21 Comments

I am going to laugh really hard when the UAW members lose their pensions after the lawyers run all the US automakers out of business. After all it was there money that funded the politicians/trial lawyers that have brought the current legal system upon the US.

I don’t want to get into the merits of this case, but something in the post caught my eye: “the first one was dismissed in a mistrial when it was discovered after two weeks of trial that five of the jurors were former clients of plaintiffs’ lawyers.” So, apparently, the Court found that because several jurors had been clients of plaintiffs’ lawyers, there was a mistrial. Before, I go any further, if this fact was affirmatively misrepresented by the jurors during voir dire, stop reading this post and move on. However, let’s assume that it wasn’t.

First, the parenthetical states that the jurors were “clients of plaintiffs’ lawyers.” Does this mean that they were plaintiffs, or could it mean that they had a will drafted by a plaintiffs’ lawyer, etc.? Assuming that the original poster meant to infer that the jurors had, indeed, brought a lawsuit from the left side of the “v.”, why should this matter?

If it does matter, then I should move for a mistrial any time the jury contains a person who has worked for a company with 50 or more employees.

One more thing, and this may render the entire post moot…but did you mean clients of the plaintiffs’ lawyers in that case, or just members of the plaintiffs’ bar? The original post left off the definite article, leaving me to believe that you were referring to members of the plaintiffs’ bar (generally) and not these members of the plaintiffs’ bar.

[I’ve corrected the ambiguity. — TF]

Why is Ford 100% responsible when it was only 55% at fault? No comparative fault in South Carolina?

[South Carolina is one of the few states that has the pure form of the doctrine of “joint and several liability”, under which any deep-pocket defendant is 100% liable even if they’re only found 1% at fault. Thirty-seven states have enacted some limits on this, but South Carolina has not. — TF]

I’m reminded of a Tom Lehrer lyric:

The land of the boll weevil,
Where the laws are medieval,
Is callin’ me to come and nevermore roam.
I wanna go back to the Southland,
That “y’all” and “shet-ma-mouth” land,
Be it ever so decadent,
There’s no place like home.

I am not sure if we ever covered this in law school, but does one defendant have privity to sue another for the deficiency in a joint and several verdict? The plaintiff may not want to, but if I was Ford I would try to take every asset this woman has and at least make her go through bankruptcy. Additionally, if she wins money in her suit against Ford, can Ford count that in its payment to the kid?

It should be noted that the “Mom” in the headline of your post does not appear to be the mother of the injured minor.

The jury apparently found that the vehicle was too prone to roll-overs.

Unless the law of SC is very odd, Ford would have an action for contribution against her for 55% of the amounts awarded on behalf of the minor. Thus, if Ford is found liable to her in her action, Ford will get an offset.

If Ford is not found liable to her, Ford can, of course, proceed to collect a contribution judgment from her.

If she can’t pay, then the question is whether a party partially at fault (Ford) should bear the loss or a completely innocent party (the injured minor) should bear the loss.

Yes, the jury found Ford guilty of manufacturing an SUV. The legal system creates incentives to find the deepest pocket and attach a shred of fault to them so that they are held entirely responsible for the consequences of others.

The culpability, however, rests with an irresponsible driver who failed to provide for the safety of the children entrusted to her care. If the driver had paid attention to the road, no one gets hurt. If the driver had refused to drive until the children were safely belted, no one gets hurt. No vehicle is safe when the driver goes off the road and the passengers aren’t belted.

The ultimate cost is borne not by Ford, but by the rest of us: lawsuits like this add $500 to the cost of every American car. You and I can’t go to the car manufacturer and get a cheaper car by promising not to be as stupid a driver as this one was. So careful drivers are subsidizing careless ones.

I’ll tell you one thing: I hear driver ignores the road and kids don’t wear seatbelts, and I’m predisposed to find for Ford in this one. That said, I would love to see what evidence was introduced regarding the safety of the Bronco to so influence the jury.

I’d also be curious as to whether the Bronco had the top off when the accident happened, or if it was torn off during the rollover.

Now that I’ve basically agreed with you Ted, I have to argue one point. If we completely eliminated product liability lawsuits tomorrow, I don’t think automakers would lower prices across the board. For one thing, lawsuits don’t affect all manufacturers equally. And for another, I see no reason manufacturers wouldn’t just pocket the $500 and keep the prices of the vehicles the same. I could see it if only certain automakers were exempt from suits, as they could compete with those that weren’t. If you’ve got anything to disprove my cynical nature on this one, I’d love to see it. I believe I used a similar example on Corpreform when my doctor paid off his copier and rather than lowering fees, he pocketed the $700 a month.

