The saga continues...

Mr. Frank's comments in black, mine in red.

1. Q. How did you determine the jury was instructed incorrectly?

A. Because the jury was instructed at all. Again, read Bunn-O-Matic. It's not worth discussing this further until you can tell me why you disagree with the court's ruling in that case. And I have yet to meet someone who can explain why the Bunn-O-Matic case isn't dispositive of the Liebeck lawsuit.

Bunn-O-Matic (Bunn, hereafter because I'm lazy) is distinguishable from and not dispositive of Liebeck for a litany of reasons.  Here are four:

1: McMahon's injuries were clearly caused by a defective coffee cup that Bunn did not manufacture. 

2: Bunn didn't serve McMahon the coffee. 

3: Bunn didn't even make the coffee, a Mobil employee did.  In my mind, the suit against Bunn would be akin to suing the manufacturer of the machine that manufactured Vioxx or a defective Firestone tire.

4: This is speculation, but I'm confident that the machine that brewed the coffee in Bunn was an industrial model, not a home model.  As such, its intended market was for a more sophisticated purchaser than the average consumer: restaurant owners.  I have no way of knowing what warnings, if any, were included in the instructions for the coffee maker.  Bunn's instruction manual may have explicitly warned the purchaser of the coffee maker about the potential for third-degree burns.  If Bunn was liable to anyone, it would have been to Mobil, but that's probably a stretch, too. 

If I had to hazard a guess, I'd say that Bunn was a defendant only because it had deep pockets. 

2. "700 people were injured by the product" [in ten years]

A. McDonald's isn't liable unless their product is unreasonably dangerous. If the number of injuries from the product is statistically insignificant, it's not unreasonably dangerous. That's the end of the story. Noting this fact is a reason to throw out the case, not to impose punitive damages.

But the question in Liebeck was if the product was defective, not if it was unreasonably dangerous.  What did McDonald's sell the coffee for?  To drink.  A McDonald's executive testified the coffee was unfit to drink.  That's prima facie evidence the product was defective.

Were punitive damages warranted?  The jury thought so, but the judge didn't.  Hence, they were thrown out.  The checks and balances inherent in our justice system worked.

In the last ten years, over FOUR HUNDRED THOUSAND people were KILLED by automobiles. Not injured. Killed. Are automobiles inherently unreasonably dangerous?

In the last ten years, about one hundred children have been KILLED by five-gallon buckets. Not just injured. Killed. Are five-gallon buckets unreasonably dangerous?

I'm not going to fall for the diversion.  McDonald's was liable in Liebeck because they admitted their product was unfit for its intended purpose; it was found to be defective not unreasonably dangerous.

The point is that 700 burns--the vast majority of which were minor--is not that many. It's not a reason for a company to change its behavior when the attribute that is causing the injury--the heat of the coffee--is precisely the attribute that makes the coffee commercially desireable. People don't have to buy hot coffee. (I don't. I don't like hot beverages.) There's orange juice, there's diet soda, there's water, there are all sorts of other items to quaff. It's not like McDonald's is adding a tasteless, odorless chemical that burns seventy people a year; the coffee burns because coffee is hot. If a McDonald's employee spills the coffee on someone, they should be liable for that. If a McDonald's coffee spills and burns because the cup breaks, that's McDonald's fault, and they should pay. If a McDonald's customer spills coffee on herself, however, it's her fault, not McDonald's, no matter how badly she's burned.

You know as well as I that whether a person buys a product voluntarily instead of through coercion has nothing to do with the seller's liability. 

One theory of liability I would have investigated is this: Liebeck was injured trying to remove the lid to add cream (or was it sugar) to her coffee.  It's obviously foreseeable that consumers would do this.  Should McDonald's have specified a lid that would have allowed consumers to add cream or sugar without removing the whole lid?  I know many vendors have flaps on their lids today for that very reason.  I don't know if McDonald's did back then.

If McDonald's coffee is unreasonably dangerous because 70 people a year out of over a billion suffered some sort of burn from it (heck, I burn myself at restaurants or cooking two or three times a year), then EVERYTHING is unreasonably dangerous, and the concept is meaningless. No reasonable jury, correctly instructed on the concept of "unreasonably dangerous" can find McDonald's coffee unreasonably dangerous: so the case shouldn't even go to the jury.

Here are the relevant excerpts from the McDonald's verdict:

"1. On Plaintiff's claim for product defect, for Plaintiff;

2. On Plaintiff's claim for breach of the implied warranty of merchantability, for Plaintiff;

3. On Plaintiff's claim for breach of the implied warranty of fitness for particular purpose, for Plaintiff;"

Nowhere do I see "unreasonably dangerous."  Instead, I see the jury found that McDonald's intended its coffee to be consumed by a human, and that they believed the executive who testified the coffee was unfit for human consumption. 

