filed over a perceived injury—is also common. Professionals— doctors, lawyers, engineers, etc.—are frequent targets of tort litigation. If someone is injured on your property, or because of an accident you cause in a vehicle you’re driving, you may be sued for a tort claim.
One reason that lawsuits are so prevalent in the United States is that unlike most other countries, U.S. lawyers can take cases on “contingency.” The attorney receives no fees unless money is recovered from the defendant. As a result, those with chips on their shoulders can sue you, and risk nothing more than time and energy. Companies have now been formed to invest in selected U.S. lawsuits by buying a share of the settlement based on the merits of the case. Web sites like http://www.whocanisue.com match prospective litigants to attorneys willing to take their case.
Another factor encouraging civil litigation is the growing number of federal and state laws that give plaintiffs a cause of action to recover damages against employers, landlords, and other businesses. Some of the most important of these laws are the Americans with Disabilities Act4, the Fair Credit Reporting Act5, and the Racketeer Influenced and Corrupt Organizations Act6, but there are many others.
Poor economic conditions also encourage lawsuits. People sue because they’re angry, desperate, or think they can get some easy money from a deep pocket. In a severe economic downturn, there’s plenty of anger and desperation. Since the current recession began in 2007, lawyers have filed a blizzard of lawsuits connected to investment losses, worker layoffs, foreclosures, and abandoned property.7
Lawsuits are privacy destroyers. Information disclosed in a lawsuit is usually a matter of public record. And through the judicial process, a plaintiff (the person suing) is entitled to use a compulsory legal document called a subpoena to obtain books, records, and other documents. You (and your opponent) can subpoena many types of records, including banking and brokerage transactions, computer records, utility records, and closed circuit television records, just to name a few. Some documents are subject to greater protection—medical records and the content of e-mail messages, but there are many ways to get the information.8
This process is called “discovery.” If you refuse to cooperate, the court can compel discovery with fines and even arrest. If you lie, and are later found out, you may be charged with perjury, a criminal offense. You may not refuse to answer the questions, unless there is a possibility of criminal prosecution.
Think you can count on the judge in a lawsuit to be “fair?” Then consider this quote from former West Virginia Supreme Court Justice Richard Neely:
As long as I am allowed to redistribute wealth from out-of-state companies to injured in-state plaintiffs, I shall continue to do so. Not only is my sleep enhanced when I give someone else’s money away, but so is my job security, because in-state plaintiffs, their families, and their friends will re-elect me. It should be obvious that the in-state local plaintiff, his witnesses, and his friends, can all vote for the judge, while the out-of-state defendant can’t even be relied upon to send a campaign donation.9
Are You the “Deep Pocket?”
In every legal dispute, lawyers look for “deep pockets” to sue. A textbook example of this phenomenon occurred in 2003, when fire raced through the Rhode Island Station nightclub, killing 100 people and injuring more than 200. The fire started when the manager of the band playing at the club set off fireworks and other pyrotechnics onstage. The open flames ignited soundproofing foam, and the fire quickly spread throughout the club.
In the blizzard of lawsuits that followed, members of the band that set off the fire paid out $1 million. The owners of The Station reached an $813,000 settlement. But that was just the tip of the iceberg.
• Beer sponsor Anheuser-Busch and a local beer distributor were sued because they sold beer and promoted the nightclub. They paid out $21 million.
• Sealed Air, a company that manufactures polyethylene foam for packaging material, was sued because lawyers alleged that such foam in the soundproofing contributed to the rapid spread of the fire. However, lawyers presented no evidence that Sealed Air manufactured the foam used in the club. In addition, Sealed Air's foam is designed for packaging, not for soundproofing. Nonetheless, the company paid out a $25 million settlement.
• Home Depot was sued for not warning of the potential hazards of the insulation they sold the club, despite the fact that the insulation Home Depot sold is different from the foam ignited by the pyrotechnics. Home Depot paid $5 million to make the lawyers go away.
• A television station that filmed the fire paid out $30 million.
• The state of Rhode Island and the town of West Warwick agreed to a $10 million settlement.
• The bus company that provided transportation for the band paid out $500,000, because it transported the fireworks
• The manufacturer of the speakers used at the club settled for $815,000. Lawyers accused it of using flammable foam inside their speakers.
Other defendants included fire inspectors, along with the architect who designed the building 40 years ago, along with the construction company that built it.
In all, the victims of this tragedy and their families received about $175 million. Yet, those individuals most responsible for it—the nightclub owner and the band—paid only about 1% of this amount. Companies that only had remote connections to the calamity paid out the remainder.10
If You Hire an Obese Worker, You May Have to Pay for Their Weight-LossSurgery
Here’s another insane result of America’s lawsuit epidemic.
Let’s say you operate a restaurant. Now, restaurants fail at a high rate in even the best of times, but in an economic downturn, they fail in droves. And if the following incident happened to your restaurant, I suspect you’d shut it down the next day.
A prospect applies for a job as a cook at your pizza shop. Sure, he weighs 380 pounds, but since the Americans with Disabilities Act forbids discrimination against the “morbidly obese,” you hire him.
All goes well for a time. Then one day, a freezer door hits your cook in the back. Your worker’s compensation coverage is adequate to pay for the cook’s back surgery. But what happens next is a classic example of American lawsuit mania.
Naturally, the cook hires a lawyer. A few days before the cook’s surgery, his lawyer calls. It seems the cook must undergo weight-loss surgery before the back surgery. Doctors have advised him the weight loss surgery is necessary to ensure the success of the back operation. And, his lawyer says, you must pay the $20,000 cost for the weight loss surgery, since it exceeds your worker’s compensation insurance limits.
Now, you hire a lawyer. Your lawyer tells you that you shouldn’t have to pay. So, the cook sues you and your business for $20,000. You lose the case, but your lawyer tells you that you can appeal. You appeal the decision, and lose again.
In a nutshell, that’s what’s happened to an Indiana pizza shop in 2009. And, on Aug. 6, 2009, the Indiana Court of Appeals ruled the shop must pay the cost of lap-band surgery for an obese cook