You write that “Ford was found guilty of manufacturing an SUV” but that is just spin, not reporting.

It is a fact, not spin, Ford was found liable for manufacturing a vehicle that was too prone to roll over.

Whether that decision was the correct one depends on the evidence introduced at trial and neither you nor I are privy to that evidence.

DM writes: neither you nor I are privy to that evidence

Actually, unless these particular attorneys came up with something new in the way of twenty-year-old documents, I have seen that evidence, because I’ve read several plaintiffs’ briefs arguing for upholding similar verdicts, as well as submissions made to NHTSA arguing that certain vehicles are “too prone” to roll over. They essentially come down to requests to ban SUVs: every SUV faces accusations of being “too prone to roll over.”

SUVs are designed to have high clearance to traverse rugged terrain. This raises the center of gravity and affects the handling: it’s a known tradeoff of the laws of physics. There are a wide variety of tests of varying degrees of scientific merit one can use to suggest a vehicle is “too prone” to roll over, and plaintiffs have the benefit of cherry-picking which tests to apply to which vehicles.

Empirically, however, the Bronco doesn’t roll over more than other SUVs, which is why NHTSA, in both the Bush I and Clinton administrations, refused to recall the Bronco when the plaintiffs’ bar asked it to. When I say Ford was held liable for producing an SUV, I’m not spinning: it was because it was held liable for producing an SUV.

Moreover, a vehicle should be viewed in totality: an auto that is more likely to roll over may be safer in other particulars that more than compensate for that increased propensity. So I question the premise. One can’t change the rollover propensity without creating a different vehicle entirely. The vehicle should be viewed holistically, and holistically, the Bronco is a safe car when used as designed.

Perhaps we as a society would be better off banning SUVs, but that’s a decision that should be made other than by a 12-person jury of laypeople. This vehicle rolled over because the driver drove off the road.

JL writes: I see no reason manufacturers wouldn’t just pocket the $500 and keep the prices of the vehicles the same.

If you really see “no reason” why at least some of that $500 wouldn’t find its way back to consumers, I recommend you take an introductory micro-economics course. You’re surely not suggesting that demand for autos is inelastic.

The roof doesn’t have to be torn off for an unbelted passenger to suffer severe head injuries. Centrifugal force throwing the passenger against the top of the roof is sufficient, and is the cause of most injuries in rollovers. There don’t appear to be any allegations in this case that roof strength was the cause of the injury.

Ford will probably only wind up paying a couple of million dollars (still too much) after appeals. If Ford did have to pay the full amount in these cases, then it would only take a few to push it into bankruptcy. With all the competition Ford is facing they probably don’t have hundreds of millions of dollars just lying around. I imagine we would then see some meaningful federal legal reforms, as Congress wouldn’t let Ford slip into receivership without a fight.

Ford now needs to sue the state and the county that put the gawd daaumed road there in the first place!

Then another suit against the DMV for providing a license to this trauma stricken, (easily distracted), woman.

And how come firestone gets off scott free? 🙂

Oh and I’ll add that it appears the juries selected evidently lack even an “average” grade collectively!

Two quick points: Elasticity varies from brand to brand and model to model. The potential buyers of a $90k Range Rover are less sensitive to a $500 price difference than the buyers of $20k Jeep. Further, it’s unlikely that the $500 figure you use would apply equally to both the Jeep and the Land Rover. Will you admit the $500 figure is a broad generalization derived in a very imprecise manner? Automobiles are also not purchased solely on price. For example, I personally won’t buy a foreign car that has a reasonable American alternative, because I believe in supporting the American auto industry. The “reasonable alternative” clause is only there so I can someday buy a Ferrari. A good example here is when I made my last car purchase decision, it was between a Mini Cooper and the Trans-Am I bought. I drove the Mini and it was nicer than the Trans-Am in several respects, but I went with the Trans-Am. Had the price of the Mini dropped by $500 or $5000, it wouldn’t have swayed me. If I remember my micro-economics course (which was a couple of years ago) my behavior violated the basic assumption of econimics that consumers make rational decisions out of financial self-interest.

Second: My question about the roof was prompted because I believe I read one of the passengers was ejected from the vehicle. I can easily see that if the roof was off, but am genuinely curious how that would have happened in a rollover if the roof was on the vehicle.

An ejection typically goes through the window, rather than the roof.

Ah, so you admit that you can think of a reason that reducing liability expense would reduce car expense.

