Paul Edelstein:
Hello. Welcome to Pulling Back the Legal Curtain. I am your host, Paul Edelstein. I’ll have my partner Glenn Fagenberg with me most of the time.
This podcast is for all of you out there who have ever read about a court case, seen a court case, been involved in a court case, went to court, thought about court, and wondered what the hell is going on in courts. It seems like every day we have these kinds of questions and get asked them. So, on this podcast, we will pull back the curtain on the mystery that sometimes surrounds the court and what happens there, and hopefully give you some answers, some interesting, some humorous, some surprising. Stick with us on Pulling Back the Legal Curtain.
Arthur, Hey, you didn’t run away.
Arthur Blyakher:
Good to see you again, Paul.
Paul Edelstein:
Hey, nice. You’re right next door to me. That’s good. I love that you come to the office. Isn’t it cool coming to an office?
Arthur Blyakher:
I missed it so much. Those two years were brutal.
Paul Edelstein:
Coming to the office. They should make a movie, right? Coming to America and it should be Coming to the Office.
Arthur Blyakher:
I shouldn’t say that. When my wife sees that… It wasn’t brutal. Being at home with the wife of kids is great.
Paul Edelstein:
Right. You love it here, right? It’s just fun being here, and you know what? There is an organic and generative aspect, certainly for lawyers, maybe other businesses, but I’m only qualified to do this. Being in the office is a big component so we can go back and forth. No one better at going back and forth than you, Mr. Obstructionist. Mr. Contrary, Mr. Get-in-the-way.
Arthur Blyakher:
I like playing devil’s advocate.
Paul Edelstein:
See, that’s such a nice way of saying it about you. I don’t even really use that kind of term when I talk about you to Glenn, but okay. So, devil’s advocate. So, we talked about all these different measures of damages in this part one of the damages podcasts, I guess we can call this that, but there’s another element of damages. It’s called punitive damages, right?
Arthur Blyakher:
Yeah.
Paul Edelstein:
You know what? There’s another term for punitive damages. You know what it is? I want to put you right in the spot.
Arthur Blyakher:
I don’t.
Paul Edelstein:
You don’t? Well, it’s good. It’s going to lead you right to the definition. So, punitive damages are also referred to in the legal world as exemplary damages too.
Paul Edelstein:
Yeah, so you knew that, right? Punitive or exemplary. That leads me right into the definition. So, what in the world are punitive damages, and why do my children think that everything I’m doing to them is punitive in nature?
Arthur Blyakher:
Well, so I want to point out, like you said, what I’m doing. Punitive damages focuses on what the tort fees or the defendant in our cases, what they did as opposed to compensatory damages where we measure the harm done to the victim.
Paul Edelstein:
Oh, that’s good. But you’re going to have to talk to me like I’m my 10th grader. Because you got it right, I get it. But…
Arthur Blyakher:
Compensatory damages that we discussed in the prior episode, we focus on the pain, the suffering, the losses that the victim suffered, and we don’t really evaluate what was the cause of those.
Paul Edelstein:
Right, the conduct. Right.
Arthur Blyakher:
That’s irrelevant for measuring the damages from a compensatory damages lens. Punitive damages, you have to focus on the conduct of the wrongdoer, what did they do, and should they be punished for it?
Paul Edelstein:
Punished or made an example of, and I think that’s where exemplary comes from, that term. I don’t know, maybe we’d have to ask the Ivy League partner over there.
Arthur Blyakher:
That would make sense, right?
Paul Edelstein:
We’ll ask Glenn. But it does make sense, right? It is aimed towards punishment, towards making an example of the person that did the conduct, right, as opposed to the victim of the conduct. It’s geared towards having a jury evaluate what happened, the conduct that happened, and if they feel it rises to a certain level of malice, which is really another words of bad [foreign language 00:04:05]. I speak some Spanish, like my children. So, bad, badness. If it rises to a level of badness, that maybe warrants punishment, and we’re making an example of, and the reason the law has that measure of damages, is as a dissuasion effect. In other words, we want to be able to punish somebody if their conduct is really bad, so that others get the message that, “Hey, not a good idea to do this kind of thing. That could be a real problem.”
