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Consumer group debunks myths about punitive damages

In a new White Paper released today entitled WHAT YOU NEED TO KNOW ABOUT… PUNITIVE DAMAGES, the national nonprofit consumer group Center for Justice & Democracy “examines the truth about punitive damages” and argues that “the imposition or threat of punitive damages is so critical in the fight against reckless corporate behavior that any effort to restrict them undermines the safety of us all.”

According to the Center for Justice & Democracy’s Executive Director, Joanne Doroshow, “Punitive damages, which are awarded by juries to stop egregious wrongdoing, are one of the least understood features of the civil justice system. Conservative free-market economists have written that punitive damages help deter non-cost-justified misconduct so they are essential to a fair, safe and efficient society. We found that contrary to conventional wisdom, punitive damages are extremely rare. Their social importance lies not in their frequency, but in signaling to big companies that the financial consequences of acting recklessly can be severe.”

According to author Emily Gottlieb, Deputy Director for Law and Policy at the Center for Justice & Democracy, WHAT YOU NEED TO KNOW ABOUT… PUNITIVE DAMAGES debunks many common myths about punitive damages and “shows how punitive damages, either actual or potential, factor into corporate decision making about product safety.” Among the report’s findings are:

Punitive damages are rarely sought and rarely awarded (5 percent of civil cases, 3 percent of tort cases with plaintiff winners). Most punitive damage awards are quite modest ($64,000 median in civil cases; $55,000 median in tort cases).

History shows that the imposition or threat of punitive damages has caused corporations to take dangerous products and services off the market and operate more safely. Manufacturers support caps on punitive damages because caps allow them to precisely budget their potential liability as a cost of doing business. However, if it becomes cost-effective for companies to simply pay victims and their families for deaths or injuries rather than fix the problem, the essential function of punitive damages to deter unsafe corporate conduct is undermined.

Since the 1990s, the U.S. Supreme Court has been placing arbitrary limits on punitive damages remedies. Moreover, in addition, 38 states have passed laws that impede consumers’ ability to seek punitive remedies. Legislative restrictions include: 1) outright bans on punitive damages; 2) damages caps; 3) mandatory apportionment of punitives to state funds; 4) heightened burdens of proof; and 5) bifurcated trials.

Congress is considering federal legislation – H.R. 5 – that would make it virtually impossible for medical malpractice and drug injury victims to obtain punitive damages from doctors, hospitals, nursing homes, pharmaceutical companies or medical device manufacturers, and would impose these federal limits in every state, overturning state law.

Many who have pushed for restrictions on consumers’ ability to seek punitive damages, including major companies pushing for caps on damages and other liability limits, do not hesitate to demand punitive damages when they feel their own interests have been compromised.

Federal and state tax laws generally allow corporations to deduct punitive damages payments. Allowing companies to deduct punitives as “ordinary and necessary business expenses” effectively rewards and subsidizes grossly irresponsible or intentional behavior, undermining their purpose to deter egregious misconduct.

Writes author Emily Gottlieb, “The availability of punitive damages protects us all by holding wrongdoers accountable for egregious misconduct and deterring its future occurrence. Laws that restrict punitive awards place the public at serious risk, and lawmakers should not be misled by falsehoods spread by corporate special interests about this most valuable and important feature of our civil justice system.”

The full study can be found here.

Cruise line must pay 93A damages to consumers who cancelled

In a victory for consumers in Massachusetts, Norwegian Cruise Lines was ordered by the Supreme Judicial to pay damages, reasonable attorneys’ fees, and costs.

Plaintiffs brought an action against defendant, seeking a refund of two cruise tickets they purchased and cancelled following concerns about the September 11, 2001 terrorist attacks. The plaintiffs received their tickets for a cruise scheduled to depart on September 16, 2001. After the terrorist attacks of September 11, 2001, the Casavants, fearful of taking a cruise that was scheduled to depart from Boston on September 16, contacted Norwegian several times in an effort to reschedule it. Norwegian refused to reschedule their trip, deemed them to have cancelled their voyage, and refused to refund the price of the tickets. The plaintiffs subsequently retained counsel and sent Norwegian a demand letter pursuant to G.L. c. 93A, § 9(3), dated August 22, 2002, claiming that they were entitled to a refund of the price of the tickets plus interest and attorney’s fees based on a number of unfair and deceptive acts and practices on the part of Norwegian that violated G.L. c. 93A, §§ 2 and 9.

The case took nearly 10 years to work its way through the Massachusetts court system, including two trips to the appellate courts. But the plaintiffs were awarded with a victory by the Massachusetts Supreme Judicial Court. The court opinion detailing the background and history of the case can be viewed by clicking here.

