« Competition, everywhere | Main | A Critical Distinction» Don Boudreaux
January 10, 2008
Milking
Don Boudreaux
I am not among those people who advocate tort reform. Sure courts hand down lots of silly, and even sometimes obnoxious, rulings. But beyond mandating a "loser-pays" rule, I distrust legislatures to fix whatever problems exist.
I cannot help, though, share this recent example of an absolutely ridiculous lawsuit. I quote from the WestLaw summary of the case, Mills v. Giant of Maryland, LLC (Here):
Lactose-intolerant individuals brought class-action lawsuit against nine sellers of milk alleging that they consumed milk before they were aware of their lactose intolerance and, as a result, suffered temporary gas and stomach discomfort.
Fortunately, both the trial court and the appeals court ruled in favor of the defendant milk sellers.
(HT Roger Meiners)
Posted by Don Boudreaux in Law | Permalink
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Mandating loser pays clearly protects the entitled from suits by the less entitled. Let the jury decide who pays. Let the jury decide that attorneys need not be paid, and give them evidence of the attorneys' past suits and win/loss record. If the plaintiff has a record of suing, give them this evidence as well.
Posted by: Martin Brock | Jan 10, 2008 2:01:50 PM
Unlimited compensatory damages are not the problem, it is punitive damages, entirely alien to the common law, that has created the modern problem.
Punitive damages are criminal penalties exacted in civil proceedings. When public interest groups think someone has commited a crime, that is, a crime against society without claims to victim compensation, they sue in civil court over a tort. Under the guise of an actual compensatory claim, that can exact criminal fines in the millions of dollars.
Except, the lawyers collect the criminal fines themselves as compensation for their police work. This is the area where we need tort reform.
Posted by: mickeyklein@mac.com | Jan 10, 2008 2:45:04 PM
Isn't it somewhat futile to be outraged at ridiculous lawsuits that get denied when our system allows for anyone to start a lawsuit against anyone else?
Posted by: David Peterson | Jan 10, 2008 3:10:27 PM
I agree that punitive damages should be limited by statute.
Posted by: Martin Brock | Jan 10, 2008 3:58:24 PM
DB: "I distrust legislatures to fix whatever problems exist."
That is to say, I think, that you distrust the legislature (and by exention executive branch regulators) to fix either "problem lawsuits" or the underlying disputes addressed in those lawsuits.
(That is, leave the sorting out to the common law.) (Right?)
My own intuition is that the common law sytem, with all its warts, is one of America's great economic advantages over most of Europe. Lawsuits, even with punitive danages, are to be preferred over the prescriptive regulatory regimes found in most of Europe.
Posted by: hwinva | Jan 10, 2008 7:05:00 PM
Wow, I didn't realize my lactose intolerance could be so potentially lucrative.
Posted by: Robert S. Porter | Jan 10, 2008 11:36:39 PM
Robert, If I had a dime for every time you farted, I guess I'd be John Edwards. Call my secretary.
Posted by: Martin Brock | Jan 11, 2008 12:46:47 AM
Think of the situation where the school bully steals money from a younger kid, and the only thing that the school ever does is sometimes force him to give the money back (i.e. he pays compensatory damages). That's hardly a disincentive to keep him from stealing. If, on the other hand, he has to pay treble damages, well, that's a strong disincentive.
There are a fair number of outlier anecdotes around punitive damages (ahem, McDonalds coffee, ahem), but my recollection is that studies show them to be generally a lot rarer and lower than most people think.
Posted by: Chris | Jan 11, 2008 1:00:22 AM
Chris,
Actually they aren't more rare nor more lower than most people think. They are quite common indeed, so common and so frequent that they are no longer news worthy in any kind of detail.
I know because I am a periphial player in the comedy who only sees maybe 40% of the total acts, but still enough to sicken me. Any court reporter who would talk honestly could tell you of the other 60%.
Any metro bus in Houston that has an accident will have many more than its paid ridership on the bus holding their backs moaning in "pain" when the ambulance and police show up. It's so regular that again it is a joke.
Any plant explosion in a chemical plant or refinery down here will be mined by scumbag lawyers and there will be people in the lawsuit who were as much as a mile and a half away who will be claiming damages because the explosion "Knocked them off their feet, they had bruised elbows and knees, Post Traumatic Syndrome (PTS), and couldn't sleep sound.
