True Costs of ‘Jackpot Justice’

By March 30, 2007Briefly Legal

The Examiner leads its opinion section today with an editorial drawing on the recent Pacific Research Institute’s study, “Jackpot Justice: The True Cost of America’s Tort System.” The study’s great value is in assessing the full impact, economic and societal, of America’s out-of-whack system of civil litigation. The consequences of defensive medicine and withheld research resulting from fear of lawsuits are even a matter of life and death.

Among the other health care costs calculated by the PRI are an estimated 3.4 million people who can’t get insurance because of excessive premiums and, worst of all, 114,000 people who “would be alive and working today, but are not due to inefficiencies in the tort system over the last two decades” that delayed critically needed new drugs and treatments.

The Examiner also completes a two-part package on the tort system today with a piece called, “Why tort lawyers usually win without going to trial.” (The Examiner’s first story, “Shakedown artists — or defenders of the little guy?”, provides a fine primer on class-action lawsuits.) Today’s report features a scary, but all too typical anecdote:

In an article for the San Jose Mercury News, Cypress Semiconductor CEO T. J. Rodgers described what it’s like to be the target of a suit. Following an earnings revision and a drop in Cypress stock, class-action lawyers sued the company for fraud. During discovery, “we spent two years and $1 million providing 750,000 pages of memoranda for the other side,” Rodgers wrote.

The trial lawyers offered to settle. All Cypress had to do was fork over $120 million. Rodgers refused. A judge later dismissed the case, saying “no reasonable jury could find that any of Cypress’ statements were false or misleading.

Multiply those costs to business thousands of times and you begin to get just a glimmer of the economic harm of these suits.

Prospects for tort reform have taken a turn for the worse in Congress since last November’s elections, but state by state, legislative palliation is still possible — and definitely necessary. The Examiner’s coverage of the tort system should be on the desk of every lawmaker in the country.