’ * United States General Accounting Office 

Report to the Chairman, Subcommittee 

on Commerce, Consumer Protection, 

and Competitiveness, Committee on’ 

Energy and Commerce, House of 

Representatives 

PRODUCT LIABIIJTY~ 

States 
.~ 

. i 

c J 

. . . 

2) 

: 

.:, 
Human Resources Division 

B-23 2860 

September 29. 1989 

The Honorable James J. Florio 

Chairman, Subcommittee on Commerce, 

Consumer Protection. and Competitiveness 

Committee on Energy and Commerce 

House of Representatives 

Dear Mr. Chairman: 

In response to your request and later discussions with your office, we have collected 

information on damages awarded in product liability court cases. In the 1980s. there have 

been problems concerning the availability and affordability of liability insurance; as an 

outgrowth of these problems, attention has been focused on the frequency and size of 

damage awards. This has, in turn, led to a great deal of debate in state legislatures and in the 

Congress over tort reforms as a remedy. 

In this study, we examined such issues as the frequency and size of awards and payments, 

outcomes of appeals. liability standards on which cases were decided, time and costs of 

litigation, and the potential effects of federal reform measures. This information was 

collected for cases that went to verdict in five states in 1983-85. 

As arranged with your office, unless you publicly announce its contents earlier, we plan no 

further distribution of this report until 30 days from the date of its issuance. At that time, 

we will send copies to interested parties and make copies available to others on request. 

Sincerely yours, 

Lawrence H. Thompson 

Assistant Comptroller General 
Executive Summary 

Purpose Concerns about damage awards in product liability cases have received 

nationwide attention during the last 5 years. Insurers have argued that 

certain features of the tort liability system were the primary reasons for 

the mid-1980s “crisis” in the availability and affordability of liability 

insurance. Along with defendants’ groups, insurers called for legislation 

to curtail perceived problems in award amounts and with the bases on 

which manufacturers and sellers were held liable. Consumer groups 

have defended the current tort system and attributed problems with the 

affordability of liability insurance to economic factors. 

Because the Congress has been considering enacting a uniform product 

liability law, the Chairman of the Subcommittee on Commerce. Consumer Protection, and Competitiveness, House Energy and Commerce 

Committee, asked that GAO determine whether allegations about the tort 

system are valid. ~-40 also considered the potential effects of reform 

proposals. 

Background Insurers have argued that tort system problems have created too much 

uncertainty about the basis upon which liability for product-related 

injuries is determined and the size of damage awards. They claim that 

jury awards for noneconomic damages (such as pain and suffering) and 

punitive damages (awarded to punish manufacturers’ malicious or reckless conduct) are erratic and often excessive relative to the amount of 

harm done. They also argue that manufacturers, increasingly, are being 

held liable regardless of whether the manufacturer could have known 

about or prevented the product’s danger. Further, insurers are concerned about (1) the considerable variation in states’ laws that apply to 

product liability and (2) the large amounts of cost and time required to 

resolve claims through the court system. 

GAO reviewed court records of ail product liability cases (305) resolved 

through trials in 1983-85 in five states-Arizona. Massachusetts. Missouri. Sorth Dakota, and South Carolina. GAO also survTeyed attorneys in 

the cases to gather information on posttrial activities and payments as 

well as attorneys’ fees and expenses. Although GAO'S findings cannot be 

generalized to other states, GAO reports the results of studies in other 

jurisdictions to give a more complete picture of the litigation of product 

liability cases. 

Results in Brief GAO found that in general damage awards were not erratic or excessive. 

G-40’s study of cases in five states and data from previous studies shorn 

Page 2 GAOiHRD-89-99 Product Liability Litigation 
Executive Summan, 

that the size of compensatory awards (which include both economic and 

noneconomic damages) is strongly associated with injury severity and 

the amount of the underlying economic loss. Previous studies have also 

shown that the total amount awarded is frequently insufficient to cover 

just the economic losses when these losses are large. Some states have 

enacted caps to limit the size of punitive damages awards. but few punitive damage awards in the cases GA40 studied would have exceeded these 

caps had they been applicable. (See pp. 26-29.) 

When used. appeals and posttrial settlement negotiations serve to 

reduce the size of most extremely large awards and eliminate many of 

the unjustified punitive damage awards (see pp. 39-43). These processes 

are not used to the same extent in all states. however. and their use adds 

to the time and money required to resolve claims (see pp. 43-45. 48-52). 

In a majority of the cases GA40 studied, liability was determined to result 

from the defendants’ negligence (see p. 30). In some other cases, manufacturers were held liable even though they were not shown to be negligent. In most such cases, however, juries and judges would have been 

allowed to consider the defendants’ ability to have foreseen or prevented the danger in assessing responsibility (see p. 64). 

GAO’s Analysis 

Awards Consistent With 

Degree of Injury 

Plaintiffs were awarded compensatory damages in 45 percent of the 

cases studied. In these cases, trial courts awarded compensatory damages of $1 million or more only in cases involving death or permanent 

disability. The average compensatory award was the highest for permanent total disability ($2.1 million), followed by wrongful death 

($937,000) and permanent partial disability ($524.000). In contrast. the 

average award for temporarily disabling injuries was $78.000. Punitive 

damages were awarded in 23 cases. In these cases. punitive damages 

were highly correlated (.71) with the compensatory damages. The relatively fe\%, large total awards (over $1 million for both types of damages) 

accounted for 81 percent of all award amounts. (See pp. 24-29.) 

