Continuing the discussion with Mr. Frank again

Same drill - Mr. Frank in Black, me in Red.

1. Is Bunn-O-Matic distinguishable from Liebeck? You give four reasons.

Your first reason is the most fascinating. You suggest Bunn should not be liable because the coffee cup was the cause of the injury, not the coffee. But how does that differ from Liebeck? In Liebeck, Liebeck was the cause of the injury, not the coffee. If the intervening cause of the cup is enough to insulate Bunn from liability, why is it not enough to insulate McDonald's? Why couldn't a jury divide the liability between the cup manufacturer and Bunn (standing in the shoes of the retailer).

Liebeck was the cause of 20% of the injury, according to the jury.  The other 80% was the fault of McDonald's for selling a product they admitted was unfit for its intended purpose and was therefore defective.  Did the jury apportion fault incorrectly?  I don't know - I wasn't present at the trial, I don't know what evidence was introduced or excluded, I don't know what the parties stipulated to, and I don't know what the witnessess testified to.  Without having access to the same information the jurors had, I'm not qualified to substitute my own judgment for theirs. 

Why couldn't the jury have divided liability between the manufacturer of the cup and Bunn (standing in Mobil's shoes)?  None that I can see.

So you haven't distinguished the cases yet. Three of the four reasons ignores the court's reasoning in Bunn, and the fourth applies equally to Bunn and McD. Nor have you explained why Bunn is wrong.

To me, the easiest way to distinguish the cases is the fact that McDonald's admitted the coffee was unfit for human consumption - defective - and Bunn did not.  It's pretty hard to convince a jury your product isn't defective when your own executives say it is. 

Fascinating that you point out the deep pockets; isn't that the reason McDonald's was sued, rather than Liebeck acknowledging it was her own fault for spilling coffee on herself?

Again, Liebeck was 20% at fault.  McDonald's was sued because they manufactured and sold the product.  Their deep pockets were just an added bonus.  If deep pockets were the goal, Liebeck would have also sued the coffee pot manufacturer, which may well have been Bunn.

2. To be defective, a product must be "unreasonably dangerous." And the judge reduced, not eliminated, the punitive damages. If the coffee is so "unfit", how come billions of cups are served? You try to create a new theory of liability over the lid, but, even aside from the reasons why that is improper, that wasn't the basis of the lawsuit.

A product doesn't have to be "unreasonably dangerous" to be defective.  You used buckets and cars as examples; a bucket sold with a hole in it is defective, and a car that won't start is defective.  The coffee was sold as a beverage to drink.  McDonald's admitted it was unfit as sold for that purpose.  Thus, the jury found McDonald's breached the implied warranty of merchantability and implied warranty of fitness for a particular purpose.  Was their coffee dangerous?  Probably.  Unreasonably dangerous?  Probably not.

3. You dodged the question of loser pays. You haven't identified a single case where tort reform prevents a plaintiff from recovering economic (as opposed to non-economic) damages. In loser pays, the loser would pay for the other side's experts.

You're advocating a different model of loser pays than what I often hear suggested - many tort reformers don't think the defendant should have to pay expert fees in addition to a jury verdict.

I oppose a loser pays model for the usual reasons:

1: Plaintiffs would be discouraged from suing in any instance where liability could reasonably be questioned.

2: It would benefit those who hire attorneys on an hourly basis at the expense of those who hire attorneys on a contingency basis.  Unless you're suggesting a loser should have to tack on another 1/3rd of the verdict to cover a contingency fee.

3: Unscrupulous insurance adjusters would use loser pays as a way to discourage injured persons from hiring an attorney or suing. "You should really take this offer, because if you go to court and lose, it might cost you your home.  Do you really want to take that risk?"

As for tort reform and economic damages?  Tort reform itself isn't the culprit, but at least two studies I'm aware of have shown that the "runaway juries" and "frivolous lawsuits" campaigns have reduced the willingness of juries to fully award economic damages.  However, I'd like to once more state that to the best of my knowledge, I've never claimed that tort reform will cap economic damages.  If you've seen a post where I have, please let me know and I'll certainly correct it. 

4. "The difference here is that I gamble on the chance of death or injury when I do 70.  That has nothing to do with the monetary value of my life. "

It has EVERYTHING to do with the monetary value you place on your life. If you valued your life at a trillion dollars, you wouldn't drive 70, because the benefit of driving 70 would be outweighed by the increased risk of death from the increased speed.

Everything I do in life is a risk: I could fall down the stairs, drown in the bathtub, be hit by a bus, etc.  But if I died, and God gave me an opportunity to undo my death in exchange for every penny I have, I'd gladly do it.  Or in a more realistic example, there's no dollar amount I wouldn't give someone holding me hostage.  I think most people feel the same way.

If life is immeasurably valuable, then how would you propose damages to be established?

By letting juries decide on a case-by-case basis.  I'll spare you the standard rhetoric about noneconomic damage caps being unfair to women, minorities, students, etc.  Instead, I'll ask you what you think a fair cap is, and why?

5. The example of the horse is fascinating. But why stop at horses? If I set fire to an office building and do $200 million dollars worth of economic damages, I'd be liable for $200 million dollars. Is it immoral to say that a person's life is worth less than an office building? If so, does that mean that there should be a floor of $200 million for any death caused, because it would be immoral to value a person's life less than an office building? You make a nice rhetorical trick, but the horse isn't being valued as a horse, it's being valued as an economic asset in the litigation you mention.

