PointofLaw.com
 Subscribe Subscribe   Find us on Twitter Follow POL on Twitter  
   
 
   

 

 

The Emperor's Clothes: Should jury bias against corporations receive legal recognition?

| No Comments


Every plaintiff's and every defendant's attorney know that, for any given alleged tort, damages determined by a jury are likely to be higher, ceteris paribus, if the defendant is a corporation than if the defendant is a human person. [There are lots of scholarly confirmations of this jury bias: see, for example, Hammitt, Carroll & Relies, Tort Standards and Jury Decisions, 14 J. LEGAL STUD. 751 (1985).] This is in no small part because compensatory damages include "pain and suffering", which have no explicit market evaluation, thus allowing for much subjective leeway against juries, who may well conclude that a "deep-pocketed" corporation will not itself feel "pain" by having to compensate a plaintiff more fully.

The Alabama Supreme Court this week tackled a very interesting ethical issue arising from this commonly held belief in jury bias against corporations. The issue, in a nutshell, was the following: if a plaintiff's attorney sues a human being, but negligently fails to sue a corporation that would have been held jointly and severally liable with that individual, and if as a direct result of this failure the plaintiff receives less money than he otherwise would have received, is the plaintiff's attorney liable (for malpractice) for the difference?

The facts in Hand v. Howell et al. were, in essence, as follows:

-Tommy Hand, driving a truck as part of his own employment, was struck and injured by a vehicle negligently driven by the personal auto of Julie Bennett, who "was on-duty and working within the line and scope of her employment with the Montgomery Advertiser" at the time.

-Hand consulted the Howell law firm, which sued Bennett BUT NOT the Montgomery Advertiser (or its parent, Gannett). By the time Hand fired the Howell firm and hired new attorneys, the statute of limitations had run against the Advertiser.

-Hand suffered severe back injuries. His economic damages alone were about $872,000, and of course he also had "pain and suffering" damages.

-Bennett's personal auto insurance limit was the state minimum $25,000 (and Bennett was manifestly insolvent). However, fortunately for Hand, the Advertiser's $5 Million liability policy actually named Bennett as being insured.

-After complicated proceedings, Hand settled with Bennett for approximately $625,000, of which $25,000 was paid by her personal liability policy and the rest by the Advertiser's insurer.

-But Hand's new attorneys produced evidence that the settlement value of the suit HAD IT BEEN FILED AGAINST THE ADVERTISER would have been between $1 million and $1,200,000. This amount would have recoverable, of course, since the newspaper's liability limit was $5 million

Against this backdrop, the plaintiff sued the Howell law firm for the difference between what he recovered (which was not even enough to pay for his economic costs) and what he would likely have recovered had the employer been sued.

A bare majority of the Alabama Supreme Court approved granting summary judgment to the Howell firm. According to the court, the only reason the settlement value of a suit against the employer was greater than the settlement value of a suit against the negligent employee is jury bias against corporations. But, stated five of eight Justices (this number included one concurring Justice), such bias may not be considered as a matter of law. The three dissenting Justices noted that negligence, causation and damages had been properly alleged and prima facie proven, thus entitling the plaintiff to pursue his legal malpratice case to a jury.

Crucial, of course, was the fact that the newspaper's liability policy personally covered the defendant -- otherwise there would have been damages aplenty as plaintiff would have recovered only $25,000. The dissenting Justices are clearly correct that plaintiff had offered proof of negligence, causation and damages. Only the refusal to acknowledge the truth of jury bias precluded recovery against the negligent law firm.

Should the majority have prevailed? Should plaintiff benefit from anti-corporate jury bias if his case is properly pleaded to a jury, but not benefit from it against his lawyer if the latter negligently failed to avail himself of it? Of course, in the former case no judge ever admits that there is bias -- the judge merely issues a judgment on the jury verdict. In the latter case, for the plaintiff to prevail against his lawyer, a court would have had to officially acknowledge jury bias. That is one thing the Alabama court (and, we think, most courts) would be loathe to do. The emperor remains fully clothed!

Leave a comment

Once submitted, the comment will first be reviewed by our editors and is not guaranteed to be published. Point of Law editors reserve the right to edit, delete, move, or mark as spam any and all comments. They also have the right to block access to any one or group from commenting or from the entire blog. A comment which does not add to the conversation, runs of on an inappropriate tangent, or kills the conversation may be edited, moved, or deleted.

The views and opinions of those providing comments are those of the author of the comment alone, and even if allowed onto the site do not reflect the opinions of Point of Law bloggers or the Manhattan Institute for Policy Research or any employee thereof. Comments submitted to Point of Law are the sole responsibility of their authors, and the author will take full responsibility for the comment, including any asserted liability for defamation or any other cause of action, and neither the Manhattan Institute nor its insurance carriers will assume responsibility for the comment merely because the Institute has provided the forum for its posting.

Related Entries:

 

 


Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.