Nuclear Verdicts are on the increase and are having a big impact on the US Trucking industry, according to a new report by the American Transportation Research Institute (ATRI).
The comprehensive report, Understanding the Impact of Nuclear Verdicts on the Trucking Industry, is the result of a large amount of qualitative and quantitative research over many months and years and outlines the real and present threat of large verdicts to the trucking industry.
In the first in our series of three blogs focused on the US trucking sector, we look at what nuclear verdicts are and why carriers should be concerned.
What is a Nuclear Verdict?
The term is banded around a lot and will be familiar to everyone in the trucking industry, but what does it mean? There is some ambiguity but ‘Nuclear Verdict’ generally refers to a Jury verdict in excess of $10 million. For many people, it’s a context-based term that refers to any very large verdict, and for example where the damages exceed direct costs by at least two to three times.
Freightwaves helpfully states that ‘a good way to summarize a nuclear verdict is an award that is significantly higher than would be expected given the injuries in the case, compared to any particular threshold.’ This seems to be an accurate reflection of broad usage.
Nuclear verdicts are increasing – and so is their impact
Nuclear verdicts are on the up both in terms of the number and the size of verdicts.
The first Nuclear Verdict was issued in 2011, when $40 million was awarded to victims of a truck crash in Cobb County, GA caused by driver negligence. This included significant potential future earnings of one victim in particular: a prominent businessperson. Since then there have been numerous cases where victims’ families have been awarded tens of millions of dollars against trucking companies due to either driver or company negligence. The largest to date is over $280 million in 2016.
Crunching the data from the ATRI Litigation Database (ALD) tells us that the mean verdict for the 14 years from 2006-2019 was $3.1 million. But over the last few years, the numbers seem out of control. The average size of verdict increased from $2.31 million in 2010 to $22.3 million in 2018.
This phenomenal increase is cause for concern for logistics operators and carriers across the USA and many have questioned whether the rise is out of control.
Increasing large-scale verdicts – over $1 million
However, it is not just the headline multi-million-dollar nuclear verdicts affecting the trucking industry. Many other large (or ‘runaway’) verdicts have been catastrophic for businesses and forced established carriers out of business owing to bankruptcy or unaffordable insurance premiums.
Verdicts with awards over $1 million have increased dramatically. Analysis of the same data from 2006-2019 from the ATRI Litigation Database (ALD) demonstrates the first five years of the data showed 26 cases over $1 million but that rose to nearly 300 cases over the last five years.
Year on year numbers of $1 million-plus verdicts increased from only four in 2006 to a peak of over 70 in 2013.
It’s no surprise that these rocketing figures have a knock-on effect on insurance premiums for the whole industry.
Can Nuclear verdicts be avoided?
Avoiding Nuclear and large-scale business-ending verdicts should be at the forefront of every carrier’s mind and top of their priority list. In the rest of our series on safety in US Trucking, we’ll look at Operation Safe Driver Week and in How to improve Truck safety and avoid Nuclear Verdicts, explore how carriers and logistics firms can minimize the risk of nuclear verdicts and avoid their catastrophic impact on business.