Stella: the Queen of Tort Reform?
Published 12 January 2005
Hi! You've stumbled upon a blog post by a guy named Ryan. I'm not that guy anymore, but I've left his posts around because cool URIs don't change and to remind me how much I've learned and grown over time.
Ryan was a well-meaning but naïve and priviledged person. His views don't necessarily represent the views of anyone.
It started with an innocent email—something ridiculous to pass along to co-workers. The Stella Awards, named for Stella Liebeck, who took McDonalds for $2.9 million for splling coffee on herself. The forward contained a list of the top five most frivolous successful lawsuits in the United States,
including the following gems:
Jerry Williams of Little Rock, Arkansas was awarded $14,500 and medical expenses after being bitten on the buttocks by his next door neighbor's Beagle dog. The Beagle was on a chain in its owner's fenced yard. The award was less than sought because the jury felt the dog might have been a little provoked at the time as Mr. Williams, who had climbed over the fence into the yard, was shooting it repeatedly with a pellet gun.
And
This year's runaway winner was Mr. Merv Grazinski of Oklahoma City, Oklahoma. Mr. Grazinski purchased a brand new Winnebago Motor home. On his trip home from an OU football game, having driven onto the freeway, he set the cruise control at 70 mph and calmly left the driver's seat to go into the back and make himself a cup of coffee. Not surprisingly the RV left the freeway, crashed and overturned. Mr. Grazinski sued Winnebago for not advising him in the owner's manual that he could not actually do this. The jury awarded him $1,750,000 plus a new Winnebago Motor home. The company actually changed their manuals on the basis of this suit just in case there were any other complete morons buying their recreational vehicles [sic]
Ever the cynic, and after having previously busted a hurried forward about the govenrment giving cell phone numbers to telemarketers (forwarded from the top of them company, first), I decided to check out Mr. Grazinski's amazing case.
Turns out a Google search for for his name turns up scores of articles on Merv Gravinski: an Urban Legend, the title of a essay by a not-so-repentant columnist Walter E. Williams who published the untrue story in a his column syndicated across the country. It's a shame this “Distinguished Professor of Economics” never learned how to base his writing on facts.
Regardless, this mentality of “frivolous lawsuits” and our “broken legal system” is going to lead us into trouble. Ms. Liebeck's story sounds absurd, until you realize that her “scald” caused third-degree burns which required a seven-day hospital stay and skin grafts—not to mention that McDonalds had received over 700 complaints about its coffee scalding people, including babies.
But should there but a limit to the amount of these lawsuits? Remember the disturbing scene in Fight Club where Edward Norton is describing his job to someone sitting next to him on a plane?
My job was to apply the formula…should we initiate a recall? Take the number of vehicles in the field—A. Multiply it by the probable rate of failure—B, then multiply the the result by the average out-of-court settlement—C. A × B × C = X. If X is less than the cost of a recall, we don't do one.
Imagine a world—one for which Bush is pushing—where companies have a maximum limit for C, where there's a limit to the amount individuals can sue a company who makes a dangerous product. Now, what if 1% of your products fail, and you have 1,000,000 products in the field, but I can only sue you for $10,000 if your product fails and cuts my arms off? Even assuming everyone who loses their arms sues you, you're safe—so long as you raise prices by $100 (that's 1% of 1,000,000 products times $10,000, divided across the total number of products). That's still 10,000 people who no longer have arms. With a set limit, companies no longer have to build products that don't injure people, they simply have to make sure their margins reflect the value of a pair of arms.
Of course it is true that there are those who take advantage of the legal system. And indeed, it is true that having to bother making a product that isn't dangerous makes it cost more to produce. But caps aren't the answer. Litigation is the consumer's defence against irresponsible producter. Perhaps we need to think about these juries that give these awards. How can they be so absurd? But wait, juries are our peers—that would make it…our…fault…