hotter than other restaurants because it allowed them to brew slightly more coffee per pound of coffee beans. In other words, hotter coffee slightly increased McDonald's profits.


Where's Ted Frank when you need him? These "salient facts" are, in fact, always mentioned, despite being (a) untrue, and (b) irrelevant. 700 complaints -- not of "serious" injury, but of any injury -- is evidence of safety, not negligence, given the number of cups of coffee McDonalds sells.
12.4.2005 6:15pm
Free Marketeer:
"...in the case of many class action tort lawyers (as this thread points out) they don't even have clients, so there's no market check on them at all"

Every case has clients, otherwise no standing.

"tort lawyers do not operate in the free market."

Doesn't the very practical cost/benefit rational governing whether to prosecute a case (expected revenues of a case and expected costs of a case) subject it to market constraints? (e.g. expected revenue from making a pizza, expected cost of making a pizza.) Westlaw ain't cheap. And discovery and expert testimony can get astronomical. Sometimes it sounds like the costs of bringing a case are minimal, and the government is in love with handing money out. I, personally, simply don't have the funds to bring most of these cases.
12.4.2005 6:35pm
Free Marketeer:
and Ted Frank:

3) a defendant who is not the proximate cause of an injury should not be held liable for that injury;
4) there is no principled construction of tort law that holds McDonald's liable for failing to prevent injury in the case of a foreseeable coffee spill, but not a clothing manufacturer for failing to prevent injury in the case of a foreseeable coffee spill, and one can agree that the latter scenario is an absurd proposition for liability;


Isn't (4) answered by (3)? The entire purpose of proximate causation (3) is to cut off liability from but-for causation (4)? (using concepts, e.g. of foreseeability, intervening and superceding causation, etc.)

Were it as foreseeable, at the time of sale, that a sale of sweatpants is just as likely to put a purchaser in the burn ward as is a scalding cup of coffee, then there would be no principled basis to distinguish between McDonalds and Clothing Manufacturer with respect to proximate causation.

But his supposition is counterfactual: there are obvious differences in foreseeability, and thus proximate causation limits the liability of the clothing manufacturer, but not mcdonalds. 700 complaints are not "irrelevant" - I would guess that the clothing manufacturer did not have 700 complaints, but McDonalds did. The relevance of these complaints goes to the foreseeability of the injury and liability-limiting doctrine of proximate causation. That customers forwarded complaints to McDonald's, and not to the clothing manufacturer, protects the clothing manufacturer, even if it exposes McDonalds to liability for selling coffee that may put you in the hospital.
12.4.2005 7:01pm
Free Marketeer:
Not to mention that the clothing manufacturer doesn't breach a duty of care by negatively failing to prevent serious injury; mcdonalds has breached a duty of care by positively serving coffee at a temperature guaranteed to cause serious injury.
12.4.2005 7:09pm
THD:
I think the use of the language of markets and the language of personality responsibility is an attempt to compare apples and oranges. The unit of analysis in market theory is concerned primarily with the nature of relationships, particularly power relationships, between the various actors on the "playing" field. This notion is quite alien to the moral and ethical concept of personal responsibility, which is not focused on relationships at all but rather the nature of the individuals actions. The outcome in the Stella case (McDonalds) made perfect sense from a relationship point of view. McDonalds had the greater power and it failed to disclose the danger of the hot coffee to Stella. From the viewpoint of personal responsibility, the jury's decision made no sense. As an individual, she chose to go to McDonalds and buy coffee. If she was ignorant and careless, that is her own darn fault.

Personally, I think that the whole idea of a tort is a scheme by three lawyers (one of them in a black robe) to defraud the weak. Yet I think that if torts were done away with the big losers would not be the Stella's of the world but business. Torts provide a safety net for the buyer and a policing tool for "honest" businessmen. In essence, they disperse risk. Absent torts, people would, over the course of years, simply stop buying. The risk would not be worth the reward. Absent buyers, companies would go under. I have said and continue to think that Ralph Nader is a great capitalist; he is a gardener pruning the weeds.

Logically, I think that the Free Marketeer is right. Very smart analysis. The difference between him and I is one of values. I believe in personal reasonability from a moral perspective. But any businessman who supports tort reform is either an aggrieved loser, an idiot, or confused.
12.4.2005 8:03pm
David M. Nieporent (www):
The fact is that legally frivolous lawsuits are pretty inexpensive to deal with. There are several mechanisms for sifting out truly frivolous claims and for shifting the costs associated with them.
The fact is that only someone who doesn't have any firsthand experience with litigation, as either attorney or party, could make these claims. Even a frivolous claim requires motion practice — and since one can never really be sure that a particular suit will be deemed frivolous, thorough defense attorneys can't limit our responses to such suits to hoping they're thrown out on such grounds. Which means we run up defense costs.
The problem is, of course, that people who want tort reform aren't complaining about legally frivolous lawsuits. They're complaining about legally meritorious lawsuits that they don't like, the McDonald's coffee case being Exhibit 1.
That is, in fact, part of the problem. That in fact the legal system does a terrible job of "sifting out truly frivolous claims," because it defines "frivolous" so narrowly that it bears no relation to the common meaning of the term. The McDonalds case is a classic example, but hardly the only one. There were the two black women who sued Southwest because a flight attendant spoke a nursery rhyme. There are the Banzhaf-inspired suits against McDonalds for making people fat. And there is, of course, the soda suits being discussed in the instant post.

To the extent the legal system fails to identify these suits as frivolous, that's a failure of the legal system which requires tort reform, not a problem with tort reformers.
You don't hear tort reformers complaining much about frivolous lawsuits that get thrown out of court.
And this is false, as well. You might want to check out, e.g., Overlawyered.com, which regularly chronicles ridiculous suits as they're filed, not only after the verdicts come in.

(e.g. Republican party, supposed to be for state's rights. Yet they take multistate class actions out of state courts and put them into federal court, even if they are based on state law.
You ignore the fact that these suits are often designed, as (for instance) the gun suits are, to implement a particular state's law on a national level. It doesn't make sense to talk about "state's rights" when one state is busy trying to impose its particular policies on the people and economies of other states.
12.4.2005 8:34pm
TDPerkins (mail):
Free Marketer wrote:


"The mere fact that lawyers have an incentive to find clients doesn't seem like such an abnormality in a free market system."


Of course, we don't have a free market system--the government essentially has a monopoly on the use of coercion. It also imposes a cost on society (please, God forgive me for writing that half truth) which the tort lawyers can externalize onto society to further the big payoff they expect when the finally get a neutered jury to see things their way. Judges and or juries should be able to say, "loser" or "filer" pays.

This seems like a natural and almost unabusable check on abuse of process.

Yours, TDP, ml, msl, &pfpp
12.4.2005 8:42pm
Le Messurier (mail):
Just heard on CBS TV that there may be a connection between the use of underarm deoderants and breast cancer.

Can you say lawsuit? I knew you could.

"Why didn't I think of this!!"

When they file just be carful you don't trip and fall in the slime.

Le Messurier
12.4.2005 8:47pm
TDPerkins (mail):
David M. Nieporent had it exactly correct when he wrote:


Where's Ted Frank when you need him? These "salient facts" are, in fact, always mentioned, despite being (a) untrue, and (b) irrelevant. 700 complaints -- not of "serious" injury, but of any injury -- is evidence of safety, not negligence, given the number of cups of coffee McDonalds sells.


Yours, TDP, ml, msl, &pfpp
12.4.2005 8:49pm
Free Marketeer:

You ignore the fact that these suits are often designed, as (for instance) the gun suits are, to implement a particular state's law on a national level. It doesn't make sense to talk about "state's rights" when one state is busy trying to impose its particular policies on the people and economies of other states.


Well, in a national marketplace (and globalized economy) it is hard to test whether a state law is intended to "impose" its values on others (other states, or other countries), or simply that power sufficient to govern itself will also govern others. But I'm not sure that motive matters, for the point at hand. I don't contest the power of Congress to impose values on states because they are acting upon a national market. (There's no "not doing" - by saying no liability, that's the effect of Congress' action.) If Republican Congress wants to do it, they can. (and, if Democrats even have control, they will undoubtedly try the same thing. And which point Republicans will talk about state's rights.)

I'm just saying that it is duplicitous for Republicans to not simply preempt state law. Because that's the effect: Republicans don't care about the proper forum in which to litigate a state tort claim. What they really want to do is impose substantive tort law. They just don't want the political costs associated with doing so.
12.4.2005 9:03pm
Brett Bellmore (mail):

Just so long as we are straight that the current political strategy of denouncing plaintiff's lawyers is, in actuality, a broad-based attack on fundamental pillars of tort. (not, as it poses, a courageous stand against all-powerful lawyers.)


Tort, as it currently fuctions, deserves to be subject to broad based assault. The "efficiency" instead of fault based nature of current tort theory amounts to nothing more than the legal community's effort to turn tort into a system of regulation parallel to legislation, but without the democratic constraints actual lawmakers operate under.

Want a rough definition of a "frivolous" lawsuit? Easy: One with so little chance of prevailing on the merits that it wouldn't be filed if a system of loser pays was in place.
12.4.2005 9:06pm
TDPerkins (mail):
free Marketer wrote:


Not to mention that the clothing manufacturer doesn't breach a duty of care by negatively failing to prevent serious injury; mcdonalds has breached a duty of care by positively serving coffee at a temperature guaranteed to cause serious injury.


Oh really? It's the nature of most clothing to be soaked through when liquid is dumped on it, it is in the nature of coffee to be hot enough to burn, and when you spill something on yourself, it is your own fault.

As long as we are going to give mythical externalities legal weight, I can tell you from personal experience that when McDonald's lowered the tmeperature at which they brewed their coffee, it became less valuable to one guy I know because it cooled off even in his Thermos(tm) before the end of the workday. He used to but a carafe and fill it at the drive-thru window. How is he to be compensated?

YOurs, TDP, ml, msl, &pfpp
12.4.2005 9:06pm
Free Marketeer:

Of course, we don't have a free market system--the government essentially has a monopoly on the use of coercion. It also imposes a cost on society (please, God forgive me for writing that half truth) which the tort lawyers can externalize onto society to further the big payoff they expect when the finally get a neutered jury to see things their way.


Your argument proves too much: Why, if plaintiff lawyers can externalize costs and internalize benefits, aren't more plaintiff lawyers rich than defense lawyers? Why do most graduates with a choice go into defense work rather than plaintiff work? Expected salary is higher, for most people, in defense work.
12.4.2005 9:10pm
Free Marketeer:

The "efficiency" instead of fault based nature of current tort theory amounts to nothing more than the legal community's effort to turn tort into a system of regulation parallel to legislation, but without the democratic constraints actual lawmakers operate under.

Tort is certainly a "system of regulation parallel to legislation." In fact, all common law is. Every 1st year student learns Contract, Tort, and Criminal law. These are common law doctrines, i.e. judically-created and able to be legislatively superceded by statute. Common law, like all law, operates to regulate the behavior of those under its jurisdiction. This is an elementary proposition of the nature of law. Today, most common law doctrines are, mixed with statutory law.

So, if you want to make a broad-based attack on tort, it shouldn't be on the grounds that it "tries to regulate people", unless you just don't like the nature of law itself.

If you want to make a broad-based attack on tort, because you don't think that a law that regulates market transactions should have the purpose of ensuring an efficient marketplace, go ahead.
12.4.2005 9:16pm
TDPerkins (mail):
A) "but" /= "buy" in the second to last sentence in my nearest above post.

b) Free Marketeer wrote:

"Absent torts, people would, over the course of years, simply stop buying."

Horse feathers! What would happen is, that the value to consumers of bodies like Consumer's Reports and UL would rise, and they would rise quite a lot. This would give rise objective evaluations of risk and a better informed consumer, obviating such shrill, gotcha shakedown artists as Nader has become (if in fact he was ever anything different).

Of course, if would disempower lawyers...

...Oh wait, where's the downside?

Yours, TDP, ml, msl, &pfpp
12.4.2005 9:17pm
Free Marketeer:

became less valuable to one guy I know because it cooled off even in his Thermos(tm) before the end of the workday. He used to but a carafe and fill it at the drive-thru window. How is he to be compensated?

By paying less.



