What the Cain story tells us about the cost of litigiousness

With details about Herman Cain’s alleged harassment of female employees still only trickling out, much of the speculation has focused on the amounts of money Cain’s organization, the National Restaurant Association, paid to the women in settlements.

One woman reportedly got $35,000 to settle her complaint, another woman $45,000. In each case, that amount represented a severance approaching one year’s salary. People wonder: What do those (reported) facts tell us about the seriousness of the allegations?

That kind of speculation, at this point, is bound to be inconclusive. What has struck me, on the other hand, is what these facts certainly tell us about the cost of our society’s litigiousness.

At the Power Line blog, John Hinderaker passes along some analysis from a reader he does not name, but whom he describes as “one of the country’s leading experts in this area of the law”:

In my opinion, the reported settlement sums — $35,000 and $45,000 — do not exceed “nuisance value.” In fact, the nuisance value of a sexual harassment claim based on the alleged misconduct of the head of an organization in the late 1990s was probably higher than these sums. Sexual harassment claims have much more potential for embarrassment than ordinary discrimination claims. And in the classic “he says, she says” situation, the outcome is usually much harder to predict. Hence the extra incentive to settle regardless of the merits.

Hinderaker’s correspondent goes on to observe that, if the accuser feels she can move easily into a comparable job, she might well settle for an amount that doesn’t exceed “nuisance value,” even if she truly was harassed, simply because she wants to move on with her life. Again, we can’t say whether these amounts signal real harassment. Hinderaker, an attorney himself, makes this observation:

Frankly, hard as this may be for many people to understand, $40,000 in the context of lawsuits is chump change. Amounts of this sort are constantly paid to people who had lousy claims, at best, and who were almost certainly lying.

I want to expand on that point. First, let’s stipulate that “nuisance” payments are one price we as a society pay for having a high legal threshold (”severe or pervasive” behavior, according to Hinderaker’s correspondent) for proving someone is guilty of harassment. It’s a way of balancing protections to both the accused and the accuser.

However, this system almost certainly encourages false claims, and that is an excessive price to pay.

Cain was head of the National Restaurant Association from 1996 to 1999. In those years, the Census Bureau reports, the U.S. median household income ranged from about $35,500 to about $40,700. In other words, our litigiousness means that someone back then could have concocted a false but plausible harassment claim, and it might well have been worth an employer’s while to pay them as much or more money as half the households in the entire United States earned each of those years just to go away.

Now, consider that this doesn’t even include the cost of handling such complaints. Consider, too, that this is just one area of litigation — there are many others (medical malpractice is an obvious one). How many jobs haven’t been created over the past couple of decades because employers are paying some people not to work, but just to shut up and go away?

This situation is also bad for real victims. Consider that the false claims — and the fact that everyone knows they exist, and resent the costs they represent — make it harder for people with legitimate claims to be taken as seriously as they should be. When lots of people cry wolf, everyone is viewed more skeptically.

I don’t know whether Herman Cain did anything wrong. But I do know that false allegations, by anyone, against anyone, end up costing all of us.

– By Kyle Wingfield

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58 comments Add your comment

Stephenson Billings

November 4th, 2011
12:25 pm

What Cain should have done was to put someone on his election staff in charge of a “Bimbo Eruption Squad” to smear any accusers that might come forward, a la James Carville with Bill Clinton. Then maybe the press would have been fine with the way he’s been handling everything.

md

November 4th, 2011
12:46 pm

Go to some sort of loser pays system…….and watch the fraud drop.

ragnar danneskjold

November 4th, 2011
12:50 pm

I think the essay’s analysis is accurate. The cure, however, is not “loser pays” – most frivolous complaints are filed on behalf of plaintiffs who are judgment-proof. The cure is abolition of contingency fees.

dylandawg

November 4th, 2011
12:51 pm

of course there is always the point that he may in fact have sexually harassed these women………..but if I was a right wing blogger/talk show host etc. I would talk about the effects of frivoulous law suits so that I could well………I am not sure the point actually…….oh I know….make him look innocent with the bonus of showing how those dirty liberals have ruined America….awesome

ragnar danneskjold

November 4th, 2011
12:52 pm

Sorry, omitted a critical element of “the cure” – 98% tax on “exemplary damages” and “punitive damages” and any similar non-economic, non-physical injuries.

