Gregory P. Hawkins

“Mrs. Smith, we have developed a procedure that will eradicate the illness ravaging your husband’s body.” Mrs. Smith looks up. A glimmer of hope shines from her tear-stained face. “Unfortunately, the cure will leave your husband in a vegetative state.”

Wait a moment. Is this any way to begin a serious discussion about the legal and social ramifications of tort reform? We are, after all, talking about modifying, and in some cases eliminating, the historical and fundamental right of American citizens to access the courts. We are talking about the average citizen’s right to seek redress for life-altering damages, often against powerful and wealthy foes, on the only level playing field available - the civil justice system. It is hardly appropriate to drag the debate down to the level of a made-far-TV move.

Apparently, it is. Tort reform advocates want Americans to believe that civil trial is a lottery. And not the typical lottery where the lottery player is four times more likely to be struck by lighting than win the jackpot. They paint pictures of experienced judges and dedicated citizen juries dazzled and confounded by slick lawyers, time and again, with regular cash awards to rival Power Ball payouts.

In this endeavour, proponents of tort reform rarely provide a statistical analysis to back their allegations. In lieu of reasoned arguments, which they believe Americans could not comprehend, they rely on the sensational. They encapsulate a complex subject into a simple story. These tales seldom, if ever, describe plaintiffs victimized by avarice or criminal incompetence. Instead, they encourage the reader to visualize the judicial lottery winner dropping his or her crutches on the courthouse steps and striding forward with confidence toward a new life of luxury.

The Spilled Coffee Caper

The most popular example of a judicial system run amok references a nearly three million dollar award for a spilled cup of McDonald’s coffee. A passenger in her grandson’s car, 79 year old Stella Liebeck placed a recently purchased cup of coffee between her knees and pried off the lid, spilling the coffee. This resulted in third degree burns over 16 percent of her body, hospitalization for eight days and agonizing treatment for more than two years.

Ouch. Who would not wince upon hearing this painful narrative? Still, hot coffee is - by definition - HOT. What American has not been taught from childhood to respect hot liquids? Certainly, it is a tragedy. But, a multi-million dollar sympathy award for an elderly woman’s carelessness stretches credibility. Americans intuitively understand that however heart rending, we must take personal responsibility for our own mistakes.

Typically, this is the point where tort reformers end ‘the tale, relying on the reader to make the correct conclusion. This is understandable. For millennia story tellers have understood that cluttering the tale with too many facts diminishes the effect.

The Rest of the Story

However, in this case the jury heard the following specifics. McDonald’s admitted to an ongoing
problem. In the ten years previous to Mrs. Liebeck’s incident, over 700 men, women, children and infants were scalded by McDonald’s coffee. In one instance, coffee spilled from a service window by an employee also resulted in third-degree bums and years of disability. the franchise food industry that its members were causing serious burns by serving beverages above 130 degrees Fahrenheit. Demonstrating the same arrogance it displayed when refusing Mrs. Liebeck’s original request for $20,000 in compensation, a McDonald’s witness admitted at trial that “there is no current plan to change the procedure that we’re using in that regard right now.”

Witnesses for McDonald’s also admitted in court:

That consumers are unaware of the risk of serious burns, That it did not warn customers of the nature of the risk and could not give an explanation of why it did not, That its coffee is “not fit for consumption” when sold because of severe scalds if spilled or drunk. (McDonald’s marketing gurus decreed the high temperature to keep the beverage hot until the typical driver reached their work place. Unexplained were other McDonald’s studies indicating that most drivers drank their coffee during the drive.)

Mrs. Liebeck’s physician testified that her injury was one of the worst scald burns he had ever seen. The trial judge Robert Scott, in refusing to grant a new trial, called McDonald’s behavior “callous. “

Is the American civil tort system broken? In the famous “McDonald’s Coffee Case” apparently not. What about this nearly three million dollar award? The jury awarded $200,000 in compensatory damages but reduced the award to $160,000 because they found Mrs. Liebeck 20% at fault. They awarded $2.7 million in punitive damages, to punish McDonald’s for its outrageous and egregious conduct, which the trial judge reduced to $480,000. Still, while even the reduced awards represent a lot of money for the average American family, they are modest when compared to McDonald’s coffee sales for a typical day, which exceeds one million dollars.

Evidently, tort reform advocates backed the wrong horse by touting Mrs. Liebeck as a judicial lottery winner - a colorful story but misrepresented.

Obviously, adding the factual details do not diminish the tale. It is unfortunate that proponents of tort reform continue to fail to offer the American public the statistical facts.

A Civil Judicial System Run Amok?

A 1996 study by the U.S. Department of Justice’s Bureau of Justice Statistics for American’s 75 largest counties, reveals a more accurate picture:

The average award is $30,500, which includes both compensatory and punitive damages. Punitive damages are only awarded 3% of the time. When they are awarded, the median award for punitive damages is small, an average of $38,000. The judges reduced jury awards 18% of the time by an average of 43%.

It appears that the runaway tort system described by proponents of tort reform is as fictional as many of the stories they tell. With few exceptions the awards are small, fair and within reason when compared to the injuries suffered by the Victims. Punitive damages are rare and large awards, rarer still. The checks and balances in the civil justice system work, with juries taking their responsibilities seriously and judges reducing excessive awards where appropriate.

Insurance Crisis?