So let me ask you a question. So, in our standard situation, if somebody just is driving, runs a red light, hits a client, really hurts them bad, can I sue for punitive damages in that very narrow set of circumstances? What would you say?
Arthur Blyakher:
No. [inaudible 00:04:52].
Paul Edelstein:
Why not? I want to punish this guy. He’s terrible, he ran the light. I hate… Can you believe this?
Arthur Blyakher:
Well, legally there’s a difference legally and morally. Some people run red lights by accident or-
Paul Edelstein:
Let’s say it’s just negligence. See, don’t start fighting me. Just an accident. The guy, he went through yellow-
Arthur Blyakher:
It’s an accident, he went through a yellow and it turned red. That’s not such a morally reprehensible act that this person needs to be put in the middle of this town square and made an example of, like you said.
Paul Edelstein:
Exactly. I got it. So now, I want you to hold onto that auto example. Because I’m going to give you another auto example and I know you know what it is, because we just have this case. But I want to wait to give you that example, keep everybody suspense building, to hear the answer to that question, okay? I want to just take a brief second to ask you if you know… Because I want to tell you these stories, because these are great examples. Two of the biggest United States examples of punitive damage to explain where they come from and why they’re important. The two cases that stick out. Do you know the two that stick out?
Arthur Blyakher:
You’re taking me back to first year of law school, the exploding car case.
Paul Edelstein:
Exactly. And what’s the other one?
Arthur Blyakher:
McDonald’s.
Paul Edelstein:
Oh my god. Did we even prepare for this? Did you and I talk about this?
Arthur Blyakher:
We did not.
Paul Edelstein:
Nobody would believe that.
Arthur Blyakher:
You’re talking about my two favorite things, cars and food.
Paul Edelstein:
Two favorite things, right. So, let’s talk about that. So, first you have the exploding… Now, it’s an unbelievable situation. It’s the exploding Ford Pinto cases in the 1970s. So, here’s what happens, right? So in the 1970s, Lee Iacocca, he’s probably like your hero, Lee Iacocca. You know what I mean? He’s God, right? So many people, Lee Iacocca. Well, this is what Lee Iacocca was doing back then. He was president of the Ford Car Company and all of a sudden these little Japanese cars are flooding the market and they’re doing great, and Volkswagen, they’re like killing it, right? They’re killing it.
So, Lee Iacocca goes to his company Ford and says, “Listen, we’re going to compete with these guys, and so we’re going to build a car.” And he says, “This car is going to weigh less than 2000 pounds,” I think there was a weight restriction, “and it’s going to cost less than 2000 bucks.” 1970, right? “And we’re going to make it that way.” So, they try to make this Ford Pinto so they could compete with these other cars, and they make it, but it was having a little problem. Remember what that problem was?
Arthur Blyakher:
I believe the gas tank would catch fire and explode, right?
Paul Edelstein:
Yeah, see? Now you know we didn’t prepare, because you were thinking. You got it right. What happened was, and Ford knew it, when this Ford Pinto would get hit in the rear at like 25 miles an hour, so not something outrageous, the gas tanks would’ve a tendency to crack and leak gas and then get a spark with light, and this fricking Ford Pinto would explode into a fireball. So, they’re building this thing and they’re like, “Wow, that’s not good.” But there’s these engineers at Ford and they figured out like, “Hey, we could fix this with a five…” There were two fixes to it. One was like a bladder on the gas tank, and the other one was, I don’t know, some kind of membrane, some other thing to separate it, whatever. It don’t even matter. Either way, both of these design fixes, and these are product liability cases, of which we have a very seminal one right now against Harley Davidson. Similar aspect here, right? These two design fixes would’ve cost like seven bucks. I think one was five bucks, one was two, right? But people at Ford, what’d they decide to do? Did they decide to do that or what?