"It's the nature of most clothing to be soaked through when liquid is dumped on it, it is in the nature of coffee to be hot enough to burn, and when you spill something on yourself, it is your own fault."

Negligence liability is defined by taking reasonable care to prevent foreseeable injuries to foreseeable persons. If you honestly think that it is as foreseeable, at the time of sale, that a sale of sweatpants is as likely to cause burns as a sale of coffee is, I don't know what to say. If you think it is more efficient to allow McDonalds to injure people by acting unreasonably, I'd be open to argument.
12.4.2005 9:23pm
Free Marketeer:

b) Free Marketeer wrote:

"Absent torts, people would, over the course of years, simply stop buying."

I didn't write that.
12.4.2005 9:23pm
Curious:
Switching to an English-style loser pays system has far-reaching implications beyond those many are citing here. Such a system will serve as a bar from the legal system to those who do not have the resources to withstand and adverse judgment. So instead of cutting down on "frivolous" lawsuits, only those with the money to do so will bring potentially meritorious (but far from slam dunk) claims, let alone frivolous or novel claims that are less likely to succeed.

This reminds me of the current auto-insurance regime in which individuals can pay the lower rate or the full tort rate. Name one person who can afford the difference in rates who will waive her rights to sue above simply economic damages? Instead of eliminating "frivolous" pain and suffering suits, that privilege is reserved and exercised unabashedly by those with the means to do so.
12.4.2005 9:30pm
Free Marketeer:

What would happen is, that the value to consumers of bodies like Consumer's Reports and UL would rise, and they would rise quite a lot.


The marginal cost of ensuring that costs are reflected in price are lower, by localizing it with McDonalds, rather than relying upon consumers spend all of their time reading about risks associated with all products they are considering buying, and their substitutes. (They wouldn't do, because the opportunity cost is so high, and thus just use a inaccurate heuristic to calculate the risk premium.) Not to mention it is cheaper to have McDonalds investigate than to have outside parties investigate.
12.4.2005 9:40pm
TDPerkins (mail):
Free Marketeer wrote:


Your argument proves too much: Why, if plaintiff lawyers can externalize costs and internalize benefits, aren't more plaintiff lawyers rich than defense lawyers? Why do most graduates with a choice go into defense work rather than plaintiff work? Expected salary is higher, for most people, in defense work.


I would also guess that since the defense work is the more sought after, that the more skilled tend to get into it. Hmmm.

It only proves too much in your eyes, because you do not admit enough to be true, that lawyers DO generally become lawyers expecting to make a lot more money than most people, and there are too many lawyers for that to happen, by rights. Currently the tort system is operating in such a fashion that lawyers do not bear the full costs of the lottery the government is operating for their benefit, by which some of their number WILL become filthy (as to honestly) rich by lucking onto a jury which as will agree to their sillier claims. The Stella/McDonalds suit is such a claim--coffee can burn, so it is your fault if you burn yourself by spilling it on yourself.


"If you want to make a broad-based attack on tort, because you don't think that a law that regulates market transactions should have the purpose of ensuring an efficient marketplace, go ahead."


It isn't an efficient marketplace. Lotteries of relatively unmerited funds are not generally--and not here--as efficient as informed decentralized decision making; and a market would arise for such information, count on it.

But it would shrink the market for laywers...

Yours, TDP, ml, msl, &pfpp
12.4.2005 9:40pm
TDPerkins (mail):
I wrote:


b) Free Marketeer wrote:

"Absent torts, people would, over the course of years, simply stop buying."



To which he replied:


"I didn't write that."


I apologize. Am I correct then, by ellepsis, to assume you do not agree with it?

Yours, TSP, ml, msm, &pfpp
12.4.2005 9:53pm
Free Marketeer:

Am I correct then, by ellepsis, to assume you do not agree with it?

Yes. My rational is different, and is in my reply to your Consumer Reports post.
12.4.2005 9:56pm
Free Marketeer:

"Currently the tort system is operating in such a fashion that lawyers do not bear the full costs of the lottery the government is operating..."

See, I think this is where we diverge. I (a) do not think tort is a lottery, and (b) think that the costs of bringing a tort claim are born by the the lawyer. (and I probably think that this is more expensive than you probably think it is.)

If your claim is (c) that the disposition of a tort claim (e.g. judgment, settlement) involves the transfer of economic value, and that such transfers are currently wrong, then we have to say upon what standard we evaluate "wrongness." I say economic efficiency.
12.4.2005 10:04pm
Free Marketeer:

"by which some of their number WILL become filthy (as to honestly) rich"


If McDonald's shareholders profit from the imposition of risk, you will say they are honestly rich. If lawyers profit from the imposition of risk, you will say that they are dishonestly rich.
12.4.2005 10:13pm
Free Marketeer:

Want a rough definition of a "frivolous" lawsuit? Easy: One with so little chance of prevailing on the merits that it wouldn't be filed if a system of loser pays was in place.

Example/ Lawsuit is probably a winner. (Has 51% chance of succeeding.) If successful, wins $1 million. Expected gross revenue: $510,000. Contingency fee = 30%, so expected net revenue = $153,000.
Costs of prosecuting lawsuit = $152,000.
Costs of defending lawsuit = $480,000.

If no loser-pays: Bring lawsuit that is probably a winner. (expected revenue = $153,000; expected cost=$152,000.)
If loser-pays: Do NOT bring lawsuit that is PROBABLY A WINNER. (expected revenue = $153,000; expected cost = $152,000 + $235,200 (i.e. 49% x $480,000) = $387,200.)
12.4.2005 10:23pm
Free Marketeer:
This is why potential defendants ask for "loser-pays": People won't file suits that they'll probably win, and expected costs are thus transferred away from the potential defendant. To ask for loser-pays is simply another way to request that the government allow them to externalize their costs.
12.4.2005 10:35pm
TDPerkins (mail):
Free marketeer definitely wrote:


"Negligence liability is defined by taking reasonable care to prevent foreseeable injuries to foreseeable persons. If you honestly think that it is as foreseeable, at the time of sale, that a sale of sweatpants is as likely to cause burns as a sale of coffee is, I don't know what to say. If you think it is more efficient to allow McDonalds to injure people by acting unreasonably, I'd be open to argument."


It is definitely foreseeable by both the manufacturer and buyer of the "sweatpants" type or garment that it will not protect from hot coffee spills, and it is equally foreseeable by the vendor and purchaser of hot coffee that it can burn you--it is the equivalency of the degree of foreseeability by each party which makes the suit ridiculous. If you disagree, I invite to douse your own crotch with another restaurant's coffee and see if you find the situation agreeable.

In your view could McDonald's have endemnified itself from further suit by continuing to sell hot coffee once it had made public the fact that it made it's hot coffee hot?

Curious wrote:

"Switching to an English-style loser pays system has far-reaching implications beyond those many are citing here. Such a system will serve as a bar from the legal system to those who do not have the resources to withstand and adverse judgment."

I do not actually propose making loser pays the rule, I propose that judges or juries, either in incombination or perhaps unilaterally, be empowered at theri discretion for imposing a "loser pays" sanction when they see fit.

Additionally, Free Marketeer wrote:


"The marginal cost of ensuring that costs are reflected in price are lower, by localizing it with McDonalds, rather than relying upon consumers spend all of their time reading about risks associated with all products they are considering buying, and their substitutes. (They wouldn't do, because the opportunity cost is so high, and thus just use a inaccurate heuristic to calculate the risk premium.) Not to mention it is cheaper to have McDonalds investigate than to have outside parties investigate."


It is far from clear that it is ever more efficient to have the prospective targets of such lawsuits internalize the cost of such investigation, because they have no natural incentive for such investigations do be done, and once they have the results of such investigations, they have a natural incentive to conceal and spin rather than reveal and articulate the results.

In short, you are asking the foxes to gaurd the henhouse. This strikes you as being efficient?

I think rather, given the inherently confrontational nature of such investigations, that you are in fact arguing that confrontations belong in courtrooms resolved by judges and juries, not incidentally enriching lawyers, rather than a confrontation of competing impulses resolved in the minds of consumers.

I also note that your "system" presupposes that people will be injured, then there will be a suit. Mine first supposes that there will be information (even water cooler talk) and then there will be better informed decisions, and perhaps not an injury.

Also, the better use of a person's time would be to assume that coffee is hot and should be handled with sufficient care, because if spilled it may burn you.

And, BTW, when McDonald's lost that suit, why would you think my friend paid less for his coffee then, even though it was worth less to him? Tell you what, I get a class action suit going against the lawyers who won that judgement, ont he grounds that they of their own free will (on the off chance they made megabucks) were counsel in the suit, the suit made on the grounds they lowered the value of the coffee to me and all the other McDonald's consumer, and we should be compensated. Eventually, a jury would be empanleded that was enraged by the ridiculousness of the previous suit and it would lighten those lawyers wallets on our behalf.

Why would such a suit be bad thing, should it eventually be won?

Yours, TDP, ml, msl, &pfpp
12.4.2005 10:37pm
Brett Bellmore (mail):

Such a system will serve as a bar from the legal system to those who do not have the resources to withstand and adverse judgment.


Excuse me, but if tort lawywers can take cases on contingency, they can take on the risk of loser pays as part of the contingency, can't they? And, as I say, if the probability of success is so low that "loser pays" would stop the suit from being filed, that's evidence in itself that it IS a frivolous lawsuit.
12.4.2005 10:44pm
Free Marketeer:
Whoops. I messed up the example, but the principle remains true. Loser-pays has the consequence of defendants not having to defend against suits in which they would probably lose.


Costs of defending lawsuit (if no loser-pays): $480,000. (i.e. 48% of $1 million)
Costs of defending lawsuit (if loser-pays): $405,520. ($480,000-(51% of $152,000=$77,520)

No loser-pays: Bring suit that is probably a winner: ($153,000 exp. revenue, $152,000 exp. costs.)

Loser-pays: DON'T bring suit that is probably a winner:
{$230,520 exp. revenue ($153,000 + $77,520); $350,704 exp. cost [$152,000 + $198,704 (49% x $405,520)]}.
12.4.2005 10:48pm
David M. Nieporent (www):
Every case has clients, otherwise no standing.
Please. Some cases -- the soda suit is a perfect example -- have nominal clients, not real ones. (That doesn't even address situations like California's former 17200, which so vitiated the standing requirement as to make it a non issue.) When the client has suffered no real injury and has sought no recovery, the client is nothing more than a name on a page. If he doesn't do what the attorney wants, the attorney picks another.

Doesn't the very practical cost/benefit rational governing whether to prosecute a case (expected revenues of a case and expected costs of a case) subject it to market constraints?
No. Even a government agency -- an attorney general's office, say -- has a budget, and has to decide based on that budget whether a case is worth pursuing. That's not the same thing as "market constraints." The important factor is that the "expected revenues" don't come from voluntary exchanges in the marketplace, but from government fiat.


Your argument proves too much: Why, if plaintiff lawyers can externalize costs and internalize benefits, aren't more plaintiff lawyers rich than defense lawyers? Why do most graduates with a choice go into defense work rather than plaintiff work?
Perhaps because lawyers by nature tend to be risk averse, and defense work doesn't lead to the lottery winnings that plaintiff's work can.


If you honestly think that it is as foreseeable, at the time of sale, that a sale of sweatpants is as likely to cause burns as a sale of coffee is, I don't know what to say.
Do you think the ratio of injuries to sales of a pair of sweatpants is higher or lower than the ratio of injuries to sales of a cup of coffee?


This reminds me of the current auto-insurance regime in which individuals can pay the lower rate or the full tort rate. Name one person who can afford the difference in rates who will waive her rights to sue above simply economic damages?
Me.
12.4.2005 10:49pm
Free Marketeer:

And, as I say, if the probability of success is so low that "loser pays" would stop the suit from being filed, that's evidence in itself that it IS a frivolous lawsuit.

Frivolous lawsuits are not ones which probably win.
12.4.2005 10:50pm
Free Marketeer:

Do you think the ratio of injuries to sales of a pair of sweatpants is higher or lower than the ratio of injuries to sales of a cup of coffee?


