My new column “Game Of GOP Thrones: Tort Reform Is The Republican Gift To Corporations” challenges the myth of “sky-rocketing” punitive damages awards perpetuated by conservative shills such as Wisconsin Governor Scott Walker. My father, consumer advocate and law professor Michael Rustad, has fought for years against the villainy of so-called tort reformers who seek to nationalize products liability law (what are they, socialists?).  His empirical research shows that punitive damages enhance consumer safety by creating financial incentives to produce great products. My article reviews my father’s work, features my original song “The Great Inevitably Exploding Ford Pinto,” and mixes in quotes from the seventh episode of Game of Thrones Season Five!

“As always, thank you for your honesty.”

My father Michael Rustad, a law professor at Suffolk University, presciently observed in 1992 that the business community, insurance industry, politicians, legal scholars, and the judiciary sounded an alarm about runaway punitive damages awards in products liability litigation [1]. Stories circulated en masse of “stupid or careless” consumers collecting multi-million dollar windfalls after being injured by their own folly. Ronald Reagan (40th President of the United States and avowed lawyer-basher) told the story of a man who successfully sued the telephone company when the booth from which he was making a call got hit by a drunk driver.

“What kind of man would I be if I ran away when I saw someone hurting you?”

While telling the telephone booth law suit story Reagan manipulatively left out the facts that the booth was installed very close to the road, the door wouldn’t open when the plaintiff tried to escape from the oncoming car, and he ended up losing his leg [1]. My father concluded that anecdotes, ideological statements, and sweeping overgeneralizations were not the road to effective policy-making. He conducted an empirical study, “In Defense of Punitive Damages in Products Liability: Testing Tort Anecdotes with Empirical Data,” published in 1992 in the Iowa Law Review [1].

“I can smell a fraud from a mile away.”

Professor Rustad smelled the fraud of the tort reform movement from a mile away. His Iowa Law Review study subjected many of the common claims of tort reformers about punitive damages in products liability to empirical investigation [1]. Their claims did not stand up under close scrutiny:

Assumption 1: Punitive damages are skyrocketing.

Empirical Finding: Punitive damage awards in products liability are actually decreasing since the mid-1980s (with the exception of asbestos litigation).

Assumption 2: Punitive damages are awarded in extremely high amounts that “boggle the mind.”

Empirical Finding: Median punitive damage awards indicate that these awards are quite modest.

Assumption 3: Out-of-control juries award punitive damages that are many times higher than actual damages.

Empirical Finding: Juries award punitive damages in ratios that are only slightly larger than compensatory damages.

Assumption 4: Judges are not controlling runaway punitive damage verdicts.

Empirical Finding: Judges frequently reverse or remit punitive damage awards in the post-verdict stage.

Assumption 5: Plaintiffs are becoming instant millionaires by entering the punitive damages legal lottery.

Empirical Finding: Plaintiffs rarely collect million-dollar punitive damages awards.

Assumption 6: Punitive damages awards in products liability cases are not the result of serious injury; rather, they are the result of litigiousness.

Empirical Finding: The plaintiffs in the study’s sample were the victims of catastrophic injury or death.

Assumption 7: Corporations are victimized by blameworthy plaintiffs.

Empirical Finding: The opposite situation is true: plaintiffs are victimized by blameworthy corporations.

Assumption 8: The government sufficiently protects consumers by punishing corporate misconduct

Empirical Finding: The government is a slow starter and a slow finisher in uncovering corporate misconduct in products liability cases.

“I imagine this is strange for you. Everyone you meet has a hidden motive, and you pride yourself on slitting in and out. But I’m telling you a simple truth: I serve the gods. The gods demand justice.”

Professor Rustad wrote that punitive damages serve social functions of punishment, deterrence of the defendant, and general deterrence of the defendant’s violation of social mores vis-à-vis his conduct [1]. Tort reformers’ proposal to cap punitive damages would eliminate the value of damages in deterring and punishing of the misconduct of corporations. Capping noneconomic and punitive damages (or limiting punitive damages to compensatory damages) would be actuarial “manna from heaven” as a firm could then calculate with certainty the maximum penalty a judge might impose.  This radical restructuring of punitive damages is special interest politics masquerading as a reform measure to boost the competitiveness of American businesses. Furthermore, it is arguable that  raiding the province of the jury via imposition of judge-assessed punitive damages violates state constitutional provisions for trial by jury [1].

“My family still has friends in the North. All I have to do is give a signal and they’ll rescue me. Climb to the top of the Broken Tower, light this candle, and put it in the window. Promise me, Theon.”

Professor Rustad noted that “punitive damages in products liability lie on the borderland between crime and tort” [1]. The term “crim-tort” acknowledges the blending, fulfilled by punitive damages, of public (criminal) and private (tort) functions. The remedy of punitive damages fills the space between the public and private branches of the legal system, thereby avoiding the need for the states and federal government to “rescue” consumers by assuming the expensive burden of punishing and aggressively deterring manufacturers of products which recklessly endanger the public. Punitive damages create an even playing field by depriving unethical corporations (i.e., those who shortchange on safety) a potential competitive advantage. The potential penalty (in terms of dollars or bad press) is usually enough to convince corporations not to trade public safety for their own self-interest. Ironically, the insurance industry may actually benefit if foreign companies perceive that they may be stiffly penalized for exporting unsafe products to the U.S.. They may emphasize safety and create more predictably reliable products which would likely cut down on insurance claims [1].

