The reality of large dollar amount jury verdicts

October 2, 2011
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Multi-million dollar jury verdicts seemingly make the news on almost a daily basis. Whether it is a class action lawsuit against a tobacco or pharmaceutical company or someone spilling hot coffee in their lap, for better or for worse, large jury verdicts seem to be part of our culture.

Fear of a large jury amount often causes businesses to settle lawsuits for far more than their "real" value.

But what happens after the verdict comes in?

Large verdicts often receive a front page headline in the media, but the reality is that many of these large verdicts are dramatically reduced or thrown out entirely on appeal.

For example, class action plaintiffs in Illinois once obtained a $10.1 billion judgment against Philip Morris, the largest cigarette manufacturer in the United States. The lawsuit involved a claim that Philip Morris fraudulently marketed cigarettes as "lights" when, in fact, the cigarettes were actually more toxic and harmful than regular cigarettes.

Nearly three years later, the Illinois Supreme Court threw out the verdict. The court concluded that the United States Federal Trade Commission had authorized Philip Morris to make all its cigarettes "lights." The plaintiffs could not claim that Philip Morris defrauded them by marketing the cigarettes as "lights" when the use of that term had been specifically approved by the federal government.

While the original verdict was front page news nationally, one had to be a much more astute observer to learn that the verdict was thrown out on appeal. For example, a short article on the verdict being reversed was buried at page 10A of the Detroit Free Press. Most reversals do not make the news at all.

On a smaller scale locally, a former health care executive once made headlines for blowing the whistle on alleged illegal practices involving Medicare billing at a local hospital. The hospital paid more than $6 million to settle these claims, from which the whistle-blower was paid almost $1.1 million.

However, the United States District Court for the Western District of Michigan later ordered the whistle blower to pay the hospital $1.6 million — more than what she received from the government — for bringing an "illegitimate" wrongful discharge lawsuit against the hospital. The judge found that the whistle-blower had filed false affidavits, concealed evidence and engaged in "wrongful workplace conduct" justifying her dismissal.

These are just two examples of how the outcomes of "front-page" lawsuits ended up much differently than what was initially reported in the media.

Even the infamous McDonald's hot coffee lawsuit, in which the plaintiff was awarded approximately $3 million for spilling hot coffee on her lap, was reduced on appeal to $480,000, a fact not widely publicized in the media.

This is not to say that reductions in jury awards are necessarily correct. Consumer advocates argue that these verdict reductions weaken consumer rights and undermine our jury system, while business advocates argue that appeals are an important check and balance on runaway jury verdicts.

However, these examples do offer at least two important lessons for businesses involved in a high-publicity lawsuit.

First, what is likely to stick in the public's mind is the result of the jury verdict, regardless of whether the case is successfully appealed. At that point, the public relations battle is often either won or lost.

Second, when it comes to the final outcome of the lawsuit, in the immortal words of Yogi Berra, "It ain't over 'til it's over." Appeals can offer a real hope in curtailing a large jury verdict against a company.

Bryan Walters is a trial partner in the law firm of Varnum LLP.

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