With respect to burn injuries? Coffee.
12.4.2005 10:51pm
Free Marketeer:

When the client has suffered no real injury

This, in products liability cases, often has little to do with whether they would, of their own accord, find a lawyer. Especially when their receipt says things like "I hereby waive all my rights, even if this blender blows up and cuts my head off."
12.4.2005 10:53pm
Free Marketeer:

Perhaps because lawyers by nature tend to be risk averse, and defense work doesn't lead to the lottery winnings that plaintiff's work can.


So, lawyers get into the profession to make huge amounts of money (TD Perkins stipulation, which I was responding to), and are then too risk averse to try to get it? This is an internally inconsistent view of lawyers.
12.4.2005 10:55pm
TDPerkins (mail):
Free Marketer wrote:

"If McDonald's shareholders profit from the imposition of risk, you will say they are honestly rich. If lawyers profit from the imposition of risk, you will say that they are dishonestly rich."

However, someone buying coffee should be aware it can burn them, and McDonald's shareholders were reasonable in presuming they could not be damaged by such a ridiculous suit.

a) Yes, at the level of silliness presupposed by most novel legal theories, the court's are a lottery. It is always possible that a jury may agree with you (and I believe unanimity is not required in some civil cases/states)--although juries are a better means than most of determining guilt and degree of culpability.

b) Are you going to try, by arguing that bringing tort suits is expensive for lawyers, that the current system is more equitable than what I propose? Unless a very great deal of pro bono work is being done, your statement presupposes that tort suits are only brought 1) when there is certain actual fraud, which excludes the sorts of cases we are talking about, or 2) that such cases are only brought when the dendedant has deep pockets, and "people" harmed by less weatlthy defendants are SOL in your eyes.

c) "I say economic efficiency." You seem to say it loudest when it means more lawyers are working, not when information is generated and disseminated by parties with an unconflicted interest to do so, leading to better choices by all parties involved.


"This is why potential defendants ask for "loser-pays": People won't file suits that they'll probably win, and expected costs are thus transferred away from the potential defendant. To ask for loser-pays is simply another way to request that the government allow them to externalize their costs."


Which is why I do not propose to got to a "loser always pays for the whole suit" system, but to instead go to a system where the jury/judge can at their discretion punish the bringer of a suit and/or their counsel if they feel that person has wasted their time.

Yours, TDP, ml, msl, &pfpp
12.4.2005 10:55pm
Free Marketeer:

The important factor is that the "expected revenues" don't come from voluntary exchanges in the marketplace, but from government fiat.

If this is true, then it is true for defendants as well. (with "expected revenues" being the amount of expected costs they can stick on other people without being held liable.)

Under your interpretation, neither defendant nor is subject to "market constraints" when deciding whether to bring or defend a suit. Fine. But this doesn't tell us much about the decisions of when to defend or bring a suit, and whether an efficient amount of defense or prosecution is taking place.
12.4.2005 10:59pm
Free Marketeer:

However, someone buying coffee should be aware it can burn them, and McDonald's shareholders were reasonable in presuming they could not be damaged by such a ridiculous suit.

Gven that this woman ended up with 2nd and 3rd degree burns, putting her in the hospital, you and I may just have different expectations of what a person buying coffee "should be aware" of.
12.4.2005 11:00pm
David M. Nieporent (www):
If McDonald's shareholders profit from the imposition of risk, you will say they are honestly rich. If lawyers profit from the imposition of risk, you will say that they are dishonestly rich.
Unless there's a rash of innocent bystanders being attacked by feral cups of coffee, McDonalds does not "impose" risk on people by selling hot coffee. Customers must voluntarily choose to assume that risk. (Yes, I know -- as Justice Wallace of the New Jersey Supreme Court noted recently, the doctrine of assumption of risk is "outdated.") That's the difference.

(That doesn't mean all tort litigation is unjustified -- it just means that it can't be compared to normal free market activities.)
12.4.2005 11:02pm
Free Marketeer:

And, BTW, when McDonald's lost that suit, why would you think my friend paid less for his coffee then, even though it was worth less to him?

Because, to the extent that temperature was valuable, he would switch to substitutes. (e.g. Make his own coffee.) If market demand as a whole responds in such a manner, then McDonalds will respond by lowering price by such an amount. If market demand as a whole does not respond in such a manner, then he will have to pay more for his idiosyncratic tastes. (as often happens.)

In such a situation, it would be perverse to have legal rules that allocate resources away from what the market demands.
12.4.2005 11:08pm
Free Marketeer:

McDonalds does not "impose" risk on people by selling hot coffee. Customers must voluntarily choose to assume that risk.

True, to the extent that the coffee is foreseeably hot, with foreseeable risks. (i.e. people know what they're buying.) Again, this may be a case-specific difference of opinion, but I don't think the law should presume that people ought to expect a coffee spill to impose 3rd degree burns.
12.4.2005 11:10pm
Free Marketeer:

instead go to a system where the jury/judge can at their discretion punish the bringer of a suit and/or their counsel if they feel that person has wasted their time.

R.11, malicious prosecution, etc.
12.4.2005 11:14pm
TDPerkins (mail):
Free Marketeer wrote:

"So, lawyers get into the profession to make huge amounts of money (TD Perkins stipulation, which I was responding to), and are then too risk averse to try to get it? This is an internally inconsistent view of lawyers."

Actually, I was thinking at the time that the fact that the better, intelligent, clear headed lawyers are able to get the defense jobs--the ones with a good outcome of PAY * LIKLIHOOD OF PAY--explains why it's the plaintiff's lawyers who cook up cockamamie theories which amount to, "You spilled coffee on yourself? Sue McDonald's!"

And it is a cockamamie theory, because it assumes no thereby actionable risk is pushed onto consumers of other slightly cooler coffee, when in fact there you are talking about 1st and 2nd degree burns, and quite possibly deep enough ones as to require skin grafting, and with a like chance of infection. Even by that stretch, McDonald's could only be responsible for the slightly increased damage potential of the hotter coffee--and no restaurant in the country can afford the liablity of serving coffee to anyone.

I mean, the above's true if you want to be consistent with your "risk", "externalized cost", and "economic efficiency" theory of justifying our current approach to torts. I mean everyone already knows that coffee might burn, so the only way that McDonald's can be liable for selling especially hot coffe even when you spill it on yourself is if every vendor of coffee is liable for risk of burns you might cause to yourself if you spill their coffee onyourself, right?

Yours, TDP, ml, msl, &pfpp
12.4.2005 11:16pm
Free Marketeer:

a) Yes, at the level of silliness presupposed by most novel legal theories, the court's are a lottery


I think that, were you a plaintiff's lawyer (and I don't know if you are), and you acted in accordance with this theory, you would go out of business.
12.4.2005 11:16pm
Free Marketeer:

I mean everyone already knows that coffee might burn, so the only way that McDonald's can be liable for selling especially hot coffe even when you spill it on yourself is if every vendor of coffee is liable for risk of burns you might cause to yourself if you spill their coffee onyourself, right?


Again, we should stick with the facts of this case. This was 2nd and 3rd degree burns, requiring hospitalization. "Everyone" does NOT expect this from a coffee spill. You might expect a blister, you might expect a blister to get infected if you don't take care of it, etc. This is situation is not what we are talking about.

And it is subtle, factual distinctions such as these that make courts a good forum for case-by-case resolution of such matters. And why McDonalds can be held liable without thereby putting every coffee vendor out of business.
12.4.2005 11:21pm
TDPerkins (mail):
Free Marketeer wrote:


"R.11, malicious prosecution, etc..."


While not aware of the specifics of R.11, I presume Rule 11, and the rest, I must observe it strikes that neither the judge nor the jury is a prosecuting authority, so it could not be malicous prosecution for a judge or jury to say, "in this case, the loser pays", and in any case, I speak of changing the rules to ones more equitable.

Yours, TDP, ml, msl &pfpp
12.4.2005 11:23pm
Curious:
TDP: While not aware of the specifics of R.11, I presume Rule 11, and the rest, I must observe it strikes that neither the judge nor the jury is a prosecuting authority, so it could not be malicous prosecution for a judge or jury to say, "in this case, the loser pays", and in any case, I speak of changing the rules to ones more equitable.

Fed. R. Civ. Pro. 11 allows for the imposition of sanctions against lawyers and/or parties for frivolous, harassing, etc. claims at the initiative of the court of by the motion of the opposing party.

Malicious prosecution is a separate cause of action a defendant can bring against a former plaintiff for analogous actions to those above.
12.4.2005 11:46pm
TDPerkins (mail):
Free Marketeer, missing or dismissing my point, wrote:


"Again, we should stick with the facts of this case. This was 2nd and 3rd degree burns, requiring hospitalization. "Everyone" does NOT expect this from a coffee spill. You might expect a blister, you might expect a blister to get infected if you don't take care of it, etc. This is situation is not what we are talking about.

And it is subtle, factual distinctions such as these that make courts a good forum for case-by-case resolution of such matters. And why McDonalds can be held liable without thereby putting every coffee vendor out of business."


And my point is that McDonald's can only be liable for selling especially hot coffee if it is only in fact the increased damage--the risk of which it should have foreseen--for which it is held liable, and only if all other coffee vendors are also proportionally liable for the lesser damages imposed by their proportionally less hot products. Nothing else is equitable or even consistent with your theory that the current approach to torts is economically efficient at bring about an evaluation of risks, or proper shifting of otherwise "externalized" costs. By your theory, if I were a plaintiff's lawyer, since I would expect to get 1st and 2nd degree burns at least from a coffee cup spilled onto and pooling under my crotch while I was strapped into a car seat and unable to move away from it effectively because I was in traffic (or was old and couldn't move fast), then any coffee vendor should be liable for the burns that happen if they sell it to me anyway, and then I spill it on myself, as long as they are the excepted 1st and 2rd degree burns, and that claim should be say, in several hundred thousand dollar range. Now if it's extra hot coffee, then I win the big jackpot and get several million awarded.

Maybe coffee shouldn't be sold to old or slow people.

And if Byomtov is to be believed, at 180degF they are still denying us a "best" cup of coffee.

Yours, TDP, ml, msl, &pfpp
12.4.2005 11:58pm
Free Marketeer:

And my point is that McDonald's can only be liable for selling especially hot coffee if it is only in fact the increased damage--the risk of which it should have foreseen--for which it is held liable, and only if all other coffee vendors are also proportionally liable for the lesser damages imposed by their proportionally less hot products.

We might be talking past one another. I apologize if I am failing to understand.

Your point, I think, is that if McDonald's is liable for foreseeable injuries caused by 3rd degree burns, then Vendor must be liable for foreseeable injuries caused by 1st degree burns, in proportion to the injury. Such a requirement would put coffee vendors out of business, because all coffee might cause such burns. Thus, rather than holding Vendors liable for foreseeable injury, we should hold consumers liable (i.e. dismiss complaint) for the foreseeable injury. Is this right?

I would just say that "foreseeability" operates both from the seller and the buyer's vantage point. (analogy: what risks did the seller think they were selling? what risks did the buyer think they were buying?)

My point is the following: With 3rd degree burns, the seller may/should know if they are selling that. We presume that the buyer does not know they are buying that. With lesser burns, we might not make such a presumption. A buyer of coffee might expect blisters from spills. Thus, based on the facts, it is possible to hold people liable for 3rd degree burns, while not holding them liable for 1st degree burns. It depends on what you believe both (a) sellers foresee, and (b) consumers foresee. They say that assumption of risk doctrine is going away, but I don't believe this. I think that it is just being incorporated into how the duty of care is defined. And - if not - I can criticize tort theory on principled grounds. And, I could be wrong on principled grounds. Either way, not a lottery.
12.5.2005 12:12am
Free Marketeer:

And my point is that McDonald's can only be liable for selling especially hot coffee if it is only in fact the increased damage--the risk of which it should have foreseen--for which it is held liable, and only if all other coffee vendors are also proportionally liable for the lesser damages imposed by their proportionally less hot products.

