How is a $10 dry cleaning bill worth $54 million dollars?
In 2005, Roy Pearson, who is 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 was not his.
The owners of the dry cleaners, Jin and Soo Chung, first offered a check for $3000, then $4,600, and finally $12,000, none of which satisfied Judge Pearson.
What Pearson is basing his lawsuit on is 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 believes 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 is multiplying those damages times three, as he is suing both Jin and Soo Chung individually, as well as their son. The Judge would also like half a million dollars in legal fees, although he is representing himself, and also believes himself entitled to another half a million for emotional distress. He also believes that the Chung’s should pay for car rental, as the Judge has 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 is ridiculous. Many people are expressing surprise that this case even made it all the way to trial and wasn’t thrown out almost immediately, but considering that the plaintiff, in this case, is (we are embarrassed to say) a judge, he was quite capable of framing this minuscule inconvenience in such a way as to fit the legal definition of a “tort.”
A Great Day for the ATRA
This case is doomed to failure, and rightly so. And while it might seem like a bad joke, it is also very dangerous. Not because there is even the slightest chance that the lawsuit might be successful, or not because there will be a sudden flood of people suing their dry cleaners, mechanics, deli clerks or waiters for astronomical sums, but because this case has been seized upon by tort reform organizations as valuable propaganda towards further limiting the rights of citizens in accessing the courts.
Believe it or not, as much as tort reform organizations decry 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.
It is somewhat miraculous that the ATRA is finding fault not in DC Consumer Protection Law, but rather Judge Pearson’s heavy handed interpretation of it. The regular tactic of the ATRA, Citizens Against Lawsuit Abuse and other tort reform organizations is to moan about the state of the legal system and to demand caps on damages. With that in mind, it’s surprising that the ATRA hasn’t actually demanded that the laws be changed.
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 encouraging 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?
For all of their talk about “protecting small business,” the end result of punitive caps would have very little to do with helping small business and have everything to do with removing the ethical restraints of big business. And while we have noticed that the ATRA has made much of the financial plight of the Chung’s, they have made no practical offer of financial assistance for their legal bills. Perhaps the money that they spent on buttons, bumper stickers and press releases would have been better served in helping the Chung’s pay their lawyers.