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Thoughts on the Litigation Lottery

Clay Conrad disputes the idea of a litigation lottery; his argument consists of quoting a Nancy Marder law review article:

Indeed, if one were to read only newspaper accounts of civil jury trials, one would conclude that most juries award excessive damages, and that they do so because they sympathize with the plaintiffs at the expense of corporations. Coverage of cases involving tobacco, asbestos, and other types of product liability paint this picture. Yet, empirical studies indicate otherwise.

The claim that media coverage of trials is stilted against plaintiffs is ludicrous (see today's Overlawyered on the pending Texas Vioxx case or Larry Ribstein's website on how business is portrayed in the movies), but, more relevant to the discussion of a "litigation lottery," the passage misses the point. No liability reformer is claiming that "most juries award excessive damages": citing the empirical studies attacks a strawman.

The nature of a litigation lottery is that the availability of potentially huge damages justify bringing a meritless claim, so long as there is some small chance that the combination of an outlier judge and an outlier jury will produce a jackpot that compensates for the risk that the judge/jury combination will get it right.

For example, as documented in Overlawyered on June 3, 2004, it does little good that Ford won thirteen straight cases regarding the design of its Ford Explorer if in the fourteenth case, the jury votes 9-to-3 to award $368.6 million in damages (reduced by the court to "only" $150 million on Sep. 3). Thirteen out of fourteen juries did not award excessive damages, which is what the empirical studies measure—but the average case awarded over $10 million. And this last number actually understates the real economic costs to American defendants given the substantial sums it costs a Ford to defend a trial.

When defendants are facing a Russian roulette game where the plaintiffs get to fire multiple shots at them, it's irrelevant to note that the median chamber of the gun is empty. It's furthermore disingenuous to complain that the media regularly talks about the McDonald's coffee case when the plaintiffs' bar holds up Stella Liebeck not as an aberration, but as an example of someone who should have recovered punitive damages for spilling coffee on herself.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.