And - somehow I always forget this, I don't know why - tort doesn't just govern relationships between buyer and seller. (Otherwise could have a breach of warranty action in contract.) Tort governs relationships between seller and injured party, even if third party. (e.g. the example above, where the car blows up and injures a bystander. Or, if the McDonald's lady had spilled her coffee on a sleeping passenger, sending them to the hospital.)
12.5.2005 12:18am
vic:
Switching to an English-style loser pays system has far-reaching implications beyond those many are citing here. Such a system will serve as a bar from the legal system to those who do not have the resources to withstand and adverse judgment. So instead of cutting down on "frivolous" lawsuits, only those with the money to do so will bring potentially meritorious (but far from slam dunk) claims, let alone frivolous or novel claims that are less likely to succeed.

oh i dont want to impose costs on the plaintiff- i want to impose the cost on the gucci clad trail lawyer


BTW anyone wanting to discuss why and how a mulimillion $ settlemnt is appropriate for third degree burns to a somewhat stupid persons crotch. i mean give a break!

the problem is that consequent to a corrupt or inefficient judiciary, we have a system run amuck. so steve wins acase for 2 million and free marketer decides to ask for 4 and so on. consequently there is so much money floating around that. it allows the system to be greesed to the advanyage of the atla types.

the other issue i have is that in many of the lawsuits the issues involved are so scientifically involved that the avg jury cannot possibly be in a position to make a reasoned judgement.

onme more point

if a defendant at the age of say 65 loses all the assts that he accumulated aftera lifetie of hard work to a brigand in gucci loafers, dont you think for this poor defendant the reaL CONSEQUENCES OF BANKRYUPCY ARE AS REAL AS incarceration. therfore this preponderance of evidence BS has to go. if you are going to senmd me into chapter 11 and homelessness, dont you think it shoulsd at least be without reasonable doubt.

oh and what about jury selection and the usual BS that goes on there in selecting a suitably (stupid) pool of jurors
12.5.2005 12:48am
vic:
Your point, I think, is that if McDonald's is liable for foreseeable injuries caused by 3rd degree burns, then Vendor must be liable for foreseeable injuries caused by 1st degree burns, in proportion to the injury. Such a requirement would put coffee vendors out of business, because all coffee might cause such burns. Thus, rather than holding Vendors liable for foreseeable injury, we should hold consumers liable (i.e. dismiss complaint) for the foreseeable injury. Is this right?


another sorry selfserving argument
12.5.2005 12:51am
The Original TS (mail):
The fact is that legally frivolous lawsuits are pretty inexpensive to deal with. There are several mechanisms for sifting out truly frivolous claims and for shifting the costs associated with them.

The fact is that only someone who doesn't have any firsthand experience with litigation, as either attorney or party, could make these claims.

David, I must, unfortunately, take some offense at this. Legally frivolous lawsuits are, in fact, relatively inexpensive to deal with. Not free, just relatively inexpensive. If they're truly legally frivolous, defendants are often entitled to sanctions. The problem you have is, as discussed above, that these suit are hardly ever legally frivolous.

In fact, in a recent survey by the Federal Judicial Center, 85% of district court judges surveyed said that frivolous litigation was either a small problem or no problem. Only 3% said it was a large problem or a very large problem. I'll bet you that every judge in this 3% had a large prison in his jurisdiction and a six-foot stack of pro-per 1983 complaints in his office.

http://www.businessinsurance.com/cgi-bin/news.pl?newsId=5365

You give yourself away by claiming that the McDonald's case is a classic example of a frivolous lawsuit. Well, no, it's not. Not only was it not frivolous, it was meritorious. You and your clients might like to see the law change in such a way that the McDonalds lawsuit would be frivolous but that is an entirely different issue.

McDonald's had settled similar complaints for substantial damages in the past. They had an opportunity to settle this one as well. They rolled the dice, went to trial and got spanked. The plaintiff didn't bring a frivolous lawsuit. If anything, the McDonalds mounted a "frivolous" defense.

The biggest problem I have with the cries for tort reform is that it is based on an absurd stereotype — the evil plaintiff's lawyer bringing meek-and-mild, virtuous corporate citizens to their knees. Go litigate with Disney and then come tell me about how all these poor defendants are being helplessly abused by the legal system. Yes, defendants are occasionally subjected to nonmeritorious lawsuits. But even more frequently, defendants try to spend plaintiffs with limited resources but meritorious lawsuits into the ground.

Corporate defendants give as good as they get — and then some — in litigation. For every soda suit, I'll see you an Erin Brokovich and raise you a Buffalo Creek.
12.5.2005 1:02am
The Original TS (mail):
I also wanted to comment on this.

Where's Ted Frank when you need him? These "salient facts" are, in fact, always mentioned, despite being (a) untrue, and (b) irrelevant. 700 complaints -- not of "serious" injury, but of any injury -- is evidence of safety, not negligence, given the number of cups of coffee McDonalds sells.

First, I suppose we can argue about how serious the injury has to be before it's serious. Suffice to say it was serious enough for the injured person to go to the trouble of making a claim. Some of these injuries were, in fact, third degree burns similar to those of the plaintiff. The point here is that McDonald's was on notice that their coffee could cause injury, even serious injury. (Having said that, as this was an unreasonably dangerous product, strict liability applies. The knowledge element primarily kicked in for assessing punitive damages.)

Second, this isn't a fragile plaintiff case. Anyone would have been injured had they poured McDonald's coffee on themselves. At 180 degrees F, it only takes a few seconds to cause third degree burns. As Free Marketeer has pointed out, it's all about consumer expectations. Yes, boiling water on my stove is hotter than 180 degrees, substantially so. But I know that, so I'm careful not to balance a styrofoam cup of boiling water on my crotch. I don't expect coffee to be that temperature since coffee isn't supposed to be that temperature. In fact, as McDonalds admitted, coffee at 180 degrees is undrinkable.
12.5.2005 1:34am
David M. Nieporent (www):
Because, to the extent that temperature was valuable, he would switch to substitutes. (e.g. Make his own coffee.) If market demand as a whole responds in such a manner, then McDonalds will respond by lowering price by such an amount. If market demand as a whole does not respond in such a manner, then he will have to pay more for his idiosyncratic tastes. (as often happens.)

In such a situation, it would be perverse to have legal rules that allocate resources away from what the market demands.
But the market demands hot coffee, as evidenced by the popularity of McDonalds coffee. It's a bad judge and 12 people in New Mexico who for some reason decided to allocate resources differently.

True, to the extent that the coffee is foreseeably hot, with foreseeable risks. (i.e. people know what they're buying.) Again, this may be a case-specific difference of opinion, but I don't think the law should presume that people ought to expect a coffee spill to impose 3rd degree burns.
Few people, except those with medical training, know the difference between "1st degree burns," 2nd degree burns," and "3rd degree burns." If consumer expectations required that level of detailed knowledge, then you'd be writing that out of the law. But of course it doesn't; it requires merely a general understanding of the type of risk, not the exact amount of risk. Steak knives are sharp. A steak restaurant doesn't need to tell people that a specific amount of pressure applied to a steak knife will penetrate a certain amount into a person's skin. It's enough to know that steak knives can cut you. In this case, coffee is hot. It can burn you. Everybody knows that. That's enough.

I don't expect coffee to be that temperature since coffee isn't supposed to be that temperature.
But the problem is that this is flat out wrong. Coffee is supposed to be that temperature. ANSI says that coffee should be brewed at between 170-205 degrees, and served at no less than 170 degrees.

I advise anybody who still doesn't understand this case to read Judge Easterbrook's decision in the Bunn-o-Matic case.


Oh, and by the way, Erin Brockovich was a great Hollywood movie... and a scientific fraud.
12.5.2005 3:42am
Brett Bellmore (mail):
Alas, frivolous lawsuits are not nearly so rare as judges will say, it's merely that judges are far too reluctant to admit that a given lawsuit is frivolous.
12.5.2005 6:26am
Free Marketeer:

Few people, except those with medical training, know the difference between "1st degree burns," 2nd degree burns," and "3rd degree burns." If consumer expectations required that level of detailed knowledge, then you'd be writing that out of the law. But of course it doesn't; it requires merely a general understanding of the type of risk, not the exact amount of risk. Steak knives are sharp. A steak restaurant doesn't need to tell people that a specific amount of pressure applied to a steak knife will penetrate a certain amount into a person's skin. It's enough to know that steak knives can cut you. In this case, coffee is hot. It can burn you. Everybody knows that. That's enough.


The facts aren't simply that "coffee is hot. It can burn you." The injury that someone with medical training might label "third degree" is not expected from a coffee spill. Can you, in all seriousness, dispute this?

There is a factual distinction here - the fact is that this coffee didn't just give this woman a blister, it put her in the hospital. One can attempt to paper over such a distinction only for reasons of ideological purity.
12.5.2005 9:53am
vic:
<i>Alas, frivolous lawsuits are not nearly so rare as judges will say, it's merely that judges are far too reluctant to admit that a given lawsuit is frivolous.</i>


judges do not want to be in aposition that they may offend their paymasters or come next election cycle campaign funds may dry up.

another freind who got sued frivolously has this story to tell. after the defendants and experts got deposed, it was time for the plaintiffs and their experts to get deposed. first- no date for deposition - kept getting delayed w one cock and bull story after another by plaintiff. finaly judge gave ultimatum to plaitiff depose expert or else. guess what no or else. deadline came and went no experts to depose. after 4 deadlines had passed still no expert. my freind in the meanwhile is languishing with mounting legal bills.

conduct of this nature is unforgivable- now go ask the judge if this is a frivolous suit and he will of course say no. coz if he felt it was frivolous he would have taken care of it.

in major municipalities the judges are always taken care of to ensure that there are no frivolous suits.
12.5.2005 12:05pm
Friv:
While I'm not sure that every state has rules with as much teeth as 26(g)(3) and 37, but improper deposition and discovery practice is highly sanctionable.
12.5.2005 12:35pm
David M. Nieporent (www):
The facts aren't simply that "coffee is hot. It can burn you." The injury that someone with medical training might label "third degree" is not expected from a coffee spill. Can you, in all seriousness, dispute this?
Absolutely.
There is a factual distinction here - the fact is that this coffee didn't just give this woman a blister, it put her in the hospital. One can attempt to paper over such a distinction only for reasons of ideological purity.
What person would not expect to be severely burned -- far more than a "blister" -- by pouring near-boiling water on their genitals? What person who has ever made -- or drunk -- coffee doesn't realize that one heats the water to near boiling to make it?

But what's the point here? What theory of liability are you arguing? That they should have warned her that the coffee could burn her severely? Or that they shouldn't have sold it at all?

It's hard to imagine that the former would have changed her behavior, given the lack of specificity, her lack of care, and her presumed lack of medical training -- and a warning that is ineffective is no warning at all.

And it's hard to figure out why they shouldn't be allowed to sell coffee the way most people want it, the way coffee is supposed to be made, just because it's foreseeable that some people will be injured from misusing it. Should the manufacturer of steak knives be required to make them dull just because they're dangerous when sharp, and it's foreseeable that people will cut themselves? Steak knives are required to be, in order to use them for their intended purpose. Should manufacturers of steak knives be insurers of knife users' safety?
12.5.2005 12:46pm
Free Marketeer:

But what's the point here? What theory of liability are you arguing?


That the coffee threatening hospitalization is unreasonably dangerous relative to the purpose for which it is sold.


Should the manufacturer of steak knives be required to make them dull just because they're dangerous when sharp, and it's foreseeable that people will cut themselves?

A sharp steak knife is not unreasonable dangerous relative to the purpose for which it is sold. One cannot make a steak knife safe without making it impractical to use.

These sort of arguments (i.e. "Everyone knows that if you spill coffee, you're going to end up at the hospital!") only work by ignoring reality.
12.5.2005 12:53pm
David M. Nieporent (www):
That the coffee threatening hospitalization is unreasonably dangerous relative to the purpose for which it is sold.
The "purpose for which it is sold" is to be coffee. Coffee is supposed to be that hot, according to ANSI.

The only ways for you to get around these inconvenient facts are to (a) argue that ANSI really is lying because it's one of those organizations attempting on behalf of "ideological purity" to "ignore reality," or (b) argue that the aesthetic qualities of an aesthetic product are irrelevant to that product's purpose -- that if properly prepared coffee can be dangerous if misused, we should only be allowed to drink bad-tasting coffee.


