Jury awards tanking along with the economy?

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Jury verdicts in civil cases can range from small, barely noticed awards to enormous amounts of money that make headlines.

But are awards diving during the recession? Well, the jury’s still out.

At least one study shows that overall median jury awards have declined 40 percent, when adjusted for inflation. For tort jury trials, the damages were even lower – off about 50 percent.

However, reports from the Jury Verdict Research Co. show that median damages in corporate cases – particularly those involving wrongful termination – have risen 18 percent.

Experts on both sides – trial lawyers and tort reformists – say the economy could be one reason for the discrepancies, but that jury trials are always unpredictable.

The lower judgments, capped in many cases by state and federal law, are necessary to keep “trial lawyers from pursuing meritless cases,” said Darren McKinney, spokesman for the American Tort Reform Association. “If the fines could be greater – particularly those for punitive damages, or pain and suffering – then lawyers would pursue every case, whether it made good sense or not. The lower verdicts for those tort trials show that the laws are working.”

McKinney doesn’t dispute that the awards are smaller than they used to be – particularly in those few cases that make big headlines.

“It’s reasonably safe to say – and I think both sides will say it – that in the outlier cases of the last decade the awards are tending to come down,” he said. “Those cases that make headlines have trended down, especially because the Supreme Court in the last 12 to 15 years has defined limits for punitive damages.”

State legislatures also have placed caps on non-economic damages, so, the sagging economy can’t be given credit for lower judgments, McKinney said.

He cites a case in Libby, Mont., where the W.R. Grace Mining Co. was being sued for knowingly releasing asbestos into the air for decades, making people ill. But when the case went to trial, in Libby, all three of the defendants – executives of the mining corporation – were acquitted on all charges.

“You would think that if people were going to be angry at a large corporation, anywhere, it would be in Libby,” he said. “This small town, where their friends and neighbors had seen the consequences, acquitted everyone. Maybe it was an issue because the company was the major employer in town, but juries are unpredictable that way.”

Denver attorney Darrin Schanker, a trial lawyer, tries to take the guesswork out of jury selection – and potential verdicts by using mock trials, jury consultants and focus groups.

He said he’s noticed a certain amount of anger toward large corporations during the past 14 months.

“This recession has some specific issues that we haven’t seen in other downturns,” he said. “We’ve seen focus groups show a great deal of anger – and higher awards – when the defendant is a large corporation whose CEOs bear the blame of the case. The feedback we’re getting is that people won’t hesitate to hand down large settlements in those cases.”

Juries also are taking current economic hardships in consideration when making awards. During the past, they would award money for economic damages, but not increase the award of future medical bills, he said.

“They always said, invest it and live on the interest,” Schanker said. “Now, they are more uncertain about investments, so they are providing money for future medical bills. We are no longer living in the world where an investment guarantees future money.”

While in Schanker’s view juries are more receptive to larger payments, McKinney said the evidence does not support that. The belief in larger awards leads trial lawyers to file more cases in a recession, he said.

“What you have to remember is that the vast majority of cases never go to trial,” he said. “So the fact that awards by juries have gone down is somewhat less important once you realize that most settlements occur outside the courtroom. It doesn’t mean fewer lawsuits, and it doesn’t mean that the costs of those suits are lower for companies, insurers and customers.”

Schanker said he has not seen a spike in lawsuits during the past 14 months, but he has seen changes in attitudes about litigation.

Jurors bring baggage with them, said Edith Greene, a psychology professor at the University of Colorado at Colorado Springs. That could mean larger awards during tough economic times – but not in El Paso County.

“Juries in El Paso County are very conservative – they’re known for it,” she said. “You’re never going to get rich being a plaintiff in El Paso County.”

In fact, most plaintiffs never get rich.

Greene said the average award in a civil case – from small car accidents to large class action suits – is only $28,000.

She said that most juries put aside their personal feelings and focus on the case at hand, citing as proof studies that show judges agree with jury verdicts the vast majority of the time.

“The system works,” she said. “Juries are very responsible, so any bias would be subtle and unconscious. They usually are not looking to push their individual agendas – they are very careful, very responsible. The system works, most of the time.”