Arthur Blyakher:
They decided to save a buck at the expense of people’s safety.
Paul Edelstein:
That’s right. They didn’t care because safety… Lee Iaccoca’s famous phrase back then was, “Safety doesn’t sell.” He was like, “This car is going to be 2000 bucks, not a dime more.” They put these cars out there, and guess what? People were getting fried alive, horrible. So, some plaintiff lawyer, kind of like you, by the way, it’s guys like you, young guys. I’m like an old guy now, right? Young guys, aggressive guys decided, “Wait a minute, that doesn’t sound right.” So Ford knew people were getting hurt, people were suing, they were settling cases, they didn’t care. It was the cost of doing business. They’re like, “Listen, whatever. What’s the difference? This is what we’re going to do.” Except one family decided that they weren’t going to take that, and they went all the way. The more they dug in, the more evidence they found that Ford knew about this, and was just sort of calculating it into the cost of doing business.
So in other words, “If we recall all these Fords, put the $7 part in there, it’s going to cost us X. Instead, we could just settle some of these cases, defend some of these cases, whatever, who cares, it’s going to cost us Y.” That’s what they did. That case went to trial and punitive damages were a rare thing in the United States up until that case. It existed. Punitive damages have existed in the United States all the way back to the 1700s. It’s been a measure of damages in United States court cases, but never until Ford did it become really in the public life. That jury compensated this family. I don’t remember the numbers, but it was a horrible, horrible injury. Then, on top of that, they were like, “Ford, you’re going to pay 200 million,” or some really, really big number, “to compensate…” It wasn’t compensation actually, “to punish you for your horrible, horrible conduct.”
Even you with your, let’s just say modestly conservative attitude that you bring to the table, I think would agree that that’s appropriate. Would you not?
Arthur Blyakher:
Absolutely.
Paul Edelstein:
Love it. See, this is where we align, and we don’t align on everything, but we align on that. So, now let’s go to the other unbelievably, incredibly interesting case, and then we’re going to get to your case, which I also find very interesting, because you taught me something, didn’t even know, and I bet you most lawyers don’t know what you learned and talked.
Arthur Blyakher:
I didn’t know before this case either.
Paul Edelstein:
See, I’m building the suspense. People are going to continue to watch this podcast. It won’t just be Maritza and Megan, it’ll be three others. So, in this other coffee case, everyone heard about the McDonald’s coffee case. Why don’t you give us the quick rendition of the McDonald’s coffee case? Then I’m going to tell you what really happened.
Arthur Blyakher:
So a woman, I believe this was in the eighties, if I’m not mistaken, she was going through a drive-through and she bought a cup of coffee. She took the lid off to put sugar or milk, whatever it was and her coffee, and she spill the coffee on her lap. She suffered burns. Then she sued McDonald’s because McDonald’s did not warn her that the coffee was as hot as it was.
Paul Edelstein:
Just tell us the end and what normal people think about the case.
Arthur Blyakher:
At the end, the jury awarded-
Paul Edelstein:
Millions of dollars, right?
Arthur Blyakher:
Millions of dollars in compensation and then millions more, I believe $12 million in punitive damages because it came out that McDonald’s knew.
Paul Edelstein:
I don’t want you to tell me that part. Everybody here’s about the coffee case, right? They’re like, “Wait a minute.” You got to give the negative side. I’m looking for you to give the devil’s advocate. Everybody hates the case. Why do we hear about that case all the time? Because people come in and say, “Oh my God, someone got millions of dollars for spilling hot coffee on themselves. I’m outraged, and the system’s broken and it’s terrible.” That’s what you hear, right? Don’t you hear that?
