Verdicts & Settlements
March 24, 2000
By DEBORAH ROSENTHAL
California juries awarded over $5.5 billion in the 10 biggest verdicts reported in 1999. Is the Golden State taking a stand against injustice, or merely feeling the effects of a prosperous era?
In 1997, California’s 10 largest verdicts totaled $376 million, with the single biggest verdict being a $101 million award in a class-action settlement for overtime pay brought by employees of General Dynamics Corp. Argo v. General Dynamics Corp., 687646 (San Diego Sup. Ct., March 1, 1997).
In 1998, the top 10 total jumped to $1.5 billion, with the No. 1 award a $785 million verdict against Lockheed Corp. in a toxic-tort case filed by dozens of Lockheed employees against five chemical manufacturers. Lockheed Litigation Cases, Group V, Judicial Council Combination Proceedings 2967.
That was then. This is now.
California jurors awarded a combined total of more than $5.5 billion in the 10 highest verdicts reported in 1999, with the single biggest award being a breakout $5 billion to six plaintiffs who were severely injured in a car explosion resulting from a defectively designed General Motors automobile. Whoever dubbed 1849 the year of the California Gold Rush was about 150 years premature.
Last year’s top 10 verdicts were handed down in three product liability cases against General Motors Corp., Ford Motor Co. ($295 million) and Philip Morris Inc. ($52 million); three breach of contract and fraud cases against Aetna U.S. Healthcare of California Inc. ($121 million), Public Broadcasting Service ($47 million) an Franchise Mortgage Acceptance Corp., a partner in a commercial transactions enterprise ($32 million); a copyright infringement case brought by Columbia Pictures Television against a licensee who aired programming for which he had failed to pay ($32 million); a premises liability case against Kmart Corp. ($27 million); a pharmaceutical malpractice case against Thrifty Payless Inc. ($31 million); and a medical malpractice action for negligence in the delivery of a baby ($22 million).
Does the size of the verdicts carry monolithic significance or just proportion? Like everything else at the end of the millennium, the top jury awards may look more momentous than they prove to be.
Brian J. Panish, lead counsel in the GM case, attributes the magnitude of his award at least in part to the booming economy. "In light of the new multibillion-dollar companies and the Internet and the mergers, the true value of cases has appreciated, and a billion dollars is not an unheard of amount," says Panish, likening the $5 billion verdict he obtained in the GM case to "giving a parking ticket to the regular person."
"The numbers did become significantly larger," says retired Judge Leonard Goldstein, who presided over the Ford Pinto trial in Orange County in the mid 1970s. in that case, the jury awarded the plaintiffs $127.5 million in damages against Ford as a result of a dangerous automobile defect similar to the offending design in the GM case.
Goldstein, now an Orange County-based mediator, agrees that the enormity of 1999′s top awards, at least with respect to the product liability cases, "reflects the development of the economy and the amount of dollars it now takes to be impressive."
But while Goldstein does not think that any litigation "reflects an attitude of people generally," something other than a prosperous populace may have influenced California juries to reach unprecedented heights in damage awards last year. The types of cases that yielded the highest verdicts may shed light on what issues are considered most pressing in the public arena today.
"Juries are not tolerating companies that put profits over safety," Panish says. "The message is, if you do it, and you get caught, you’re going to have to pay."
In fact, during the GM case, Panish emphasizes that "the only way that [corporations] are going to get the message is if they have a jury render a substantial monetary verdict." After the trial, a juror reported that they relied on this sentiment in calculating the multibillion-dollar award.
Los Angeles attorney Henry D. Gradstein also believes that the big awards were a function of the public’s intolerance for corporate injustice. Last year Gradstein represented Michael Nesmith, former member of the television rock band the Monkees, in a breach of contract and fraud action against the Public Broadcasting System. Gradstein brought Nesmith’s claims in a countersuit against PBS, who had sued Nesmith for money the television station claimed he owed it on a personal guaranty. Nesmith prevailed in the action, winning $47 million in the state’s fifth-highest award of the year.
Gradstein believes that the victory is proof that juries are not dissuaded from their pursuit of truth by the reputability of the defendant. He points out that in his case, the cross-defendant was PBS, "a nonprofit, quasi-public entity with the mantic, of, really, the holy grail."