And, because they are part of the grouped lawsuit brought by the scumbags, they walk away with money, more money than they ever would see in a lifetime of savings. I have seen some of our southern neighbors set for life by playing that game. They take that money and go back across the border to their little village as true Ricos!
What is true is that 95% of the people in this country have no clue as to how deep, thick, and stenchy that cesspool is. And the next truth is that it is not fixed and will not be fixed for the same reason gamblers do not want gambling declared illegal, one never knows when one has a chance at the life altering jackpot of being able to sue deep pockets, not even a congressman or attorney (connecting the words congressman and attorney is virtually redundant today).
Loser pays is the only answer to cleaning it up, and to answer the above claims that punitive damages are the only way someone can be made to feel a cost significant enough to make him clean up his act, I say BRAAAAAPPPPPPPPPP! BullShit!
Make em pay for the lawsuit, the compensatory damages, and then to make them feel the pain you bring criminal charges against them in criminal court for criminal negligence and let the evil doer sit in prison for term long enough to make others realize that that had become part of the playing rules along with "loser pays".
The bottom line truth in most tort claims filed is that the attorney is doing so knowing that there is a 95% chance that the deep pockets will settle rather than face a jury. That means payday for the attorney and the client. The defendant would rather not take a chance of getting a liberal jury and being really stiffed; and the attorney would rather not have to take a chance on getting a conservative jury and not getting anything.....so they settle.
The second part of this truth is that these frivilous tort lawsuits are what is clogging our court dockets, because until it is settled it has to be managed by the courts as if it were going to trial.
Posted by: vidyohs | Jan 11, 2008 9:43:52 AM
My personal preference isn't a strict loser-pays system because sometimes you really were injured but unable to sufficiently prove your case. These are not the cases we want to discourage - we want to discourage the frivolous lawsuits.
Instead, I suggest a 3-tiered system.
Plaintiff sufficiently makes case to win: Defendant pays.
Plaintiff judged to have brought a spurious/frivolous suit. Plaintiff pays.
Plaintiff does not win, but suit is not ruled to be frivolous, everyone covers their own costs.
Posted by: Jody | Jan 11, 2008 9:54:37 AM
Jody,
I suggest you not get hung up on the word frivilous and focus on the word loser.
If you can't prove your case, you lose.
If it is a hung jury, which is what you're suggesting, then the suit is not dead and can still be refiled with new or more evidence and presented to a new jury. Or, the plaintif could walk away knowing he couldn't do that, in which case he lost because he couldn't make his case. That is just another definition of losing.
Posted by: vidyohs | Jan 11, 2008 10:48:58 AM
vidyohs,
Might another (complementary or supplementary) solution be to treat fraudulent lawsuits as criminal acts of attempted theft? I do not see how a fraudulent lawsuit is any different from a mugging, or breaking into someone's house and stealing their possessions. As you said, plaintiffs and their lawyers know how expensive it is to defend any suit, and count on settlements regardless of whether or not they have a provable case.
It sickens me too. My family has been involved in two frivolous lawsuits. Fortunately, one of the suits was corporate, and we managed to counter-sue for an anti-trust violation (as the plaintiff was using a fraudulent patent to try and get smaller companies to settle), and win a good bit of money.
Odd that an anti-trust law (I'm not familiar with the specifics) would help against patent-trolling and BS lawsuits... but it did.
Posted by: Grant | Jan 11, 2008 11:34:11 AM
I absolutely agree, Grant.
Good point. And, yes sir, I have seen a substantial number of those as well.
Sometimes I receive notices of depostion with the style of the case listing the parties named as defendants and the list is staggeringly long.
When I ask or just pay attention I find that in an auto accident the scumbag lawyers have listed even the people that trucked in the traffic control lights for installation at the intersection where the accident happened. And, each of those listed have to spend money to defend themselves and/or get released from the suit.
Posted by: vidyohs | Jan 11, 2008 12:18:37 PM
vodyohs --
I agree with most of what you wrote, but note that you didn't really address my more limited point about punitive damages -- they are actually awarded far less frequently, and the awards are a lot smaller, than most people think. If I have time, I'll go back and pull up the study.
