California’s biggest verdicts go to businesses, not individuals
Monday, March 19, 2012
The National Law Journal published its list of the nation’s Top 100 Verdicts of 2011 in its print issue of March 12. (The online version of the report is available only to paid subscribers.) Of those Top 100 verdicts, 18 were handed down in California, either in state or federal court; since California has only 12% of the nation’s population, this would seem to fit the notion that California is a “litigious” state. Furthermore, those 18 California verdicts all rank among the 67 highest nationally, making up almost 27% of that total.
But before the “tort reform” crowd gets too carried away with decrying California’s “runaway juries” and “jackpot justice,” they should take a look at who’s winning these cases.
Because the overwhelming majority of those large jury awards are going to corporate plaintiffs.
Ninety percent of the money awarded in those 18 largest California verdicts went to businesses that filed suit. And of the very largest verdicts — those over $50 million — seven of the nine were won by corporations, who received 96% of the total money awarded.
The big money in California lawsuits isn’t going to people suing businesses, or even people suing other individuals. It’s going to businesses suing other businesses, typically in intellectual property or breach of contract suits.
Here are those 18 largest California verdicts, listed by type of suit. Verdicts won by corporate plaintiffs are in bold. According to The National Law Journal, the dollar amounts are “what the jury awarded; this list does not account for judicial reductions, offsets or appeals.” (We’ll discuss some of those modifications later.)
- Intellectual property, $2.32 billion (Pacesetter Inc. v. Nervicon Co.)
- Intellectual property, $576.9 million (Asahi Kasei Pharma Corp. v. Actelion Ltd.)
- Intellectual property, $101.2 million (Medtronic Sofamore Danek USA Inc. v. NuVasive Inc., federal court)
- Breach of contract, $88.5 million (Mattel Inc. v. MGA Entertainment Inc., federal court)
- Products liability, $73.1 million (Mauro v. Ford Motor Co. Inc.)
- Intellectual property, $70.0 million (Lucent Technologies Inc. v. Gateway Inc., federal court)
- Negligent retention, $67.4 million (Rosenberg v. Encino-Tarzana Regional Medical Center)
- Intellectual property, $66.7 million (Trust Co. of the West v. Gundlach)
- Breach of fiduciary duty, $50.4 million (CFRI-NCA Palladium Venture LLC v. NCA Argyle L.P.)
- Motor vehicle, $49.6 million (Pedeferri v. White)
- Products liability, $48.2 million (Trejo v. McNeil Consumer & Specialty Pharmaceuticals)
- Fraud, $47.2 million (Massoyan v. HL Leasing Inc.)
- Products liability, $41.3 million (Casey v. FDCC California Inc.)
- Breach of contract, $32.9 million (Concept Chaser Co. Inc. v. Pentel of America Ltd.)
- Products liability, $31.4 million (Bell v. MasterCraft Boat Co.)
- Breach of contract, $30.4 million (Sharp Image Gaming Inc. v. Shingle Springs Band of Miwok Indians)
- Breach of contract, $30.0 million (Citrus El Dorado LLC v. Stearns Bank, federal court)
- Motor vehicle, $29.3 million (Hutchinson v. Bucci)
The dominance of business cases in the largest verdicts category is not limited to California. The National Law Journal broke down the 100 largest verdicts by category. The biggest category, by far — with 30 times more money awarded than in the second-largest category — was wrongful death, which is not where you see business v. business litigation. But that category was fueled by the largest verdict ever handed down in a U.S. court: a $150 BILLION verdict in a Texas case, Middleton v. Collins.
In that case, the defendant was a Texas man, Donald Collins, who allegedly sexually assaulted and later badly, badly burned an eight-year-old boy who died from his injuries 13 years later. Collins has not faced criminal charges in the case, and he did not appear at or mount a defense in his civil trial because he is in prison for failing to register as a sex offender after he was convicted of molesting another eight-year-old boy. The jury’s verdict against Collins was strictly symbolic; the plaintiffs don’t expect to ever collect a dime, but their hope is the verdict will spur prosecutors to pursue criminal charges.
Aside from the Collins case, only two wrongful death verdicts were in the top 100, for a total of $64 million.
Discounting wrongful death, the biggest dollar value of verdicts was for intellectual property suits, more than $5.3 billion. That’s more than the next eight categories (toxic torts, products liability, fraud, breach of contract, medical malpractice, motor vehicle, Medicaid fraud and sexual assault) COMBINED.
The biggest intellectual property verdict was that $2.32 billion award in the California case of Pacesetter Inc. v. Nervicon Co., the second-largest verdict of any type anywhere in the country last year. Of course, there may not be any collection in that verdict either. The case is described National Law Journal reporter Amanda Bronstad as “a trade secrets case that ended in a verdict against a former employee who fled to China and didn’t show up for the trial.” The verdict was reduced by a judge to $1.45 billion.
But, Bronstad wrote, “even without that case, the value of verdicts [in the top 100] in intellectual property cases would have increased by 24 percent from 2010.” Those other intellectual property verdicts in the top 100 combined to be 66% more than the TOTAL of products liability and medical malpractice, two categories tort “reformers” like to point to as sources of big verdicts that require reining in the civil justice system.
Or take another category of business v. business litigation, breach of contract. The breach of contract verdicts in the top 100 last year totaled $478 million, more than the $430 million awarded in the medical malpractice cases in the top 100. That’s even though the breach of contract amount for top 100 cases was down 58% from 2010 and medical malpractice was up 233%; breach of contract was still bigger. (Of course, there were no California medical malpractice cases among the national top 100 verdicts because California’s unjust MICRA law limits compensation for non-economic damages in those cases to just $250,000 and has since it was enacted in 1975.)
The largest medical malpractice verdict in the nation last year was for $144.6 million in a Michigan case that will provide for lifetime care for a child who was injured during birth. The plaintiff’s attorney in that case, Geoffrey Fieger, told the National Law Journal, “What you’re seeing is not a tendency to have more [medical malpractice] lawsuits or more verdicts. The defendants, the insurance companies and hospitals have become much more brazen. They believe with tort reform and a lot of the propaganda against lawsuits that’s out there, they, instead of settling the cases, have pushed them to trial. So that’s been the result.”
The next time you hear some of that tort reform “propaganda against lawsuits,” ask if that applies to lawsuits filed by businesses as well.