Beware the Thin Edge of the Wedge

As someone who once spent nearly a hundred hours to defeat a $20 Department of Labor claim, mainly to fight the precedent, I can sympathize 100% with Wal-Mart spending millions to fight a $7,000 OSHA claim.  Note that despite all the OSHA wailing about not understanding why Wal-Mart is fighting so hard and causing them so much trouble, they admit at the end that they are trying to set a precedent for future actions.

For several years I worked for Emerson Electric, which among its many divisions owned a ladder manufacturer.  If there ever was a product that simply is what it is, totally WYSIWYG, it's a ladder.  But it turns out in this age of personal responsibility that anyone who ever gets hurt using a ladder, usually doing something stupid, will sue the ladder manufacturer for his or her injury.  Emerson fought every one, all the way to trial and sometimes appeal.  Lawyers said they were crazy, that in any given case, it would be cheaper (considering legal fees) to just settle.  But Chuck Knight (Emerson CEO) knew that these were not individual cases, they were multiple events in an ongoing "game," and game theory gives a different answer.  Fight enough of these, and tort lawyers looking for a quick buck with little work and cost will choose to spend their time elsewhere.


  1. Doug:

    I've been in the insurance industry all my life and believe that this is also the answer to huge malpractice premiums. Huge awards get all the publicity, but insurance companies will often settle a $10,000 claim to keep from spending $20,000 to fight it.

    We need more judges like the one a couple of years ago who told Hooter's that Kerr's scantily clad servers weren't infringing on any trademark. Then she had Hooter's fork over $1 million to them for their trouble. If you know you'll have to pay for the other guy's defense if he wins, you might want to make sure you have a case before you sue.

  2. Stephen Macklin:

    I worked for 10 years at the BIC Corporation. The legal department there was very busy defending the company against and endless stream of lawsuits over it cigarette lighters. What I found amazing was the sheer volume of cases that were dismissed because the product involved was not even made by BIC. Lawyers were just suing the big name in hopes of getting a settlement.

    There are good arguments on both sides of the loser pays idea, but I think there should definitely be a "sleazy pays" rule and probably a "stupid pays" rule as well.