oversight

Product Liability: Verdicts in Arizona for 1983-85

Published by the Government Accountability Office on 1990-10-25.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                       United States General Accounting Office   .'_, . "
                       Report to Congressional Committees
    GAO

.   October1990
                       PRODUCT LIABILITY
                       Verdicts in Arizona for
                       1983-85
                  It




    GAO/1fRD.91·7
GAO   United States
      General Accounting Office
      Washington, D.C. 20548

      Human Resources Division

      B-240754

      October 25, 1990

      The Honorable Richard H. Bryan
      Chairman, Subcommittee on Consumer
      Committee on Commerce, Science,
        and Transportation
      United States Senate

      The Honorable Doug Walgren
      Chairman, Subcommittee on Commerce,
        Consumer Protection, and Competitiveness
      Committee on Energy and Commerce
      House of Representatives

      In the mid-1980s, businesses and other organizations reported problems
      obtaining adequate, affordable liability insurance. In response, nation-
      wide attention was focused on the role of litigation, especially trends in
      the frequency and size of damage awards in court cases, in contributing
      to problems concerning the cost and availability of liability insurance.
      At the same time, the Congress and state legislatures debated whether
      reforming the tort system (the legal rules and judicial procedures for
      compensating injured parties) would remedy the insurance problems.

      Last year, GAO issued Product Liability: Verdicts and Case Resolution in
      Five States (GAO/HRD-89-99, Sept. 1989) to assist the Congress in its delib-
      erations on uniform product liability law at the federallevel.1 Currently,
      however, each state establishes its own legal standards for product lia-
      bility cases. Reform advocates, therefore, have focused much of their
      efforts on changing state laws. The resultant activity in the states has
      been widespread, but has varied considerably from state to state.

      In general, policymakers and researchers have noted a persistent lack of
      information, especially at the state level, on awards and the bases of
      liability. This lack of information makes both congressional and state
      deliberations about needed reforms difficult. To facilitate these delibera-
      tions, for four of the five states reviewed in our earlier report, we are
      providing detailed state-level information on verdicts in product liability



      I Manufacturers involved in interstate commerce have contended that as a result of variations in state
      laws. they are being held to different liability rules in different states, further complicating estima-
      tion of risk for insurance purposes. We found that federal reforms, if sufficiently clear, would make
      the application of product liability law more uniform in the 50 states. The impact of such federal
      reforms would, however, depend on the specifics of the legislation enacted.



      Page 1                                       GAO/HRI).91-7 Product Liability Verdicts for Arizona
             8-240754




             cases. 2 We are addressing these reports to you because the Subcommit-
             tees you chair have recently held hearings and the full Committees have
             reported favorably the proposed legislation to establish uniform product
             liability laws. 3 In this report, we present information for Arizona.


             Generally, proposed reforms have been designed to remedy alleged
Background   problems in the tort system, including increasingly large awards and
             high litigation costs. Defendants have claimed that the basis of liability
             has shifted from liability based on intent or negligence toward a de facto
             no-fault liability system financed entirely by manufacturers. Data limi-
             tations have fueled debate on (1) the magnitude of these problems and
             (2) whether reforms would alleviate them.

             In our earlier report on product liability, we analyzed data on (1) the
             frequency and size of awards and payments, (2) liability standards used
             to decide cases, (3) posttrial activities and adjustments to awards,
             (4) time and cost of litigation, and (5) potential effects of federal reform
             measures. We collected these data for cases in Arizona, Massachusetts,
             Missouri, North Dakota, and South Carolina.' Not surprisingly, we found
             significant differences from state to state.

             We concluded that, in general, (1) damage awards in the five states were
             strongly associated with severity of the injury and, presumably, the
             underlying economic loss and (2) liability was still based largely on neg-
             ligence. We found that appeals and posttrial settlement negotiations
             reduced the size of the majority of awards over $1 million. Appellate
             courts also eliminated many punitive damage awards (which are
             designed to punish flagrant or intentional wrongdoing and to deter
             others from similar conduct). These activities, however, added to the
             substantial cost and time required to resolve claims.

             2We are not issuing a separate report for one of the states, North Dakota, because of the small
             number of cases in that state

             3In May 1990, the Committee on Commerce, Science, and Transportation reported S. 1400, the
             Product Liability Reform Act of 1989, favorably to the Senate. In June 1988, the Committee on
             Energy and Commerce reported H.R. 1115, the Uniform Product Safety Act of 1988, favorably to the
             House. In December 1987, the Subcommittee on Commerce, Consumer Protection, and Competitive-
             ness had approved that bill.

             'We based our selection of states on (1) whether product liability cases could be identified without
             manually searching thousands of case files, (2) the amount of information already published on
             product liability litigation in the jurisdictions, and (3) the relative costs associated with obtaining the
             information. The five states offer a mix in terms of region of the country, degree of urbanization,
             numbers of manufacturers and manufacturing employees, and tort laws (see Product Liability: Ver-
             dicts and Case Resolution in Five States, pp. 76-77).



