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By Scott Martelle

Imagine you pull up to a four-way stop in your car around the same time as another driver, you both proceed into the intersection, and crunch, fenders are bent.

Then you learn the other driver wasn’t really driving. In fact, no human was controlling the car – it was a computer-managed “autonomous car,” driving itself.

So, who’s at fault, man or machine?

Next, consider this future-shock scenario: You’ve had one too many Scotches at that meeting. Can you slip behind the wheel of your autonomous car and tell it, “take me home,” without breaking drunk-driving laws?

What once was considered science fiction is quietly becoming reality as designers press forward with prototypes of motor vehicles that use censors, computers and, in some designs, vehicle-to-vehicle communications to navigate streets and highways. That cutting-edge technology has spawned some cutting-edge legal issues over everything from liability to privacy.

This isn’t far-in-the-future stuff. Google engineers have been test-driving – or test-riding – autonomous vehicles near the online giant’s home base in Mountain View, and the federal National Highway Safety and Transportation Administration in August will begin trials on wirelessly connected autonomous cars near Ann Arbor, Michigan.

Yet the only state to adopt laws on such vehicles is Nevada, which last year gave its state Department of Motor Vehicles authority to start registering the cars – red license plates for experimental models, green plates for those sold to the public. It also required the vehicles include the capability for drivers to take over controls, and that each car be programmed to safely park itself on the side of the road should it encounter programming problems and the operator does not take control.

But the regulations do not lay out groundwork for the stickier liability and privacy issues. In early March, California state Senator Alex Padilla introduced legislation worked out with Google (SB 1298) that is similar to Nevada’s law. Legislatures in Florida, Hawaii and Arizona also are contemplating bills.

Santa Clara Law professor Dorothy Glancy

“Technology is way ahead of the law,” says Dorothy Glancy, a law professor at Santa Clara University with a long history in public transportation and privacy issues. “Looking at it now, we have to think about what the future is going to be in terms of technology and privacy interests. Looking 20 or 30 years into the future, it gets to be interesting to look at the combinations and permutations of possibility.”

Addressing the legal issues – especially civil liability – could be crucial to developing autonomous cars for a consumer market, says Gary E. Marchant, the Lincoln Professor of Emerging Technologies, Law & Ethics at Arizona State University’s Sandra Day O’Connor College of Law.

General Motors has had the capability for years to develop an autonomous car but didn’t take steps to put them on the road, in part over liability fears, says Marchant, who formerly did legal work for the automaker in Washington, D.C. If technology shifts responsibility from the driver to the manufacturer, the liability costs become a disincentive to development of what could otherwise be a boon to society by removing driver error from the list of accident causes.

“Right now the vast majority of car accidents are caused by the driver, so the number of cases in which the manufacturer is liable is a pretty small slice of the total pie,” Marchant says. “As we go to autonomous vehicles, the actual number of accidents should go down dramatically but the percentage formed by the manufacturers getting sued will likely go up. So you have the paradox that the vehicles on the whole will be safer, but from a manufacturer’s standpoint, the risk of liability goes up.”

Similar concerns confronted pharmaceutical companies developing vaccines, which have a broad societal gain in reducing illness. That conundrum gave rise to the National Vaccine Injury Compensation Program to deal with claims arising from a range of vaccines, and giving the manufacturers some protection. “You don’t want to get rid of” manufacturer’s liability altogether, Marchant says, but you also don’t want to make exposure a disincentive to manufacturing products that have a broader societal value.

Legal minds have been rolling around some ideas about all of this. The Santa Clara Law Review’s annual symposium in January drew legal scholars from around the country to discuss regulations (from the local to the federal level), insurance coverage, civil and criminal liability, and even communications law, since one iteration of autonomous vehicles being tested by the federal government would rely on wireless communication.

No one set of technologies has taken hold, but two leaders have emerged. One is the automated cars being developed at Google, which are self-contained computer systems that navigate based on programming and conditions detected by sensors. The other, which the NHTSA has been experimenting with, involves computer-managed cars that communicate with each other.

Santa Clara Law professor Robert Peterson

The issues raised by the advent of such cars range from thorny constitutional questions to the bureaucratic. Robert Peterson, an expert in insurance law at Santa Clara, points out that California’s Proposition 103, adopted in 1988, requires insurers set rates based on the insured person’s driving history – something that gets warped when the machine is doing the driving.

Similarly, manufacturers of the autonomous cars – and the computerized systems driving them – may face a new generation of liability issues, which could lead to some unusual solutions, such as having the manufacturer provide the insurance for the vehicle (the cost likely rolled into the sticker price).