Awards Reduced 

Substantially Posttrial 

Appeals and posttrial settlement negotiations resulted in final payments 

different from the initial verdicts in 30 percent of all cases. and reduced 

total award amounts by 43 percent. Reductions occurred in .X percent 

Page 3 GAO ‘HRD89-99 Product Liabilit! Litigaticm 
Executive Summ~ 

of the cases won by plaintiffs and in 71 percent of the cases with awards 

of $1 million or more. Even though these large awards were often 

reduced, payments in the relatively few cases with large awards constituted 73 percent of all payments. Payments of compensatory awards 

ranged from full payment in Arizona and South Carolina to 32 percent 

of the award in Korth Dakota. (See pp. 38-45.) 

Punitive Damages 

Frequently Reversed 

Appellate courts reversed or remanded for retrial all punitive damage 

awards on which they ruled. The courts ruled on 12 punitive damage 

awards: 9 were reversed and 3 were vacated and remanded for retrial. 

For only 1 of the 9 awards that were reversed, the compensatory damage award was also reversed. (See p. 37.) 

Cases Took Years to 

Process 

On average, cases required almost 2-l/2 years to move from filing of a 

complaint to the beginning of the trial and 12 more days for the trial 

itself. An appeal added an average of 10 months to the completion of the 

case. States differed in processing time, with state court cases taking 

longer than federal court cases. (See pp. 48-51.) 

Attorneys’ Fees Were a Plaintiff attorneys are usually paid on a contingency fee basis. Those 

Large Percentage of Total who were paid a fee received, on the average, 35 percent of their clients’ 

Payments recoveries. A few plaintiff attorneys were paid in excess of $1 million. 

although the median was $33,000. Over one-third of total payments by 

defendants were for their own legal fees and expenses. Defendant attorneys, who are usually paid on an hourly basis, received fees ranging 

from $1.500 to $400.000, with a median of $20,000. Defendant attorneys’ fees and expenses in appealed cases were double those in cases not 

appealed. (See pp. 51-52.) 

Defendants’ Actions In the five states examined, negligence by the defendant was a basis for 

Considered in Majority of liability in about two-thirds of verdicts for plaintiffs, a higher rate than 

Plaintiff Verdicts had been assumed previously. In 27 percent of cases in which liabilitywas found, strict liability (liability without negligence) was the basis for 

the award. (See p. 30.) 

Most Proposed Reforms Although enhancing uniformity across states most of the proposed fedAffect a Minority of Cases era1 reforms would have affected only a minority of cases studied. In 

only a few cases that involved serious personal injury did the ultimate 

Page 4 GAO/HRD439-99 Product Liability Litigation 
Executive Summar 

payout exceed statutory caps that have been enacted in a few states. 

Two proposals-to reduce awards by (1) the degree the plaintiff was 

responsible for the injury and (2) the amount previously paid or to be 

paid by workers’ compensation-would have potentially affected more 

awards than other reforms. (See pp. 61-64.) 

Recommendations This report includes no recommendations. 

Agency Comments Since no executive branch agency oversees product liability, we did not 

obtain comments from any agency. 

Page 5 GAOIHRD-89-99 Product Liability Litigation 
Contents 

Executive Summary *7 

Chapter 1 10 

Introduction Background 10 

Objectives, Scope, and Methodology 18 

Chapter 2 “3 

Trial Verdicts: Frequency of Plaintiff Victories Varies Across States and “4 

Frequency and Size of Type of Court 

Awards 

Award Size Varies Substantially by State 

Size of Compensatory Awards Varies by Type and 

Severity of Injur) 

2. 5 

‘7 

Chapter 3 

Effects of Posttrial 

Activities on 

Payments 

Three States Show High Rate of Punitive Damage Awards 

Liability More Often Based on Negligence Than 

Previously Assumed 

Conclusions 

Posttrial Activities Can Lead to Payments That Differ 

From Awards 

Few Adjustments Made by Trial Judges 

Appeals Filed in a Large Minority of Cases 

Posttrial Activities Reduce Awards by Over 40 Percent 

Conclusions 

39 

30 

3 1 

32 

33 

34 

:35 

:39 

17 

Chapter 4 

Product Liability 

Cases Are Lengthy 

and Costly 

Average Time for Case Processing Was 30 Months 

Legal Fees for Attorneys a Substantial Part of 

Defendants’ Total Payments 

Conclusions 

Chapter 5 .i( i

Effects of Proposed 

Federal Reforms on 

State Laws and Case 

Considerable I’ariation Exists iZcross State Laws 

Federal Reforms Would Decrease Variation Across States 

Ilost Reform Proposals \Vould Have Affected Only a Fexf 

Cases Studied 

Outcomes 

Page 6 GAO ~HRJMY-99 Product Liabilit) LltigatifBn 
Contents 

Chapter 6 

Implications of Our 

Review 

Federal Reforms N’ould Reduce Variation in State Laws 

Findings Consistent \Vith Concerns About Time and Costs 

Findings Consistent With Concerns About Punitive 

Damages 

Concerns About -4ward Amounts Largely Unfounded 

Defendants’ Liability Most Often Based on Negligence 

Some Concerns About Product Sellers’ Liability Do Not 

Appear to Be Supported 

L7navailability of Data to Assess Tort Reforms Confirmed 

Appendixes Appendix I: Detailed Description of Methodology 

Appendix II: VS. General Accounting Office Surveys: 