             Page 2                                         GAO;1lRD-91-7 Product IJabllity Verdicts for Arizona
                       B-2407M




Product Liability in   Tort reform advocates do not consider the state of Arizona to be a
                       problem state in terms of excessive damage awards or inappropriate
Arizona                bases of liability. Little effort, therefore, has been expended to reform
                       product liability law in the state. No bill specifically targeting product
                       liability has been proposed.

                       Some efforts have been made, however, to change personal injury law;
                       such changes would affect the large majority of product liability cases
                       since these cases are usually brought for personal injury (that is, bodily
                       harm as opposed to contracts, real property, or property damage cases).
                       Most important, in 1987, the legislature abolished the doctrine of joint
                       and several liability in personal injury cases, except in cases of inten-
                       tional wrongdoing or hazardous waste. Under the doctrine, a defendant
                       may be held responsible for all of a plaintiff's damages even though
                       some degree of fault is attributable to others. The plaintiff cannot collect
                       more than the total amount of damages awarded, but may collect all
                       damages from any defendant(s) found liable. With abolition of the doc-
                       trine, each defendant is now responsible for paying only his or her share
                       of responsibility for the injury.5

                       In several respects, our findings in Arizona were distinct from those in
                       the other four states we reviewed and in other studies. 6 First, the
                       average award in Arizona was $1.5 million, double the average of
                       $685,000 for the other four states combined. Second, Arizona and two of
                       the other states had a high rate of punitive damage awards relative to
                       the remaining two states and to jurisdictions reported on in other
                       studies. 7 Finally, cases in Arizona were appealed less often than
                       average; posttrial reductions to awards of compensatory damages,
                       designed to replace the losses caused by injuries, were smaller.



                       5In 1986, a general referendum failed to abolish the constitutional prohibition against any limitation
                       on damage awards in personal injury cases.

                       6See Mark Peterson, Syam Sarma, and Michael Shanley, Punitive Damages: Empirical Findings (Santa
                       Monica, Calif.: The Rand Corporation, The Institute for Civil Justice, 1987) and Stephen Daniels,
                       "Punitive Damages: The Real Story," ABA Journal (Aug. 1, 1986).

                       7In our 1989 report, 25 percent of awards in Arizona and South Carolina included punitive damages,
                       as did 18 percent in Missouri. In contrast, only one award in North Dakota included punitive damages
                       and no punitive damages were awarded in Massachusetts (see Product Liability: Verdicts and Case
                       Resolution in Five States, p. 29). In another study, punitive damages were awarded in only six
                       product liability cases in Cook County and San Francisco in the 25-year period ending in 1984 (see
                       Peterson, Sarma, and Shanley, Punitive Damages: Empirical Findings, pp. 12-15). Only 2 of 32 juris-
                       dictions in another study showed a rate of punitive damage awards as high as Arizona (see Daniels,
                       "Punitive Damages: The Real Story," pp. 60-63).




                        Page 3                                      GAO/HRI>-91-7 Product LIability Verdicts for ArIzona
                80240754




                In this report, we provide information for 59 product liability cases that
Scope and       were resolved through verdicts in 1983-85 in 9 of Arizona's 15 state
Methodology     superior courts and in the U.S. District Court (federal court) in Arizona.
                Of the 59 cases we studied, 56 were heard in state courts. The 9 state
                superior courts cover 88 percent of the state's population and nine coun-
                ties, encompassing the largest urban counties of Maricopa (including
                Phoenix) and Pima (including Tucson). We describe

              • the accidents giving rise to product liability cases, the parties to the
                cases, the allegations and demands contained in plaintiffs' complaints,
                and the amount of time spent at each stage of cases - from the acci-
                dents to final court actions (see app.I);
              • the percentage of cases in which defendants were found liable, the bases
                of liability, and the amount of compensatory and punitive damages
                awarded (see app. II); and
              • the frequency of posttrial adjustments to awards and actual payments
                made to plaintiffs after verdict (see app. III).

                For a discussion of the methodology used to identify cases and collect
                data, see appendix IV.


                We are sending copies of this report to members of Congress, state legis-
                lators and officials, and other interested parties. The report is also avail-
                able on request. If you have any questions, please call me on (202) 275-
                6193. Other major contributors are listed in appendix V.



                 ~7,2J~
                Joseph F. Delfico
                Director, Income Security Issues




                Page 4                           GAO/1fRD.91·7 Product Liability Verdicts for Arizona
Page 5   GAO/IJRD.91-7 Product Liability Verdicts for Arizona
Contents


Letter                                                                                                    1

Appendix I                                                                                                8
Cases That Went to
Verdict: Accidents,
Parties, Demands, and
Processing Time
Appendix II                                                                                              13
Verdicts: Rate and Size
of Awards
Appendix III                                                                                             16
Payments: Effects of
Statutes and Posttrial
Activities
Appendix IV                                                                                              19
Methodology
Appendix V                                                                                               21
Major Contributors to
This Report
Tables                    Table 1.1: Large Minority of Accidents Involved                                  8
                              Machinery
                          Table 1.2: Majority of Injured Parties Suffered Personal                         8
                              Injury
                          Table 1.3: Typical Injured Party an Adult Male, Married,                         9
                              and Working
                          Table 1.4: Higher Proportion of Plaintiffs Than                                  9
                              Defendants Went to Verdict
                          Table 1.5: Majority of Plaintiffs Who Went to Verdict                           10
                              Were Those Harmed by Products