In any case, your response sort of dances around the answer to my question. Do you think McDonalds should have warned her, or that McDonalds shouldn't be allowed to sell hot coffee?
12.5.2005 1:43pm
Free Marketeer:

The "purpose for which it is sold" is to be coffee. Coffee is supposed to be that hot, according to ANSI.


Good lord. Why do you persist with this point? Really. Who, when they buy their morning cup, expects that a spill will land them in the burn ward?


In any case, your response sort of dances around the answer to my question. Do you think McDonalds should have warned her, or that McDonalds shouldn't be allowed to sell hot coffee?

Well, your point, I thought, was that McDonald shouldn't be held liable, whether the basis of liability is a warning defect or otherwise.

My answer is the following: McDonalds is PERMITTED to sell super-scalding coffee. Nobody prohibits them from doing this. They should sell all they can. McDonalds will simply be held liable for any super-scalding that such super-scalding coffee causes. If incorporating such costs will make super-scalding coffee unprofitable, well, I'm not sure why our legal system should subsidize it.

Is this preferrable to a product warning? Many times, a good warning will sheild a defendant from liability for injuries resulting from what would otherwise unreasonably dangerous product. I don't have a good answer, in particular cases, other than to have recourse to what will promote market efficiency. I would have to think about what would be more efficient, in such a case. Perhaps others on this board have a better answer.
12.5.2005 1:59pm
Dick King:
On 12.3.2005 8:26pm, Free Marketeer alluded to Coase's theorem, arguing that imposing the costs of the occasional coffee burn on McDonald's is most efficient.

While this might otherwise be true, the logic of Coase's theorem fails if judgments in excess of damages are awarded frequently enough to matter, or even if they are awarded infrequently if the excess is enough, as was almost certainly the cases in the McDonald's judgment [which was intended to be the entire corporation's earnings from coffee sales for a couple of days]. There's also the moral hazard problem -- people might be inclined to do stupid things if they realize that they will be made more than whole if there's an incident.

One point should be raised about lottery payout judgments. The problem they cause is that people like to buy lottery tickets. What do I mean by this? The fact of these widely publicized huge judgments [a quarter of a billion dollars for a 60-year-old Wal-mart intermediate level employee who had been married a year? Cut me a break], even if they are quietly reduced or reversed, induces clients to buy a lottery ticket by not settling.

-dk
12.5.2005 2:21pm
Free Marketeer:
And, in any case, the question of how much injury coffee foreseeably produces is a question of fact. Our system allows a neutral finder of fact to resolve such questions.

What you are advocating is the dismissal of the complaint; not allowing a fact finder to find facts that, in all probability, most of us would find.
12.5.2005 2:25pm
Free Marketeer:
(that was a response to David.)
12.5.2005 2:26pm
Free Marketeer:

While this might otherwise be true, the logic of Coase's theorem fails if judgments in excess of damages are awarded frequently enough to matter, or even if they are awarded infrequently if the excess is enough

I would agree with you, and support a greater rationalization of mechanisms to assess the proper amount of punitive damages. (But I think that most people on this board aren't just talking about the amount of damages, but whether there should be liability at all.)

A proposal that I've found attractive regarding the assessment of punitive damages is something like the following: (a) figure out what costs the defendant might guess to get away with from other claims (e.g. claims not brought); (b) add the amount of damages from such claims in the instant claim, in the claim.

I would also consider (c) not allocating all of the punitive damages to the plaintiff. (I don't know, give it to the Republican party.)

However, I heard once that a Supreme Court case has put the first half of this proposal out of question. (though I could be wrong.)
12.5.2005 2:34pm
Dick King:
The problem with the argument "the question of how much injury coffee foreseeably produces is a question of fact" is that even if 99% of the juries to get it right by deciding that, yes, hot coffee can burn a person, severely if the person knows or should know that she has elderly paper-thin skin, the accuracy is useless if the hundredth jury is free to multiply the damages by a hundred.

The Supreme Court disallowed extreme punitive damages in STATE FARM MUT. AUTOMOBILE INS. CO.V. CAMPBELL . Good job, you say? "No problem", said that Merck/Vioxx jury in Texas. It appears to me that they decided what the total should be, then they divided by the multiplication factor of 9 that they knew the Supreme Court would tolerate, and they adjusted the compensatory damages accordingly. That is, unless you believe that $25M is the correct compensation for the wrongful death of a husband who was elderly, had a weak heart, was working in a mediocre job, where you had been married long enough to no longer be dewy-eyed newlyweds but not long enough to have a lifetime history.

-dk
12.5.2005 2:36pm
Free Marketeer:

the accuracy is useless if the hundredth jury is free.."

True, it won't be perfectly accurate; but it will be more accurate than not imposing liability at all.


"That is, unless you believe that $25M is the correct compensation for the wrongful death..."


But this was punitive damages, right? (I honestly don't know.) So, it had nothing to do with compensation. (which is why I might support not giving the plaintiff all of the punitive damages.) Again, I support finding a better mechanism to calculate punitive damage totals. I just don't think that the present inability to calculate accurately cuts in favor of doing away with them altogether, or capping them at an arbitrary amount agreed to by lobbyists.
12.5.2005 2:47pm
David M. Nieporent (www):
My answer is the following: McDonalds is PERMITTED to sell super-scalding coffee. Nobody prohibits them from doing this. They should sell all they can. McDonalds will simply be held liable for any super-scalding that such super-scalding coffee causes. If incorporating such costs will make super-scalding coffee unprofitable, well, I'm not sure why our legal system should subsidize it.
If this case merely stood for the principle that McDonalds should pay the health care costs that result from people pouring near-boiling liquid on their genitals, that would be one thing. It seems strange to ignore the LCA principle, but fine. (No, McDonalds is not the LCA -- by forcing McDonalds to sell lukewarm coffee, you impose costs on tens of millions of coffee drinkers. A cost you repeatedly refuse to acknowledge. The only person who's happy is the one who was careless.) But you're repeatedly ignoring something important. Stella Lieback had about $20,000 in actual injuries. Then she got another approximately $140,000 for "pain and suffering." And then the court gave her $2.7 million in lottery winnings for punitive damages.

Those have nothing to do with the "costs" of hot coffee. Those have to do with the whim of twelve people who confused the definition of the terms "callous" and "negligent." They -- as they said in interviews -- were mad at McDonalds because McDonalds (rightly) treated injuries as statistics. So they wanted to punish McDonalds.

What you are advocating is the dismissal of the complaint; not allowing a fact finder to find facts that, in all probability, most of us would find.
Do you think Easterbrook was wrong in the Bunn-o-matic case when he affirmed a grant of summary judgement for the defendants? How about the numerous cases he cited in his opinion which ended the same way?
12.5.2005 3:15pm
Free Marketeer:

Stella Lieback had about $20,000 in actual injuries. Then she got another approximately $140,000 for "pain and suffering." And then the court gave her $2.7 million in lottery winnings for punitive damages.


Regarding punitive damages, see my above posts. Perhaps this is what is really galling you, not the fact that McDonalds is liable.

I haven't read the Bunn-o-matic case (but I will, when I have time), but if Easterbrook said that no issue of fact exists regarding whether 3rd degree burns renders a cup of coffee "unreasonably dangerous", then I would have to say that I disagree with him.
12.5.2005 3:24pm
Free Marketeer:
If punitive damages (calculated in some reasonably way, e.g. per the proposal I outlined above) did not go to the plaintiff, but was still taken from the defendant, would that be satisfactory?
12.5.2005 3:26pm
Free Marketeer:

by forcing McDonalds to sell lukewarm coffee, you impose costs on tens of millions of coffee drinkers.

Again, I would just say the following: If the market valued temperature above what McDonald's is selling it, they would pay for it. McDonald's could incorporate the cost of risks imposed. McDonald's is a rational economic actor, it knows this, and would profit from it if they could. If the market does not demand this, then those persons who wish this higher temperature at the higher cost have, by definition, idiosyncratic preferences. (so probably not "tens of millions of people.") I'm just not sure why the legal system should subsidize their preferences, rather than having them simply choose available market substitutes. (e.g. make their own coffee.)
12.5.2005 3:38pm
Free Marketeer:
(I guess the point of that last post was to show that I'm not "ignoring" the imposition of cost on consumers, rather, I'm saying that consumers should bear this cost.)
12.5.2005 4:12pm
Aaron:
It appears to me that the other ideological problem is that people don't respect juries anymore. It wasn't a "political hack" judge, a "bottom feeder" plaintiff's lawyer, or a "scorched earth" defense counsel who created these awards--it was 12 citizens who, unlike the bloviating pundits here, SAT through the trial, HEARD all of the evidence, and RENDERED their judgment. Shame on all of you for dismissing them as stupid, vengeful, thoughtless clods who abrogated their sworn duty.

But hey, I guess that it's easier to call names when someone disagrees with us. No wonder non-lawyers hate lawyers--look at the contempt that we display against them.
12.5.2005 4:29pm
The Original TS (mail):
Part of the problem with the argument that McDonalds coffee was at the "correct" temperature" is that McDonald's coffee was substantially hotter than coffee at other, similar restaurants. The idea that McDonald's customers actually preferred coffee served so hot that, by McDonald's own admission, it was undrinkable also strikes me as odd.

If, as has been argued above, McDonald's real reason for brewing their coffee so hot is because it allowed them to make slightly more coffee per pound of beans, would you agree that forcing them to pay the costs caused by that policy is fair and reasonable?

If this case merely stood for the principle that McDonalds should pay the health care costs that result from people pouring near-boiling liquid on their genitals, that would be one thing. . . . But you're repeatedly ignoring something important. Stella Lieback had about $20,000 in actual injuries. Then she got another approximately $140,000 for "pain and suffering." And then the court gave her $2.7 million in lottery winnings for punitive damages.

IIRC, Lieback offered to settle for 20K but McDonald's refused and insisted on going to trial. And the court didn't award her 2.7 million in punitives. The jury did. The judge cut her punitives to $480K. The case then settled for an unknown sum.
12.5.2005 4:40pm
Dick King:
" "That is, unless you believe that $25M is the correct compensation for the wrongful death..."



But this was punitive damages, right? (I honestly don't know.) "

The compensatory damages were set to $25M [in round numbers] and the punitive damages to $225M, for a total of $1/4 billion , which "coincidentally" is the amount the plaintiff's attorney claimed was the profit Merck made over the time the drug "should have been" withdrawn.

" by forcing McDonalds to sell lukewarm coffee, you impose costs on tens of millions of coffee drinkers.


Again, I would just say the following: If the market valued temperature above what McDonald's is selling it, they would pay for it. McDonald's could incorporate the cost of risks imposed."

That would work, if McDonald's only had to pay the actual damages. Suppose each of ten million consumers valued hotness in their coffee by a dime, and out of ten million cups sold there was one severe burn that cost somebody $100,000 . Now it's efficient to sell the coffee, no matter what the liability rule. Coase got this right.

However, let's suppose juries could reasonably be expected to award $2.5 million total damages, including major punitive damages. That works out to $0.25/cup -- too much. Much of that money may go to a consumer, so the value of the overpayment should be figured into the value one receives when one buys that cup of coffee which would make it a good value again -- except for the vast majority of people who are instinctively too careful to splash themselves, so they'll never get the windfall.

And the real situation is worse. The awards are capricious enough that the company has to price high [they don't want to go bankrupt] and the consumer has to value low [risk adversity is correct when the windfalls are larger than you can reasonably spend, and in large part go to the lawyer anyway].

