Read all AAJ Talking Points on the Activist Center
Visit the Press Room for more information

General Talking Points

—Adopted from an article originally compiled by Jean Hellwege, Rebecca Porter, and Carmel Sileo for Trial Magazine

Myth: Asbestos bankruptcies

Asbestos lawsuits have driven many manufacturers into bankruptcy, causing businesses to close and jobs to be lost.

Asbestos companies in financial trouble? Some of the largest ones facing liability for exposing employees and consumers to deadly asbestos are anything but, according to a recent study.

When hundreds of thousands of people became ill or died because of asbestos exposure, the victims and/or their families sought compensation from the makers of the toxic substance. Many of the companies sought Chapter 11 bankruptcy protection, which lets them stay in business while they pay the plaintiffs’ rightful claims.

A 2003 study by George Benson—Emory University’s John H. Harland Professor of Finance, Accounting, and Economics—found that seven of the biggest asbestos manufacturers that had filed for bankruptcy protection were making profits, and their employment rolls had either increased or did not decline materially.

Based on an analysis of the seven companies’ 1998-2002 financial statements and 2003-2005 projections, Benson concluded that “on the whole, they essentially have increased or stabilized their sales, assets, employment, and profitability, and have projected increases. It is fair to say that they are viable and likely to be increasingly successful companies that should generate funds to exit bankruptcy significantly stronger than when they went in.”

Myth: Med-mal premiums

We need to limit recoveries in medical malpractice cases in order to lower doctors’ insurance premiums. In states that don’t limit med-mal awards, doctors are leaving their practices because their malpractice insurance rates are skyrocketing.

It is true that med-mal insurance rates are skyrocketing; they did so in the mid-1970s and the mid-1980s, and they are rising again now. But this cyclical increase is tied to insurance companies’ investment losses due to drops in the market. (The Truth About Med-Mal Premiums, TRIAL, May 2004, at 36.)

Medical membership associations have raised a hue and cry about a “medical liability crisis” and doctor shortages where their members evacuate states with high insurance rates or leave the profession. But a U.S. General Accounting Office study found that these reports were “not substantiated or did not widely affect access to health care.” In the five states the medical profession cites as key examples of the “crisis,” the number of doctor departures reported were “sometimes inaccurate or involved relatively few physicians.”

These associations and other tort “reform” proponents insist that capping medical malpractice awards is the only way to lower doctors’ insurance premiums. The “reformers” just can’t show that caps work.

Insurance rates are still soaring in states with caps, including Colorado, Florida, Georgia, Missouri, Nevada, Ohio, Washington, and West Virginia. The insurance industry has even gone on record to say it has not cut, and does not plan to cut, insurance premiums because of tort restrictions. “The insurance industry never promised that tort reform would achieve specific premium savings,” the American Insurance Association stated in March 2002.

Several states without caps have experienced low rate increases, while other states that have passed major tort “reform” laws have seen high increases.

U.S. newspapers report doctors’ frustration and unhappiness with the increased workloads and decreased payments wrought by managed care. Their medical malpractice insurance rates are not the problem: The cost of med-mal liability premiums is less than 1 percent of total health care costs, according to the Consumer Federation of America. Overworked doctors make mistakes —up to 98,000 patients die in hospitals each year due to medical errors, a study by the Institute of Medicine found. Changing the structure of managed care as well as updating hospital practices will go a long way toward preventing medical negligence.

Reforming insurance company practices will control how much they are allowed to charge doctors for insurance. Currently, these companies are not subject to antitrust laws, and they are free to set their own rates based on their own estimates, often in collusion with other insurers.

Curtailing insurers’ practices, not the courts, will stabilize premiums for doctors.

Myth: "Frivolous" lawsuits

"Frivolous" tort cases are clogging the courts.

Tort “reformers” claim that too many lawsuits lead to increased costs and delays in the civil justice system. President Bush twice denounced “frivolous lawsuits” in his State of the Union address in January. But researchers have been unable to confirm the existence of a “litigation explosion.”

Tort filings in state courts have declined by 5% since 1993, according to the National Center for State Courts (NCSC). Contract filings, meanwhile, which are more likely to involve businesses than tort cases, rose by 21% over the same period.

Civil litigation is decreasing in the federal courts as well. The Administrative Office of the U.S. Courts found federal civil filings dropped from 280,000 in 1998 to 265,000 in 2003, and the percentage of personal injury cases in that time fell from 21.2 percent to 18.3 percent of all civil cases filed. Less than 20 percent of all federal civil cases are tort cases, according to the U.S. Bureau of Justice Statistics (BJS).

The truth is, only 2 percent of Americans file lawsuits, according to the Rand Institute for Civil Justice. In state courts, only 5 percent of the tort cases filed go to trial; in federal court, only 3.1 percent do, according to the BJS.

It is defendants who raise costs and drag out suits by stalling discovery: Courts around the country have sanctioned corporate defendants for withholding or destroying evidence, routinely filing numerous objections, failing to produce documents and witnesses, and hiding records or denying that they were ever kept.