                          Page 6                         GAOjHRJ).91-7 Product Liability Verdicts for Arizona
         Contents




         Table 1.6: Majority of Defendants Who Went to Verdict                           10
             Were Manufacturers
         Table 1.7: Most Plaintiffs Resided in Arizona and Most                          10
             Defendants Were Headquartered in Other States
         Table 1.8: Monetary Demands Increased With h\iury                               11
             Severity
         Table 1.9: Neligence the Predominant Basis of Liability                         11
             Claimed by Plaintiffs
         Table ILl: Defendants Found Liable in Just Under One-                           13
             Half of Cases
         Table II.2: Liability Rates for Key Defendant Types                             13
             Similar
         Table II.3: Extremely Large Awards Accounted for                                13
             Majority of Total Amount Awarded
         Table II.4: Total Award Amount for Compensatory and                             14
             Punitive Damages Varied by Type and Severity of
             Injury
         Table II.5: Compensatory Damages Varied by Type and                             14
             Severity of Injury
         Table II.6: Punitive Damages Large                                              15
         Table II.7: Negligence a Basis of Liability in 3 of Every 4                     15
             Cases in Which Defendants Found Liable
         Table II1.l: Defendents' Payments to Plaintiffs May Differ                      16
             From Initial Awards as a Result of Statutory Limits
             and Posttrial Activities
         Table IlI.2: Adjustments to Awards by Trial Court Judges                        16
             Reduced the Total Amount Awarded by 16 Percent
         Table III.3: Appeals More Frequent in Cases Plaintiffs                          17
             Won Than Those Defendants Won
         Table IlI.4: Appeals Rate Varied by Size and Type of                            17
             Award
         Table II1.5: Net Effect of Posttrial Actions Reduced                            18
             Payments by 40 Percent
         Table II1.6: Cases With Reduced Awards Most Often                               18
             Resolved by Posttrial Settlements

Figure   Figure Ll: On Average, Cases Took 2-1/2 Years to Reach                          12
             Verdict and Appeals 1 Year to Resolve




         Page 7                          GAOjHRI)-91·7 Product IJabllity Verdiets for Arizona
Appendix I

Cases That Went to Verdict: Accidents, Parties,
Demands, and Processing Time

Table 1.1: Large Minority of Accidants
Involved Machinery                       Product type                                                                  Number            Percent
                                                                                  ----~~~~~~.         ~~~-




                                         Machinery
                                                -:----'-~~~
                                                                                                                              26              43
                                         Vehicle                                                                                8             13
                                         Ladder                                                                                 4                  7
                                         Drug                                                                                   4                  7
                                                 ~~~~-




                                         Othera                             ~.~-~~-~~~--
                                                                                                                              19                31
                                         Total                                                                                61 b             101 b
                                         aThlS category Includes a variety of products. such as food and chemical substances.

                                         bBecause 2 cases involved multiple products, (1) the total number of products exceeds 59, the total
                                         number of cases, and (2) the percentages total more than 100.


Table 1.2: Majority of Injured Parties
Suffered Personal Injury                 Injury type                                                                   Number            Percent
                                         Personal injury:
                                           Permanent partial disability
                                                                                                           ----~--cc-
                                                                                                                              33                   56
                                           Permanent total disability                                                          8                   14
                                                                        .   -~-   ~--.~   ---

                                           Temporary partial disability
                                                                 .--
                                                                                                                               5                    8
                                           Temporary total disability                                                           4                   7
                                           All personal injury                                                                50                   85
                                         Death                                                                                  6               10
                                                                                  ~   ----~---~            ~---        -~~-




                                         Property damage                                                                        5                9
                                         Total                                                                                61 8             1048
                                         aBecause 2 cases each involved 2 types of Injury, (1) the number of injuries IS more than 59, the total
                                         number of cases, and (2) the percentages total more than 100. The first case was personal injury With
                                         death, the second, property damage




                                         PageS                                            GAO /HRD-91-7 Product Liability Verdicts for Arizona
                                             Appendix I
                                             Cases That Went to Verdict: Accidents,
                                             Parties, Demands, and Processing Time




Table 1.3: Typical Injured Party an Adult
Male, Married, and Working                   Characteristic                                                                    Number
                                             Sex
                                             Male                                                                                     48                    66
                                             Female                                                                                    22                   30
                                             Not applicable (businesses)                                                                3                    4
                                             Total injured parties                                                                    73               100
                                             Age category"
                                                                                                                                     ---------
                                             Children (1-17 years old)                                                                 10                   14
                                             Adults (18+ years old)                                                                    60                   82
                                             Not applicable (businesses)                                                                3                    4
                                             Total injured parties                                                                     73               100
                                             Marital status (adults only)
                                             Marned                                                                                    26                   43
                                                   - - - - - -

                                             Single                                                                                    13                   22
                                             Divorced, separated, or widowed                                                            2                    3
                                             Not specified                                                                             19                   32
                                             Total adult inJured parties                                                               60               100
                                             Employment status (adults only)b
                                             Employed full-time                                                                        43                   72
                                             Employed part-time                                                                         3                    5
                                             Not working                                                                                6                   10
                                             -.-----~-             ---

                                             Not specified                                                                              8                   13
                                             Total adult injured parties                                                               60               100
                                             aOn the baSIS of data for 81 percent of the Injured parties, the average age was 36 years old

                                             bin 46 percent of the cases, the Injuries occurred on the job.