The court ruled that the evidence at trial plainly established that defendant violated the Attorney General’s travel service regulations in two respects: fist, it failed to disclose the refund policy; and second, having violated the disclosure statement, it failed to refund the payments made by a cancelling customer within thirty days. These violations qualified as unfair or deceptive acts, and they caused plaintiffs a loss: the lack of a prompt refund of the ticket price.

The court also concluded that plaintiffs’ demand letter satisfied the requirements of G.L.c. 93A, section 9(3). The purposes of the demand letter were sufficiently fulfilled where it constituted fair notice of the claim and enabled defendant to make a reasonable tender of settlement.

Hot Coffee movie premieres on HBO

Seinfeld mocked it. Letterman ranked it in his top ten list. And more than fifteen years later, its infamy continues. Everyone knows the McDonald’s coffee case. It has been routinely cited as an example of how citizens have taken advantage of America’s legal system, but is that a fair rendition of the facts?

Hot Coffee reveals what really happened to Stella Liebeck, the Albuquerque woman who spilled coffee on herself and sued McDonald’s, while exploring how and why the case garnered so much media attention, who funded the effort and to what end. The movie premieres on HBO this month. The HBO preview can be viewed by clicking the image below.

For more information on show times on HBO, click here.

We have written frequently about misguided tort reform efforts in the United States. Click here to see our previous posts. This film puts faces on the controversy and is a must see for anyone concerned about civil justice. You are urged to spend 86 minutes watching this film. The official film trailer can be viewed by clicking the image below.

GM and Chrysler escape justice in product liability cases

GM and Chrysler may have been bailed out by the government, but they are running away from their obligations to consumers injured by their defective vehicles. Despite jury verdicts in their favor, these injured people are the latest losers in the auto industry meltdown. Here’s how the Wall Street Journal story on the topic sets the scene:

Vicki Denton died several years ago after the airbag in her 1998 Dodge Caravan minivan failed to deploy during a head-on collision in the Georgia mountains. In 2009, a jury found Chrysler responsible for her death because of a manufacturing defect, awarding her surviving son and other relatives $2.2 million.

The family was near collecting those damages on the eve of Chrysler’s government-brokered bankruptcy. Now, two years removed from a $12.5 billion bailout, Chrysler Group LLC still hasn’t paid the damages, and doesn’t have to.

The reason: The company’s restructuring allowed it to wash away legal responsibility for car-accident victims who had won damages or had pending lawsuits before its bankruptcy filing. The same holds true for General Motors Co., which discarded the liabilities as part of its own $50 billion bailout and restructuring.

Under bankruptcy laws, GM and Chrysler were able to walk away from their obligations and have no further legal obligation to tort claimants, many who are profoundly injured and have no means for their own financial support. According to the WSJ report, Chrysler and GM each expressed sympathy for those with product-liability claims while emphasizing that they were among many stakeholders called upon to sacrifice.

The tort victims in these cases do not need sympathy from GM and Chrysler. Rather, they should get the justice due them.

Friending defense counsel not required, but user info must be disclosed

As a personal injury plaintiff, the last person you would consider a friend would be the lawyer for the defendant in your case. A Pennsylvania court agrees, and would not require the plaintiff to accept defense counsel as a “friend” on Facebook. But another court required a plaintiff to provide his Facebook and MySpace user names and passwords to counsel for defendants. These cases point out the vulnerability of what you may think are private posts. As a party to litigation, you have to be careful about what you post.

In Piccolo v. Paterson, Judge Albert J. Cepparulo issued a one-paragraph order denying a motion to compel filed by attorneys retained by Allstate Insurance Co. seeking access to the photos of plaintiff Sara Piccolo that she posted on the social networking site. In denying the request, the judge ruled that the “materiality and importance of the evidence … is outweighed by the annoyance, embarrassment, oppression and burden to which it exposes” the plaintiff. You can read more about the case by clicking here.

But in another case in the same state, McMillen v. Hummingbird Speedway Inc., the court held that Facebook postings were discoverable and ordered the plaintiff to provide his username and password to the defendant’s attorney. The defense argued access to Piccolo’s Facebook page would provide necessary and relevant information related to the claims by Piccolo. In its ruling, the court stated that:

Facebook, MySpace, and their ilk are social network computer sites people utilize to connect with friends and meet new people. That is, in fact, their purpose, and they do not bill themselves as anything else. Thus, while it is conceivable that a person could use them as forums to divulge and seek advice on personal and private matters, it would be unrealistic to expect that such disclosures would be considered confidential….