-dk
12.5.2005 4:48pm
vic:
The jury did. The judge cut her punitives to $480K. The case then settled for an unknown sum.

as i have alluded to in a previous post, part of the problem over here is that in our tort system as currently formulated
1. Juries will tend to be the lowest common denominator in intellegence and education
2. compounding this is the fact that many cases involve very complex arguments and even more complex inferences from statistical data and the interpretation of stsistical data (given how math illitrate the general population is)
3. the system of preemptory challanges of jurors makes the system worse- anyone of even a modicum of intellectual heft is weeded out
4. now you have just the right set of circumstances for a snake oil salesman to extract the maximum emotional effect out of the jurors. get them mad get them emotional. and geta 27 million $ verdict.
5. judges in general are lothe to discipline the BS that goes on in their courtrooms.

so the at leats for the lawyers the system is a gift that keeps on giving, with no end in sight.

tort is not bad necessarily but the current system is abusive and needs fixing
12.5.2005 4:52pm
Free Marketeer:

However, let's suppose juries could reasonably be expected to award $2.5 million total damages, including major punitive damages. That works out to $0.25/cup -- too much


Again, I would like to find a better methodology to compute punitive damages. (And, as you point out, this is a separate issue from liability.) I would say that the problem is one of methodology, not principle. Do you agree? One proposal I found attractive was basing punitive damages on the value of claims that could be expected not to be brought. Do you think this is a good proposal?
12.5.2005 4:56pm
David M. Nieporent (www):
(I guess the point of that last post was to show that I'm not "ignoring" the imposition of cost on consumers, rather, I'm saying that consumers should bear this cost.)
Then what you're ignoring is the nature of punitive damages. Punitive damages are designed precisely to short-circuit that calculation. There's no relationship between the costs of the behavior and the punitives imposed. As the stories about the Liebeck case have noted, the jury decided to fine them an amount equal to two days' worth of coffee sales.

If punitive damages (calculated in some reasonably way, e.g. per the proposal I outlined above) did not go to the plaintiff, but was still taken from the defendant, would that be satisfactory?
No. While I admit that it galls me on a gut level that someone can carelessly injure herself and win the lottery as a result, my objection is based on the nature of punitives, not the recipient.

You do talk about trying to calibrate punitives to match the level of actual damages suffered by consumers, which sounds superficially reasonable -- it properly incentivizes McDonalds to weigh costs and benefits, right? -- except that I'm not sure who it's supposed to benefit. All that does is result in a transfer of wealth from McDonalds and its careful customers to the recipient of punitive damages -- either the careless Lieback or the government. If the government were caring for all the injured but non-suing McDonalds customers, that would make sense -- but it isn't doing so, generally speaking. That money will go towards bridges in Alaska, not McDonalds' burn victims.

Part of the problem with the argument that McDonalds coffee was at the "correct" temperature" is that McDonald's coffee was substantially hotter than coffee at other, similar restaurants.
It appears that the plaintiff's attorney made that claim, and that McDonalds did a very poor job of rebutting it, but there's no reason to believe that this is true, or, rather, substantial reason to believe that it isn't.
The idea that McDonald's customers actually preferred coffee served so hot that, by McDonald's own admission, it was undrinkable also strikes me as odd.
1. Coffee cools after being served. If customers wanted to consume it on the spot, they'd sit in the restaurant. They want to drive to work while drinking it.
2. Customers add things to coffee, cooling it more.
12.5.2005 5:12pm
Free Marketeer:

There's no relationship between the costs of the behavior and the punitives imposed. As the stories about the Liebeck case have noted, the jury decided to fine them an amount equal to two days' worth of coffee sales.


The problem isn't that juries are silly, or are ignoring their duty, the problem - if any - is that the law hasn't sufficiently told them how to assess punitive damages. If they are supposed to simply punish defendants, they are doing a good job. (perhaps, at least, not any worse than legislatures are doing punishing drug crimes and such. but that's a whole other thread.)

What do you think about the relationship that I've suggested (value of claims expected not to be brought)? Your problem seemed to be who to give it to (govt) when it is taken away from defendant. Let's ignore who to give it to for a second. (Assume we've found somebody suitable to give it to, e.g. hold it in a pot for a period of time and advertise for other claimants to come forward.) Do you think this is a good methodology for assessing punitive damages?
12.5.2005 5:21pm
Free Marketeer:

Part of the problem with the argument that McDonalds coffee was at the "correct" temperature" is that McDonald's coffee was substantially hotter than coffee at other, similar restaurants.
It appears that the plaintiff's attorney made that claim, and that McDonalds did a very poor job of rebutting it, but there's no reason to believe that this is true, or, rather, substantial reason to believe that it isn't.
The idea that McDonald's customers actually preferred coffee served so hot that, by McDonald's own admission, it was undrinkable also strikes me as odd.
1. Coffee cools after being served. If customers wanted to consume it on the spot, they'd sit in the restaurant. They want to drive to work while drinking it.
2. Customers add things to coffee, cooling it more.


Again, these are all questions of fact. Why would you advocate dismissing the complaint, rather than putting these questions to the finder of fact? And if you disagree with the factfinder, fine, but it's hard to say that their findings with respect to these facts are unreasonable. At least it's hard for us, who didn't attend trial, to say so.
12.5.2005 5:24pm
Free Marketeer:
I mean, it's not like the McDonalds lady won on summary judgment.
12.5.2005 5:24pm
vic:
suggestions:

1. loser pays ( plaintiff attorney)
2. judges instructions to jurors need to be better
3. lets get away from hired gun experts ( ? prostitutes) from both sides how about the court appointing and paying " experts" who will not be beholden to one side or the other.
4. appeals courts need to start regularly and consistently whittling down the 2.7 million awards
12.5.2005 5:44pm
vic:
If they are supposed to simply punish defendants, they are doing a good job. (perhaps, at least, not any worse than legislatures are doing punishing drug crimes and such. but that's a whole other thread.)

just thinking out loud now (and trying to be fair which is more than our trial lawyer freinds seem to be willing to be- considering indirectly what is at issue here is money going out from my pocket into theirs), what if in order to assess any punitive damages the jury had to agree to do so without a reasonable doubt-ie jury unanimity- raise the bar so to speak

any takers?
12.5.2005 5:53pm
Dick King:
"Do you agree? One proposal I found attractive was basing punitive damages on the value of claims that could be expected not to be brought. Do you think this is a good proposal?"

Can you honestly trell me that in this day and age there are droves of people in the United States who are getting severe coffee burns who aren't suing? My god, there is at least one person who hadn't even taken Vioxx who sued Merck [although he withdrew when Merck ran down the lot numbers of the sample card the patient supposedly took and discovered that the date of manufacture was later than the date of the heart attack]. Again I say, on serious injuries with many injured the lawyers will find the injured, on serious injuries with few injured there's really no need for punis, and on minor losses with large numbers of plaintiffs class action suits are quite feasible. Just look at the sponsored links of this.

How would you estimate such a number [of unmade claims] in a principled way, anyway, assuming you thought that number to be large?

And if you do believe that, you want to give each plaintiff his share of the unmade claims, not the entire body of unmade claims as juries seem to want to do. If 200 claims are made and 20 claims are not made, punis would be 10% of general damages on this theory.

-dk
12.5.2005 7:06pm
Free Marketeer:

Can you honestly trell me that in this day and age there are droves of people in the United States who are getting severe coffee burns who aren't suing?

How would you estimate such a number [of unmade claims] in a principled way, anyway, assuming you thought that number to be large?


Perhaps not droves. Under the proposed methodology, this would result in a lower punitive damages award. I should expect that you would welcome that.

As far as feasibility: I'm thinking that in at least some of these suits, with e.g. products manufacturers, they are aware of that P problem occurs X% of the time, they are aware of the cost of changing P, and they are aware of the cost of not changing P. When they calculate the cost of not changing P problem, I don't think it is too unusual to make a guess as to the % of claims regarding P that could be, but probably won't be, pursued (NP). (Attempts to raise NP as much as possible is evidenced by the language included on the inside of a bunch of these boxes - whether or not it is enforceable - that the purchaser has waived all rights.)

I'm not saying it is an absolutely perfect methodology. But we don't live in a perfect world. I'm saying that it is relatively more efficient than other alternatives, including insulating defendants from liability, or doing away with punitive damages completely.


you want to give each plaintiff his share of the unmade claims, not the entire body of unmade claims as juries seem to want to do. If 200 claims are made and 20 claims are not made, punis would be 10% of general damages on this theory.


I do not want to doublecount (or 200 count) punitive damage awards. 1 is sufficient, assuming it is the appropriate number. So here is the proposal, in general outline (please, don't nitpick - this is an outline): If 200 claims are made and 20 are not made, on claim #1 assess punitive damages for 220 claims. On the next 199 claims, do not re-assess punitive damages. Award claimant #1 1/220 of the punitive damage award, and withhold the rest, to be distributed to other claims as they arise. If any is left over after the applicable period of limitations, then split that among the plaintiffs who brought claims.

But again, this is just a proposed method. If it has faulty, it doesn't endanger the efficiency of the principle, relative to doing nothing.
12.5.2005 7:35pm
vic:
free marketeer:

here you go again- you start off with what sounds reasonable and then the money grubbing starts.

If 200 claims are made and 20 are not made, on claim #1 assess punitive damages for 220 claims. On the next 199 claims, do not re-assess punitive damages. Award claimant #1 1/220 of the punitive damage award, and withhold the rest, to be distributed to other claims as they arise. If any is left over after the applicable period of limitations, then split that among the plaintiffs who brought claims.


as i read this - in this scenario what will happen is that the class action attorney will just figure out a way to keep the change- not bad- and certainly better than 33%
12.5.2005 7:42pm
Free Marketeer:

you want to give each plaintiff his share of the unmade claims, not the entire body of unmade claims as juries seem to want to do. If 200 claims are made and 20 claims are not made, punis would be 10% of general damages on this theory.


I misread your post. Yes, if 200 claims are expected to be made, and 20 claims are expected to not be made, then because punitive damages = the amount of claims not expected to be made, the amount of punitive damages would be (assuming heterogeneous injury) 1/20 of general damages. Sound good? (of course, if 20 claims are expected to be made, and 200 claims are expected to not be made, then punitive damages are 10x general damages.)
12.5.2005 7:43pm
Free Marketeer:
I move that we always give the leftovers to Vic.
12.5.2005 7:43pm
Free Marketeer:

I do not want to doublecount (or 200 count) punitive damage awards. 1 is sufficient, assuming it is the appropriate number. So here is the proposal, in general outline (please, don't nitpick - this is an outline): If 200 claims are made and 20 are not made, on claim #1 assess punitive damages for 220 claims. On the next 199 claims, do not re-assess punitive damages. Award claimant #1 1/220 of the punitive damage award, and withhold the rest, to be distributed to other claims as they arise. If any is left over after the applicable period of limitations, then split that among the plaintiffs who brought claims.

Whoops. This was wrong. If only expect 20 no-claims, then only assess punitive damages for 20 claims. Then split this into 200 (expected claims), and award claimant #1 1/200 of the award big enough for 20. etc. If expect 200 no-claims and 20 claims, then assess punitive for 200 no-claims, and split this into 20, awarding claimant #1 1/20 of award big enough for 200.
12.5.2005 8:08pm
Dick King:
Free Marketeer, this has two problems:

1: Surely you wouldn't add the case of the person who didn't actually take Vioxx, or the person who took Vioxx but got run over by a car, to the pot. How would you approximate the number of claims not made in any principled manner? Your proposal requires an estimate of the number of claims that won't ever be made but that would be meritorious if they were made.

2: So the first suit judged gets all of the unmade claims? Presumably that lawyer gets a larger share of the contingency fee. This creates all sorts of wierd incentives concerning the timing of bringing cases, both on the plaintiff's side [the lawyers would be racing each other, and a single firm with many cases would want to jigger the relative timing of cases in jurisdictions with different levels of generosity] and on the defendant's side [the lawyers would want to retard cases in more generous jurisdictions].

The really fundamental issue with this is that the defendant is being assessed damages to phantom plaintiffs whom they may not cross examine, or have examined medically, or in any other way assess whether they even exist. I asked once, you didn't answer, and I ask again -- what principled method do you have for estimating the number of meritorious claims unmade, or even of inferring that there are any at all?

Manufacturers are not trying to raise NP by putting a sticker on the lawn mower "not to be used as a hedge trimmer". They're trying to define a contract that says that you bought a lawn mower, and that they'll be happy to sell you a separate hedge trimmer.

-dk
12.5.2005 8:31pm
Free Marketeer:

Manufacturers are not trying to raise NP by putting a sticker on the lawn mower "not to be used as a hedge trimmer". They're trying to define a contract that says that you bought a lawn mower, and that they'll be happy to sell you a separate hedge trimmer.


True, but you know as well as I do that this is not the sort of language that I am referencing.


So the first suit judged gets all of the unmade claims?

No, it gets a % of the unmade claims, in proportion to how many claims can be expected to be brought.