Table 1.4: Higher Proportion of Plaintiffs
Than Defendants Went to Verdict                                                                             Number                     Percent going to
                                             Party"                                                   At filing   At verdict                    verdict
                                                                                          ------~--------
                                             Plaintiff                                                      115               105                           91
                                                   ---,---
                                             Defendant                                                      192                 96                          50
                                             aAt filing, 56 percent of the cases had multiple plaintiffs; at verdict, 49 percent had multiple plaintiffs.
                                             For defendants, at filing, 76 percent of the cases had multiple defendants; at verdict, 39 percent had
                                             multiple defendants




                                              Page 9                                          GAO/1lRD-91-7 Product Liability Verdicts for Arizona
                                              AppendiIl
                                              Cases Tbat Went to VenIict:: Acddenbl,
                                              Parties, Denumds, ...................g11me




 Table 1.5: Majority of Plaintiffs Who Went
to Verdict Were Those Hanned by               Plaintiff type                                                                Number            Percent
Products                                      Injured parties                                                                      61                  58
                                              Spouses                                                                              19                  18
                                              -'----- - -                --        ---------
                                              Parents                                                                               9                   9
                                              Children                                                                              7                   7
                                              Other"                                                                                9                   9
                                              Total                                                                              105               101 b
                                              '''Other'' plaintiffs are primarily insurance companies suing to recover insurance payments to injured
                                              parties

                                              bpercentages add to more than 100 due to rounding.


Table 1.6: Majority of Defendants Who
Went to Verdict Were Manufacturers            Defendant type                                                                Number            Percent
                                              Manufacturers'                                                    51                               53
                                                                                                                                             ._---
                                              Seller/distributorsb                               - - - _._---
                                                                                                                18                               19
                                                                                    ------                                                         --
                                              Assembler/installers
                                                                                                    -.--- ._---
                                                                                                                10                                10
                                                                              .-------                                                        -----
                                              Other"                                                            17                                18
                                              Total                                                                                96              100
                                              "In this category, 48 manufactured the finished product and 3 a component part.

                                              bin 32 cases, 33 product sellers were named in the complaints. When the cases went to verdict, 1B
                                              seliers remained in 17 cases, a drop-out rate comparable with that for ali defendants.

                                              "This category .ncludes a variety of types of defendants, such as employers and owners of the compa-
                                              noes that were sued.


Table 1.7: Most Plaintiffs Resided in
Arizona and Most Defendants Were               State                                                                         Number           Percent
Headquartered in Other States                  Plaintiff residence
                                               Arizona
                                              -------
                                                                                                                                    92                  88
                                               Other states                                                                          7                   7
                                               ---
                                               Not specified
                                                                                --------
                                                                                                                                    6                    6
                                               Total                                                                              105                  101"

                                               Defendant headquarters
                                               Arizona
                                                           -------                  --------             ----      ---
                                                                                                                                    21            22
                                               Other states                                                                         57            59
                                                                                                                                              -----
                                               Not specified                                                                        18            19
                                               Total                                                                                96                 100
                                               "Percentages do not add to 100 because of rounding.




                                               Page 10                                       GAO/HIID-91-7 Product Liability Verdicts for Arizona
                                           AppeDdlII
                                           Cases 'l1Iat Weat ... Venlkt: Atx:identB,
                                           Parties, Demaads, ..... ProeeIIsiDg TIme




Table 1.8: Monetary Demands Increased
With Injury Severity                       Dollars in thousands                   --_.
                                                                                                                                         $1 million or
                                                                                                                  Demands                    more (in
                                           Type of in;ury                                      Number         Average   Median              percent)
                                           Wrongful death                                              3"        $882     $500                      33
                                           Personal injury:                                           45b        1.888     400                      29
                                                                                                 .----

                                             Permanent                                                38         2.187     600                        32
                                             Temporary                                                 7           263     125                        14
                                                                                    ..   ----
                                           Property damage                                             4           213            139                  0
                                                                                  --------
                                           All cases                                                  52"'"      1.701            464                 27
                                           Note: In all 52 cases. plaintiffs requested compensatory damages and, in 16 cases, compensatory and
                                           punitive damages. Compensatory damages are paid to plaintiffs to replace the loss caused by injury.
                                           These damages consist of economic damages, which cover the actual out-of-pocket expenses incurred
                                           by plaintiffs, and noneconomic damages, which cover intangible injuries such as pain and suffering.
                                           Punitive damages are given to punish intentional or flagrant wrongdoing and to deter others from similar
                                           conduct
                                           "Of the 3 cases, 1 also involved personal Injury
                                           "01 the 45 cases, 1 also Involved property damage
                                           CData were unavailable for 7 cases. 01 these 7 cases, 4 involved personal injury and 3, wrongful death.

