Tuesday, January 28, 2014

Blocking Your Day in Court, Thanks to ALEC, Part I


Background.

Many comedians and living room pundits have enjoyed the jaded glow of disdain followed by suitable knowing laughter while invoking the infamous McDonald’s hot coffee lawsuit as proof positive that a citizen’s access to the Halls of Justice needs to be slowed down, so much so that he and she don’t even consider seeking redress for righteous wrongs. The documentary Hot Coffee tries to set the record straighter about Ms. Stella Liebeck and McDonald’s hot coffee.

According to the documentary, comedians and armchair pundits overlook the fact that McDonald’s had more than 700 complaints about the high heat of its coffee before Ms. Liebeck sustained injuries. In addition, most people who mocked Ms. Liebeck’s suit fail to note that McDonald’s lowered the holding temperature of its coffee by 10 degrees after the company lost in court. Perhaps most important, the documentarians reveal what the jury saw: medical records including photographs of Ms. Liebeck’s injuries. She sustained more than burns to the skin. The coffee was so hot that when her clothing was removed, flesh came with it. She underwent extensive treatment to heal.

Ms. Liebeck also did not leap to the head of the line by suing immediately. She sought more modest remedies, including a request that McDonald’s cover her medical expenses. It refused so left with debt for her care, Ms. Liebeck sought redress by using the judicial branch of government, the branch that some would like to change. Many physicians and businesses would like to limit settlements and even access.  In response, especially because its membership includes businesses, the American Legislative Exchange Council (ALEC) has set another goal for the 2014 legislating season, and it is to limit a citizen’s access to judicial redress. Anyone hurt or killed by corporate practices or products will find it harder to hold the corporations responsible.

Conventional Wisdom.
   
Many people believe that U. S. health care costs are high in part because doctors are unduly burdened by malpractice insurance and claims. What fewer people know is that the largest malpractice insurer is doctor owned. Furthermore, many people have been taught that many medical malpractice claims are frivolous--just a result of folks trying to get rich at the expense of honest, competent doctors. Fewer people recognize that most of the claims filed have merit and a small percentage of doctors account for more than half of all suits. In other words, medical malpractice affects few physicians, except for the need to have insurance, and the problems of medical malpractice have been overblown in order to dissuade citizens from suing and to persuade them to support reforms.

In addition, Big Corporations, including those providing food, energy, medicines, cigarettes, and paint, lament the high costs of litigation; they too seek legislative remedy to deter and even prevent the public from seeking damages. They have also engaged in a public campaign to persuade the public that petitioners are greedy and even dishonest. Hollywood and history, on the other hand, suggest a different reality.

Julia Roberts as Erin Brockavich convinced audiences that the plaintiffs were right to sue. Their questions went unanswered, and they were fed lies even as they became sick and died. But even after the large punitive damages settlement, townspeople continue to suffer from the effects of chromium-6 because the chemical is so toxic and so prevalent; it has seeped into groundwater and continues to damage residents.

State Attorneys General collaborated to sue tobacco companies, and they were able to identify so-called smoking guns in the form of internal documents that revealed full industry knowledge of the harms of tobacco, industry dollars spent to bamboozle the public, and campaigns to recruit more smokers while medical professionals warned the public about the harms of tobacco. The companies continue to invent products that are purportedly safer; the e-cigarette is one, but health professionals warn that industry claims about the product’s safety are deceptive. Ecigarettes contain carcinogens, not just nicotine.

A recent California case held three paint companies liable for cleaning up after themselves. Documents from the 1920s prove that the companies knew the lead component in paint would poison children, but the companies continued to make the products and expose children to them, even advertising with a child painting his red wagon using lead-based paint. In this case as well as the one involving Erin Brockavich against P G & E and State governments against tobacco companies, the courts ruled in favor of public health and against private profits when the companies had reason to believe that their products and/or practices would cause harm, and these cases prove that sometimes business lets its own prosperity override concerns for the public health, so much so that the businesses engage in fraud with malicious intent.

Photo by Al Griffin
Warnings.

ALEC proposes to rein in punitive damages and make it more difficult for class action or individual cases to proceed. Their model legislation, appearing below, demands that clear, compelling evidence must be brought forth proving that the companies had malicious intent to harm. And therein lies the problem: intent is difficult to ascertain, harder to prove without full and open confessions as to intent, and the malicious component harder still to prove for individuals may plead ignorance, thoughtlessness, and loyalty to Boards and/or dividends rather than the public, clearing them of legal responsibility if not moral or ethical.

An additional and perhaps more significant problem derives from the very definition for punitive damages: a defendant’s conduct warrants punitive damages because the conduct was borne of malice and committed under a veil of fraud or the conduct itself was reckless and egregious. In other words, ALEC’s proposal is redundant for the states’ punitive damage laws already include a defendant’s intent, and these laws already filter out so-called frivolous lawsuits.

