Punitive Damages And Tort Reform

[Meadmaker]

That's because the magic word isn't "insurance," but "indemnify."

Yes, that word is right there in the policy. No, it doesn't solve our problems. It helps, but it is still a lot harder to find places than it used to be.

ETA: And once again, Drk is nearly completely correct. There are ways to solve all these problems. However, it turns out that the First Baptist Church doesn't really want to solve this problem. They want to let the Cub Scouts use their basement, and I want to say that I'll take my chances with the beans, and if anything does go wrong, well, them's the breaks.

Our legal system doesn't allow it. The church cannot assume that if my kid gets sick on the food that I or my neighbor prepared, that I will hold them harmless in the incident. In order to make sure they don't get hit with a huge settlement charge, they have to jump through a bunch of legal hoops and/or pay a bunch of money. So, they just decide that it's a whole bunch easier to not allow food, or sports, or whatever the potentially dangerous activity is. That's what we are encountering in today's world.

 

[Darth Rotor]

But being rare doesn't keep it from being an issue when it does come up. It's a question of who bears the risk.

Heck, why not waivers all around and participants are attending at their own risk?

That would work, barring some really really really gross negligence.

Thanks to you both.

So you would be happy to accept the full liability for one?

Since I am not a deep pocket, what is your question again?

DR

 

[quixotecoyote]

Yes, that word is right there in the policy. No, it doesn't solve our problems. It helps, but it is still a lot harder to find places than it used to be.

Our legal system doesn't allow it. quote]

As dr kitten pointed out, the legal system does allow it. If for whatever reason the church doesn't want you, that's between you and them.

 

[ponderingturtle]

Since I am not a deep pocket, what is your question again?

DR

Who gets the liability. Your agrument was that because something happens a few hundred times it is dependable. Well I have driven to work many times and not gotten into an accident, this doesn't mitigate my need for insurance to cover my liability if I do cause an accident.

 

[Darth Rotor]

Your agrument was that because something happens a few hundred times it is dependable.

No, but yours now is, since you said that.

My point was that the risks are low, and that the risks were being overstated based on my experience, which is numerous data points.

DR

 

[Meadmaker]

Yes, that word is right there in the policy. No, it doesn't solve our problems. It helps, but it is still a lot harder to find places than it used to be.

Our legal system doesn't allow it. quote]

As dr kitten pointed out, the legal system does allow it. If for whatever reason the church doesn't want you, that's between you and them.

Yes, there are legal ways around this problem. If they sign the proper forms, collect the proper paperwork, pay the proper fees and dot the i's and cross the t's, everything's fine.

Or they can just stop letting people use their basements, which is what is happening.

If you like that sort of world, keep doing what you're doing.

And who benefits? What is the real consequence? Who likes this system?

Big businesss and insurance companies. Insurance companies love large, predictable, payouts. Big business knows that this hurts small business and non-profits a lot more than big business, so it eliminates their competition. I used to say I supported "tort reform", and I would jump on any bill I saw that promised it, until I realized that the goal of most legislation was not to lower the costs so much as to make them more predictable.

 

[Dunstan]

I'm pretty sure defense lawyers for big companies work on retainer or salary.

they have their own lawyers on salary or retainer. The contingency fee thing is mostly for us little people. (So even if a jury awards large damages to a class of plaintiffs, the lawyers get a big slice of that first--I think it's typically 30%.)

The corporate lawyers are on salary. They get paid whether there is a suit going on or not. If the losing defendant gets dinged for the amount that they spent defending against a legitimate complaint, they basicly have to pay twice as much for losing lawyers on their staff.

That's only if they're on salary. If they're billing by the hour--which is usually the case,

As a practicing litigator, let me clear up a few things.

First, retainers. Although there are different ways to structure a fee agreement and retainer, in my experience, they almost always serve simply as an advance payment against fees incurred. In other words, if the XYZ Corporation has my firm on retainer, it doesn't mean that we do all their legal work at no extra charge. It simply means that they've deposited funds to our client trust account sufficient to provide us with the assurance that we'll get paid for the work we do. (And at least in litigation, most retainers are "evergreen," meaning that XYZ needs to replenish it each month. As a practical matter, what this really means is that XYZ pays our bill each month, and the retainer remains as security.) Basically retainers are just the way that attorneys protect themselves from some of the risk of non-paying clients.