                                           "Demands ranged from $9,000 to $17 5 mIllIon.


Table 1.9: Neligence the Predominant
Basis of Liability Claimed by Plaintiffs   Basis of liability                                                               Number             Percent
                                                                                     -- - - - - - _ . _ - - - - - - - - = - - - - - - - : - : : -
                                           Negligence only                                     --_.         __ .                    25                42
                                           Negligence and strict liability                                                 15                         25
                                                                                     - - - - . - - . - - - - - - - - ------c=---
                                           Strict liability only                                                            7                         12
                                           Negligence. strict liability, and breach of warranty            6         10
                                                                       -----
                                           Negligence and breach of warranty                               4          7
                                                                          -- - _ . ---- - - - - - - - - - - - - - - .
                                                                              .

                                           Strict liability and breach of warranty                         2          3
                                                                                         - - --.---- - - - - -
                                           Total                                                                                   59                 99"
                                           Note: In Arizona, plaintiffs can allege that defendants are liable for one or more reasons-negligence,
                                           strict liability, and breach of warranty. Under negligence, defendants are liable if they did not exercise
                                           due care and this lack of care caused the injury. Under strict liability, a defendant is liable if the product
                                           was defective and this defect made the product unreasonably dangerous and caused the injury. The
                                           plaintiff in a strict liability action need not prove that the manufacturer or seller failed to exercise due
                                           care, as is required in a negligence action. Under breach of warranty, a defendant is liable if the product
                                           failed to work as expressly or Implicitly warranted or promised
                                           "Percentages do not add to 100 because of rounding.




                                            Page 11                                          GA0/BRD-91-7 Product Liability Verdicts for Arizona
                                           Appendix I
                                           Cases That Went to Verdict: Accidents,
                                           Parties, Demands, and Processing Time




Figure 1.1: On Average, Cases Took 2-1/2
Years to Reach Verdict and Appeals 1
                                              In Months
Year to Resolve




                                                           12.9                            30.7                      4.1         12.1


                                            Incident                   Filing                                         Appeal              Appeal


                                                                                         Trial Starts .4   J     I
                                                                                                                      Filed a

                                                                                                                 Verdict
                                                                                                                                         Resolved




                                           Note: Time between verdict and filing of appeal primarily reflects the time required to resolve parties'
                                           motions (requests) to the tnal Judge (for example, a motion for a new trial or a motion for a reduction In
                                           the award) DUring thiS time, parties submit briefs (arguments) In support of their positions on the
                                           motions and the judge considers and rules on them




                                            Page 12                                        GA0/1fRD.91·7 Product Liability Verdicts for Arizona
Appendix II

Verdicts: Rate and Size of Awards


Table 11.1: Defendants Found Liable in
Just Under One-Half of Cases                                                                                    Cases
                                                                                                                              Defendants found
                                         Type of injury                                          Reaching verdict                         liable
                                                                                    ~---------~--,---~--~---




                                         Wrongful death
                                         ----,----,-                                -----"-------,---~--~---
                                                                                                                  6                               5
                                         Property damage                                                          4                               2
                                                                        --        ----_._----------                                       ----
                                         Personal injury                                                         49                              21
                                                   ~---                   -,        ~-------              -------,~~-




                                         Total                                                                   59                              28

Table 11.2: Liability Rates for Key
Defendant Types Similar                                                                                                    Defendants
                                                                                                            Reaching           Found liable
                                         Type of defendant                                                    verdict        Number     Percent
                                         Manufacturers                                                                51             20          39
                                                                          -        ----~-------------,---,-~




                                         Sellers/ distributors                                                        lB              B          44
                                                                                     ----   ------ ---' ------                        ,--,~----




                                         Installers/ maintalners                                                      15             6           40
                                         ~---~-------                                                                                      ~----




                                         Other                                                                        12              1           B
                                                                              -   -- ------- - - - - - -   -,    --
                                         Total                                                                        96             35          36

Table 11.3: Extremely Large Awards
Accounted for Majority of Total Amount   Dollars In thousands
Awarded
                                                                                                                                          Percent of
                                                                                                                Awards                         total
                                         Size of award                                          Cases      Average    Median               awarded
                                                                                       ---~-,~~--           -----
                                         Less than $100,000                                           B         $38            $45                 1
                                         $100,000 to $999,999                                        12         367            370               11
                                         $1 million and over                                          8       4,529          2,9B4               BB
                                                             -----            ----     --~   ------        -'---~---=:::--                  ----
                                         All cases                                                   28"      1,462            370              100
                                         "Awards ranged from $8,800 to $9 million, totaling $40,9 million Seven awards Included punitive dam-
                                         ages as well as compensatory damages




                                         Page 13                                            GAO;1lRD-91-7 Product Liability Verdicts for Arizona
                                        AppendixU
                                        Verdicts: Rate and Size of AWlU'ds




Table 11.4: Total Award Amount for
Compensatory and Punitive Damages       Dollars in thousands
                                                                    ---- - -   - - - - _..
Varied by Type and Severity of Injury                                                                                  Awards
                                        Injury type                                          Cases     Average         Median        Expected"
                                        Personal injuryb                                         21       $1,750          $405              $750
                                        Wrongful death                                            5c         801           500                  668
                                        Property damaged                                          2"          98            98                   98
                                        All cases                                                28        1,462           370                  694
                                        aExpected award is the average award across all cases, including those won by defendants. Of the
                                        three ways of describing the typical award, the expected award is the best indicator of what plaintiffs
                                        received across all cases that went to verdict

                                        bAmong personal injUry cases, larger awards were given for permanent disability than for temporary
                                        disability For the 19 cases Involving permanent disability in which defendants were found liable, the
                                        average award was $1.9 million and the median award, $450,000 Awards in the two cases Involving
                                        temporary disability were $9,000 and $335,000.

