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The Impact Of Trucking Verdicts On The Industry: How To Avoid Negative Consequences

The American Transportation Research Institute (ATRI) has published two studies in 2020 and 2021 detailing the impact of trucking verdicts on the trucking industry. The first study, published in 2020, looked at all trucking verdicts over $10 million. The second study, published in 2021, looked at all trucking verdicts and settlement cases under $1 million.

What did they find?

The average trucking verdict increased from $2.3 million in 2006 to $22.2 million in 2019. That’s an increase of 967%!

However, the accumulation of small verdicts can have a negative impact on the industry as well. Defendants facing legal action against them can be expected to pay anywhere between $406,386 and $449,792 in plaintiff payments. This type of litigation can have a chilling effect on the industry, causing companies to be more risk-averse and resulting in a decrease in innovation.

In this blog post, we will discuss the impact of nuclear verdicts and small trucking lawsuits on the industry and how to avoid the negative consequences of each.

What is a nuclear verdict?

By definition, a nuclear verdict is a verdict that is over $10 million. This means that, when a trucking company is sued, the potential damages that could be awarded are over $10 million.ATRI confirms that the number of nuclear verdicts against motor carriers has doubled in the last five years. Near the end of 2021, one verdict alone, the result of a lawsuit against two trucking companies for the death of an 18-year-old student, was a staggering $1 billion! This was a record-breaking verdict and is a clear sign that the trucking industry is not immune to large judgments.

What are some potential consequences of a nuclear verdict?

There are several potential consequences of a large verdict.

First, the trucking company that is the subject of the verdict typically finds itself in serious financial trouble. Going out of business is a real possibility.

Second, the trucking industry may become more cautious and risk-averse as a result of these large judgments. This could lead to a decrease in innovation and an overall slowdown in the industry.

Third, the trucking workforce may be impacted. As companies become more cautious, they may lay off employees or close down altogether.

Fourth, the cost of doing business for the entire trucking industry could go up. This is because companies will need to factor in the cost of potential lawsuits when making business decisions.

It’s obvious that the impact of a nuclear verdict can be devastating for the trucking company and the industry as a whole.

What is a small verdict?

By definition, a small verdict is a verdict that is under $1 million. Compared to nuclear verdicts, small verdicts are much more common. However, their number has also drastically increased in recent years, as well as the number of settlement payments under $1 million.

Reasons for this increase range from negative public opinion towards trucking, loose state laws regarding civil suits, litigation fraud, and “ambulance chasing,” the practice of plaintiff attorneys soliciting clients who have been in minor traffic accidents shortly after the accident (often even right at the crash scene).

What are the potential consequences of a small verdict?

The potential consequences of a small verdict are less severe than those of a nuclear verdict. At the same time, when compounded, these small verdicts and settlement cases can contribute to the overall negative effect that litigation has on the trucking industry.

Some consequences of a small verdict include the following:

  • Financial consequences for the trucking company, including paying out a settlement or punitive damages to the plaintiff which can cripple a company.
  • Increased regulation and paperwork burdens as a result of lawsuits.
  • A decrease in the availability of insurance.
  • Coverage for trucking companies becoming more expensive.
  • The potential for a company to go out of business.
  • An increase in the cost of doing business.
  • Employees being laid off or companies going out of business.

The trucking industry is not immune to the consequences of small verdicts. When these judgments are added together, the impact of small verdicts can be significant and have far-reaching consequences.

Variations across the U.S.

Since the United States is a federalist system, the effect of trucking verdicts can vary significantly from state to state.

ATRI found that Tennessee was the only state with lower than average payments to plaintiffs.

On the other hand, California had the highest average payment to plaintiffs at $588,231. Following close after were New Jersey, with the average jury award of $569,022, and Missouri, with the average payment of $493,306. These three states were dubbed “judicial hellholes,” meaning that litigation environments in these states were particularly plaintiff-friendly.

What this means is that the effects of trucking verdict awards can be felt most acutely in certain states, while other states may be less impacted. However, it’s important to remember that no state is immune to the consequences of a large judgment.

How to avoid negative consequences of trucking verdicts

While it’s impossible to completely avoid negative consequences of a trucking verdict (big or small), there are steps that motor carrier companies can take to minimize the impact.

Some steps include the following:

Good liability insurance

Good liability insurance is key. Make sure that your insurance policy covers all potential risks, including large judgments.

In case of a lawsuit, having a good insurance policy from a reputable insurance company will help you financially and may even prevent you from going out of business. Without good insurance, a trucking company is at risk of being sued for millions of dollars and may not be able to survive the judgment.

Effective risk management

According to the ATRI report on nuclear verdicts, truck crash avoidance is the key to preventing large judgments. Implementing effective risk management practices can help reduce the chances of a crash happening in the first place.

This includes things like truck driver safety training, using technology to monitor drivers and vehicles, and regular safety inspections. Adhering to the regulations set forth by the Federal Motor Carrier Safety Administration (FMCSA) is paramount.

Additionally, motor carrier companies should have procedures in place for responding to accidents and dealing with potential lawsuits.

By taking these precautions, companies can help minimize the risks of a nuclear verdict and protect themselves from small verdicts as well.

Be aware of state laws

Each state has different laws when it comes to civil suits. You need to be aware of the laws in your state and how they might impact your business. If you are operating in more than one state, you need to be familiar with the laws in each state.

You may need to consult an attorney in order to make sure that you are complying with all the relevant laws.

Document everything

Make sure you document everything related to your business. This includes communication with customers, drivers, and anyone else associated with your company. Documentation can help prove your case if you find yourself in court.

Don’t shy away from litigation preparation

If it so happens that you are sued, don’t shy away from litigation preparation. This includes working with an attorney who specializes in trucking litigation and assembling a strong legal team. Preparation can help you mount a successful defense and reduce the chances of a negative outcome.

Make sure that you are clearly and openly communicating with your legal team. Information flow and coordination is key in these types of cases.

Weigh your settlement options

Parties involved in litigation can settle at pretty much any point during the proceedings: pre-trial, during the trial, or even after a jury verdict is rendered.

Settlement can be a more advantageous option for both sides than going to trial and risking a negative outcome.

However, keep in mind the following findings:

  • Settlement payments are typically higher than verdict payments (approximately $135,805 higher on average, when looking at small verdicts).
  • The size of the settlement payment increases with the length of the trial. Early settlements usually reduce costs.
  • The size of the settlement payment also depends on crash characteristics, such as the type of personal injury. In case of death, head, spine, or severe injury, the payment is higher than compared to other types of injuries.

If you are considering a settlement, be sure to weigh all the pros and cons carefully.

Conclusion

The trucking industry is facing an increasing number of lawsuits, from both small verdicts and nuclear verdicts, as well as a higher average verdict amount. Reasons for this are multifold: state tort laws that are favorable to plaintiffs, litigation fraud, attorneys who engage in “ambulance chasing,” plaintiff attorney firms that are structured as “settlement mills,” and more.

What a trucking company can do to avoid negative consequences from these lawsuits are:

  • Getting good liability insurance coverage
  • Implementing effective risk management practices
  • Being aware of state laws
  • Documenting everything
  • Thoroughly preparing for litigation
  • Considering settlement options, and more

By following these guidelines, a trucking company can help protect itself from large judgments and minimize the chances of a negative outcome.

Don’t let your trucking company go out of business – protect your assets from costly lawsuits by investing in trucking insurance. Mike Keith Insurance offers reliable, affordable trucking insurance for businesses of all sizes. Contact us today to get started!

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