Should Business Be Afraid Of Juries?

What do an investment bank, an auto maker, and a law firm have in common? The answer: They all suffer from some strain of juryphobia.

Salomon Brothers Inc. asks business partners to waive a jury trial should a disagreement arise--preferring instead to face only a judge. General Motors Corp. settles disputes with its Saturn dealers before an arbitration panel made up of Saturn employees and retailers. Its decisions are binding. And the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison paid $45 million in September to settle a civil case with the government--even though the firm's lawyer contends his client would have fought the charges had the government agreed to drop its demand for a jury trial. These companies and many others are working hard to sidestep juries--a legal vehicle considered by many to be too costly, too time-consuming, and just too risky. "It's like playing with loaded dice, and you're on the wrong side," says Jonathan A. Marshall, a New York patent attorney.

Much of the uneasiness has been fueled by megaverdicts and the publicity that follows. Remember the $1.2 billion award Litton Industries Inc. won in September from Honeywell Inc. in a patent case? Or when GM was hit in February with a $105 million verdict awarded to the parents of a teenager killed in one of its pickup trucks--of which $101 million was in punitive damages? Or the granddaddy of them all, the $10.5 billion awarded to Pennzoil Co. in 1985 in its fight with Texaco Inc.? "The jury is probably the No.1 factor that swings all of the parties to look at alternative means of settling disputes," says Julie A. Welborn, litigation management director at Liberty Mutual Insurance Co.

OVERBLOWN? Corporate fears are explained by one viewpoint perennial in the business world: Juries are sympathetic to plaintiffs, and they distrust defendants. They maintain that jury trials too often are used to force monied defendants to redistribute the wealth. "A lot of people feel that if you can't win the lottery, maybe you can win a good lawsuit," observes Donald Vinson, chairman of DecisionQuest, a consulting firm that helps lawyers analyze jury pools.

But Corporate America's fear of juries may be overblown. Three independent studies of jury verdicts and jurors' attitudes completed within the last year suggest that the litigation explosion is on the wane. In fact, the studies show that plaintiffs are actually losing a greater proportion of cases today than they have in many years. Plaintiffs won 63% of all personal injury claims against businesses in 1988; in 1992, they won only 54% of them, according to a study to be released in November by Jury Verdict Publications (chart). In every category of personal injury litigation over the past five years, except those involving automobile accidents, the percentage of plaintiffs' victories have decreased.

Jury Verdict's study, which looks at everything from product liability to sexual harassment in the workplace, also refutes the popularly held notion that juries' monetary awards are increasingly out of control. On the contrary, awards have remained relatively constant in the past five years. "The notion that juries are wild, unpredictable, and capricious is just not true," says Marc S. Galanter, a professor at the University of Wisconsin Law School. "People have very distorted views about what juries do."

In the area of product liability, the most controversial and high-profile legal arena, the data are even more startling. Defendants last year won 57% of those cases brought by individuals, compared with only 46% in 1989, the study shows. The number of product-liability suits filed is also down. Excluding asbestos matters, cases filed in federal court dropped to their 1985 level in 1991 with 12,413 filings, down from a high of 18,679, another study reveals. For many plaintiffs' lawyers, the news on juries merely supports what they have known all along. "Juries don't give away the kitchen sink," says Lee S. Kreindler, a New York plaintiff's lawyer. "Plaintiff bias has been overstated."

The apparent trend away from sky-high verdicts and escalating litigation is so palpable that even tort reformers, whose arguments are undercut by evidence of sane juries, are acknowledging it. In fact, they are taking credit for it, pointing to their campaigns to educate the public about the economic consequences of excessive verdicts. But William D. Fay, executive director of the Product Liability Coordinating Committee, cautions his allies from getting too excited. "The trend we see can always reverse the other way," he says.

For now, it appears that jurors are indeed focusing more on the financial implications of their decisions. Valerie P. Hans, a professor of psychology at the University of Delaware, interviewed hundreds of jurors and concluded that they are generally probusiness. Hans says jurors are very concerned about what role plaintiffs may have had in contributing to their injuries as well as the economic impact of verdicts on the marketplace and their own wallets. "Jurors are not Robin Hoods," she says. "Americans generally believe that what's good for business is good for the country."

A third study dispels yet another widely held view--that judges are more prodefendant than juries. A Cornell Law Review study of verdicts in federal courts reveals that plaintiffs in product-liability cases win 48% of the time before judges, compared to only 28% with juries. The evidence is much the same in medical malpractice suits, with judges ruling half the time for plaintiffs, while juries find liability in only 29% of the cases. The study finds little difference between the outcomes of other types of cases tried before judges and juries. "I attribute the results to the fact that plaintiffs' lawyers have too much faith in juries and defendants' lawyers have too much fear," says Theodore Eisenberg, a Cornell Law School professor who co-wrote the study.

Still, no academic endeavor can provide the definitive word on how fair--or unfair--juries are. They don't take into account suits that may be frivolous but are settled anyway by defendants to avoid costly and protracted litigation. They don't reflect the diverse attitudes of jurors from different geographical areas. And, as with any disputed theory, studies can be found to show that business is in as much legal trouble as ever. Vinson, the jury consultant, says his research indicates that more than half of all jurors hearing product-liability cases come into court believing manufacturers are guilty of wrongdoing. In employment litigation, the presumption of guilt is about 70%. "Having been in the line of fire, working with real litigants on real cases, I can tell you that Corporate America has a lot to be worried about," Vinson says.

Maybe so. But if these studies are any indication, businesses are becoming more adept at overcoming many of the innate biases of juries. That's one sign that the system, flawed though it may be, is working--welcome news for anyone heading to court, no matter which side they're on.

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