Timing May Play a Part in Record Numbers of Big Verdicts Against Makers of Products

An interesting article published by Businessweek last month discusses what has become a growing trend in United States product liability law: a surge in big awards against companies accused of putting defective products in the marketplace. According to the article, ten of the 50 biggest jury verdicts last year came in product-defect cases, compared to five in 2009 and only one in 2008. In 2010, there were 15 jury verdicts of $25 million or more, versus seven in 2009.

We previously reported on two of these exceptionally large verdicts. The most recent of those was the $66 million verdict against exercise equipment manufacturer Cybex International, wherein a New York jury awarded the sum to a physical therapist who became paralyzed when an exercise machine fell on her at work. As we reported, the verdict, if allowed to stand, threatens to bankrupt the company. The company’s chief operating officer reportedly said of the suit that he has no idea what the company did wrong.

The second of those cases was that of the $500 million punitive damages award against Teva Pharmaceutical Industries, upon which we reported back in May as appearing to be a case of misplaced anger. There, a Nevada jury found that the company’s packaging of its anesthetic drug created a risk of contamination, thus leading to the plaintiff’s contracting of hepatitis.

So what’s the cause of these enormous, seemingly unwarranted verdicts? Legal experts consulted by Businessweek identify several factors: a stalled economy and recent flood of negative corporate news such as the BP oil spill, Toyota sudden-acceleration suits, and bank foreclosure practices. Some believe these issues have fueled public anger, and thus affected lawsuits across the country against other companies in unrelated cases. Defense attorneys consulted for the article note that it is now almost impossible to detect jurors’ prejudice and bias against corporate America, which today is “more subtle and not always conscious.”

Also quoted in the article is a comment by one of the team of attorneys who won the $500 million award against Teva. He reportedly attributes the rise in large product-defect awards to “cheap defendants and cheap insurance companies. . . . The defendants and the insurance companies are holding onto their money and they’re not settling the cases.” One can hope that his comment was taken out of context. Certainly, he doesn’t propose that company defendants and their insurers fork out huge sums of money to settle claims they believe have no merit? I don’t think this makes them “cheap.” A wise man once said that a jury trial, in spite of its shortcomings and pitfalls as discussed in the article, is one of the most distinguishing and greatest parts of the American judicial system. It sounds like there may be plenty of them this year.

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