Some Important Things that Trucking Companies Should Know About Runaway Juries and ‘Nuclear Verdicts' Part 1 of 3

In the past five years, there were nearly 300 court cases resulting in jury verdicts over $1 million against trucking fleets, according to a new American Transportation Research Institute analysis made public last June.

From 2010 to 2018, the size of court verdict awards against trucking companies increased 51.7% a year – while standard inflation and healthcare costs grew 1.7% and 2.9%, respectively.

It confirmed what many truckers are seeing: Large verdicts against motor carriers are increasing dramatically both in number and size.

A study found that nuclear verdict cases are up 300%, causing insurance rates to skyrocket, forcing carriers to shut their doors.

According to the study by the American Transportation Research Institute (ATRI) Research Advisory Committee (RAC), nuclear verdicts against trucking companies are often over $10 million settlements. They typically stem from cases involving serious crashes that resulted in injury and/or death.

As more and more “nuclear verdicts” occur, the more the trucking industry will see insurance rates increase.

Nuclear verdicts first began in 1994 when a jury awarded a $2.7 million verdict in punitive charges for selling scalding coffee. While the amount was reduced after the appeal and then settled for an undisclosed amount, the large verdict captured America’s attention and became the standard.

Nuclear Verdicts

In 2006 only four verdicts were over $1 million. However, in 2013 there were over 70 cases that were $10 million or higher.

For trucking, that standard came in 2011, when a $40 million verdict was awarded to victims of a crash. In this case, a truck driver blew through a stop sign and struck a passenger vehicle, killing two passengers and severely injuring another.

One of the victims was a “prominent member of the business community, was calculated to have a future lost income of $15 million to $42 million for a business venture that had not begun.” Once the case was over, the jury deliberated for five hours, and then awarded $40 million to the plaintiff.

Two years later, in 2012, a drive shaft broke off a truck and went through the windshield of a car. The driver of the car was killed. “The court that heard this case found that while the driver was not negligent, the company, Heckmann Water Resources, was negligent. The court initially handed down a record verdict of $281.6 million, which was reduced on repeated appeals, to $105.2 million, and eventually settled for an undisclosed amount,” ATRI states.

A 2014 crash near Odessa, Texas led to one of the largest settlements in the history of trucking.  A truck driver was driving under the posted speed limit in inclement weather when a car traveling in the opposite direction lost control, went through the media, and veered into the truck’s path.

Please note that the trucking company was not at fault, but the outcome was based on the “Deep Pockets Liability Theory”. In this, damages that are gotten from codefendants based on who can pay and not who was negligent. As a result of the collision, a 7-year-old was killed, and three others were injured, one with traumatic brain injuries. The family sued the carrier and were awarded $90 million in 2018.

To date, the largest verdict for the trucking industry came from a truck-involved crash in Alabama in 2016. In that crash, the driver reportedly fell asleep and crossed the centerline and struck an SUV head on. Judy Madere, 58 years old, Trudy Herbert, 58 years old, Carrie Jones, 23 years old, along with Jones’ two children, 7-year-old Trinity and 4-year-old Jackson, all died in the crash. The driver and carrier were found liable and ordered to pay $280 million.

In 2019, the ARTI ranked the “Impact of Large Verdicts on the Trucking Industry” as one of its top research priorities, because at the time, several motor carriers had shut their doors, citing rising insurance premiums as a factor.

One carrier, who faced such as verdict, said that they were forced to shut their doors because their insurance rates increased more than 100% in a year — from $340,000 to 700,000 for a single year. 

Of the 451 cases ATRI analyzed, the average verdict was approximately $3.1 million. Over the last 6 years, the number of cases with verdicts over $1 million increased 335%. The number of verdicts greater than $1 million increased by 300%.

Rising Insurance Premiums

ATRI says that insurance costs are also on the rise. From 2017 to 2018, insurance increased 12%. Over the last five years, insurance has increased 18.3%.

Some new or small carriers are reporting a 35 to 40% annual increase!

According to the ATRI’s data, small carriers and owner operators are paying “pay out-of-pocket considerably more on a per-unit basis than larger fleets.”

“Not surprisingly, insurance rates have increased at similar rates as litigation awards. Over the last 2 to 5 years, commercial truck insurance premiums have increased annually between 35 percent and 40 percent for low- to average-risk carriers according to the expert surveys,” ATRI states.

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