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What Tort Reform might do to injured plaintiffs: A return to the "good old days."
From: Dave Farber <dave () farber net>
Date: Wed, 12 Feb 2003 09:49:40 -0500
------ Forwarded Message From: Barry Ritholtz <ritholtz () optonline net> Date: Wed, 12 Feb 2003 07:21:30 -0500 To: dave () farber net Subject: What Tort Reform might do to injured plaintiffs: A return to the "good old days." Hi Dave, You might have missed the WSJ article (last week) about the plight of the Titanic survivors. When the Titanic went down, the Tort cause of action had not yet fully evolved under US law; Politics -- and a lack of access to lawyers -- created terrible inequities to injured parties; The Titanic sinking is a perfect example of injured being unable to receive compensation to the damages caused by a reckless or negligent tortfeaser (See attached WSJ article, below). That scenario is before we even contemplate what arises from the law of unintended consequences; Perfect example is the "Private Securities Litigation Reform Act of 1995", which allowed accountants to escape liability for acts of Fraud (Enron, Worldcom, etc.): (c) AUDITOR LIABILITY LIMITATION- No independent public accountant shall be liable in a private action for any finding, conclusion, or statement expressed in a report made pursuant to paragraph (3) or (4) of subsection (b), including any rule promulgated pursuant thereto. http://www.lectlaw.com/files/stf04.htm Arthur Anderson may have been forced to dissolve, but they (and other accounting firms) were financially off the hook for defrauding millions of investors and leading to the loss of 100s of billions of dollars. Regards, Barry Ritholtz ================================ Check out my HTML experiment: http://www.geocities.com/ritholtz/ow.html February 5, 2003 DEJA VU By CYNTHIA CROSSEN Titanic's Sinking Plunged Survivors Into Poverty URL for this article: http://online.wsj.com/article/0,,SB1044398577689669693,00.html In less than three hours, 1,517 people died when the Titanic sank on its maiden voyage to New York. Most of the bodies were never recovered. On that April night in 1912, the survivors were lucky: they found their way onto lifeboats and, eventually, to America. But many of them, as well as thousands of families of the dead, would soon face another affliction: They had lost their savings, possessions, wage-earners and, in many cases, all three. The Red Cross and Salvation Army quickly mobilized to provide emergency services for the survivors, such as short-term housing, clothing and small amounts of cash. Other relief funds sprang up in the U.S. and Great Britain. But these were soon exhausted. Ultimately, the wreck of the Titanic condemned many surviving families to lifetimes of poverty. Widows and orphans would later beg charitable funds for a pair of eyeglasses or a set of false teeth. Annie Mitchell, a New York mother of two whose husband died on the ship, couldn't afford the five-cent subway ride to a relief fund's offices. But the nine-mile walk got her enough cash to care for herself and her children for two months. Then she was on her own. "I want some work where I can live with the children," Mrs. Mitchell told the New York Sun. The Titanic's owners -- the White Star Line, a British subsidiary of an American trust controlled by J.P. Morgan -- became tight-lipped after the sinking. When surviving crew members arrived in New York, White Star tried to hustle them back to England without letting any outsiders talk to them. In July 1912, the company said it had paid no claims thus far and would contest any future action seeking damages. White Star, then valued at about $180 million, had the law on its side. Under a federal statute, the company's liability was limited to the value of the property salvaged from the ship (14 lifeboats) and its receipts from passenger tickets and cargo. On Oct. 4, 1912, White Star asked a federal court to certify its liability at $98,000, a petition that would eventually be decided in the company's favor by the U.S. Supreme Court. The ship itself was insured for $5 million. There was only one way White Star could be forced to pay more: if the ship had been operated negligently, and the company knew about it. Inquiries quickly began in Washington, D.C., and London, but both were tainted by political and social prejudice. The U.S. investigation was led by Sen. William Alden Smith, whose grandstanding and occasional obtuseness (Question: "What is an iceberg composed of?") undermined the weight of the committee's findings. The British inquiry was technically exhaustive but morally fainthearted: Despite conclusive evidence that the captain had sailed the ship too fast through iceberg-studded waters, the British court exonerated him and White Star, blaming the disaster on "excessive speed." "If the court's finding had been worded with the express purpose of adverting from the White Star Line financial liability for the deaths of 1,517 persons, it could not have been more effectively phrased," editorialized the New York Times. Despite these setbacks, many people filed lawsuits against White Star in the U.S. and abroad. Eventually, claims in the U.S. rose to $18 million. Marion Thayer asked for $14,910 for her husband's baggage, but nothing for his life. Charlotte Cardeza wanted $177,353 for her lost baggage, which included 84 pairs of gloves and 33 pairs of shoes. But most of the people who had traveled third-class had neither the knowledge nor the means to hire a lawyer. They sought help from organizations like the Women's Relief Fund. A young English woman who had come to live with her mother in the U.S. lost her $250 nest egg, without which her mother was unwilling to take her in. "The committee gave her some money," reported the New York Sun, "and one member employed her out of hand as a lady's maid." The surviving crew were in little better financial condition. Their pay stopped when the ship went down, and they returned to their homes, most of them in Southampton, England, with nothing but the clothes on their backs. In addition, the city lost 549 wage earners, whose dependants expected to be partly compensated by a voluntary relief fund. However, the fund announced in August 1912 that it had inadequate money to meet all the claims. A woman named Eileen Wilson recently told the BBC about her grandfather, John Edward Puzey, a steward on the Titanic. He lost his life, leaving a wife and two sons, Ms. Wilson recalled. "She was given a few sovereigns and that was it. They were left in poverty." Perhaps the most poignant story was that of the families of the musicians, who were still playing their instruments when the ship went down. Because they had been hired by an outside contractor, White Star deemed them passengers rather than employees, which meant their dependants were not entitled to workmen's compensation. That contention was later upheld by a British court. It wasn't until July 1916, more than four years after the Titanic sank, that White Star and all the U.S. plaintiffs came to a settlement. White Star agreed to pay $665,000 -- about $430 for each life lost on the Titanic. E-mail comments to cynthia.crossen () wsj com 1. Hyperlinks in this Article: (1) mailto:cynthia.crossen () wsj com Updated February 5, 2003 ------ End of Forwarded Message ------------------------------------- You are subscribed as interesting-people () lists elistx com To unsubscribe or update your address, click http://v2.listbox.com/member/?listname=ip Archives at: http://www.interesting-people.org/archives/interesting-people/
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- What Tort Reform might do to injured plaintiffs: A return to the "good old days." Dave Farber (Feb 12)