Considering that celebrities have been killed by their stalkers (and of course, non-celebrities as well), it sure as hell doesn’t seem like nothing. The hotel was insanely negligent.
Huh? It’s too late to settle – it went to a jury and she won. Do you not know how a trial works?
There’s still the possibility of appeals.
Cases are frequently settled after trial, but not usually cheaply
Most hotels are not owned by the brands whose names are on the signs. Most hotels are owned by individuals or businesses who own a few to many hotels. A three-second search turned up Marriott’s response to this lawsuit, and they say:
Most hotels have 100 to 300 rooms. I couldn’t quickly find the size of the Nashville Marriott, but looking at the picture, I would guess about 200 rooms. A hotel that size with the room rates they appear to have probably grosses about $10 million a year in room revenue. That is gross revenue. The entire property/business is almost certainly not worth $55 million, though it probably is worth more than $27 million (49 percent of $55 million).
So, yes, in my judgement an award that approaches the entire value of a business, including real estate, for a modest slip-up is exorbitant. With all necessary caveats about not hearing the testimony, not knowing all of the facts, etc. … If I were on that jury, I think a $5 million award would have been ample. And I would likely have found the hotel perhaps 10 percent culpable. YMMV.
Also, as I understand it, a decision like this merely gives the plaintiff the right to initiate collection proceedings; the court isn’t going to seize $55 million worth of assets and turn them over to her. She can initiate liens and other vehicles to get her money, but they can be as slow and obstructionist as the law allows. They could still negotiate a settlement where they basically say “here’s $10 million, now leave us alone, otherwise we’re going to make it as hard and expensive as we possibly can for you to collect.”
Since we have some hotel workers posting.
Don’t most big, fancy hotels have special privacy suites for rich or famous guests? I’ve heard they have floors where the public elevator doesn’t stop. The floor can only be reached from a special elevator. I’m not sure how common that is. But it certainly would give these special guests more security.
So what happens when she realizes that the perv has no money, and the $27 million award will bankrupt the hotel owner? Lawyers will look at what the insurance coverage is and negotiate a more reasonable figure. If you don’t want to call that a settlement, what do you call it?
Of course, that is a real concern. But again, I question the magnitude of the damages. Would be interesting to hear what evidence there was of the persistent psychological scarring she has experienced. Maybe the jury could have awarded her a lifetime’s supply of duct tape, so she can put a little piece over the peepholes of any hotel rooms…
I’m not sure an award should be based on the possibility that something worse might have happened. But I’m far from an expert in these types of civil cases.
Even ordinary guests need the type of basic security being discussed. People often go to hotels to lay low, and anyone can have a jilted spouse, angry ex, or whatever trying to find them. It’s an everyday concern for pretty much all hotels.
In terms of microeconomics that doesn’t make any sense. If the market clearing price for the room is X, the hotel will charge X. They can’t charge more than the market-clearing price and make more money or else they’d already be doing it. The arithmetic that determines the profit-maximizing price of their rooms is the same whether they pay Erin Andrews $55 million or fifty-five cents.
A PS to my previous post. Even if the hotel (business and property) is worth more than the $27 million judgement, it almost certainly has a mortgage for 60 to 80 percent of it, meaning the owner likely has equity of far less than $27 million. The judgement was ridiculous. The perp only got 30 months for committing the crime!! And the hotel owner is on the hook for $27 million?
Awards of this magnitude - and the fact that so many otherwise intelligent people so vehemently approve of them - is exhibit “A” in the brief as to why jury trials are a bad, bad idea in civil cases.
Sure, it is easy to see, in any individual case, the heinousness of a defendant’s actions, the depth of their negligence, and the trauma of the victim.
What is not so easy to see is the damage that having the possibility of multi-million dollar lawsuits for non-malicious screw-ups imposes on the economy as a whole.
Is it worth it to “send a message”? What’s the message - that hotels should ensure that their employees never make a mistake? Seems unlikely to happen. More likely, insurance rates go up, as hotels (and every other business out there) attempts to protect itself with more expensive policies with higher limits.
