What is a nuclear power verdict?
A nuclear verdict refers to exceptionally high jury awards – generally those exceeding $10 million. Such rulings have become increasingly common over the past decade. In fact, the National Law Journal reported that the average jury award among the top 100 US judges more than tripled between 2015 and 2019, soaring from $64 million to $214 million. Additionally, 30% more judgments exceeded the $100 million threshold in 2019 compared to 2015.
A variety of factors have contributed to this trend, including increasing funding for litigation, eroding tort reform, and most notably, deteriorating public sentiment toward corporations. Amid growing corporate mistrust, companies have not only been expected to meet higher standards in their operations, but have also been held more accountable for their misconduct. After being sued and taken to court, companies have often encountered juries sympathetic to plaintiffs. Exacerbating this problem, there is a growing perception that companies (especially large ones) can always afford the cost of damages. This means that juries are likely to have fewer reservations when awarding substantial damages to plaintiffs, resulting in nuclear verdicts.
Nuclear judgments can have significant consequences for companies of all sizes and sectors, causing lasting reputational damage, causing underinsurance concerns and causing large-scale financial devastation. That̵7;s why it’s important for businesses to better understand these judgments and how to prevent them. This case study summarizes a recent nuclear ruling, describes factors that led to the ruling, highlights associated compliance considerations, and provides related risk mitigation measures.
$1 billion in car loss
In August 2021, after five days of testimony and four hours of deliberation, a Nassau County jury awarded $100 million to the victim’s parents for pain and suffering related to their loss and $900 million in punitive damages against AJD Business Services – contributing to a total verdict of 1 billion dollars. These damages significantly exceeded AJD Business Services’ $1 million insurance limit.
In September 2017, an 18-year-old college student at the University of North Florida was killed in a motor vehicle accident while driving on Interstate 95. At the time of the crash, the victim had been held up in stationary traffic for more than an hour. This traffic backup was caused by a truck driver employed by AJD Business Services who was distracted by his phone and ran into another vehicle, which then flipped his truck and ignited a fire. Further investigation revealed that the truck driver lacked the necessary license to drive a commercial vehicle and had been involved in several other accidents in the past – information that AJD Business Services did not know because the company did not conduct a background check before hiring him.
While stopped in traffic due to the accident, the victim was fatally struck by another truck driver employed by Kahkashan Carrier Inc. The truck driver had the vehicle’s cruise control set at 70 mph and did not brake until shortly before crashing into the victim. Further investigation revealed that the truck driver was on his 25th hour behind the wheel when the crash occurred, significantly exceeding the maximum driving time allowed under Federal Motor Carrier Safety Administration (FMCSA) Hours of Operation (HOS) regulations. The truck driver also could not read English, which prevented him from understanding electronic warning signs in the miles leading up to the traffic jam.
In the aftermath of the fatal crash, the victim’s parents filed a lawsuit against AJD Business Services and Kahkashan Carrier Inc. for their respective roles in the incident. In August 2021, after five days of testimony and four hours of deliberation, a Nassau County jury awarded $100 million to the victim’s parents for pain and suffering related to their loss and $900 million in punitive damages against AJD Business Services – contributing to a total verdict of 1 billion dollars. These damages significantly exceeded AJD Business Services’ $1 million insurance limit. According to the FMCSA, both carriers are no longer active.
Factors that led to the verdict
The truck driver employed by AJD Business Services was looking at his phone when he crashed into another vehicle, causing the initial traffic backup. This incident is an example of distracted driving. According to the Centers for Disease Control and Prevention, distracted driving refers to any activity that can divert a motorist’s attention from the road. These distractions can be visual (eg, staring at navigation systems), manual
(e.g. texting) or cognitive (e.g. daydreaming). Regardless of the type of distraction, distracted driving is a serious safety hazard that contributes to a significant number of accidents on the road. In fact, the National Highway Traffic Safety Administration reported that more than 2,800 people are killed and 400,000 are injured in crashes involving a distracted driver each year—which equates to roughly eight deaths and 1,095 injuries per day.
AJD Business Services choosing not to do a background check on its truck driver and Kahkashan Carrier Inc. hiring a driver who couldn’t read important road signs — hiring decisions that both played a role in the fatal incident — constitute negligent hiring. Such hiring means that a company does not exercise adequate care in hiring, retaining or supervising its personnel, resulting in “reasonably foreseeable injury” to another party. In other words, a company could be held liable if it knew or should have known (if it had taken appropriate steps) that an employee was unfit for his role at the time of employment, and this unfitness results in illness, injury or other damage to another party .
This nuclear ruling also poses several compliance considerations, particularly in enforcing FMCSA regulations. Here’s a breakdown of those considerations:
Restrictions on handheld mobile phones
FMCSA prohibits the use of hand-held cell phones by drivers of commercial motor vehicles (CMVs). This prohibition includes using at least one hand to hold a cell phone while making a call, making calls on a cell phone by pressing multiple buttons, and reaching for a cell phone in a manner that requires significant maneuvering or movement from a seated position behind the wheel.
According to FMCSA’s HOS rules, CMV drivers carrying property can drive no more than 11 hours at a time after 10 consecutive hours off and cannot drive past the 14th consecutive hour after coming on duty. Passenger-carrying CMV drivers may drive no more than 10 hours at a time after eight consecutive hours off and cannot drive past the 15th consecutive hour after coming on duty.
FMCSA requires all CMV drivers to be able to speak and read the English language sufficiently to communicate with the public, understand road signs, respond to law enforcement officers, and complete driving and vehicle related reports.
Risk mitigation measures
To avoid nuclear verdicts similar to the one arising from this case, companies should follow these risk mitigation tactics:
Minimize distracted driving problems.
Educate employees on the main types of distractions behind the wheel and how to avoid them. Additionally, create a distracted driving policy that prohibits various activities on the road – including personal grooming, eating, drinking, reading, fiddling with the radio or GPS, and using hand-held devices. Have employees review and sign this policy to confirm they understand it. Be sure to apply and update this policy as needed. Consider providing positive reinforcement (eg, company-wide recognition) to those who uphold this policy. It may even be useful to implement some forms of vehicle technology, such as telematics and in-cab video cameras, to further monitor employees and alert them to potentially distracting behaviors behind the wheel.
Prevent careless letting.
Implement vigilant hiring processes for all positions. These processes should include job candidates completing detailed applications, verifying their employment and education history, contacting listed references, utilizing in-depth interviews, and conducting adequate background checks. Note that additional control steps may be necessary for high-risk jobs. For example, when filling CMV driver positions, be sure to review candidates’ motor vehicle records, required licenses, and accident history. When hiring employees, provide them with the appropriate training and supervision for their success. Conduct necessary reviews to document employee driving performance over time and take any complaints against staff seriously.
Regularly evaluate driving policies and procedures to maintain compliance with FMCSA regulations as well as any applicable federal, state and local driving and employment laws (especially related to negligent rental). Consult legal counsel for additional compliance assistance.
Ensure proper coverage.
In this increasingly litigious environment, it is important to purchase adequate insurance. Contact one of our trusted insurance advisors to discuss specific coverage needs.