Well, hello there Week #8!

1. Well, hello there Week #8! TORT LAW **Starring: Sonya, Sandra, Charles B., Cheryl B., Jolie, Rachel, Tashara, Dawn, Susan, Andrea, Cynthia, Felicia, Susan, Megan, Vic, Tammy, Cheryl K., Amanda, Erin, Laurie, David, Wanda, Melissa, Charles W., Tamica, and Delendell!! Guest starring: Adam

2. What you need to do this week. • Rest up for a busy Week #9! We (I mean you guys) have 3 assignments due in Week #9. • AND there are two discussion questions this week.

3. Quick Overview of what you need to do in Week #9…. You need to complete part #4 of the Final Draft. It is worth 100 points. Final Exam. It is 60 questions. Approximately 30 True/False and 30 Multiple Choice. AND you have 2 hours to complete it. It is worth 120 points. Final Exam Essay (Tex & Rex scenario). It is worth 100 points.

4. This week (and tonight) – we will discuss: This Unit will discuss the tort reform movement, as well as automobile insurance since most tort cases involve auto accidents.

5. TORT REFORM – what is it? • Tort reform is sweeping the country due to an outcry that we are too litigious a society. People are being encouraged to file lawsuits. • Laws favor plaintiffs, and this encourages more lawsuits. Juries are awarding large sums of monies, including punitive damages, to plaintiffs, in excess of actual damages suffered. • This lesson defines the five goals of our present tort system. The system is expected to compensate those injured, deter others from doing similar acts, spread the cost throughout society with appropriate insurance coverage, make the victim whole, and expose misconduct. • The question of whether there is truly a problem with the system is often raised, but nevertheless, tort reform is underway. It has a number of key goals, the most popular of which include capping damages, modifying certain rules that favor plaintiffs, discouraging frivolous lawsuits, and encouraging arbitration.

6. Auto Insurance…. • Because auto accidents represent a large percentage of the tort cases filed every year, understanding automobile insurance coverage is very important. • There are five major characteristics of automobile policies: single versus split limits, coordination of benefits provisions, primary versus secondary coverage, subrogation rights and arbitration rights. • There are also seven types of auto insurance coverage: liability, medical payments, comprehensive, collision, accessory coverage, uninsured motorist, and underinsured motorist.

7. GOALS OF THE TORT SYSTEM • First, the tort system is designed to compensate victims. Not only are victims served by this compensation, but society also benefits because tort victims who are compensated are less likely to become public charges, thereby alleviating some of the stress on an overburdened social welfare system. • Second, tort law serves a deterrent function, providing individuals with an incentive to act in socially responsible ways. Over time, both individuals and businesses learn to consider the social consequences of their actions. • Third, tort law spreads the risk of injury among members of society. By incorporating the costs of this social “insurance” into the costs of goods and services, all are protected from the expenses of catastrophic loss.

8. Goals of the Tort System (continued) • Fourth, justice is served when victims are made whole. Restoring victims to the positions in which they would have been but for the defendant’s wrong serves the collective conscience. • Fifth, tort law exposes corruption, incompetence, and a variety of other forms of misconduct. Behaviors that might otherwise have escaped public attention are brought into the limelight of public scrutiny and rectified.

9. American Tort Reform Association (ATRA) www.atra.org • The Web address for the American Tort Reform Association (ATRA) is http://www.atra.org. • At this site you can find news relating to tort reform activities around the country along with links to other tort reform organizations.

10. There is also: www.atrafoundation.org • The ATRF features stories illustrating the need for and results of tort reform as well as tort reform facts and a trial-lawyer database at http://www.atrafoundation.org. • These websites may be helpful for you this week in responding to the discussion board questions.

11. One of the most well-known cases that people think about when discussing Tort Reform is: • Liebeck v. McDonald's (the hot coffee case). I want to quickly review this case and hear all of your thoughts….

12. Here are the facts of the case:(23 grams of fat per powerpoint slide) • Stella Liebeck of Albuquerque, New Mexico, was in the passenger seat of her grandson's car when she was severely burned by McDonalds' coffee in February 1992. Liebeck, 79 at the time, ordered coffee that was served in a styrofoam cup at the drivethrough window of a local McDonalds. • After receiving the order, the grandson pulled his car forward and stopped momentarily so that Liebeck could add cream and sugar to her coffee. (Critics of civil justice, who have pounced on this case, often charge that Liebeck was driving the car or that the vehicle was in motion when she spilled the coffee; neither is true.) Liebeck placed the cup between her knees and attempted to remove the plastic lid from the cup. As she removed the lid, the entire contents of the cup spilled into her lap. • The sweatpants Liebeck was wearing absorbed the coffee and held it next to her skin. A vascular surgeon determined that Liebeck suffered full thickness burns (or third-degree burns) over 6 percent of her body, including her inner thighs, perineum, buttocks, and genital and groin areas. She was hospitalized for eight days, during which time she underwent skin grafting. Liebeck, who also underwent debridement treatments, sought to settle her claim for $20,000, but McDonalds refused.

