In this episode of Cause for Action, Nathan Morris, senior vice president, legal reform advocacy at the U.S. Chamber of Commerce Institute for Legal Reform, is joined by Lee Parsley, the general counsel of Texans for Lawsuit Reform, to discuss some of the issues the trucking industry faces and what legislators can do to make sure that excessive lawsuits don’t shut down this critical industry.

Lee and Nathan also discuss how the trucking industry faces more “nuclear verdicts,” which are massive jury verdicts worth $10 million or more, than most other industries.

A new report from the American Transportation Research Institute stated that while trucking industry court cases that result in verdicts of less than $1 million may not dominate headlines like those that end in multimillion-dollar judgments, the cumulative effect of these smaller verdicts can still inflict significant financial distress on the industry.

The study also found that trials that end in settlements, as well as those that involve injuries or fatalities, tend to result in larger monetary awards.

“While cases of this size are not individually as devastating to motor carriers and thus do not attract the attention of media outlets, in aggregate they have a significant negative impact on the trucking industry,” ATRI said in the study, titled, “The Impact of Small Verdicts and Settlements on the Trucking Industry.” Released Nov. 18, it aims to provide an overview of the smaller award litigation landscape and offer carriers and defense attorneys strategies to assist in preventing costly litigation outcomes, ATRI said.

“This analysis proves a theory that I have always had; there are two markets as to the value of cases – the settlement market and the trial market,” said Doug Marcello, an attorney with the Carlisle, Pa., transportation law firm Marcello & Kivisto LLC. “There should be one market, and that is what a case is objectively worth.” Marcello served as a subject matter expert for ATRI on the report.

In the study, ATRI found that cases that reach settlement result in damages that are approximately 37.7% larger than those decided by a jury. The report also found that in cases involving a severe injury, settlement is 217% more likely than a trial. Cases of this type are also 199% more likely to result in payment to the plaintiffs of more than $600,000. Cases that involved a fatality are 393% more likely to result in a settlement, and also were the strongest predictor of higher payments, the report found.

The report also details the average amounts of award payouts in settlements where an injury or death has occurred; cases involving a fatality had the highest average award at $607,532, while back injuries had the lowest average payout at $368,237. Cases that did not have a fatality had an average payment amount of approximately $428,000. “Crashes that resulted in one or more fatalities yielded an average payment that was 41.9% higher than crashes that did not result in a fatality,” the report noted. “Cases involving back and neck injuries resulted in the smallest average payment amounts.”

The new report follows ATRI’s 2020 study, “Understanding the Impact of Nuclear Verdicts on the Trucking Industry,” which studied so-called “nuclear” verdicts in excess of $10 million. The new report notes differences in how certain injuries are viewed by juries depending on severity.

“Spinal cord injuries command some of the highest average awards in nuclear verdict cases, but back and neck injuries in this report are not necessarily spinal injuries,” ATRI said. “Plaintiff attorneys may be incentivized to exaggerate back and neck injuries in a trial because they know spine injuries generate large awards in high profile cases.”

The report also reviewed payments to plaintiffs based on the type of traffic violation the truck driver may have been charged with, and how that factored into the payouts. “Some alleged infractions, such as driving over the posted speed limit, apply to drivers, while others, such as inadequate training practices, apply to motor carriers,” the report said.

The top five violations and their respective payouts are:

• Poor driving history, $680,333
• Telephone usage, $629,375
• Hours-of-service violations, $564,531
• Asleep at the wheel, $543,343
• Equipment failure, $503,641

“Carriers should make the elimination of these issues a top priority to lower litigation payments,” the report said.

The report also noted a significant difference in award sizes if cases are heard in state court versus federal court.

“According to subject matter experts, state courts are notorious for unpredictable outcomes in court trials,” the report said. “More diverse jury pools and the use of appointed rather than elected judges fuel the perception that federal court is more disinterested in truck crash cases. For this reason, defendants often find federal court a preferable venue.”

The report also pointed out that to pursue a case in federal court, specific prerequisites must be met, and these additional conditions may prevent defendants from pursuing a lawsuit in federal court and instead encourage out-of-court settlements.

A new record for nuclear verdicts against a trucking company may have been set with a $1 billion verdict handed down Tuesday by a Florida jury. But more than 90% of the verdict was against a trucking company that apparently no longer exists and had not participated in the proceedings for at least two years.

