Jeanette Ortiz, a former manager of a Chipotle Mexican Grill in Fresno, was accused in 2015 of stealing $626 from a safe at the restaurant. She was fired. She filed a wrongful termination suit against her bosses. Jurors ordered Chipotle to pay her $7.97 million in damages.
Compare to that with the recent settlement by Michigan State University which will pay $500 million to settle lawsuits brought by 332 victims of Larry Nassar, the former doctor who sexually abused hundreds of young girls and women. On average, each victim will get $1.28 million. The Torrance Unified School District has also agreed to a $31 million settlement with 25 current and former students who were molested by wrestling coach Thomas Snider. Although it will be paid by the insurance company, the astronomical amount of money for damages can be an eye-opening spectacle.
America is a country under the rule of law. The protection of personal rights is a priority. New immigrants often hear that if you get hit by a Mercedes Benz or a BMW, then congratulations, you are about to get rich! Even though it is a joke, it alludes to the fact that many lawsuits in America result into senseless huge payouts. Judges and juries often sympathize with the victims. Wrongful imprisonment, rights violation, especially government abuses of power, often lead to jackpots of money. The victim becomes millionaires. Damages are also free from income taxes under the law.
The former Chipotle manager was accused of pocketing $626 in an envelope. The management accused her of stealing the store cash and fired her. We have no way of finding out the truth. How an accusation of merely stealing $626 resulted into a nearly $8 million in damages for the business is astounding.
The lawyers of the plaintiff had asked for $10 million. An exorbitant demand seems to be the norm in American courtrooms. After all, any settlement can net the lawyers 40 percent to 60 percent of the payout. Therefore, filing lawsuits become an “evil” fad. It also put all of us on pins and needles, afraid of falling into a trap of law.
Suppose the aim of a $8 million payout is to compensate the “character injuries and emotional toll”. Personal integrity is priceless. The amount of damages can be debated. However, how long will it take for an ordinary worker to earn $8 million? Is such a huge payout proportional? The parties in the lawsuits do not care. It is karma for the perpetrators. Whether it is justice is another matter.
We often read the news about some scumbag was wrongfully imprisoned for 20 years and got a multi-million payout. His “annual salary” in jail amounted to hundreds of thousands to a million dollars. It was better than a corporate CEO in addition to free room and board and complete tax free. These kinds of damages are cautionary tales for government officials to not catch the wrong guys and botch the trials. However, it is the taxpayers who are ultimately holding the bag. Thus, the mistakes and payouts continue.
By the same token, the astronomical damages against the businesses could be passed along to the consumers. Unless they go out of business due to price wars, all the consumers will ultimately pay for the astronomical damages.
In the name of personal rights, the astronomical damages have become a norm in American justice system. The government and business costs increase as a consequence. Why is it that American businesses cannot compete with Asian countries?
President Trump has gone out of his way to ask manufacturers to come back, take care of the folks at home and make America great again. But if you are so trigger happy to file lawsuits, and the damages are so out of proportion, they increase costs for the businesses. American inability to compete with manufacturers in Asian countries is one of the root causes of its decline.