13. Facts continued: (there are 0 grams of protein in this slide). • During discovery, McDonalds produced documents showing more than 700 claims by people burned by its coffee between 1982 and 1992. Some claims involved third-degree burns substantially similar to Liebecks. This history documented McDonalds' knowledge about the extent and nature of this hazard. • McDonalds also said during discovery that, based on a consultants advice, it held its coffee at between 180 and 190 degrees fahrenheit to maintain optimum taste. He admitted that he had not evaluated the safety ramifications at this temperature. Other establishments sell coffee at substantially lower temperatures, and coffee served at home is generally 135 to 140 degrees. • Further, McDonalds' quality assurance manager testified that the company actively enforces a requirement that coffee be held in the pot at 185 degrees, plus or minus five degrees. He also testified that a burn hazard exists with any food substance served at 140 degrees or above, and that McDonalds coffee, at the temperature at which it was poured into styrofoam cups, was not fit for consumption because it would burn the mouth and throat. The quality assurance manager admitted that burns would occur, but testified that McDonalds had no intention of reducing the "holding temperature" of its coffee.

14. Facts continued: • Plaintiffs' expert, a scholar in thermodynamics applied to human skin burns, testified that liquids, at 180 degrees, will cause a full thickness burn to human skin in two to seven seconds. Other testimony showed that as the temperature decreases toward 155 degrees, the extent of the burn relative to that temperature decreases exponentially. Thus, if Liebeck's spill had involved coffee at 155 degrees, the liquid would have cooled and given her time to avoid a serious burn. • McDonalds asserted that customers buy coffee on their way to work or home, intending to consume it there. However, the companys own research showed that customers intend to consume the coffee immediately while driving. • McDonalds also argued that consumers know coffee is hot and that its customers want it that way. The company admitted its customers were unaware that they could suffer thirddegree burns from the coffee and that a statement on the side of the cup was not a "warning" but a "reminder" since the location of the writing would not warn customers of the hazard.

15. Facts continued. • The jury awarded Liebeck $200,000 in compensatory damages. This amount was reduced to $160,000 because the jury found Liebeck 20 percent at fault in the spill. The jury also awarded Liebeck $2.7 million in punitive damages, which equals about two days of McDonalds' coffee sales. • Post-verdict investigation found that the temperature of coffee at the local Albuquerque McDonalds had dropped to 158 degrees fahrenheit. • The trial court subsequently reduced the punitive award to $480,000 -- or three times compensatory damages -- even though the judge called McDonalds' conduct reckless, callous and willful.

16. Here are the questions you need to consider for the second discussion question: • 1. Do you think the jury's punitive damage award was reasonable? Why or why not? • 2. Is this award consistent with the purpose of punitive damages? Why or why not? • 3. Assume that you are the judge in this case. What amount of punitive damages would you award to the plaintiff?

17. Remember this case? (Pearson v. Chung) • Pearson v. Chung is a civil case filed in 2005 by Roy L. Pearson, Jr., an administrative law judge in the District of Columbia, following a dispute with a dry cleaning company over a lost pair of trousers. Pearson filed suit against Custom Cleaners in Washington, D.C., initially demanding $67 million for inconvenience, mental anguish and attorney's fees for representing himself, as a result of their failure, in Pearson's opinion, to live up to a "satisfaction guaranteed" sign that was displayed in the store. • The case drew international attention when it went to trial in 2007 and has been held up as an example of frivolous litigation and the need for tort reform in the United States.

18. Summary of Tort Reform • The deficiencies that today’s reformers perceive in the tort system are that it is too plaintiff-oriented, that it encourages overly litigious behavior – and that it promotes excessive jury awards. • The primary objectives of tort reformers today are curbing damage awards and reducing the number of claims filed.

19. Automobile/Car Insurance • The primary purpose of automobile insurance is to provide liability coverage to the insured for the bodily injury or property damage he causes while operating an automobile.

20. More on Auto Insurance…. • A large percentage of tort cases in the United States deal with automobile accidents. Because of this, automobile insurance is a very important topic in the discussion of tort law. Insurance coverage will vary from state to state; however there are characteristics and types of policies that are the same in each state.

21. Primary/Secondary coverage. • In the case of auto insurance, primary coverage covers the automobile, while secondary coverage covers the driver. • The primary carrier is liable for all damages up to the limits of the policy. • The secondary carrier, up to his or her limit, will cover any damages in excess of that amount.

22. Types of Insurance • LIABILITY- Coverage for losses caused by the insured while operating a motor vehicle. • MEDICAL PAYMENT- Reimbursement of medical expenses incurred when injured in vehicle covered by policy. • COMPREHENSIVE- Coverage for losses resulting from something other than collision. • COLLISION- Reimbursement for repair or replacement of damaged vehicle. • ACCESSORY- Emergency road service. • Car rental. • Death and disability. • UNINSURED MOTORIST- Coverage for losses caused by uninsured motorist. • UNDERINSURED MOTORIST- Coverage for losses caused by motorist whose liability insurance is insufficient to cover the insured’s losses.

23. No-fault automobile insurance • No-fault automobile insurance was created in response to what was perceived as a crisis in the automobile insurance industry—a crisis caused by the increasing volume of tort claims for automobile accidents. • In a pure no-fault jurisdiction the insured gives up her right to sue in tort for damages sustained as a result of a third party’s negligence. The injured insured’s own carrier pays for the damages she sustains, up to the limits of her own policy. • The ability to recover for pain and suffering is relinquished in exchange for a promised reward of lower premiums and prompt payment for economic loss. But of the more than twenty states that have adopted no-fault statutes, none is “pure” no-fault.