... a jury of her peers ultimately awarded Liebeck $160,000 in compensatory damages (for medical bills and the like) and $2.7 million more assessed as punitive damages against McDonald's.
About the Gourley case, Cohen says:
When Gourley's parents sued, Nebraska law capped their damages at a total of $1.25 million, an arbitrary figure far short of the $6 million the family established it needed to take care of their son for the rest of his life. A jury, which was not told of the state cap, had awarded the family $5.6 million to help pay for Colin's care.
Cohen believes the award in the McDonald’s case was appropriate and that Gourley’s parents should have received the $5.6 million the jury awarded them to care for their son. But these cases are substantially different: punitive damages are not the same as compensatory damages.
In the McDonald’s case, the jury believed McDonald’s was acting irresponsibly and wanted to encourage them to behave better in the future. I might argue that such encouragement would better come in the form of legislation but even if we grant that juries should be assessing punitive damages, why do they go to the plaintiff? Compensatory damages, yes: the McDonald’s customer may well have deserved repayment for the costs she incurred from coffee McDonald’s knew was hot enough to cause severe burns. And I have no objection to her attorney getting some cut of the punitive damages; we want people like her to be able to find lawyers. But why should the plaintiff get any of the money being assessed to encourage McDonald’s?
It seems to me that when the public opposes “frivolous” lawsuits what they’re really opposing is plaintiffs being able to actually make money by suing. If we do away with the profit aspect, then lawsuits are simply about plaintiffs being repaid for money they are out due to bad behavior on the part of the defendant. (I can't actually figure out where the punitive damages should go instead. Every idea I come up with has bad incentives for someone.)
The Gourley case is utterly different. No legislature should be capping compensatory damages. That’s insane. If someone’s bad behavior results in a financial loss or burden then the bad actor should pay up. The plaintiff can present his financial evidence, the defendant can counter with his own, and then the jury can - as Cohen argues they should - decide on a number.
What about pain, suffering, loss of reputation? Well, loss of reputation can sometimes be quantified and, if so, it should be; it can then be treated as a matter of compensatory damages. Beyond that, I’d say cap compensatory damages for pain, suffering, and loss of reputation at some fixed number like $1 million. Is it heartless to put a dollar limit on, say, the loss of a beloved spouse or child? Perhaps, but if so the heartlessness arises from an attempt to assign a monetary value to such a loss in the first place.
*****
Reading:
Break In by Dick Francis - A cautionary tale about (in part) a system in which a plaintiff whose suit does not succeed must pay the defendant’s legal fees.
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3 comments:
As an aside on the McDonald's case, I still do not understand a jury award that told the plaintiff her mind-numbingly stupid behavior of driving with a cup of coffee in her lap--a cup of coffee she knew to be extremely hot, as McDonald's at the time was bragging about their coffee's hotness in their advertising--should be rewarded. The suit should have been dismissed out of hand and the "lady" and her counsel sanctioned for bringing a frivolous suit.
On the larger question, what happens when you cap punitive damages (which redirecting them to somewhere other than the plaintiff would be), but uncap compensatory damages, instead? You shift the punitive amounts into the compensatory side. Trying to legislatively define "compensatory" has provided a sufficiently Byzantine legal structure as it is. Trying to "refine" that definition so as to lock out punitive funds altogether will only add complexity to that maze.
I lean toward doing away with punitive damages altogether. If an entity has behaved so egregiously that punishment is warranted, approach the punishment through a separate criminal trial. If a crime legitimately can be posited. If not, there's nothing, pretty much tautologically, to be punished.
In the McDonald’s case, the jury believed McDonald’s was acting irresponsibly and wanted to encourage them to behave better in the future.
The courtroom of a free market, with customers' aggregate decisions, is the only legitimate means of circumscribing behavior when that behavior is not criminal. Rudeness, bad business decisions, lack of concern for customers will bring sufficient punishment, and quite quickly.
I'm also spring-loaded to dismiss plaints of "pain and suffering." Far too often, this is just an excuse to be a professional victim and seek to get rich off an accident. In general, if you can't quantify the loss, you didn't suffer one. Lost your spouse to an avoidable accident? Lots of suffering from that, to be sure. I lost my spouse to the same--down to the veriest detail--sort of avoidable accident. I had lots of suffering from that, too. The losses are identical, but the sufferings are necessarily different, since we are different people and our circumstances post loss are different. On what basis should our losses be assessed? On what basis should our compensations be different? On what basis should our compensations be identical?
