JIB in the News

[stjaba]

The risk is still with JIB customers, however now the risk is being heavily borne by the customer who is assaulted as opposed to all JIB customers equally.

And that's one of the debated points: whether damages awarded equal or exceed the risk born by the customers.

At least earlier the debate was framed as whether JIB or the customer should bear the risk.

[alfred russel]

This sounds like the market is working as expected. If it is riskier for a business to be open at night, then rational businesses should be closed, unless they are willing to protect their customers via extra security or insurance to cover the risk of attack.

That is great. I would ask who covers the rest of my night, but then I realized the line is so long it all gets spent at McDonalds. $3 for a McFlurry, and insurance coverage against random beatings. What a bargain.

[The Minsky Moment]

You haven't answered the question though.  If you change the rule to several liability, how is that just for the innocent person who only gets 40% of their money back, simply because Bad Guy #1 had two accomplices with no dinero?

I see your point.

Are you maintaining that in every case involving joint and several liability the parties are accomplices?

although  - you and AR both assume my example involves collusion, it doesn't necessarily.

The broader point is that if some defendants are judgment proof (missing or without assets) then someone is going to be screwed.  It could be the plaintiff or it could be the other defendants.

What the common law did traditionally was say that if someone should be screwed it should be a party responsible for the wrong, and not the victims of it.  Thus joint and several liability

But what if the only solvent defendant was only slightly at fault?
Then you get something like the Missouri scheme where it is only proportional liability unless a certain threshold of fault is hit (50% in Missouri).  That is a pretty common scheme that lots of states follow now.

[Admiral Yi]

This sounds like the market is working as expected. If it is riskier for a business to be open at night, then rational businesses should be closed, unless they are willing to protect their customers via extra security or insurance to cover the risk of attack.

It's not necessarily riskier for the business.  A head stomping in their parking lot doesn't harm them much. 

The market solution is for businesses to choose varying security/cost points, and for customers to choose their own tradeoff.

[stjaba]

This sounds like the market is working as expected. If it is riskier for a business to be open at night, then rational businesses should be closed, unless they are willing to protect their customers via extra security or insurance to cover the risk of attack.

It's not necessarily riskier for the business.  A head stomping in their parking lot doesn't harm them much. 

The market solution is for businesses to choose varying security/cost points, and for customers to choose their own tradeoff.

I meant risk from a legal/liability point of view. It sounds like you are suggesting that a business should never be liable for a beatdown that occurs in its parking lot. That's different from rejecting or embracing joint and several liability.

However, in negligent security cases, the general theory of liability is that the premises owner affirmatively did something (or failed to do something) that caused a risk of injury to a patron. Generally, a beatdown of a customer, without anything more, is insufficient to render a business liable. However, hypothetically, if Jib is aware that beatdowns had occurred in its parking lot at night, and did nothing to prevent future occurrences nor did anything to warn customers about the risk of beatdowns, then legally it could be liable.

Returning to being open at night example- let's assume that Jib is aware of an increased risk of beatdowns in its parking lot at night, and that this alone is sufficient to make Jib liable for future beatdowns in the parking lot. Obviously the smart thing for Jib to do would be to add security and/or make sure insurance covers it. Jib then spreads the costs to it customers, probably at the cost of fractions of a penny per burger. How is this a bad thing?

[The Minsky Moment]

I'm not sure if anyone has pointed this out yet, but in some states that have eliminated joint and several liability (i.e. Florida), courts generally do not permit the apportion of damages between intentional tortfeasors and negligent tortfeasors.  This is significant for "negligent security" cases.

For instance, in negligent security cases(i.e. exactly what the Jib case is) in Florida, a jury is not permitted to assign any fault to an attacker of a patron. So if the Jib case was in Florida, JIB would be responsible for the entire verdict, unless the plaintiff was at fault also.

Interesting, had not known that, this kind of case is a bit out of my usual area.
That would explain the result here.

[alfred russel]

Stjaba, I understand the way things are.

My point of view is this. The insurance model you suggest is not good public policy in this instance. In theory, there is a risk, and the insurance protects everyone from that risk, with the premium paid by the business and passed on to the consumer. But in reality, the actions a person takes can significantly alter their risk. Also, there are significant sources of waste in using insurance:
-insurance has significant overhead, from profits to investors, to administration costs, to legal costs, and adjusting costs
-the litigation in these sorts of situations is enormously expensive
-the outcomes in front of a jury are random and unpredictable

I also disagree about the triviality of the costs. I don't know the ownership structure of this JiB. It may have been a owned by a franchisee who had just one or two stores, and with insurance limits that will cause him to go into bankruptcy. It may be have been a corporate store owned by JiB. But if we assume the biggest pockets possible--this was owned by JiB--I checked their net income from last year: $58 million (and that includes Qdoba). A $20m judgment would be a big deal to them if they self insure. Even if they don't, their insurance costs must be considerable.

[DGuller]

Not quite.  All the defendants can look to eachother to work out (through third party proceedings etc) what each of their own share of the lability should be.  The policy decision is to not put that burden on the Plaintiff.