“Hold a minute,” say the tort reformers. “Certainly, you cannot deny that insurance rates are going through the roof, primarily because of rapacious lawyers.” Half of this statement is true. The tort reform movement became a significant player in American politics during the mid 1980s. A major “liability insurance crisis” caused insurance premiums to spike upward. Small businesses, doctors, even non-profit organizations found themselves hard pressed to pay the premiums. In many cases, insurance simply was not available as detailed extensively in the national media, including a 1986 Time Magazine cover story, “Sorry, Your Policy is Cancelled.”

Those Damn Trial Lawyers

Trial lawyers offered an attractive target of convenience. “They are bleeding us white,” claimed insurance giants, echoed by corporations tired of compensating injured customers. Insurance premiums, they asserted, simply reflect an “explosion” in litigation, an eruption of “frivolous” law suits and “out of control” juries.

Notwithstanding statistical evidence to the contrary (1980s studies mirrored statistics similar to the 1996 U.S. Department of Justice study presented above), these accusations found a willing audience. Tort reform represented a rare opportunity to put lawyers in their place. If it is impractical to “kill all the lawyers” as Shakespeare advised in his play Henry VI, tort reform offered the next best thing. (Insert your favorite lawyers joke at this point.) In 1986 alone, 41 state legislatures passed tort reform bills.

But efforts to punish trial lawyers as the instigators of the “liability insurance crises” rebounded on the injured more heavily than lawyers. Victims found it more difficult and sometimes impossible to find representation against insurance companies. Limits to corporate liability overturned veal’S of common law that- for generations had provided citizens the right to confront corporate misconduct in court. Laws to restrict punitive damages (designed to send a strong message to wrongdoers to beware the fury of the American judiciary) allowed the return of boardroom discussions on “the cost of doing business” rather than “we cannot afford to harm our customers.”

Insurance Industry Takes It In the Shorts

The insurance industry propaganda, however, began to unravel almost immediately. Study after study exposed the “insurance crises” as self inflicted ~ caused by mismanaged underwriting practices of the industry itself. In 1986, the National Association of Attomeys General concluded that “the available data indicate that the causes of, and therefore solutions to, the current crisis lie with the insurance industry itself.” In 1987, Business Week reported that “even while the industry was blaming its trouble on the tort system... its problems were largely self-made.”

Top insurance executives spoke to insurance audiences revealing that industry problems were due to price cuts taken “to the point of absurdity” in the early 1980s. Maurice R. Greenberg, President and CEO of American International Group, Inc.. stated that without these price cuts, there would not be “all this hullabaloo” about the tort system.

Still, the insurance industry told a different story to the public and lawmakers. In 1986, they instituted a massive advertising campaign designed to reach 90% of American adults, “to change the widely held perception that there is an ‘insurance crisis’ to a perception of a ‘lawsuit crisis. “, John J. Bryne, a leading industry spokesman and GEICO’s chairman, recommended that insurance companies “withdraw [from the market] and let the pressure for reform build in the courts and in the state legislatures. “

Regardless of the devious nature of the insurance industry’s campaign of misinformation, tort reform legislation went forward with alacrity. Surely all the tort reform legislation designed to deny maltreated citizens access to the civil justice system should have provided some benefit for the insurance industry? Surely, the insurance industry would respond by favoring states willing to institute the most stringent tort reform legislation with lower insurance premiums?

Lower Insurance Premiums? Um, no.

Apparently, the answer was no. Tort reform failed as an impetus to reduce insurance rates. In 1986, while attempting to influence the New Jersey legislature to pass tort reform including a cap on damages, insurance lobbyist Peter G. Straus of the Alliance of American Insurers testified that “liability insurance rates would go down,” but admitted under questioning that he knew of “no state where rates had declined as a result of such ‘caps’ or other revisions in the civil justice system.” Simply one example among many.

Again, multiple studies have evaluated the ebb and flow of insurance premiums over the last fifteen years. When comparing premiums in states with extensive tort reform laws, states with moderate tort reform laws and states with few such laws, studies consistently conclude that there is little difference in premiums.

From California to Connecticut to Florida to Texas, citizens and state legislators have asked why tort reform laws rarely, if ever, resulted in lower insurance premiums. Insurance lobbyists have responded with statements like “the rates will not go up as quickly or as high.” This claim, too, has been categorically and statistically disproved, time and again.

Tort Reform Rears Its Ugly Head - Again.

Notwithstanding the extent and comprehensive evidence to the contrary since 1985, tort reform has re-established itself with a vengeance, primarily because of rising insurance rates again. The lessons of history are short lived.

When the 2004, State of the Union Address includes the words, “we must eliminate wasteful and frivolous.. law suits,” one is left to wonder how this will be accomplished outside of the civil justice system? Must we conclude that the civil justice system - with its judges, juries (and lawyers representing both sides) in a well established and proven forum - no longer provides the proper venue to decide when a case is frivolous or when victims deserve recompense?

In the clash over tort reform, those injured by malfeasance, malpractice and corporate avarice always lose the most. Yet, they are seldom mentioned, except as “potential lottery winners.”

Tort Reform is the Cure that May Kill the Patient

Tort reform should not be viewed as a battle between trial lawyers on one side and insurance companies, doctors and corporations on the other. At its core, tort reform is not about reform at all. The word reform means to improve. Tort reform is about limiting, and in many cases the elimination, of fundamental and treasured American rights - access to the courts and the prerogative to seek redress Item those who have damaged you or your family. Americans must retain the right to demand redress. It matters little if you like the players or not.

Americans, and especially their elected officials, must take a stand to maintain a civil judicial system that protects the individual against powerful and well financed foes. There is too much at stake.