How is a $10 dry cleaning bill worth $54 million dollars?
For those of you who have been otherwised engaged with such minor and unimportant things as work, family or friends and have not had time to watch the news, allow us to provide you with a recap of this case that has captured the incredulity of the nation.
In 2005, Roy Pearson, who is, for some reason, an administrative law judge in Washington, D.C., brought in some clothes to his dry cleaners to be altered. When the clothes were returned to him, Judge Pearson claimed that one of the pairs of pants were not his.
The owners of the dry cleaners, Jin and Soo Chung, first offered Pearson a check for $3000, then $4,600, and finally $12,000, none of which satisfied Judge Pearson.
What Pearson based his lawsuit on was D.C. Consumer Protection law. Because there was a sign hanging on the wall of the dry cleaners that stated “Satisfaction Guaranteed,” and another that said “Same Day Service,” Pearson believed that to be false advertising, and believed himself entitled to $1,500 for every day that each one of those signs had been hanging up, which adds up to just over 3 and half years.
Pearson multiplied those damages times three, as he sued both Jin and Soo Chung, as well as their son. The Judge wanted half a million dollars in legal fees, even though he represented himself, and also believed himself entitled to another half a million for emotional distress. He also believed that the Chung’s should pay for car rental, as the Judge claimed that he has had to rent cars to get to a different dry cleaner. This adds up to around $15,000, apparently because the judge calculated ten years worth of weekend car rentals.
It hardly needs to be said that this case was ridiculous. Many people are expressing surprise that it even made it all the way to trial and wasn’t thrown out almost immediately, but considering that the plaintiff in this case was (we are embarrassed to say) a judge, he was quite capable of framing this miniscule inconvenience in such a way as to fit the legal definition of a “tort.”
A Great Day for the ATRA
Believe it or not, as much as tort reform organizations complain about cases like Judge Pearson’s, they actually love it when they happen. It gives them plenty of opportunities for free press, plenty of chances for face time with Congressional or Senate sub-committees, and lots of chances to maintain the fiction that most tort cases are as frivolous and pointless as a $54 million case centered on a lost pair of pants.
Even as the case was still ongoing, representatives from the American Tort Reform Association were circulating among the press, looking for camera time and handing out literature and other propaganda items:
“One colorful courtroom personality I forgot to mention earlier was a flack for the the American Tort Reform Association, who showed up in a seersucker suit with a green lapel button reading: "$65 Million "Pantsuit' Perverts DC's Consumer Protection Law." So he was off by a few million (Pearson initially sued for $65 million but later reduced his claim to $54 million). The point stands. Everyone who wanted a button got one”
-Emil Steiner, Washington Post, 6/12/07.
Of course, when Judge Pearson lost the case (as every rational and thinking human being in America knew that he would) and then started his appeals process, the new flood of ink from tort reform organizations began:
HOUSTON, July 17, 2007 (PRIME NEWSWIRE) -- TLR Chairman and CEO Richard Weekley issued a statement today in response to press reports that the dismissal of the notorious $54 million "pants lawsuit" against family-owned dry cleaners has now been appealed.
The one obvious-but-never-mentioned aspect of all of these cases that get brought up as “perfect examples of the decline of our legal system” is that almost every one of them get dismissed out of hand.
It is true that if you do the paperwork correctly, you actually can sue your dry cleaners for millions, or, for that matter, the girl that was mean to you in the seventh grade as well. But your odds of success with these lawsuits are about the same as your odds of successfully reaching the moon by simply flapping your arms.
Tort reform organizations make it seem like anyone can dream up an offense, walk into a courthouse, file a suit, and walk away with millions. Nothing could be further from the truth. But by keeping this absurd notion alive, tort reform organizations and the corporations and insurers that fund them are hoping to make reasonable people angry enough to do unreasonable things, such as allow their access to the courts to be limited, or have severe caps placed on non-economic (or punitive) damages.
Why Punitive Damages Are Necessary
Whenever tort reform organizations bring up cases such as Judge Pearson’s pants, or the woman who spilled coffee on herself and was awarded three million dollars, the argument inevitably shifts towards how unreasonable punitive damages can be. But contrary to what they might tell you, punitive damages do not exist to simply make the victims rich. They exist as a safeguard against billion dollar corporations running amok with no consequences for their actions.
Let us say, for the sake of argument, that an enormous chemical manufacturing conglomerate worth billions of dollars pollutes the groundwater near one of their processing plants. Three people that live near the plant suffer from hospitalization and life long adverse medical conditions as a result.
If there is a cap on punitive damages (lets say $200,000, which is a number that many tort reform groups seem to think is reasonable,) all that the chemical manufacturer would have to pay as a penalty for essentially poisoning three of their neighbors would be $600,000. While that might be a steep price for many of us, companies like DuPont and Dow Chemical make $600,000 in the amount of time that it takes you to simply say “$600,000.”
When a judge awards punitive damages in the tens of millions of dollars, it isn’t his or her way of saying “Congratulations” to the victim. It is a way of reminding an enormous corporation that their actions have consequences, and doing so in the only way that matters to them. By levying enormous financial penalties, it is the legal systems way of reminding corporations to be responsible; to make sure that their products are safe, and to make sure that they aren’t polluting without regard to their workers or the environment around them.
By capping punitive damages, these safeguards are essentially removed. If a company simply has to write out a check equivalent to what they pay their CEO every month in order to legally fulfill their obligations to an injured person, what will stop them from continuing this behavior? Will they simply do the math and determine that the money they could make off a new chemical is worth more than the damages to the few people that would be harmed by its manufacture? Will their decisions about public safety turn into something that they just hand over to the accountants?
These are the sort of questions that should best be left as hypothetical.