The issue is that here the other defendants wont be able to contribute because they are broke.  But, as pointed out earlier, that creates more deterrent from people acting negligently if they think there is a chance they may be responsible for the whole pot.

IMO, the point of the tort system is to internalize the externality of your action.  However, that point runs the risk of being lost when the externality is over-internalized by a factor of 100.

In theory, insurance should account for that. Insurance comes into play probably in 90%+ of tort cases. The risk of facing joint and several liability should be reflected in an insurer's risk assessment and calculations of premiums. I am sure there are studies which look at the impact of tort reform (i.e. elimination of joint and several liability) on insurance premiums.

No, it doesn't account at all for the perversion of the legal theory upon which tort system is based.  It only changes the deep pocket being tapped into in a particular case, and in the long run that cost is just spread along all the deep pockets that buy insurance.

[DGuller]

This sounds like the market is working as expected. If it is riskier for a business to be open at night, then rational businesses should be closed, unless they are willing to protect their customers via extra security or insurance to cover the risk of attack.

Just because individual actors are acting based on their financial incentives does not meant that the market is working as expected, if the costs being avoided are artificially inflated way past the real costs inflicted on society.  You still have an inefficient allocation of resources based on a legal absurdity.

[crazy canuck]

1 Off-Duty Police Officer: $25/hour.

Or at least following their own internal policies, which according to the report they did not do.

[crazy canuck]

  You still have an inefficient allocation of resources based on a legal absurdity.

that the risk of wrongdoing should be borne by the wrongdoers and not the victim.  What an interesting view of absurdity you have 

[CountDeMoney]

1 Off-Duty Police Officer: $25/hour.

Or at least following their own internal policies, which according to the report they did not do.

The organizational mission of JIB is not security.

[stjaba]

No, it doesn't account at all for the perversion of the legal theory upon which tort system is based.  It only changes the deep pocket being tapped into in a particular case, and in the long run that cost is just spread along all the deep pockets that buy insurance.

Assuming JIB is like most businesses, it passes along the cost of its insurance to its customers by building the cost of insurance into the price of its products. In the long run, the risk is being spread to all the patrons of JIB.

[stjaba]

Stjaba, I understand the way things are.

My point of view is this. The insurance model you suggest is not good public policy in this instance. In theory, there is a risk, and the insurance protects everyone from that risk, with the premium paid by the business and passed on to the consumer. But in reality, the actions a person takes can significantly alter their risk.

The system partially accounts for that being reducing damages in the event that a plaintiff has himself acted negligently. Additionally, while obviously people can take non-negligent actions that increase their individual risk, it is probably cheaper and more efficient to essentially treat everyone equally.

Also, there are significant sources of waste in using insurance:
-insurance has significant overhead, from profits to investors, to administration costs, to legal costs, and adjusting costs
-the litigation in these sorts of situations is enormously expensive
-the outcomes in front of a jury are random and unpredictable

In a non J&S world, you are still going to have all of that. The elimination of J&S in Florida certainly did not eliminate the need for businesses to purchase liability insurance. Are you opposed to the tort system generally? Or the concept of tortfeasors passing along insurance costs to customers? Even if you are opposed to imposing liability on JIB in negligent security cases, JIB is still going to have buy insurance to cover slip and fall accidents, accidental finger in chili incidents, etc.

I also disagree about the triviality of the costs. I don't know the ownership structure of this JiB. It may have been a owned by a franchisee who had just one or two stores, and with insurance limits that will cause him to go into bankruptcy. It may be have been a corporate store owned by JiB. But if we assume the biggest pockets possible--this was owned by JiB--I checked their net income from last year: $58 million (and that includes Qdoba). A $20m judgment would be a big deal to them if they self insure. Even if they don't, their insurance costs must be considerable.

Again, these costs and risks generally exist whether J&S liability exists or has been abolished. Does J&S liability marginally increase the odds of a significant adverse judgment and marginally increase the cost of insurance? Probably, but I suspect you are vastly overstating how much of an impact J&S liability has on the general cost of liability insurance.

[stjaba]

Just because individual actors are acting based on their financial incentives does not meant that the market is working as expected, if the costs being avoided are artificially inflated way past the real costs inflicted on society.  You still have an inefficient allocation of resources based on a legal absurdity.

Also, it should be pointed out that in a non-tort world, many of the issues you and AR raise would still exist. Rather than businesses bearing the risk of loss via tort suit, rational individuals would purchase insurance to protect against the risk of loss, and/or the cost of other insurance(i.e. health and disability) would increase  There would still probably be litigation over accidents, albeit in the form of breach of contract suits between individuals and insurance companies. An analogous example to this is un/under insured motor(UM) insurance.  UM carriers are routinely sued in lawsuits all the time.

There's no escaping insurance and litigation costs. What the tort system does is place the risk of loss on the party who is best placed to spread that risk over a large pool of people. Additionally, it incentives defendants to put into place measures to avoid accidents, which makes sense because defendants generally are much better situated to put into place measures to avoid accidents, compared to plaintiffs.