This Week:

Quote of the Week

Website of the Week

Correction, Sort Of

The McDonald’s Coffee Case
What the Heck is “Tort Reform?”

Greetings,

This week’s Quote of the Week illustrates perfectly the point I have been trying to make for many months now: It is, indeed, all about priorities when you live in the richest country in the world.

I ran out of space this week, once again. I was gonna talk about housing, wealth, the Mayor, and all kinds of stuff. Those things will have to wait for a couple of weeks.

Lots of new readers this issue, and they live all over the place. Welcome, Mexico! Welcome, Chicago! Etc! And I love my fellow Minnesotans, you all know that.

I really enjoy your E-mails, and I try to respond to each one, however briefly. Remember that I will be out of town this week; I’ll get back to you when I get back. Pushing the deadline; gotta go. See ya in TWO weeks.

Nygaard

"Quote" of the Week:

“We have the resources - the issue is setting priorities.”

-- Minnesota Senate Majority Leader Roger Moe (Democrat), who “didn’t rule out using some of the state’s budget surplus for high- tech business development but said those needs have to be balanced against others, such as tax relief,” as reported in the Star Tribune (Newspaper of the Twin Cities!) of Thursday March 9th.

Website of the Week

Last week I promised to introduce a “regular feature” by this name. Why do I keep doing this? I’ll try to do it every week, but I might not. And sometimes it will be two sites. Sometimes it will just be one page within a site. And so on. Long-time readers know all this. I just call it a “regular feature” because it sounds better than “An Arbitrary and Whimsical Feature That I May or May Not Find Room For Every Week.” It’s a lot shorter, too.

Anyhow, this week’s WOTW is The Center for Public Integrity, a group that studies money in politics. In particular look at “The Buying of the President 2000 Project.” If you are interested in the Presidential campaign, you can learn a lot of what you need to know by turning off your TV every time the candidates come on, and heading instead for this website at: http://www.publicintegrity.org

Their reports are limited by the fact that they only track the obvious money (the kind that is publicly reported). Still, it’s essential reporting and well worth looking at and pondering.

(Those of you without computers can copy down this address and go to any library, where they can help you look at it and most likely print a lot of it out for you to take home.)

Correction, Sort Of

This is a strange one. Last week’s Quote of The Week was Jesse Ventura saying he “no longer supports” the death penalty. Here is the full reference as it appeared in the Star Tribune (Newspaper of the Twin Cities!):

“During his appearance on ‘Meet the Press,’ Ventura said...that he no longer favors the death penalty. ‘I would not want that on my conscience,’ he explained. Citing flaws in DNA testing, he said, ‘Imagine what you'd feel like if someone were put to death and a year or two later found out that the person didn't do it. So I do not support the death penalty and I don't feel that the government has the right to take someone's life.’”

Doesn’t that sound like he just changed his mind? Well, he didn’t. He has been opposed to the death penalty for more than a year, according to a friend who works in his office. I made it my Quote of the Week in part because it struck me as odd that such a major reversal would not be a headline in the Star Trib. Of course, it wasn’t a major reversal, but merely a re-stating of an existing position. That’s why, I guess, it only appeared as one paragraph in a story about John McCain maybe asking Ventura to be his vice presidential candidate. So, why was it in the paper at all? I don’t know.

So, I apologize for what may or may not be an error on my part or on the part of the Star Trib. So, is this a correction? Or what? I thought I should say something. So there you go.

The McDonald’s Coffee Case

Has everyone heard about the lady who sued McDonald’s for three million dollars because she got burned by coffee that she herself spilled? I’ll bet you have. Doesn’t that seem crazy? I thought it seemed crazy, so I did a little research and found out a few facts that most people don’t seem to know:

• McDonald's coffee is heated between 180 and 190 degrees Fahrenheit, while coffee made at home is between 130 and 140 degrees.
• Over the past ten years McDonald's received 700 reports of patrons burning themselves with its super-heated coffee.
• The woman, 81-year-old Stella Liebeck of Albuquerque, New Mexico, was hospitalized for eight days and underwent skin graft operations for third-degree burns.
• The jury awarded Liebeck $200,000 in compensatory damages, which was reduced to $160,000 because the jury found Liebeck 20 percent at fault in the spill.
• The jury also awarded Liebeck $2.7 million in punitive damages.
• $2.7 million equals about two days of McDonald's coffee sales.
• The trial court subsequently reduced the punitive award to $480,000 - or three times compensatory damages - even though the judge called McDonald's conduct reckless, callous and willful.
• We shall never know if a judge would have further reduced or even reversed the plaintiff's award on appeal because McDonald's elected to settle privately with Ms. Liebeck.
• Post-verdict investigation found that the temperature of coffee at the local Albuquerque McDonald's had dropped to 158 degrees Fahrenheit. Also, after the McDonald's award, Wendy's voluntarily suspended selling hot chocolate - which it sold mostly to children and heated to a scalding 180 degrees - until it could lower the temperature.

What the Heck is “Tort Reform?”

Three short stories.

Story Number 1:

In 1976, the year of Our Nation’s Bicentennial, three friends and I packed ourselves and all of our belongings into a Ford Pinto and returned from an excellent adventure in California, driving on various interstates all the way to Minneapolis. We had no idea that we were riding in a death-trap, since few people knew, at that time, what everyone would soon realize: that Ford had knowingly designed the Pinto to be a car that was likely to blow up and incinerate its passengers upon an impact of about 30 miles an hour. Within a couple of years of our fortunate, if crowded, cross-country trip, Ford had been forced to recall 1.5 million Pintos, had paid $128 million in punitive damages, and had become the first American corporation ever indicted or prosecuted on criminal homicide charges. (They were eventually acquitted.) At the time, the $128 million punitive damages award was the largest ever, but later on Ford started selling trucks with defective parking brakes, and they failed to warn people about it, and then they actually lied about it. After a 3-year-old was run over and killed by one of these defective trucks, all of this came out, and Ford ended up being assessed $153 million in punitive damages. It’s always nice to beat your own world’s record.

