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Rob Sama Grand Plan – Legal Reform

Rob Sama Grand PlanDuring my lifetime, there are three political issues that I remember from my teenage years as being issues then that are still issues today. Those are the poor state of our public education system, the mathematical certainty that our entitlements systems would collapse, and our jackpot justice system. Of these the last one should be the easiest to solve. And it is necessary to solve it before any talk of health care reform.

Philosophically speaking, there are two competing conceptions of justice at work in the United States. The first and older of the two is what’s called strict liability. Which is to say, he who is at fault pays the damage. In such a system, people pay the price for their own stupidity or negligence. The competing theory is what’s called the deep pockets theory of the law, which is to say that because somebody is going to have to pay for the damage that’s been done, best that the party who is most able to pay do so.

The problem with the deep pockets theory, of course, is that it motivates the less than scrupulous to put themselves in situations where they can sue those with the deep pockets for compensation. And not just those with deep pockets themselves such as large companies and governments, but those who are well insured as well, such as individual doctors. Indeed, an entire industry has blossomed around suing such deep pocketed parties. The result has been catastrophic.

One part of any long term answer to this problem is to only appoint judges who rule on the basis of strict liability law. But there’s more to it than that. We need to eliminate the idea that going to court is a potential bonanza. And that requires some structural changes to our current ways of managing tort disputes.

I’m going to propose a few simple reforms, and then walk through how those reforms would have worked in some famous cases.

English Rule – Loser Pays Winner’s Legal Fees

The United States stands alone in requiring everyone to pay for their own leal fees in a civil suit. In most countries, what’s called the English Rule applies, which is to say that the loser pays at least some portion of the winner’s legal fees. This is only natural and just. In the event one party is wronged and goes to court to seek justice, that justice should include the cost of going to court. Likewise, should a party have been dragged into court by a jackpot justice seeker out on a fishing expedition, justice ought to include that his cost of acquittal be paid for by he who is wrongly accusing.

The lack of such a rule encourages legal extortion throughout society. Here’s how it works. Legal extortionist files a lawsuit against MegaCompany. MegaCompany knows that the suit has no merit, and that they’ll win in the end. But legal costs will exceed $3 million to put this to bed. So they offer to settle for $1.5 million, even though they did nothing wrong. Not only is this situation manifestly unjust, but it acts as a tax on all of productive society for the benefit of a class of legal leeches. The only reason why this situation hasn’t been rectified is because our legislators are in hoc to the legal lobby, and have no regard for their constituents.

In any event, you can read much more on the English Rule here. Suffice it to say, this one reform alone would do wonders for ending the system of jackpot justice we’ve created in this country.

Class Action Reform

I don’t object to the existence of class action suits per se, though I spent a long time considering whether or not they should just be done away with. However, I can see how they serve a purpose, when scores of people have been wronged by the same party. Nevertheless, some reform is desperately needed here.

The first step is to mandate minimum damages to be a viable suit. I’ve been “involved” in 2 class action law suits, one of which resulted in getting a coupon and the other in a check for $15. In the latter case, I was not only a customer but a shareholder, so I was literally robbing myself on that one. But in either case, it wasn’t worth it. In neither case did I feel I’d been wronged, or really want a lawsuit to proceed. And when it did proceed, the result was stupid.

So there needs to be some sort of minimum damages per person for the class action to make sense. Without that, this just amounts to lawyers raiding companies on behalf of themselves. So we need a rule that says something to the effect that “If you can’t prove damages of at least $100 per class member after legal fees, then you’ve wasted everyone’s time and you lose.”

Now the objection to this will be, “But the purpose of class action lawsuits are to stop companies from screwing their customers in little ways. If you eliminate any suit where damages are under $100/class member, then what’s to stop companies from behaving badly?” And the answer is, the marketplace. When a business does something small and petty to make me unhappy, I cease frequenting that business. Conversely, when something is industry practice, like the way that a monitor size is measured, I simply learn about it and adjust my buying behavior. I just don’t need class action lawsuits to “help” me, and businesses learn from their petty bad behavior by virtue of losing customers.

The second reform that needs to be made with respect to class action lawsuits is to strictly regulate legal fees, which get paid out only after the minimum $100/claimant is paid. Something like 2.5 hours should be billable for every hour of court time, with a strictly regulated rate per hour. Without a real client to answer to who can fire the attorney or dispute the bills, a fixed rate is the only way to assure there are no abuses with legal fees.

End Punitive Damages

Punitive damages, it seems to me, is a confused concept. Punishment, by definition, ought to be for the state to engage in for violations of the law. Citizens ought not be engaging in it against each other; that is vigilantism. Punitive damages, it seems to me, seeks to legalize a form of vigilantism, or citizens meting out their own punishments.

There are several problems with this. The first is that punitive damages put the plaintiff in the position of receiving a windfall for being harmed, which only serves to encourage him to be harmed, or to not take proper precautions on his own. The second problem with this is that it violates the principle of having no ex post facto law. If something were already against the law, then there would be established and publicly debated fines for violations, and citizens would know before acting what the consequences were. That’s only just. But punitive damages undoes that, in effect creating law on the fly. And that’s unjust.

Take for example the lady who spilled hot coffee on herself after going through the McDonald’s drive through. First off, according to strict liability she’s the one at fault because she spilled the coffee, not McDonald’s. Nevertheless, her contention, and reason for seeking punitive damages, was that McDonald’s served their coffee at unreasonably hot temperatures. But McDonald’s was acting within the scope of the law at the time. And if coffee temperatures needed to be regulated, then the proper method isn’t by creating law on the fly in a courtroom and exacting insane punishments upon the company. The proper thing to do is to legislate a regulation on the maximum temperature coffee can be served in the state.

So to that end I would be supportive of any measure that eliminated punitive damages, and remanded legislative recommendations to the legislature in extreme cases where action needs to be taken. Because the proper way to assure that behavior changes is to change the law.

But at a minimum, if you are going to have punitive damages, then by God put an upper limit on them, and have the proceeds go to the state. Barring that, we will continue to see frivolous lawsuits and an increased cost of doing business if not living as a result of them.

Other Reforms

There are two other reforms that are needed. The first of which is what I’ll call specialist reforms. Basically, there’s too much junk science and other nonsense allowed in today’s courtrooms. Particularly when it comes to medical related lawsuits. A simple sanity check form a panel of experts, appointed as judicial advisors as it were, would alleviate this problem. I envision it as acting as a screen allowing or denying suits from moving forward. Basically, allowing a legitimate medical malpractice claim through, while denying the “vaccine caused my kid’s autism” lawsuit to pass.

Finally, in recent years, lawyers have taken to suing companies for the fact that their stock has dropped in price. This is about the most asinine thing imaginable. as if the proper response to a decline in stock price is to partially liquidate, as if management has control over the markets, as if management should withhold bad news from the public. These types of lawsuits should be eliminated entirely. If you buy stock, you take risk, end of story . If there’s fraud involved, let the state mete out punishment and a bankruptcy judge handle liquidations. If you don’t like the way management performs, sell your stock or vote for different directors.

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