Tort Trends Less Frivolous Lawsuits

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1 Tort Trends Less Frivolous Lawsuits In Pearson v. Chung, heard in the Superior Court, District of Columbia, the Plaintiff Roy Pearson filed a lawsuit in 2005 demanding $67 million from a small local dry cleaning company that had allegedly lost his trousers, which he brought in for alterations. The case went to trial in 2007 and several newspapers called the case the Great American Pants Suit. This case is considered an example of frivolous litigation and the need for tort reform in the United States. Pearson, an administrative law judge, could have settled the case for $12,000, but refused. The judge claimed the pants were a part of a suit he liked, and that the shop advertised that customers would have work done to their satisfaction. On June 25, 2007, there was a ruling in favor of the dry cleaners and they were awarded costs for the litigation. Public fund-raisers were held in support of the dry cleaners for all the lost business they sustained. Pearson was sanctioned $12,000 for unnecessary litigation. Pearson appealed the case in August In November 2007, a D.C. commission voted against reappointing Pearson as an Administrative Law Judge, in part because he demonstrated lack of judicial temperament. On December 12, 2008, a District of Columbia Court of Appeals denied Mr. Pearson s appeal of the case and ruled in favor of Mr. Chung. What can be done to deter frivolous lawsuits? 1

2 Increase in Prescription Drug Restrictions and Litigation Many suits have been brought concerning various drugs that were introduced to the marketplace and then pulled for a variety of reasons after causing harm to the consumers. Notwithstanding, some consumers still insist they are helped by these drugs and are extremely upset when the only drug they claim works for their particular condition or disease is no longer available to the public. The Food and Drug Administration (FDA) issued its severest warning, a black box label in April 2007, on Amgen s two leading drugs, Epogen and Aranesp. Still they are allowed to remain on the market, but with restrictions on use. Other consumers are extremely frustrated when drugs they are told will help them are delayed entry into the U.S. markets. Amgen is also conducting large-scale trials of denosumab, a potential osteoporosis drug. Wyeth s stock plunged when U.S. regulators rejected the drug manufacturer s bifeprunox drug for use with people with schizophrenia. The FDA needs a study showing the pill is effective before the agency will consider approving it. Should people with schizophrenia be denied this drug now? 2

3 Limiting Punitive Damages In addition to the damages awarded to make a person whole in a lawsuit, punitive damages were developed to punish defendants who were found to have acted deliberately and maliciously. Punitive damages are meant to punish irresponsible and harmful behavior. In some courts and jurisdictions, punitive damages have become a routine part of a civil award, yet this was not the original intent. Often punitive damage awards have become so large that they are bigger than the actual damages a plaintiff is awarded at the time of trial. Some argue that the punitive damages have no relationship to the actual compensatory damages, and the prospect of large punitive damage awards makes it difficult to settle cases, clogging up courthouses. Close to half the states have made an effort to limit punitive damage awards in some way. Other states have established the need to prove actual malice, or require clear and convincing evidence, before punitive damages can be awarded. Still others require that punitive damages be proportionate so that the punishment fits the offense. Which side of the issue do you favor? 3

4 Collateral Source Rule Reform Collateral source payments are when a plaintiff receives money or benefits from a party not involved with the lawsuit, to compensate the plaintiff for the damages sustained. An example of this is where you slip and fall because of a spill on the floor at your local grocery, but your injuries are covered by your private health insurance. With the collateral source rule, even though the plaintiff had his or her medical bills paid for through insurance, the defendant is prohibited from mentioning this at the time of trial, and the plaintiff gets to basically recover twice for the same bills. Some argue that allowing a plaintiff to recover twice goes beyond compensating a plaintiff and punishes the defendant. Others argue that a defendant should not benefit because a plaintiff happens to be careful and pays for his or her private health insurance. The defendant may be prohibited from mentioning the availability of collateral sources at the time of trial depending on the jurisdiction. But, many insurance companies require reimbursement and seek to be indemnified for any amount they have paid out if a lawsuit settles, or the plaintiff wins the case. Approximately half the states have now passed laws to allow the jury to consider collateral sources when awarding judgments or to allow judges to offset awards by the amount of collateral source payments a claimant has received. Are these new laws fair? 4