Part A: Plaintiffs’ Attorneys/Part B: Defendants’ 

Attorneys 

81 

Appendix III: Cases That Reach Verdict: Incidents and 

Parties to the Suits 

89 

Appendix IV: How the Five States Studied Exemplify 

l’ariability of State Laws 

98 

Appendix V: Detailed Tabular Information and 

Supplementary Data on Verdicts and Payments 

Appendix \‘I: State Product Liability Laws (1988) 

-4ppendix 121: Major Contributors to This Report 

10” 

10; 

109 

Related GAO Products 

Tables Table 1.1: Type of Court in Which Cases Tried by State 

Table 2.1: Cases Plaintiffs 1Von by State 

Table 2.2: Damage Awards by State 

Table 2.3: Bases of Liability in Cases Won by Plaintiffs 

Table 3.1: Posttrial Processes That Can Affect .4ward 

Amount and Payment After the l’erdict 

Table 3.2: Appeals Rate by State 

Table 3.3: ,4ppellate Court Decisions 

Table 3.4: Effects of Posttrial Actions on Plaintiff Awards 

and Defense \‘erdicts 

13s 

:3s 

-III 

Table 3..5: Posttrial Outcomes by Award Size 1 .i 

Page 7 GAO;HFUM9-99 Product Liability Lirigatiou 
Contents 

Table 3.6: Type of Award and Payment-to-Aivard Ratios 

by State 

35 

Table 3.‘;: Posttrial Outcomes in Reduced Cases by Reason 

for Reduction 

Table 4.1: Average Case-Processing Time by State 

Table 4.3: A\-erage Case-Processing Time in State Courts 

and Federal Courts 

.50 

.j" 

f Table 5.1: Product Liability Reform Proposals (State and 

Federal) 

58 

Table 5.2: Product Liability Laws: 1988 Laws for Five 

States Studied I’ersus H.R. 111.5 

Table 3.3: Potential Effects of Selected Reform Proposals 

on Case Outcomes 

63 

Table I. 1: Cases Covered and Sources Used in State Courts 

Table 1.2: Percentage of Cases for Which Payment Data 

Obtained 

78 

80 

Table 1.3: Comparison of Cases With and R’ithout 

Payment Data 

80 

Table III. 1: Types of Products 

Table 111.2: Types of Injury Category by State 

Table 111.3: Severity of Plaintiffs’ Disabilit) 

Table 111.4: Types of Plaintiffs Who Went to Verdict 

Table 111.5: Demographic Characteristics of Injured 

Parties at the Time of Incident 

Table 111.6: Monetary Demands by Injury Categor] 

Table 111.7: Monetary Demands by Severity Category of 

Personal Injur) 

Table 111.8: Types of Defendants 

Table 111.9: State of Defendants’ Headquarters Compared 

U’ith the State in N’hich the Case &‘as Tried 

Table III. 10: Time Between Incident and Filing 

Table 11’. 1: Variations in Product Liability Lake for the 

Five States Studied ( 1983-85) 

Table Y. 1: Percentage of Cases 1I’on by Plaintiffs in State 

Court.s and Federal Courts 

Table V.2: Compensatory Damage 4wards b>. Types of 

In,jury 

Table \‘.3: Compensatory Damage AFvards by Severity of 

Personal Injury 

Table \..3: Incidence and Size of Punitive Damage Awards 

Table i’..?: Total Damage -4wards by Types of Injur) 

Table \-.G: Total Damage -4lvards by Severity of Personal 

90 

90 

91 

92 

93 

94 

9.5 

96 

96 

9-i 

99 

IO:! 

102 

IO:! 

103 

103 

103 

Injur) 

Page 8 GAO HRD89-99 Product Liability Litigation 
Contents 

Table V.i: Cases U’on by Plaintiff in State Court and 

Federal Court by Type of Injur) 

Table V.8: Cases \Von by Plaintiff by Percentage of IVrban 

Population 

Table 1’.9: Cases Won by Plaintiff by Gender of Injured 

Party 

Table V. 10: Incidence of Comparative Negligence and 

Effect on Award 

Table L’. 11: Appeals Rate for Cases Plaintiffs Won and 

Cases Defendants Won by Injury 

Table V. 12: Disposition of Appeals 

Table i-.13: Effects of Posttrial Actions by Size of .Jury 

Award 

Figures Figure 2.1: Percentage of Total Amount Awarded by 

Award Size 

Figure 3.1: Percentage of Cases Appealed for Verdicts 

With and Without Punitive Damages 

Figure 3.2: How Posttrial Activities Changed Cases Won 

by Defendants and by Plaintiffs 

Figure 3.3: Percentage of Total Amount Paid by Size of 

Verdict Award 

Figure 3.4: Payment Compared With Punitive and 

Compensatory Components of Awards 

Figure 3.5: -4verage Awards and Payments for Plaintiff 

1’erdicts With and Without Punitive Damages 

Figure 4.1: Average Case-Processing Time 

105 

105 

10.5 

106 

26 

37 

41 

42 

43 

44 

49 

Abbreviations 

.4HA ilmerican Bar Association 

G.40 General -4ccounting Office 

1C.J Institute for Civil .Justice, Rand Corporation 

Page 9 GAO ‘HRD89-99 Product Liability Litigation 
Chapter 1 

f&oduction 

The recent “crisis” in the cost and availability of commercial liability 

insurance has led to extensive debate over (1) the size and number of 

damage awards in product liability court cases and (2) the bases on 

which these awards are made. In the mid-1980s. a crisis of unprecedented proportion was reported in commercial liability insurance:’ one 