Lil' Barry Bailout (Revised Downward)

November 4th, 2011
12:52 pm

Follow the money, and it almost always leads back through the trial lawyers to their protectors in the Democrat party.

Lil' Barry Bailout (Revised Downward)

November 4th, 2011
12:53 pm

A fine idea, Ragnar. That’s “unearned income”, just like carried interest and capital gains!

Kyle Wingfield

November 4th, 2011
12:54 pm

Yeah, and if I were a left-wing/contrarian blog commenter, I would take a blog post that flat-out states, “I don’t know whether Herman Cain did anything wrong,” and claim the author was trying to make Cain “look innocent.”

Sam

November 4th, 2011
1:04 pm

“However, this system almost certainly encourages false claims, and that is an excessive price to pay.”

The cost to a secretary of pursuing litigation (not to mention the risk of being unemployed) is proportionately a lot higher than it is for the executive to defend it. In this case, for example, the executive paid nothing at all. His employer is the one that paid both the legal costs and the settlement. So, one could just as easily say that the system encourages executives to engage in sexual harassment. Or at least, that it creates an environment where they can do it with little risk of consequences.

@@

November 4th, 2011
1:08 pm

I would argue that two-thirds of jay’s commenters are frivolous.

It’s gonna reach the point where hiring women comes with too much risk.

My husband works with several women. He argues that if you tell one woman her hairstyle/dress/makeup is flattering, you better be ready to tell all of ‘em the same thing lest they get their feelings hurt.

WOMEN! I am one, and even I don’t understand ‘em.

Triple entendre

November 4th, 2011
1:15 pm

Who’s going to end up with more notches on his totem pole?

Tiger’s wood? Or Herman’s cane?

Totally unnecessary comment admittedly. But since half the Republican field is wholly unnecessary…

carlosgvv

November 4th, 2011
1:21 pm

There is a much more serious problem here. The Courts are increasingly accepting any and all frivilous lawsuits instead of rejecting them. For example, some years ago a woman spilled hot coffee from a MacDonald’s order and burned herself. She sued and the suit was accepted by the Court. Common sense would have dictated the court reject this since coffee gotten from a fast food source is obviously going to be hot. Common sense has fled our legal system and, for any and all suits, it’s “come on down”. This is nothing more than lawyers protecting lawyers and, since most of our politicians are lawyers, don’t look for any changes in the forseeable future.

hatorade drinkers

November 4th, 2011
1:21 pm

i don’t have the facts to back this up, but if you are being forced to defend against harassment issues from 15 years ago, it’s your fault. if you have to duck and dive, blame yourself.

Don't Tread

November 4th, 2011
1:46 pm

I’ll have to go with Carlos on this one. Half this stuff should be thrown out of court in the beginning when it fails the “common sense” test, but that would mean lawyers get paid less money.

It doesn’t matter which side eventually “wins” in court, the real winners are the lawyers – every time.

Junior Samples

November 4th, 2011
1:49 pm

Hey Kyle,

I think the question “How many jobs haven’t been created over the past couple of decades because employers are paying some people not to work, but just to shut up and go away??” is misleading.

Certainly it’s cheaper to pay off these claims rather than fight. But the number of jobs a company needs is related to the amount of labor it takes to produce whatever product or service they offer.

I understand the point you’re attempting to make, but it’s bit of a stretch to correlate legal fees with job creation when out-of-court settlements (like sexual harrrassment) are deductible as a business expense.

But I agree that our society’s litigious landscape is out of control.

md

November 4th, 2011
1:50 pm

Let’s not forget the judges are predominantly lawyers too………the ultimate good ole boy system. And they even created their own language to make it harder for the common Joe…………

Tiberius - Your lightning rod of hate!

November 4th, 2011
1:52 pm

A couple of points:

First, any halfway decent lawyer will tell you that defending these nuisance suits is a waste of time and money, and will usually counsel you to settle if the cost isn’t too high. That these women allegedly settled for such a relatively small amount shows that they really weren’t all that harassed, if they were harassed at all.