But citizens must become aware that few lawsuits filed go to trial and of those that do, very few result in punitive damages. In fact, Landes & Posner (1986) found that only 2% of product liability cases result in punitive damages. Another study showed an even smaller frequency. In looking at certain localities, the Rand study found punitive damages occurred in only 1/10 of 1% in Cook County and even less in San Francisco.” Thus, the ALEC legislation appears to be a solution for a problem that does not exist.

Furthermore, the Supreme Court has demonstrated that it believes punitive damages should be no greater than a single digit multiplier from compensatory damages; e.g., if a jury were to award actual damages as $4,000, then punitive damages should be no greater than one to nine times that amount or an additional $4,000 to $36,000. With numerous Supreme Court decisions about punitive damages, legislatures throughout the nation have clear boundaries within which to work without the intervention of ALEC.

So once again, be wary of ALEC and its agenda. It appears to work against the citizen’s right to the judiciary and to receive punitive damages when warranted. It appears to believe that citizens are the problem, not the businesses or physicians who cause harm to citizens.

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The model legislation appearing below is included for the readers’ benefit. As some of you may know, ALEC legislation has become law, showing up word for word as first proposed by ALEC in Florida (http://thinkprogress.org/economy/2012/02/02/417488/florida-gop-alec-forget) and Michigan (http://www.prwatch.org/news/2012/12/11903/michigan-passes-right-work-containing-verbatim-language-alec-model-bill). If punitive damage bills appear in your state, compare them to what appears below.

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Punitive Damages Standards Act

Summary

The Punitive Damages Standards Act establishes a standard for liability for punitive damages, raises the burden of proof to clear and convincing evidence, allows a bifurcated trial on the question of whether the defendant is liable for punitive damages, limits the amount of a punitive damages award to twice the
amount of compensatory damages, and establishes an FDA defense to punitive damages for over-the-counter and prescription drugs, medical devices, and foods. Because the laws governing punitive damages vary so much among the states, a legislator planning to introduce a punitive damages bill should first obtain information about his or her state's laws governing punitive damages.

{Title, enacting clause, etc.}

Section 1. {Title.} This Act shall be known and may be cited as the Punitive Damages Standards Act.

Section 2. {Legislative Finding.} The legislature finds and declares that:
(A) the specter of unlimited punitive damages encourages plaintiffs and defendants to try cases needlessly and frustrates early settlement, thereby delaying justice and impeding the swift award of compensatory damages to victims;
(B) reasonable and fair standards will promote predictability in the award of punitive damages in a manner fully consistent with the objective of deterrence;
(C) private enterprise has been hampered unduly by the threat of unreasonablepunitive damages awards, with the consumer paying the ultimate costs in higher prices and insurance costs;
(D) punitive damages are private punishments in the nature of fines awarded in civil cases;
(E) when warranted in egregious cases, punitive damages can provide an appropriate expression of public disapproval for conduct that is truly shocking;
(F) current procedures for the award of punitive damages do not properly protect those accused of serious wrongdoing nor provide sufficient guidance for the imposition of these penalties; and
(G) it is in the public interest to strike a balance between deterring egregious misconduct and encouraging reasonable activity.

Section 3. {Definitions.} For the purposes of this Act, the meaning of the terms specified shall be as follows:
(A) "Clear and convincing evidence" means evidence which leaves no serious or substantial doubt about the correctness of the conclusions drawn from the evidence. It is more than a preponderance of evidence, but less than beyond a reasonable doubt.
(B) "Compensatory damages" means damages intended to make good the loss of an injured party and no more. The term includes general and special damages and does not include nominal, exemplary or punitive damages.
(C) "Defendant" means any party against whom punitive damages are sought.
(D) "Malice" means either conduct which is specifically intended by the defendant to cause tangible or intangible serious injury to the plaintiff or conduct that is carried out by the defendant both with a flagrant indifference to the rights of the plaintiff and with a subjective awareness that such conduct will
result in tangible serious injury.
(E) "Nominal damages" are damages that are not designed to compensate a plaintiff and are less than $500.
(F) "Plaintiff" means any plaintiff claiming punitive damages.
(G) "Punitive damages" includes exemplary or vindictive damages and means damages awarded against a party in a civil action because of aggravating circumstances in order to penalize and to provide additional deterrence against a defendant to discourage similar conduct in the future. Punitive damages do not include compensatory damages or nominal damages.
(H) "Drug," "device," "food," and "food additive" have the meanings defined in the "Federal Food, Drug, and Cosmetic Act."