of the types of insurance most affected by cost increases and. consequently, availability was product liability. The cost increases were so 

large (for example, as much as 1,000 percent or more) that some businesses could no longer afford product liability insurance. As a result, 

according to reports, some aircraft manufacturers stopped producing 

many types of general aviation aircraft; all US. manufacturers of trampolines stopped production; and some pharmaceutical firms stopped 

research on new drugs. Insurers justified rate increases as being a 

response to (1) dramatic increases in the number and size of awards and 

(2) what they perceived to be a movement away from liability based on 

defendants’ actions, which had resulted in insurers’ inability to accurately predict their risksThis report addresses a wide range of issues concerning awards in product liability cases. Specifically, we examined verdicts in these cases to 

determine (1) the frequency and size of awards. (‘2) the legal standards 

on which awards are based, (3) posttrial activities and adjustments to 

awards, (4) litigation costs, and (5) the potential impact of proposed federal product liability legislation. This study was requested by the Chairman of the Subcommittee on Commerce. Consumer Protection. and 

Competitiveness. House Committee on Energy and Commerce. 

Background As concern over the insurance crisis mounted, insurers. consumer 

groups, and others debated its causes. Insurers and other tort reform 

advocates claimed that large rate increases and limits on coverage had 

been needed because of a “malfunctioning tort system.” which had led 

to unpredictable claims payments. According to these tort reform advocates, significant problems in the tort system included ( 1) a large growth 

in the size of jury awards (2) a mov’ement away from considerations of 

‘Insurance Information Institute. Insurance Facts 198.5~86 Property Casualty Fact Book (Sew York 

1985 I. p.6 

‘Hobert H. Malott. Member. Product Liability Coordinatmg CommIttee. Statement before the Subcomnuttee on Commerce. Consumer ProtectIon. and Competmveness: CommIttee on Energy and Commerce: L’S House of Representatlres iMay 5. 1987). Senal no. 10041. “Product Llablllty (part II.” 

pp 39-5.5 

Page 10 GAO~WUX39-99 Product Liability Litigation 
- 

Chapter 1 

Introduction 

intent or negligence toward a de facto no-fault liability system financed 

entirely by manufacturers and (3) excessive litigation costs. ’ 

Consumer groups claimed that insurance problems were the result. not 

of a malfunctioning tort system, but of dropping interest rates coupled 

with insurers’ pricing practices. Insurers had priced their products at 

unrealistically low levels in the early 198Os, said these groups. to bring 

in investment income when interest rates were high:-’ when interest 

rates and. consequently, insurers’ investment income dropped. insurers 

had to raise their prices dramatically to cover claims. The insurance 

industry seemed to concede that insurance prices had to rise to some 

extent in the mid-1980s because of past pricing practices.; Insurers also 

acknowledged that insurance prices had previously fallen unrealistically. They stood firm in their belief, however. that a malfunctioning 

tort system had been the primary cause of the crisis.‘, 

Recently, GAO has explored numerous issues related to the charges and 

counter-charges in the controversy over the causes of the crisis (see the 

list in Related GAO Products at the end of the report). In one report, we 

reviewed the growth in the number of product liability tort filings. 

which has also been cited as an indicator of tort system problems.; 

- 

Gro\vth in Size of Awards Only a small percentage of product liability cases are resolved through 

verdicts-most are resolved without a trial.’ But dramatic growth in the 

“Report of the Tort Policy Workmg Group on the Causes. Ex-tent. and Pohcy Implications of the Current Crisis m Insurance Availability and Affordability Washington. DC 19861. p. 2. 

‘National Insurance Consumer Organization. Fact Sheet on the Insurance Crisis ( 1984-85 I. p 1 

“Insurance information Institute. Insurance Facts: 1986-87 Propemy Casualt!- Fact Book I Sew York 

1986). pp. 6-7 

“Insurance Facts 1986% Property /Casualty Fact Book. pp 51-M 

‘13 General Accountmg Office. Product Liability, Extent of “Litigation Explosion” m Federal C’ourts 

Questioned (GXO IIRD-8%36BR. Jan. 23. 1988) Other studies also addressed this ISSW. The 19,Xti 

report of the Tort Police Workmg Group. for esamole. had cited an alarming 758 oercent mcrcast’ in 

product liability tort filings in federal &rts dunn; the 1 l-year wriod ending m iR85 Additional 

analysts of the data bl- GAO. hwvever. Indicated that I 1 ) the gram th m filmgs bva\ likely to have been 

severely overestimated and I :! I subsrantial growth Eva? evident m rclatic~n to only a fw prodrnts. 

asbestos being the most prominent. A recent Study is consistent with G.40‘4 fmdmgc Tcrctw 

Dungworth. Product Liability and the Busmess Sector: Litigaticin Trends in Federal ('ourts I Santa 

Monica. Calif The Rand Corporatioii. The Institute for CIVII .lusti<.tt. 1988,. pp 2.5-27 This strid! ;&(I 

repc)rted that the grciu-th m filings differed signIficantI> acro,s industrial sector\ 

Page 11 GAO’ HRD89-99 Product Liability Litigation 
Chapter 1 

Lntroduction 

size of jury awards is frequently cited as a major reason for increases in 

insurance rates. For product liability cases, the Tort Policy Working 

Group (a federal interagency task force headed by the Department of 

Justice) reported that nationwide, the number of verdicts of more than 

$1 million rose from 9 in 1975 to 86 in 1984.:’ Further. the average 

(mean) award increased 370 percent (from $394,000 to $1.8 million) 

over the same g-year period. I0 In addition, for long-term trends since 

1960 in jury awards for selected jurisdictions, available data show substantial increases, but only for extremely large awards.” Growth in 

awards for noneconomic damages and punitive damages have been cited 

as major contributing factors to increases in award amounts.‘- ,I S 

Consumer groups and others contend that (1) the use of the average is 

misleading and (2) the data in general overstate the problem for several 

reasons.‘-’ First, because average award size is strongly influenced by a 

few exceedingly large verdicts, I5 consumer advocates argue the median 

award (midpoint) is a more accurate indicator of trends in award size;!’ 