Arthur Blyakher:
When I first heard about this case, my attitude was-
Paul Edelstein:
Same way.
Arthur Blyakher:
Same way. “You spilled some coffee, you need a sign to tell you that coffee is hot?”
Paul Edelstein:
Right. Okay, so here’s what really happened in this case. So, this lady was 79 years old. It happened in 1992. Close, it’s a little bit low, right? You were like, what? Seven years old at that time?
Arthur Blyakher:
Three.
Paul Edelstein:
Three. Oh my god, you were three years old. All right, so when Arthur was three, this 79 year old lady went to McDonald’s, got a cup of coffee, put it in her lap in her car, and the lid wasn’t on tight and it spilled in her lap and it burned through her jacket, her pants, and her undergarments, and it actually seared her labia to the point where she had to have surgeries and it was horribly painful and just incredibly bad. She got a lawyer and said, “Wait a minute, this shouldn’t happen. I shouldn’t get third degree burns through all my clothes from a cup of coffee.” She actually initially asked McDonald’s for $20,000 in medical bills. That’s all she wanted. And you know what McDonald’s said? Tell me what McDonald’s said.
Arthur Blyakher:
Sure. Here’s a check.
Paul Edelstein:
No, it’s actually the opposite. They said, “Go F yourself. No way, goodbye. We’re not paying, you’re done.” That’s what happened. So, she brings the lawsuit and says, “Well, all right, you’re not going to pay me.” She goes to trial. Throughout the course of the lawsuit, those lawyers, young lawyer just like you, that’s why one young civil lawyer can make a big difference in the world, and I’m a big believer in that. So, a young civil lawyer like you finds out that McDonald’s has been serving their cups of coffee at, I don’t know, 180 or 190 degrees. So, if you put 190 degree water on your, you’re going to get a third degree burn in a millisecond. They were doing it on purpose, because they didn’t want people to go back to their cars, the takeout, you’re going through the drive-through window, whatever, and the cup gets cold and then customers come back and go, “Listen the cup, it’s cold. Give me a refill.” That would cost them another 3 cents a cup of coffee. That’s really what they [inaudible 00:13:53]. “But if we serve it at 190 degrees, that won’t happen. People won’t come back for more cups of coffee. We’ll make more money.”
Well guess what’s happening? People getting burned, not just Miss… I think her name was Liebeck, something like that, like the 79-year-old lady, not just her. Others are getting burned and McDonald’s is like, “Well, so what? These are not good cases. How are you suing me for spilling coffee on yourself?” So, most people don’t take those cases. I think if I brought the case to you, you would’ve said, “No way. I’m not taking this case,” because you’re a tough nut for you to take a case. So you just said no. Most lawyers are saying no. Some are bringing the cases, and they get nowhere, they’re losing, and it sounds like a loser. You spill it on yourself. Or McDonald’s is settling for a couple of bucks, whatever. Maybe once in a while they lose a case. They’re doing the numbers and they’re like, “Forget it, and we’re paying out X in damages in settlements, but if we change the temperature of the coffee, we’re going to lose Y in sales.”
Well, this jury, I think it’s somewhere in the middle of the country, like the Midwest, heard this, and they didn’t like it. So, they gave this… First, they decided that liability, and nobody knows this. They didn’t blame McDonald’s a hundred percent, they split liability. And juries could do that. You know that. It’s called comparative negligence. We have it all the time. You could blame two drivers. You were 50%, you were 50%. In this case, they blamed the McDonald’s 60%, I think, and they blamed this woman 40% because she put the coffee here. Totally sounds reasonable to me. She’s somewhat to blame, they were somewhat to blame. Then they gave her, I don’t know, three or 400,000 in compensatory damage. We talked about that in our last episode. Compensate her for the pain and suffering, and it was probably medical bills and stuff like that too. But then they went to punitive damages and they gave her, I think something like $3 million. I think it was like 2.7 million bucks in punitive damage, to punish McDonald’s. Do you know where they got that number from? It’s really cool.
