Whenever a news story reports about a jury awarding millions of dollars to an injured victim for a case involving a major company’s unsafe products or activities, claims about the litigious nature of American society follows suit. The public appears to be generally convinced that plaintiffs take advantage of the American civil justice system to promote frivolity instead of justice. Otherwise, lawsuits for spilled hot coffee would not end with multi-million dollar jury awards.
Asking “how can a jury award a victim millions of dollars” is a good question. This blog attempts to answer that question by examining whether America has a problem with frivolous lawsuits.
The Cost of Tort Litigation
Recently, the U.S. Chamber Institute for Legal Reform (ILR) released a report about tort costs in the United States. According to the report, national tort costs and compensation payments totaled $429 billion in 2016. That figure represented approximately 2.3 percent of the country’s gross domestic product. Furthermore, $300 billion relates to liabilities that businesses faced.
Interestingly enough, the report does not attempt to quantify the number and filing rate for tort claims. Additionally, the ILR report does not differentiate costs based on meritorious versus frivolous claims. However, it is important to keep in mind that state laws provide for a legal cause of action regarding frivolous lawsuits and the abuse of our legal system for improper purposes.
What Is Behind Large Jury Awards?
When a jury awards damages to a plaintiff, the figure covers necessary medical and hospital expenses, physical or mental pain and suffering, and – in particularly shocking cases of wrongdoing – exemplary or punitive damages. Exemplary damages do not compensate the injured plaintiff, but instead, serve to punish the defendant for particularly wrongful acts.
For example, in the infamous Liebeck v. McDonald Restaurant case, the plaintiff – an elderly woman in her 70s – instituted a lawsuit against the fast-food giant for causing her 3rd degree burns across 16% of her body when she accidentally spilled a hot cup of McDonald’s coffee on her lap. Liebeck was mainly interested in receiving compensation for her medical bills from McDonald’s, which amounted to about $10,000. However, McDonald's merely offered her an $800 settlement in response.
The jury in Liebeck awarded the plaintiff $2.7 million in punitive damages – a figure which represented just 2 days of McDonald’s coffee sales. The punitive damages award was based on evidence suggesting that McDonald’s knew their coffee temperature was harmful when they brushed off 700 complaints for coffee-related injuries over the course of a year.
Ultimately, the judge reduced the jury’s award to $480,000. The media’s portrayal of the Liebeck case misrepresented the facts and painted the plaintiff as a money-hungry crone who lacked common sense. However, if the case were so meritoriously deficient, then the jurors must also unanimously lack common sense.
This blatant disregard for a jury’s ability to objectively judge a case hasn’t gone unnoticed. In a recent lawsuit against the agrochemical tech company Monsanto, the plaintiff alleged that his exposure to the herbicide product known as RoundUp caused him to develop terminal leukemia. A San Francisco jury unanimously found the defendant liable for $250 million in punitive damages based on evidence that demonstrated how Monsanto allegedly knew about the carcinogenic nature behind RoundUp.
At the behest of Monsanto, the judge ultimately reduced the jury award to $78 million. Monsanto claimed that the jury’s verdict was improper because the plaintiff’s attorney used inflammatory remarks during opening and closing arguments. In an astonishing stand against judicial interference, several members of the jury personally wrote the judge letters expressing their disappointment. They emphasized how the attorney’s alleged inflammatory remarks “were just not a factor… We were told not to consider it so we didn’t consider it.”
Tort Reform and Astroturf Lobbying
The notion that America is a litigious society and that tort plaintiffs lack common sense can be traced back to “grassroots” rhetoric employed by Citizens Against Lawsuit Abuse (CALA) organizations during the 1990s.
According to an expose featured by the Center for Justice and Democracy in 2000, the CALA groups were manufactured and funded by large companies who were frequently targeted in lawsuits involving unsafe products. These CALA groups relied on exaggerated figures from suspicious “studies” to promote business-friendly tort reforms policies throughout the country. A leaked 1986 memo from the Tobacco Institute revealed the dubious character of the CALA organizations:
“In order to be totally effective, the grassroots effort must appear to be spontaneous rather than a coordinated effort. The goals of the Committee should be set by the Tobacco Institute. Invite suggestions and discussion, however, steer the discussion so that it ends up at our predetermined objective.”
As a result, the term “astroturf lobbying” was coined to describe the artificial grassroots nature of the CALA groups in the 90s. However, they were extremely effective at passing legislative reforms making it harder to sue large corporate defendants. Because these CALA groups had espoused the same rhetoric regarding lawsuit abuse and common sense that we see today, one can’t help but question whether the contemporary perception that American society is too litigious might be equally artificial.
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