I asked once, you didn't answer, and I ask again -- what principled method do you have for estimating the number of meritorious claims unmade, or even of inferring that there are any at all?

I answered you last time: the same methods that a company would use in figuring out whether to change the problem.


The really fundamental issue with this is that the defendant is being assessed damages to phantom plaintiffs whom they may not cross examine, or have examined medically, or in any other way assess whether they even exist.

All of this will happen with compensatory damage - someone who isn't actually damaged will also not get punitive damages.
12.5.2005 8:38pm
Free Marketeer:

The really fundamental issue with this is that the defendant is being assessed damages to phantom plaintiffs whom they may not cross examine, or have examined medically, or in any other way assess whether they even exist.


Example/ It is shown that exposure to toxin X at level Y will cause injury Z in 80% of the human population. It is shown that Company exposed 100 people at level Y, and 10 claims are expected. Punitive damages are assessed at an amount equal to damage to 70 people.

Each person compensated has been injured by the defendant: this has been assured via techniques of cross-examination, medical examination, etc. The defendant is NOT liable TO someone he didn't injure.

Is the defendant liable FOR causing injury? Once the issue of causation has been proven to a preponderance in case A, this would be a matter of issue preclusion. The defendant is held liable for damages which it has already been proven to a preponderance that he caused.
12.5.2005 8:53pm
vic:
free marketeer:

i am not a lawyer so i dont like to get money that i havent earned
12.5.2005 9:00pm
The Original TS (mail):
Free Marketeer,

You know, if you follow your analysis all the way through, you are forced to the conclusion that "punitive damages" can only be assessed in class action suits.

To put it another way, any time there is a claim for punitive damages, it ought to be converted to a class action. You don't ever assess punitive damages but you do collect every penny of actual damages that would be due to the class and then split up the proceeds through a claims system.

Would this be more efficient? Maybe, but I have a feeling that corporate defendants would prefer to take there chances with punitive damages under the current system!
12.5.2005 9:18pm
TDPerkins (mail):
Hello Free Marketeer, you wrote:

"Good lord. Why do you persist with this point? Really. Who, when they buy their morning cup, expects that a spill will land them in the burn ward?"

Anyone who sits in the puddle for any length of time should expect it, therefor McDonald's is not rightly at fault here.

"McDonalds will simply be held liable for any super-scalding that such super-scalding coffee causes."

This only make sense if vendors of regular temp coffee are held liable for the regular temp scalding their coffee causes. I mean you're all about shifting the cost of risk to where it ought to be, right? Because it's economically efficient, right?

Yours, TDP, ml, msl, &pfpp
12.5.2005 9:20pm
Free Marketeer:
TS:
Thinking about it, the class action context is probably how I heard the proposal in the first place, i.e. as a substitute for class action.
12.5.2005 9:23pm
Seamus (mail):

Part of the problem with the argument that McDonalds coffee was at the "correct" temperature" is that McDonald's coffee was substantially hotter than coffee at other, similar restaurants.



So much the worse for other, similar restaurants. As best I can find from searching the internet, McDonald's was hammered in that lawsuit because they served coffee at 190° F. As it happens, coffee experts usually recommend that coffee be brewed at that temperature or hotter:


The recommended brewing temperature of coffee is 93 ºC (204 ºF). Any cooler and some of the solubles that make up the flavor will not be extracted. If the water is too hot, some undesirable elements will be extracted, adversely affecting the taste, especially in bitterness.



Coffee should be brewed for 4.5-5 minutes using a ratio of 55 grams of ground coffee per liter of filtered water (195-205°F).



Brew with hot water, as opposed to lukewarm or boiling water (Middle Eastern and cold-water coffees are exceptions). A temperature of 200° F is ideal, which means bringing the water to a boil and then waiting a minute or two before brewing.


I suppose the plaintiffs' lawyers would say that, if McDonald's wants to brew its coffee at the optimal temperature, that's fine, but they just better set it aside (probably with a little thermometer in each cup) and wait until the temperature falls to, what? 160° F? Or I suppose they could raise the price of their coffee high enough to create an insurance pool for customers who clumsily injure themselves by spilling coffee that's served at the optimal temperature.
12.5.2005 9:44pm
David M. Nieporent (www):
What do you think about the relationship that I've suggested (value of claims expected not to be brought)? Your problem seemed to be who to give it to (govt) when it is taken away from defendant. Let's ignore who to give it to for a second. (Assume we've found somebody suitable to give it to, e.g. hold it in a pot for a period of time and advertise for other claimants to come forward.) Do you think this is a good methodology for assessing punitive damages?
In theory.

("In theory, communism works. In theory.")

Of course, what you're doing here in effect is converting every tort claim into a class action. There are all sorts of problems relating to the compensation of attorneys in that, though. Not to mention the problem of the cases being independent -- you can't award punitive damages in one case but not in others based on the fact that some have been awarded before.
12.5.2005 10:45pm
Free Marketeer:


("In theory, communism works. In theory.")

Obviously not the proposal at hand.


problem of the cases being independent -- you can't award punitive damages in one case but not in others based on the fact that some have been awarded before.

That isn't the proposal. I have proposed every claimant getting a share of 1 punitive damages award, rather than many punitive damages awards. If you like, instead of the defendant being assessed the entire punitive damage award on claim #1 (although claimant #1 only gets a % of this), it could just get assessed a % of the award on claim 1, every time a claimant comes, and then again at the end.


Of course, what you're doing here in effect is converting every tort claim into a class action. There are all sorts of problems relating to the compensation of attorneys in that, though.

Is that the problem? You and vic just don't like the "windfall profits" of attorneys? Sorry. What if I told you that attorneys invest "windfall profits" in future cases? Would that help any?
12.5.2005 11:05pm
Free Marketeer:
Sorry David, I didn't realize before that I didn't put the proposal in response to you, but to another commentor. As stated to you, your quote is correct.
12.5.2005 11:07pm
David M. Nieporent (www):
Obviously not the proposal at hand.
I wasn't red-baiting here. I was just quoting Homer Simpson. It's a way to express dubiousness as to the working of a proposal.

Is that the problem? You and vic just don't like the "windfall profits" of attorneys? Sorry. What if I told you that attorneys invest "windfall profits" in future cases? Would that help any?
That appears to be vic's objection. It isn't mine, however. The point I was making was the point Dick King was making in paragraph 2: that this would create all sorts of weird incentives.

That, as with my comment about independent cases, pertained to your old proposal in which plaintiff #1 got punitives and plaintiffs #2-200 didn't, not your current one where each plaintiff gets an award based on a ratio of claims/nonclaims.
12.5.2005 11:48pm
Curious:
Has this thread finally gone flat?

(sorry, that was awful yet funny nonetheless)
12.6.2005 5:59pm
Jim Copland (www):
This has been an interesting exchange. Steve, TS, and Free Marketeer recycle some familiar canards -- familiar at least to those of us in the tort reform debates -- and David responds admirably. TS's characterization notwithstanding, I'm neither a defendant nor an "economic illiterate," but I'm a strong proponent of tort reform, so I'll try to shed some light on this discussion. There are three main lines of argument embraced by the status quo tort system's defenders in this comment thread, and they're all flawed: based on bad political theory, faux federalism, and bad economics. I'll address each in turn.

1. Bad political theory. This canard is the old "it's libertarian to support tort law" line. Well, really, the statement is a gross oversimplification. The basic classical theory assumes that, in general, people who freely exchange both benefit from that exchange, assuming both are sufficiently competent mentally to assess their own self-interest and that there is no fraud or duress. There are some limited exceptions to that rule: when two parties in the free exchange impose costs on third parties; and when increasing returns to scale and barriers to entry create "natural monopolies" or the equivalent that are welfare-reducing.

As Richard Epstein and others have explicated at length, the classical common law generally accommodates this free society. Vesting property rights permits exchange and prevents tragedies of the commons. Contractual rights facilitate planning -- and avoid the game-theoretic problem that parties' inability to precommit would create were there no enforcement mechanism to stop them from breaching their earlier promises. Tort and criminal law deal with the problems of force, fraud, duress, or other issues in which one party hurts another, including third-party harms. (The status quo tort defenders here are quite right that it is very possible for actors to generate "negative externalities" and that tort law, rightly conceived, helps them to internalize social costs.) The state -- in its taxing and spending functions -- serves to remedy the opposite side of the externality coin, i.e., by providing for socially useful goods or services that collective action problems prevent the system of free exchange from providing (e.g., community policing).

But -- here's the key point -- it's an illogical leap to go from saying that tort law's function is (at least in part) to force individuals and corporations to internalize the social costs they generate and to make the empirical claim that the status quo system is fulfilling that function at an efficient level. It's also key to realize that regulation -- in essence, modern extension of traditional criminal law -- fulfills the same function as tort law in this respect (i.e., in meeting tort's deterrence rather than compensatory function). A law that prevents a company from dumping waste in a river, with EPA enforcement authority, also is intended to reduce negative externalities. The equivalent tort is the common law claim of nuisance. Note that the mere fact that these enforcement mechanisms overlap -- criminal law and tort -- in no way tells us which approach is better, or what constraints we put on each.

What's crucial to recognize is that both approaches -- criminal law and tort -- involve the state's monopoly on the use of force. The discussion in this thread has been somewhat confused by conflating the bar authorities' monopoly over entry (a separate issue) and the state's monopoly on the legitimate use of force. In criminal law, the state can fine you or put you in jail. In tort law, the state can take your money and give it to another party.

There is an important distinction between how tort and criminal law function, however: tort lawsuits are initiated by the individual (or, in some cases, by the lawyers), whereas criminal law enforcement falls to the state. But that's not enough to make tort law the "libertarian" and criminal law the "statist" approach. Criminal law can be either overaggressive or underaggressive -- and because its actors (regulators, attorneys general) don't often bear the costs of their actions (i.e., they're supported by taxpayers, not themselves), there's a significant danger that they'll overprosecute in some cases (and, due to resource constraints, underprosecute in others).

The same, though, is true of tort law. Lawsuits impose costs, by definition. The suing party doesn't bear all its own costs -- the absence of the American loser pays rule, discussed in this thread, being a clear example. So there's an incentive to file some suits that shouldn't be filed, and impose those costs on others (more on that later). Conversely, defendants don't bear all the costs they impose, either. Plaintiffs' costs aren't necessarily covered for winning cases, so good cases don't get filed if the expected recovery is low.

The larger issue is that tort law -- because it's individually driven -- doesn't bear a necessary relationship to social welfare. Criminal law can be way off, because as public choice theory would predict prosecutors', regulators', and representatives' interests depart from the public good. But so too can tort law be way off, in no small part because contingency fee plaintiffs' lawyers have incentives to maximize the take for themselves and their clients. While contingency fees generally align the incentives of attorney and lawyer, they also generate the incentive to redistribute more money through the government's monopoly over the use of force, in this case via the courts. My colleague Walter Olson analogizes the practice of letting an invading army plunder: you get more plundering. It doesn't matter whether the army works for the state or whether they're mercenaries to determine the appropriate level of plundering (more precisely, in this example, whether the benefits of improved troop morale outweigh the plundering costs).

Detached from the faux libertarian characterization, the pro-tort advocates' arguments boil down to Guido Calabresi's "least cost avoider" calculus. But that calculus is top-down -- whether it's imposed ex post in a court of law, or ex ante by legislation or regulation. Sometimes the ex ante approach makes more sense, and sometimes the ex post approach makes more sense. But whether a regulator mandates the maximum temperature at which a restaurant can serve coffee or whether a jury slaps punitive damages on the restaurant after the fact if someone is burned with coffee served above that temperature the effect is the same. One might claim that the tort approach is "more libertarian" because decision making is more decentralized, but conversely there's no public accountability for the decision makers whatsoever, notwithstanding that they're using the government's monopoly on force, rather than free exchange, to achieve their ends.

What's really at issue is whether the procedural and substantive legal rules -- and how those rules actually operate through judges and juries -- generate more litigation than is socially optimal. Tort reformers' claim is yes. Merely calling the tort system the preferred "libertarian" approach doesn't do anything logically to rebut that claim.

