One of the catch phrases you learn in law school is that “for every wrong there is a remedy.” This means that anyone with a legitimate grievance can show up in court and get some redress, even if it’s only the symbolic peppercorn. The problem is that, something that redresses the wronged person’s finances, may nevertheless be so small in value that it doesn’t serve as a disincentive to the actor.
Where one really sees the disincentive problem play out is in cases against deep-pocket corporations accused of placing dangerous products on the market or committing bad acts against society. Often, the damages associated with each bad product or bad act are limited. A toaster that gives people shocks can be replaced for $35.00. This low cost remedy may mean that it’s cheaper for the manufacturer to keep making cheap, dangerous toasters, because it will only occasionally be called to account to fix them — and then the dollar cost of a fix is low. The law has two remedies for this situation: (1) class actions, where lawyers find one real toaster customer and hypothesize all the others, which creates aggregate damages far beyond the actual $35.00 breakdown; and, if a class action isn’t feasible, (2) really, really big punitive or special damages. If making a bad toaster will cost you $35.00 in actual damages, but $500,000 in punitive damages, business sense dictates a rejiggering of your toaster assembly line.
In theory, the above approach to renegade manufacturers and corporations isn’t such a bad thing. It allows the legal system to redress marketplace asymmetries so that a large business cannot place dangerous products in the market or engage in wrongful practices simply because it’s economically cost efficient to do so. With legal amplification from class actions, or from special or punitive damages, that economic incentive to behave badly goes away.
As with so many things that are good in theory, though, real life facts have a way of interfering. Class actions have often devolved into lawyer “get rich quick schemes,” where lawyers cobble together bogus cases and then quickly settle them, with pennies going to the consumers and millions going to the lawyers. Whole industries can be destroyed when lawyers get the bit in their teeth, and judges do not or cannot restrain them.
All of this ruminating leads me to one case in today’s headlines — the story of the man who successfully won a $400,000 award from a jury based on his claim that American Airlines shouldn’t have taken him off a plane:
A jury in Massachusetts ruled on Friday that American Airlines should pay a South Florida man $400,000 in a discrimination case.
John Cerqueira and his attorneys accused American Airlines of racial profiling after he was removed from a plane in Boston in December 2003.Cerqueira said he had visited family in the Boston area and was trying to fly back to Fort Lauderdale-Hollywood International Airport when American Airlines officials ordered him and two other men off the plane.
“I have a feeling these kinds of incidents of racial profiling happen to people more often than we’re aware of,” said Cerqueira.
Cerqueira said three Massachusetts state police officers escorted him and two Israeli men off of the plane. They were all questioned and later released.”We went to the American Airlines ticket counter and they refunded our fares for all three of us and told me I was being denied service,” Cerqueira said. “They didn’t tell me for how long and I had to figure out a way to get home.”In his suit against the airline, Cerqueira, who is an American citizen of Portuguese descent, claimed he was denied service because the airline mistakenly believed he was of Arab, Middle Eastern or South Asian decent.The complaint included an e-mail message, which Cerqueira said is from an airline official, stating, “Our investigation has revealed that our personnel perceived certain aspects of your behavior, which could have made other customers uncomfortable on board the aircraft.”
Consider the facts: Mr. Cerqueira was taken off a plane and given a refund. He then had to find another flight home. It was maddening and inconvenient, but was it really a $400,000 injury to Mr. Cerqueira? No, it wasn’t. What it was was a situation in which the jury was sending a message to American Airlines that, while one man’s injuries weren’t too much of a problem (a few hundred dollars), what American Airlines did was really, really bad. That juror conclusion, though, leads me to ask whether what American Airlines did was really so bad. I don’t think so.
We’re living in a day and age when bad guys get onto planes with box cutters, and shoe bombs, and liquid bombs, and visions of murder and mayhem in their head. We’re living in a day and age when these bad guys kill, not one or two people, but hundreds and thousands. And we’re living in a day and age when airlines, which have lost their own people in these attacks, are the first line of defense for all of us against these crazies. Airlines have to do the best they can and they are not always going to get it right. With a verdict like Cerqueira’s, however, Airlines are going to be caught between Scylla and Charybdis. They’re damned economically if they inadvertently pull the wrong person off the plane, because verdicts are hugely disproportionate to the cost and inconvenience of any given individual tagged this way, and they’re damned to all eternity if their fear of litigation causes them to relax their vigilance.
Perhaps there can be some type of oversight board to make sure airlines don’t become overly aggressive or paranoid about policing their own flights. But the current system, where every jury with a blank check can cause airlines to second guess their own necessary vigilance, is definitely a wrong path in assuring the safest flights possible.
What’s your take on this situation, and what would you do to ensure that airlines maintain their vigilance without becoming vigilante organizations?