                                        cThe average, median, and expected awards can be extremely unreliable when only a few cases are
                                        considered

                                        dThe 2 awards in property damage cases were for $15,000 and $180,000.


Table 11.5: Compensatory Damages
Varied by Type and Severity of Injury   Dollars in thousands
                                                                                                                       Awards
                                        Injury type                                          Cases      Average        Median        Expected"
                                        Personal injuryb                                21                 $1,078          $405             $462
                                        Wrongful death                                   5                    481           375              401
                                        Property damageC                                 2
                                                                         ----_.------:=-=-
                                                                                                               98            98               98
                                        All cases                                       28d                   901           355              428
                                        aExpected award IS the average award across all cases, including those won by defendants.

                                        bAs might have been expected, among personal injury cases, larger compensatory damage awards
                                        were given for permanent disability than for temporary disability. In the 19 cases involving permanent
                                        disability In which defendants were found liable, the average compensatory award was $1.2 million and
                                        the median award, $450,000 Awards in the 2 cases involVing temporary disability were $9,000 and
                                        $335,000.

                                        Clncludes the 2 awards in property damage cases, which were for $15,000 and $180,000

                                        dCompensatory awards ranged from $9,000 to $6 8 million, totaling $25.2 million




                                         Page 14                                       GAO/HIID-91-7 Product Liability Verdicts for Arizona
                                              Appendixll
                                              Verdicts: Rate and Size of Awards




Table 11.6: Punitive Damages Large
                                              Dollars in thousands
                                                                                                                                   Awards
                                              Type of damages                                                        Cases     Average   Median
                                              ---'-''------'~--            --     --------
                                              Compensatory and punitive damages:"                                         7       $4,203        $2,200
                                                                                         '---------
                                                Punitive damage component b                                               c         2,245          750
                                                Compensatory damage component                                             c         1,958        1,450
                                                                                  -- --._--,-------
                                              Compensatory damages only                                                  21           549             325
                                                                            -   -----   -----

                                              All cases                                                                  28         1,462             370
                                              aJuries awarded punitive damages In 7 of 12 cases In which compensatory damages were awarded and
                                              pUnitive damages had been sought: punitive damages totalled $15 7 million (or about 38 percent of the
                                              total amount awarded). Punitive damages ranged Widely, from $54,000 to $7 million.

                                              "The size of the punitive damage awards was correlated with the sIZe of the compensatory damages. In
                                              the 3 cases with punitive damage awards over $1 million, the compensatory damage awards were also
                                              $1 million dollars or more. In the 2 cases with the lowest punitive damage awards (that is, awards of
                                              $HlO,OOO or less), the compensatory damages were less than $55,000. On the average, punitive dam-
                                              ages were double the size of compensatory damages

                                              eNo number IS given because this is a component


Table 11.7: Negligence a Basis of Liability
in 3 of Every 4 Cases in Which                Basis of liability                                                              Number           Percent
                                              -----                                        ----   ---._---
Defendants Found Liable                       Negligence only"                                                                      15
                                                                                                -------------------
                                                                                                                                                       54
                                              Negligence and stnct liabilityb                                                        6                 21
                                              Strict liability only                                                                  5                 18
                                              c----~_c_--=----                  ---- - - - - - - - .
                                              Not specified                                                                          2                  7
                                              Total                                                                                 28                100
                                              "Under negligence, a defendant IS liable If he or she did not exercise due care and this lack of care
                                              caused the injury.

                                              bUnder strict liability, a defendant IS liable if the product was defective and thiS defect made the
                                              product unreasonably dangerous, causing the injury The plaintiff need not prove that the defendant
                                              failed to exerCise due care, as is required under negligence




                                               Page III                                           GAO/HRD-91-7 Product Liability Verdicts for Arizona
Appendix III

