Thursday, August 07, 2008

More on peppers

Let us assume, for the sake of argument, that Brian Grubbs did indeed suffer no injury worse than a case of diarrhea, and that Wal-Mart had no legal liability regardless of Mr. Grubb's injuries; they did everything they could and were legally obligated to do to to ensure the safety of their food. As Dagood might say, two of the legs of the stool are made of the thinnest straw.

We will further assume that although weak, the lawsuit is not frivolous, that is having no basis at all in fact and/or law, a case that would be impossible to win.

(I have no idea whether this is actually the case, and I don't wish to libel Mr. Grubbs; I'm discussing a pure hypothetical. It is definitely the case that some people do sue with a case that almost certainly would lose in trial, and that companies do settle such cases.)

It is entirely possible that even assuming the above, Wal-Mart might settle. They have to balance the cost of bringing the suit to trial and successfully defending their position against the cost of just paying Grubbs to go away. Should we be worried?

There are two ways of looking at such a hypothetical case: the pragmatic and the principled.

From a pragmatic standpoint, we cannot draw any conclusions from such a hypothetical case except that the civil justice system is not perfectly efficient, which is hardly a surprising conclusion. At best, such a hypothetical case would constitute only anecdotal evidence. Anecdotal evidence is not entirely worthless (it proves, at least, that some state of affairs is possible), but it has limited value.

We would have to ask larger, statistical questions: How much money in total is spent settling weak, probably-unwinnable lawsuits? How does that amount of money compare to the total economy? How does it compare to the total spent settling strong lawsuits? If a company has an incentive to settle lawsuits they'll probably win, they have even more incentive to settle lawsuits they'll probably lose.

And we know there's an upper limit on settlements for weak lawsuits: The cost of defending the case. No company is going to settle a weak lawsuit for more than it would cost to defend. They will usually settle for considerably less; if it's six of one, half dozen of the other, you might as well defend. And lawyers are expensive, but they're not that expensive.

Without such numbers, I simply have no way of deciding whether or not settling weak lawsuits is a problem in a practical sense. Given the size of our economy, even the size of the civil lawsuit portion of the economy, I can read anecdotal cases for a month without getting a sense of the overall numbers.

I rarely see any numbers at all from advocates of tort reform, and when I do see numbers, they're usually context-free: "$100,000,000 in settlements!" [I made the number up] How much of that $100,000,000 can be provably linked to settlements of weak cases? Furthermore, we have a $13 trillion economy; you have to get into the hundreds of billions of dollars to go over 1%. The Waltons have tens of billions of dollars: They could find a measly $100,000,000 from the change in their couch.

As a matter of principle, we can know with great confidence that the outcomes of some cases do indeed conflict with our ordinary, intuitive notions of justice in a way that we can say meaningfully, "Such-and-such a case was indeed in some sense unjust." But so what? Frankly, my conscience is not particularly shocked if Wal-Mart were to cough up $100,000 they wouldn't otherwise have to pay.

Furthermore, let us assume that Grubbs did indeed suffer serious injury (food poisoning is potentially fatal, and often requires a multi-day hospital stay), but Wal-Mart is not in fact at fault, they did nothing wrong, and we know somehow they are not at fault.

There are 40,000,000 people in this country, most of them working, who do not have health insurance. (Actually, if you're not working, it's pretty easy to get health insurance. Furthermore, if Grubbs does have health insurance, his insurance company is likely to demand that he sue Wal-Mart as a condition of payment.)

Which shocks your conscience more: that Wal-Mart should pay for Grubbs' hospitalization even though they are not at fault or that Grubbs should be bankrupted for no fault of his own?

Our civil justice system is not always about determining fault. If someone slips and falls in my house and breaks her leg, I am legally obligated to pay for her treatment, even if I am not in any way at fault... and I don't even own my house. We tend to infer fault from financial responsibility, but that inference is not warranted by the laws we actually have. Someone has to pay, and I carry insurance for just that eventuality.

The way our system actually works is that if you get sick from something you ate at Wal-Mart, it is legitimate to hold Wal-Mart financially responsible even if we know they are not at fault.

This is perhaps not the best way to run an economy, but until we have universal health insurance, we have to balance what appears to be a tolerable financial impact on corporations and insurance companies (they seem to be posting quite good profits, thank you very much) against the suffering of real human beings.

If you think the profit margins of corporations and insurance companies is more important than medical care for real people, well, you're no friend of mine.

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