Friday, November 26, 2004

Excessive Litigation: Lawsuits

One of my "mandates" was to address the issue of excessive litigation which affects not only doctors and our health care, but virtually every possible human interaction.

While researching "outrageous lawsuits", I came upon several sites that were dedicated to the subject. The first one I looked at must have been built with intentional irony: while providing examples of outrageous lawsuits, there were Google Ads along the side for law firms specializing in getting "quick cash" or "class action" lawsuits. But it had some mind-numbing examples of where common sense is replaced with nonsense.

Another site had examples of warning labels intended to avoid lawsuits... some real winners here.

California may not have a monopoly on outrageous lawsuits, but they get plenty. Perhaps it is because of their "West Wing" view of the law.

Okay, you've had your laughs (if you clicked on the links). But, it's not all that funny. Sen. Mark Hillman of Colorado testified before the Colorado state senate that litigation cost over $700 for every man, woman and child in the U.S. You think you don't pay it? The costs of litigation go right back into the cost of products and services... better believe it.

Of course, lawsuits are legitimate means of resolving differences that cannot be resolved in other ways. Daimler Chrysler (DCX) just lost a $105.5 million lawsuit; they will appeal. Two things are obvious to the reader:

  • $98 million for punative damages is a lot of damage
  • a product meeting all legal requirements for safety is not protected from the judicial process
Maybe DCX could have made the seats stronger. Maybe by making them stronger the seats could have caused other types of injuries in another type of accident (as DCX claimed). The appeals process will address these things, but juries are inclined to sympathize with families over corporations... and it is difficult to find the truth in conflicting "facts".

There are, of course, situations where individuals or corporations have been deliberately cheating others or causing harm. I suppose if DCX deliberately designed their seats so that they were dangerously flimsy, DCX should be punished to the tune of $98 million. The jury should have:
  • looked at comparative seat designs of all major minivan competitors including whether or not competitors' seats were designed to perform in the same manner for the type of accident in question.
  • seen evidence that the DCX design did not meet or exceed all Federal safety standards.
  • received data from insurance companies that DCX seats failed more often in similar accidents than major competitors... and that more passengers were injured as a result.
If the DCX product met all safety standards and performed as well or better than competitors, then the jury should have decided for the defendant, DCX. If I had been a juror, I would have expected to see such evidence and would have decided according to the evidence... as the evidence dictated.

The DCX lawyers should have provided evidence that their product was as good or better than most competition and met safety standards. If they did not, DCX has either inept representation or an inferior product. If they did, the jury wrongfully awarded money to the plaintiff... who should have sued the jerk who drove into them at twice the speed limit.

But in today's climate of excessive litigation, it is not necessarily who is wrong that is sued, but rather who can pay.

Can"t Find It?

Use the SEARCH BLOG feature at the upper left. For example, try "Global Warming".

You can also use the "LABELS" below or at the end of each post to find related posts.

Blog Archive

Cost of Gasoline - Enter Your Zipcode or Click on Map

CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

My photo
Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)