Grubman Case Prompts Lawsuit Claims Debate

New York City publicist Lizzie Grubman's July 7, incident, allegedly involving the back-end her father's Mercedes SUV and a crowd of 16, has prompted a mini-blizzard of coverage and commentary in the New York press.

As have the handful of lawsuits against her, reportedly totally more than $90 million, and much of that in punitive damages, for Grubman allegedly backing the vehicle into the crowd in anger, seriously injuring a few.

Grubman's criminal defense lawyer, Stephen Scaring, calls the amounts "ridiculous" and "in no way reasonably related to this accident."

"There's no way that she's ever going to be required to pay it," he says. "Its lawsuits like this that give trial lawyers a bad name."

While experience shows few plaintiffs ever recover the grand totals of the most exorbitant punitive damage claims, Grubman's case is fueling a the timelessly hot debate over whether plaintiffs should be allowed to file for such enormous amounts in the first place.

Few Fixed Limits

Tort reformers like to cite as excessive the famous New Mexico jury punitive award of $2.7 million to a woman who spilled hot McDonald's coffee on herself, and received third-degree burns, from a cup lacking a warning.

"In America today, in most states, there is no fixed limit in the amount of punitive damages, unlike in criminal law, where the fines are spelled out," says Victor Schwartz, general counsel for the American Tort Reform Association.

"[P]unitive damages in most jurisdictions are unlimited. And that's why you occasionally do get crazy verdicts like the McDonald's case," he says.

Trial lawyers, on the other hand, note McDonald's and other restaurants, as with many other cases involving major punitive awards, ended up changing their behavior, lowering their coffees' temperatures and putting warning labels on their cups.

Massive punitive awards are needed for deterring companies or individuals from intentional behavior that may harm or kill someone, says Carlton Carl, spokesman for the Association of Trial Lawyers of America.

"We don't send Firestone to jail. What should the punishment be? Should it be capped, as the court reformers, as corporate America, including Firestone, want? Should we limit it to ½ million dollars, $1 million? That kind of penalty is a slap on the wrist for a huge corporation."

Punishment and Deterrence

The possibility of an unpredictably large punitive damage judgement, he says, deters corporations from factoring into their business decisions anticipated manageable costs of damage awards related to safety risks.

"That's why it is so important not to let corporations know what their penalties might be if they do wrong."

He cites a famous case involving allegedly unsafe gas tanks on Ford Pintos, made mostly in the 1970s. The company, he says, "chose not to fix the car because they thought it would cost them less" than they would have paid in damages.

Schwartz does not disagree potentially painful punitive damages can be a deterrent, but he argues lacking specific restrictions, juries sometimes approve awards that can wreck a company or individual financially — potentially leaving insufficient resources for paying awards to all successful plaintiffs.

"The core problem with punitive damages in America is the jury is given very little guidance. It's almost, do whatever you feel like. It's Alice in Wonderland."

Most of the largest jury awards get thrown out or reduced on appeal, he says, as occurred with the McDonald's coffee case. And large judgements against individuals, such as the $34 million award against O.J. Simpson, may never be collected for lack of seizable assets, he says.

But Schwartz, who represents corporate defendants, says appeals can take a long time and, in the mean time, put a company's credit at risk.

"I think their better off with an award that's fair, that can be sustained, rather than one of these zooey awards that probably never gets collected anyway," he says.

Carl says the system works, because punitive awards can be reduced on appeal. But he adds: "Quite frankly, in some cases maybe these companies have acted so recklessly, maybe they ought to be put out of business," adding, "But that almost never happens."

PR Strategy?

With respect to Lizzie Grubman, it's been alleged she would have a difficult time paying all of the claims if they were awarded against her.

Newsday, citing real estate records, reports she does have a $2.1 million Upper East Side apartment in her name, with only a $700,000 mortgage against it.

Experts say enormous claims for punitive damages, in addition to hopes for large compensation, are often more about news media attention to case.

Schwartz cites a Florida lawyer who recently filed suit for $1 billion against Bridgestone. "He can file it, and he got a headline, and he got himself on Court TV that night. But he's not going to get it."

It is what Scaring believes is happening to his client. "That's what it's all about, and it's been pretty successful."

For her part, Grubman brought in public relations sage Howard J. Rubenstein to interface with the press.

Was it Intentional?

Whether punitive damages are at all awarded against Grubman may hinge on whether the jury finds she intentionally backed the car into the plaintiffs.

"If you hurt somebody on purpose, with a lot of maliciousness, then you're open to additional punishment — punitive damages," says Carl.

Punitive damage awards are pretty rare, accounting for only about 3 percent of civil cases, according to a recent Justice Department study. In civil cases, most juries usually determine people hurt other people more out of negligence, than out of maliciousness, says Carl.

"The standard's pretty high to get punitive. You really have to prove somebody had an idea they were going to do something terrible," he says.

Witnesses say, moments before the car started in reverse, Grubman swore at bouncers who had asked her to move her car from a fire lane and called one of the plaintiffs, "white trash."

Police have charged her with assault, reckless endangerment and fleeing the scene of an accident. Grubman reportedly denies she hit anybody.

One plaintiff, in a suit, reportedly accuses the Manhattan publicist of drinking and taking drugs less than 7 eight hours prior to the incident — an account reportedly denied by Scaring, who has reportedly said the car lurched out of control accidentally.

If the plaintiffs prove Grubman acted intentionally, so that her insurance company cannot be tapped for payment of punitive damages, and such damages are awarded, there may actually be less money available for plaintiffs to collect.