Posted by: Chris | Jan 11, 2008 12:19:55 PM
Chris,
The issue isn't so much the size or frequency of punitives as it is their nature. They are, by definition, punishments. The civil side of our justice system is set up to make the injured party whole again, not to punish wrongdoers. That's left to the criminal side. Punitive damages allow for criminal punishment without many of the safeguards, including an elevated burden of proof, that we intentionally built into that criminal system.
To use your example, the school bully may still be subject to detention, suspension, expulsion or any of a wide range of punitive measures after he's had to give back the lunch money. I don't think anybody's saying criminal acts which result in civil suits shouldn't be punished, just that they should be punished in the proper venue.
Posted by: Billy | Jan 11, 2008 1:47:44 PM
Billy --
Agreed that criminal charges are often sufficient. However, not all civil wrongs are criminally actionable. Plus, the state have made policy choices to augment law enforcement's role by allowing punitive civil damages. If you didn't, then you'd expend a lot more resources pursuing those criminal elements.
And, finally, the standards for mens rea and burdens of proof are different. Under criminal law, there are levels of "intent" that you have to meet, which don't really apply in civil law. Do you really a valid defense to be "I shouldn't be punished because I was just negligent"? Do you really want "beyond a reasonable doubt" for what has heretofore been just a "more likely than not" standard?
Posted by: Chris | Jan 11, 2008 2:32:41 PM
Chris,
If a defendant is found to be at fault and a good and true system of realistic compensation can be worked out to pay damages and to see to it that the plaintif, at a minimum, suffers no loss of the lifestyle he had at the time of damage, that to me is sufficient. I can even stretch my compassion to see some compensation for an anticipated income for a plaintif who had training in a specialty that historically gave the individual with those qualifications a lifestyle superior to what he had at the time of the accident, which may have been virtually upon completion of his training and at the beginning of his career.
Okay, so far?
But punitive rewards to a plaintif are to me nothing more than a jackpot. In my opinion neither a plaintif or a government should fiscally gain from a criminal act. Punish the crime through use of common law.
But, our differences are of a minor nature IMHO.
You'd simply have to sit through the uncountable depositions I have to understand how many unworthy lawsuits are brought and how flimsy the testimony in justification. But, I wouldn't wish that pain on anyone but the strong of mind and heart.
Posted by: vidyohs | Jan 11, 2008 3:35:48 PM
Chris,
Not all civil actions are appropriate for punishment, either. If we come across a situation where a civil wrong is not criminally actionable, but seems to require punishment, that strikes me as a better case for expanding the scope of the criminal system to incorporate that act, rather than grafting a punishing ability onto a system not designed to punish. If, on the other hand, we can't get an act criminalized, why are we trying to punish it?
Do you think the increased resources devoted to the criminal side would offset the gains seen from removing the major incentive for "jackpot justice," especially given the current overlap between tort and criminality? The genie may be out of the bottle with regard to the incentive, though. It would take a long time with no punitives to erase the idea of a lottery lawsuit from the minds of many.
Of course there are different standards of mens rea and burden of proof. That's a reason to disallow punitives in and of itself. Yes, I want someone to avoid punishment because he was merely negligent. That's the idea behind mens rea on the criminal side to begin with. He is going to make his victim whole again through the civil courts. That's "punishment" enough, and where it isn't, find criminal charges to press. Your last question is backwards. The question is why "beyond a reasonable doubt" questions were shifted to the "more likely than not" standard.
Posted by: Billy | Jan 11, 2008 5:17:47 PM
Would the class of all those who get heartburn and ulcers hearing about the stupidity (and cupidity) of lawyers and courts please join me in a class action suit against said lawyers and courts?
Posted by: John Reed | Jan 11, 2008 8:40:50 PM
http://www.silverrepublican.org/content/view/147/1/
Happy to blog this one!
Posted by: J. Edward | Jan 12, 2008 5:07:51 PM
http://www.silverrepublican.org/content/view/147/1/
Happy to blog this one!
Posted by: J. Edward | Jan 12, 2008 5:08:55 PM
Don:
A "loser pays" rule is a tort reform. And, while there are certainly objectionable proposals out there that are merely wealth transfers, many of the proposals of reformers are simply attempts to undo the perverse incentives created by the legislature (or, sometimes, by the courts) to "fix" a problem through creating a new civil cause of action.
Cheers,
Ted
Posted by: Ted | Jan 23, 2008 4:44:36 PM
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