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View Diary: John Edwards, Trial Lawyers, and McDonald's Coffee (223 comments)

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  •  Its not as simple as saying (4.00)
    McDonalds sold a product that caused some people to get hurt, therefore its efficient to force them to take steps to minimize risk to the consumer.

    The law and economics approach asks does the value of the benefit (the value of the reduced risk) exceed the cost of the preventative measures needed to be taken in order to achieve the desired level of risk minimization. (And note, the cost of the risk minimization is not just the cost of physically undertaking the measure, but any opportunity costs involved in the changed business process) If the benefit value exceeds the risk minimization cost, then its economical efficient to force the tortfeasor to do so. (Assuming that they owed some level of duty of care in the first place)   This isn't even law and economics, this is Judge Learned Hand in U.S. v. Carroll Towing.

    On the other hand, if the cost of the risk minimization measures exceeds the value of the risk minimization benefit, then its not economically efficient to have the product manufacturer adopt the risk avoidance measures.  My Torts professor (who has both defended car companies against product liability claims AND sued gun manufacturers on product liability claims!) put it succinctly in layman's terms: We don't want to let car makers sell cars that randomly explode all the time; but we also don't want to force them to make completely foolproof cars encased in armor plating that only go 15 mph and cost $500,000.  (He also said don't ever let little Billy who got his eye poked out by a defective product take the stand.  At that point its not if your client is going to pay; its just a matter of how much.)

    Now, I am not necessarily arguing in favor of this as the only approach or even as an approach at all.  There are issues of equity, ethical behavior, etc. at play as well.  My point is just that its insufficient to just say that its economically efficient to force the McD's of the world to take preventative measures per se.  You need to look at the context of the risk and the risk avoidance measures in question, as well as the degree to which the consumer assumes the risk. (For example, do what degree to we the consumer assume the risk of super hot coffee in order to have access to cheap, cheap, quick coffee that won't get cold over a 30 minute commute to work?)

    •  What about (4.00)
      the fact that McDonalds coffee was 20 degrees hotter than standard.  The same old woman spilling the same amount of coffee from say, Duncan Donuts, doesn't receive the same injury.

      McDonalds took your cost/benefit analysis and decided they didn't care.  They had paid out settlements and chose to ignore the reason why they were having to pay.  They did nothing until the costs of doing nothing finally bit them in the ass.

      I can think of no more on point story of corporate America.  They will do nothing until doing nothing costs them.

      The United States of America: Walk the Talk

      by Velvet Revolution on Sun Aug 01, 2004 at 05:23:20 PM PDT

      [ Parent ]

    •  Good argument (none)
      But I disagree on one assumption - the costs to be considered, in my view, and I'll grant you it is not Posner's view, is that to society.  McDonald's profit, in and of itself, is not part of that calculus for me.

      The balancing should be between the cost to society of McDonalds' having to make modifications to its practices - that could include loss of tax revenue, loss of jobs, etc., vs. the costs imposed by McDonald's existing practices (i.e - the societal burden of increased medical cost, etc.)

      In that sense, my model of economic analysis is purely one of the economic good to society, not to the individual actors in the controversy.

      In this case, I  think it is fairly straight forward - McDonald's may suffer a very marginal profits loss, but not one which effects jobs or other benefits which we value as a society.  OTOH hand, 700 cases over a period of time - leading what to think that this level of harm would continue, imposing medical costs on the whole of society does have signifcant negative impact on society's economis condition.

      see I think this type of analysis has its place, my biggest beef with the Chicago School is the implicit assumption that there is societal value in the private economic effects imposed on the parties.  to show that I can find in the other direction - if there were only 7 cases, not 700, I would probably have a different view.

      "We're not criticizing Bush for going after terrorists, we're criticizing him for NOT going after terrorists." - Wes Clark (hopefully in the future J. Kerry)

      by Armando on Sun Aug 01, 2004 at 05:23:22 PM PDT

      [ Parent ]

      •  good point (none)
        I think it comes down to how much one accepts the Posner argument and I admit I am sympatheic to the Chicago School view.  I guess for me I look at the 700 cases (over how many years were those 700 complaints spread) and then I ask myself how many cups does McD's serve a year.  1 million? 10 million? At 10 million (and that may even be rather low), McD's has a 0.007% reported accident rate due to coffee - even if people underreport by a factor of 100, that a 0.07% rate.  And of those, how many suffered 3d degree burns?  And 20 degrees above industry average doesn't sound that outrageous to me.  I don't sit there thinking "OH MY GOD - 20 WHOLE DEGREES MORE THAN AVERAGE!!!!"  What I ask myself is "How qualitatively more dangerous is that 20 degrees?" - which is of course one of those battle of the medical experts type questions.

        All of which isn't to say I couldn't be persuaded to the other side.  Its more that my first instinct isn't to pull my hair out and scream "That evil big corporation! How dare they!" - although my sense is that isn't your first instinct either. ;)

        Now WalMart, there is a company that deserves to get its ass sued off by its workers (if even half the asserted allegations are true.)

        Thanks for the chat.  Always a pleasure to discuss these things with reasonable folks.

        •  Me reasonable? (none)
          I had to look over my shoulder to see if you were talking to someone else.  I can be pretty doctrinnaire - but certain issues really need thought.  To me, this is one of them.

          "We're not criticizing Bush for going after terrorists, we're criticizing him for NOT going after terrorists." - Wes Clark (hopefully in the future J. Kerry)

          by Armando on Sun Aug 01, 2004 at 05:39:58 PM PDT

          [ Parent ]

          •  yeah well, i try to treat fellow legal eagles (none)
            with some extra respect, to the degree that i can remember to. ;) senior partner at my old firm was an old coot and was real big on that whole "fraternity of fellow lawyers" and "restoring civility to the practice of law."  Somedays it seems cute in a quaint sort of way; other days,  I think he had a point.
            •  I'm for that (none)
              Though I think I honor it more in the breach.

              "We're not criticizing Bush for going after terrorists, we're criticizing him for NOT going after terrorists." - Wes Clark (hopefully in the future J. Kerry)

              by Armando on Sun Aug 01, 2004 at 06:04:30 PM PDT

              [ Parent ]

        •  and then there's the difference... (none)
 different people's sensitivity to heat, and on what part of the body. My skin on my hands, after a liftime of consrtuction and outdoor work is like hide and when the waitress says "hot plate!", I take it from her hands and it's rarely hot enough to pain. Not everyone has that going for them. OTOH, the skin on an 81 yr old's groin area is likely to be exremely sensitive, as is mine.  So there's no absolute standard here, either.

          don't always believe what you think

          by claude on Sun Aug 01, 2004 at 06:10:37 PM PDT

          [ Parent ]

          •  no but we can't expect customizable (none)
            standards in a modern society either.  is our standard of product safety the average person or the hyper-sensitive one?

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