Arthur Blyakher:
I believe it was a day’s sales of coffee.
Paul Edelstein:
You are the best. How did you know that?
Arthur Blyakher:
You told me this story before.
Paul Edelstein:
Because I told you, and that’s really what it was. They said, “Oh, well, we’re just going to do one profit sales,” something like that. That’s how they measured it, and they gave her that. But everybody hears that story and is like, “Wait a minute, some lady got 3 million bucks or multimillions,” and it was, it’s something like over 3 million total, “damages for spilling coffee on herself. That’s an outrage.” The insurance industry and the corporate industry took that McDonald’s case, it actually made it to a Seinfeld episode and it was probably one of the worst things that ever happened to civil plaintiff lawyers ever, because people just completely misunderstood it. When they know the real facts, they’re like, “Wait a minute, that makes a lot more sense.” But the other question I have for you is.. Well first of all, you’re fairly conservative. Any problem with that verdict as I just laid it out to you?
Arthur Blyakher:
No. Once you learn the facts and you realize the company decided to put profits over people, and that’s-
Paul Edelstein:
That’s correct. And that jury didn’t like it, right? But ultimately though, the case got appealed and that lady never even collected all that money, as you know. She got some money, but it was reduced significantly. I think she collected something like 300,000 or something like that. She never even got the 3 million. So, nobody ever knows any of the facts of those cases correctly. But the exploding Ford Pinto case and the McDonald’s case are probably the two most famous examples of punitive damages cases that I can think of, and they’re really interesting to think about.
Now, that brings us back to where I wanted to start and where I want to finish. We’re talking about punitive punishment, exemplary, make an example. You said in the beginning that type of damage is only available when there’s egregious conduct, malice, reckless. It’s got to be really bad what the [inaudible 00:17:29], meaning the person who did something, did. Not the recipient, it’s not looking at what happened to the victim. It’s looking at what the cause, what whoever caused it, what they did.
So, I think the most common, easiest thing… I’ve been a plaintiff lawyer for 29 years and I’m thinking, “Well, we get a lot of drunk driving cases, so those must be perfect cases. Somebody’s drunk, they get behind the wheel. Well, that’s got to be punitive in nature.” That’s got to be a case where I can get punitive damage. Then I had one of those cases, and I’m like, “Arthur, I want you to go get punitive damages against this lady, because she’s a drunk driver. Go get her, run with this case and call me when you’re done.” And when you called me, you told me something and I’m like, “What?”
Arthur Blyakher:
I was shocked.
Paul Edelstein:
What was it?
Arthur Blyakher:
That criminal conduct in a motor vehicle accident, including drinking and driving, is not enough to warrant punitive damages.
Paul Edelstein:
What? Just that.
Arthur Blyakher:
It’s not enough. So I was blown away, because when you think about what is more punishable than criminal conduct, I can’t think of it. It’s a crime.
Paul Edelstein:
Actually, when you told me that, what did I say? What did I say? I said, “You’re wrong.”
Arthur Blyakher:
You said, “Arthur. You’re wrong. Go figure it out.”
Paul Edelstein:
“Go figure it out.” Now, you did figure it out though. You were right, I was wrong. But you figured it out, because you came in and said to me, “Hey Paul, you’re not going to believe this. What you think is not accurate, just because this defendant was drunk alone. Just because she was drunk and was convicted of a DUI, that in of itself doesn’t mean you get punitive.” I said, “You’re crazy. You are wrong.” But you were right. But then you said, “But there is a way.” There is a way, and how do you do that?
Arthur Blyakher:
So, you got to look at aggravating factors. So, something that takes it outside of just drinking and driving. The more I read about it, it made a little bit of sense. So for example, if you get into a car accident where you barely tap somebody in the bumper, or it’s an accident that’s not caused because you are driving drunk, but because you may have made a left turn a little bit too wide or whatever it is. If the cause of the accident isn’t the drinking or the inebriation, it’s something else. In that type of scenario, you don’t want to expose a person to punishment, because it might be a little excessive.