Professor Rustad’s Tennessee Law Review article, “How the Common Good is served by the Remedy of Punitive Damages,” helpfully provided corporations with “Ten Commandments for Avoiding Punitive Damages” [2]:

1. First Commandment: Thou Shalt Comply with Industry, State, and Federal Product Safety Standards

2. Second Commandment: Thou Shalt Not Fraudulently Misrepresent a Product’s Safety

3. Third Commandment: Thou Shalt Not Engage in a Cover-up to Conceal a Product’s Dangers

4. Fourth Commandment: Thou Shalt Not Ignore a Profile of a Developing or Known Danger

5. Fifth Commandment: Thou Shall not Trade Safety for Profits

6. Sixth Commandment: Thou Shalt Promptly Remedy Known Product Defects

7. Seventh Commandment: Thou Shalt Not Rely Upon the Supposed Safe Harbor of State of the Art

8. Eighth Commandment: Thou Shalt Adequately Inspect and Test Products

9. Ninth Commandment: Thou Shalt Warn Consumers of Known Product Dangers

10. Tenth Commandment: Thou Shalt Not Undertake Half-Baked Corrective Measures

Automobile executive Lee Iacocca flagrantly violated all ten of the above commandments. Mr. Iacocca is the subject of my original song “The Great Inevitably Exploding Ford Pinto” (featured in the TortsProf blog: http://lawprofessors.typepad.com/tortsprof/2014/07/the-great-inevitably-exploding-ford-pinto.html)  Per the Mother Jones classic article “Pinto Madness” by Mark Dowie (http://www.motherjones.com/politics/1977/09/pinto-madness), Ford Motor Company waited eight (8!!!) years to meet federal safety standards because it’s internal cost-benefit analysis placed a dollar value on human life. Here’s the music video (with lyrics below):

https://www.youtube.com/watch?v=IZ39MnvPK68

Do you want a subcompact car at an affordable price?
Low Gas Mileage?
Wouldn’t that be nice?
There’s nothing that the Germans or Japanese can do
That the US can’t do better and bring into the showroom just for you
Gotta bring it to the market – it’s all about the bottom line
And if 500 cars blow up you know I guess that would be fine

It’s the Great Exploding Pinto
Great Exploding Pinto
The Great Inevitably exploding Ford Pinto
The fuel tank ruptures, it’s a fire trap
Once you get stuck inside there is no turning back

You may call me cynical, you may call me crass
But if you talk to me about safety
You know your ass is grass
Cause safety doesn’t sell
And winners always cheat
The Pinto leaves you with that warm feeling when you drive it down the street
Gotta bring it to the market – it’s all about the bottom line
And if 500 cars blow up you know I guess that would be fine

It’s the Great Exploding Pinto
Great Exploding Pinto
The Great Inevitably exploding Ford Pinto
The fuel tank ruptures, it’s a fire trap
Once you get stuck inside there is no turning back

It’s cheaper to pay the settlements than fix the faulty design
What’s the value of your life? Corporations will decide it in due time

“The Great Inevitably Exploding Ford Pinto”
Lyrics and Music by James Rustad.
Copyright 2014. All Rights Reserved.

“Everyone has a choice. Even slaves have a choice. Death or slavery.”

In Grimshaw v. Ford Motor Co., the widely publicized Ford Pinto case, a jury handed down a $125 million punitive damages award [1].  Although Ford ended up paying all of the compensatory award, the California Appeals Court remitted the punitive award from $125 million to only $3.5 million.  When a remitter is entered, a trial judge presents the plaintiff with Hobson’s choice (i.e., “take it or leave it”). Three-and-a-half million dollars is still a great deal of money, however the Grimshaw case was notable in the number of “smoking guns” uncovered which might justify punitive damages. Ford’s conduct in the Grimshaw case was so egregious that Ford became the poster-child for corporate malfeasance in business ethics classes [1].

“It’s against my code to hurt a woman.”

Professor Rustad called out the Republicans for their “War on Women” way back in 1996 in his Rutgers law review article “Nationalizing Tort Law: The Republican Attack on Women, Blue Collar Workers, and Consumers”  [3].

Rustad wrote, “the Republicans propose to cap punitive damages at a level equal to a certain multiple of economic damages. Failing to consider noneconomic damages in calibrating the size of the punitive damage award places women at a great disadvantage. With equivalent injuries, women usually receive smaller economic verdicts than men because of their lower overall wages. In general, women will have lower earnings over their life cycle and spend fewer years in the labor force than men” [3].

