(From l. to r.: Dan Murray, ATRI; Clay Porter, outside counsel for Schneider; Charli Morris)
If a theme came out of a well-attended panel on nuclear verdicts at the recent Truckload Carriers Association meeting in Florida, it’s this: the problem isn’t likely to go away anytime soon.
There was one self-described silver bullet from panelist Clay Porter, the outside counsel for Schneider National Carriers: tort reform. But that’s a long slog and isn’t going to stop the trend that keeps catching carriers and shutting their doors.
Rather than providing solutions, the four-person panel identified a lot of shortcomings in the trucking industry’s approach to dealing with lawsuits and the nuclear verdicts that can explode if the litigation doesn’t go well. (The precise definition of a nuclear verdict was not made clear but assume anything above $5 million is a nuclear verdict. That’s open for debate.)
Chief among those issues: Defense attorneys for the trucking sector are woefully unprepared to deal with the seemingly unlimited resources of the attorneys serving plaintiffs.
“There is a huge business model disconnect between the defense and the plaintiff,” said Dan Murray, senior vice president of the American Transportation Research Institute. ATRI is the research arm of the American Trucking Associations and is wrapping up a report on nuclear verdicts to be issued in the coming weeks.
“The plaintiff puts everything into it,” Murray said. “The defense does cost minimization.”
Porter brought a similar observation down to a more granular level. He laid out a scenario in which a company’s insurer says to the defense attorney, “I want you to defend this case, but here’s your budget for doing this.” A limit on taking a deposition might allow the attorney four paid hours to get the job done, whereas the plaintiff’s lawyer is taking three weeks, Porter said.
“The insurance industry has taught defense lawyers to do the minimum,” he added. Meanwhile, attorneys for plaintiffs are running full-blown mock trials to prepare for a case.
(You can read about a FreightWaves Intelligence report on nuclear verdicts here.)
The general sentiment was that the trucking industry just doesn’t “get it,” though nobody actually used that term. There is a fundamental advantage that plaintiffs’ attorneys have in that they are representing people who may have gone through a terrible medical ordeal or lost a loved one. “The messaging must change,” Murray said.
In response to those very human-based arguments, he added, trucking companies are putting up experts who are talking about braking distances and other technical factors — dry arguments unlikely to sway a jury.
“We need to make the jury understand the trucking company is a good steward, has a great safety culture and is a job creator,” Murray said.
But Charli Morris, a legal communications consultant, disagreed. Her conclusion: “It doesn’t work.”
“I have seen opening and closing arguments on that, and it just hasn’t worked,” Morris said. “So we need to get to the bottom of that.”
Instead, she recommended gathering more data on what sways jurors and more research on that data. “I don’t think the trucking industry has captured all the data that would tell us more,” she said. Morris also expressed concern that within the trucking industry, that lack of data leads to “confirmation bias” in discussions of “where did the jury get it wrong” — confirmation bias defined usually as a self-absorbed group of individuals all saying the same thing and effectively assuring themselves that they’re right and everyone else is wrong.
“We are going to have to do more and do it differently to have more data at our fingertips rather than whacking the mole one case at a time,” she said.
In case there was any doubt whether nuclear verdicts are growing, Murray did show data being put together for the ATRI report that indicated clear growth in the size and number of verdicts in recent years. Porter also cited data showing much the same thing, and noted that it seemed to begin in 2012.
“The deck is kind of stacked against us” was the observation of Doug Rennie, a partner at Montgomery, Rennie & Jonson.
A newer threat is that trucking is increasingly the target of litigation financing. Murray referred to it as a form of gambling in which a source of capital puts money into a pool to finance litigation against any of several industries, with the hope that the financing will result in a series of lawsuits that generate big payouts, recouping the investment — and then some. It isn’t legal everywhere, Murray said, “and we may want to look at the states on this issue.”
Porter quoted a dictum: “Verdicts are fictions and settlements are real.” He noted that verdicts often get reduced, such as the $280 million verdict against a steel hauler — generally believed to be the biggest ever against a trucking company. It was one of the rare statements on the panel that maybe things weren’t quite as bad as they seemed. Porter noted that the judge later lopped $100 million off that verdict.
Settlement offers can backfire sometimes. For example, Murray cited two cases in which trucking companies came in with settlement offers that were “so low they insulted the plaintiffs, who walked out.” The ultimate jury verdict in those cases was 10 times the settlement offer “because a reasonable offer was not extended at the beginning.”
Beyond the suggestion of tort reform to end nuclear verdicts, Murray offered up what he described as a radical solution: an insurance surcharge. It would work much like a fuel surcharge, tacked on to the per-mile rate and fluctuating with the price of insurance. It would help the entire supply chain “have an iron in the fire” dealing with the volatility and the impact of rising insurance costs.
