Why America is not 'like America': debunking myths of the American legal system

Plaintiff winners were more likely to be awarded punitive damages in judge trials (8 per cent) than jury trials (3 per cent). While Judges were more likely to award punitive damages, the amount they awarded did not differ from those of the jury.

The largest punitive damage amount of $138 million was awarded by a jury to 22 individual plaintiff winners in a negligence case against service seller defendants. The trial lasted 21 days, resulting in a final award amount of $143.4 million – the largest in the sample.

The largest punitive damage award in a bench verdict was $2 million to two plaintiff winners in a premises liability trial involving bodily injury claim against service seller defendants. The case lasted five years from filing to the final judgment.

Why the Perception?

Why are we led to believe the system in the United States is so bad? The major forces seeking to reform tort law in the United States are, predictably, those organizations with the most to lose from an unfettered common law system. Large corporations reaping profits from products channelled into the community are at significant risk should their products be defective. Importantly, they are at risk from awards of punitive damages should their conduct be seen, by a judge or panel of juries, to be in contumelious disregard of the plaintiff’s rights. These organizations are waging a well funded and well organised war against the rights of plaintiffs (and prospective plaintiffs) to limit their exposure should a product or their conduct not comply with what is expected of a reasonable person.

Much of the argument of the tort reform is based on examples of "horror" stories of the American legal system. Unusual or controversial verdicts are part of a flexible common law system. The Australian legal system produces many "unusual" verdicts and these are delivered by judges in the Australian legal system. For example, in Tame v. Morgan (1998) 27 MVR 387, the plaintiff was injured in a motor vehicle collision. The other driver was intoxicated. The police officer recorded the defendant’s blood alcohol level in the plaintiff’s details in the police report. When told of the contents of the police report by his solicitor, the plaintiff suffered psychiatric injury. Gowling DCJ held the police liable.

In essence, the tort reformers rely upon a fear campaign to reform tort law in the United States. That fear campaign has trickled across to Australia. The fear of a legal system out of control is not statistically supported in the United States or in Australia.

Lessons for Australia

When one delves into the reasons why the average person believes the American legal system is out of control, the response is based upon their knowledge of "horror stories" and a vague notion of the United States civil justice system. Unfortunately, the fear campaign of the tort reformers has been so successful, both in the United States and indirectly in Australia, that the tort reformers have persuaded many citizens of both countries that the US system of civil justice is out of control.

Any community or legislature considering changes to the rights of individuals to pursue claims for damages for wrongs committed within the community must be vigilant to avoid succumbing to public pressure or popularity based upon anecdotal evidence that Australia might be becoming "like America". Any changes restricting access to damages in a common law system must be based upon sound jurisprudential principles and objective statistical evidence.

Moreover, if a particular area of community activity proves to be a source of fruitful litigation for plaintiffs, it is likely that the conduct of the defendants or a group of defendants is objectively unacceptable to the community as a whole. Regulation of the rights and actions of the wrongdoer is a much fairer method of resolving the problem than removing the rights of the injured party to claim compensation for the injury.