Companies face bigger jury verdicts

(From Bloomberg) The stalled economy and a surfeit of negative corporate news, such as the BP Plc oil spill, sudden-acceleration suits against Toyota Corp. and bank foreclosure practices, has fueled public anger, affecting lawsuits against companies in unrelated cases across the country, legal experts said.

Ten of the 50 largest jury verdicts last year came in product-defect cases, compared with five in 2009 and one in 2008, according to data compiled by Bloomberg. There were 15 such verdicts of $25 million or more in 2010, compared with seven in 2009.

The largest jury verdict of the year of any kind was for $1.3 billion in a copyright-infringement action against SAP AG. That was also the largest copyright jury award in U.S. history, almost 10 times higher than the second-biggest, according to Bloomberg data.

The top product-defect verdict was for $505.1 million against Teva Pharmaceutical Industries Ltd., the Israeli drugmaker, and its U.S. distributor, in a Nevada case over a claim that packaging of its anesthetic propofol created a risk of contamination and led to the plaintiff’s hepatitis. Three of the top 10 were in smokers’ suits against tobacco companies, led by a $152 million award against Lorillard Tobacco Co. in Boston in December.

The total of the largest five product-liability verdicts was $1.1 billion, up from $620 million in 2009 and $408 million in 2008. The 77 percent growth from last year accelerated a trend from the previous year, when the biggest five product verdicts rose 52 percent from 2008.

There hasn’t been any radical change in product-liability law to cause this change.  Prejudice today “is more subtle and not always conscious,” he said. “It’s a blue-collar feeling that corporate America doesn’t really care, and that’s difficult to eliminate in voir dire,” the jury selection process.

Outcomes in cases still “in the pipeline” may reflect the recession’s impact, said Carl Tobias, a University of Richmond law professor in Virginia.

“What’s happened to the economy could well make people distrustful of big entities, particularly corporate ones,” Tobias said. “There may be a fair amount of exposure going forward.”

There may be another reason for the rise in large product- defect verdicts, said Will Kemp, a lawyer who was part of the team that won the $505 million jury verdict against Teva.

It’s “cheap defendants and cheap insurance companies,” Kemp said in an interview.

“The defendants and the insurance companies are holding onto their money and they’re not settling the cases,” he said. “When the recession started, everyone started to hold on to their money. They’re making people try more cases.”

Gene Egdorf, an attorney who won a $54 million product- defect verdict in January 2010 against Caterpillar Inc., the world’s largest maker of construction and mining equipment, agreed.

“It’s getting tougher and tougher to get cases settled,” Egdorf said. “The companies may be hoping for better results on appeal.”

Many of the verdicts of 2010 may be reversed or reduced on appeal, or in post-trial motions, as typically happens to the biggest jury verdicts in product-liability suits.


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