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Are Nuclear Verdicts The New Normal?

On Behalf of | Oct 20, 2022 | Business Litigation

The answer to the titular question is, “Yes.” Nuclear verdicts have become the new normal. Though the change may be hard to process, it has been a long time in the making. The real question, therefore, may be whether it’s possible to push back against this trend and, possibly, reverse it.

At the very least, the trucking companies, insurance providers and other businesses that have suffered from the explosion of nuclear verdicts will want to know how to defend themselves better. That starts with an understanding of the factors that contribute to nuclear verdicts and the defense strategies that prove most effective.

What are nuclear verdicts?

Nuclear verdicts are any jury verdict of $10 million or more. The use of the word “nuclear” refers largely to the potential damage such a verdict can do to a business.

However, the damage can reach beyond businesses and their insurance companies. Nuclear verdicts force businesses and insurers to raise prices, and this means the true costs of such verdicts can spill out to consumers and society in general.

As an example, trucking companies have faced roughly one-quarter of all nuclear verdicts from automobile accidents. Accordingly, trucking companies have to pay more for their insurance. The companies that can still stay afloat need to cover the extra costs, and that means it costs more to transport goods. Prices rise across the board.

The explosive rise of nuclear verdicts

Although the use of the term “nuclear verdicts” is relatively new, the legal profession’s concerns over inflated verdicts predate the term by a good measure. As some researchers have noted, a 2003 paper addressed the trends behind “staggering verdicts.” The paper’s focus on the “increasing boldness” of plaintiffs’ attorneys keenly anticipated our current situation.

More recently, a study from the U.S. Chamber of Commerce Institute for Legal Reform explored the meteoric rise of nuclear verdicts:

  • The median value of nuclear verdicts increased by 27.5% over the 10-year period from 2010 to 2019
  • While the number of nuclear verdicts may vary from year to year, it has shown a steady upward trend, increasing by roughly 50% over the 10 years
  • These rates have risen across all types of nuclear verdicts except for intentional torts
  • Three types of cases accounted for two-thirds of all nuclear verdicts: product liability, auto accidents and medical liability
  • Nuclear verdicts vary in frequency by state, with Florida, New York, Pennsylvania, Illinois and California featuring the most nuclear verdicts per capita

Information from the National Law Review highlighted the impact of these nuclear verdicts in another fashion. Its 2015 and 2019 summaries of the years’ Top 100 Verdicts showed an increase from an average of $64 million to $214 million.

Why are we seeing so many nuclear verdicts?

It does us little good to understand that nuclear verdicts are a massive problem without understanding what causes them—and how to avoid them. Accordingly, the Institute for Legal Reform continued its study by exploring the contributing factors. These have been corroborated and elaborated upon by many other legal researchers.

Most sources point to three primary causes:

  • “Reptile theory” has been a game-changer for the plaintiffs’ attorneys as they focus on manipulating jurors to lash out at the big, bad, impersonal companies they perceive as threats to themselves and others
  • Plaintiffs have taken advantage of outrageous anchoring tactics, proposing massive lump-sum awards or presenting arbitrary formulae to place ever-larger price tags on damages like pain and suffering that are hard for jurors to quantify
  • Plaintiffs have increasingly benefitted from third-party investors who help fund the litigation in return for a cut of the verdict

Of course, these aren’t the only factors. Unfavorable jurisdictions contribute to some nuclear verdicts. Attorney advertising often touts the verdicts awarded by juries, rather than focusing on what companies must actually pay or what the plaintiffs actually claim. These advertisements normalize the idea of massive awards. Society has grown to distrust large corporations. And there’s a degree to which bad lawyering plays a part.

What can businesses do?

To the extent that nuclear verdicts hurt the whole of society almost as much as they hurt businesses, some of the solutions will likely involve new legislation. Advocacy groups want to end third-party funding or, at least, make it more transparent. Legislators could also look at capping certain non-economic damages, addressing misleading advertisements and making it harder for plaintiffs to steer cases to the venues of their choice.

Of course, legislative solutions are slow at best and tend to be unreliable. So, the best solutions may be more immediately focused on addressing cases before and during trial:

  • Think carefully about which cases to try and which to settle
  • Introduce alternative damage valuations early to counter the plaintiff’s anchoring tactics
  • Humanize the business
  • Thorough trial preparation, potentially including mock trials, focus groups and extensive witness preparation

Ultimately, good lawyering matters. The 2003 study that focused on “staggering verdicts” noted that they owed to two broad factors—greed and bad lawyering. You can’t stop plaintiffs from being greedy, but you can make sure your bad lawyering doesn’t trigger the nuclear alarm.