It’s unlikely that the $500 applies equally to the Jeep and Land Rover, but not in the manner you think: (1) the less expensive car is more likely to be driven longer and more often and with more carpooling passengers; (2) less likely to have expensive top-of-the-line safety features that haven’t yet become standard and thus more likely to be sued over the lack of those features; and (3) more likely to be sold in such a volume that trial lawyers have put together a cheap package targeting the vehicle for lawsuit in the hopes of achieving economies of scale by targeting a lot of potential plaintiffs. (There will never be a mass tort for a Rolls Royce, for example–not enough of them are sold.) Note that the plaintiffs’ bar puts profits before people: they look at the costs and benefits of bringing suit, and target the most profitable vehicles to sue over, rather than the most dangerous ones, which is why the Ford Pinto is notorious and the VW Beetle (whose designers were so inconsiderate to write their memos in German instead of cheap-to-analyze English), which killed people at a much higher rate, is remembered with fond nostalgia.

So the $500 figure (which comes directly from the president of Chrysler) is probably higher for cheap cars and lower for expensive cars, and perhaps close to zero for the Rolls.

The relevant inquiry is not what you, Justinian Lane, would do: yes, there exist some vehicle purchasers who are prejudiced against autos built by brown or yellow people. (Economics doesn’t teach that rationality depends on financial self-interest, it teaches that rational decisions are based on economic self-interest—utility. You claim to get $5000 worth of self-satisfaction in discriminating against non-American automobiles, so purchasing the Trans Am instead of the Mini Cooper is not “irrational” in the economic sense, even if it reflects an irrational prejudice.) But the critical inquiry for elasticity is what auto buyers collectively do at the margin in response to price increases or decreases. If you didn’t learn that in microeconomics, your class failed you.

Auto manufacturers sure seem to think that price changes make a difference. They sell more cars when they offer $500 rebates, and fewer when they don’t; they price cars in numbers ending in $95, apparently thinking that the difference between $19995 and $20000 is psychologically meaningful to buyers at the margin.

I’m no economist, but if I recall my microeconomics class correctly, it often dealt with “widgets” – a hypothetical, identical product. Cars are far from that. For many people, they’re a personal statement. There are some cars that people simply won’t buy, no matter the price.

Can you imagine a “tree hugger” buying a Hummer because it’s on sale for $500 off? Or even if they price-matched it to a hybrid? Just not going to happen. Similarly, a family with three children is not going to buy a 2-seater for their only car, no matter how cheap it is.

I appreciate that you provided the source of your $500 figure, but I generally don’t fall for appeals to authority.
Perhaps his figure of $500 is correct for Chrysler, but not necessarily for any other auto manufacturer. My assumption is he simply took some estimate of tort costs on the automotive industry, divided it by the number of cars sold in a certain year in the U.S., and then rounded it up or down a few bucks to $500 so it would make a nice sound byte. Effective? Yes. Accurate? No.

Let’s analyze that figure even further. In 2005, Chrysler sold 180,088 units. Multiply that by the $500, and you get $90,044,000… which is about 1.5% of Chrysler’s total revenue for 2005. How low should tort costs be for an auto manufacturer? 1%? .5%?

I’d also like to compare that $500 with another number: destination charges. I live within ten miles of a factory that produces the Saturn Vue. A Saturn dealer also within ten miles of the plant is selling those cars with a $600 destination charge. Saturn dealers in Los Angeles have the same $600 charge. Now, do you think it really costs the same amount of money to transport a car 10 miles as it does 1700 miles? No – so why not fight to reform the marketplace to force manufacturers to stop using artificial destination charges to increase profits?

I freely admit that if we reduced the tort costs in America, prices on some products would drop by some small percentage. But lower prices are not a compelling reason to change the justice system.

I’ll take your word for it that the Beetle was more deadly than the Pinto; that seems plausible enough. But the infamy of the Pinto wasn’t due to a large number of lawsuits as much as it was to the press surrounding one whopper of a jury verdict, and the criminal prosecution of Ford. All it took was two trials to doom the Pinto. The recall didn’t help it, either. 🙂

My personal decision to buy American isn’t based on racial discrimination, but out of patriotism; there are plenty of brown and black and yellow people working in the very same factory in Dearborn where my Bronco was built. (I’ve been there, and they have an awesome tour. If you’re ever in Detroit, I highly recommend it.)

