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Supply Chain News: A Look at Nuclear Verdicts against Carriers by ATRI

A new report from the analysts at the American Transportation Research Institute (ATRI) find that large lawsuit awards against trucking companies are having a growing impact on the industry and will drive costs and capacity issues for shippers as well.

ATRI says that large legal verdicts, sometimes called "nuclear verdicts" have been a part of the legal landscape of the trucking industry since 2006. Awards to injured plaintiffs of sometimes more than $10 million naturally stem from serious crashes involving massive injury and death.

"However, these large verdicts can exist on tenuous legal grounds and can have negative effects on multiple parties," ATRI says.

In fact, rising insurance costs is a key factor in pushing many trucking firms out of the industry.

The report starts by noting some history, notably how the dollar awards to plaintiffs have grown enormously over time. If also reviews various types of negligence that a plaintiff can allege against a trucking company connected in some way to an accident, as well as various types of liability.

These negligence and liability frameworks can combine to give plaintiffs an edge, ATRI says.

For example, ATRI says that states with what is called joint liability (any liable defendant can be required to pay the entire damages award) may find that plaintiffs place the entire burden of the damages onto a carrier, despite the carrier being less negligent than other defendants.

Joint liability may also create an incentive for plaintiffs to sue parties such as corporations, for example, as they have substantial assets. The often-disparate relationship between liability and negligence has created an environment where large verdicts have become relatively commonplace.

For this report, ATRI compiled litigation data for 600 cases to statistically analyze the key metrics of large verdicts in the trucking industry. This data was collected and amalgamated from multiple external sources in the industry, including a litigation database firm. Case information with jury awards over $1 million was inputted into an ATRI-developed spreadsheet; incorporated data included verdict amounts, crash/filing/publication details, and jury/litigation details.

The data is interesting. Cases in which plaintiffs won awards of more than $1 million rose rapidly for a few years after 2010, to over 70 in 2013, as shown in the chart below from the report. Since then, the number of million awards has been generally been trending down, to about 35 in 2019. That is still much higher than levels seen pre-2010.

The average award in the data pool of over $1 million verdicts was $3.1 million, with a median of $1.7 million, across the 451 cases analyzed.

If a carrier is involved in an accident in which children are hurt or killed, awards gets really high, with average awards of over $40 million.

On the other hand, when carriers use an expert witness, the amount of the awards falls dramatically.

The analysis also showed that the time between the crash date and the verdict date increases the size of verdict.

The report contains a significant amount of other data. What the industry should do about all this was not addressed.

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