Overlawyered: Chronicling The High Cost Of Our Legal System

Responses to comments on yesterday’s McDonald’s coffee posts

Several comments on yesterday’s post merit responses.

1. One commenter invokes the Ford Pinto case, which is interesting because that’s perhaps the most famous anti-reform urban legend of all. He mistakenly says that Ford’s problem there was undervaluing human life (though the figure in the memo merely repeated the NHTSA number), but, in reality, the plaintiffs sought and obtained punitive damages because Ford performed a cost-benefit calculation at all. Any manufacturer caught performing the cost-benefit calculation that the commenter believes reflects the tort system operating at its most efficient is going to be accused of “putting profits before people” and undervaluing human life, and is at severe risk of being hit with punitive damages unless the judge or jury is unusually economically literate.

2. I’m not saying the court should have thrown the case out because of the factual dispute. The jury made the wrong decision on the facts, but the judge made the wrong decision on the law: see McMahon v. Bunn-O-Matic and the dozen or so cases throwing identical theories out.

3. I agree that it’s not enough to look solely at the costs of the tort system, and that one must look at the benefits also. I don’t oppose the tort system as a whole, but there are certainly problems with the tort system that can be improved to increase the benefits while decreasing the costs. The McDonald’s case illustrates several of these problems: (a) bogus expert testimony; (b) the distorting effect of punitive damages, especially when punitive damages in a products liability case is based on the defendants’ sales, rather than the defendants’ conduct; (c) the erosion of the concept of proximate cause from the tort system; and (d) the erosion of the concept of personal responsibility from the tort system; (e) the backwards-looking “failure to warn” cause of action; (f) the system’s unscientific rejection of concepts of statistical significance.

This would be bad enough if the case was simply an outlier, a case where bad luck, a bad judge, a bad jury, and defense mistakes combined to create a wrong result, but ATLA and law professors are holding up this case as a good result, and there’s a generation of law students who mistakenly think that this is what the tort system should aspire to.

4. I mentioned Snopes.com in the post; they appear to have taken down their original McDonald’s coffee page. I’ve changed the link from the main Snopes page to a different post discussing the “Stella Awards” (which we debunked August 27, 2001). There, Snopes.com repeats the claim that the McDonald’s coffee lawsuit was legitimate, and furthers the urban legend that there’s a sinister force behind the Stella Awards—a curious claim, given that the Mikkelsons’ experience with urban legends has surely taught them that no right-wing conspiracy is needed to result in the spreading of a good yarn that isn’t true. (See also Aug. 14.) In contrast, ATLA affirmatively promotes urban legends about the Ford Pinto and McDonald’s coffee case on their page.

5. Side note about an irony of the Ford Pinto case: the litigation was sold to the American public as a godsend because Pintos were so dangerous that their gas tanks killed a thousand or more. Gary Schwartz added up the numbers, and discovered that only 28 people died in Ford Pinto fuel-fed fires—a rate lower than many other small cars. ATLA shamelessly uses the new number to exclaim that current product manufacturing snafus are “worse than the infamous Ford Pinto,” which is, of course, infamous only because of the successful propaganda of the trial bar.

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House passes cheeseburger bill

As it did last year (see Mar. 11, 2004). This time the margin is wider, 306-120 instead of 276-139. The Senate, as usual, is the sticking point. (Libby Quaid, “House Votes to Ban Obesity Blame Lawsuits”, AP/MyWay.com, Oct. 20).

More: Jacob Sullum (Oct. 20) takes a dim view of the bill because of its expansive interpretation of the Commerce Clause, and also suggests that the bill contains a rather wide loophole:

[It] makes exceptions not only for violations of express warranties but for violations of state or federal law that result in excessive calorie consumption. The latter exception would apply to Pelman v. McDonald’s, the case in which two overweight teenagers seek to blame the chain for their chubbiness. The suit was dismissed twice by U.S. District Judge Robert Sweet for failure to adequately state a claim, but it was revived by the U.S. Court of Appeals for the 2nd Circuit, which ruled that the plaintiffs could pursue their argument that McDonald’s violated New York’s Consumer Protection Act through deceptive marketing practices.

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Urban legends and Stella Liebeck and the McDonald’s coffee case

Thirteen courts have reported opinions looking at product-liability/failure-to-warn claims alleging that coffee was “unreasonably dangerous” and the provider was thus liable when the plaintiff spilled coffee on him- or herself. Twelve courts correctly threw the case out. Another trial court in New Mexico, however, didn’t, and became a national icon when the jury claimed that Stella Liebeck deserved $2.9 million in compensatory and punitive damages because McDonald’s dared to sell the 79-year-old hot 170-degree coffee.

The case is ludicrous on its face, as a matter of law and as a matter of common sense. Eleven years later, this should be beyond debate, yet somehow, it keeps coming up in the blogs, and we keep having to refute it. (Dec. 10, 2003, Aug. 3, 2004, Aug. 4, 2004).

Amazingly, rather than argue that the tort system shouldn’t be judged by the occasional outlier, the litigation lobby has succeeded in persuading some in the media and on the left that the Liebeck case is actually an aspirational result for the tort system, and, not only that, but that anyone who says otherwise is just a foolish right-winger buying into “urban legends” (Aug. 14, Aug. 16, and links therein). Even the Mikkelsons at snopes.com have made the mistake of buying into the trial lawyer hype, calling the case “perfectly legitimate” and effectively classifying the common-sense understanding of the case as an urban legend.

