The Law of Large Numbers View the Top 10 list

The Recorder
By Leigh Jones and Greg Mitchell
March 17, 2006

California regained its place as the golden state last year, with the state's top 10 verdicts totalling $1.986 billion, almost double the previous year's tally.

In 2004, the top 10 barely topped the billion-dollar mark as the 2003 cap on punitive damages put a crimp in awards. In 2003, the top 10 had totalled just over $2 billion.

Plaintiff lawyers can no longer rely on outsized punitive damage awards to juice verdicts, experts say. So they're focusing more on compensatory damages. And in '05, it was complex business cases, not sympathetic injury victims, that yielded the big numbers.

In 2004, the top verdict was a Ford rollover, which a jury rang up at $369 million.

In 2005, three verdicts topped that - and none of which are easily explained in a sentence, much less an opening statement.

Gary Fontana, of San Francisco's Thelen Reid & Priest, won $700 million in punitive damages in a suit where the state alleged that the purchaser of a huge California life insurer had concealed its ties to a bank, in violation of a state law prohibiting banks from participating in the management of insurance companies. But the judge tossed out the award in Quackenbush v. Altus Finance, CV 99-02829.

The second biggest verdict, $465 million, came in a trade secrets dispute over memory cards.

In the third biggest verdict, a jury awarded Masimo Corp. $420 million on its antitrust claim against a rival it said had monopolized the pulse-oximetry market.

California's super-sized verdicts were a bit of an anomoly. Nationwide, total awards among the top 100 verdicts in 2005 slid for the third straight year, indicating that juries are becoming ever stingier toward plaintiffs - at least with regard to the punitive damages they dole out.

Juries across the country awarded $8.2 billion in compensatory and punitive damages last year, the lowest total since the National Law Journal started tracking the top 100 verdicts in 2001.

"Jurors have become generally far more sophisticated," said Philip Anthony, chief executive officer of DecisionQuest, a litigation consultancy.

The tallies for the top 100 verdicts of 2005 were 28 percent smaller compared to 2004's total of $11.5 billion, and presented a stark contrast to the $41.4 billion in verdicts for 2002, the year with the highest awards of the past five years. (All dollar figures throughout are adjusted for inflation.)

While punitive awards have varied dramatically since 2001, nonpunitive awards, which include compensatory damages and may include fees and costs if awarded by the jury, have remained relatively constant.

The upshot is that jurors apparently have scaled back on huge awards intended to punish defendants in the cases that end up at trial, but they remain committed to trying to make plaintiffs whole.

The decline in punitives is partially due to a drop in the number of high-stake cases making it to trial, said Samuel Solomon, chief executive officer for Doar, a litigation consultancy in New York.

As more cases were resolved by settlement, jury trials dropped to fewer than 2 percent of all civil cases filed, according to an American Bar Association study in 2002, the last year for which the information is available. The decrease in awards, Solomon said, also is due to caps on punitive damages, now implemented in more than half of the states. In addition, plaintiffs' lawyers are shifting from arguing for punitive damages to pushing for large compensatory awards. "Why argue punitive damages when you know it will be capped?" he said.

In 2005, punitive damages totaled $3.5 billion, while nonpunitive damages equaled $4.7 billion. Those figures were in keeping with a general decline in total awards since 2002. But punitive awards decreased at a much faster rate than compensatory awards - which, by comparison, remained relatively constant.

The punitive damages portion of total awards over the past five years has dropped markedly. In 2005, punitives made up 43 percent of the total awards, and in 2004 they equaled 38 percent. But in 2003, punitive damages represented 70 percent of the total awards, and in 2002 they were 87 percent. In 2001, punitive damages amounted to 58 percent of the total awards.

Viewed another way, punitive damages over the last five years ranged widely, from the 2005 total of $3.5 billion up to a hefty $36.0 billion in 2002. But the range of compensatory damages over the same period was much smaller, from a low of $4.7 billion in 2005 up to just $7.1 billion in 2004.

Among the top 100 verdicts of 2005, court battles over corporate wrongdoing yielded some of the largest awards. The biggest verdict was in the securities fraud case brought by Coleman, the camping gear company owned by Revlon Chairman Ron Perelman.

Coleman sued Morgan Stanley over its advisory role in the sale of the company to Sunbeam Products in March 1998. A Florida jury in May handed out nearly $1.44 billion in total damages, including $850 million in punitives. An appeal is pending.

Anthony, with DecisionQuest, said that corporate malfeasance has become the cause of action du jour, as jurors continue to warily eye big business due to Enron Corp., WorldCom Inc. and other high-profile corporate scandals. At the same time, jurors have begun to temper their awards in personal injury verdicts, he said. They also tended to be better educated about the legal process and require more from plaintiffs' lawyers in terms of causation and injury in those types of cases.

"That awareness leads to a healthy skepticism, with a much greater focus on documentation," he said. (DecisionQuest previously has conducted juror surveys with the NLJ.)

Only one medical malpractice case ranked among the nation's top five verdicts last year.

The average award among the top 100 verdicts was $82 million, with compensatory damages averaging $47 million. The average award in 2004 was $115 million, with compensatory damages averaging $70 million. The median award in 2005 was $30 million, including $6 million in compensatory damages. The median award in 2004 was $35.5 million.

The types of cases that made the top 100 verdicts of 2005 varied greatly, from accounting malpractice to workplace safety. Products liability was the most common kind of action, with 14 cases falling under that category. Thirteen trials involved motor vehicle cases, 11 involved medical malpractice, nine were breach of contract actions and seven were intellectual property cases.