!‘Report of the Tort Pohcy Working Group. 1986. p -10 

“‘The average award refers to the average of awards made m verdicts for plamtiffs. The average 

therefore. does not include cases m which plamtlffs lose and receive nothmg. 

’ ’ From 1960 to 1987. the average award increased 2 12 percent in Cook County. Illinois. and over 

1,000 percent in San Francisco County. controlling for inflation. Mark A. Peterson. Civ11 Junes m the 

1980s. Trends m Jury Trials and Verdicts m California and Cook County. Illinois (Santa Momma. 

Calif.: The Rand Comoration. the Insntute for Civil Justice. 1987). D. 22: M.G. Shanlev and XA 

Peterson, Comparatke Justice: Civil Jury Verdicts m San Franc~scd and Cook Count& (Santa 

Momca. Calif. The Rand Corporation. the Institute for Civil Justice. 1983). p. ‘36 

“Report of the Tort Policy Rorkmg Group. 1986, pp. 2 and 3536 

“JPunitive damages are awarded to punish a defendant for intentlonal or flagrant misconduct or to 

deter others in that party‘s position from similar conduct. Punitive damages can be extraordmanll 

large See Mark Peterson, Syam Sarma. and Michael Shanley. Pumtlve Damages: Empuxal Findmgs 

(Santa Monica. Calif.: The Rand Corporanon. The Institute for Civil Justlce. 19% I. p 15. Accordmg to 

tort reform advocates. these awards often do not reflect the seriousness of the misconduct and arc’ 

excessive relative to the amount of harm done See Tort Pohcy Workmg Group An I’pdate on the 

Llablhty Cnsis ( Washmgton. D.C.. .22ar. 1987). p. 17 

“Our own calculations Indicate that when fmal. rather than prchmmary. figures are used and the 

figures are adlusted for mflatlon. the reported 3iO percent mcrease in a\‘erage award drops to l( I-1 

percent. 

“The Institute for Civil JustIce has found that m San Francisco and Cook Counties. mc.rra~e\ m 

awards are largelv due to Increases m a few ve77’ larer alvards See Peterson. CIXII .Junc? In th(, 

1980s. p “2 . . 

. /. 

‘%e. for example. Mark N Cooper. Trends in Llabthty Awards, Have .Junrs Run IVlld” c Washmgton. 

D C Consumer Federation of America. 1986 1. pp 32-31. and “The Assault on Personal InJuv LaivSuits.” p 14 

Page 12 GAO,, HRD439-99 Product Liability Litigation 
Chapter 1 

Introduction 

most studies have found smaller increases in the median.‘; Second. consumer groups contend that averages and medians are both misleading 

because they do not take into consideration instances in which plaintiffs 

lose and receive nothing.‘* Third, since awards are frequently reduced 

after the initial verdict, the extent to which awards represent actual 

payments made by insurers is questionable.1” 

Consumer groups have also contended that growth in award size does 

not reflect growth in noneconomic damages but. rather, skyrocketing 

medical care costs. a result in part of medical advances. Because these 

advances have enabled more severely injured victims to sumive their 

injuries, the victims require expensive rehabilitative services as they 

recover. 111 

The extent to which punitive damage awards contributed to the growth 

in award size has also been questioned.” On the basis of data from two 

studies of punitive damages, such awards appear to be infrequent in 

product liability cases. For example, the Institute for Civil Justice (ICJ) 

reported that during the 25year period ending in 1984, punitive damages were awarded in only two product liability cases in Cook County 

(out of 334 cases with awards) and four in San Francisco (out of 226 

cases with awardsLdZ A study of 32 counties in 10 states found that 

punitive damages were awarded infrequently in product liability cases. 

When awarded, however, they tended to be large.:’ 

Changes in Tort Liability The tort system’s primary functions are to deter wrongdoing and to 

compensate victims. According to tort reform advocates. the courts have 

“Civil Juries in the 1980s In 1960-84. m Cook County. for example. while the average award 

increased 212 percent, the median increased 82 percent. In San Francisco. the median award 

increased substantially (641 percent), but still less than the 1.061 percent increase m the average 

award. 