2. Faux federalism. This canard really attacks a straw man: "Republicans" or "conservatives" embrace federalism, but only when it suits their ends. With that statement, to some extent, I won't quibble -- but only as applied to political actors rather than to those of us who actually think about the issues in principled fashion. Committed federalists -- i.e., those who think that the federal government does too much -- shouldn't be caricatured as "states' rights" advocates who think that the federal government has no role whatsoever.

A principle problem with the Articles of Confederation was that states embraced "beggar thy neighbor" policies that collectively made all the states worse off. The original method here was through trade protections, which though against states' economic interests were in the representatives' political interests, as public choice theory explains. The same mechanism exists for modern products liability and class action law, at least for elected state judges: the judges have every incentive to sock it to out-of-state defendants to pay off in-state plaintiffs (notice that even if such an approach isn't in the state's long-term economic interests, it's in the judges' short-term political interests). Alex Tabarrok and Eric Helland have confirmed that state judges do in fact sock it to out-of-state defendants in practice.

Note too that tort reform proponents vary in the degree to which they want the federal government to be active in solving the tort problem. Some folks, like Michael Krauss, prefer no substantive federal role but rather a federal choice of law rule to put competitive economic pressure on states not to overreach. Others prefer outright federal preemption in some instances. Note also that the preferred federalist response varies: at one extreme, for products liabiilty, the case for some federal response is high; at the other, slip-and-fall cases are highly localized, so while there might be an anti-defendant bias it's at least against a local employer and there's no real case for a federal role.

3. Bad economics. There are two dominant strands of traditional law and economics scholarship. The first examines different legal rules, under different assumptions, and determines which rules are most efficient if those assumptions hold. The second shows how actual case law conforms, or not, to efficient rule sets. The early law and economics both showed that many traditional common law rules were efficient and pushed for legal changes that would be more efficient.

It's important not to conflate these two lines of inquiry, nor to ignore the key fact that the law and economics movement, originally, was theoretical and not empirical. The fundamental underlying assumption -- that judicial outcomes on average "get it right" and provide appropriate cost internalization incentives -- may well not hold. Tort reformers like myself believe, and there's some significant empirical evidence on our side, that judicial outcomes on average don't get it right at all.

Also, a lot of defenders of the status quo tort system -- like many of the folks on this thread -- simply lack the economic nuance of people like Calabresi, Posner, Landes, and Shavell. Administrative/transaction costs -- "tertiary costs" in Calabresi's terminology -- are incredibly important and indeed formed much of the basis for early law and economics' analysis of negligence versus strict liability. But simplistic analyses tend to ignore these costs.

Take for instance Free Marketeer's stylized "loser pays" analysis on this thread. He argues, based on made up numbers, that loser pays systems discourage suits that are likely to win -- and thus, by implication according to him, should be brought. But he's wrong.

First of all, in general loser pays specifically discourages weaker suits and encourages stronger suits relative to the American rule, precisely because the losing party internalizes system costs: better cases that aren't worth bringing are if the losing defendant has to pay the winning plaintiff, and very weak cases that might be brought because they have positive settlement value are discouraged because they now have a negative expected return.

Why then does Free Marketeer's stylized example show that a likely-to-win case survives under the American rule but not under loser pays? Precisely because (1) Free Marketeer assumes that defendant's legal costs exceed plaintiff's by more than 200%; and (2) he assumes that the possible payout -- a constant -- is small relative to the parties' costs. Relax either of those assumptions, and the equation looks very different.

(1) Legal cost differential. Let's change the assumptions and instead assume that defendant's and plaintiff's legal costs are roughly equal. (That may or may not be the case. It is worth noting that plaintiffs' attorneys get about 19% of the tort pie, versus defense attorneys' 14%. If that gap isn't all consumed by a risk premium, we would assume that attorneys would enter the plaintiffs' market until there was a rough equilibrium.) Whether or not that's the case, changing the assumption highlights just how sensitive FM's analysis is. Using FM's numbers, plaintiffs' lawyers take any case under the the American rule that has at least a 50.7% chance of success; under the loser pays rule, they reject cases until they have a 58.3% chance of success.

But if in fact the expected costs to litigate for the plaintiff is $480,000, like it is for the defense, a plaintiff under a loser pays rule has a positive expected return as long as the case has a 55.2% likelihood of success. But under the American rule, the plaintiff's attorney rejects the case even if the probability of success is 100%! See what I mean about the American rule weeding out good but low-dollar cases? This effect happens as long as the gap between plaintiffs' and defendants' costs is sufficiently small. Under FM's example, if the defendant's legal costs are $480,000, then the plaintiff's have to fall to $300,000 before his attorney will accept a 100% likely case under the American rule. (At that $300,000 cost level, a plaintiff's attorney will accept a case under loser pays as long as the likelihood of success is at least 56.5%.)

(2) Small payout relative to parties' costs. The other reason FM's example is so stylized is that it assumes the payout from the suit -- $1,000,000 -- is relatively small in comparison with the parties' legal costs ($480,000 in the case of the defendant). Realize that the expected revenues for a case with a $10,000,000 payout 10% of the time are the same as those for a case with a $1,000,000 payout 100% of the time. But the implications for evaluating the American rule versus loser pays are far different.

Let's change FM's assumed payout from $1,000,000 to $10,000,000, with the same plaintiff and defendant costs ($152,000 and $480,000). Under an American rule system, the plaintiff now takes any case with a 5.1% likelihood of success -- quite the longshot. The loser pays rule ameliorates this trend somewhat, though it hardly solves the problem: under loser pays, a plaintiff needs to have a 16.7% chance of winning before a lawyer takes his case. (And if the longshot payout is $100,000,000, the plaintiff's attorney takes the case with a 2.1% chance of success under loser pays versus a 0.5% chance under the American rule: outlier verdicts matter, whichever rule you select!)

Finally, even under his own assumptions, FM's conclusions don't make any sense. He thinks that the American rule is superior to loser pays because the case is more likely to succeed than not. Really? First of all, that conclusion assumes that likelihood of success at trial, times expected payout, is the same thing as actual injury, on average. But is that true? I don't think so.

Secondly, what about transaction costs? Over half the costs of the tort system don't go to the injured party. Just taking FM's stylized numbers, the total cost to litigate is $612,000. The expected return from a suit is $510,000. That makes sense?!? And realize that the plaintiff only gets 70% of that $510,000, so his actual take is $357,000. To cover the $612,000 in litigation costs, with only a $1,000,000 payoff at the end of the rainbow, would require an 87% likelihood of success. That's a heck of a lot higher threshold than what's required under loser pays!

Of course, most cases settle (all would assuming perfect information in FM's model). And loser pays has implications there, including lowering the likelihood of settlement when parties' assessment of case probabilities differ.

The point is that the economics here are pretty complicated -- and that in general they cut in the opposite direction from those FM asserts.

In sum, in evaluating tort reform we need to think clearly -- and not let bad political theory, faux federalism, or bad economics get in the way.
12.6.2005 6:48pm
Free Marketeer:
My opportunity costs are too high to make a full response, but let me begin by stating an obvious point:
The debate on this thread did not feature "reformers v. status quoers." Rather, it was between two groups of people, both of which had substantive ideas on how to change the current tort system, but who had different substantive ideas on how that system should be changed.

1. Political theory
Our debate on this thread incorporated and alternated between:
(a) Principles by which we can assess whether to hold a defendant liable (e.g. external costs versus culpability)
(b) Principles by which we can assess the extent to which a defendant should be held liable. (e.g. $)

Your criticism, if I may boil it down, is that even if my answer to (a) is correct (i.e. "libertarianism", or - more correctly - utilitarianism); one can still be a principled libertarian and disagree with my conclusions regarding (b). Therefore, you suggest, I have committed a logical fallacy.

However, to the best of my knowledge, the portions at which I brought up "libertarianism" dealt with principled rationals by which to solve problem (a). (Or, at least, it was intended to.) Your criticism of "political theory" is somewhat of a non sequiter, because it is directed at (b).


2. Federalism.
I'm not sure if you actually disagree with anything I said. I simply pointed out that Republicans have chosen federal courts as the superior forum in which to adjudicate state law, and that their motive in doing so was not to choose the institutionally superior forum in which to adjudicate issues of state law, but to preempt substantive state tort law.

I also said that I thought that the federal government has Commerce power to impose national tort law. I pointed out that, when - as may eventually happen - Democrats have control of the federal government, they will also wish to do the same. Finally, I predicted that, at this point, I expect Republicans to resort to a state's rights argument.

Having said that, I do continue to believe that local government is the most democratic manner in which to govern, even if it imposes inefficient costs. Analogy: It may be for example, more efficient to nationalize contract law also. (less information costs.) Nonetheless, I am not sure if, from the perspective of democratic theory, I would support this. I have not made up my mind, at this point, on how my political commitments with respect to democracy should affect my tort analysis with respect to whether control should be institutionalized at a local or national level. (Is the sole reason for federalism the minimization of cost? Should it be?)

3. Economics. (Loser-pays)
I think that the basis for the numbers I chose in "my" example is fundamentally misunderstood. (By someone complaining about my economic analysis!) Costs, for example, were not chosen from an empirical study of what a plaintiff's costs might be to prosecute a particular car accident case, McDonald's case, asbestos case, medical malpractice, etc. No assumptions were drawn out of a hat regarding the relative costs between plaintiffs and defendants in particular cases, for example.

Rather, the numbers were built upon assumptions of economic rationality.

If a case is expected to have a 51% chance of winning, and the potential award is expected to be $ 1 million, then the expected revenue to a plaintiff is $510,000. That is to say, a rational plaintiff would choose to spend up to $510,000 to prosecute the case, and a rational defendant would have an incentive to spend up to $490,000 to defend against it. If it would cost the plaintiff $510,001 to prosecute the case, a rational plaintiff would choose not to do so. Likewise, if it would cost a defendant $490,001 to defend against the case, a defendant would choose not to do so. (Ignoring, for the moment, the value of issue preclusion to the defendant facing numerous plaintiffs.)

However, because law is a business, what is needed is to calculate the incentives of a lawyer to take on a case.

Because plaintiffs lawyers do not receive 100% of the potential earnings, an assumption must be made regarding what percentage of the revenue a lawyer, when evaluating whether to take the case, will expect to take. I made the assumption of a 30% contingency fee. Because the expected revenue is $510,000 to the plaintiff, a plaintiff's lawyer making a 30% contingency fee can expect to make $153,000. So long as the expected costs from prosecuting a case do not exceed $153,000, a rational plaintiff's lawyer will take the case. Therefore, if a rational plaintiff's lawyer takes this case, we can assume that the costs of prosecuting the suit do not exceed $153,000. For simplicity's sake, I assumed that that the cost was $152,000.

What are the costs of defending a lawsuit?
In a non-loser pays system, each side handles their own costs. Therefore, a rational defendant with a 49% likelihood of success will accept up to $490,000 in costs in order to litigate the case. (Unlike plaintiffs, defendant's lawyers don't foot any of the costs.)

Under a loser-pays system, the defendant can expect that 51% of the time, they must carry the plaintiff's costs. Because the rational plaintiff's costs have been assumed to be $152,000, the expected cost to the defendant is $77,520. Therefore, under the loser-pays system, the defendant has an incentive to only defend a case costing $412,480 ($490,000-51% of $152,000).


Will the plaintiff litigate the case?
No loser-pays: the plaintiff's lawyer can expect to have $153,000 in expected revenue, and (because he is a rational actor), no more than $153,000 in costs. (for simplicity's sake, I assume $152,000). Therefore, the plaintiff's lawyer takes the case with a 51% chance of success.

Loser-pays: the plaintiff's lawyer now has larger expected revenues. Continuing to expect $153,000, he now also expects that 51% of the time the defendant will pick up his costs. (51% of $152,000 = $44,520). Adding these revenues, the plaintiff's lawyer now has an expected revenue of $230,520.
What are the plaintiff's expected costs? We have assumed that, as a rational actor, he would assume no more than $153,000 in costs. (for simple numbers, we assume $152,000 in costs.) However, having to shoulder the defendant's costs 49% of the time (49% X $412,480=$202,115), the expected costs are now $152,000+$202,115 = $354,115.

Because the expected costs ($354,115) exceed the expected revenues to the lawyer ($230,520), the lawyer does not accept a case that will probably win.
12.7.2005 9:18pm