Perhaps you saw the Seinfeld episode in which lawyer Jackie Chiles encourages Kramer to sue over a cup of hot coffee. The show was a comic take on the reported $2.7 million awarded to a woman who had sued McDonalds. Elaine's reaction to Kramer mirrored what most people were saying, "Who ever heard of this anyway? Suing a company because their coffee is too hot? Coffee is supposed to be hot." Of course Kramer, replies, "Yeah, but Jackie says the top was faulty."
It's a perfect morality tale exposing everything wrong with a litigious American society whose members refuse to accept personal responsibility. The McDonalds lawsuit was ridiculous, right? We're all bearing the burden of higher insurance rates because there is an epidemic of lawsuits, right? Malpractice lawsuits are driving doctors out of business, right?
Well, not really.
Third Degree Burns
Here's what the talk show pundits and columnists neglected to mention about the McDonalds coffee burn case:
79 year old Stella Liebeck suffered third degree burns on her groin and inner thighs while trying to add sugar to her coffee at a McDonalds drive through. Third degree burns are the most serious kind of burn.
McDonalds knew it had a problem. There were at least 700 previous cases of scalding coffee incidents at McDonalds before Liebeck's case.
McDonalds had settled many claim before but refused Liebeck's request for $20,000 compensation, forcing the case into court.
Lawyers found that McDonalds makes its coffee 30-50 degrees hotter than other restaurants, about 190 degrees. Doctors testified that it only takes 2-7 seconds to cause a third degree burn at 190 degrees.
McDonalds knew its coffee was exceptionally hot but testified that they had never consulted with burn specialist.
The Shriner Burn Institute had previously warned McDonalds not to serve coffee above 130 degrees.
And so the jury came back with a decision- $160,000 for compensatory damages. But because McDonalds was guilty of "willful, reckless, malicious or wanton conduct" punitive damages were also applied. The jury set the award at $2.7 million. The judge then reduced the fine to less than half a million. Ms. Liebeck then settled with McDonalds for a sum reported to be much less than a half million dollars. McDonald's coffee is now sold at the same temperature as most other restaurants.
The Lawsuit Crisis Myth
President Bush is now pushing for "tort reform," claiming that lawsuits are hurting the economy. Contrary to popular belief, since 1975 the number of lawsuits has declined. Government data show that the median jury verdict for punitive damages was only $37,000, significantly less than the $65,000 median award in 1992.
Although corporate America is complaining about how lawsuits are "hurting the economy" the vast majority of lawsuits are brought by corporations, not individuals. Moreover, judges dismiss corporate lawsuits as frivolous 69% more often than the lawsuits brought by individuals.
So, why are Newsweek and Time running cover stories about "Lawsuit Hell"? Why is there a common perception of a "lawsuit crisis"? Why is Bush talking about the need for "tort reform" (legislation that would limit citizens‚ rights to a jury trial or limit juries‚ ability to set punitive damage awards)?
It wasn't until the 1950's that lawyers began to make progress in getting judicial precedents that established corporate responsibility for injuries to workers and consumers. Corporations started to be held accountable and consequently their insurance companies were increasingly being forced to pay damages. The insurance industry responded with a public relations campaign against "excessive awards." Their strategy was to convince people who might sit on juries that there was a problem.
By the 1980's, with the insurance industry in a slump, industry strategists decided it was time to move beyond targeting prospective jurors, and to take on the law itself. Their goal was to restrict citizens‚ right to a jury trial. Their ad copy pointed out that "everybody pays" for overzealous lawsuits. The industry couldn't very well attack consumer and environmental protection or victims. Instead they scapegoated the trial lawyers. Dozens of tort reform measures were introduced in state legislatures.
Teams of lobbyists were mobilized to push the tort reform bills through state legislatures. The insurance industry mobilized right wing think tanks to focus on the "crisis". They targeted journalists and circulated bogus statistics about the "costs of frivolous lawsuits". Large corporations created fake grassroots groups (called "Astroturf") like Citizens Against Lawsuit Abuse and set up chapters in local Chambers of Commerce. Fantastical anecdotes of bizarre lawsuits buzzed on the internet, and major media outlets like U.S. New and World Report picked up on the stories without fact checking. Conservative columnists at smaller papers also ran with these urban legends of runaway jury verdicts. Did you hear the one about the man who sued Winnebago after setting his R.V. on cruise control and going to the back to make some coffee? How was he supposed to know the R.V. would crash? The fact that the incident never happened didn't stop papers like the Weirton Daily Times in West Virginia from printing the story in a column calling for tort reform.
Have insurance rate gone up? Sure. The insurance industry is one of the most profitable industries. The companies typically make most of their profits in stocks and bonds. When the bubble burst on Wall Street several years ago the industry jacked up premiums to maintain their profit margin.
Will outlawing our right to sue grossly negligent doctors for punitive damages stop the escalating costs of health care? The non-partisan Congressional Budget Office figures that medical malpractice lawsuits account for one half of one percent of health care costs.
Would insurance rates go down? According to the American Insurance Association, "The insurance industry never promised that tort reform would achieve specific premium savings." (March 13, 2002) and the American Tort Reform Association added, "We wouldn't tell you or anyone that the reason to pass tort reform would be to reduce rates." (July 19, 1999).
What will tort reform accomplish? It will limit our ability to hold corporations accountable for their misdeeds. Corporate America has succeeded to a great extent in buying up our legislators and capturing regulatory bodies. We must not let them wrest control of the judicial system as well.
Greenbaum is an organizer for Metro Justice, a member-based peace and justice organization in Rochester, NY.
He can be reached at email@example.com