I wish to apologize for the delay in getting out the fall edition of this newsletter. As promised, I have been diligently working digitally in order to accommodate the shift to my web site:
This is the proposition which became law on November 5, 1996, and denies recovery for damages for pain and suffering to a driver who was himself/herself uninsured at the time of injury. When this proposition first passed in November, 1996, many of my colleagues, and that included very senior members of the bar, were predicting the law would be struck down as unconstitutional. Voted in for all the wrong reasons, I felt that the Proposition was an unfair method for addressing the total cost of tort litigation---costs which very often have more to do with the processes for recovering rather than the fundamental right to recover. Yet, it was clear to me the "proposition" had been ingeniously packaged with something we could all get behind--denying recovery to drunks and felons--which explained its overwhelming acceptance.
In Yoshioka v. Superior Court, 2nd Appellate District, October 27, 1997, Proposition 213 was upheld as constitutional in its entirety. And, I do not expect any change to occur in that finding, should the matter be heard by the California Supreme Court, or by any other tribunal. I think the "battle" over automobile tort litigation is pretty much over, and the insurance companies have won.
As consumers I hope "we" all get the promised benefits from those reputable organizations that continue to sell products and services based upon injury and property damage---the insurance companies. Have your rates decreased to reflect the phenomenal drop in litigation?
While trying to establish whether you've saved any money lately on your insurance, think about the next item.
In June of this year, in the course of litigation involving State Farm and a former employee, a State Farm attorney reportedly removed declarations presented to the Court under oath, and made part of the court file. This followed an effort by State Farm which failed to keep these documents under seal (unavailable to the public). The declarations were authored by Amy Zuniga, who was employed with State Farm from 1988 through the middle of 1996. Ms. Zuniga alleged that State Farm routinely defrauded policyholders. An article which appeared in the Los Angeles Times concerning the story, quotes the attorney for State Farm as stating she "was concerned that any Joe Schmoe in the public could just go in there and get a copy of the exhibits---any newspaper or newspaper reporter---anybody could go in there and look at it."
The backdrop to all of this is litigation which first began with claims related to the Northridge earthquake damage. In the course of some of that litigation, the testimony of Ms. Zuniga has been offered. An effort by State Farm to stop this has recently been rejected by a California Appellate court. I offer this lengthy introduction because of the absolutely incredible tale of institutional arrogance Ms. Zuniga has to offer concerning her years with State Farm, in a fairly responsible position. In pertinent parts of her declarations, Ms. Zuniga reports (under oath):
Whether or not such tactics are industry wide, is anyone's guess. If Ms. Zuniga's statements under oath are ever proven, a fundamental irony is that the very costs associated with "such practices" were at the same time used as data to further fuel the flames of "tort reform". In my opinion, the plaintiff's bar and tort lawyers have been permanently taken out of the equation of insurance rates. The insurance industry is now going to be hard pressed to "deliver". Should it fail, it will be interesting to see if the political branch----often the recipient of insurance campaign contributions---will be willing to deliver a justified and vengeful public response. Because the benefactors of such contributions involve both political parties, my guess is that there will be no reaction, and we will see more Propositions in the new century attacking the insurance industry. We might start by allowing competition in the industry and making the laws which regulate insurance products and services national as opposed to creatures of state law.
I have received a few inquiries concerning recent media attention given to potential changes brewing in the Bankruptcy laws. All of this "rumor" and speculation is related to the activities of the above commission, which was appointed to study the Bankruptcy laws and make recommendations. I have downloaded the entire report of the Commission which recently issued from the United States Central District, Bankruptcy Court web site (http://www.cacb.uscourts.gov/). There are 45 pages of recommendations, and yes, there was some "division" among the Commission when it came to certain aspects of bankruptcy as it related to businesses, but, overall, my reading is that as to consumer bankruptcy, the recommendations are debtor favorable. There are a number of "administrative" and procedural type changes affecting all bankruptcies, but overall, I am fairly impressed with the report.