Second, there was an interesting comparison done regarding stories the big three networks ran on this issue in the first three days. ABC, CBS and NBC ran over 50 stories on the Cain sexual harassment claims over a three day timeframe on their various news programs and morning shows. Conversely, when three different stories came out against Bill Clinton’s sexual misconducts (Lewinsky, Flowers and the alleged Broadderick rape), a total of six news reports were run in the first three days by the big three networks. Six reports on three separate incidents for Clinton, over 50 for one anonymous allegation for Cain.

Good thing there’s no liberal bias in the mainstream media . . . :roll:

Bobby Taylor

November 4th, 2011
2:09 pm

The problem is Cain was thinking with the wrong head.

duder

November 4th, 2011
2:23 pm

And yet Cain continues to rake in campaign contributions. Who hasn’t felt harassed by someone at some point in their life- it’s all in the eye of the beholder.

MarkV

November 4th, 2011
2:26 pm

While I generally agree with Kyle, my question being the following: What was the purpose of this article? Is the cost of litigiousness in this area a particularly hot topic at this time? Or is the purpose to undermine subtly the claims of the women against Cain?

While Kyle appears top be neutral regarding the issue of significance of the financial amounts of the settlements, the “usual suspects” here are not.

“That these women allegedly settled for such a relatively small amount shows that they really weren’t all that harassed, if they were harassed at all.”

Disgusting.

DebbieDoRight

November 4th, 2011
2:27 pm

Follow the money, and it almost always leads back through the trial lawyers Sleaze Mongers to their protectors in the Democrat republican party.

DebbieDoRight

November 4th, 2011
2:28 pm

Oops that should be “Follow The Leak”…………

Junior Samples

November 4th, 2011
2:29 pm

Tiber,
Your second point is a result of the insatiable 24 hour news cycle we must now endure from every other channel. Searching ‘cain harassment’ on foxnews.com produces over 6500 results. Even they ran the story.

Regardless of which channel ran this story, it’s news. Was there a particilar ‘liberal’ media outlet stating or implying he’s guilty? That would prove your bias statement. If you’re referring to the shear volume alone, I’ll defer to my first sentence.

DebbieDoRight

November 4th, 2011
2:35 pm

Kyle: Yeah, and if I were a left-wing/contrarian blog commenter, I would take a blog post that flat-out states, “I don’t know whether Herman Cain did anything wrong,” and claim the author was trying to make Cain “look innocent.”

that’s because you WERE Kyle! Why deny it? You have the amazing ability to look at everything but the elephant in the room. For instance:

Kyle – “I don’t know if that driver was drunk, but I do know that someone, somehow, ran into that flagpole which toppled over and hit that kid upside his big head.”

Reporter – “So you’re saying that the driver WASN’T drunk?”

Kyle – “It could’ve been the driver or it could’ve been the kid — that kid’s head was WAY too big anyway.”

Voila!

On this matter Kyle – I’d go with the observation that MarkV made:

What was the purpose of this article? Is the cost of litigiousness in this area a particularly hot topic at this time? Or is the purpose to undermine subtly the claims of the women against Cain?

Voila!

ByteMe

November 4th, 2011
2:40 pm

This situation is also bad for real victims. Consider that the false claims — and the fact that everyone knows they exist, and resent the costs they represent — make it harder for people with legitimate claims to be taken as seriously as they should be.

And here I thought it was “tort reform” that made it hard for legitimate claims to be taken as seriously as they should be…..

jconservative

November 4th, 2011
2:41 pm

So Cain told an advisor in 2004 about the harrassment settlements. So Cain had 10 days notice the Politico story was going to run. So Cain failed to even attempt to prepare a response to the story he knew was coming. So Cain’s response has been at least 4 lies to the press.

This guy will not win if nominated.

Bart Abel

November 4th, 2011
2:46 pm

People should really take the time to learn the facts on the McDonald’s spilled coffee case before highlighting it as a civil justice system gone bad.