5 Toxic Torts Update In the 1990s many states were suing tobacco companies for smoking-related health care costs. In the end, tobacco manufacturers paid out more than $300 million. Asbestos litigation has filled the courtrooms, causing over 75 companies to file for bankruptcy. One area of emerging court suits is associated with perchlorate exposure. Perchlorate is an artificial inorganic salt used since the 1940s for rocket fuel, munitions, and airbags. Military and weapons contractors are the main users of perchlorate. States and the Environmental Protection Agency (EPA) have been lobbying for a significantly lower level of perchlorate in drinking water than NASA or the Pentagon finds acceptable, although no formal level has been set by the EPA for enforcement. It is very possible that if acceptable levels of perchlorate are set very low, this might put a significant dent in defense manufacturing, with the next wave of lawsuits filling the courtrooms due to contaminated water levels. What do you think prevents the EPA from setting a standard for perchlorate permitted in drinking water? 5

6 Suits Against Fast-Food Entities (Obesity/Health) There are several class actions pending against some of the major fast-food companies. These actions are modeled after similar tobacco lawsuits. Ashley Pelman and other teenagers brought an action against McDonald s in the U.S. District Court for the Southern District of New York alleging that McDonald s is the source of their obesity and related health matters. This case was dismissed by the judge with leave to amend their complaint with specificity as to how McDonald s misled or fooled customers about the health risks of eating their products. Additionally, the teens were directed to show that if it were not for the alleged deception that the teens would not have been obese. This will be an uphill battle at best. In another suit, Adam Jernow brought a class action on behalf of himself and others similarly situated against Wendy s for allegedly misleading customers about the level of trans-fatty acids (trans fats) in Wendy s food products. This suit was also brought in the Southern District of New York, and was filed May 22, Jernow claims Wendy s advertised that the level of trans fats in its French Fries and fried chicken was nominal or nonexistent when in fact it was as much as 500 percent greater than that claimed by Wendy s. Should Wendy s be held liable for customers health? 6

7 More Toxic Torts Pumping for Oil at Beverly Hills 90210! Erin Brockovich, the assistant to attorney Ed Masry, who successfully sued PG&E for $333 million for contaminated drinking water, has sounded the alarm that one of the nation s richest high schools sits atop an oil field that is sickening its students. Beverly Hills High graduates from 1976 to 2000 have three times the rate of Hodgkin s disease that you would expect to see in students of that age group. The one thing they appear to have in common is the chemical emissions from the Beverly Hills High pumping site and at a nearby plant in Century City, which includes the carcinogen benzene. There are 19 oil wells in operation at the Beverly Hills High School. In 1979, Beverly Hills amended its municipal code to outlaw oil drilling anywhere in the city except Beverly Hills High School. In 2006, a judge dismissed the first 12 toxic tort cases claiming there was not enough evidence to establish that the cancers were caused by the industrial operations on or near the school grounds. These suits are on appeal and more are on the way. The lease agreement for drilling at the school expires in Emission fees are paid for releasing into the air such carcinogens as formaldehyde, acetaldehyde, and benzene. Should the oil pumping continue? 7

8 Medical Malpractice Reform After years of multimillion-dollar jury verdicts almost every state has introduced bills to change or amend their medical malpractice laws. This was preceded by doctors who complained that they could no longer obtain malpractice insurance at a reasonable price and were retiring in droves, creating a serious shortage in some areas. They refused to practice in the higher risk specialties such as obstetrics, neurosurgery, and cardiac surgery. Also hospitals were threatening to close their doors. Some laws put caps on the amount of damages that patients can receive from their medical providers. Other laws limit the statute of limitations period in which to sue, typically to two years, or another brief time period. More than half the states have succeeded in setting a cap on damage awards such as $250,000, and many have even set a limit on attorney fees, and have eliminated the joint and several liability theory for assessing damages. Some physicians are so weary of suit that they refuse to treat patients unless they sign a mandatory arbitration agreement, agreeing to forgo a jury trial in the event of a dispute. Would you sign away your right to a trial in order to see your favorite doctor? 8

9 Expanding Employer s Duty to Family or Third Parties The Plaintiff s bar is now attempting to bring toxic torts suits by the family members of the injured employee against the employer, as a result of toxins the employee was exposed to in the workplace. Usually a family member is exposed to someone who worked on the employer s premises and tries to bring the action. The chemical exposure could have been brought to family members via the employee s clothes. Some states have rejected this expansion of an employer s premises owner s liability case. The New Jersey Supreme Court ruled that the duty of care should be extended to a wife who might have been expected to wash her husband s clothes each day, and ended up with malignant mesothelioma. The court found that it was foreseeable that the wife could be exposed to asbestos in this manner. Do you favor expanding the right to sue to family members of an injured employee? 9