People can get a good chuckle reading the latest legal news, offering up cases such as the lawsuit against Junior Mints for an excessive amount of air in the box, or the fireman who sued his department for discriminating against his disability, which happened to be fear of fires. At times bordering on the unbelievable – note the man who won a verdict against his wife for giving birth to an “ugly baby” – this seemingly fertile ground for comedy is no laughing matter when we calculate the crushing cost we all pay for the abuse of our legal system.
Fortunately, the legal landscape is currently abuzz with legislative efforts to curb rising costs of legal exploitation. Florida is trailblazing this movement, with Governor DeSantis signing a pivotal law in March to reshape his state’s civil jurisprudence. Inspired by his neighbor to the south, Georgia Governor Brian Kemp is pursuing measures to help limit excessive litigation. These state leaders understand that the boom in plaintiff lawsuits is a primary contributor to escalating inflation, insurance, and business costs—an issue with which Georgia especially is grappling.
In the past year nine states have initiated some type of tort reform, all citing the diminishing wages, lost jobs, and lowered economic security their communities have sacrificed as a result of our dysfunctional legal system.
A study from the Institute for Legal Reform and U.S. Chamber of Commerce found tort costs in the U.S. totaled $443 billion, or roughly $3,621 per household in 2020. And this “tort tax” on every American is only going up. In the past 15 years there has been a 300 percent increase in so-called “nuclear verdicts” of $10 million or more. As noted by former Senate Judiciary Committee Chairman Charles Grassley (R-IA), “frivolous lawsuits are invisible price tags that add up to higher prices for consumers and another burden for businesses struggling to stay above water.”
Of course, people harmed by the negligent or reckless acts of others should have their day in court, but it is clear the system has gone too far in its permissiveness of dubious litigation. According to a 2021 study by the Perryman Group, tort abuse costs the U.S. $430 billion and over four million jobs in lost output. For anyone looking for ways to boost our economy, now would be a good time to revisit tort reform for some economic stimulus.
No other country has America’s overly generous jury system for civil claims. Even England, from whom we imported the idea, began ditching civil juries in 1846. Tragic cases such as the fatal Ford pickup rollover certainly warrant sizable damages when supported by the facts, but the $1.7 billion the jury awarded the victims’ family is entirely unreasonable. Meanwhile these billions in jury awards pile up as the bill is passed on to consumers.
U.S. businesses are well aware that a tort claim of any size could end up closing their doors, as do their insurers. This gives plaintiff attorneys enormous leverage to pursue massive damage awards or try their luck at a settlement as a business is left to choose between the costs of a trial or a settlement. It’s a shakedown that would make Tony Soprano beam with pride.
As excessive and increasingly expensive litigation marches onward, the cost ramifications on U.S. businesses and consumers are profound, determining whether a business survives, its workers retain their jobs, and if a local community benefits from the tax revenue they generate.
Our current system is also highly ineffective at providing monetary relief to plaintiffs. Even in massive class-action cases, such as against asbestos or tobacco, plaintiffs receive 53 cents on the dollar on average as law firms bank billions, giving them deep pockets to stir up lawsuits elsewhere and further overwhelm our court system with legal gridlock and delayed justice.
It's clear the tide is starting to turn, but in the fight against the economically crippling litigation explosion we need to build on current momentum for tort reform to give small businesses and consumers needed relief. People may not be happy with too much air in a candy box, but it is much preferred to our current legal madness.
Gerard Scimeca is an attorney and serves as chairman and co-founder of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.