Understanding the Effect of Tort Cases on the Plaintiff and the Respondent and Why there are a need for Tort Reform - Essay Example

?Understanding the Effect of Tort Cases on the Plaintiff and the Respondent and Why there is a need for Tort Reform Facts of the case: In 1992, Stella Liebeck of Albuquerque, New Mexico, sat on the passenger seat of her grandson's car with a Styrofoam cup filled with steaming coffee between her knees. He grandson stopped the car for while to allow his 79 year old grandmother to add sugar and cream on her coffee. However, as Liebeck opened the lid of the Styrofoam cup, the coffee spilled unto her lap and the liquid was absorbed into her sweatpants. As the soaked sweatpants clung to Liebeck’s skin and she suffered from third-degree burns on about 6 percent of her body. Her inner thighs, buttocks, perineum, genital areas and groin were severely burned that she had to be admitted for treatment to the hospital for 8 days. While in the hospital for treatment, Liebeck went through skin grafting and debridement treatments. Liebeck filled a claim with McDonalds for $20,000.00, but McDonald refused to pay the said amount so Liebeck brought the case to court. During the discovery proceedings, McDonalds produced documents showing more than 700 claims by people burned by its coffee between 1982 and 1992 and a number of these claims were similar to that of Liebeck. The documents presented by McDonalds proved that McDonalds knows about the hazards that its coffee products have on drive-thru costumers. McDonalds’ quality assurance manager also said that based on the advice of its consultants, the company made it a policy to keep its coffee between 180 and 190 degrees Fahrenheit to keep its taste. This policy stands even though other companies serve their coffee lower temperature and coffee is normally served at home around 135 to 140 degrees. McDonalds’ quality assurance manager admitted that the company did not evaluate the safety ramifications that this practice may have on the costumers. He also acknowledged the fact that any food items served as 140 degrees or more may cause burning. He also acknowledged the fact that since McDonalds’ coffee is between 180 and 190 degrees, the coffee is not fit for consumption as it would cause burning on the mount and throat. 2. Issues to be decided by the court a. Whether or not Liebeck is entitled to compensation for the pains and sufferings that she went through after she was burned by the coffee bought from McDonalds. b. Whether or not McDonalds observed proper safety measures to protect its clients from possible harm that its products may cause. 3. Facts Relied Upon by Stella In arguing her case in court, Liebeck relied on the testimonies of a scholar in thermodynamics applied to human skin burns. According to the expert, 180 degrees, liquids can cause third degree burns in a matter of two to seven seconds. The degree of the damage on human skin reduces exponentially as the temperature of the liquid reduces to 155 degrees and below. If Liebeck’s coffee had been around 155 degrees when it spilled on her lap, she may not suffer serious burns. 4. McDonald’s Defense McDonald claimed that its costumers buy coffee on their way to work or home with the intention of drinking the coffee once they arrive at their destination. As it is, the coffee would have enough time to cool down along the way so it will not be scalding hot when the costumers get to drink them. Another defense posed by McDonalds is that its costumers know that the coffee they buy from the drive-thru is hot and the costumers want it that way. 5. Court Decision The jury awarded Liebeck $200,000 in compensatory damages and another $2.7 million in punitive damages. The compensatory damages were later on reduced by the jury to $160,000 since Liebeck was also at fault. The trial court, on the other hand, reduced the punitive damages to $480,000.00. 6. Opinion on the case Awarding both compensatory and punitive damages to Liebeck is only fitting in this case because McDonalds committed gross negligence in doing its job to protect its costumers. However, I do not agree with the jury’s decision to impose excessive punitive damages on McDonalds despite the fact that the company may have made some acts of negligence in not warning its costumers about the hot coffee. According to the court in the case BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), the degree of the reprehensibility of the defendant’s act should be taken into consideration when setting the amount of punitive damages. 