The $1 billion verdict came in a case involving a September 2017 crash that took the life of Connor Dzion, who had just begun classes as a freshman at the University of North Florida. The wreck occurred in Yulee, Florida, on Interstate 95. Yulee is in Nassau County, north of Jacksonville, and a Nassau County jury handed down the verdict.

The two companies involved in the latest case were Kahkashan Carriers, a Canadian company, and AJD Business Services, which records indicate was based in Staten Island, New York.

The billion-dollar verdict was split as a $100 million payment to Dzion’s parents, who brought the suit, and a $900 million punitive damages verdict against AJD. The split on the $100 million payment was 90% against Kahkashan and its driver and 10% against AJD and its driver, according to court documents.

What had generally been believed to be the biggest nuclear verdict previously was the $411 million awarded last fall against a one-truck company that offered essentially no defense at trial. And that appears to be what happened here.Documents in the case show that the firm of Cole, Scott & Kissane asked to withdraw as legal representation for AJD and its driver in the wreck, Russel Rogatenko, in July 2019.

AJD was absent from all recent proceedings. A court default was entered against it on June 28, saying that AJD had failed to participate in the proceedings of the case since July 2019. That default is what led to AJD shouldering the punitive damages.

FMCSA data shows AJD as having its insurance canceled in July 2019. At the time of the accident, it was covered by Falls Lake National Insurance Co. FMCSA documents also show the status of AJD as inactive.

Kahkashan was represented by Sean McDonough of the firm of Wilson Elser. A call to him from FreightWaves had not been returned by publication time.

Kahkashan Carrier is Quebec-based. Its DOT number, like AJD’s, is listed as inactive.

Even if no money is ever collected from AJD, that does not mean that case has no impact. By ratcheting up yet again what constitutes an acceptable verdict in a trucking case, it leaves attorneys representing trucking companies concerned.

“The $900 million punitive damage verdict is essentially only meaningful for the plaintiff and lawyer in the sense that they were told by the jury that this was egregious and we want to recognize that with this award,” Kristen Johnson, a partner with Florida-based Taylor & Associates, said. Her area of speciality is trucking and logistics.

The reality of trying to collect, she said, is that “there’s nothing there.”

Without knowing what happened with AJD’s insurer, Johnson said it is likely that the insurer paid off the maximum amount it covered soon after the accident, “and then they are out.”

But the public image of trucking takes another hit with the verdict, according to Johnson. “It continues to build the reputation that the plaintiff’s lawyers are trying to build about trucking, that it is a bunch of bad guys that have these distracted guys on the road,” she said.

It also allows the plaintiff’s attorney, Pajcic & Pajcic, to accurately claim that it was a law firm that obtained a $1 billion verdict for a client in a case against a trucking company.

In a prepared statement released after the verdict was handed down Tuesday, Pajcic & Pajcic gave its version of what happened on Labor Day weekend in 2017.

“The semi-driver, working for AJD Business Services Inc. was distracted by his cell phone, driving over the legal limit of hours and did not even have a commercial driver’s license when he caused a crash and flipped his truck, blocking the highway and causing a massive backup on the interstate,” the statement from the law firm said. “More than an hour later, another distracted trucker, working for Kahkashan Carrier, Inc. of Canada, was traveling on cruise control at 70 miles an hour when he slammed into the line of stopped traffic, killing Connor [Dzion]. That truck’s data recorder showed he did not even attempt to brake until one second before the fatal crash.”

Jannie Steck, a partner with the trucking-focused law firm of Scopelitis Garvin Light Hanson & Feary, said the likely inability of the plaintiffs to collect the damages shouldn’t lead people to diminish the importance of the new high score in the nuclear verdict arena.

“It tells us something, that’s what they’ll do if you have a bad accident,” she said. The case had many of the “really new factors that we commonly see in nuclear verdicts,” Steck said, including improper use of cell phones and a driver’s poor safety record, which was alleged particularly against the AJD driver.

Alix Miller, the president of the Florida Trucking Association, said she was not familiar with the case beyond what she had read in media reports. But she indicated that the environment for trucking companies involved in litigation in the Sunshine State is getting tougher.

