…there wasn’t a problem with the “person behind the desk.” The house phones displayed the room number of guest. This is unbelievably fucked up. Every single guest that stayed at this hotel was exposed to this identical security flaw.
[QUOTE=Malthus]
<snip>
http://www.investopedia.com/ask/answers/08/broken-window-fallacy.asp<snip>
[/QUOTE]
I sure do wish this article about the “broken window fallacy” would have included the date when Bastiat wrote this fallacy. He lived between 1800 and 1850 which I guess nails things down fairly well.
The lawsuit specifically was aimed at the single hotel only, not the chain.
Please note that I was responding to this:
Sure, but it is the height of absurdity to rely on massive punitive damages in an individual lawsuit to correct such flaws. A more inefficient and unjust method of regulation would be hard to create from scratch.
A timely death, indeed, as it benefited the mortician who now had money to spend on new stained glass windows for his home!
…I’ve run one business before and I’m currently self-employed. I’ve worked at 6 different hotels and I’ve been in the hospitality and conference industry for 15 years.
I have plenty of “idea” about such things. I’m not anti-business, I have full insurance, and I’m not “fooled” into what is and isn’t passed onto consumers.
It is pretty clear you’ve formed the opinion that everyone who has or will disagree with you is an anti-business luddite. But you are wrong.
$55 million from one judgement isn’t gonna make jack-shit difference to anything. In this industry its a drop in the bucket. Most hotels use yield management to optimize pricing and this won’t change anything at all. This hotel is the one that fucked up and this hotel is the one that has to pay up. There is no need to “guilt the jury” because they made a fair and reasoned decision.
Well, I laughed.
…define “height of absurdity.” This isn’t a form of regulation. Its a punishment, and I don’t see what was unjust about it at all. This hotel has been fucking up something very basic for probably a very long time, and it was only bought to everyones attention when this fuck up was exploited by a fuck up. And as bad as this incident was, it could have been a hell of a lot worse.
Two people standing next to each other at the front desk asking for adjoining rooms while checking in won’t be affected by this case in any way. The difference is clear and obvious.
It’s the worst possible system, with the exception of all others.
Massive punitive damages get the attention of risk managers and other health and safety officials. The power of a jury, as opposed to legislaturers or regulators is obvious, they can’t be corrupted. Most cases resolve before trial, of the cases that go to trial,one study found that only 5% included awards of puntive damages. The median punitive award was around $68,000
It’s not about the person behind the desk. It is about the hotel making sure that the appropriate policies and procedures are put in place to correct this in the future. So for example, if a hotel is mulling over whether a more secure phone system is “too expensive”, they can now factor a potential $55 million settlement into those calculations.
The usual reasoned explanation for this (IMO absurd) system is the one you yourself have previously advanced - that it is supposed to modify the first person’s behavior (specific deterrence) and modify the behavior of everyone similarly situated (general deterrence).
In many cases, and indeed in most, that’s typically the job of regulatory bodies - they are supposed to educate, inspect, and yes, on occasion discipline those who willfully contravene regulations and/or codes of industry practice.
The difference in the case of litigation is that the courts are artificially gluing at least three different concepts together:
1- Restitution to the actual victim in a specific instance. No need to belabor the point, but it ought to be obvious to any thinking person that $55 million is an absurd amount to pay in actual damages for invasion of privacy in this case.
2- Punishment for behavior that is truly beyond the pale, and cannot be allowed in descent society. There is no doubt that the individual perp ought to be so punished - he’s a creep of the first order - but what the hotel has done strikes me as garden-variety negligence. There was no malice, high-handedness, or any of the other terms that are usually found when describing this purpose of punitive damages.
3- Sum sufficient to modify behavior, as noted above (specific or general). This is the only category that “fits”.
Problem is that there is absolutely no logic or justice in marrying these three purposes together; and it is highly inefficient. It makes about as much sense as gluing a horse to an eagle.
Think of it this way. Assume it makes perfect sense to take a large sum of money from a hotel to modify its behavior. Why does it make any sense to hand that money over to the person harmed in this specific incident, over and above the amount actually needed to compensate her for her actual damages? As you yourself have said, the “wrong” was done to hundreds, perhaps thousands of people. Why does she get the money?
It would be better, IMO, to regulate such problems by regulation (education, inspection, etc.) and, if massive fines are felt necessary, have them go towards actual regulation - not to lucky plaintiffs who hit the jury jackpot.
You were the one who brought up the person behind the desk. 
Nevertheless, let’s explore your notion. Is it your contention that the best means of determining the relative value of safety systems is leaving it up to what is likely to attract massive punitive awards?
in Alaska, half of all punitive damage awards go to the state treasury. So that’s another way of doing it, if you prefer.
If that was true, the Judge would not have allowed the question to go to the jury. Punitive damages almost always require something like “malice” or a “reckless disregard for the safety of others.” They are often thrown out by judges before (or sometimes after) trial, and quite often not awarded by a jury even when allowed. It is routine for the defendants to file a motion for partial summary judgment on the basis that “if we did anything wrong it was only negligent and would not allow an award of punitive damges.”
I don’t know the facts of this particular case very well, but I would be surprised if they didn’t introduce evidence of more than mere negligence on the hotel’s part.
Wait, are we talking about the peculiar system of tort law you have, or democracy? Are you seriously conflating the two?
No, it is not “worse than any other system” - look at some other systems. I may have mentioned Canada’s.
Are you seriously contending that regulatory corruption is a major factor?
Most cases resolve before trial, as I may have already mentioned - that’s a score for my side, not yours. Because each and every time someone settles, they do a risk calculation - in which, the risk of losing a jury jackpot will, obviously, be a prime motivator.
Well, I’m pretty sure this suit has reduced the pool of willing hotel owners by at least one company, and is probably putting a scare into many more. And I bet liability insurance rates will rise, as well, reducing the net income of most hotels. Sure, it’s a drop in the bucket of the entire industry, but it’s likely devastating to this one owner. Perhaps it’s deserved, as you imply, since this hotel fucked up. But there are ripple effects.
And it seems you have made your mind up that the jury made a “fair and reasoned decision”. I disagree, and see no possible reason the award was this high. That’s why there is a discussion/debate.
I haven’t read the case either, but nothing in the commentary claimed the hotel acted maliciously - only stupidly.
Maybe that is part of the “magic” of being found jointly and severally liable with an admitted pervert stalker. 
And I could (hypothetically) decide that this insult was massively traumatizing and demand significant compensation and nobody has the right to suggest otherwise, apparently.
For what it’s worth, I’d shrug at a judgement of $1 million. Her legal fees would eat up a sizable chunk of that. I could imagine doubling or tripling that without a problem. $10 million has me raising an eyebrow and $55 million… etc.