Payments: Effects of Statutes and
Posttrial Activities


Table 111.1: Defendants' Payments to Plaintiffs May Differ From Initial Awards as a Result of Statutory Limits and Posttrial
Activities
Mechanism                  Definition/description                                    Possible effect on award
~----------------~----~.                       ~~----~~~
Statute                    Statutes may limit the amount that can be recovered       Decreases award if statute sets limit (for example,
                           from defendants (for example, requiring that awards       under the law, prejudgment settlements with
                            be reduced by the amount of prejudgment settlements defendants who did not go to verdict would be
                           with other defendants)                                    deducted from the award)
Subrogation                The   nght  of  a person who is secondarily liable to     Does not change total amount plaintiff receives;
                            succeed to the rights of the person he or she paid; for subrogation decreases the amount the defendant
                            example, If an insurer pays the injured under an         pays to the plaintiff; the defendant pays the
                            insurance policy, the company can then recover the       subrogated amount to the person secondarily liable
                            amount paid from any subsequent award to the injured
Motion (request) to trial   Request to the trial judge to either change the verdict Trial Judge may (1) decrease verdict (remittitur);
Judge                       or grant a new tnal                                      (2) increase verdict (additur); (3) partially or completely
                                                                                     overturn the verdict, thereby eliminating some or all
                                                                                     awards, or (4) grant a new tnal
Appeal                      Request that an appellate court determine whether        Appellate court may (1) decrease verdict; (2) increase
                            (1) sufficient eVidence eXists to support the verdict or verdict; (3) partially or completely overturn the verdict,
                            (2) the trial Judge made any major errors In ruling on   thereby eliminating some or all awards; or (4) set aSide
                            speCifiC matters                                         the verdict In whole or In part and remand the case to
                                                                                     the tnal court for further proceedings
                                                                                                                             ~~~~--~~~
Settlement                    Negotiated agreement between parties specifying               May increase the payment so that It is more than the
                              how the case will be resolved                                 verdict, decrease the payment so that it is less than
                                                                                            the verdict, or speCify a payment schedule for the
                                                                                            original tnal verdict


Table 111.2: Adjustments to Awards by
Trial Court Judges Reduced the Total             Dollars In thousands
Amount Awarded by 16 Percent                                                                                     Awards
                                                 Stage                                        Cases         Average    Median              Total awarded
                                                 At verdict                                      28           $1,462     $370                     $40,900
                                                                                              ..--.... --_._......            --::c::-::-----------::--::-:-c.
                                                 At judgment a                                      28               1,235      370                   34,600b
                                                 aln each of 3 cases, the tnal court judge adjusted the initial award. In 2 cases, because of a statutory
                                                 requirement, the Initial award was reduced by the amounts of settlements between plaintiffs and
                                                 defendants who had not gone to verdict In 1 of these cases. the judge also reversed a $6·million puni·
                                                 tive damage award; this reversal accounts for most of the reduction In total amount awarded. In the
                                                 third case, the judge Increased the award amount.

                                                 bAt judgment, the expected award was $586,000 Expected award IS the average award across all
                                                 cases, Including those won by defendants




                                                 Page 16                                        GAOjHRD-91·7 Product Liability Verdicts for Arizona
                                           Appendix III
                                           Payments: Effects of Statutes and
                                           Posttrial ActIvities




Table 111.3: Appeals More Frequent in
Cases Plaintiffs Won Than Those                                                                                                  Appealed
Defendants Won                             Winning party                                                           Cases       Number   Percent
                                                                            --~   .---------------~.-




                                           Plaintiff                                                                    28         12          43
                                                                              ----------- ---------------
                                           Defendant                                                                    31           9         29
                                                                         ---~-----                                - - - - - - - - " " - - - - - --
                                           All cases                                                                   59          21 a        36
                                           aWe obtained data on the resolution of appeals for 14 cases. In 3 cases. the appeal was dismissed prior
                                           to an appellate court ruling. at the request of one Or both of the parties. In the other 11 cases, the courts
                                           affirmed the Initial trial verdicts in 5 cases, reversed the Initial verdicts In 3 cases, and vacated the
                                           verdicts and remanded the cases for reconsideration at the trial court level in 2 cases


Table 111.4: Appeals Rate Varied by Size
and Type of Award                                                                                                                 Appealed
                                           Award                                                                   Cases        Number   Percent
                                                                                       - - - - --------            ----         -----         ------
                                           Size
                                                                                  ----_._--
                                           $100,000 or less                                                              8              o              o
                                           More than $100,000                                                       20  28                           60
                                                                                                  - - - ----_.- ------
                                           Type
                                           Compensatory damages only                                                    21;---          8~-         38
                                                                                  - - - - -..- - - - --------=c-                              ._--
                                           Compensatory and punitive damages                                              7             4            58




                                           Page 17                                         GAO/HRI).91-7 Product Liability Venlicts for Arizona
                                               Appendix ill
                                               Payments: Effects of Statutes and
                                               Posttrial Activities




Table 111.5: Net Effect of Posttrial Actions
Reduced Payments by 40 Percent                 Dollars in thousands
                                                                                                                                                Ratio of
                                                                                        Cases                      Average                 payment to
                                               Posttrial action                     Number Percent               Award Payment                   award"
                                               Plaintiff verdicts
                                               Reduced                                    11            24        $2,649        $1,186
                                               Unchanged                                  12            27            740           740               100
                                               Defendant verdicts
                                               Unchanged                                  18            40             0             0
                                               Increased                                   4             9             0           127
                                               All cases                                  45d          100          $845          $504                ,6Qb

                                               Note: For purposes of this study, payments were defined as all moneys paid to plaintiffs by defendants
                                               who went to verdict, excluding payments for post judgment interest, legal fees, liens, and pretnal
                                               settlements,
                                               'Consistent with previous research, this is the ratio of payments to awards for a group and not the
                                               average of ratios for individual cases