“See. for example. “The Assault on Personal Iryury Lawsuits.” p. 2 

’ ‘See. for example. “The Assault on Personal InJuy Lawsuits.” p 15 

‘““The Assault on Personal lryury Lawsuits.” pp. 15-16. and Trends m Liability Awards: Have .June\ 

Run Wild’.‘. pp. 16-18 Increases m the loss of income resultmg from disabling inJuries. growth m real 

income. and increases in medical care costs are among other factors cited a.? contributmg to the 

growth in aivard size 

” See. for example. “The Assault on Personal 1tyut-y Lawsuits,” pp 30.31 

“Peterson. Sarma. and Shanley. Punitive Damages. Empirical Findings. pp. 12-15. For all c1v11 JUT 

trials. 1C.J found sigmficant mcreases in the number of punitive damage awards 

“Stephen Damels. “Punnive Damages the Real Stan.” ABA Journal c Aug. 1. 1986 1. pp till-ti3 

Page 13 GA0~‘HlW89-99 Product Liability Litigation 
Chapter 1 

Introduction 

deemphasized the goal of deterrence in favor of compensating victims. 

regardless of whether the defendants caused the injury or did something 

wrong.‘l Tort reform advocates argue that plaintiffs and juries see manufacturers as deep pockets, who can afford to compensate for damages 

whether or not wrongdoing was committed in a product’s manufacture, 

design, or marketing. These advocates also point out that because product liability law has evolved largely through case law set by court decisions instead of by legislation, any changes in the law are applied 

retroactively-that is, the defendants are held responsible under standards that did not exist at the time the case was filed.‘; Insurers and 

manufacturers complain that these recent trends in the law have made 

the bases for liability unpredictable and created considerable uncertainty concerning the risks of insuring and manufacturing products.” 

The Tort Policy Working Group cited the standard of strict liability and 

the doctrine of joint and several liability as examples of the courts’ moving away from deterrence and consideration of wrongdoing toward a de 

facto no-fault compensation system, financed by defendants.” Traditionally, a defendant’s liability has been based on the standard of negligence-whether the defendant had failed to act with reasonable care. In 

recent years, strict liability has been used increasingly as a basis for 

liability in product liability cases. Under strict liability, a defendant is 

liable if the plaintiff proves the product (1) was dangerously defective 

at the time it left the defendant and (2) caused an injury, regardless of 

whether the defendant had been negligent.?” 

Under joint and several liability. each defendant is liable for all plaintiff’s damages. The plaintiff cannot collect more than the total amount 

‘%ee. for example. Report of the Tort Policy Working Group. lR8i. pp. 30-35: Roberr L. Habush. 

President. .4ssoclation of Trial Lawyers of America. Statement before the Subcommittee on Commerce. Consumer Protection. and Competltweness: Committee on Energy and Commerce: 1. S Hor~w 

of Representatwes iMay 5. 1987). Serial no 100-61, p 118 

“For example. a state appellate court recently held. for the fu-st time. that all escalatora arra “unrwsonably dangerous per se.” regardless of theu- benefits to society or of a manufactuw’s ablhr> to 

remove their nsks. See Brown v Sears. ,503 So.2d 1122 (La. App 1987 1, modlfwd. 51 -I So 2d -X39 I IA 

19,871: rehearmg demed. .5lA S2d 115-l (La. 1988). Pnor to this caw. no COWI had rulrd rhat t+cal;itors were unreasonably dangerous per se 

“‘.4ccordmg to one source. consumer advocates believe that ehmmarmg unpredlctabill~~ completc~l~ 

would dlwpate the deterrent effect of thr law and maktb product dt~fc~c~tsJu~;l another co\f (II dtrmg 

business. 

“Report of the Ton Policy H‘orhng Group ( 19% I, pp 30-X 

“See Amencan Law Institute. Restatement of the Law Torts. Second. sty X12.4 (St Paul Ament an 

Law Institute Pubhshrrs. 19ti.i). ch. 1-t. p 017 

Page 14 GAO: -89-99 Product Liabilit) Litigation 

. 
Chapter 1 

Introduction 

of damages awarded. but may collect all damages from any defendantcs 1 

found liable. This protects plaintiffs from receiving less than the full 

amount of damages when one defendant lacks resources or is relatively 

inaccessible. Defendants who believe they have paid more than their 

fair share of the damages must independently sue other defendants for 

contributions. According to tort reform advocates. under this doctrine. 

those defendants seen as deep pockets end up paying more than their 

proportional share of liability.;” 

Many legal scholars have documented a movement by the courts toward 

the use of strict liability. JI’Some of these scholars and defendant groups 

have objected that under strict liability, defendants are liable regardless 

of their ability to have foreseen or prevented unsafe aspects of products..31 Other legal scholars have noted that for cases in which the plaintiff alleges the product carried an inadequate warning, a hybrid form of 

strict liability and negligence is evolving such that a defendant’s ability 

to have known about the defect is considered.:” Still other scholars 

believe that because manufacturers make profits from the products they 

sell, manufacturers are in the best position to cover damages resulting 

from unreasonably dangerous defects, regardless of whether they could 

have known about the defects. Ii 

Tort Reform Movement The tort reform movement began as liability insurance became less 

available and affordable. Interest grew in reforms to alter the rules by 

which claims could be brought and decided in court. With few exceptions, the reforms advocated would make it more difficult for plaintiffs 

%ee. for example. Report of the Tort I’ohcy Working Group (1986). p. 33 

““See. for example. George L. Priest. “Product Llabllity Law and the Accident Rate.” in R.E. Litan and 

C Winston (eds ). Liability: Perspectives and Policy Washmgton. D.C.. The Brookmgs Instltutlon. 

1988). pp. 194-200. and Peter W. Huber. Liability: The Legal Revolution and Its Consequences (Yew 

York Basic Books. Inc 1988). pp 36-39 

.“See. for example. American Tort Reform Association. Leglslatlve Resource Book for Tort Reform. 