I’ll let others deal with the multiple examples of jaw-dropping economic illiteracy in Justinian’s comment (which borders on a troll), and simply note that, once again, his facts are wrong: Chrysler’s actual 2005 sales were 2.3 million units, which makes the relevant figure well over a billion dollars, or more than 60% of the Chrysler Group’s profit and about 2% of its revenue.

Note that this is $500 added to the price of every vehicle. As we discussed, costs aren’t entirely shifted to consumers, so the actual cost to society is more than $500/vehicle.

Is the figure exactly $500? Probably not: someone probably figured it was easier to remember $500 than something like $512.72. So what?

Mea culpa. I misread the DaimlerChrysler press release and substituted a monthly sales figure for a yearly sales figure. Thank you for correcting that error. (I thought that 180k figure sounded low.)

I did some digging and found the $500 figure came originally from John Graham in the 1991 book The Liability Maze. The $500 figure is comprised of the costs of the tort system AND the cost of safety improvements made to vehicles because of the tort system.

Specific examples cited included the redesign of the Pinto’s gas tank (a societal benefit) and the installation of rear seat shoulder belts. (also a societal benefit) He specifically found, “liability seemed to cause safety improvements to occur more quickly than they would have in the absence of liability.”

I would be exceedingly interested in knowing exactly how much money DC (or any of the Big Three) spent in 2005 defending itself in tort lawsuits.
Perhaps with that number a more compelling argument to alter the justice system can be made than, “Because of the tort system, there’s a bunch of safety stuff in your car that drives up the price.”

I’ve noticed the one thing we argue most about is money in some form or another. I think we have a philosophical difference here. I believe the sole purpose of the justice system is, well, to administer justice. As such, economic arguments for tort reform don’t generally persuade me.

You seem to believe that an additional purpose of the justice system is to increase the economic efficiency of society. For that reason, I don’t think we’ll ever see eye-to-eye on issues such as damage caps. But I bet we can find some common ground on rules of evidence and the like.

JL, you say: “But lower prices are not a compelling reason to change the justice system.” Is this actually what you believe? Or am I taking this out of context? “Modestly lower prices,” maybe?

Justinian Lane’s excerpt from Graham’s article in The Liability Maze, “Product Liability and Motor Vehicle Safety,” misrepresents Graham’s actual finding. The full paragraph from which Lane quotes, out of context, is the following (pp. 183-84): “The case studies provide little evidence that expanded product liability risk was necessary to achieve the safety improvements that have been made. In the absence of liability risk, the combined effects of consumer demand, regulation, and professional responsibility would have been sufficient to achieve improved safety. In some cases, however, liability seemed to cause safety improvements to occur more quickly than they would have occurred in the absence of liability.”

Quite a different ring than Lane’s excerpt, huh?

Particularly when qualified by Graham’s further and final finding, 6 bullet points down (pp. 184-85): “The case studies demonstrate that vehicle manufacturers sometimes delayed making seemingly feasible pro-safety design modifications. The liability system may contribute to such delays by creating fears among manufacturing management that design improvements will be used by plaintiff attorneys and juries as evidence that prior damages were defective. Hence the behavioral incentives created by product liability are not always pro-safety.”

Did Lane misread the article or deliberately quote it out of context to protray its findings, incorrectly, as comporting with his position? That’s an inquiry I’ll leave to the readers’ discretion.

Another point regarding Lane’s reading/reporting of the facts: The $500 per car figure comes from The Liability Maze, but not from the Graham article. Rather, it comes from Murray Mackay’s subsequent article, “Liability, Safety, and Innovation in the Automotive Industry” (p.199): “In researching this paper, I persistently asked manufacturers what the cost and consequences of the rise in liability have been. In simple financial terms the answers have varied by a factor of ten, ranging from $50 to $500 per car sold.” The variance may suggest that the $500 figure is on the high side; but Mackay indicates that the costs seem to be much higher for domestic manufacturers than for importers, which may be why Chrysler sticks to the higher number. Steve Hantler, DaimlerChrysler’s assistant general counsel, tells me that the $500 estimate, being 15 years out of date, is itself probably low; he suggests that today’s liability cost is closer to $1000 per car.

One more point: Mackay seems to understand that marginal costs affect pricing in reasonably competitive markets, a point that seems to elude Lane: “First, as a matter of principle, it is clear that the customer ultimately pays.”

And as Justinian seems to misunderstand or to forget, higher prices also lead to lost lives, as price-sensitive consumers on the margin forego purchasing newer, safer products that save lives.

Drew: we’ve previously raised with Justinian whether he really believed the nonsense he spouts that economic implications should be irrelevant, and his only response was to change the subject (as he attempts to do here).