Arguing Class Actions is a monthly column by Adam J. Levitt for the National Law Journal.
Reprinted with permission from the November 6, 2023 edition of the National Law Journal. © 2023 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Recently, the defense bar has increasingly cast class action verdicts of a certain size as “shock,” “runaway,” or “nuclear” verdicts. What qualifies as a “nuclear” or “shock” verdict is apparently defined as jury awards as low as $10 million, the implication being that any verdict exceeding seven figures surpasses what they would have one believe is a “reasonable” or “rational” plaintiff’s verdict. Under this definition, a large enough sum recovered by plaintiffs is presumptively “unreasonable,” without regard to the evidence actually presented at trial and its relation to the actual harm that the defendant caused to plaintiffs and the other class members.
This defense strategy attempts to condition potential jurors and judges in future cases that corporations responsible for causing a great deal of harm should not be responsible for fully compensating plaintiffs and the other class members, simply because the harm that they caused is too great. With this reframing of the issue, the defense bar would have potential jurors and courts avoid neutrally applying the law about who should bear the costs of a full recovery in the face of tortious conduct—or put more succinctly, avoid viewing plaintiffs in a sympathetic light and, instead, turn that sympathy toward the corporation. In a sense, the defense bar seeks to shift onto plaintiffs the burden of bearing rising litigation costs which corporations and insurers had always considered to be a “cost of doing business.” This notion is exemplified by the fact that defense firms generally tout and advertise their multi-million-dollar recoveries in business litigation, but assiduously demonize the same recoveries when obtained by plaintiffs. Why are large recoveries “reasonable” to redress business torts, but unreasonable and irrational when protecting plaintiffs’ interests?
Such misleading narratives can and are already having serious impacts on plaintiffs’ access to justice and their ability to achieve a fair and commensurate recovery for injuries, as well as the role that private enforcement plays in checking corporate misconduct. In a political landscape where consumers and other injured parties are often left without a governmental remedy, private enforcement of legal rights and protections through class action litigation plays an important role in safeguarding the public. In consumer fraud class cases, the goal is to protect the average consumer from unfair business practices. In data privacy cases, the goal is to ensure protection of the personal and sensitive information collected from unaware users. In environmental cases, the goal is to ensure groups of individuals exposed to contamination can still obtain access to a safe healthful environment.
Effecting change and protecting consumers in each of these fields requires obtaining redress on an aggregated basis for all those harmed by illicit corporate practices, while disincentivizing those practices in the future. The availability of plaintiffs’ verdicts that provide relief proportionate to the harm caused by corporate wrongdoing is an essential component of this scheme. Large verdicts in the class action context are thus not usually “unreasonable” in proportion to the case presented at trial, because the entirety of the harm caused by the defendant’s misconduct is what drives the amount of the damage award (and that is separate and apart from any award of punitive damages, which is also an important deterrent). Indeed, in the class action context, a single, large monetary verdict is awarded not to a single plaintiff, but to a collection of class members whose damages have been aggregated in that action.
Thus defendant corporations’—and their lobbyists’—use of hyperbolic language to characterize large verdicts is simply unwarranted, certainly in the overwhelming majority of cases. Moreover, such nomenclature attacks serve no purpose other than to try to suppress large verdicts by prospectively shaming jurors (and/or judges) into awarding less money than is actually warranted in a given case—and less than the trial record supports—because to award what’s actually appropriate may result in a damages figure that the defendant corporation believes is too large. The fact is, however, that, as with all other legal remedies, damage awards must have a foundation in both the law and the evidence, and they must further be supported by a reasonable comparison to the harm suffered by the injured party. For defendant corporations—or, more precisely, in many cases, their insurance companies—having to pay out for a case that may have been resolved for less had they chosen to settle feels inherently unreasonable. But one should not forget that any recovery that emerges from trial has already passed through several layers of judicial scrutiny. What the defense bar fails to acknowledge in the many articles published on this subject is that large recoveries are the result of an extensive fact-finding process concluding that there has been large or widespread harm.
To the extent that such large recoveries are becoming more frequent, several factors explain this trend wholly apart from any inherent unreasonableness in such verdicts. First, some verdicts address specific and unique kinds of harms, particularly environmental harms, that have only recently become apparent. Historically, such harms may have injured plaintiffs undetected, but advances in science that have brought them to light should be celebrated, not bemoaned. And the fact that the liable corporate defendants had been able to continue their illicit practices—oftentimes for several decades—without being made to account for the significant damages they inflicted is not a reason to minimize their legal exposure. Second, any rise in large verdicts in recent years has been accompanied by a general decrease in freely available social services and affordable healthcare, the increased cost to obtain any social service across the board, flatlining wages, and skyrocketing inflation. In sum, the costs of being an American consumer have skyrocketed. Commensurately, so has the cost of redressing the average American’s injuries. In this vein, articles blaming “emotionally draining evidence,” “juror anger,” and even “an increase in anti-corporate attitudes and unequal wealth distribution due (in part) to the success of corporations and their executives” as motivation for American jurors to award larger damages than they historically have against corporations and their insurers deflect from the real causes for the rise in large verdicts. The focus for any damages awards should remain on the harm that defendants’ conduct inflicted and the appropriate compensation to plaintiffs and the other class members for that harm, not on the level of discomfort or financial indigestion that such an award might otherwise cause the liable defendant corporation.
Unfortunately, the defense bar’s campaign may already be having some effect. For example, in an appeal last year from a $925 million verdict entered against ViSalus, the Ninth Circuit held for the first time that an aggregated damages award in a class case could violate due process as a Constitutional matter, even though the individual award to each class member, when considered separately, would not. This holding has troubling consequences for deterring corporate misconduct through allowing companies to escape full responsibility so long as the damage they inflict is sufficiently large.
Looking forward, the pattern of mischaracterizing plaintiffs’ recoveries threatens devastating impacts on redressing harm and enforcing private rights in the future. Because class actions and other tools used by plaintiffs’ attorneys play such a large role in the private enforcement of rights and responsibilities, characterizing “wins” in these cases as “nuclear,” “shocking,” or “runaway” casts a dark shadow on our ability to achieve justice for injured parties. Hard-won victories in the court of law should not be undone in the court of public opinion.
Thank you to DiCello Levitt associate, Anna Laird, and partners, John Tangren and Brian O’Mara, for contributing to this column.
Adam J. Levitt is a founding partner of DiCello Levitt, where he heads the firm’s class action and public client practice groups. He can be reached at [email protected]