“The legal climate in Florida has been getting increasingly worse, with settlements and verdicts not reflective of evidence or the case,” she said in a statement to FreightWaves. “It is becoming difficult for trucking companies to do business in Florida — major insurance companies are no longer writing policies in the state, and rates can be 3-4x more per truck than other states. Safe and responsible trucking companies are facing moving out of Florida or going out of business as a direct result of a broken judicial system.”

Nuclear verdicts have jumped over 300% in the past decade, according to an analysis in JD Supra, and the average verdict size for a lawsuit involving a truck collision has increased from $2.3 million to $22.3 million. Eric Zalud, co-chair of Benesch’s Transportation and Logistics Practice Group, argues that the drastic jump in the dollar amount of these suits has been propagated by a sophisticated yet primordial strategy known as the Reptile Theory.

State legislatures across the United States are taking notice of this issue, and its effects upon the transportation sector in particular, and are working towards legislative fixes. One of the first bills to address this problem directly, Texas House Bill 19, recently passed on a bipartisan basis and will take effect in September. The law aims to compartmentalize the trial process and create new procedural thresholds, with the goal of putting the brakes on the Reptile Theory.

After a nearly three-year delay, a Texas appellate court has voted for all of its nine justices to take over an appeal of an $89.7 million lower court jury verdict against Werner Enterprises in a 2014 fatal accident that the motor carrier has steadfastly maintained was not its driver’s fault.

An appeal of that lower court ruling has already been heard by a three-judge panel of the Texas Fourteenth Court of Appeals in Houston. However, resolution was stalled after a judge on the panel retired before a decision was issued.

“Upon its own motion, a majority of this court orders en banc consideration of this case,” said a July 27 filing made after the nine justices took a vote. En banc cases are those that will be heard and decided by all nine of the court’s justices.

It was in 2018 that a Houston jury returned the huge verdict — one of the highest ever against a motor carrier — in connection with the 2014 crash. In it, a pickup truck driven by a friend of the plaintiff lost control on a slick interstate, traveled across the highway median and collided with a Werner tractor traveling on the opposite stretch of road. A jury awarded the plaintiff the $89.7 million verdict, but Werner appealed that decision in October 2018.

As the parties in the case awaited a decision, the court’s clerk sent a letter in January 2021 to the parties saying that “one or more” of the justices who heard the arguments had retired from the court before a panel decision could be made.

Now the entire court will hear the case; however, a timeline has not been disclosed.

Werner’s attorneys wrote in a court pleading: “At the time of this accident, [driver] Shiraz Ali was proceeding in his lane, in control of a Werner tractor-trailer and well below the speed limit, when the [plaintiff’s] vehicle suddenly careened into his path, leaving him no time to avoid a collision.”

The plaintiff’s attorney in the case, Eric Penn, told the jury that the driver was inexperienced, driving too fast, and should not even have been driving during the icy conditions. He also charged that Werner was negligent for failing to adequately train and supervise the driver for operating in bad weather.

Werner has denied those allegations and is asking the appellate court to “reverse the trial court’s judgment and render judgment in their favor or, at a minimum, remand this matter for a new trial.”

It’s unclear why the three-judge panel did not act more swiftly to render a decision.

In a dissenting opinion on the vote to hear the case en banc, Chief Justice of the court Tracy Christopher questioned why the three-judge panel was not permitted to issue its decision, which was circulated among the justices in anticipation of a panel ruling.

“There is no other appeal pending before this court with similar issues, nor are there any identified conflicts in our precedents,” Christopher wrote. “Simply put, in the 11 years that I have been on this court, there have been no grants of en banc consideration in a situation such as this.” Christopher added, “The panel majority opinion has been silenced — not to see the light of day.”

“There is simply no reason for this court to send the parties directly to en banc, not pass go, and not collect $200,” wrote Justice Randy Wilson in a 32-page dissenting opinion on the vote. “Research indicates that in the history of Texas jurisprudence an intermediate court of appeals with more than three justices has ordered en banc consideration of a case in the first instance only about a dozen times. The en banc court should explain why it has taken this highly unusual action.”

Justice Meagan Hassan, who voted in favor for en banc consideration of the case, said that proposed opinion of the three-judge panel “attempted to overhaul this court’s well-established standard of review concerning directed verdicts.” She added, “A majority of this en banc court has voted to examine this appeal and has decided that no additional briefing is necessary to do so.”

“It sounds like the full appellate court is going to decide the current appeal, and we continue to wait for that ruling,” said a Werner spokesman.