7. Tort Reforms Needed The United States tort laws establish the rights, obligations and remedies available to persons have suffered pain, economic losses and the like due to the wrongful acts of others. For tort actions to prosper in the United States, three elements must be established, namely, the existence of a duty of care, the failure of the other to perform the duty of care and due to the failure of the other party to exercise the duty, the aggrieved party suffered injuries or loses. According to the court in the case of United States v Carroll Towing Co 159 F. 2d 169 (2d. Cir. 1947), breach is ordinarily established when there is failure to exercise reasonable care. The three elements required by law are present in the case of Liebeck, however, some people believe that the case of Liebeck demonstrate the excessive use of the right to sue and recover damages. Many believe that the case of Liebeck is a poster child from excessive lawsuits and some scholars even venture to call this case as “frivolous lawsuit” (Greenlee, 1997). Note that the case of Liebeck hinges on the idea that McDonalds should not serve very hot coffee to its costumers to avoid causing injuries to costumers. According to the court in this case, the scalding hot liquid is not fit for consumption so McDonalds should pay damages for the injuries suffered by Liebeck. The idea that McDonalds should not serve hot coffee or tea was not accepted by the English Court when it decided the case of Bogle v McDonald’s Restaurants Ltd. [2002] EWHC 490 According to the court in this case, if the submission that McDonald’s should refrain from serving hot coffee to avoid scalding its costumers, the coffee or the tea would lose its flavor and its costumers will not be satisfied with its service. According to the English court, tea or coffee need to be prepared using boiling water and most people prefer to have their tea or coffee hot especially during cold weather. The court also noted that most people have the sense to allow their coffee to cool down before they drink it so the danger of being burned by the hot liquid can easily be averted. The case of Liebeck sparked a lot of discussions on whether or not the tort law systems of the United States should be changed. According to the proponents of tort change, the tort system that needs to be changes because lawsuits have serious economic effects on the persons or entities involved. a. Tort Reform Arguments Because companies are afraid of paying the cost of litigation and compensation from their own pockets, these companies take out insurance coverage for these types of expenses (Greenlee, 1997). In turn, the insurance companies knowing the high cost of litigation and compensation, raises the cost of insurance premiums. Proponents of tort reform stress that if tort laws are designed in such a way that expensive litigations can be minimized or even avoided, the general public can benefit from the lower cost of insurance premiums (Greenlee, 1997; Congressional Budget office, 2003). Yet, although the logic of lower insurance premium may be acceptable to many, a number of people who are against tort reform do not agree with this argument. According to those who oppose tort reform, the fact that costumers can sue a company for failing to exercise the duty of care extends a large amount of protection to the public (Cane, 2006). If the right to sue for damages is weakened, diminished or removed, the general public will no longer have protection against unscrupulous companies. Another economic argument that tort reform advocates posed is that the current tort system invites too many litigations and such situation can inhibit innovations on the part of the manufactures and service providers (Huber and Litan, 1997). The fear that innovations can spark lawsuits can hamper development, thus, many people advocate for tort reforms. Many advocates for tort reform believe that the present tort system is too expensive both for individuals and companies and since filing a case in court is easy, a lot of frivolous lawsuits clog the system (Congressional Budget Office, 2003). Note that court procedures cost money and the resolution of each case filed in court take up a certain amount of time and resources from the government. When the courts are clogged with frivolous lawsuits, it may not be able to give enough time to resolve more meritorious case in an efficient and timely manner. According to the study conducted by Towers Perrin, the cost of resolving tort cases in the United States significantly increase year after year (Towers and Perrin, 2008). The same report starts that the increase in the cost of tort cases in the country had steady increased since the 1950s. Moreover, the fact trial lawyers often get one-third of any compensation for damages make lawyers prosecute aggressively even if they know that the case is not meritorious. This practice often results to the awarding of large sums of money to compensate for minimal damages. As in the case of Liebeck, the jury awarded Liebech a 2.7 million in punitive damages despite the fact that the plaintiff