Rustad also eloquently argued against the Republican calls for limiting and/or eradicating pain and suffering damages [3]. He noted that “in medical malpractice litigation, women receive pain and suffering damages for miscarriages, loss of fertility and sexual assault. In medical malpractice litigation, noneconomic damages constitute the bulk of recovery for psychological injuries that stem from spontaneous abortions, miscarriages and permanent sterility. These injuries have a low dollar value in terms of economic damages, but may be devastating in terms of pain and suffering” [3].

“Neither silence nor lies were an option.”

Professor Rustad observed that “tort reformers often justify the federal preemption of the state punitive damage laws by arguing that the present variations between the states create unpredictability and confusion for American manufacturers who market across state lines. Federal tort reform, however, is not designed to solve this problem. The federalization of tort law focuses only on restricting the rights of American consumers” [3].

“I’ve sacrificed more than enough for your traditions.”

Professor Rustad exposed the tort reform movement as a mechanism to shift costs of corporate malfeasance from business to the government: “The evaluation of the impact of tort reform is not only a tort law concern; it is a taxpayer issue as well. With a limitation on total recovery, who absorbs the cost that is not borne by the wrongdoer? Who are the victims of tort reform? Is it the family of the injured plaintiff? Is it the state? Is it charitable associations?” [3].

“Bastards can rise high in the world. Like your half-brother Jon Snow. Born the Bastard of Winterfell, now the Lord Commander of the Night’s Watch.”

Upon entering office in 2011, Wisconsin Governor Scott Walker immediately worked on changing state law to make it easier for corporations to win large cases and limit damages paid if their products or practices kill or maim citizens of Wisconsin  (see Lisa Graves’ excellent article on this topic, “Echoing ALEC’s Playbook, the Real Story of Walker’s Tort Reform,” in “The Center for Media and Democracies PR Watch” at http://www.prwatch.org/news/2012/09/11723/echoing-alecs-playbook-real-story-walkers-tort-reforms).  Lisa Graves documented that key provisions of Walker’s tort reform package were previously drafted by lawyers or lobbyists for the multinationals that comprise the nefarious American Legislative Exchange Council (ALEC).

Even though changing the rights of citizens injured by corporations has not been shown to create jobs in the Unites States, Walker pushed the following ALEC agenda:

1) Limiting damages for pain and suffering

2) Limiting the liability of companies that make products with common ingredients (where the brand may be difficult to ascertain over time, e.g., brain damage-causing lead pain) by preventing courts from relying on risk-contribution

3) Limiting punitive damages when a jury finds intentional corporate misconduct or gross negligence

4) Limiting who can testify as an expert in ways preferred by corporate defendants

The final tort reform bill passed in Wisconsin limited punitive damages to $200,000 or twice any compensatory damages, whichever is greater. Just as conservative politicians advocate for self-sufficiency for ordinary people and corporate welfare for their wealthy sponsors, they also argue for personal responsibility among consumers and unaccountability for big business.

“Sell swords, loyal to nothing but gold.”

David Corn’s article in Mother Jones, “As a Private Lawyer, Ted Cruz Defended Companies Found Guilty of Wrongdoing” shows how Texas Senator Ted Cruz (as a private legal gun for hire who billed at least $695 per hour) sometimes defended corporations that engaged in sleazy practices (http://www.motherjones.com/politics/2015/03/ted-cruz-lawyer-braun-medical-shandong-linglong). This is the same self-declared “courageous conservative”/Tea Party hero Ted Cruz, who has railed against “crony capitalism” and “corporate welfare.” He has also bragged that he authored “legislation to end federal dollars subsidizing corporate fat cats.” A plaintiff’s attorney who argued against Cruz’ client in one case observed “he (Cruz) was a run-of-the-mill corporate defense attorney who’d defend anything anytime a corporation wants to defend something.” Indeed, Ted Cruz is also a run-of-the-mill corporate politician who’d defend anything anytime a corporation wants to defend something.

“A man of the people, is that your game? It’s an old game, dull and unconvincing.”

Rand Paul revealed his true nature as a corporate apologist in his commentary about the British Petroleum Deep Horizon oil spill in 2010 (BP was found grossly negligent). Paul stated: “What I don’t like from the president’s (Obama) administration is this sort of ‘I’ll put my boot heel on the throat of BP.’ I think that sounds really un-American in his criticism of business,” He continued: “I’ve heard nothing from BP about not paying for the spill. And I think it’s part of this sort of blame game society in the sense that it’s always got to be someone’s fault instead of the fact that sometimes accidents happen.” Someone who was truly interested in representing all of the people instead of just the privileged would be reluctant to let BP off the hook for clear lack of safety protocols. Proper attention to safety by BP could have protected the public and their very own workers who perished in the explosion and sinking of the Deep Horizon oil rig.

Sources:

1) Rustad, Michael L. In Defense of Punitive Damages in Products Liability: Testing Tort Anecdotes with Empirical Data, 78 IOWA L. REV. 1 (1992)

2) Rustad, Michael L. How the Common Good is served by the Remedy of Punitive Damages, 64 TENN L. Rev. 793 (1997).

3) Rustad, Michael L. Nationalizing Tort Law: The Republican Attack on Women, Blue Collar Workers, and Consumers. 48 Rutgers L. Rev. 6733 (1996).