Justinian Lane

“The Formula”

Fight Club is without a doubt in my top five favorite movies. I remember when it was in theaters, I thought it was going to be a lame movie about yuppie jocks. One of my friends dragged me to see it, and within the first ten minutes, I was hooked. There are many memorable scenes in the film, but one stands out in particular: "The Formula."

In that scene, Ed Norton callously explains his job as a recall coordinator. Rather than try and describe his performance to you, watch it for yourself. Someone thoughtfully uploaded the scene to Youtube.

I remember when I saw the movie in the theater, the entire audience laughed nervously at the conclusion. We all suspected that there was more than a little truth in the fact that major corporations sometimes decide whether to let people die depending upon how expensive it would be to save lives. It wasn't until years later, that I learned that Fight Club's "The Formula" scene was loosely based upon the Ford Pinto.

The gas tank in the Pinto was known by Ford engineers to be defective. If a Pinto was rear-ended at under 30mph, there was a likelihood that the gas tank would be torn open by protruding bolts, causing gasoline to pour into the car's interior. At 40mph, the same thing would happen... except the doors would also be jammed shut and people would be trapped in their burning Pinto.

[Update: Thanks to Professor Bill Childs for pointing out a factual error in this article. I had posted an excerpt from a memo which I believed pertained to the Ford Pinto, but in fact dealt with a proposed Federal regulation. In the interest of accuracy, I've deleted the excerpt and my comments regarding the memo. 10/6/06 J.C.L.]

In 1981, a 13 year-old boy was permanently disfigured by a fire caused by the defective gas tank. A California civil jury returned a $126 million dollar verdict against Ford, which was the largest verdict ever at that time.... although the trial judge reduced it to about $6 million dollars.

However, the damage to Ford's reputation was done, and the company itself was even indicted for homicide in Indiana after three teenage girls burned to death in their Pinto. The History Channel has a news report about the prosecution here. In short, the prosecution was outgunned, if for no other reason than it's entire trial budget was $20,000 while Ford literally had millions to defend itself. In what could possibly be called a forerunner to the O.J. Simpson case, Ford was acquitted.

The publicity surrounding the numerous civil trials contibuted towards the National Highway Traffic Safety Administration's decision to investigate the Pinto, which was eventually recalled due to the unsafe gas tank. Put another way, if not for personal injury lawsuits, more people surely would have been injured, and possibly killed by the dangerously defective gas tank.

They say that those who don't learn from history are doomed to repeat it. History was indeed repeated when Ford was selling Explorers with defective tires. Firestone and Firestone had been making confidential settlements with victims of the defective tires on Ford Explorers for at least eight years before their defects became public knowledge and the tires were pulled from the market. Apparently, application of "The Formula" revealed that it was cheaper to let people die than to recall the defective tires. Once again, personal injury lawsuits with large jury verdicts led to the recall of the defective tires and saved lives.

Of all the lessons to take away from the Ford Pinto disaster, take this one away: One of the stated goals of the ATRA is to bring "predictability" to the civil justice system, such as with damage caps. If a $250,000 damage cap had been in place during the 1970's, Ford would have been able to have confidentially settled every lawsuit that arose from the Pinto's design. If a $250k damage cap had been in place during the 1990's Ford and Firestone would have been able to have confidentially settled every lawsuit that arose from the defective tires. After all, if the most you can get is $250k in noneconomic damages, and you're offered $250,000 to confidentially settle, you're going to take the settlement. "Predictability" really means making it easier for corporations to decide whether to let consumers die in the name of profit.

Twenty years from now, if another manufacturer sells another defective car or tire, let's hope the civil justice system is still strong enough to hold the company accountable and contribute towards a product recall.

Justinian Lane: Author Bio | Other Posts
Posted at 9:45 AM, Oct 05, 2006 in Product Liability
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I am not defending the Pinto-- I am no expert in automobiles, and the little I have read suggests that it was an eggeregiously ill-designed car. But there is more than a touch of deagoguery in talking of "making it easier for corporations to decide whether to let consumers die in the name of profit." The design of *every* product necessarily involves trade-offs between efficiency and safety. We could reduce highway fatalities to near zero if we required every car to be as strong as a Sherman tank, or if we forbade manufacturers from making cars that were capable of going faster than 10 mph. You don't advocate either of those proposals, do you? Why not?