committed contributory negligence. Aside from the economic burden brought about by the present tort system, limits in the non-economic damages are also an issue which the proponents of tort reform want to address (Greenlee, 1997). According to the proponents of tort reform, the non-economic damages caps is necessary to place limits on the ability of the jury to award damages to the victims for the pains and sufferings caused. The aim of this cap is to promote fair compensation to the victims without imposing excessive burdens on the part of respondents. According to Glassman (2004), emotionally-driven jury sometimes award huge amounts of money as for compensatory damages and punitive damages to plaintiffs without really looking into the economic impact that their decisions may have on the company. Note that high cost of litigation and compensation can drive a company to bankruptcy and when this happens, several people will lose their jobs. Also, when companies are made to pay high big money on litigations, these companies will seek to recover the cost thereof by increasing the prices of their goods and services. As it is, more people will be affected simply because the jury became emotional and awarded an unreasonably big amount of compensation to the plaintiff. Another point is that high profile tort cases often attract a lot of media attention that some people now use the tort system as a means to regulate certain activities (Greenlee, 1997; Cane, 2006). For instance, when Congress is unwilling to pass regulations governing the processing of certain products, filing a class suit to recover huge amount of compensation for damages due to sufferings and losses incurred by certain group of people who used these products can affect the production process of these products. As earlier mentioned in this essay, litigation can be very expensive and it can drive certain companies to bankruptcy so if many people file complaints against a certain product of a company, the company may drop that product line to avoid more lawsuits. If the government caps the amount of compensation awarded to victims in tort cases, companies need not pay unreasonable amounts and will be able to continue its business. While there are many who favor capping the amount of compensation that the jury may award to the victim, there are also a number of people who oppose the cap. According to Greenlee (1997), capping the non-economic damages will reduce corporate accountability and some scrupulous companies may get away with unsafe practices simply because they cannot be made to may high punitive damages. b. Why Awards Should be Limited There are a number of reasons why awards for non-economic damages should be capped. For some people, capping the awards for non-economic damages would ensure that the justice system will not be turned into a “lottery” where victims can expect a large amount of money after winning the case (Glassman, 2004; Cane, 2006). Because there are so many people out there who think that they can use the tort system to get money, more and more frivolous cases will be filed in court and the government waste valuable resources to resolve these cases. Aside from turning the tort system into a “lottery”, many people now turn to the tort system to indirectly regulate certain industries (Cane, 2006). This situation is not healthy and the court should not be turned into a kind of regulatory agency that issues verdicts to stop certain companies and organizations from performing certain activities through the imposition of costly fines and compensation for damages. Another reason why the awarding of non-economic damages should be capped is that the cost of litigation is often passed by the company to the insurance companies and to the health care system, as the case may be. As it is, when the cost of litigation goes up, the cost of insurance premiums may also go up. The rising cost of insurance premiums can have a domino effect on different stakeholders and in the end some people may not be able to afford to get insurance coverage. Moreover, when companies pay too high insurance premiums, they will be forced to increase the prices of their goods and services so people will have to spend more money these things. Aside from pushing the prices of insurance premiums up, the high cost of litigation can also hamper development and innovation. According to Glassman (2004), when we allow the jury to award huge amount of non-economic, an emotional jury may sympathize too much with the victim and they will seek retribution by awarding huge amounts of compensation for damages to the victim. Saddled with the burden of high litigation costs, a company may decide to forgo some of its product development activities or simply close its business. Note that companies do not have unlimited resources to pay anyone who