Second, salaries vs. hourly. It's true that most corporations of any size have "in house" lawyers -- at least a general counsel, and in some cases (especially for large corporations) an entire legal department. Sometimes those in-house lawyers will handle lawsuits filed against the company themselves, but that usually requires that it's a sufficiently big legal department and/or a small or routine enough matter that it isn't going to overload their capacity or require special expertise. And if it's something that's covered by insurance, then the insurer is going to hire outside counsel for the company.

The bottom line is that, while it depends on the company, industry, type of lawsuit, etc., I'd say that most of the time, corporations (or their insurers) are paying their lawyers by the hour to defend lawsuits.

 

[drkitten]

Our legal system doesn't allow it. The church cannot assume that if my kid gets sick on the food that I or my neighbor prepared, that I will hold them harmless in the incident.

Why should they be able to assume that?

It's not so much that "our legal system doesn't allow it" as "our legal system recognizes that people don't hold each other harmless." Even if you told the church that you would hold them harmless, that's not enough (since you can't control what a third person does). Indeed, our legal system also recognizes that people lie -- and therefore a simple statement that you make may not be relied upon. Especially if you later deny making it.

In order to make sure they don't get hit with a huge settlement charge, they have to jump through a bunch of legal hoops and/or pay a bunch of money.

Not at all. YOU (the Cub Scouts) can jump through the hoops and pay the money yourself, on their behalf.

Not willing to do that? Too much trouble and expense? Why should you expect the church to do what you're demonstrably unwilling to do yourself?

 

[drkitten]

My point was that the risks are low, and that the risks were being overstated based on my experience, which is numerous data points.

What do you mean, "the risks are being overstated"?

There are lots of ways to calculate and to state risks. We can go with expected value, which yields one number, with minimax value, which yields another, and with a worst-case estimate. If you're doing disaster planning, it's often useful to look at a worst-case scenario to see if the organization as a whole is capable of riding it out, regardless of its degree of likelihood.

In the case of a church renting out its hall,.... well, the worst-case scenario is a liability judgment that will bankrupt the organization. No matter how small the probability of that happening, why take that risk at all, when you can avoid it simply by saying "no"? (Sure, you lose a little bit of rental income that way, but it's not like there aren't dozens of other organizations out there that aren't going to want to bring food in....)

Now, if you were relying on rental income to make the bills and you needed every client you could get, the appropriate calculation would be different. But churches by and large aren't trying to maximize revenue; they have other goals. Goals that are not greatly aided by hosting a Cub Scout potluck, but that could be seriously derailed if things go wrong.

 

[Dunstan]

If you like that sort of world, keep doing what you're doing.

But who is the "you" here?

I know everyone likes to blame lawyers, insurance companies, etc., but the thing that drives the entire system is juries.

I expect that if you showed this thread to a random sample of Americans, the vast majority would agree with Meadmaker that it's tragic that the Boy Scouts can't hold potlucks in church basements, and that people shouldn't be able to sue the scouts or the hall because they got food poisoning from Mrs. Johnson's potato salad.

The problem is that when you get those same average Americans on a jury, and they see the hospital bills and hear little Billy testify about his food poisoning, and Mrs. Johnson testifies that her potato salad had to sit in her little camping cooler for two hours during the awards presentation instead of a refrigerator because there wasn't one available, and the scouts and the hall admit that they knew food was going to be served but didn't make sure that proper refrigeration was available, suddenly that same average American thinks that it's quite fair and reasonable to make the scouts and the hall (or, more likely, their insurance companies) pay for at least some of what little Billy and his parents have had to bear.

Lawyers don't have magical powers of persuasion, and for every plaintiff's lawyer trying to get a jury to award damages there's a defendant's lawyer trying to do the opposite. The basic problem (if it's a problem) is that when faced with an injured plaintiff and a corporate defendant (who the jury suspects has insurance anyway), juries tend to want to award damages. They don't like telling little Billy that "hey, you eat Mrs. Johnson's potato salad, you takes your chances," and they don't want poor Mrs. Johnson to bear all that burden, either.

 

[drkitten]

But who is the "you" here?

I know everyone likes to blame lawyers, insurance companies, etc., but the thing that drives the entire system is juries.

[...]

The basic problem (if it's a problem) is that when faced with an injured plaintiff and a corporate defendant (who the jury suspects has insurance anyway), juries tend to want to award damages. They don't like telling little Billy that "hey, you eat Mrs. Johnson's potato salad, you takes your chances," and they don't want poor Mrs. Johnson to bear all that burden, either.

And I'm not convinced that it's a problem.

If the Cub Scouts decided to go on a rafting trip, but said "hey, we're too cheap to buy first aid kits or life vests, so if you want them, bring your own," we'd all recognize that as an unacceptably irresponsible way of doing business.

