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 . .. ,~ ' . ~~------------------------------------------------------------------------------ .' Ordering Infonnation The rll'St five copies of each GAO report are free. Additional copies are $2 each. Orders should be sent to the following address, accom- panied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20877 Orders may also be placed by calling (202) 275-6241.
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)