The problem is that while the benefactors of massive lawsuit winnings are visible and often very sympathetic, the costs of such a system are largely hidden - and appear (in any individual case) to be chump-change for ‘some big corporation somewhere’. So ordinary folks don’t feel that these costs affect them at all. But these costs have to be paid, and they come from somewhere - they come at the expense of more useful economic activity. Which, in turn, comes at the expense of everyone living in that society.
It is a classic “broken windows” problem:
This is not to say that damages should not be awarded when businesses screw up. But those damages should be proportional to actual damages suffered, based on other comparators. They should not be a sort of free-form exercise in economic sticking it to the corporations.
This is, BTW, a problem particularly in the US. In Canada, for example, jury trials in civil cases are rare, punitive damages rarely awarded (and amounts awarded are low), and costs rules encourage settlement. Yet Canadian businesses are not notably more dangerous than American.
Well put Malthus!
These verdicts make headlines because they are rare. Even rarer are the cases that pay out amounts this large. Large verdicts can, however, motivate insurers and corporations to act more carefully, which benefits all of us. Everything is okay.
The flip side of that is if damages aren’t high enough, businesses will simply calculate the cost of paying out those damages in lieu of actually taking any corrective action.
The number is so high because these are punitive damages as opposed to compensatory damages. They are trying to make an example out of this hotel so the next time some concierge or desk clerk is thinking about revealing which room a guest is staying in (particularly a high profile one), they will think twice knowing how serious the consequences could be.
Very good post, Malthus.
Liability insurance costs, often sold under monikers such as business, umbrella, E&O, malpractice or professional, are significant for many businesses and professionals. And I know that many people have such an anti-business sentiment that there is little recognition of the problem, let alone sympathy. And don’t fool yourself into thinking that these costs are not passed onto consumers. While market forces may dictate what a business can charge, increasing insurance and regulatory costs reduce competition, which allows prices to increase. People who have never owned or run a business have no idea about such things, but they are quick to point fingers at “big corporations” and “rich business owners” and label them as evil.
The verdicts are rare. The settlements you never hear about, reached because of the threat of such verdicts, are not. For every case you see reported, there are probably at least twenty settled, though as they are not reported it is a little hard to say for sure:
Naturally, a when arranging a settlement, part of the calculus is the “risk” of going to trial. What do you think the possibility of enormous punitive damages awards does to the “risk” calculation?
Huge pay-outs based on the risk of absurdly enormous punitive damages awards creates large “hidden” costs, of which you are simply unaware. The “benefits” received in return for these costs are dubious, as evidenced by the fact that other jurisdictions do not do it this way, and yet do not suffer more greatly from unsafe products or practices - notably, Canada.
In fact, the main beneficiaries as a group tend to be plaintiff-side class action lawyers, paid on the basis of contingency fees.
Everything is not okay.
Why should a person behind the desk in a hotel give a shit? He (or she) doesn’t have $55 million.
Sure, if they screw up they will be fired, but that would happen if the reward was $50,000 or $50 Billion.
In either case, it is unlikely to come out of their personal pocket, and they are likely to be fired.
…this isn’t about “rich or famous” guests. This is about basic security that every single hotel should be offering to every single guest.
You’ve already heard from several ex/current hotel employees in this thread. I’ve worked at 6 different hotels, from a very small hotel to 3 of the biggest in the country.
Not revealing the room number of a guest is one of the basic things taught to every hotel employee (from General Managers to the cleaners) at every hotel I’ve worked at (from 1-5 Star standard), and is supposed to be part of the basic training at every major hotel chain in the world. We are trained on ways that people will try and “trick us” to get Hotel Room Numbers.
This hotel fucked up. And it didn’t just fuck up over this incident. **Every single guest **that stayed at this hotel **was exposed with exactly the same security flaw **that hopefully they have fixed by now. And every other hotel in the country now have a 55 million dollar incentive to get things right.
OK, that is a major security flaw. I’m on board, the hotel is liable.
Does this seem contrary to other’s experiences? I have called hotels looking for guests but have been told that they could not verify a person was staying there if I didn’t have their room number.