What’s Wrong with the American Tort System?

Every year, the Stella Awards compiles a list of tort cases wherein the jury and the courts awarded huge damages to the "victim." Usually, these cases were frivolous and ridiculous, which made the huge sums even more unbelievable. Named after Stella Liebeck, who was awarded $2.9 million by a jury for spilling hot coffee that she purchased from McDonald’s on herself. Randy Cassingham, the author behind the Stella Awards, also publishes a weekly newsletter for the past seven years. In all these years, Cassingham has never run out of material.

The American tort system has long been criticized for being open to abuse, becoming more of a forum for extortion, rather than for redress for justifiable wrongs.

And the implications are widespread and serious. According to panelists at the 2004 Property/Casualty Joint Industry Forum, these frivolous cases and potential huge awards have made products available in the United States a whole lot more expensive than it should be. More than that, it also discourages investments that create jobs. In fact, America does not have enough companies that manufacture vital products for use in the country because businesses are afraid to be sued.

And the effects are not exclusive to businesses. Doctors, for one, have been known to prescribe a series of needless tests to protect themselves from frivolous lawsuits. This practice alone has cost the federal health care budget an estimated $217 billion every year.

More than this, tort laws have come to a point where they benefit large law firms more than the plaintiffs.

Four years ago, then President George Bush signed the Class Action Fairness Act, a law that seeks to correct the problems brought about by the tort system. Basically, tort reform initiatives have made it more difficult for frivolous and sometimes fraudulent lawsuits to succeed in court by putting up new evidentiary and procedural blocks, narrowing liability, and limit the damages that could be awarded. However, even the CAFA is not deemed to be enough to remedy the situation.

The problem with tort reform is that it is not just about economic and judicial policy, but it is more of a question of justice as well as a question of values. Who is to more to blame, McDonald's for serving cups of hot coffee or old ladies who are careless in carrying them? Who has greater liability, McDonald’s for its super fattening hamburgers, or the teenagers who do not have the discipline to stay away from these burgers and make them a part of their daily meals? So it goes beyond financial figures and goes right down to the kind of culture and values that we uphold.

One thing is for sure, the money that goes to what Pres. Bush called a "litigation tax" could be used for other things. What the current tort system needs are safeguards against abusive and fraudulent lawsuits; more education for the public who would, in time, serve as part of a jury in some of the cases; stiff penalties for erring lawyers and law firms; and a limit to the fees for lawyers and law firms involved in these cases.

So, as one can see, tort reform is not merely about limiting the damages awarded to plaintiffs. There are people, specifically those who are legitimate victims of erring companies, who deserve to be awarded some degree of assistance and retribution for the pain they suffer and the loss of livelihood that may go beyond the set limit for damages. What is really wrong can be in the people who cultivate a negative kind of culture as far as the judicial system is concerned and the very system adopted by the judiciary. These are the things that can really use some changes.