The McDonald’s coffee case and others that have drawn media attention have distorted the public perception of the legal system, giving people the impression that huge sums are commonly awarded for questionable wrongs. In fact, the media report only large verdicts or unusual cases that they deem newsworthy.

And the woman who spilled the McDonald’s coffee? She was 79, in the passenger seat of a stopped car, and the coffee scalded her so badly that she suffered third-degree burns and needed skin grafts. During discovery, McDonald’s produced documents showing more than 700 claims from people burned by its coffee between 1982 and 1992. The judge reduced the jury award of $2.9 million in compensatory and punitive damages, and the woman settled for about $600,000. An injured person received a fair award. That’s the story that needs to be told.

Myth: "Tort tax"

Plaintiff lawsuits hurt the U.S. economy by creating a so-called tort tax on products and services.

That term, like tort “reform,” is only a clever marketing slogan. Behind it is a concerted effort to let corporations off the hook and take away the right to a jury trial. The excuse: that juries—that is, ordinary citizens—too lightly give away too much money.

The fact is, the only people paying a “tort tax” are taxpayers, who have to pick up the tab when a company’s misconduct leaves someone brain-damaged, paralyzed, chronically ill, or dead. Eliminating juries and capping damages just shifts the costs to overburdened government programs that provide health and disability benefits.

The people crying “tort tax” say businesses are crippled by litigation costs. But the real picture tells a different story. A 1999 survey by Ernst & Young and the Risk and Insurance Management Society found that liability costs have actually declined. The study found that companies paid only $5.20 in liability costs for every $1,000 in revenue and that these costs—which include property damage, workers’ compensation, and lawsuit expenses—were down 37 percent from 1992 levels.

Runaway juries

Irrational juries frequently hand out multimillion-dollar punitive damages awards to plaintiffs.

Again, the media feeds the belief that extraordinary cases are the norm. The awards in punitive damages cases reported in the 1980s and 1990s in the New York Times, Wall Street Journal, Washington Post, Los Angeles Times, and Christian Science Monitor exceeded the typical punitive award in the United States by 88 percent, according to the Center for Justice and Democracy.

Cases that result in a punitive damages verdict are rare, and the typical amount awarded is low. And most punitive damages are never collected because of posttrial reversals, settlements, or defendant insolvency.

A 2002 study conducted by the NCSC and Cornell University debunked the “out-of-control jury” myth in its analysis of more than 8,000 civil trials that ended in 1996 in 45 large trial courts nationwide: It found that juries awarded punitive damages in only 2 percent of all civil cases.

The U.S. Department of Justice studied 10,278 tort trials conducted in 1996 in the nation’s 75 largest counties and found that punitive damages were awarded in only 3.3 percent of the 4,879 trials that plaintiffs won—that works out to 162 cases. Most of the punitive awards were for less than $40,000. Juries, like judges, tended to award punitive damages in proportion to compensatory damages.

In fact, the NCSC-Cornell study found that injured consumers are more likely to win their cases before a judge than before a jury (plaintiffs won 61.8 percent of bench trials, but only 47.3 percent of jury trials). Judges awarded punitive damages in 6.7 percent of cases, while juries imposed them in only 4.7 percent of cases. And judges’ awards were higher.

When juries speak, companies listen: Because of verdicts that included punitive damages, children’s pajamas are no longer flammable, medical devices and auto fuel systems have been redesigned, and farm equipment and factory machinery include safety guards.

Victims and Families United, an Illinois group that publicizes victims’ stories, says that behind every lawsuit is a real victim or family who is seeking justice. “Sorry works,” the group claims, noting that most victims just want an apology and an offer to help.

The group points to a Department of Veterans Affairs (VA) hospital in Lexington, Kentucky, where if doctors make a mistake, they admit it and offer to settle. According to a 1999 article in the Annals of Internal Medicine, federal records show that settlements average about $15,000 per claim at the Lexington facility, while the average VA hospital settlements was more than $98,000.

Myth: Nonprofits as victims

Volunteer organizations like the Girl Scouts and Little League face constant personal injury lawsuits. Litigation is driving these organizations out of business and threatens volunteers.

Who knows where this one comes from—certainly not the Girl Scouts of America, which in 1995 demanded the retraction of tort “reform” ads claiming the organization had been besieged by lawsuits. “Absolutely not true,” said the Scouts. That same year, a CNN report revealed that while ads running in 40 congressional districts announced, “Lawsuits could drive Little League teams out of existence,” the organization had more teams than ever.

Yet the myth persists. Just last December, Newsweek published “Civil Wars,” a sweeping attack on the civil justice system that highlighted the story of an Arizona man who volunteers as an organizer of an annual softball tournament that raises money for school sports programs. The story reported that the man canceled the tournament this year for fear of being named in a lawsuit, but it neglected to mention that people who volunteer for nonprofit groups or government organizations are protected from tort claims by the Volunteer Protection Act of 1997. This federal law, enforced in every state, immunizes (with a few exceptions) the negligent acts of anyone volunteering for a nonprofit organization—even people who work with children.

