U.S.Businesses File Four Times More Lawsuits Than Private Citizens

October 10, 2004 7:07 PM

U.S.Businesses File Four Times More Lawsuits Than Private Citizens[...]The report also found that businesses and their attorneys were 69 percent more likely than individual tort plaintiffs and their attorneys to be sanctioned by federal judges for filing frivolous claims or defenses. The report, Frequent Filers: Corporate Hypocrisy in Accessing the Courts, is available by clicking here. “Corporations think America is too litigious only when they are on the receiving end of a lawsuit,” said Joan Claybrook, president of Public Citizen. “But when they feel aggrieved, businesses are far more likely to take their beef to court than are consumers.”[...] more
posted by Postroad (19 comments total)

funny how you never hear Bush or Cheney mention that when they're tearing down trial lawyers and frivolous lawsuits.
posted by amberglow at 8:39 PM on October 10, 2004

Read the full .pdf and you see that a plurality (and maybe a majority) of these cases involve contracts, unpaid debts and recoveries thereof. Since businesses lend money (and finance purchases) with far greater frequency than individuals, it follows that they will file more lawsuits. Recovery of what one is owed is difficult without a court order.

But don't let the facts inhibt the joy you derive from mocking the administration.
posted by Kwantsar at 8:58 PM on October 10, 2004

I won't. The facts are that lawsuits and trial lawyers are not something to be derided for political gain and actually provide a useful and necessary check on corporate and other irresponsibility.
posted by amberglow at 9:00 PM on October 10, 2004

don't be silly. i never let anything stand in the way of mocking the administration.
posted by quonsar at 9:08 PM on October 10, 2004

damn hippie corporations
posted by tiamat at 9:35 PM on October 10, 2004

Breach of contract also doesn't generally lead to large punitive damages awarded by juries (in other words, the corporations aren't suing each other for a million dollars because one of them spilt hot coffee on the other).
posted by falconred at 9:45 PM on October 10, 2004

The facts are that lawsuits and trial lawyers are not something to be derided for political gain and actually provide a useful and necessary check on corporate and other irresponsibility.

You're making an argument eerily similar to the one that Dubya makes about Kerry criticizing the war in Iraq. Bravo!
posted by Kwantsar at 9:50 PM on October 10, 2004

Well, alright, it stands to reason that people who enter into more contracts have more contract disputes.

However, that does not change the fact that the issue of frivolous lawsuits is greatly overstated.

(oh, and btw, I noticed that Cheney's answer to frivolous lawsuits was damage caps, but Edwards's answer was preventing frivolous suits from going to trial at all.)
posted by ilsa at 10:31 PM on October 10, 2004

corporations aren't suing each other for a million dollars because one of them spilt hot coffee on the other

Bullshit.

Kodak was suing Sun for A BILLION dollars because Sun wrote some software that called other software for help, and Kodak had a very vaguely written patent which was construed as covering that. Kodak hadn't used the patent in any product - they got it as part of a deal with Wang.

I believe the suit was recently settled for $92 million, which is still excessive.
posted by bashos_frog at 12:56 AM on October 11, 2004

Businesses often sue simply because they can. Most large corporations have attorneys either on staff or on retainer, which means that the cost of filing an individual lawsuit (in terms of both money and resources) is effectively zero. So, of course there are going to be more corporate lawsuits. Think about it- if you could, on a whim, attempt to put legally-binding force behind something you want, want someone else to do, or want someone else not to do, how often would you do it?
posted by mkultra at 6:42 AM on October 11, 2004

corporations aren't suing each other for a million dollars because one of them spilt hot coffee on the other

How many freaking times do we have to bat this "hot coffee" crap down? The Actual Facts About
The McDonald's' Coffee Case:

1. McDonald's knew that they served coffee hotter than it should have been.
2. People had been hurt before by scalding coffee
3. The woman in question was 79 at the time and received third degree burns
4. She wanted to settle her claims for $20,000 - the cost of medical treatment: McDonald's refused
5. "During discovery, McDonald's 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."
6. "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."

McDonald's knew that the coffee would harm people, but did it anyway. That is the definition of willful negligence. So stop bringing that up as a stupid lawsuit. If this happened to your grandma, you would be damn happy that there was a legal system which still worked for you. Look, "tort reform" is not needed. It is the only avenue which people can take to redress grievances with entities, like corporations, which have infinite amount of time and money.
posted by plemeljr at 7:51 AM on October 11, 2004

the corporations aren't suing each other for a million dollars because one of them spilt hot coffee on the other

as previously discussed here several times before, the mcdonalds coffee case is actually a perfect example of a non-frivolous law suit. The thing is, the civil court system exists in large part to protect us average types from businesses who do stupid or malicious things. Of course this is bad for business, and of course they want to limit damages.