Although products liability actions were the most common cases last year, the top five verdicts did not include such an action. The products liability lawsuit with the highest verdict was a Texas Vioxx case, Ernst v. Merck & Co. The jury in that case awarded the plaintiff $253 million for the pharmaceutical company's failure to warn of the product's risk of causing heart attacks. Some $229 million of the award was in punitive damages, which were capped at $1.65 million. The end result was a $26.1 million verdict.

The decline in punitive damages is a pendulum swing from the era of hot-coffee injuries and tobacco class actions that, in part, spurred tort reform advocates to push for limits on awards and a change in public sentiment.

But despite the shift in awards that the top 100 verdicts of 2005 reveals, Cornell Law School Professor Theodore Eisenberg, considered an expert on punitive damages, asserted that the ratios have stayed basically the same. Eisenberg, who has studied trends in punitive damages since 1997, attributes dramatic spikes in totals to large award outliers, rather than any major change in the way jurors are handing out verdicts. "There probably never was a serious crisis," he said.

Looking ahead, jury consultant Anthony expects contractual disputes to heat up, especially if there is an economic downturn. He anticipates more lawsuits involving real estate and labor disputes, but as the public's ire over the Enron scandal and other corporate misdeeds begins to die down, the juror climate will become "one of relative calm," he said.

"I don't think there is tremendous anxiety in the general jury-eligible population," he said.

Recorder Managing Editor Greg Mitchell contributed to this report.

Top 10 Verdicts 2005

  Award Case name and court Plaintiff
Description Status
1 $700,000,000 Quackenbush v. Altus Finance
U.S. District Court, Central District CV 99-02829-AHM, 7/25/2005
Gary Fontana, Thelen, Reid & Priest, San Francisco Robert Weigel and James P. Clark, Gibson Dunn & Crutcher, New York Fraudulent Concealment
Executive Life Ins. Co. buyer concealed its ties to Credit Lyonnais
Court set aside punitives; judgment for $241 M on unjust enrichment claim.
2 $465,400,000 Lexar Media v. Toshiba Corp.
Santa Clara County Superior Court 1-02-CV-812458, 3/24/2005
Matthew D. Powers, Weil Gotshal & Manges, Redwood Shores Michael A. Jacobs, Morrison & Foerster, San Francisco Intellectual Property
Memory-card maker accused electronics company of theft
Request for emergency appeal denied.
3 $420,000,000 Masimo Corp v. Tyco Health Care Group LP
U.S. District Court, Central District CV 02-4770 MRP (AJWx), 3/21/2005
Stephen D. Susman, Susman Godfrey, Houston, Texas Stephen C. Neal, Cooley Godward, Palo Alto Antitrust
Manufacturer claimed rival monopolized pulse-oximetry market
Post-trial motions pending.
4 $172,000,000 Savaglio v. Wal-Mart Stores Inc.
Alameda County Superior Court C-835687, 12/22/2005
Frederick P. Furth and Jessica L. Grant, The Furth Firm, San Francisco Neal S. Manne, Susan Godfrey, Houston, Texas Employment
Employer failed to provide employees with legally required meal breaks
Appeal expected.
5 $63,899,000 Baker v. Privatair Inc.
Los Angeles County Superior Court BC322198, 12/13/05
Michael L. Kelly, Kirtland & Packard, El Segundo Joseph C. Maya, Maya & Assoc., Westport, Conn. DefamationPilots and flight attendant schemed to get pilot fired  
6 $40,803,113 1601 McCarthy Boulevard LLC v. GMAC Commercial Mortgage Corp.
San Francisco Superior Court CGC-03-425848, 1/26/2005
Jon B. Streeter and Matthew M. Werdegar, Keker & Van Nes LLP, San Francisco Thomas Arthur and Thomas M. Robins III, Frandzel, Robins, Bloom & Csato, Los Angeles Real Estate
Loan servicer refused to release impounded lease-termination payment
Appeal pending.
7 $38,332,930.90 Blanks v. Seyfarth Shaw LLP
Los Angeles County Superior Court BC 308 355, 4/4/2005
James R. Rosen, Law Offices of James R. Rosen PC, Beverly Hills John M. Moscarino and Joseph Connolly, Moscarino & Connolly, Los Angeles Legal Malpractice
Tae Bo creator claimed lawyer botched suit against his agent by not filing in time
Remitted to $29,021,958 to avoid double recovery; atty fees of $2.1M added; defense motions denied.
8 $30,000,000 Estate of Bakley v. Blake
Los Angeles County Superior Court EC 034380, 11/18/2005
Eric J. Dubin, Law Offices of Eric J. Dubin, Irvine Gary S. Austin, Law Offices of Gary S. Austin, Beverly Hills; Peter G. Ezzell, Haight, Brown & Bonesteel, Santa Monica Wrongful Death
Robert Blake shot wife while she waited for him in car
Motion for JNOV expected.
9 $28,050,000 State of California v. Underwriters at Lloyd's of London
Riverside County Superior Court 239784 / RIC-381555, 5/16/2005
Darryl L. Doke, Office of Attorney General, Sacramento; Robert M. Horkovich, Anderson, Kill & Olick, New York John E. Peer, Woolls & Peer, Los Angeles Environmental
Insurers liable for cost of cleaning up Stringfellow Acid Pits
Recovery limited to single tower of coverage, resulting in $12M award. Bad faith issue still to be litigated.
10 $27,386,567 Dominguez v. City and County of San Francisco
San Francisco Superior Court. CGC 03-422963, 9/1/2005
Brian J. Panish and Kevin R. Boyle, Panish Shea & Boyle, Los Angeles John Aubrey and Karen E. Kirby, Office of City Attorney, San Francisco Motor Vehicle
Truck jumped curb, killing 4-year-old in full view of her mother
Motion for new trial denied.
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