Energy On The Offensive #037 - Nuclear Verdicts in the Energy Sector

The 2020 whitepaper "Nuclear Verdict: Old Wine New Bottles" by George Speckart, Ph.D. and Bill Kanasky Jr., Ph.D. provides an in-depth analysis of the modern phenomenon of nuclear verdicts—exorbitantly high damage awards in civil litigation that far exceed rational expectations. While the term "nuclear verdict" is relatively new, the issue itself is not. Large, unexpected verdicts have been an ongoing concern for decades, particularly in cases involving personal injury, wrongful death, and corporate negligence. Historically, these verdicts were referred to as "runaway jury" awards, a term that gained prominence in the 1990s and even inspired a Hollywood film based on John Grisham's The Runaway Jury. Today, the problem has resurfaced under a new name, with increased alarm in sectors like the insurance industry and defense litigation due to the frequency and scale of such awards.

Historical Context and Development of Nuclear Verdicts

High damage awards have plagued defendants for at least a generation. The concept of putting a monetary value on human life became a major point of contention, particularly in wrongful death cases where jurors were asked to assess compensatory damages. Methods like the “willingness to pay” (WTP) model, which quantifies how much rescue and medical services would spend to save a life, helped create baseline expectations for damage amounts. These estimates typically ranged between $1.2 million and $8.4 million, providing a benchmark for defense attorneys. However, several landmark cases set the stage for what we now recognize as nuclear verdicts:

• In 1985, $10 billion was awarded in Pennzoil v. Texaco.

• In 1994, the Exxon Valdez case led to a $5 billion judgment.

• In 1999, a Los Angeles jury awarded $4.9 billion against General Motors.

These cases were pivotal in establishing the potential for outsized damage awards, and by the early 2000s, the phenomenon was drawing serious attention from groups like the American Tort Reform Association, which coined the term "Judicial Hellholes" to describe regions where such verdicts were disproportionately common. This alarm was rooted in the fear that jurors were increasingly influenced by sympathy, outrage, and plaintiff attorney tactics, rather than strict legal principles or fair compensation.

Key Factors Contributing to Nuclear Verdicts

Speckart and Kanasky identify several critical factors contributing to nuclear verdicts:

1. Problematic Witnesses: Defense witness performance, especially during deposition and trial testimony, is one of the most significant contributors to inflated damage awards. Research shows that 70-80% of a witness’s impact on jurors comes from non-verbal cues like body language and vocal intonation. Witnesses who appear defensive or evasive during testimony often provoke negative reactions from jurors. Plaintiff attorneys have become skilled at exploiting these weaknesses through psychological manipulation, such as the "Reptile Theory," which taps into jurors' primal instincts to maximize emotional responses.

2. Egregious Conduct: Jurors tend to punish defendants more harshly when corporate conduct appears negligent, reckless, or unethical. Cases involving environmental disasters, like pipeline explosions or oil spills, can trigger massive compensatory and punitive damage awards. For example, in 1999, a $296 million award was issued for a pipeline explosion that killed a teenage girl, partly because jurors were enraged by the perceived corporate negligence.

3. Punitive Jurors: "Stealth jurors," who conceal their biases during jury selection, are another driver of nuclear verdicts. These jurors often desire to punish corporations, particularly in cases where income inequality or corporate greed are perceived as factors. While voir dire aims to screen out biased jurors, sympathy and emotion can override rational decision-making in the deliberation room, resulting in massive damage awards.

4. Judicial Hellholes: Some judicial districts have a reputation for disproportionately large verdicts. These "hellholes" are areas where local judges and juries are seen as more sympathetic to plaintiffs, creating a hostile environment for corporate defendants. Examples include regions in Georgia, California, Texas, and Florida, where high-profile cases often lead to eye-popping verdicts.