                                               bReduced payments In 3 cases with punitive damage awards accounted for the large majority of the
                                               reduction across all caSes Of the cases, 1 had an initial award of over $1 million and 2 had initial awards
                                               of $9 million, In all 3 cases, the awards were reduced by more than one-half, Excluding these cases, the
                                               payment-to-award ratio for the remaining 8 cases with reduced awards was .85 as compared with 45
                                               including the 3 cases Considering both cases won by plaintiffs and those won by defendants, the ratio
                                               of amounts paid to awards was .96 excluding the 3 cases

                                               cThe ratio IS undefined because the base, average Jury awards, IS 0,

                                               din the survey of attorneys used to collect thiS information, we obtained responses for 45 of the 59
                                               cases (see app. IV)


Table 111.6: Cases With Reduced Awards
Most Often Resolved by Posttrial                                                                                                   Cases
Settlements                                    Reason for reduction                                                    Number                   Percent
                                               Settlement                                                                   8                        73
                                               Court action                                           2           18
                                               Deduction for pretrial settlement                      1            9
                                               Total                        ---------------::1-:-1-------1:-::0"'"0




                                                Page 18                                         GAO/HRD-91-7 Product Liability Verdicts for Arizona
~endixIV


Methodology


                     We gathered data on product liability cases resolved in 1983-85 by a
Selection of Cases   judge or jury verdict. To ensure a sufficient number of cases for our
                     analyses, we examined those that went to verdict during a 3-year
                     period; that is, we treat the 3 years as one period, not three consecutive
                     periods. Since appeals can take years to resolve, we estimated that cases
                     closed in 1985 were the most recent for which we could reasonably
                     expect all appeals to have been resolved. We examined cases that were
                     resolved in 9 of Arizona's 15 state superior courts and in the U.S. Dis-
                     trict Court (that is, federal court) for Arizona. '

                     We used two jury verdict reporters to identify product liability cases
                     that had been tried in state superior courts. 2 These reporters cover the
                     courts in nine counties: Cochise; Gila; Graham; Greenlee; Maricopa,
                     including Phoenix; Pima, including Tucson; Pinal; Santa Cruz; and Yuma;
                     88 percent of the state's population live in these counties. The reporters
                     listed 56 cases that went to verdict in 1983-85. The large majority of
                     these cases came from Maricopa (39 cases) and Pima (16 cases) counties.
                     We obtained a listing of cases that were resolved in federal court from
                     the Administrative Office of the U.S. Courts. 3 The Administrative
                     Office's listing indicated that only 3 cases had gone to verdict in
                     1983-85.

                     We were unable to examine (1) any cases that may have been resolved
                     by a judge in state court because our sources were limited to jury ver-
                     dicts and (2) any cases tried by justices of the peace, who, rather than
                     judges in superior courts, may have tried some cases with small claims
                     (under $2,500).4


                     From the jury verdict reporters and case files maintained by the courts,
Data Collection      we obtained background information, including descriptions of accidents
                     and parties to the lawsuits; the disposition of the cases against each


                     lCases involving state law can be heard in federal court if (I) all defendants are citizens of states
                     different from all plaintiffs and (2) during 1983-85, at least $10,000 was claimed in damages. Since
                     April 1989, to be heard in federal court, the amount in controversy must be at least $50,000.

                     2Reporters are listings or digests of court activities prepared by the U.s. government, state govern-
                     ments, or private organizations. usually for subscription sale.

                     3The Administrative Office's data are generally considered to be the best source for information on
                     product liability cases.

                     4Supe rior courts hear all cases with claimed damages of $2,500 or more and share jurisdiction with
                     justices of the peace for claims between $500 and $2,499. Claims under $500 are the exclusive juris-
                     diction of justices of the peace



                     Page 19                                      GAO/HRD-91-7 Product Liability Verdicts for ArIzona
Appen<lixIV
Methodology




defendant; the amount of compensatory and punitive damages
demanded and awarded; and dates of various stages of case processing,
from the date of the accident to final resolution. We also recorded infor-
mation on posttrial activities, including appeals and settlement negotia-
tions, as well as, when available, their outcomes. To supplement
information on appeals, we searched appellate court records, when
available, and a computer database that includes nationwide informa-
tion on appeals (WESTLAW).

To gather information not consistently available from court files and
reporters, we sent copies of a questionnaire to plaintiff and defendant
attorneys who represented the parties in the cases. Attorneys were
asked to report the status of the cases, payments made to date, and how
the amounts were determined. Concerning payments, the questionnaire
was designed so that a response from only one side in the dispute pro-
vided complete case data. We obtained complete payment data for 45
ca..<;es, 76 percent of the 59 cases.




Page 20                          GAO/HRJ).91-7 Product Liability Verdicts for Arizona
Appendix V

Major Contributors to This Report


                   Cynthia A. Bascetta, Assistant Director, (202) 275-0020
Human Resources    Susan E. Arnold, Assignment Manager
Division,          Laurel H. Rabin, Reports Analyst
Washington, D.C.




(105536)           Page 21                        GAO;HRD-91-7 Product Liability Verdicts for Arizona
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