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The Truth about Large Jury Verdicts

Consider this: A supertanker carrying millions of gallons of crude oil is being steered by an inebriated captain. The massive barge, filled to the brim with crude oil, runs aground. What happened next is history. After the Exxon Valdez dumped eleven million gallons of black goo into Prince William Sound, billions of dollars were expended in a cleanup that lasted over a decade. An entire ecosystem was destroyed. Fisherman whose livelihoods were dependant on that ecosystem were without means to support themselves or their families.

Several years later, a jury finds that the captain's employer was liable for the acts of its employee after evidence is presented that:

  1. prior to the date of the grounding, the captain was treated for alcohol abuse,
  2. he was then assigned to command a supertanker upon release from treatment,
  3. he relapsed,
  4. the employer was aware of the relapse, and
  5. after treatment, the employee drank regularly in bars, parking lots, airports, hotels, at various ports, and aboard various other tankers. In spite of that knowledge, the employer did not think to evaluate the captain's known history before returning him to duty.

The jury concluded in that case that the employer's conduct involved a gross deviation from the level of care an ordinary person would use, having due regard to all the circumstances. A jury slapped the owner of the supertanker with a $5 billion dollar punitive damages award.

How about this scenario? While sitting at a traffic light waiting for the green light, you are slammed from the rear by a drunk driver who never saw you and didn't even attempt to stop. Clearly, you are an innocent victim with no fault in the accident. Unfortunately, you are severely injured, suffering several broken bones and an operable lower back injury. Medical bills total $150,000. Because you couldn't work for over a year, lost wages climb to $50,000.

You seek to be compensated by the party at fault (the drunk driver). After investigation, it is determined that the at-fault driver has only $50,000 in liability insurance. Sadly, further investigation reveals that the at-fault driver has no assets and earns only a modest salary.

You can demand that the at-fault party pay the $200,000 for medical expenses and lost wages. Chances are excellent though that the drunk driver will not simply write you a check. A lawsuit is filed and three years later a jury returns a verdict for $350,000 plus $100,000 for punitive damages. The system worked, right? Wrong. This is known as a "hollow" verdict. It is hollow because the insurance company is only responsible for $50,000 of the verdict. Under the law, the balance of the verdict is the at-fault party's responsibility. However, recall that the at-fault party in our example has no assets. As for the punitive damage portion of the award, most automobile insurance polices specifically exclude punitive damages, and certainly, the drunk driver has no means to pay it.

Large Verdicts/Small Payouts

People often complain when they hear of a jury awarding large sums for traffic accidents. They wrongly blame these large verdicts for their rising insurance premiums. Insurance companies foster this misconception by blaming trial attorneys for pursuing large jury verdicts.

It may be surprising to learn that five years after the judgment was entered against Exxon, the oil company responsible for that massive enfironmental disaster has not yet paid one dime of that punitive damage award. Instead, the company has appealed the award to delay and possibly defeat any payment.

Article after article in newspapers and magazines alike sensationalize the so-called outrageous nature of large verdicts, but seldom do they report how few are actually collected. Headlines suggest that one can spill hot coffee and win a multi-million dollar verdict, or work in an asbestos-laden building, suffer from asbestosis, and win a large verdict. However, the reality is that the large verdict is an anomaly.

Hollow Victories

In 1994, after a five-year study of million dollar plus verdicts published in the National Law Journal, one hundred such verdicts were researched. Of the hundred, 32 were set aside by trial judges or reversed by appellate courts, 33 were reduced by trial or appellate court judges, and some were settled swiftly after the verdict but for far less than the jury award. Some reductions by judges were massive. The study shows that most verdicts of $1 million or more are hollow or reduced.

"Hollow" (defined as lacking in real value, sincerity, or substance) is a term that expresses the unlikely collectability of a judgment. The punitive damage award of $5 billion dollars in the oil tanker case can be characterized as hollow. Five years have passed and not one cent has been collected. You may consider that example extreme, however, everyday verdicts of $100,000 or less often encounter similar obstacles.

So don't be fooled. The next time you read of a large dollar jury verdict being handed down, realize that the net amount finally collected by the plaintiff could be far less, or even zero.

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