Billion-Dollar Verdicts Vanishing
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Billion-dollar jury verdicts may be a thing of the past. For the second time in the past three years, juries in 2008 issued no awards above that amount, according to data compiled by Bloomberg News. In 2007, there was a verdict for $1.5 billion, which was reversed and settled before being retried; in the 14 years prior there was at least one billion-dollar verdict a year, with 26 total. Six cases produced $5 billion or more verdicts.
The drop in the amount of verdicts has been primarily caused by changes in legal rulings; punitive damages, which are designed to punish, can be thrown out if they far exceed actual damages. For that reason, many lawyers don’t seek amounts that would clearly violate the rules. “There’s no need to ask for huge punitive that far outstrip the compensatory damages,” said Phoenix attorney Grant Woods. In a contract trial in September, he urged jurors to award “not too little, not too much.”
The new legal rules and the lower threat of high punitive damages has helped corporate defendants by taking away an incentive to settle out of court, said Marquette Wolf, an attorney in Texas who won an $84 million jury verdict against U-Haul International in 2008. The award, including $63 million in punitive, was later cut to $45.7 million, half in punitive damages.
The top verdict in 2008 was $606.6 million against Boeing Co. and a subsidiary. It was the lowest top verdict of the year in dollar terms since 1991, according to Bloomberg data.
“We’re seeing the effects of a campaign that has been ongoing for the last 10 to 12 years of trying to eliminate punitive damages against corporate interests,” said Cunningham, of Cunningham Bounds Yance Crowder & Brown in Mobile, Alabama. “It appears to have worked.”
Ten of the 12 largest awards were either cut or reversed, one was uncollectible, and the last was wiped out when the case settled for the amount in available insurance.
The U.S. Supreme Court ruled in 2003 that punitive damages can’t legally be as much as 10 times actual damages, except in “particularly egregious” cases. Last year the Court replaced a $2.5 billion punitive judgment with one for $507 million in the Exxon Valdez oil-spill case, which moved the punitive-to-actual damages to “generally one to one, with few higher than three to one,” said attorney Barry Lee.
In addition to courts being more cautious in upholding juries’ actions, “juries are much more cynical than they used to be,” said Deborah Kuchler of Abbott, Simses & Kuchler, a corporate defense firm. “Now even insurance companies want juries.”
These facts are sound evidence against the vast array of tort “reform” measures that Corporate America and the Chamber of Commerce continually lobby for in state legislatures and the United States Congress. So-called “frivolous lawsuits”, “runaway litigation”, and “runaway verdicts” are scare tactics used by the Chamber and those in the back pockets of the Chamber and Big Business. In fact, the number of jury trials has been on the decline over the past decade or more. These scare tactics are also a means of raising money for politicians who curry favor with large, wealthy corporate interests; by supporting tort “reform” (more properly called tort “deform”), these politicians can raise boat loads of money to get elected. The fact is, we will see more corporate greed and misconduct (witness the past 6-12 months) if the courthouse doors are shut for the average American – there will be no check on these powerful interests. This is not healthy for our country.