My rhetorical trick is no worse than your efforts to force me into arguing coffee is unreasonably dangerous.  ;)

Should noneconomic damages have a floor of $200 million?  No - that would bankrupt society in a hurry.  But $250k is a joke.  Again, what cap would you suggest?

6. "None of the casinos ever passed the savings onto their guests in the form of lower prices or increased payout frequencies."

Again, you misunderstand how prices are set. Prices are set by supply and demand. If costs go down, insurers cannot make unusually high profits, because other insurers will want their business, and compete the high prices down. Can I guess that you haven't had Econ 101 yet?

Yes, I've been through Econ 101 and 102.  But basic principles of supply and demand don't apply to the insurance industry as they do to the rest of the world.  Have you read "Premium Deceit" by J. Robert Hunter? 

If construction costs go down, then more casinos will be built, and the casinos will compete for the pool of customers with lower prices or increased payout frequencies. So there is a relationship. It won't be direct, but it will be there. I've been to Las Vegas a dozen times, and only had to pay for a room once.

My argument is that businesses do not lower their prices as an automatic response to a cost savings.  They lower their prices if it will benefit them financially.  I'll again bring up "Premium Deceit," as it makes a strong case for the argument that insurers won't lower premiums in response to tort reform.

"Such tort reform supporters as Sherman Joyce, Victor Schwartz, and Donald Zuk, have all publically stated in one way or another that tort reform will not lower insurance premiums."

This is absolutely false, and was refuted on pointoflaw. http://energycommerce.house.gov/107/hearings/07172002Hearing648/Schwartz1122.htm

I'm going to the library this weekend and see if I can track down Schwartz' and Joyce's purported quotes.  If they don't exist, or are used in an improper context, I'll thank you for pointing that out to me. 

However, GE Medical Protective filed for a 19 % rate increase in Texas after the 2003 tort reforms, stating that "Capping non-economic damages will show loss savings of 1%."  Are they lying?

Comments

[Ted]

1. You acknowledge your first four distinctions are invalid, so you suggest a fifth: an admission supposedly made by McDonald's.

I seriously doubt McDonald's admitted that their coffee was unfit for human consumption. Why would they even litigate the case if they believed that? (I know the plaintiff's lawyer said that McDonald's said that. I suspect he's taking a misleading deposition question out of context. It's certainly not true in the legal sense.)

But let's go back to your distinction: are you admitting that McMahon v. Bunn-O-Matic was correctly decided? If Liebeck had spilled equally hot Starbucks coffee on herself, with the same injuries, and Starbucks refused to make the admission you allege happened, should the case be thrown out before trial?

If McMahon was incorrectly decided because it didn't allow a jury to divide liability between the coffee and the cup (it held that the coffee provider wasn't liable at all), why?

2. To recover for personal injury from a "defective" product design, most states require the design to be unreasonably dangerous. The New Mexico statute (13-1406) says "unreasonable risk of injury." Your acknowledgment that McDonald's coffee was not unreasonably dangerous demonstrates you agree that McDonald's coffee was not "defective." So we're one third of the way there.

Of course, if the coffee wasn't unreasonably dangerous, it can hardly be said to have breached its warranties--the same coffee Liebeck purchased was sold billions of times without incident, and there was no difference between that coffee and what Liebeck purchased. Coffee is supposed to be hot.

3. Please e-mail me links to the studies you're talking about.

4. But would you give every penny you own to eliminate a 1% chance of death? (I don't know how many pennies you have, so perhaps you would.) But, again, of course life is full of risks. The fact that we're willing to take those risks demonstrate that we place a finite value on life; I'll take the 1-in-a-ten-million chance of a car/plane crash to do some travelling or to go downtown for dinner, even though it'd be safer to stay at home and hide under the covers, and so on.

5. You seem to be saying that caps are not inherently unreasonable. I certainly would find $250k problematic in certain situations, though not the case of minor negligence in medical malpractice. I think the correct number is worthy of societal debate. Better we do it uniformly across the board (at least, in any particular state) through the democratic process than have one jury decide it should be $50 million and another decide it should be $100,000.

6. Why don't principles of supply and demand apply to insurers? It's clear that they do--lots of medical malpractice insurers have stopped writing new insurance because they can't charge rates high enough to cover their costs. Lots of medical malpractice insurers have entered the Texas market, because they think they can win customers by charging less than the incumbents.

I don't disagree that businesses don't lower their prices as an automatic response to a cost savings. But a cost savings will provide the economic pressure for competition to reduce prices.

GE Medical Protective's request for a rate increase was denied. I don't think their rate request shows anything other than that, in a regulated market where a public agency, rather than competition, sets prices, insurance companies have an incentive to make high rate requests. If they're poorly run (as their recent S&P ratings decline perhaps indicates--they're down to A- from AA- in late 2003), the ten new medical malpractice insurers who have entered Texas since reforms have been passed will take their customers. Also, the 19% was a lot less than the 90% it raised rates in Connecticut.

http://www.insurancejournal.com/news/southcentral/2004/04/16/41290.htm

Note that Texas is facing a backlog of medical malpractice suits, because lawyers rushed to file many before the tort reforms took place to take advantage of the old laws.

Again, in 2003, medical malpractice costs with $1.375 for every $1.00 in premiums collected across all insurers: Hunter is simply wrong when he claims that the current crisis is the fault of insurers. (Indeed, his reasoning is that insurers charged TOO LITTLE a few years ago, and are now doing a better job of classifying high-risk professions. This is small solace to doctors.) Most medical malpractice insurers are mutual societies consisting of the insured doctors. Are the doctors conspiring to charge themselves too much?

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