Personal Injury Law

Billion Dollar Punitive Verdicts A Thing Of The Past

By Jane Akre

The "King of Torts" may be a thing of the past.

Bloomberg News is reporting that billion dollar jury verdicts are vanishing from U.S. courtrooms. 

The news group compiled jury awards in 2008 and found no award above that amount.  In 2007, there was one high verdict for $1.5 billion.

Prior to that, there was at least one billion dollar verdict a year for the past 14 years.

And there were six cases producing awards more than $5 billion each.

Judges are now allowed to throw out large awards if they deem they exceed actual damages.  Phoenix attorney Grant Woods tells Bloomberg that he is careful when addressing the jury on that point.  "Not too little, not too much," he tells them.

The result of lowering of high punitive damages is that corporate clients are less inclined to settle out of court.

That's the opinion of Marquette Wolf of Mesquite, Texas who won an $84 million jury verdict against U-Haul in 2008.  That amount included $63 million in punitive damages but was later reduced to just over $45 million and is currently on appeal.

"When the threat of punitives was there, the courthouse was a level playing field," he tells Bloomberg.  "Now the threat of consequence isn't there for billion dollar corporations."

Top 10 Awards 

Even the total of the top 10 awards of 2008 was down about 30 percent from the year before and down 63 percent from 2006.

The largest verdict of 2008 involved a contract dispute with Boeing Co and a subsidiary, and amounted to $606 million, won by Manatt, Phelps & Phillips.

A jury found that Boeing violated the terms of a deal with ICO Global Communications under which Boeing agreed in the mid-1990s to build a dozen communications satellites. ICO terminated the deal in 2004, when Boeing asked for $400 million in additional funding to complete the project, reports AmLaw.

The last billion dollar punitive verdict was in 2004.

State limits on damages, federal limits on claims, judge discretion, and tort reform backed by businesses likely to be sued, all members of the U.S. Chamber of Commerce have added to the decline. Jurors are increasingly skeptical and less sympathetic to plaintiffs in some cases, while federal preemption is already curtailing a remedy through the courts.

Reversed

Even when one wins big, the danger is that win will be reversed.

A 2007 billion-dollar verdict against Microsoft in a patent case was reversed and settled.

An $11.9 billion case against Exxon Mobile Corp for underpayment of natural gas royalties was erased in post-trial appeals.  Alabama, which brought the lawsuit, wound up with $120 million, according to Exxon attorney Samuel Franklin talking to Bloomberg.

Punitive damages are designed to damage the wrong-doer but are not to exceed as much as ten times the actual damage, unless the damage is particularly egregious, the high court ruled in 2003.

The Exxon Valdez oil spill didn't qualify as particularly egregious.

The U.S. Supreme Court intervened in the Exxon Valdez oil spill case which generated a $2.5 billion punitive judgment. The justices in June replaced that award with $507 million.

IB member Jon Lewis, an attorney from Birmingham writes that instead of the $2.5 in punitive, Exxon got off easy. "The kicker? In the last quarter, $500 million equaled about four days of net profit. That means, it will take four days for them to pay off this verdict."

And in Florida, the Engle tobacco case, still the biggest jury verdict ever at $145 billion, was thrown out and disbanded forcing thousands of plaintiffs to go it alone in individual cases which are still unresolved.   

The concept of negligence recognizes that manufacturers often have more ability than consumers to avoid accidents; thus, it is more likely to view failure to take inexpensive action as negligence or to attach liability.  Still, the majority of tort disputes never reach a trial verdict.  

In 2000, the National Center for State Courts estimated that only 3 percent of cases were decided in U.S. District Court.  #

Full post as published by InjuryBoard on January 09, 2009 (boomark / email).