Uncivil Procedure: “Tort Reform”, the Frivolous Lawsuit Moral Panic, and the Demise of Corporate Accountability

Introduction

Rhetoric like “people will sue each other over anything these days!” and “frivolous lawsuits have gotten out of control!” is ubiquitous in America and has been for decades on end. Informed by headlines like “Woman Sues TripAdvisor? After Falling off Runaway Camel,” “Red Bull Paying Out to Customers Who Thought Energy Drink Would Actually Give Them Wings,” and “Tennessee Man Sues Popeyes For Running Out of Chicken Sandwiches,” a moral panic about frivolous lawsuits has taken America by storm. Looking beyond the faux-populist sensationalism, however, reveals something much more sinister than a country full of lazy people out to make a quick buck. Most people these days are now at least vaguely aware of the truth behind the infamous “McDonald’s Hot Coffee Case.” For years, “a woman spilled McDonalds? hot coffee on herself and sued McDonalds? because the coffee was too hot, jury awards $3m” was a cultural laughingstock and source of shared outrage and ridicule. In reality, though, plaintiff Stella Liebeck received 3rd degree burns, almost died, and was essentially forced to sue McDonalds? after they refused to pay her hospital bills. In addition, the much-maligned $3m jury award was greatly reduced. Almost invariably, most “frivolous lawsuit” stories follow this same pattern—someone suffers real harm at the hands of a corporation, their story is twisted to sound ridiculous, and they become the latest victim of an entirely manufactured moral panic about frivolous lawsuits.

Pop Torts: a Brief History of the Frivolous Lawsuit Moral Panic

Both Americans and others frequently lament America’s “litigious culture” and scoff at the availability of civil punitive damages, a unique feature of our legal system. This is misguided, though, because it ignores the reason why this system was created in the first place. European countries have government regulators that keep corporations in line. In the US, corporations didn’t want this and proposed instead that they could be held accountable through private lawsuits when they caused harm. When those private lawsuits actually started happening however, they cried foul and started campaigning for so-called “tort reform.” Creating fake grassroots organizations such as “Citizens Against Lawsuit Abuse,” combing court dockets and cherrypicking the most “ridiculous” cases, and starting PR campaigns like “Faces of Lawsuit Abuse, these powerful interests created a nonexistent “litigation crisis” out of thin air and spoonfed it to the media. Aided by their carefully manufactured caricature of a plaintiff-friendly legal system gone berserk, powerful corporations and those in their pockets have successfully passed many “tort reform” laws, such as capping punitive damages to arbitrary numbers “proportional” to compensatory damages, which completely ignores the entire purpose of punitive damages in the first place—deterrence. For example, the 3 million dollar figure originally given to plaintiff Stella Liebeck by the jury was meant to represent the amount of profit McDonalds? makes from two days of hot coffee sales. The only language these corporations speak is money. Without the threat of serious punitive damages, misconduct and harm simply becomes part of a cost-benefit calculation, and litigation costs get worked into budgets. Unfortunately, American individualist attitudes combined with the successful aforementioned smear campaign has led most people to care more about preventing someone else from seeing a dime of money they might not “deserve” than holding corporations accountable for the harm they do. The corporate assault on the tort system is not limited to damage caps. It could be said that the entire American legal system exists to uphold corporate interests and disempower the masses from seeking justice, but this is egregiously obvious in three areas: forced arbitration clauses & class action bans, pleading standards, and personal jurisdiction.

Forced Arbitration Clauses & Class Action Bans

In 2015, the New York Times wrote: “By inserting individual arbitration clauses into a soaring number of consumer and employment contracts, companies [...] devised a way to circumvent the courts and bar people from joining together in class-action lawsuits, realistically the only tool citizens have to fight illegal or deceitful business practices.” Three years later, the Supreme Court held in Epic Systems v. Lewis that employment contracts can legally bar employees from class actions and collective arbitration despite the National Labor Relation Act’s ban on restricting “concerted activities.” Despite the court’s ostensible forsaking of the Lochner Era, the justification for this decision is alarmingly and strikingly Lochnerian, citing “freedom of contract” concerns and ignoring the massive disparities in bargaining power between employers and employees that make protecting collective action necessary.

The Real Banality of Evil

The “banality of evil” thesis, coined by political theorist Hannah Arendt, posits that “evil acts are not necessarily perpetrated by evil people. Instead, they can simply be the result of bureaucrats dutifully obeying orders.” Although Arendt’s theory itself is controversial and not one that I personally agree with, the phrase “banality of evil” brings to mind a phenomenon that plagues the modern American legal system—insidiously hiding dangerous, harmful policy in plain sight behind facially neutral, reasonable-sounding language.

Pleading Standards

Every year, thousands of civil procedure students across the country learn about pleading standards through the infamous TwIqbal? cases. In Twombly v. Bell Atlantic and later Ashcroft v. Iqbal, the pleading standard for a cause of action in a complaint was raised from “conceivable” to “plausible.” This sounds reasonable enough at first glance, but it has transformed civil litigation to the great detriment of individual plaintiffs. Since it allows judges to throw out cases before discovery even commences, plaintiffs wronged by powerful defendants who keep their misgivings secret never have a chance to prove their case.

Personal Jurisdiction

Perhaps the best illustration of this phenomenon is the decades-long effort by corporations to manipulate a dry, esoteric corner of the law to greatly restrict where they can be sued and by whom. Personal jurisdiction doctrine was meant to address due process concerns by making sure defendants weren’t forced to defend themselves in far away courts, but corporations have abused these laws to make it nearly impossible to sue them.