A "nuclear verdict" is defined as a settlement exceeding $10,000,000. They have been awarded in an unprecedented number of lawsuits as of late. Jury verdicts of $30,000,000+ are commonplace. The annual cost was in the billions of dollars last year.
America's attention was first captured by a nuclear verdict in 1994 when a jury awarded $2.7 million in punitive damages for selling scalding coffee. While the amount was reduced after appeal and then settled for an undisclosed amount, the large verdict set a new standard.
Today, $2,700,000 pales in comparison to the $39,000,000 automobile liability award caused by a driver unprepared to for icy conditions...or the $54,000,000 auto liability verdict resulting from the desperate hire of a driver with a history of major driving violations.
Nuclear verdicts are also skyrocketing the premium cost of auto, excess liability and management liability insurances. Premium increases of 15%-40% or more are not uncommon.
These awards are positioned as the result of legally forcing people, and their insurance carriers, to pay for their financially responsibility. The challenge is that the verdicts are exorbitant. They often go way beyond financial responsibility. The imbalance is threatening the financial viability of our businesses, and the job security of the people who work for them.
What legal tactic is helping trigger the excessive awards?
Robert Tyson Jr., trial lawyer and the author of "Nuclear Verdicts: Defending Justice for All" provides this answer...
"In 2009, ...a book titled "The Reptile Theory" was published. The book describes a tactic in which plaintiffs'attorneys spark the "fight or flight" mentality among jurors so they decide cases based on emotions rather than the facts. The book changed the way many plaintiffs' lawyers try cases and taught them not how to garner sympathy from a jury but how to get them angry...
What fuels a jury's anger? This is key. Very often what will make a jury angry has nothing to do with the subject of the lawsuit. It will not be about if your truck went through a red light, for instance. It will be that you failed to train the driver a year earlier on the dangers of going through red lights. Or that your employee handbook did not explain the dangers of going through a red light. Or that your background search did not detect that your driver had gone through a red light once before 10 years ago.
All of these things trigger a jury's anger and have nothing to do with whether the light was red or green."
How to eliminate "nuclear verdicts" and reduce insurance costs going forward.
"Make sure you, (your insurance carrier), and your defense counsel are showing the jury you care. That's right, to defuse juror anger, you must show the jury you care for the plaintiff. How do you show you care? Accept responsibility in every case... This does not mean admitting full liability, or even any liability. For example, the defense can accept responsibility for employee training practices, following traffic laws or putting a safe product into the commerce stream...
When done properly, accepting responsibility for something makes the defense look like the most reasonable party in the room and defuses the type of anger that results in excessive jury verdicts."
As employers, we must do our part to avoid legal liability by making sure the right employee education, operating standards, hiring practices, and data monitoring (electronic logs, telematics, proactive claim data feeds, etc.) are in place to eliminate incidents and to demonstrate how we've taken responsibility to protect people and defend ourselves when a claim occurs.
VANTREO is here to help. We stand ready to provide you with education and tools to help boost your immunity to nuclear verdicts. If you would like more information or have any insurance or risk management question at all, just let us know. Reply here.