Paul Edelstein:
Well, so when can you? When is driving behind the wheel… We know certainly drunk driving is negligence, it’s the end of the story. We’re not saying that, but when can somebody who’s a drunk driver be exposed to punitive damage to being punished for that?
Paul Edelstein:
Not compensatory, but punitive.
Arthur Blyakher:
Of course look at if there’s a history. If this is your second, third, fourth time driving drunk and you caused an accident, well, you clearly didn’t [inaudible 00:20:08] lesson and you won’t until you’re punished. If you have what we had in our case, severe inebriation or a combination of alcohol, drugs, something where it’s more than just, “I had a few beers or I had a few drinks and I got behind the wheel, it was a stupid mistake.” Something beyond a stupid mistake, which again, these stupid mistakes ruin lives, and I don’t want to diminish that.
Paul Edelstein:
That’s right. No, but we’re just talking about one measure now.
Arthur Blyakher:
But from a legal standpoint, it has to be something, some kind of conduct where it’s not just criminal, but it’s morally reprehensible. So in our case, we actually had to fight over it, and I thought we had a slam dunk case, and when we’re in front of the judge, it was a fight, and it wasn’t a given. What we had in our case was alcohol, multiple drugs, 2:30 in the afternoon on a weekday, on the same block as a school, all of these things. And the rate, how fast she was going.
Paul Edelstein:
That’s right.
Arthur Blyakher:
It was a huge impact. I thought it was open and shut. We won, but it was still a fight.
Paul Edelstein:
When you pointed out the aggravating factors in that case, it was pretty apparent we were going to win, and you did win. The aggravating factors in this case were that not just that this particular defendant had pled guilty to a drunk driving, but that, like you said, she was drunk driving at 2:30 in the afternoon during the day. She was in a residential area where there was a school. She was going at a high rate of speed. She hit one car, bounced off, hit three others. She had a history of problems and subsequent problems, drugs were involved, prescription medication that may have exacerbated. So, all of these other things were considered aggravating factors. Because of that, in that case, you were able to get how much overall?tTe case settled, so the jury didn’t award it, but clearly the threat of punitive damages being awarded resulted in a settlement of how much?
Arthur Blyakher:
$2 million.
Paul Edelstein:
Okay. I got to tell you, we’re not going to talk about the real details of the woman’s injuries, our client’s injuries, but you and I could both agree, and even I think the defendants agreed and the judge agreed, that our plaintiff’s injuries, the compensatory component to that, were definitely not worth $2 million. Right?
Okay, so the case settled, and had it gone to a jury, there would’ve been a compensatory component and a punitive component. Because you were so successful and really so good at getting over this component to punitive damages in a drunk driving case, we were able to get that. But you also taught me something that I didn’t know before that, and I’ve been doing this a long time, which is just the fact that somebody was a drunk driver, just that alone, is not enough to warrant punitive damages. It’s definitely negligence for sure, one a hundred percent right off the bat. But to get punitive damages from a junk driver, you actually needed a little bit more. You figured it out. You got this client 2 million bucks. Freaking, great job.
Arthur Blyakher:
Thank you. Now it’s your turn. Go get Harley.
Paul Edelstein:
That’ll be episode three, punitive damages against Harley Davidson. We’ll have to do that next.
Thanks for joining us on Pulling Back the Legal curtain with Paul and Glenn. Because we get so many questions over so many years about what goes on behind the legal curtain in the legal world, we try to put this together so that it would be entertaining and interesting and, hopefully, educational. If you liked it, come join us again or visit our website at edelsteinslaw.com. Either way, we’re always going to be here, in front of, and behind the legal curtain, doing the only thing that we know how to do, which is proceed. Take care.
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