Myth: Excessive attorney fees

Plaintiff lawyers rake in huge fees, frequently charging clients one-third of any recovery, even when a case settles after just a phone call or letter.

This myth was manufactured by the tort “refomers” two decades ago to reinforce their claim that the legal system was overdue for an overhaul. It didn’t fly then, and it won’t now.

Several states have recently refused a bid by the “reform” group Common Good to radically change the rules regarding lawyers’ fees. Among other things, the proposal would prohibit contingent fees in personal injury lawsuits unless plaintiff lawyers first sent a “notice of claim” to potential defendants. A Utah Supreme Court attorney-ethics committee found that the proposal was “entirely out of character with the general approach and goals of the Rules of Professional Conduct” and “uncharacteristic of general principles that govern the actions and relationships of lawyers.” (Utah Court Rejects Bid to Limit Contingent Fees, TRIAL, Apr. 2004, at 16.)

The contingent fee system is called the “key to the courtroom” because it allows injured people to seek compensation in court without having to pay their lawyer first.

A few fee facts:

• Lawyers are bound by professional rules to charge reasonable fees, and they typically charge much less than the usual one-third if a case settles early or with little work done by the lawyer.

• Contingent fees keep frivolous lawsuits from reaching the courthouse and promote efficiency. Lawyers who know they will be paid only if their client’s case prevails avoid taking cases that lack merit. And they avoid prolonging litigation because pretrial expenses come out of their own pockets.

• Courts already have the power—and use it—to reduce excessive fees.

• Arbitrary caps on fees would make it much harder for all but the most seriously injured people to seek justice in court. For example, if fees were capped at 10 percent (a typical “reform” proposal), lawyers who took cases with minimal damages would soon go out of business.

• Fee caps are one-sided, limiting the rights of the injured and making it easier for well-financed defendants to force meager settlements. “Reform” proposals do not apply to the often exorbitant hourly fees charged by defense counsel.

Urban legends in cyberspace

An e-mail circulating on the Internet describes cases that vied for the annual “Stella” award for the most frivolous lawsuit in the United States. These cases show why we need to stop people from filing baseless claims.

The cases nominated for “Stella” awards—mockingly named for Stella Liebeck, the McDonald’s coffee plaintiff—are outrageous, but they aren’t real. They’re modern-day urban legends: stories everyone “knows to be true” and “heard from a reliable source” but that never include an actual case name or citation.

The nonpartisan, professional debunkers at Snopes.com concluded that “all of the entries in the list are fabrications” and that “a search for news stories about each of these cases failed to turn up anything.”

The tort “reformers’” fingerpointing at frivolous lawsuits has led the public to believe almost any denunciation of trial lawyers, yet they conveniently “forget” that the number of contract cases filed in state courts was 50 percent higher than that of injury lawsuits in 2000, according to the American Bar Association.

If you want to see frivolity—like Mattel suing a man for giving away toys to dying children, or Kellogg’s suing Exxon because its logo looks too much like Tony the Tiger of Frosted Flakes fame—business-to-business lawsuits are a good place to start.

Myth: Class actions

Class action reform will ensure that victims of mass torts are compensated fairly while reducing the burden of these massive cases on state court systems.

Federal courts are overburdened not by litigation but by the increasing federalization of state laws—a trend that Supreme Court Justice William Rehnquist, among others, warned about years ago—and an unusually high number of judicial vacancies.

Also, state courts are faster at processing civil cases, and their judges are more experienced at handling them; turning them over to slower-moving, inexperienced federal courts will bog down the dockets even more. Is that what the “reformers” really want?

Sure they do: The tobacco, pharmaceutical, automotive, and chemical industries that fund the American Tort Reform Association are happy to backlog these cases to avoid paying for their mistakes. Meanwhile, special rulings to speed processing of business-to-business lawsuits send these cases flying through the courts. Businesses like lawsuits when they are the plaintiffs.

But consumers know the value of class actions. Recent state polls have determined that most consumers believe that they lead to better, safer products and a cleaner environment, and consider them a good way to compensate injured people.

Conservative principles

The tort “reform” movement contradicts conservative principles of the party of Lincoln, like promoting personal responsibility, limited government spending, and family values.

Everyone should be responsible for their own wrongdoing—corporations as much as individuals. When a company’s products harm someone, or when workplace conditions make employees chronically ill, that company should compensate the injured person for the harm it’s caused.

Civil lawsuits protect children and families. Economic loss and illness can tear families apart. Compensating them for their injuries helps them stay together. And the jury system does this by making wrongdoers—not taxpayers, through government-funded benefits programs—foot the bill for these costs.

The civil justice system is a free-market mechanism: Individuals bring lawsuits without government interference. And jury verdicts allow ordinary Americans to hold more powerful wrongdoers accountable, and prevent them from causing future harm.

Posted August 2004