Nuclear Verdicts: What, Why and How to Defend Against Them
Defendants increasingly find themselves facing the prospect of 'nuclear verdicts', particularly in state courts in the US.
Bill Ryan and Shari Friedman of Chicago law firm Marwedel, Minichello & Reeb educated the attendees at the Thomas Miller Bodily Injury Seminar as to what constitutes a nuclear verdict, why they appear to be happening with increased frequency and, most importantly, what can be done to counter them. Noreen Arralde of Thomas Miller (Americas) recaps Bill and Shari's presentation.
What is a Nuclear Verdict?
- A jury verdict of $10 million or more
- A verdict in which non-economic damages are way out of proportion to economic damages
- A jury verdict of less than $10 million, but substantially more than expected for the type of case
- The word ‘nuclear’ also refers to the overwhelming damage such a verdict can do to a business, an industry and society at large
Consequences of Nuclear Verdicts
- Forces insurers and businesses to raise prices
- Increased prices and costs spill over to consumers and society, driving up the costs of goods and services
- Prolongs litigation as plaintiffs hold out for bigger settlements and virtually guarantees an extensive cycle of appeals
Economic v. Non-Economic Damages
- Differential between economic and non-economic damage awards help drive nuclear verdicts
- Non-economic damages (primarily pain and suffering) are usually the largest component of nuclear verdicts
- In 6 of the 10 years between 2010 and 2019, the total non-economic damages in nuclear verdicts exceeded the total economic and punitive damages combined
U.S. Chamber of Commerce Institute for Legal Reform
The U.S. Chamber of Commerce Institute for Legal Reform conducted a study of nuclear verdicts between 2010 and 2019. The study analysed over 1,300 nuclear verdicts handed down between 2010 and 2019. It concluded that nuclear verdicts are increasing in both amount and frequency. The study’s detailed findings were as follows:
- Almost one-half of the awards were between $10 million and $20 million
- About one-third of the awards were between $20 million and $50 million
- The remaining 16% exceeded $50 million, including 101 ‘mega’ verdicts of over $100 million
- Six US states accounted for 63% of nuclear verdicts: California, Florida, New York, Texas, Pennsylvania and Illinois
- These six states accounted for only about 41% of the US population
- California and Florida reported the most nuclear verdicts between 2010 and 2019, followed by New York and Texas
- The median nuclear verdict increased from $19.3 million to $24.6 million
- Nuclear verdicts in motor vehicle accident cases rose 63.2%, from $15.2 million to $24.8 million
- Other states prone to nuclear verdicts in more recent years were Georgia, New Jersey, Washington state, Missouri
- 90% of nuclear verdicts were handed down in state courts, as opposed to federal courts
Factors that Contribute to Nuclear Verdicts
- Reptile Theory
- Anchoring and Adjustment
- Priming and Recency
- Large Number Bias
- Third Party Litigation Funding
- Attorney Advertising and Media
1. Reptile Theory
The Reptile Theory continues to make a notable impact on personal injury litigation. The Reptile Theory focuses on safety and security to encourage jurors to put themselves in the plaintiff’s situation. It engages the most primal part of the brain to suggest that if a defendant’s conduct is not punished (by a large verdict), then the community at large may be in danger.
2. Anchoring and Adjustment
Anchoring and adjustment is a mental shortcut that influences the way jurors assess numerical estimates by allowing them to make a decision or solve a problem quickly with minimal mental effort. Anchoring bias refers to the tendency to rely too heavily on early information that is offered (‘the anchor’) when making decisions. Plaintiffs’ attorneys use anchoring to propose massive awards or present arbitrary formulas to justify massive figures for pain and suffering, which are hard for jurors to quantify. Jurors will likely start with the suggested reference point (the anchor) and make incremental adjustments based on additional information, but these adjustments are usually insufficient. The effect is to give the initial anchor undue influence in the final award.
