By Dr. Ken Broda Bahm:
So we have made it through the 2022 midterm elections. As is typical, the party out of power seems to have made some gains, although so far at least, the anticipated “Red Wave” doesn’t seem large enough to surf. Going into the election, the common wisdom was that that the broadly felt effects of a challenging economy (including rising prices for groceries and fuel, and a full one-third of Americans living paycheck-to–paycheck) predicted a bolder move away from the party in power. Instead, what we saw is that incumbents tended to get re-elected, red districts and states tended to stay red, while blue districts and states tended to stay blue, and those who are perceived as fringe candidates from both parties tended to lose. In other words, the fundamentals held.
As the political pundits were theorizing about the effect of a down economy on the midterm elections, legal analysis have also been theorizing about the effects on damages awarded by juries. Some are sharing confident predictions that awards, particularly against corporate defendants, are likely to increase in a coming weak economy. For example, a recent article in Bloomberg, “How a Downturn Could Impact Civil Jury Awards” shares that common wisdom while quoting from several trial attorneys. The author notes, “Financial downturns often hit the general public the hardest, while larger corporations and businesses often continue to flourish” and that perceived imbalance drives a resentment against the corporate defendant that can put a thumb on the scale, particularly when it comes to non-economic and punitive damage categories.
There is definitely risk of a changed orientation toward damages during a downturn, and the article does share some information that during our last big downturn, in 2009, some categories of verdicts did in fact increase. That will matter for many clients, and it should be part of the risk assessments we offer them. At the same time, there is reason to believe that the change to verdicts won’t be a dramatic, reliable, or across-the-board effect. There are fundamentals to each case that will matter more than the feelings of impending recession. In this post, I will share some thoughts on why.
Understand the ‘Recession Effect’ on Juries
During the last major recession in 2009, a number of academics and trial consultants addressed the question a damage-effect in a series of articles in The Jury Expert, “Jury Damage Awards in Times of Recession.” The authors at that time shared the understandable point that hard times can drive an anti-corporate sentiment in the courtroom, particularly with news of unprecedented corporate profits accompanying rising prices. That can lead to a mindset driven by punishment rather than compensation, and trigger a “They can afford it” rationale among jurors. But it can certainly cut the other way as well. The normal amounts of skepticism toward plaintiffs can be heightened when the hardship on the general population is more widespread. As one of the authors, Dr. Edie Greene, put it, “Why, jurors might reason, should they enhance the standing of a few plaintiffs when other people continue to suffer financially?” In that context, claims that might seem trivial or more of a two-way street — e.g., an employee or customer who didn’t protect themselves — could trigger more of a backlash.
This is one of those questions where it is difficult to get reliable data. It is impossible to create a controlled study on cases with and without a background recession, and because the relatively few cases that make it to trial (in good or bad times) tend to be unique and not directly comparable to each other. The most we tend to get are anecdotes on verdicts that seem high. But as Dr. Greene points out, the fundamentals that affect all cases are likely to have the greater effects: “Juries will continue to scrutinize the motives of plaintiffs and the actions taken by defendants. They will continue to make crucial credibility judgments and evaluate the evidence carefully. They will continue to try mightily to understand and apply the jury instructions to the facts they believe were proven.” The end result is likely to be damage awards in bad times that are largely comparable to the ones that we see in good times.
Also Understand That Your Case Isn’t the “Average” Case
Authors and attorneys like those quoted in the Bloomberg article, however, do focus on some evidence showing increases in average verdicts during a recession. But averages can be misleading. In an era of fewer trials, any average can be strongly skewed by one or a few nuclear verdicts, particularly when we are talking about a specific venue or a specific category of litigation. When the vast majority of cases don’t make it to trial, those that do are often very unique cases for that reason. The effects of economic hard times are unlikely to hold for all regions and all fact patterns. For that reason, it is essential to think about and to study what drives juror responses in your own case. The way to do that is to survey your venue, to run a mock trial exercise, and to get a broad and diverse set of feedback on your case.
Part of what you learn, of course, will tell you whether jurors’ feelings of economic insecurity might be bleeding into their reactions toward the case. But the rest of what you learn should focus on the rest of the fundamentals: How do jurors understand and relate to the parties and the story?
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Other Posts on Damages:
- Learn What Motivates Punitive Damages
- Damages: Know Your Anchor
- Consider How Jurors Arrive at Damages Numbers: In Stages and With DifficultyImage credit: Shutterstock, used under license