claim to be aversely affected by its actions or inactions so it is only fitting that the awarding of damages must be done equitably. c. Should Caps apply to all Cases? To be effective, the law must be applied uniformly so caps for non-economic damages must be applied equitably. To apply the law equitable, all persons and entities that are in the same situation or circumstance must be treated in the same way, without exceptions. Yes, it is important to protect the general public against unscrupulous companies and organizations but the system should not be overly biased towards the public to prevent abuses. In the same way, the tort system must not give companies and organizations too much leeway that they will be tempted to cheat and abuse the system. In other words, there should be a check and balance in the application of the laws to prevent injustices. To promote justice and fairness, before the jury or the court awards compensation to the victims, it should look into the important issues surrounding the case, the degree of culpability of both parties, the degree of damages suffered by the victim and the impact that the awards may have on the general public. d. Application of non-economic damages caps to Liebeck’s case Tort reform is an issue that we need to address in order to protect both the victims and the respondent. Although the victims have the right to be compensated for the pains and losses they suffered due to the acts or omissions of another that does not mean that they are entitled to very large settlements that are way beyond the damage they suffered. As in the case of Liebeck, the amount of punitive damages awarded by the jury to the victim is way too high compared to the damage caused which make the award inequitable. Note that the actual damages suffered by the victim was already fairly compensated when the jury awarded her $200,000 for actual damages so the imposing another 2.7 million punitive damages is quite excessive. As the court pointed out in this case, there is a need to look at the degree of the wrong committed by the respondent when awarding punitive damages to victims. In the case of Liebeck, McDonalds is in the business of serving fresh food items that its clients can enjoy. If McDonalds holds its coffee at a lower temperature, the coffee will lose some of its flavor and its customers may not enjoy drinking it anymore. Holding coffee at a temperature of more that 150 degrees is not evil in itself and the costumer has the responsibility to exercise due diligence in protecting themselves from harm. Although McDonalds may have erred in not putting warning signs on the coffee cup but that does not mean that it intentionally wanted to harm its costumers. In cases like Liebeck, both the victim and the respondent are at fault so there is a need to balance things in such a way that both parties get what they deserve. Awarding too high compensation for non-economic damages in the case of Liebeck would have been inequitable as it will unreasonably punish McDonalds for wanting to satisfy its customers by serving hot coffee. Note that when the courts punish companies and organizations who try to please their customers, these companies will stop trying to find innovative ways to improve their products and services. Once this happens, certain industries may die out and people will lose their jobs. References BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996) Bogle v McDonald’s Restaurants Ltd. [2002] EWHC 490 Cane, P. Atiyah's Accidents, Compensation and the Law. 7th ed. Cambridge University Press, 2006. Congressional Budget Office. The Economics of U.S. Tort Liability: A Primer. 2003. 8 March 2011 http://www.cbo.gov/doc.cfm?index=4641&type=0 Glassman, A. D. “The Imposition of Federal Caps in Medical Malpractice Liability Actions: Will They Cure the Current Crisis in Health Care,” 37 Akron L. Rev. 417, 2004. Greenlee, M.B.. “Kramer v. Java World: Images, Issues, and Idols in the Debate Over Tort Reform.” 26 Cap. U.L. Rev. 701, 1997. Huber P.W. and Litan, R. E. eds.,. The Liability Maze: The Impact of Liability Law on Safety and Innovation. Washington, D.C., 1997. Johnson, D. The Attack on Trial Lawyers and Tort Law. 2003. 8 March 2011 http://commonwealinstitute.org/archive/the-attack-on-trial-lawyers-and-tort-law-1 Liebeck v. McDonald's Restaurants, P.T.S., Inc., No. D-202 CV-93-02419, 1995 WL 360309 (Bernalillo County, N.M. Dist. Ct. August 18, 1994) Towers and Perrin U.S. Tort Costs Up Slightly in 2007; Significant Increases Anticipated for 2008 http://www.towersperrin.com/tp/showdctmdoc.jsp?country=usa&url=Master_Bra nd_2/USA/News/Spotlights/2008/Nov/2008_11_19_spotlight_tort_costs.htm United States v Carroll Towing Co 159 F. 2d 169 (2d. cir. 1947) Waites, R.C. Courtroom Psychology and Trial Advocacy New York: American Lawyer Media, 2003. Read More