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So sue me.

You know that insane $28 billion verdict against Phillip Morris? Well, Max Power explains what's wrong with the logic behind such a huge punitive award -- besides the fact that it was based on the fiction that a smoker didn't know of the risks of smoking, I mean. It's punishing bigness, not wrongdoing. Max adds:

I don't smoke, I get annoyed at people who smoke in front of me on a moving escalator, but I still recognize this as a dangerous dangerous case. If the government has the power to randomly swoop in and take a third of your revenues for the year, well, that's a huge disincentive to doing business or investing in a business that can face such confiscatory policies. The same is true when the government's power is backed by a random assortment of twelve underemployed people and a judge who hates corporations. This isn't just cigarettes, it's hospitals, auto manufacturers, food sellers, retail stores, banks, etc. Jury verdicts like this do more damage to the economy than a hundred Ken Lays.
Max omitted one point in his argument: the "huge disincentive to doing business" is not a foreseen or unforeseen side effect of such suits. The disincentive is the goal of such suits. (Along with money for plaintiff's attorneys, of course.)

Along those lines, the New York times reported on the progress of a lawsuit against the gun industry. After laughably describing Americans for Gun Safety as a gun rights group, it describes the NAACP's (current) attempt to sue gun manufacturers for crimes committed with guns.

Anthony J. Sebok, a professor at Brooklyn Law School who has written about the gun cases, said the new information could build a devastating case against the gun industry. But he also said that if the plaintiffs fail in the Brooklyn case, that could be a setback for all the lawsuits across the country. "It could end the campaign to use litigation as a method of achieving gun control," he said.

Elisa Barnes, the chief lawyer for the N.A.A.C.P. in the Brooklyn case, said the 11 years of gun-sales data she obtained from the federal government is being analyzed by experts on marketing, the gun industry and statistics who are working with her on the case. In filing the suit in 1999, the N.A.A.C.P. said its goal was "to protect the well-being and security of its membership, which has been disproportionately injured" by illegal handguns.


Ms. Barnes made several strategic decisions that make the current case different from her 1999 case. Instead of seeking damages for the families of gun victims, for example, the current case seeks an injunction that would establish new restrictions on the marketing and distribution of handguns.

There are many problems with these sorts of lawsuits, but the biggest one is that they represent an end-run around the democratic process. Anti-smoking groups, anti-gun groups, and anti-fast food groups in the future, know they can't win in the legislatures. They can't convince a majority of the public to ban these supposed evils. But with the magic of punitive damages, they don't have to. They can destroy these industries by convincing twelve people to feel sorry for one suffering guy.


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This page contains a single entry from the blog posted on October 7, 2002 9:56 PM.

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