Posted by: Dr. Caligari | October 5, 2006 12:48 PM

To me, it's the matter of cost. If it costs $5-10 per car to eliminate a defect that may cause a substantial number of people to burn to death, then eliminate it. If it means adding $10,000 to the price of a car, don't eliminate it.

What's the right tradeoff in cost vs. safety? I don't think there's a magic number or percentage. I think that corporations need the specter of a lawsuit with uncapped noneconomic damages to help guide them in their decision making. If you cap noneconomic damages at $250k or some other arbitrary figure, you end up making too easy for these decisions to be made based upon small sums of money.

Posted by: Justinian Lane | October 5, 2006 1:57 PM

"To me, it's the matter of cost. If it costs $5-10 per car to eliminate a defect that may cause a substantial number of people to burn to death, then eliminate it. If it means adding $10,000 to the price of a car, don't eliminate it."

OK, we've established what you are, now we're quibbling about the price.

Seriously, where do we draw the line between $10 and $10,000? And who should draw that line?

Posted by: Dr. Caligari | October 5, 2006 2:34 PM

Lol, that's a classic joke.

Where do we draw that line? I don't have an answer that will apply in every case. I do know we can't just eliminate the line in the name of economic efficiency.

Who should draw it? You can't trust the manufacturer to draw it, as they're too financially involved.

I don't trust our government to draw it, if only because regulatory agencies like the FDA and NHTSA are both asleep at the wheel and stocked with former employees of the companies they're charged with regulating. Oh, and their budgets are too small for them to be effective at protecting the public.

I certainly don't trust the legislatures to draw the line, as lobbyists and their corporate masters have way too much sway over the process.

So I think that leaves the jury.

Posted by: Justinian Lane | October 5, 2006 2:54 PM

How about providing reasonable information?

How about telling the purchaser what the real risks are instead of making all the decisions, and keeping the consumer in the dark?

Posted by: lee tilson | October 5, 2006 3:05 PM

An excellent post Justinian!

Posted by: Cyrus Dugger | October 6, 2006 12:13 AM

Speaking of reasonable information that isn't being provided, liberal professor Bill Childs's comment to Lane is relevant:"Of course, all of this gets pretty far afield from what I originally wrote and that you've conceded, which is that you (unintentionally but sloppily) misrepresented the facts of the Pinto memo, failed to research its background beyond what was apparently represented to you, and still haven't (last time I checked, at 9:10 p.m.) updated your site to reflect your error. Nor have you approved the trackback I sent to the site. You've posted comments to that very entry and another entry has gone up on the site, but readers still see the plainly inaccurate statement that the memo excerpt you show was Ford evaluating tort liability for rearendings, when in fact it was Ford evaluating a regulatory proposal for rollovers using numbers from NHTSA." and I will note that my first-year law students usually take about thirty seconds of seeing that same excerpt on the screen to notice that it refers to a huge number of cars and a large number of pickup trucks and recognize that it could not possibly be Pinto-specific.

Posted by: Ted | October 6, 2006 4:19 AM

Let's recap:

You started with a demagoguic critique of "the formula" and argued that corporations shouldn't be balancing economic efficiency against human lives. The minute I called you on that, you immediately conceded that some "formula" has to be used-- that it's simply impossible to design any car-- or indeed any product-- without making some trade-off between safety and efficiency. But you won't draw the proper line, and don't want democratically-elected legislative bodies to draw the line either.

You want the line to be drawn by juries-- which means the line will always be drawn after the fact, and that different juries will draw it differently for the same product (what's the latest score on Vioxx-- 6-5?).

Is this any way to make economically-efficient allocations? (And don't tell me you value human safety over economic efficiency, because you already conceded that a perfectly safe car which costs an extra $50,000 won't do consumers any good.)

Clear rules, drawn in advance by elected legislators, may be far from perfect, but in my book they are far preferable to ad hoc after-the-fact determinations by 6 people who couldn't get out of jury duty.

Posted by: Dr. Caligari | October 6, 2006 2:45 PM