Some years ago, a list of the “Stella Awards” began to make its way across the Internet. Named for the famous 1992 case in which a woman successfully sued McDonald’s for $654,000 after she spilled coffee on herself, the list of awards focused on around eight absurdly frivolous lawsuits from all around America. The winner was usually listed as a Mr. Grazinski, who wrecked a Winnebago motor home on its first drive after setting the cruise control at 70 mph and walking to the back of the vehicle to make some coffee. Grazinski sued, claiming that the manual did not say that the cruise control didn’t work that way. He won, claims the author, and was awarded $1,750,000 and a new Winnebago.

This lawsuit and every single one of the others were completely fictional. Nevertheless, the fact that so many readers easily believe that this and other Stella Award-winning cases are real points to a distressing problem in American courts, a problem that can easily affect small businesses. Most frivolous lawsuits are directed at large corporations with the intention of profiting from their vast financial reserves, but many others are directed at small businesses with few means to combat the litigation. For instance, in our last issue we mentioned a 1972 law that holds everyone who carries a product responsible for its flaws, regardless of whether they made it or merely supplied it. Also, many remember the case last year in which a Virginia judge sued a dry cleaner for $65 million after they allegedly lost his pants. Although the courts ruled in favor of the dry cleaning company, the company was eventually forced to go out of business as a result of the legal fees. All in all, frivolous lawsuits cost American businesses over $865 billion per year, according to the Pacific Research Institute. That’s a whole 2.2 percent of the United States’ annual GDP spent on tort costs, compared to the United Kingdom’s 0.8 percent and Japan’s 0.8 percent.

To be sure, American courts seem to be waking up to the problem. For instance, the state of Mississippi recently passed a bill putting a cap on non-economic damage awards at $500,000. At the national level, the Personal Responsibility in Food Consumption Act, also known as the “Cheeseburger Bill,” was put forth to help food suppliers avoid suits from people who claimed they became obese from using their products. The bill passed in the House in 2005 but was killed in the Senate. Despite these advances, frivolous lawsuits will continue to be a problem in American courts for some time to come. To protect yourself, there are a number of simple things you can do to minimize your risk. To begin with, incorporate your company. Incorporating protects your company in many ways, not just from frivolous lawsuits. (Find out the corporation that’s best for you in last year’s Nov/Dec issue.) In addition, obtain and maintain sufficient liability and umbrella insurance. Find out how on page 18 of this month’s issue. Also, be clear in all of your business dealings. For example, if you own a service company, you might want to include a list of what you did not do in your invoices along with a list of the services you did perform. Furthermore, you should routinely check your business for any potential hazards and fix them, no matter how slight. Also, choose the people who surround you carefully. Do your absolute best to make sure that your employees and partners are people you can trust. Lastly, watch what you say. Personal and non-contractual agreements may come back to haunt you.

In 2003, two women sued Southwest Airlines after a flight attendant said, “Eenie, meenie, miny, mo, pick a seat, it's time to go.” They claimed that the attendant was racist since one version of the rhyme contained a racial slur, a fact the attendant, who was merely trying to be cute, was unaware of. The judge dropped the case.


A Florida therapist claimed that he suffered mental and physical pain at his bachelor party after a lap dancer’s large breasts, which he claimed were like “cement blocks,” struck him during her dance. He sued for $15,000—on People’s Court, of all places—and lost.

An Alabama man who discovered that parts of his new BMW 351i had been repainted by the dealership to conceal damage from acid rain was awarded over $2 million in damages.

A Montana man who changed his name to Jack Ass in 1997 to combat drunk driving sued Viacom, the makers of the TV show and movie Jackass, claiming defamation of character. He wanted $10 million to regain his reputation. The case was dismissed.

In 1993, a New Jersey man spilled the McDonald’s milk shake he had between his legs while driving as he was reaching into the passenger seat to get the rest of the meal out of the bag. He claimed that McDonald’s should have warned him about the dangers of eating while driving. He lost.