Last year, Johnson & Johnson was hit with an $8 billion verdict by a Philadelphia jury, an amount that exceeded the gross domestic product of more than sixty countries (included Monaco, Belize, and Greenland) in that same year, according to data from the International Monetary Fund. In fact, Johnson & Johnson has become the posterchild for what many in the legal industry refer to as “nuclear verdicts,” but J&J is not alone. Jury verdict awards in the hundreds of millions and billions are becoming more and more common in American trials. The impact of this upward trend in verdicts is often referred to as “social inflation” and has become a popular topic that has understandably caused panic within the insurance industry.
Social inflation and nuclear verdicts indisputably demonstrate that a standard economic analysis for assessing risk in litigation is no longer sufficient for accurately predicting potential risk. Under a standard economic analysis, the value of an injury such as quadriplegia for a plaintiff should be no different in 2019 than it was in 2007 for a similar plaintiff beyond the adjustment for standard inflation (and certainly no different from a similar injury in a similar 2019 case), but that is not what we are seeing with jury verdicts. Instead, they are wildly erratic and inconsistent. In short, the data on jury verdicts demonstrates irrationality at work. Fortunately, the study of jury economics (a subdivision of behavioral economics) helps explain this phenomenon, highlighting what renowned psychologist Dan Arriely calls the “predictably irrational” behavior of today’s juries. Continue reading →
Next month, the largest jury trial to date against opioid manufacturers, distributers, and sellers will take place in northeastern Ohio. The trial will involve the first case among the consolidated lawsuits brought by about approximately two thousand cities, counties, tribes, and others. In light of the recent decision in Oklahoma, in which a judge ordered Johnson & Johnson to pay $572M to the state, it is easy to understand why the stakes are significant.
These cases are particularly interesting because of how they mirror the tobacco lawsuits filed by states years ago. The brilliant tactic by the plaintiff attorneys in the tobacco litigation was to make the states the plaintiffs rather than the individual smokers. Before that, when the plaintiffs were individual smokers, it was too easy for the tobacco companies to point the finger at the user and say that it was their choice to smoke. Those kinds of appeals to personal responsibility worked when the plaintiff was an individual user, but having the states as the plaintiffs significantly limited the tobacco companies’ ability to do that. It was hard to place any critical focus on the states, which is so important in jury trials. It is no coincidence that the same has happened here. Continue reading →