(Washmgton. D C Amencan Tort Reform Association. 1986,. p C-l. and 2 D Twerski. “X >foderdtr 

and Restramed Product Liability Hill. Targeting the Crws Areas for Resol Ition. I.mverslty of Mlchlgan .Joumal of Law Reform. Vol 18 ( 1985 1. pp 589-99 

“Henry Cohen. Tort Law Reform Pros and Cons of Recommendatwns of the Tort Policy %‘orkmg 

Group (Washington. D C Congressional Research ,Q~ice. 1986~. p CRS-7. In most states. under 

strlctiabihty. defendants are not liable for failing to adequately warn If they could not have forrsern 

and warned the plamtlff about the product defect 

‘~‘See. for example. Jery J Phllhps. !‘mversnv of Tennessee Law School, Statement before the Subcommittee on Commerce. Consumer ProtectIon. and Competitiveness: Cornrruttee on Energy and Commerce: 1. S House of Representatives I Aug 6. 1987 I, Senal no. 100-102. “Product Liablllry (part II 1.” 

pp 312-13 

Page 15 GAO/HRD89-99 Product Liability Litigation 
Chapter 1 

Introduction 

to win in court and would limit award amounts. Since state legislatures 

and state courts establish almost all tort law. the reform movement has 

been active primarily at the state level. 

In the 1970s concern over the escalating costs of medical malpractice 

insurance resulted in the adoption of tort reforms, which affected malpractice cases in many states. In the 1980s medical malpractice was 

again the subject of a tort reform movement at the state level. This time, 

however, reforms also focused on product liability. 

Each state establishes its own legal standards for product liability cases. 

Since manufacturers involved in interstate commerce could, potentially, 

be sued in any state in which their products are sold, the manufacturers 

contend that they are being held to different standards of liability under 

the different state laws. In fact, manufacturers complain that the current situation allows plaintiffs to “forum shop” (that is, to file cases in 

the jurisdiction they deem most likely to favor them)? The most effective reform in this situation, manufacturers argue, would be federal law 

that is applied uniformly across jurisdictions.‘j’ In addition to calling for 

a federal law, manufacturers along with other tort reform advocates 

have continued their efforts to pass reforms at the state level. Numerous states and the federal government have also considered reform 

measures for product liability in recent years. Ko reform proposals have 

been passed by the Congress. As of January 1989, a majority of states 

had adopted some reforms. These reforms have increased the variation 

in laws across states (see ch. 5 for a detailed discussion). 

Product Liability Process The potential for a product liability case arises when a person suffers 

bodily injury or damage to property from a product. In many instances 

and for a variety of reasons, an injured party may not seek compensation. If the injured party decides to seek compensation, the first step is 

to file a claim with the potentially liable party (for example, the manufacturer), its insurance company, or both. On the basis of data on claims 

.“Vlctor E. Schwartz. “State Tort Reform-Helping the System or Creating More Chaos.” unpnbli~hed 

report (Washington. D.C.: Crowell and .Mormg. 198i 1. p 13 

“‘See Victor E. Schwartz, Statement before the SubcommIttee on Commerce. Consumer ProtectIon 

and Competitiveness: Corrumttee on Energy and Commerce: L..S. House of Representatives I May 5 

1987). Serial no. 100-61. “Product Liability (part I).” pp 5i and 89: and An I’pdate on the Llabliir) 

Cns1s. p. 66. 

Page 16 GAO /HRD8999 Product Liability Litigation 
Chapter 1 

Introduction 

filed in 1976-Z. for about 2’7 percent of claims, lawsuits were also 

filed. “1 

Most plaintiffs in product liability cases are the people who were 

injured. They can be joined in their suits, and often are, by others. such 

as spouses or parents who may have incurred losses (either economic or 

noneconomic) as a result of the injuries. Defendants in product liability 

cases are usually the manufacturers of the product: product sellers are 

often parties in these cases as well. 

Since many defendants in product liability cases do business in more 

than one state, plaintiffs in a product liability suit often have a choice of 

states and courts (that is. federal or state court) in which to file their 

cases? A case can be filed in the state in which the plaintiff resides or, 

if different. in any state in which a defendant does business. r\;o matter 

which state the case is filed in, the case may be heard in federal court if 

(1) all defendants reside in states different from all plaintiffs and (2) 

there is at least $50,000 claimed in damages.‘” 

Depending on the case law or statutes in the state in which the case is 

filed. plaintiffs can allege that defendants are liable for different reasons. Most prevalent among these reasons are negligence, strict liability. 

and breach of warranty. Under negligence, defendants are liable if they 

did not exercise due care and this lack of care caused the injury. Under 

strict liability, defendants are liable if the product was defective and 

this defect made the product unreasonably dangerous and caused the 

injury. There are three types of defects for which defendants can be 

found strictly liable: (1) a flaw in the product introduced in the manufacturing process (manufacturing defect); (2) a defect in the design of 

the product (design defect): and (3) a failure to adequately warn of risks 

or give instructions (warning defect). Under breach of warranty. 

defendants are liable if the product failed to work as expressly or 

.“‘Although lawsuns were filed in a mmontv of claims, these lawsuns accounted for 93 percent (11 

total payments for claims Insurance Semick Office. Product Lrability Closed Clatm Suney .A Ttv IImeal Analysts of Sune)- Results i Washington. D.C.. 1977). p. 95. 