These recommendations now have to be considered by Congress, so don't expect anything immediate which would affect pending matters, or action you may be contemplating in the near future. A better guess would be that we would be looking at a new Bankruptcy Code by next year this time.
Some of the recommendations include:
Nearly 45% of all undergraduate education is at least in part financed with student loans. The percentage is even higher for advanced degrees. The average debt load for an undergraduate degree is $11,000, and 6 figure balances are not unusual for graduate or professional degrees.
If your student loan has got you thinking about drastic decisions, think again. Under present law, loans extended for educational benefits, and/or otherwise guaranteed by the government, are not dischargeable. You could wait and see if Congress in fact repeals Section 523(a)(8) of the Bankruptcy Code---the section that makes such loans non-dischargeable. However, don't hold your breadth. If you are considering realistic options in the here and now, however, listen up.
The options with student loans lie mainly in the type of repayment plan you select; whether the loan is private or government; whether you are in default, and whether you can make use of consolidation. If you are in trouble, don't wait till you are missing payments to explore "deferment". Many student loans allow for an automatic deferment post-graduation; and then two or more deferments during the life of the loan. It is best to discuss the potential for deferment when you are not delinquent, and that is because interest will continue to accrue during such periods. "Hardship" exclusion is sometimes perceived as something different from deferment. It isn't.
Repayment plans can be standard, graduated, extended, or income based---or some combination thereof. Standard is what is usually calculated at the time of the loan. Graduated allows for stepped up payments. Extended is just that--it takes on the life of a real estate mortgage--however, you end up paying a great deal in interest. Sometimes multiple loans can be consolidated and yield a lower repayment rate.
The point is that the criteria for discharge of student loans is very precise, and rarely ever satisfied. The better process is to think ahead and plan. This much is certain: you can be assessed costs and fees for a delinquency; you can lose your income tax refunds; you can be sued for student loan defaults; and, your wages can be garnished and to the extent allowed by state law, your property can be executed against.
THE ACTUAL FACTS ABOUT THE MCDONALDS' COFFEE CASE
There is a lot of hype about the McDonalds' scalding coffee case. No one is in favor of frivolous cases of outlandish results; however, it is important to understand some points that were not reported in most of the stories about the case. McDonalds coffee was not only hot, it was scalding -- capable of almost instantaneous destruction of skin, flesh and muscle. Here's the whole story.
Stella Liebeck of Albuquerque, New Mexico, was in the passenger seat of her grandson's car when she was severely burned by McDonalds' coffee in February 1992. Liebeck, 79 at the time, ordered coffee that was served in a styrofoam cup at the drivethrough window of a local McDonalds.
After receiving the order, the grandson pulled his car forward and stopped momentarily so that Liebeck could add cream and sugar to her coffee. (Critics of civil justice, who have pounced on this case, often charged that Liebeck was driving the car or that the vehicle was in motion when she spilled the coffee; neither is true.) Liebeck placed the cup between her knees and attempted to remove the plastic lid from the cup. As she removed the lid, the entire contents of the cup spilled into her lap.
The sweatpants Liebeck was wearing absorbed the coffee and held it next to her skin. A vascular surgeon determined that Liebeck suffered full thickness burns (or third-degree burns) over 6 percent of her body, including her inner thighs, perineum, buttocks, and genital and groin areas. She was hospitalized for eight days, during which time she underwent skin grafting. Liebeck, who also underwent debridement treatments, sought to settle her claim for $20,000, but McDonalds refused.
During discovery, McDonalds produced documents showing more than 700 claims by people burned by its coffee between 1982 and 1992. Some claims involved third-degree burns substantially similar to Liebecks. This history documented McDonalds' knowledge about the extent and nature of this hazard. McDonalds also said during discovery that, based on a consultants advice, it held its coffee at between 180 and 190 degrees fahrenheit to maintain optimum taste. He admitted that he had not evaluated the safety ramifications at this temperature. Other establishments sell coffee at substantially lower temperatures, and coffee served at home is generally 135 to 140 degrees.