“No one has squarely addressed that, but the Nevada regulations say that the operator, the person who pushes start, is responsible,” Peterson says, which could be interpreted “that as far as tort liability is concerned, you are now strictly liable even though there’s no fault on your part.” It could evolve that the standard liability would fall to the operator regardless of the accident cause, and if it was a programming malfunction, the operator could try to shift the liability to the manufacturer.

Adding insurance to the upfront cost of the vehicle “would be a solution, but it means merging private car insurance with car manufacturers, and there are a lot of practical and legal barriers to doing that,” Marchant says, adding that such solutions will require a re-imagining that “could mean a fundamental change in how we do insurance.”

Criminal liability poses its own related set of questions, says Frank Douma, of the Humphrey School of Public Affairs at the University of Minnesota. If a car is programmed to move at a certain speed, but fails to detect a slower posted speed when it pulls from a freeway to city street, does the motorist get a ticket? What if the car is programmed to travel at the safest speed, which on a California freeway could be above the posted limit? Is the driver responsible for the infraction?

“It makes what seems to be some simple thoughts about traffic enforcement and other criminal liability situations much more complicated,” says Douma.

A second level of issues lies in the interactions with law enforcement. How does a traffic cop pull over an autonomous car? A car programmed to obey traffic signals and respond to external threats such as suddenly slowed traffic is one thing; getting it to respond to flashing lights to the rear and a siren is another.

Douma suggests systems could be designed that would empower police to override a car’s computer system externally, directing it to pull over.

“The advantage in allowing that is the doomsday scenario, where somebody could put high explosives in a car and send it along its merry way,” Douma says. “But if that’s found out and law enforcement has the power to take over, they can prevent those things from happening.”

Kidnapping also poses an interesting scenario, if someone can hijack the computer controls and force a car – and rider – to go somewhere unanticipated. “There are a number of those kinds of tricky things that you don’t think about,” Douma says.

Yet giving police the ability to remotely pull over cars runs into Fourth Amendment problems, he and Glancy say. Also, in the vehicle-to-vehicle technology in which the cars communicate with each other, records could be kept that would make it easy to track a driver’s movements, which most consumers would view as a violation of privacy.

“Once you start sending information out of the car, security and the privacy of the information becomes a matter of concern,” Glancy says, adding that in conversations with people she finds a lot of skepticism about how well-protected that privacy might be. “They usually talk about fears of massive government surveillance, but also are concerned about” information on their shopping travels being shared with marketing companies. “What stores they’re going to, what stores they go by, that information is so valuable for marketing firms.”

Staking out the legal parameters now and then adapting them as the cars go into use makes more sense, the experts say, than waiting for the technology to take root first then trying to figure out how to deal with the legal issues after the fact.

“It’s going to be with us whether we think about these issues or not,” Glancy says. “To think about the legal issues in advance – that’s a really good thing.”

Irvine-based journalist Scott Martelle is the author most recently of “Detroit: A Biography.” This piece originally appeared in Consumer Attorney of California’s Forum magazine.

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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.)

1. Intellectual property, $2.32 billion (Pacesetter Inc. v. Nervicon Co.)
2. Intellectual property, $576.9 million (Asahi Kasei Pharma Corp. v. Actelion Ltd.)
3. Intellectual property, $101.2 million (Medtronic Sofamore Danek USA Inc. v. NuVasive Inc., federal court)
4. Breach of contract, $88.5 million (Mattel Inc. v. MGA Entertainment Inc., federal court)
5. Products liability, $73.1 million (Mauro v. Ford Motor Co. Inc.)
6. Intellectual property, $70.0 million (Lucent Technologies Inc. v. Gateway Inc., federal court)
7. Negligent retention, $67.4 million (Rosenberg v. Encino-Tarzana Regional Medical Center)
8. Intellectual property, $66.7 million (Trust Co. of the West v. Gundlach)
9. Breach of fiduciary duty, $50.4 million (CFRI-NCA Palladium Venture LLC v. NCA Argyle L.P.)
10. Motor vehicle, $49.6 million (Pedeferri v. White)
11. Products liability, $48.2 million (Trejo v. McNeil Consumer & Specialty Pharmaceuticals)
12. Fraud, $47.2 million (Massoyan v. HL Leasing Inc.)
13. Products liability, $41.3 million (Casey v. FDCC California Inc.)
14. Breach of contract, $32.9 million (Concept Chaser Co. Inc. v. Pentel of America Ltd.)
15. Products liability, $31.4 million (Bell v. MasterCraft Boat Co.)
16. Breach of contract, $30.4 million (Sharp Image Gaming Inc. v. Shingle Springs Band of Miwok Indians)
17. Breach of contract, $30.0 million (Citrus El Dorado LLC v. Stearns Bank, federal court)
18. 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.

–J.G. Preston

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