5. Plaintiff Attorney Tactics: The aggressiveness of plaintiff attorneys, particularly their use of psychological manipulation techniques, plays a significant role in securing nuclear verdicts. These attorneys often frame their cases to provoke emotional responses from jurors, repeatedly discussing high damage amounts early and throughout the trial to desensitize jurors to large sums. The psychological tactic known as "anchoring" is frequently used, where plaintiff attorneys ask for an extraordinarily high damage amount in hopes that jurors will "split the difference" between the plaintiff's ask and the defense's lower counteroffer, still resulting in an inflated verdict.

The Role of Science in Predicting and Controlling Verdicts

The authors emphasize that the defense industry's current strategies are insufficient for controlling nuclear verdicts. Defense attorneys often take a reactive approach, focusing on minimizing costs rather than investing in scientific jury research, witness training, or mock trials that could better prepare them for high-stakes litigation. Speckart and Kanasky argue for the need to incorporate scientific methodologies—such as predictive jury research, psychological assessments, and advanced witness training—to better predict and mitigate these large verdicts.

Mock trials and jury research are critical tools in this approach. When done properly, these tools can give defense teams a clear sense of how jurors are likely to react to the case, allowing them to adjust their strategies accordingly. However, the authors caution that many mock trials are poorly executed, with unrepresentative jury pools or incomplete simulations of trial conditions, leading to inaccurate predictions. The application of science to litigation is not widespread, but when it is employed correctly, the results can be transformative. For example, in cases like the Exxon Valdez disaster, scientifically designed mock trials predicted the $5 billion verdict almost exactly.

The defense industry, however, remains hesitant to adopt these methods due to cost concerns. This reluctance can result in defense attorneys being caught off guard in court, allowing plaintiff attorneys to dominate the narrative and ultimately secure nuclear verdicts.

Application to the Energy and Oil & Gas Industry

In industries like energy and oil and gas, where environmental risks, worker safety, and regulatory scrutiny are ever-present, the stakes in litigation are particularly high. These industries have been the subject of some of the most infamous nuclear verdicts, such as the Exxon Valdez case, where a $5 billion punitive damages award was issued after the catastrophic oil spill. Similarly, pipeline explosions, refinery accidents, and environmental contamination cases have led to astronomical awards driven by jurors' emotional responses to perceived corporate negligence and harm to the environment.

In the oil and gas sector, the risk of nuclear verdicts is heightened by the industry's frequent involvement in large-scale environmental disasters and public safety incidents. Jurors in these cases are often influenced by the narrative that large corporations are prioritizing profits over safety and environmental protection. This perception can trigger outrage, leading to compensatory and punitive damages that reach into the billions.

Defense attorneys in these industries must take particular care with witness preparation and trial strategy. The technical nature of oil and gas litigation often requires expert testimony on complex issues like pipeline integrity, environmental impact, and regulatory compliance. However, even highly technical witnesses can be vulnerable to plaintiff attorneys who employ Reptile Theory tactics, framing the case as a failure of corporate responsibility that endangered the public.

To avoid nuclear outcomes, companies in the energy sector should invest in advanced witness training programs that focus on the psychological aspects of testimony. Witnesses must not only be technically proficient but also able to communicate their points clearly and confidently without appearing evasive or defensive. Furthermore, the industry must embrace predictive jury research to anticipate juror reactions to complex technical cases and develop strategies to mitigate potential nuclear verdicts.

In conclusion, while nuclear verdicts are a challenge across industries, they pose particular risks for companies in the energy and oil and gas sectors, where environmental disasters and safety incidents can provoke emotional reactions from jurors. By adopting scientifically-backed litigation strategies and investing in proactive witness preparation, companies in these industries can better protect themselves from the threat of nuclear verdicts.

Author Bios

Dr. Bill Kanasky, Jr. is Senior Vice President of Litigation Psychology for Courtroom Sciences, Inc. and a nationally recognized expert, author, and speaker in the areas of advanced witness training and jury psychology in civil litigation.

Dr. George Speckart is Of Counsel for Courtroom Sciences, Inc. where he conducts scientifically-designed jury research for corporate clients facing imminent litigation with significant exposure.