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The chances your business will suffer a nuclear verdict (losing a lawsuit and having to pay the plaintiff $10 million or more) is pretty remote. But they are becoming more common and are costly for insurance companies. One way they may recoup these losses is to increase premiums on all their customers, not just the ones needing to pay these awards.
What Is A Nuclear Verdict?
A “nuclear verdict” is an abnormal legal outcome, according to the Insurance Journal. They are exceptionally high jury verdict awards that most legal and insurance experts may consider unreasonable given the facts and law of a case. They’re an award or settlement that’s more than $10 million, but for a small business, a fraction of that amount might do “nuclear” damage.
Even where there haven’t been similar cases in the past, attorneys and judges should have a general idea of what a case’s settlement would be. In cases with nuclear verdicts, these values could far surpass expectations. These verdicts have increased by 27.5% from 2010 to 2019, according to the US Chamber of Commerce’s Institute for Legal Reform.
Most of the nuclear verdicts (63%) over the past decade are from six states:
- California
- Florida
- New York
- Texas
- Pennsylvania
- Illinois
If a lawsuit is based on state law, the plaintiff’s ability to claim massive damages will vary from state to state. One type of damage award may be difficult or impossible to obtain in one state but not another.
Why Are Jurors Deciding Against Defendants And Issuing Nuclear Verdicts?
Several factors are believed to explain the existence and increase in nuclear verdicts, including:
- Anti-corporate feelings in light of perceived price gouging during the COVID pandemic
- Evidence of corporate unethical and illegal acts
- Anger at the “status quo”
- Wealth redistribution. It’s viewed as a way to move money from very wealthy defendants to poor or middle-class plaintiffs
Plaintiffs’ attorneys can also be very effective at putting on their cases and appealing to jurors’ emotions. They may generate anger over corporations’ public safety failures while maintaining high profit margins and paying CEOs record compensation. Jurors may be more interested in “sticking it to the man” than following tradition when deciding verdicts.
What Effect Might Nuclear Verdicts Have On A Defendant And Businesses In General?
Nuclear verdicts may be beyond a defendant’s policy limits. Despite insurance coverage, defendants may need to pay substantial amounts of their money after a nuclear verdict. This is a threat to small- or medium-sized companies whose financial resources are limited. If nuclear verdicts continue to pile up and strain insurers, they may raise rates to make up for their losses.
As nuclear verdicts become more common, they may be seen as normal and expected. As their numbers increase, case values may, too. This rising tide of verdicts may lift all lawsuit boats.
Eye-popping nuclear verdicts can also generate extensive press coverage, making a court decision more damaging to a company’s reputation or brand than what may have happened with run-of-the-mill lawsuits in the past.
If your company is sued, talk to your Newport, CA business litigation lawyer about the chances of a verdict against you and how high it may be. If nuclear verdicts are becoming more common in your area and the facts may steer a jury in that direction, it may be wise to try to settle the case early or try mediation if that fails. Protect your company’s future—reach out to Focus Law LA today for strategic legal counsel.