Section 4. {Pleading Punitive Damages; Pre-Suit Notice}
(A) An award of punitive damages must be specifically prayed for in the complaint.
(B) The plaintiff must specifically plead either:
(1) that at least 30 days in advance of filing the complaint, that the plaintiff hasgiven notice of seeking damages pursuant to this Act and that in good faith a reasonable settlement could not be reached; or
(2) that such 30 days notice under this section could not be given because of exigent circumstances.
(C) The plaintiff shall not specifically plead an amount of punitive damages, only that such damages are sought in the action.
(D) The prayer for punitive damages shall be stricken prior to trial by the court, unless the plaintiff presents prima facie evidence sufficient to sustain an award of punitive damages under this Act to the court at least 30 days prior to trial.

Section 5. {Procedure for Award of Punitive Damages}
(A) All actions tried before a jury involving punitive damages shall, if requested by any defendant, be conducted in a bifurcated trial before the same jury.
(B) In the first stage of a bifurcated trial, the jury shall determine liability for compensatory damages and the amount of compensatory damages or nominal damages. Evidence relevant only to the issues of punitive damages shall not be admissible in this stage.
(C) Punitive damages may be awarded only if compensatory damages have been awarded in the first stage of the trial. An award of nominal damages cannot support an award of punitive damages.
(D) In the second stage of a bifurcated trial, the jury shall determine if a defendant is liable for punitive damages.
(E) Evidence of a defendant's financial condition or net worth is not admissible in the proceedings on punitive damages.
(F) In determining the amount of punitive damages, the trier of fact shall consider all relevant evidence, including:
(1) The severity of the harm caused by the defendant;
(2) The extent to which the plaintiff's own conduct contributed to the harm;
(3) The duration of the conduct, the defendant's awareness, and any concealment by the defendant;
(4) The profitability of the conduct to the defendant;
(5) Awards of compensatory and punitive damages to persons similarly situated to the plaintiff;
(6) Prospective awards of compensatory damages to persons similarly situated to the plaintiff;
(7) Any criminal penalties imposed on the defendant as a result of the conduct complained of by the plaintiff; and
(8) The amount of any civil fines assessed against the defendant as a result of the conduct complained of by the plaintiff.
(G) In determining the amount of punitive damages, the trier of fact shall not consider the wealth or financial condition of the defendant, but such evidence may be considered by the trial and appellate courts in determining whether the award is excessive.
(H) If a verdict is rendered awarding punitive damages, the trial court shall carefully review the decision of the trier of fact, considering all relevant evidence, including the factors identified in subsection (F), to ensure that the award does not exceed an amount necessary for the sake of example and to punish the defendant. Trial courts are to reflect in the record their reasons for interfering with a jury verdict, or refusing to do so, on grounds of excessiveness interfering with a jury verdict, or refusing to do so, on grounds of excessiveness of damages.
(I) The amount of punitive damages shall be reduced pursuant to the contributory or comparative fault principles of the law of this state. In any action in which there are two or more defendants, an award of punitive damages must be specific as to each defendant, and each defendant is liable only for the amount of the award made against that defendant.

Section 6. {Proof Required for Award of Punitive Damages.} Punitive damages may only be awarded if the plaintiff proves by clear and convincing evidence that his or her harm was the result of actual malice. This burden of proof may not be satisfied by proof of any degree of negligence including gross
negligence.

Section 7. {Ceiling for Punitive Damages Award.} No award of punitive damages shall exceed two times the amount of the plaintiff's compensatory damages award or $250,000, whichever is greater. If the defendant is an individual or a business with 50 or fewer full-time employees, no award of
punitive damages shall exceed two times the amount of the plaintiff's compensatory damages or $250,000, whichever is less.

Section 8. {Availability of Punitive Damages.} Nothing contained in this Act is to be construed as to creating any claim for punitive damages which is not now present under the law of this state.

 Section 9. {FDA defense.}
(A) Punitive damages shall not be awarded if a drug or device or combination device or food or food additive which caused the claimant's harm:
(1) Was subject to premarket approval or licensure by the federal Food and Drug Administration under the "Federal Food, Drug, and Cosmetic Act," 52 Stat.1040, 21 U.S.C.Sec.301 et seq. or the "Public Health Service Act," 58 Stat.682, 42 U.S.C.Sec.201 et seq. and was approved or licensed; or
(2) Is generally recognized as safe and effective pursuant to conditions established by the federal Food and Drug Administration and applicable regulations, including packaging and labeling regulations.
(B) This exception shall not apply where the plaintiff proves by clear and convincing evidence that the product manufacturer:
(1) Knowingly and in violation of applicable agency regulations withheld or misrepresented information required to be submitted to the agency, which information was material and relevant to the harm in question; or
(2) Made an illegal payment to an official of the federal Food and Drug Administration for the purpose of securing approval of the product.

Section 10. {Severability Clause.}

Section 11. {Repealer Clause.}

Section 12. {Effective Date.} This Act shall be effective as to any civil suit for damages commenced on or after the date of enactment of the Act regardless of whether the claim arose prior to the date of enactment.