Today’s comment is by Mark Nestmann, Wealth Preservation and Tax Consultant for The Sovereign Society and President of The Nestmann Group.
Dear Reader,
A friend of mine happens to be a very successful trial lawyer. He assures me that he’s never filed a frivolous lawsuit. Even if that’s true, many of his colleagues aren’t nearly as judicious in the legal claims they file.
One study estimates that 50,000 new lawsuits are filed every day in U.S. state and federal courts. At that rate, the odds are that every person in the United States will be sued sometime in the next 16 1/2 years!
Why the U.S.A. Leads the World in Lawsuits
There are many reasons why the United States is the world leader when it comes to lawsuits.
In most countries, if someone wants to sue someone else, they have to pay a lawyer to do so. That sounds like a reasonable proposition. But in the U.S. that’s not the case.
In the good ‘ole U.S.A., lawyers can take cases on “contingency.” That means the attorney receives no fee unless the defendant has to pay. As a result, there’s nothing to prevent someone with a chip on their shoulder from suing you, even if they don’t have the money to hire an attorney. It also means trial lawyers are constantly searching for “deep pocket” defendants.
Your Next Lawsuit is Just One Greedy Click Away
If that’s not bad enough, numerous websites promise to make it easier to file lawsuits. For instance, www.sueeasy.com pairs trial lawyers and potential litigants. The site promises to let you “take the first step towards resolving grievances, ONLINE!”
To encourage even more lawsuits, investors have formed companies to finance lawsuits by buying a share of the settlement. When I searched on Google today under the term “lawsuit funding,” I received an amazing 159,000 hits.
Another reason lawsuits are so common is Congress has created an avalanche of laws that practically invite people to file lawsuits in U.S. courts.
For instance, just a few months ago, President Bush signed a bill amending an obscure law called the “Foreign Sovereign Immunities Act.” The bill makes it easier for terrorist victims to recover civil damages. It also launched an orgy of lawsuits against U.S. companies that never had anything to do with terrorism.
Other federal laws that encourage individuals to file lawsuits include the Americans with Disabilities Act, the Racketeering in Corrupt Organizations Act (RICO), and many others.
No More Frivolous Lawsuits? Yeah Right.
Some people collect stamps, coins, or antique furniture. My collecting habits are somewhat more esoteric: I collect stories of frivolous lawsuits. Here are a few of the more outrageous examples recently crossing my desk:
Group claims allergy to Wi-Fi signals. A group of “electro-sensitive” individuals in Santa Fe, New Mexico, claim they’re allergic to wireless Internet signals. And they’re suing the city for discrimination under the Americans with Disabilities Act. The group wants the city to disband all Wi-Fi devices in public buildings.
“Chaperone” sued for wrongful death. Have you ever accompanied your child on a school trip? If you have, and someone else gets hurt, you might be sued for failing to act as a “responsible party.”
That’s what happened to Susanne Sadler. She accompanied her cheerleader daughter on a trip to the 2004 Hula Bowl. Trouble is, another cheerleader on the same trip did a little too much partying and plunged naked to her death from a nine-floor hotel room. Sadler claims that she never agreed to chaperone anyone. Nonetheless, the parents of the dead cheerleader sued her, and an arbitrator awarded the parents US$690,000.
Packaging company sued for unintended use of product. In 2003, fire raced through the Rhode Island Station nightclub, killing 100 people. A company called Sealed Air that manufactures polyethylene foam is now on the hook for US$25 million. Why you ask? The nightclub owner used this product for soundproofing and the product allegedly spread the fire more quickly.
But guess what? There’s no evidence that the owner used Sealed Air’s polyethylene foam for soundproofing. Nor is there any evidence that Sealed Air ever promoted its foam for this purpose. Nonetheless, under Rhode Island’s “joint and several liability” law, if the court proved Sealed Air was even 1% liable for the fire, the company would have to pay a possible multi-billion-dollar claim. To avoid that possibility, Sealed Air will pay US$25 million in what amounts to protection money.
Bar responsible for your customers who ARE NOT drinking alcohol. “Dram shop laws” in all 50 states require bartenders to refuse to serve alcohol to obviously intoxicated patrons. In New Jersey, however, a court has gone even further. The court ruled that a bar owner may be sued for negligence because he did not try to protect a patron who purchased only soft drinks at the bar.
In this case, the owner was sued for failing to prevent a non-drinking patron from getting into a vehicle with a driver who was visibly intoxicated. The passenger died in a subsequent accident. There’s no reason to believe that a non-drinking guest in your own home wouldn’t be covered by the same legal logic.