When a user communicates through Facebook or MySpace, however, he or she understands and tacitly submits to the possibility that a third-party recipient, i.e., one or more site operators, will also be receiving his or her messages and may further disclose them if the operator deems disclosure to be appropriate. That fact is wholly incommensurate with a claim of confidentiality.

The McMillan court expressly observed that the plaintiff was making representations on the publicly viewable portion of his Facebook page that were inconsistent with the position he took in the litigation. Because of that, the court noted that the defense in that case would have been prejudiced without access to the private portions of the plaintiff’s Facebook page.

The bottom line is that social media, while it may provide an outlet for venting to your friends, can also provide fodder for a wily defense attorney looking to turn your case upside down.

Report details hypocrisy of Chamber of Commerce

The American Association of Justice has released a new report which exposes the Chamber of Commerce as one of the most aggressive litigators in Washington and details the Chamber’s hypocrisy. Underwritten by its multinational corporate members, the Chamber spends millions of dollars to undermine the civil justice system, prevents Americans from holding wrongdoers accountable in the courtroom, and advances the agenda of its corporate membership.

Earlier this month, U.S. Chamber of Commerce President and CEO Tom Donohue called litigation “one of our most powerful tools for making sure that federal agencies follow the law and are held accountable.” Yet ironically, the Chamber today holds its annual Legal Reform Summit – an event underwritten by its multinational corporate members that promotes undermining the civil justice system to weaken the basic legal protections of American workers and consumers.

The Chamber’s hypocrisy – blocking justice for everyday Americans while using the courts liberally for its own pro-corporate agenda – is the subject of the report that exposes the Chamber as one of the most aggressive litigators in Washington, entering lawsuits at a rate of over twice weekly.

“The Chamber’s ‘one rule for corporations, another rule for everybody else’ motto has come at the expense of ill-treated workers, defrauded investors and injured consumers,” said AAJ President Gibson Vance. “It readily spends millions of dollars to prevent Americans from holding wrongdoers accountable in the courtroom, and then aggressively uses the very same legal system to advance the agenda of its multinational corporate membership.”

In almost every case, the Chamber’s litigation on behalf of corporations has come at the expense of Americans’ health or financial security. The Chamber has:

  • justified the actions of Wall Street banks that drove the country’s economy into turmoil;
  • defended the most conceited and worst behaved CEOs and their most extravagant excesses;
  • tried to force workers, instead of employers, to pay for their own safety equipment;
  • filed numerous actions opposing any move to combat climate change;
  • sought to shield pharmaceutical executives who skirted safety procedures that ultimately killed 11 children;
  • opposed measures allowing workers to receive a rest period during a full work day;
  • fought on behalf of lead paint manufacturers found to have poisoned thousands of children;
  • defended corporations that discriminated on the basis of race and disability;
  • and spent years defending big tobacco, asbestos companies and chemical companies found to have contaminated water and air.

“The Chamber has every right to seek what it believes to be justice in a court of law, even if representing the most deplorable corporate interests,” said Vance. “But it must learn that this right to justice belongs not just to their organization, or big business generally, but to all Americans.”

The report, entitled The Chamber Litigation Machine: How the Chamber Uses Lawsuits to Keep Americans Out of Court, can be found by clicking here.

Medicare rebuked by Appeals Court on settlement

The Center for Constitutional Litigation (CCL) recently won a landmark decision that affects tort claims of clients who may have received Medicare benefits. The U.S. Court of Appeals for the Eleventh Circuit emphatically rebuked Medicare over the way the agency treats settlements and held that Medicare does not have the right to claim full reimbursement from an undifferentiated settlement, as it has for years. Instead, Medicare must participate in any state-authorized process to prorate its lien claim or accept the result when it refuses to participate. The decision is the first by a federal circuit court on the issue.

A Florida nursing home resident died from complications of bed sores and received a settlement of $50,000. Since Medicare had paid for the deceased’s medical expenses, the 11 surviving children, who sued for loss of consortium, invited Medicare to participate in an allotment of the settlement. Medicare claimed the entire amount citing its manual and later refused to take part in a probate hearing to allot the settlement. The family’s lawyer went to federal court seeking recognition of the probate court’s decision. The court deferred to Medicare’s interpretation of the 1980 Medicare Secondary Payer Act.

The family then appealed the case to the Eleventh Circuit Court of Appeal. That court adopted the argument that the Medicare Manual lacked the force and affect of law, that the statute did not authorize Medicare’s position, and that, having chosen not to participate in the allocation; Medicare must accept the probate court’s decision that Medicare’s proportionate share of the settlement was only $787.50.

This is a tremendous victory for injured plaintiffs. The American Association of Justice was instrumental in guiding the family through the appeal process.

To view the decision in the case, click here.