Eric Hines
Cohen made a number of points in his essay, two of which were: people have very strong opinions on the McDonald's case without an understanding of even the most basic facts and it's a violation of the underpinnings of our legal system not to trust juries to do their jobs.
On the first point, the woman who was burned by the coffee was not driving; she was a passenger. Further, McDonald's was in possession of documents that showed they had had 700 reports of burns from their coffee before her suit. Does that mean the plaintiff should have won? I'd say that's up to a jury, a jury in possession of full facts about the case.
Trying to legislatively define "compensatory" has provided a sufficiently Byzantine legal structure as it is.
Yes, but my point is that when compensatory damages can be quantified (as in the case of the child who was severely brain-damaged) they should be and the legislature should stay out of it. In other words, trust juries to understand the issues and make an intelligent decision.
When they can't be quantified, then legislatures can set simple, clear caps - or even amounts so the jury is simply deciding whether the plaintiff has proved his or her case. Insurance companies do - or did - this all the time. I can remember accidental death and dismemberment policies that would pay so much for death, so much for the loss of an eye, etc.
Trying to "refine" that definition so as to lock out punitive funds altogether will only add complexity to that maze.
I have no quarrel with punitive damages. I just don't think they should go to the plaintiff.
The courtroom of a free market, with customers' aggregate decisions, is the only legitimate means of circumscribing behavior when that behavior is not criminal.
Rather a radical idea. And I'm not convinced that we would be better served by more and more and more laws than we are by the relatively loose system of lawsuits we currently have.
The losses are identical, but the sufferings are necessarily different, since we are different people and our circumstances post loss are different.
Agreed. But the law is necessarily both imperfect and - we hope - indifferent to circumstance.
On the first point, the woman who was burned by the coffee was not driving; she was a passenger.
A valid point, but the larger problem was her negligence in holding a cup of coffee she knew to be extremely hot in her lap in a moving car.
McDonald's was in possession of documents that showed they had had 700 reports of burns from their coffee before her suit. Does that mean the plaintiff should have won?
Not at all. McDonald's should have won, due to the plaintiff's negligence. Hammer manufacturers also are fully aware of users smashing their thumbs with hammers. Should the manufacturers be held culpable for the actions of the hammer owners?
...trust juries to do their jobs.
And accept their outcomes. Including the Anthony case, just concluded, for instance. But that does not mean blind acceptance without questioning. Not only the lawyers should be post-morteming these outcomes for lessons learned. So should the general public. We're the ones who hire the lawyers, and we're the ones who originate the laws, through the representatives we elect to populate the government we've hired to work for us.
When they can't be quantified, then legislatures can set simple, clear caps.... Insurance companies do - or did - this all the time. I can remember accidental death and dismemberment policies that would pay so much for....
And so did health insurance companies. And such limits would become even clearer, were competition allowed to rear its ugly head in the insurance industry. Limits is an area where the legislature(s) generally are missing an excellent opportunity to shut up. But govermnet control of competition, rather than free market control, has been the meme since Wickard, and to some extent since Nebbia.
The courtroom of a free market....
...I'm not convinced that we would be better served by more and more and more laws than we are by the relatively loose system of lawsuits we currently have.
Actually, this was an argument for fewer laws and fewer lawsuits that plainly are just efforts by a "victim" to profit from his victimhood.
...the law is...indifferent to circumstance.
Agree that it is. Thus, what is being compensated is the loss itself, not what we're "reduced" to as a result of the loss. But since the loss was accidental, why is any compensation warranted, no matter the heart-rending nature of the loss? At what point do we draw the line and say this accident gets no compensation, but that one does? I submit that this is a slippery slope, and the only way to halt a slide is to not start. No accident should get compensation beyond what an insurance contract, or some such, specifies, unless actual negligence can be shown.
Given an argument for negligence, we're back to square one: let a jury decide. But no punitive damages and let the compensation be limited to line-item, quantifiable expenses. And let the lawyers prosecute these suits for flat fees. This will make it harder to bring questionable suits, but there's no clear argument for bringing those in the first place, and too many award demands are driven by the lawyer's cut rather than just compensations.
Eric Hines
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