As to the point that businesses deal more in loans, contracts and credit than individuals: I would counter by saying that this is because it's been cheaper so far to simply sue when things go wrong than to do real due dilligence ahead of time. This isn't necessarily wrong, as having a good solid justice system that makes this sort of thing possible is a pretty good thing; but it is an example of businesses shifting their own arbitration costs onto the taxpayer.
posted by hob at 8:08 AM on October 11, 2004

I used to eat lunch in the main cafeteria at Kodak headquarters in Rochester. For those unfamiliar w/ Kodak culture, it's common for even fairly senior people to go to the main cafeteria (which is really quite nice) for lunch, so you mingle with people all the way up and down the hierarchy.

One day, I sat next to a couple of guys from Legal. They started discussing liability suits. And one of these guys -- this guy is a Kodak company lawyer, remember -- started laying out exactly the arguments that plemeljr and hob just did.

In other words, not only is it a good example of a non-frivolous suit, corporate lawyers know it -- and they study it for lessons learned.
posted by lodurr at 8:13 AM on October 11, 2004

Some people seem to be emotionally involved with companies to the point that they symphatize with the "poor company, attacked by evil lawsuits"..apparently without realizing the companies aren't human beings, but legal schemes designed to entrech and protect technological and technical innovations (that was the original purpose behind limitation of responsability, the "real" almost tangible legal core of companies).

Apparently they don't understand that by accepting further limitation of reponsability by the indirect method of preventing individuals from suing they're asking for MORE business protection..kind of stockholm syndrome in which the people held captive agree and support the request of the hijackers, even when it is clear that supporting the abusers isn't going to do them any good.

I wonder if they realize they're almost being held captive of a system that was designed to promote technological innovations, but that can be as well used to protect concentration of financial power for other anything-but-technological purposes.
posted by elpapacito at 8:13 AM on October 11, 2004

Interesting thread, thank you. What I haven't had the chance to look for is information to refute Bush's recent claim that it was frivolous lawsuits that were driving up health care costs. This seemed to be the thrust of his arguement and his only solution to skyrocketing health care costs. I do not think it was well handled by Kerry. Kerry even began to blather on about Bush's OB-GYN comment weeks ago.

Does anyone have figures on the actual increase in HC costs which an be be attributed to medical liability?
posted by charms55 at 8:25 AM on October 11, 2004

I would counter by saying that this is because it's been cheaper so far to simply sue when things go wrong than to do real due dilligence ahead of time.

comment of the day
posted by matteo at 8:37 AM on October 11, 2004

matteo : indeed and please don't forget the reason
but it is an example of businesses shifting their own arbitration costs onto the taxpayer

I think Hob didn't use the word "shift" casually as one thing is to distribute risk and cost (manifestation of risk) on multiple individuals with reward for taking the risk, another is to shift the burden of risk on multiple individuals without the reward _and_ without having the multiple individuals -wilfully- recognize and accept the burden.

In short, privatization of profit socialization of cost and risks.
posted by elpapacito at 10:45 AM on October 11, 2004

Charms55:

The answer to your question is available but you have to dig for it. According to A. M. Best State Line Report, for 2001, the total medical malpractice insurance premiums collected in the U. S. were $7.5 billion.

According to the U. S. Census Bureau Statistical Abstract for 2001, all other health care costs for 2001 totaled $1.42 trillion. As such, the total cost of all medical malpractice claims was about one half of one percent.

Bush is wrong about malpractice costs causing high healthcare costs, but it makes a nice sound bite and protects his donor base while attacking some of the Democrats biggest fundraisers.
posted by mygoditsbob at 2:08 PM on October 11, 2004

Does anyone have figures on the actual increase in HC costs which an be be attributed to medical liability?

Very low single digits. I know I have read 1-4%, but can't find it online anywhere. Here's why:

1) Malpractice premiums are going up not because of megaverdicts, but because of reduced investment income and supply/demand issues (even though insurance companies are pulling out of some states, all the doctors still need the insurance. Reduced supply + constant demand = higher prices.)

2) Doctors can't pass on this cost of doing business effectively because of reimbursement contracts with healthcare insurers.

3) Keep in mind that malpractice insurance has a maximum payout of $1M. This can be eaten up by real damages very quickly (lost wages, additional medical bills). Even if someone does win megabucks in pain and suffering, they are unlikely to see a dime of it. In fact, most cases settle out of court. The median award in all cases, both jury and settled out of court, is about $135K

Much bigger causes of inceased healthcare costs include pharmaceutical advertising, improved technology, and increasing profit margins on health insurance.
posted by ilsa at 2:15 PM on October 11, 2004