Stella Liebeck, 79, spilled McDonald’s coffee on herself while sitting on the passenger side of a parked card. As a result, she suffered third-degree burns over six percent of her body, including her inner thighs, perineum, buttocks, and genital and groin areas. She was hospitalized for eight days, during which time she underwent skin grafting. Liebeck, also subsequently endured multiple debridement treatments. Due to hundreds of previous such claims, McDonald’s, which heated its coffee to about 40 degrees higher than considered safe, had full knowledge about the extent and nature of the hazard they created.

http://www.jtexconsumerlaw.com/V11N1/Coffee.pdf

Kyle Wingfield

November 4th, 2011
2:48 pm

MarkV: Do you really think I’m so apt to pull my punches? If I wanted to suggest Cain was innocent, do you really think I’d resort to writing a post about litigiousness more generally? Or maybe, just maybe, did I really intend to write a post about…litigiousness more generally?

You know, sometimes a cigar…

On second thought, maybe a line from Freud is a bad choice given the subject :-(

Kyle Wingfield

November 4th, 2011
2:50 pm

You know, sometimes I think you should change your name to DebbieDoConspiratorial. Because you have an amazing ability to find an elephant in a room full of ants.

Junior Samples

November 4th, 2011
2:52 pm

Debbie,
I disagree, Kyle can only see the Elephant in the room.
(rimshot)

Sorry Kyle :)

Hillbilly D

November 4th, 2011
2:53 pm

Don’t know the facts of this particular case but in general, lawyers are the ones who profit from the legal system. Most everybody else, including those who win, usually come out on the short end of the stick.

A “loser pays” system sounds good in theory but that would just give the well-heeled even more of an advantage than they have now. They already know they can drag it out long enough to bleed their adversary dry, and win by default.

Grasshopper

November 4th, 2011
3:17 pm

Kyle Wingfield

November 4th, 2011
3:18 pm

LOL Very funny, Junior.

MarkV

November 4th, 2011
3:36 pm

Kyle Wingfield @2:48 pm doth protest too much, methinks.

Kyle Wingfield

November 4th, 2011
3:44 pm

MarkV doth overanalyze too much, methinks.

1961_Boomer

November 4th, 2011
3:47 pm

At $300 an hour, $35,000 represents about 116 hours, or less than three weeks worth of attorneys fees. Taking a case to court and through appeals could EASILY go more than 116 hours. I have seen relatively simply divorces (estate less than $200k) that cost EACH SIDE upwards of $15,000.

It makes no sense to carry out an entire civil trial over that amount of money as it costs as much to defend against it as it does to pay them off and be done with it.

getalife

November 4th, 2011
3:57 pm

“WOMEN! I am one, and even I don’t understand ‘em.”

You got that right :)

carlosgvv

November 4th, 2011
4:14 pm

Bart Abel – 2.46

I can see that common sense isn’t one of your virtues. If it were, you would know that ANYTIME you get coffee from any fast food place, it’s going to be hot and will burn you if spilled on your body. Pretending you’re not aware of this and accusing the vendor of promoting a “hazard” is a sleaze trial lawyer’s trick and, because the Courts accept this kind of perverted logic, our entire legal system is well on the way to being totally ruined. Fairness and justice increasingly mean nothing to the courts now. Large amounts of money for the lawyers means everything.

I Report (-: You Whine )-: Thee Magnificent!!! mmm, mmmm, mmmmm! Just sayin...

November 4th, 2011
4:14 pm

Why do you think most lawyers are dummycrats?

Lil' Barry Bailout (Revised Downward)

November 4th, 2011
4:19 pm

“i don’t have the facts to back this up”
———–

We noticed.

You don’t know what Herman Cain did or didn’t do. Are you simply motivated by your anger at one who escaped the plantation?

Bart Abel

November 4th, 2011
4:24 pm

RE: “…$40,000 in the context of lawsuits is chump change. Amounts of this sort are constantly paid to people who had lousy claims, at best, and who were almost certainly lying.”
——————————————————————–
I sort of interpreted this post as a “Cain is probably innocent” piece in disguise too (see quote above), but if Kyle says otherwise, then I take him at his word.