The victory, says Gradstein, is proof that "in our society, once somebody manages to stand up and go to court, it doesn’t matter who it is. What matters is the truth, and if someone is capable of making it all the way there, people will award damages to someone who has been wronged."
Boalt Hall Professor Stephan Sugarman is less optimistic. "Many people think that when you get inside these big punitive damages cases, what you see was poor strategy and poor performance by the defense attorneys and experts that testified," says Sugarman. Post-trial juror interviews reveal that often in cases with huge awards, the defendants, their counsel or their experts "came off as arrogant or patronizing, and that really upset the jurors and got them in the mind-set of, ‘We’re going to teach them a lesson,’" Sugarman explains.
Sugarman did not comment on whether he thought last year’s 10 biggest verdicts reflected poor lawyering, but he did state that the numbers that gave those awards their stature were not accurate reflections of a litigation trend, nor does he believe they exemplify the issues Californians find significant today.
"Punitive damage cases stick out because they are newsworthy, but they tend to be awarded, in the end, relatively rarely, and they often get reversed or reduced by the trial judge, or settled for less," Sugarman notes. "The real question is, what are the biggest actual payouts? And that may not at all be what the biggest verdicts are."
Sugarman believes that despite last year’s big numbers, if there is a trend underway, it is a trend away from big verdicts. "Both as a matter of doctrine and as a matter of jury attitude, the system is more conservative than it was 10 years ago," Sugarman says. He notes that the voters’ rejection of Propositions 30 and 31 on the March 7 ballot shows that Californians today "care more about their roles as homeowner and driver than as victims possibly suing someone."
Another trend heralded by 1999′s top 10 is an increase in lawsuits involving health-care issues. Three of the 10 big verdicts addressed major health-care issues. In Goodrich v. Aetna U.S. Healthcare of California Inc., RCV020499 (San Bernardino Sup. Ct., Jan 26, 1999), a widow sued the HMO that refused treatment that would have lengthened her husband’s life. In Cabanillas v. Thrifty Payless Inc., 780749 (Orange Sup. Ct., Jan 15, 1999), a minor prevailed against Thrifty Payless Inc. when its pharmacist negligently filled a prescription incorrectly and caused the child permanent brain injury and total disability. Similarly, in Vasques v. Lin, BC191183 (Los Angeles Sup. Ct., Jan. 21, 1999), a minor obtained a multimillion-dollar verdict as a result of the severe, disabling brain injuries she sustained in a negligently delayed delivery.
"I think it’s tied into the outrage over HMOs not giving the personalized attention and time to really make sure that each person is getting what they need," says Malena R. LeClair of the Santa Ana firm of Horton, Barbara & Reilly, one of the attorneys in the Cabanillas case who won $31 million for her 6-year-old client against Thrifty.
"That is a sign of the times: People put their trust in their health-care providers, and when that trust is violated, they are going to take action. And I don’t think it’s an anomaly. I think probably, people weren’t aware of the potential dangers associated with pharmacies, and how easily errors can occur, and I think that scared them."
In LeClair’s opinion, the jury’s big awards in 1999 reveal their increased knowledgeability. She foretells an increase in litigation in areas such as health care as consumers become better able to understand what has happened to them. LeClair points out that her law firm received many more calls regarding potential pharmacy malpractice and took on several more of these kinds of cases after the jury rendered its verdict in Cabanillas and the media publicized it.
Karla Kelley, a transactional attorney who practices health-care law for Luce, Forward, Hamilton & Scripps in San Diego, but who formally litigated personal injury and malpractice cases on the East Coast, agrees.
"I think patients are getting more educated through the wealth of information on the Internet, through cases, through the frustration with managed care and through losing the sense that the physician is God," says Kelley. "I think jurors are very sophisticated people these days."
Indeed, a better educated, better informed population fills California’s jury boxes every year. According to the California Department of Education, there was one computer for every 8.7 students in grades K-12 during the 1998-99 school year, and a 1995 report by the California Postsecondary Education Commission projected that 455,000 more students would seek access to post-secondary education by 2005-06. Data gathered by the commission from 1995 through 1999 have proved these projections accurate.
Furthermore, the Bureau of Labor Statistics projects that over the next five years, occupations requiring bachelor’s degrees will grow nearly twice as fast as the average for all occupations.