Pot luck suppers are safer than rafting trips, safe enough that many people are willing to pretend that problem don't occur. But pretending that problems don't occur is a surefire recipe for being unprepared when they do.

 

[Dunstan]

And I'm not convinced that it's a problem.

If the Cub Scouts decided to go on a rafting trip, but said "hey, we're too cheap to buy first aid kits or life vests, so if you want them, bring your own," we'd all recognize that as an unacceptably irresponsible way of doing business.

Pot luck suppers are safer than rafting trips, safe enough that many people are willing to pretend that problem don't occur. But pretending that problems don't occur is a surefire recipe for being unprepared when they do.

Right, and everyone's going to draw the line differently. It's hard to come up with a clear legal rule that's going to prohibit lawsuits over failure to ensure food safety for a potluck supper but allow them for failure to provide adequate rafting equipment. Or the thousands of other potential liability situations. We tend to fall back on general principles like "reasonableness" and "foreseeability," and that means leaving it up to a judge and/or jury to decide what is reasonable, foreseeable, etc. in any given situation. And since you can't predict with certainty how a judge, let alone a jury, will decide any particular situation, that means there is a litigation risk that the parties have to deal with.

 

[Darth Rotor]

What do you mean, "the risks are being overstated"?

If you look at Dunstan's case example, it's a risk easily mitigated, reduced, or eliminated. You have risk frequency and risk severity, and risk mitigation in any risk management strategy.

Funny, I used to teach that.

DR

 

[drkitten]

If you look at Dunstan's case example, it's a risk easily mitigated, reduced, or eliminated.

And the easiest way to eliminate the risk is to eliminate the risk-causing events (the potluck). That's much easier than requiring potential renters to fill out several pages of forms that are likely to require court action to enforce anyway.

But that's what Meadmaker is complaining about. The halls are taking the most effective risk mitigation strategy they have available. Rather than taking steps on his own to make other solutions equally practical and effective, he's complaining that the halls are acting rationally.

But that's just what You have risk frequency and risk severity, and risk mitigation in any risk management strategy.

Funny, I used to teach that.

Several of us have. Some of us still do.

 

[Darth Rotor]

And the easiest way to eliminate the risk is to eliminate the risk-causing events.

Sure. Assume the fetal position, and don't leave the house. Never mind the trivial risk mitigation actions that prevent people getting ill, let's get draconian.

We are not having the same conversation, so I'm done here.

DR

 

[ponderingturtle]

Sure. Assume the fetal position, and don't leave the house. Never mind the trivial risk mitigation actions that prevent people getting ill, let's get draconian.

We are not having the same conversation, so I'm done here.

DR

THe thing is that the people who own the hall can not perform any of the actions needed to insure that the food is safe. They are depending on the organisation that is renting the space to enforce such things on those who bring something to a potluck.

So they are still in a situation were they are accepting liability for something that they don't have control over.

 

[leftysergeant]

There should obviously be a difference in the way that a for=profit entity and an individual are treated in cases of liability.

Criminal conduct in either case should be an open door for the raiders to come in and clean out the assets of the offending party.

Awards based on incompetence on the part of an individual should be limited to actual damages and such non-monetary compensation as would be reasonable. To this extent, it should take into consideration the wealth of the victim and the offending party, with the wealthier paying more to the less wealthy.

In the case of a commercial oiperation, damages should be set higher, because there is the expectation of safety and ethics. There is no room for an unethical industry when the ecconomy is as fragile as this one. Tort deform will just let the unethical and slip-shod industries continue to gobble upp the more meticulous.

 

[drkitten]

Never mind the trivial risk mitigation actions that prevent people getting ill, let's get draconian.

Refusal to rent the hall is pretty trivial. I'm not sure what other options you even have to make sure that Mrs. O'Malley doesn't leave her tuna casserole in the trunk of the car for two hours before bringing it to the potluck.

.... but I'm fairly sure that whatever options you would suggest would be much more time-consuming and difficult than simply saying "no."

 

[MikeMangum]

I don't disagree, but I really think the crazy pants lawsuit is an extreme example, because I really think nothing could have helped that situation. The plaintiff was either crazy or stupid or both - he believed his case had merit in law and fact. The threat of disbarment for a frivolous lawsuit will not deter a man who believes his lawsuit is not frivolous.

Actual disbarment would deter him, however.

 

[MikeMangum]

This is what I consider a frivolous lawsuit. Basic synopsis: women's daughter is killed in car accident because man is talking on his cell phone, woman sues cell phone manufacturer and service provider for damages.