The truth is our political biases can color our judgment on these issues. If this were a revelation about President Obama, for example, I suspect that this post would have been about how a settlement equal to 12 months pay indicates that the accusers probably had witnesses and other evidence to support their claims. That assertion, also, could also have have been supported by quotes from an anonymous person described as “one of the country’s leading experts in this area of the law” (why this so-called expert would want to remain anonymous is anybody’s guess).

Bart Abel

November 4th, 2011
4:30 pm

carlosgvv,

Anytime you get coffee from any fast food place, it’s not going to be hot enough to cause third-degree burns, hospitalization, and multiple surgeries. I suspect that you haven’t bothered to do your research and learn the facts. As I indicated, McDonalds kept their coffee significantly hotter than their competitors, than home coffee makers, and than what is considered safe.

@@

November 4th, 2011
4:33 pm

I’ve been distracted. Back to my previous and only post.

My husband works with several women. He argues that if you tell one woman her hairstyle/dress/makeup is flattering, you better be ready to tell all of ‘em the same thing lest they get their feelings hurt.

And then there’s the one who would find the comment suggestive.

carlosgvv

November 4th, 2011
5:40 pm

Bart Abel

I have gotten coffee many times at McDonalds and other fast food places. I learned you DO NOT take a big gulp at first. In fact, I usually wait a few minutes before even taking a sip. Common Sense, Bart, not convoluted legal thinking, is what I go by. You?

Dusty

November 4th, 2011
5:46 pm

What’s the matter with you liberals that can’t stand for Kyle to write his opinion? He is writing about the main political news of the time presented in an equitable manner. Just the facts, mam!

Due to the suspicious character of liberals, they believe every Republican has a dire motive behind anything said or written. You really cannot adjust to people telling the honest truth The veracity of Kyle is something you cannot understand or believe.

May I suggest you return to that which you just left. Bookman’s blog that it. It has the atmosphere in which your conclusions of doubt are well understood. Don’t believe nuthin’ he says!! You don’t have to hang out here just because he’s playing music. (It calms the savage beast!)

Au revoir, les liberatees! Or mind your manners.

Bart Abel

November 4th, 2011
6:00 pm

As a result of this case, McDonald’s has lowered the temperature of their coffee to a safe level. So, if you happen to accidentally spill it on yourself Carlos, despite all that common sense, you don’t have to worry about third-degree burns, eight days of hospitalization, and multiple medical procedures. You can thank Stella Liebeck. Prior to her, hundreds had suffered similar injuries.

One of the benefits of a strong civil justice system.

Dusty

November 4th, 2011
6:02 pm

What is the matter with you liberals that want to “correct” Kyles’s honest opinion? He is writing about a current political news report and doing it in a very equitable manner.

The nature of liberals seems to be not believing what any Republican says. That is probably due to the fact that little comes from Democratic sources that is true. .You cannot adjust to a different environment.

I suggest you return to that which you left. Bookman’s blog, that is. Don’t believe nuthin’ he says, a good time to be doubtful. But you don’t have to leave just ’cause he’s playing music. (It calms the savage beast!)

Au revoir, mes liberates! Or stay and mind your manners!

Jon

November 4th, 2011
6:09 pm

As a centrist Democrat, I have to say, there’s really no “there” there when it comes to the Cain harassment allegations. It says a lot about the slant in the media that this is being covered as much as it is. Not a left-right slant, (because we’re long past the point where we can credibly say that so many media outlets owned by giant multinational corporations are “liberal”), but a slant towards the salacious rather than the substantive.

Personally, I would love to see more coverage of Cain’s “9-9-9″ middle-class tax hike proposal, or his anti-Muslim comments, or his deer-in-headlights responses to foreign policy questions rather than nonstop coverage of this nonsense. Those are far bigger reasons not to vote for him, but the idea that there might have been sexual impropriety gets all the attention.

Lil' Barry Bailout (Revised Downward)

November 4th, 2011
6:17 pm

Bart, thanks for putting a name to the person I curse whenever I’m handed a lukewarm cup of coffee!

Monica L

November 4th, 2011
6:17 pm

Kyle just HAD to mention cigars on this particular post. Sometimes a cigar ISN’T “just a cigar”

If the dress is a mess, you must confess!