Story Number 2:

On March 2nd the Star Tribune (Newspaper of the Twin Cities!) reported on an HMO called Medica, which had suddenly closed a Minneapolis clinic that specializes in AIDS and HIV. This “cost- cutting” move, which deprived some patients of access to the clinic, resulted in state regulators levying the “maximum” fine of $25,000 against Medica. Medica’s assets in 1998 were about $435 million, bringing the “maximum” fine for cutting off some of its chronically- ill, inner-city patients to approximately 57 one-millionths (0.0057%) of its assets. That should stop ‘em! (Nygaard Notes Arithmetic reveals that a fine of the same proportion levied against the typical American wage-earner, whose assets are $37,000, would yield...two dollars and 16 cents.)

Story Number 3:

On the same day as the Medica story, the Star Trib reported that Koch Petroleum Group [the makers of “environmentally-friendly” Blue Planet (TM) gasoline, sold only at Holiday (TM) gas stations] had been ordered by U.S. District Court judge Ann Montgomery to pay the largest federal environmental fine in state history for polluting the heck out of some land in Dakota County, just south of St. Paul. The $8 million fine was assessed because Koch knowingly allowed “200,000 to 600,000 gallons” of aviation fuel to leak into the ground and a wetland from 1993 to 1997. Koch also admitted to violating the Clean Water Act in 1997, when it pumped onto the ground “millions of gallons” of waste water with high ammonia concentrations.

Wait, we’re not done! The third thing that Koch admitted to was “increased dumping of waste water into the Mississippi River during weekends, when its discharge permit did not require testing.” These Minnesota violations are but a few of the myriad environmental crimes for which Koch has been trouble around the country. Koch is the 18th largest company in the U.S., with estimated profits of about $700 million per year. An $8 million fine is thus about 1.1 percent of its annual profit. Since it’s a private company, we don’t know what its assets are, but rest assured that a mosquito bite would cause more discomfort to a company of this size than will this $8 million fine.

What do these stories have in common? They are all examples of corporate misconduct that resulted in some sort of penalty being assessed on the guilty corporation. The issue of corporate misconduct and punishment comes up quite often in the news, and especially in the presidential campaign. In case this surprises some readers, let me hasten to point out that the actual phrase “corporate misconduct” rarely comes up. Rather, the phrase you are likely to hear is “tort reform,” a subject about which I promised to say something, ‘way back in Nygaard Notes #44. The somewhat mysterious-sounding phrase often pops up in the statements of elected officials and candidates. George Bush, for example, often brags about his heroic efforts in Texas to limit the amounts for which citizens can sue corporations in court.

What Is a Tort?

A “tort” is a wrongful act that causes someone harm or loss. When you sue someone to recover your loss or to address the harm, this is called a “tort” lawsuit.

When people file a tort lawsuit and win, two things can happen. One thing is that they could get compensation for whatever harm or loss they suffered, which is called “compensatory damages,” the amount of which is simply whatever it costs to fix or pay back what was harmed or lost. Compensatory damages focus on past harm done to individuals. The other option is for the plaintiff to be awarded “punitive damages,” which are like fines, levied against the offending company. Since they are meant as a means of deterrence, punitive damages thus focus on future protections for society as a whole.

Since tax cuts and Libertarian ideology prevent the government from conducting effective oversight and regulation, the best resource for addressing corporate misconduct that citizens have at present is the tort lawsuit. Not surprisingly, business interests and their representatives in government would love to weaken this resource. This corporate attack on citizens’ right to fair compensation is what is known as “tort reform.”

The corporate line on tort reform is long and involved, but a lot of the arguments for “reforming” the system of tort law are based on anecdotes. The point, apparently, is to get people to believe that Americans are suing somebody or getting sued every time they turn around, and that juries are awarding trillions of dollars to the plaintiffs and ruining the American economy for everyone. Lawyers are an unpopular group, so it helps the cause to link the whole “problem” to out-of-control lawyers, which “tort reform” advocates are more than willing to do.

The American Tort Reform Association (ATRA), a corporate lobbying and propaganda outfit, has a page on its website entitled “Litigation Horror Stories: Stories That Show A Legal System That's Out of Control.” It’s chock full of stories like the one about the man who tried to sue God, the woman who sued Universal Studios because their Haunted House was too scary, and so forth. (It’s interactive! with a form that allows you to “submit your own litigation horror story!”)

Elsewhere in this issue I take a look at possibly the most famous “litigation horror story” of them all, the McDonald’s Coffee Case. After looking at that and finding out that it was a little less, er, “horrible” than it first appeared, I became suspicious about all the rest of these anecdotes, and curious about the entire basis for the talk of “tort attack.” Oops, I mean “tort reform.”

Surely somebody has actually studied this subject, I thought, to see if “punitive damages are skyrocketing,” as Supreme Court Justice Sandra Day O’Connor has said, or if people are casually filing suits just to get rich, which the industry calls “jackpot justice.”

My research on this subject led me to a remarkable man named Michael Rustad, whose studies on the subject I will discuss in Nygaard Notes Number 63.