Putting damage award caps in place and preventing plaintiff attorneys from appealing to the reptilian region of the brain to instill fear in jurors are just two of the U.S. Chamber of Commerce’s recommendations to combat nuclear verdicts.
In its report released earlier this month on nuclear and smaller verdicts impacting the trucking industry, the Chamber winds its way through 50-plus pages to a series of specific recommendations to slow the trend. The Chamber defines nuclear verdicts as those with a $10 million judgment or settlement.
“Because trucking is by far the most prevalent means by which communities throughout America get their goods, inflated and disproportionate verdicts against trucking companies affect everyone,” the report said.
The problem is still expensive for the trucking sector
As trucks kept rolling during the opening months of the pandemic, the public embrace of drivers was believed to signal a new acceptance of the job. There had been some thought that it might translate to less onerous jury verdicts in litigation regarding trucking accidents. That has not happened, according to the Chamber’s report.
“Although it took some time for jury trials to ramp up again after the peak of the pandemic, somewhat limiting the available data, the review suggests trucking’s improved public perception has not translated to a more reasonable litigation environment,” it said.
The Chamber reviewed 154 verdicts and settlements between June 2020 and April 2023. The mean plaintiffs’ award was $27.5 million; the median award was $759,875. The huge gap between the two is that the mean award is an average, so giant verdicts — even when there is essentially no chance that the plaintiff can collect — drive up the mean. The median is the middle number in the full range of 154 verdicts.
Settlements were less onerous. The mean for settlements in that period was $10.6 million and the median was $210,000. “Although the means are driven up by a handful of extreme verdicts and settlements, trucking companies and insurers alike must account for these significant risks,” the report said.
The report cited Federal Motor Carrier Safety Administration data on safety that between 2000 and 2020 there had been a 47% increase in large truck vehicle miles traveled. The raw number of fatal crashes was mostly steady during that period, but the rate of fatalites went down to 1.47 from 2.23 per million miles traveled. A University of Michigan study cited said automobile drivers were responsible for 70% of the fatal crashes.
Plaintiff attorneys are starting to focus on brokers as a source of deep pockets
With the brokerage industry coming off a recent significant legal victory regarding its liability in the event of a crash by a carrier hired by the 3PL, the Chamber’s section on broker exposure to growing lawsuits is sobering.
Legal theories being pursued by the plaintiff’s bar, according to the Chamber, include negligent entrustment, which is “usually difficult for plaintiffs to prove because freight brokers customarily are not the ones making the truck involved in an accident available to the truck’s driver”; vicarious liability, which would “assess whether the driver’s liability should be imputed to the freight broker”; and negligent selection, which is “premised on a freight broker’s duty to use reasonable care in selecting the motor carriers with which it contracts.”
What is driving the push to go after 3PLs, the Chamber said, is a “search for deep pockets [that is] expanding.”
The role of ‘reptiles’
Among the reasons cited for the increase in verdicts is a 2000 book entitled “Reptile: The 2009 Manual of the Plaintiff’s Revolution.” The reptile theory has been described as having plaintiff attorneys appealing to the “reptilian” region of the brain, which focuses on danger. “Volumes have been written about how the theory is implemented to instill fear in jurors and make them think the only way they can keep their loved ones and the community safe is to award massive damages to the plaintiff,” the Chamber said in its report. In doing so, it has a “pernicious effect … to divert the juror’s attention from the legal elements of a claim.”
One way it is accomplished, the Chamber said, is to find one or two omissions by the trucking company where it failed to follow its own safety guidelines, even if they weren’t directly connected to the accident being litigated. The plaintiff attorneys then focus on those shortcomings.
“The point is to instill fear that the trucking company is jeopardizing the safety of the jurors and their community,” the report said. In doing so, jurors can be “influenced” to hand out a large award.
Tough places to do business
The 52-page report also has a section it calls “problematic jurisdictions.” It is those states that have had a track record of handing out particularly large awards in lawsuits involving fatal truck accidents. Some of the states that are at the top have notorious large awards in their history, like Texas (the Werner verdict) and Florida (the $411 million verdict against a company that apparently has disappeared). But the median awards smooth that out. The Texas mean award was $4.5 million; in Florida it was $1.26 million. Meanwhile, California’s median was $8 million, with a mean of $13.5 million. New Jersey’s median was only $20,000, even with a mean of $11.3 million.
“Litigation risk varies by state and sometimes even within the state,” the Chamber said. And it hits the bottom line even if a company is not involved in the verdict: The state’s insurance profile affects prices and availability of insurance and, by extension, “carriers that have historically operated and served customers nationwide are assessing the viability of continued service in problematic jurisdictions.”
The Chamber presents a full list of recommendations on how to deal with the issue
Solutions recommended by the Chamber are numerous and do not list one overriding change that it believes would have a significant impact on the size of trucking awards. Among the key points:
- Compensation for medical procedures as a result of an accident should be tied to such formulas as the Medicare reimbursement rate for a procedure, or what is in a “letter of protection,” the report said. The website of the Simmons and Fletcher law firm describes a letter of protection as having been written by the injured person’s attorney and which “allows the injured party in this predicament to obtain the medical care they otherwise cannot afford on credit or cash, in exchange for a promise to pay for the services directly out of a settlement or judgment.” Recent changes in Florida law have reduced potential payouts under letters of protection. “Inflated medical rates that no one pays — whether insured or not — will no longer be available to establish inflated damages,” the Chamber said.
- Utilize the McHaffie Rule to combat reptile tactics. Under McHaffie, if a carrier admits it is “vicariously liable” for the negligence of its driver, there is “no further need for derivative theories to prove the employer’s negligence,” the Chamber suggested. And making those additional fear-based theories is part of the reptile approach.
- Put in place damage caps and a ban on anchoring. The Chamber praised recent changes in Iowa that capped all noneconomic damages at $5 million. “Anchoring” is setting a high number at the start of the litigation that even if tossed out by a judge means that “it is exceedingly difficult for juries to put the genie back in the bottle.”
- Allow defendants to cite whether an injured party was not wearing a seat belt. The Chamber said most states do not allow that as admissible evidence.
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