What is a nuclear power verdict?
Nuclear verdicts refer to exceptionally high jury awards – generally those exceeding $10 million. Such convictions, such as negligent hiring, retention, and loss of supervision, 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.
$7.34 billion Negligent hiring, retention and supervision loss
In December 2019, an 83-year-old woman was robbed and was killed by a Charter Communications (aka Spectrum) cable technician at her home in Texas. When The victim’s family went to check on her for the next few hours, they found her body. The technician was arrested later that month and sentenced to life imprisonment for capital murder. Following the arrest of the technician prompted the victim’s family to file a lawsuit v. Charter Communications and argued that the company’s negligence contributed to the fatal incident.
In December 2019, an 83-year-old woman was robbed and killed by a Charter Communications (aka Spectrum) cable technician in her home in Texas. The day before the fatal incident, the technician responded to a service call at the victim’s home while on call. A day later, he became aware that the victim was still having service issues and used his key card to secure a company-owned vehicle and drive it to her home. Although the technician was off duty at the time, he wore his work uniform and returned to the victim’s home claiming he was called to fix her ongoing service issue.
Once inside the victim’s home, the technician attempted to steal her credit card from her purse; however, she caught him red-handed. In response, the technician used a company utility knife to stab the victim to death. From there, the technician took the victim’s credit cards and used them to make a series of fraudulent purchases. When the victim’s family went to check on her in the next few hours, they found her body. The technician was arrested later that month and sentenced to life in prison for capital murder.
After the technician was arrested, the victim’s family filed a lawsuit against Charter Communications, alleging that the company’s negligence contributed to the fatal incident. Specifically, in the midst of a pretrial motion, the victim’s family’s legal team argued that Charter Communications failed to verify the technician’s employment history before hiring him—a step that would have revealed he misrepresented his work history. Court documents also showed the technician was on a six-month disciplinary action plan at the time of the incident and had previously written to his supervisors regarding “severe distress over financial and family issues.”
Throughout the trial, several Charter Communications employees testified that, although he was off duty at the time, the technician’s crimes occurred within the scope of his employment. Additionally, those employees described a pattern of thefts and similar crimes committed by company personnel against customers over the past several years — more than 2,500 incidents in all — that Charter Communications declined to investigate or report to authorities.
Between June and July 2022, a Dallas County jury found the company 90% responsible for the victim’s death, arguing that its systemic safety failures played a role in the fatal incident. The verdict also found the company guilty of using forged documents in an attempt to prevent a jury from hearing the lawsuit. As a result, Charter Communications was held liable for $7 billion in punitive damages and $337.5 million in compensatory damages, for a total of nearly $7.34 billion in total damages.
Despite this extensive verdict, the company argued that the technician’s crimes were not foreseeable and therefore was not responsible for the fatal incident. “The responsibility for this horrible act rests solely with [the technician], who was not on duty, and we are grateful that he is serving life in prison,” Charter Communications said in a statement. Although the company was unable to appeal the jury’s decision, a judge eventually reduced the total damages to $1.15 billion in September 2022, largely based on precedent from previous rulings that established a less acceptable ratio of punitive to compensatory damages.
Factors leading to conviction – negligent employment, retention and supervision
Looking more closely at this case, the main factors contributing to the nuclear verdict were negligent leasing, retention, and monitoring. Such negligence means that a company does not exercise adequate care in hiring, retaining or supervising its personnel, which results in reasonably foreseeable harm to another party.
In other words, if a company knew or should have known (if it had taken appropriate steps) that an employee was unfit for their role when it hired them, and this unfitness results in illness, injury or other harm to another party, the the business will be held responsible for such damages. Similarly, if a company realized or should have realized during a worker’s employment that they posed a foreseeable risk to others and failed to discipline or terminate that worker before they injured another party, the company may be held liable for the damages associated with this. Additionally, if a company neglected to reasonably control or supervise an employee’s actions, and this lack of supervision enabled the employee to injure another party, the company may be held liable for the related damages.
In the context of this ruling, Charter Communications’ failure to verify the technician’s work history may constitute negligent employment, while the company’s failure to act upon the employee’s written pleas regarding his financial and family problems may indicate negligent retention. Further, the company’s history of prior crimes committed by its employees against customers and its refusal to investigate or report these incidents can serve as evidence of both negligent retention and surveillance.
This nuclear power judgment also poses certain compliance considerations related to negligent leasing, retention and monitoring. It is important to note that the laws regarding such negligence vary between states. Given that this particular ruling took place in Texas, here is an overview of the elements the state uses to establish negligent hiring, retention and workplace supervision:
- The employer must have a legal obligation to hire, manage and retain competent employees. This may involve the following measures:
- Verification of applicants’ work qualifications, skills and experience
- Conduct background checks on applicants
- Provide routine training to employees
- Supervise and review employees within their roles
- The employer’s failure to exercise the aforementioned duties must be a direct and foreseeable cause of injury to another party.
Risk mitigation measures
To avoid nuclear verdicts similar to the one arising from this case, companies should follow these risk mitigation tactics:
- Minimize exposures to negligent hiring, retention and supervision. 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. When hiring employees, provide them with the appropriate training and supervision to be successful in their roles. Use periodic, documented reviews to better measure employee job performance over time and take potential employee complaints seriously.
- Ensure. Regularly evaluate workplace policies to maintain compliance with negligent hiring, retention and supervision laws and all other applicable federal, state and local regulations. Consult legal counsel for additional compliance assistance.
- Ensure proper coverage. In this increasingly litigious environment, it is important to purchase adequate insurance. Contact a trusted insurance specialist to discuss specific coverage needs.
Contact one of our trusted insurance advisors to discuss specific coverage needs, so you can avoid a nuclear conviction – regarding negligent hiring, retention and loss of supervision.