“Nuclear verdicts” sound more like a new form of energy than a massive jury award and are generally described as worth $10 million or more. If that sounds like a lot of money to you, that’s because it is. Nuclear verdicts are on the rise, with troubling implications for corporations, small businesses, and society at large.
What Are the Key Findings?
ILR’s recent research report, Nuclear Verdicts: Trends, Causes, and Solutions, shows that these verdicts grew significantly in frequency and size between 2010–2019, with the median verdict rising from about $19 million in 2010 to almost $25 million in 2019. That’s a 27.5% increase, far outstripping inflation of about 17.2% over the same period.
Among the study’s findings:
- Florida, California, and New York produced the most nuclear verdicts in the study period, with a combined 575 verdicts worth over $10 million;
- Noneconomic damages are typically the largest component of a nuclear verdict—in fact, in six out of 10 years in the study period, the total amount of noneconomic damages in nuclear verdicts exceeded total economic and punitive damages combined; and
- Nuclear verdicts were most frequent in product liability (23.6% of the total), auto accident (22.8%), and medical liability (20.6%) cases.
Nuclear verdicts got their name because these verdicts can have devastating impacts on businesses, industries, and even society. For example, our Cause for Action podcast episode 24 explains how the trucking industry faces more nuclear verdicts than most other industries. In fact, the new research states, “about one in four auto accident trials that resulted in a verdict of $10 million or more involved a trucking company.”
These nuclear verdicts are especially hard on the trucking industry because they contribute to high insurance premiums, which make it difficult to afford insurance. Without affordable insurance, trucking companies might have to suspend operations or raise rates which will affect consumers.
The increases in frequency and size of nuclear verdicts not only reveal the issues with our civil justice system, but they also adversely affect society. The real-world impact can be felt in higher costs of everyday items and services—including food, housing, and medical care—and they can threaten the viability of businesses, because rising lawsuit costs can inhibit job growth and new investments.
What Contributes to a Nuclear Verdict?
Nuclear verdicts are the result of an abusive litigation machine that starts before a juror steps foot in a courtroom.
Plaintiffs’ lawyers take advantage of lawsuit advertising. Unfortunately, the truth about these ads is they often give a false impression. They promote large verdicts regardless of whether those verdicts were eventually knocked down by a judge, distorting potential jurors’ views of appropriate compensation. Also, third party litigation funders can change litigation dynamics and drive up award demands.
In addition, plaintiffs’ lawyers use a litigation tactic (the Reptile Theory) that pushes jurors to make decisions based on fear rather than based on the evidence in the trial. The research explains that “[t]he tactic aims to instill a sense of danger in jurors’ minds to suggest that unless they render a verdict that exceeds actual damages and effectively punishes the defendant, they are doing a disservice to the community and endangering the public and themselves.”
What Are the Solutions?
The paper outlines several opportunities for legislators and courts to take action to prevent nuclear verdicts. No single change will stop nuclear verdicts altogether but applying a comprehensive approach that addresses core causes and procedural issues can mitigate the rising trends. Suggestions for reforms include:
- adopting pre- and post-nuclear verdict civil justice reforms such as evidence management, venue reforms, and damages guardrails,
- addressing misleading lawsuit advertising,
- promoting sound science in the courtroom,
- adopting third party litigation funding disclosure, and
- prohibiting manipulation of juries through anchoring tactics.
Allowing nuclear verdicts to continue to rise will adversely impact society. Businesses will need to absorb rising lawsuit costs into their products and services costs while also facing rising (and unpredictable) liability and insurance costs. Consumers will end up paying more for goods and services. Ultimately, society and businesses will lose confidence in a fair and predictable civil justice system.