So what exactly is the benefit of refusing to implement the straightforward reform of loser pays?

Again: it's balancing costs and benefits.

How about because we don't even have a winner pays system?  It's not uncommon for a plaintiff to win its case, but not even have all of its economic damages covered by the verdict.  And expert witness fees also have to be deducted from the verdict, too.  So why should we implement a system where a losing plaintiff has to pay the defendant's expert witness costs, if a losing defendant doesn't have to pay a winning plaintiff's expert witness costs?

A. Sure you can. You, Justinian, do it all the time. Do you drive 70, or do you drive 55, or do you stay off of the highway entirely? Did you spend a little extra to buy a car with side air bags? Do you spend a little extra to fly, instead of drive, a long distance? Did you pay a little extra to live in a neighborhood where you'd be less likely to be murdered? Do you use your cell phone in the car?

Every day, you're making implicit economic decisions that reveal that an X% chance of death is worth more than or less than Y dollars to you. Every day, the government (and the voters that chose that government) is making the same calculus in deciding between the wealth and health of its people. We could save 10,000 lives a year by a national 30 mph speed limit, but society clearly agrees that those lives wouldn't be worth the cost--as demonstrated by the celebration when the 55 mph speed limit was lifted.

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. 

You'd agree that we should not tax the citizenry to spend a trillion dollars to save one life, right? Fifty billion, right? Probably not even fifty million--I'd be surprised if your own set of life choices showed a revealed preference that a life was worth more than seven digits.

In any event, you misrepresent the caps. No one is proposing to cap total damages at $250,000.

A trillion dollars is fine if it's my life. :) 

I know that no one is trying to cap economic damages.  I don't think I've ever made a claim to the contrary.  But economic damages have nothing to do with the value of a human life.  I personally believe that all men are created equal, and as such, each life has an equal value - priceless. 

Putting a price on human life via capping damages demeans us all and steals our humanity.  It could also lead to a situation like this:

Imagine that a doctor horribly botches surgery on a young housewife and renders her sterile.  She doesn't have a job, so her economic damages are limited to her medical expenses.  Her noneconomic damages are capped at $250k - that's what the law says her loss of the ability to have children is worth.  Now imagine that a veterinarian botches a surgery on the mare Santa Catarina, rendering her sterile.  In 2004, that mare sold for $4.8 million dollars.  Santa Catarina's owner could collect nearly $5 million in economic damages because the horse is worthless.

Any law that places greater value on a horse's ability to reproduce than a human's is unjust, unfair, and unconscionable.

7. Q. I'm confident that [insurers] pocket whatever savings tort reform enacted.

A. This reflects a fundamental misunderstanding of economic principles. At any rate, it's simply not true. Premiums are directly related to loss rates. As you should know from pointoflaw.com, nationwide in 2003, medical malpractice insurers faced $1.375 in defense costs, judgments, and settlements for every $1.00 in premiums they collected. Reforms in Texas reduced malpractice insurance rates there 17% off the bat. Premiums are high because the tort system is ridiculously expensive and inefficient.

I grew up in Vegas, and it always made the news when a casino would finish paying off its construction loans.  Funny thing, though: None of the casinos ever passed the savings onto their guests in the form of lower prices or increased payout frequencies.  Instead, they passed the savings on to their shareholders or owners in the form of profit.  I guess the casino owners had a fundamental misunderstanding of economic principles. 

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.  Numerous malpractice insurers have filed for rate increases after tort reform went into effect because they saw little or no savings from tort reform.  Other insurers have even said that damage caps raise costs because it gives plaintiffs a target to shoot for.

So if neither the American Tort Reform Association nor malpractice insurers claim that tort reform will lower premiums, why should I think it will?

8. I'm aware of Toro's program. I'm working on an article about it, the gist of which I won't discuss yet. But even if I'm wrong, and Toro is adopting the appropriate approach, they're in a relatively favorable situation where their products are responsible for a low number of relatively uncontroversial and relatively minor discrete injuries from discrete incidents. It doesn't work in the case of asbestos, or drug interactions, or complex torts.

I'll be on the lookout for the article.

Comments

[Ted]

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

I'll start with the last three. You suggest that Bunn is different than McD because Bunn is a manufacturer, while McD served the coffee. This is correct; indeed, the court noted the distinction, and expressed amazement that the parties failed to do so. Bunn waived that argument before the court. The plaintiff and Bunn agreed to treat Bunn just as if Bunn were in the shoes of the gas station. "[B]oth sides in this case treat Bunn and the retailer as identical.  We proceed on that basis..." So, while these are arguments Bunn COULD have made (and probably could have made successfully), they are not the reason the court decided the case in favor of Bunn.

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).

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.

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?

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.

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.

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.

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

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.

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?

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.

"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

There's a reason that ATLA relies on misquotes instead of actual data.