A Look at Big Jury Verdicts

— -- Remember Stella Liebeck, better known as the woman who won millions of dollars after a cup of hot McDonald’s coffee spilled on her lap?

A few years ago, her jury award became fodder for every tort reform advocate in the country. A seemingly incredulous public declared the case a perfect example a court system gone awry — too many people bringing cases and too many juries handing out big punitive damage awards.

But what got little attention was the fact that Liebeck didn’t end up with the initial windfall. A court reduced the verdict and the parties evenutally settled for less than $640,000. Some argued that was still too much, while others maintained it was just compensation for being burned and brought about worthwhile change — McDonald’s did end up lowering the coffee temperature to avoid future burns.

Read on as ABCNEWS.com takes a look at jury awards and the debate over whether they’re a useful tool for change.

What’s the Damage?

How much is an arm worth? An eye? How about two legs and hearing in one ear?

Those are the questions juries must answer when deciding what compensatory damages — money to compensate for pain, suffering, lost earnings and bills — to award. It’s a peculiar algebraic exercise where people’s lives and limbs do not have fixed value.

Plaintiff lost her voice in a botched surgery? She’ll get more money if she’s an opera singer than a computer programmer. A child and a CEO both killed in a car crash? Jurors may find that the child’s life is worth less monetarily than the highly paid executive.

While compensatory damages are always part of the verdict, the real money comes from punitive damages, awards given to punish bad behavior. The amount usually depends on the wealth of the losing party. This is “hit ’em where it hurts” time. The more egregious the behavior is judged to be, the bigger the award. Jurors often sift through financial statements and earnings reports to come up with a number they think will keep the defendant from ever doing wrong again.

The Case For Big Verdicts

Ask Shanin Specter where you get justice and he’ll tell you it can be found in a check.

The Philadelphia lawyer won a whopping $151 million verdict against Ford Motor Company for the death of a 3-year-old boy, who was killed when his father’s parked truck rolled downhill and ran him over.

Specter says the jury was trying to send a message to Ford to “be more careful.” But do these awards work to send big corporations like Ford a message?

“I think it’s the most effective thing that can be done,” says Specter. “The civil justice system is America’s best protection against misconduct.”

Steven Pegalis, Pegalis, a New York lawyer who has won large damage awards, agrees.

“The idea is it should act as a deterrent,” he says. “The reason it works so well is that so many companies and people think about it, talk about it — especially big companies.”

The Case Against Big Verdicts

From talk shows to editorial pages, opponents of big punitive awards were up in arms after an Alabama jury awarded $581 million in punitive damages to a family who claimed they were overcharged by $1,200 for two satellite dishes.

Critics said damage awards are growing out of control and are calling for judgment caps.

Sherman Joyce, president of the American Tort Reform Association, says there should be limits on what the monetary punishment can be for certain types of actions.

“If you go in and rob the local convenience store, you can’t be put in prison for life,” he says. He says there should be similar limits for civil cases. “Punitive damages [should be used for] flagrant, conscious, intentional wrongdoing.”

Fredic Goldfein, a medical malpractice defense lawyer in Philadelphia, agrees that there should be caps on punitive damages, and says there should be more uniformity in the awards.

Experts also say that jurors are influenced by the value of the dollar in society, and may take into consideration the large awards that they hear about in the media when deciding their cases.

“I think that the jackpot justice climate influences what they do,” says Davis Carr of the Defense Research Institute in Alabama. “In the last 10 years, the jury pool — at least in the South — has been desensitized.

Verdict Is Just Half the Battle

Sometimes the numbers are so big, you can’t help but laugh.

Four million dollars to a man who bought a used BMW that was painted to look new; $581 million to a family who was overcharged for television satellite dishes.

But by the time those headlines were lining birdcages, the BMW owner had cashed a check for only $50,000. Legal experts say the $581 million satellite dish verdict will plunge to $1 million.

Juries award such atmospheric damages when they think a company has acted badly or shown a lack of concern for the consumer. Sometimes the numbers seem justified, like the $265 million a South Carolina jury awarded a family whose 6-year old got tossed out the back of a Chrysler minivan when the door latch failed.

“By their very nature, punitive damages are designed to inflict pain on the wrongdoer, and we consider that to be sound public policy,” says Elizabeth Story, of the American Insurance Association.

But the same justice system that allows juries to award millions in damages also provides a mechanism for cooler heads to prevail.

“I do believe in the jury system but every now and again, there is an aberration,” Chrysler lawyer Wade Logan recently argued on appeal before a U.S. district court.

The BMW judgement was cut in half by the Alabama Supreme Court, and then tossed out altogether by the U.S. Supreme Court, which called it “grossly excessive.”

In fact, that case prompted the high court to issue “guideposts” instructing lower courts to consider the “degree of reprehensibility” of the damage when considering excessive awards.

Indeed, it’s so common for excessive awards to shrink that a recent $760 million verdict for 38 Lockheed Corp. employees hurt by chemicals didn’t even faze defense attorneys. Boasted one, “Experience shows that punitive damage awards returned under facts similar to this case don’t stand up on appeal.”

The verdicts have consumer advocates cheering, even though they actually give tort reform advocates a boost. “It certainly highlights the need for reform,” said Kathy Bowden, of the Alabama Civil Justice Reform Committee, after the satellite dish verdict.

But the most startling numbers of all might be the ones a RAND Institute for Civil Justice study recently turned up: from 1984-1995, punitive damages were awarded in less than 4 percent of verdicts in 15 jurisdictions. “It’s a myth created by headlines,” sniffs Lawrence Levine of the McGeorge School of Law.