Further, McDonalds' quality assurance manager testified that the company actively enforces a requirement that coffee be held in the pot at 185 degrees, plus or minus five degrees. He also testified that a burn hazard exists with any food substance served at 140 degrees or above, and that McDonalds coffee, at the temperature at which it was poured into styrofoam cups, was not fit for consumption because it would burn the mouth and throat. The quality assurance manager admitted that burns would occur, but testified that McDonalds had no intention of reducing the "holding temperature" of its coffee.
Plaintiffs' expert, a scholar in thermodynamics applied to human skin burns, testified that liquids, at 180 degrees, will cause a full thickness burn to human skin in two to seven seconds. Other testimony showed that as the temperature decreases toward 155 degrees, the extent of the burn relative to that temperature decreases exponentially. Thus, if Liebeck's spill had involved coffee at 155 degrees, the liquid would have cooled and given her time to avoid a serious burn.
McDonalds asserted that customers buy coffee on their way to work or home, intending to consume it there. However, the companys own research showed that customers intend to consume the coffee immediately while driving. McDonalds also argued that consumers know coffee is hot and that its customers want it that way. The company admitted its customers were unaware that they could suffer thirddegree burns from the coffee and that a statement on the side of the cup was not a "warning" but a "reminder" since the location of the writing would not warn customers of the hazard.
The jury awarded Liebeck $200,000 in compensatory damages. This amount was reduced to $160,000 because the jury found Liebeck 20 percent at fault in the spill. The jury also awarded Liebeck $2.7 million in punitive damages, which equals about two days of McDonalds' coffee sales.
Post-verdict investigation found that the temperature of coffee at the local Albuquerque McDonalds had dropped to 158 degrees fahrenheit. The trial court subsequently reduced the punitive award to $480,000 --or three times compensatory damages -- even though the judge called McDonalds' conduct reckless, callous and willful.
No one will ever know the final ending to this case.
The parties eventually entered into a secret settlement which has never been revealed to the public, despite the fact that this was a public case, litigated in public and subjected to extensive media reporting.
(Excerpted from ATLA fact sheet. ©1995, 1996 by Consumer Attorneys
of California)
This addresses the overlap between the criminal law and civil law from a different perspective than presented in my last newsletter.
From time to time, in the context of an ongoing or threatened civil lawsuit, my client(s) will approach me and request that I convey to the opposing attorney or party facts and/or subtle threats about taking "certain" information to law enforcement agencies and bureaucracies concerning the coduct of the other side. When I reply to my clients that I cannot do that for ethical reasons, even if the information is fairly mild, I am often confronted with confused reactions.
Here is an explanation of the rule which addresses this for attorneys, and I think an understanding of the rule will give one a better understanding of the "goals" the law seeks to achieve in the context of resolving disputes involving money and private parties.
An attorney is not permitted to threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute. "Civil dispute" is interpreted broadly. Neither is an explicit threat necessary to cause a violation and disciplinary action against your own attorney. The reason for the rule and the prohibition of such conduct is that unregulated it can cause practices which are illegal ---the law does not want attorneys to be engaged in a process of extorting results. Since it is very difficult to draw lines, as to attorneys, the law simply prohibits such conduct.
Therefore, my standard reply in such situations is that if you have knowledge or information which suggests criminal or quasi-criminal activity, you need to report that to the appropriate authorities. It then becomes a matter for the state to investigate or evaluate.
State Bar of California-www.calbar.org
Check on lawyer membership.
U. S. Central Districti Bankruptcy-http://www.cacb.uscourts.gov/Great Court site.
Riverside County Courts-paladin.cirrus.co.riverside.ca.us
Check filing fees.
California Courts-www.courtinfo.ca.gov
A general resource directory.
Deep Data-http://www.midtown.net/~acessnfo/subrosa.html
Do online investigation (for a fee).
My further updates will follow.
Sincerely,
Gerald Spala
October 31, 1997
Copyright, 1997, Gerald A. Spala, Esq. All rights reserved. The
materials and opinions contained herein are not intended as legal advice,
nor should be relied upon as legal advice in the absence of a complete
and thorough consultation or review of your matter by a licensed attorney.
