17 Sep Lessons Learned from Nuclear Verdicts

Nuclear verdicts” refer to exceptionally high jury awards in civil cases, typically against companies or institutions, often reaching millions or even billions of dollars. These verdicts, especially common in personal injury, medical malpractice, and trucking accident cases, have been on the rise in recent years. There are several factors that contribute to the occurrence of nuclear verdicts and lessons that can be learned from them:

Why Do Nuclear Verdicts Occur?

1. Jury Sympathy: Juries may be swayed by emotion, especially in cases involving severe injuries or death. Plaintiffs’ attorneys often emphasize the human toll to generate sympathy and influence the size of the award.
2. Punishment for Negligence: In many nuclear verdict cases, companies are perceived as negligent or indifferent, whether due to unsafe practices, failure to follow regulations, or prior incidents. Juries may use large verdicts as a way to “punish” the defendant, especially if they feel the company is unrepentant.
3. Reptile Theory: A strategy used by plaintiffs’ attorneys, where they appeal to the jury’s primitive instinct for survival by framing the defendant as a danger to the community. This encourages jurors to act not only in favor of the victim but to prevent future harm to others.
4. Litigation Funding: The rise of third-party litigation funding means plaintiffs can often afford to take cases to trial, even if they face a well-funded corporate defendant. This allows for more cases to reach verdicts, some of which result in these nuclear awards.
5. Media Influence: Public perception of big corporations, particularly in industries like trucking, healthcare, or pharmaceuticals, can be negatively influenced by media coverage of high-profile cases. This can make juries more inclined to hand down punitive verdicts.

Four Recent Verdicts 

Directors & Officers Liability:  Athletic Apparel Company Settles Lawsuit for $434 Million

An athletic apparel company based in Baltimore reached a $434 million settlement with shareholders who alleged they incurred significant losses due to false and misleading statements regarding the company’s prospects. The securities fraud class-action lawsuit was filed in 2017 and covered those who purchased publicly traded company shares from Sept. 15, 2015, through Nov. 1, 2019. The lawsuit claimed the business and some of its officers mispresented the company’s sales and growth while it was expanding rapidly. The lawsuit also questioned sales-related accounting practices and disclosures from the third quarter of 2015 through the fourth quarter of 2016. The company has denied the accusations and admitted no wrongdoing. The settlement awaits court approval.

Cyber Liability:  Software Company Agrees to $6.75 Million Settlement With California

South Carolina-based software company reached a $6.75 million settlement with the state of California over a 2020 data breach that  exposed sensitive information of over 13,000 customers and millions of downstream users. The state accused the company of providing misleading
statements about its cybersecurity measures before the breach and the extent of the cybersecurity incident’s impact. California’s attorney general
claimed these actions went against the Reasonable Data Security Law, Unfair Competition Law, and False Advertising Law related to data security.
California’s Department of Justice’s probe into the company found it failed to carry out basic security procedures (e.g., multifactor authentication),
monitor suspicious activities on its systems and stay updated about changing security standards. The lawsuit also claimed the company did not
provide timely and accurate information to those impacted by the breach. The settlement, still subject to court approval, required the business to
strengthen its data security and breach notification processes.

Employment Practices Liability:  Tech Company to Pay $15 Million Discrimination Settlement

A California-based technology company that created a popular social media and messaging app agreed to a $15 million settlement with the California Civil Rights Department after facing allegations of employment discrimination, sexual harassment, equal pay violations and retaliation. The Civil Rights Department claimed the company marginalized women by not taking adequate measures to ensure women were paid or promoted
equally. The department’s lawsuit alleged women were generally paid less than their male counterparts and that a toxic, male-dominated office culture existed. Women were allegedly denied promotions, given negative performance reviews or were fired when they filed internal harassment
complaints. According to the complaint, male managers regularly promoted male employees over more qualified women. The settlement, which is awaiting court approval, stated that women who worked at the company between 2014 and 2024 are eligible for monetary relief. The company also agreed to other stipulations to prevent these issues from occurring.

Liability:  Seattle Woman Receives $13 Million Jury Award After Sidewalk Injury

A Washington jury determined the city of Seattle and the owners of an apartment building must pay an ultramarathon runner $13.1 million after she
fell on the sidewalk and sustained severe injuries. The runner’s lawyers stated the amount reflects the extent of the plaintiff’s injuries and damages
to her future earning potential. According to the complaint, the sidewalk was notoriously dangerous and regularly covered in water and algae.  Other residents also testified they had fallen at that location. According to the plaintiff, who underwent multiple surgeries on her injured quadriceps,
she will never run again. Responsibility for the $13.1 million payment is split in half between the two defendants.

Lessons to Be Learned

1. Improve Corporate Safety and Compliance: Businesses must prioritize safety and compliance to reduce the risk of accidents and negligence claims. By investing in these areas, companies can avoid situations that might lead to nuclear verdicts.
2. Better Communication and Transparency: Companies that demonstrate responsibility, empathy, and transparency in court are less likely to incur the wrath of juries. It’s important to communicate care for the community and for customers or employees.
3. Effective Legal Defense: Legal teams need to counteract emotional arguments by focusing on facts and presenting the defendant in a human, relatable light. They should also address and neutralize reptile theory strategies used by plaintiffs.
4. Litigation Risk Management: Businesses should adopt robust risk management strategies, including evaluating litigation risks early and settling cases when appropriate, to avoid the unpredictability of jury trials.
5. Jury Education: Courts could play a role in educating juries about the wider impact of excessive verdicts, such as the effect on industry, insurance costs, and ultimately consumers.

By addressing the root causes that lead to nuclear verdicts, businesses can mitigate risk while ensuring they operate in a way that protects both their customers and their reputation.