3. Priming and Recency
Priming and recency refers to the practice of repeating something often enough to get jurors acclimated to it so they accept it. There was a time when plaintiffs’ attorneys would consider whether asking for large verdicts would outrage jurors – not anymore. Now the repetition of massive numbers is commonplace.
4. Large Number Bias
People generally do not understand large numbers. The psychological principle known as ‘scalar variability’ states that the ability to comprehend numbers decreases as the number increases. Also, asking jurors for large numbers makes them feel that they are deciding a big, important case.
5. Third-Party Litigation Funding
Third-party litigation funding has become a multibillion dollar industry. Plaintiffs and their attorneys contract with third-party investors who help fund litigation in exchange for a share of the verdict. Third-party funding may result in riskier and more speculative lawsuits being filed. Litigation funding companies have been accused of wrongfully taking control of litigation by blocking plaintiffs from accepting a settlement.
6. Attorney Advertising and Media
Publicity and advertising of nuclear verdicts desensitises jurors to astronomical amounts requested at trial. Jurors are led to believe that massive awards are normal and legally sound, when they are not. The public becomes accustomed to seeing large verdict awards and perceives these verdicts as the norm, while unaware whether such awards were subsequently reduced or overturned. We have seen jurors discuss large verdicts from other cases when deliberating in mock trials and focus groups. Also, the media tends to focus on bad actions by a few corporations, which increases the perception that corporations overall are bad.
Ways to Counter Nuclear Verdicts
The defense bar is taking steps to counter the proliferation of nuclear verdicts, but there is no easy or quick fix. The following trends and practice pointers have been adopted with some success.
- Settlement Considerations
- Alternative Damage Valuations
- Preach to the Jury
- Be Proactive
1. Legislative or judicial remedies can address some of the factors leading to nuclear verdicts, such as:
- Capping certain non-economic damages
- Preventing misleading attorney advertising
- Reforming third-party litigation funding to make it more transparent (or ending the practice entirely)
- Prohibiting forum shopping to make it harder to plaintiffs' attorney to steer cases to venues notorious for delivering nuclear verdicts
2. Settlement considerations
Carefully consider which cases to try and which to settle. Consider what is a reasonable settlement versus what is the worst-case scenario. While the median nuclear verdict is about $20 million, the mean is substantially higher at $76 million. The higher average verdict results from the occasional award in the hundreds of millions or billions of dollars. Mega verdicts, those in excess of $100 million, typically include a substantial award for punitive damages.
3. Alternative Damage Valuations
Suggest alternative damage valuations early in the case and remind jurors that they are not bound by the plaintiff’s numbers. Discuss damages early, even in voir dire and opening statements. Offer an alternative number for damages, including for pain and suffering and other non-economic damages. Explain the term ‘anchor’ and what the plaintiff’s attorney is trying to accomplish with the anchor. Offering a counter-anchor does not decrease the chances of a defense verdict, but can be effective in reducing the damages awarded. Engage in thorough trial prep, including focus groups and mock trials to gauge potential juror reactions to the case and the parties’ theories and the potential for awarding a nuclear verdict.
4. Preach to the Jury
Strike jurors who (i)seem susceptible to the Reptile Theory, (ii) have an anti-corporation bias, and (iii) are interested in enacting social change. Offer a jury instruction that advises a jury that an award cannot be based on fear, anger or emotion, and cannot be used to punish a defendant or ‘send a message’. Remind jurors of their oath to decide the case according to the law and the facts. Remind jurors of jury instructions that state damages are not to be based on sympathy or prejudice.
5. Be Proactive
The best strategies for countering nuclear verdicts begin before an incident happens. Practices such as: (i) investing in enhancing safety protocols across the organisation, (ii) increasing efforts to comply with safety regulations, and (iii) having a reliable record-keeping system to prove compliance can negate the Reptile Theory.
After an incident occurs, act quickly to investigate and gather information that may help at trial. Once litigation ensues: (i) utilise experts and professionals to depict the company in the best possible light, (ii) manage perceptions of the company’s operations and culture, and (iii) get ahead of the negative image the plaintiff will try to sell to the jury.