Many business groups across the country routinely call for changes to the legal system to reduce what they call frivolous lawsuits – something called tort reform. But in this edition of FM89’s commentary series The Moral Is, Fresno State Business Law Professor Ida Jones says the current system, despite some well publicized exceptions, is working just fine.
Have you heard about the man who sued Applebee’s because he bent over and was burned by a sizzling skillet of fajitas which he then accidently dumped in his lap? He claimed the server didn’t warn him that they were hot. Or the lawyer who sued a dry cleaner for $67 million because they lost his pants? And what about the woman who won a $3 million suit against McDonalds because the coffee was too hot? These types of lawsuits are the reason that business groups call for tort reform.
Businesses argue that the pendulum has moved so far toward protecting injured people that businesses can’t compete efficiently. The fundamental premise of tort reform is that it should be harder for people and classes of people who were injured by the same product to sue for injuries they suffer when they use a defective product or service. Businesses claim that they have to try to anticipate how a customer might get hurt or even how they might hurt themselves, because then the business might have to pay. That’s money that could be spent on innovation and jobs. And lawyers have an incentive to take these cases for fees of up to 40% of the recovery.
There are many proposals for tort reform: the simplest is loser-pays, where the loser pays the winner’s attorney’s fees. Other proposals limit the ability to file claims in the first place or place caps on non-economic damages.
Some of those changes have already been implemented. In California, non-economic damages for medical malpractice have been capped. Texas requires that the loser pay the winner’s court costs. And the ability to file class actions has been limited through the federal Class Action Fairness Act.
Those existing reforms have negotiated a balance between business liability for mistakes and consumers’ need for recourse if the businesses don’t take sufficient care. Businesses should bear the costs of doing business, including the costs of injuries if they’re too careless. And individuals should bear responsibility for their own conduct.
The system works, although sometimes slowly. The man who was burned by the sizzling skillet of fajitas lost. The appellate court said the risk posed by the hot platter was self-evident. And the lawyer didn’t win the lawsuit against the dry-cleaner. Although he went to trial and filed several appeals, every court dismissed his lawsuit. But the woman who sued McDonalds won because a jury concluded that the company didn’t do enough to warn people that the coffee was served 20-30% hotter than any other coffee. The trial judge had reduced her $3 million damage award to 10% of that, primarily by reducing the punitive award set at two days of coffee sales for the company. Her final award is unknown as the case was ultimately settled out of court.
Society wins when individuals have a way to obtain some compensation for their injuries. Everything considered, as things now stand, the tort system appropriately balances the interests of businesses and of consumers.