But the real urban legend has to be that the case has any legitimacy. Worse, this urban legend is being taught to a generation of law students by professors like Jonathan Turley and Michael McCann. Now, any peripheral mention of the McDonald’s coffee case provokes a gigantic backlash from the left, who, while congratulating themselves on their seeing past the common-sense view of the case and being above urban legends, spread a number of urban legends of their own about the case. Witness the 200-plus comment outpouring at Kevin Drum’s Political Animal blog. This post provides a partial rebuttal to some of the things said in that thread, and will hopefully serve as a FAQ in the future.

Read On…

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Valerie Lakey v. Sta-Rite

Five-year-old Valerie Lakey suffered devastating injuries when she was literally disemboweled when she sat on an open pool drain in 1993. Throughout the 2004 presidential campaign, John Edwards made much of his trial victory in this case against the manufacturer of the pool drain cover, Sta-Rite, and it immunized him from much criticism, with the media regularly making encomiums to his dramatic closing argument invoking his own dead son.

But it turns out the facts of the case are much more complicated than John Edwards and the media made out.

Valerie Lakey suffered horrendous injuries because other children at her municipal swimming pool vandalized the safety equipment protecting the pool drain and the city didn’t fix the problem. “‘I don’t believe this has anything to do with product design—it’s an issue of maintenance, an issue of a missing cover and the child sitting down on it,’ said Ken Giles, a spokesman for the U.S. Consumer Product Safety Commission.” (“Drain that injured girl lacked cover”, Raleigh News & Observer, Jun. 24, 1993). According to the same article, “The National Spa and Pool Institute, along with the Consumer Product Safety Commission, issued a list of precautions for pool owners and managers in 1982. It states that covers must be checked daily to see whether they are in good repair and to make sure they cannot be removed without tools.”

The powerful circulation pump, manufactured by another defendant, didn’t have a readily-accessible emergency shut-off switch. After John Edwards settled with the municipality and pump manufacturer for $5.9 million, guaranteeing him a hefty profit on the case, he was able to focus on the lottery-litigation against the manufacturer of the pool drain cover at trial, blaming them for not doing more to protect the pool drain from vandalism—including the standard second-guessing of the “failure to warn” the municipality of the obvious problems of letting the pool drain be vandalized. There was no evidence that the additional warning to screw in the drain cover would’ve made a difference: county regulations already required the pool drain cover to be screwed in, and the pool managers testified that they had done so several times in the year before Lakey’s accident. (“Defense argues pool staff knew to screw down drain covers”, Raleigh News & Observer, Jan. 10, 1997.)

The defense decided not to settle after it tried the case in front of four focus groups that agreed that it acted reasonably. But the jury in the Lakey case wasn’t allowed to make that decision: the judge erroneously instructed the jury that Sta-Rite acted unreasonably as a matter of law, apparently overreacting to a discovery dispute. Edwards had asked Sta-Rite to provide documents relating to the specific model of pool cover, and then thought to modify his request to include documents relating to all covers a week before trial—and when Sta-Rite provided the newly requested documents (which related mostly to hot tubs), Edwards accused them of having deliberately hidden the documents. (“Final stages of pool drain trial to begin”, Raleigh News & Observer, Jan. 6, 1997.)

Because of the risk of bankrupting punitive damages, Sta-Rite settled for slightly above insurance limits rather than appeal. According to Raleigh News & Observer, after the trial, a number of jurors said they could have gone either way until the judge instructed them on the question. (Anne Saker, “Focus groups becoming vital tool for N.C. lawyers”, Jan. 18, 1997.)

Sta-Rite had been putting warnings on its pool-drain covers since 1987, so the case did nothing to change their product; if anything, the additional safety innovation hurt them at trial because it was used against them to argue that they should have acted earlier.

The Monkeytime site has some additional details, including Edwards’s invocation of his son’s death.

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Broken newsfeed — advice from readers?

Despite our attempt last week to fix our RSS/XML newsfeeds for the benefit of readers who keep up with the site that way, it looks as if we haven’t succeeded. A reader writes:

I was missing my daily dose of Overlawyered, but wrote off your lack of activity to your domain move and hosting issues. But such is not so … your newsfeed from overlawyered.com is broken. The XML has no style associated, and chokes the newsreaders I’ve tried to use on it (Thunderbird, Blagg and a FireFox plugin).

We would be grateful if technically knowledgeable readers took a moment to advise us how to get this task done.

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Sentenced at Merrill Lynch

Tom Kirkendall wonders (Oct. 16) why a former energy trader who admitted that he stole $43 million from his employer, Merrill Lynch, just got a comparatively lenient sentence of 3 1/2 years, while former Merrill employee Jamie Olis (May 18, 2004), who “did not receive a dime from the [accounting hype] that is the basis of his alleged crime”, got 24 years:

Let’s see. Embezzle $43 million and, if you get caught, cop a plea and serve 3 1/2 years. Or, do your job, don’t embezzle a cent, defend your innocence against criminal charges even when your employer serves you up as a sacrificial lamb so that the employer can avoid criminal charges, and then endure either as long, or much longer, a sentence if you are convicted.

Correction: my foulup. As I should have remembered, Olis was a Dynegy, not a Merrill Lynch, employee. Tom K. does discuss the sentences handed out to two Merrill employees who, like Olis, were not alleged to have profited personally from their misdeeds.

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At DRI in Chicago Thursday

The Defense Research Institute has been kind enough to invite me to speak on two panels at its annual meeting in Chicago on Thursday. The first panel will touch on topics including litigation-curbing reforms (a topic on which DRI and I have been known to come down on opposite sides), while the second will discuss the changing role of state attorneys general. I know many DRI members read this site: if you see me at the conference, feel free to come up and say hello.

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