“.Ilthouph planttiffs may have a chow of whtch court to file their suns tn. they cannot c,hlH)st’ 

lvhrch states’ law ~~111 be applied m the suiti .4 court ~111 usually apply the law of the state v. tth th 

most significant contact wtth the case Thts is almost always the state where the acctdent occ~urr~~i III 

addnton. a defendant can ask the court to transfer the case to a more convement court 

‘“Before X!ay 1989 to be heard in federal court clatmed damages had to be at least $l~l.OOCr 

Page 17 GAO/HRD-89-99 Product Liability Litigation 
Chapter 1 

Lntroduction 

implicitly warranted or promised. In addition to seeking monetary compensation for economic and noneconomic loss, a plaintiff in maq 

instances also seeks punitive damages. 

Plaintiff attorneys are typically paid a contingency fee. If the plaintiff 

wins at trial or settles out of court with a defendant. the attorney is paid 

a percentage (usually between 30 and 40 percent) of any money the 

plaintiff receives from defendants. Otherwise. if the plaintiff loses and 

fails to reach any settlement, the plaintiff usually pays the attorney 

nothing, except on rare occasions when the plaintiff and the attorney 

have entered into a special fee arrangement whereby costs are covered. 

In contrast, defendant attorneys are normally paid (1) on an hourly 

basis plus expenses or (2) salaries if the attornies are in-house and, thus. 

receive payment regardless of case outcome. 

At any time following the filing of a suit, the plaintiff and the defendant 

(the parties) can come to an agreement that resolves the matter without 

further court action. If a trial ensues, the parties may still settle before a 

verdict is rendered. Most cases (87 percent) end before a verdict because 

the parties settle or the plaintiff decides not to proceed with the case. If 

a settlement is not reached or the case is not dropped, the trial ends with 

a verdict, which may be rendered by a jury or a judge. i\ jury verdict 

can be modified by the trial judge, and any verdict can be appealed. Settlement negotiations can also continue after the verdict and while the 

appeal is pending. Sometimes an appealed case is remanded for a new 

trial. in which case the trial process starts again. The entire process can 

be extremely time-consuming. Cases going to trial may take several 

years to resolve, and those that are appealed may take even longer. In 

some states, a plaintiff’s award may include an amount for ( 1) prejudgment interest to make up for the defendant’s not paying the award at 

the time of the loss or (2) postjudgment interest to make up for the 

defendant’s not paying the award at the time the judgment is rendered 

or both. 

Objectives, Scope, and Our goal was to provide the requester with information on a wide range 

Methodology of issues concerning the litigation of. and outcomes in. product liability 

cases. Specifically. our objectives were to determine 

l the percentage of cases in which defendants are found liable and the 

amounts of compensatory and punitive damage awards. 

l the extent to which the standards of negligence and strict liability are 

used to determine liability. 

Page 18 GAO i HRD89-99 Product Liability Litigation 
Chapter 1 

Introduction 

l the incidence of posttrial activities and actual payments made to plaintiffs after verdict, 

l the size of awards and payments relative to plaintiffs’ economic* losses, 

l the time and cost of litigation. and 

l the possible impact of proposed federal product liability legislation on 

(1) the outcomes of court cases and (2) the variations in laws across 

states. 

To address these objectives. we gathered data on product liability cases 

resolved by a judge or a jury trial in federal and state courts in 1983-8.5. 

The state courts we studied are ones with general jurisdiction. “’ 

Selection of States We limited our review to five states: Arizona, Massachusetts, Missouri. 

Korth Dakota. and South Carolina. Through a telephone survey of the 

48 states in the continental United States and the District of Columbia. 

we found 10 states in which all product liability cases or cases in major 

metropolitan areas could be identified without manually searching 

thousands of case files.Ji’ Our final selection was based on ( 1) the amount 

of information available on product liability litigation in the jurisdictions and (2) relative costs associated with obtaining the information. 

U’e eliminated two jurisdictions (Illinois and California) because product 

liability verdicts in those jurisdictions have been reported by K.J. \VZ‘~ 

excluded three jurisdictions (the states of Colorado. Michigan. and Yinnesota) because obtaining case listings would have entailed relatively 

large expenditures that exceeded our resources. 

Although the five states cannot be considered representative of all 

states, they offer a mix in terms of region of the country, degree of 

urbanization. numbers of manufacturers and manufacturing employees. 

and tort laws (see apps. I and IV). We were not able to include any of the 

large industrial states that reform advocates have identified as “problem” states in the area of product liability. The five states, however. 

have elements of product liability law, such as strict liability and joint 

and several liability. which have been pointed to as problems by insurers and other tort reform advocates. 

Page 19 GAO HRD89-99 Product Liability Litigation 
Chapter 1 

Introduction 

Selection of Cases We limited our review to cases resolved through verdicts because of the 

(1) difficulty in obtaining information on pretrial settlements and (2) 

significance of these cases. Although only about 3.5 percent of all product liability claims are resolved by verdicts, these cases can be considered significant because they are (1) bellwethers for settlements that 

establish amounts plaintiffs could expect to receive for injuries, (2) the 

focus of recent criticisms concerning the tort system, and (3) the cases 

for which the effects of tort reforms would be most quantifiable. The 

reader should keep in mind, however, that these cases are unlikely to be 

representative of all claims since they are the cases left after settlement 

negotiations. We, therefore, cannot relate our findings to claims resolved 

prior to verdicts. 

Because criticisms of the tort system have focused on suits brought by 

individuals (as opposed to suits by corporate entities),-” we examined 

cases in which suits were brought by individuals alleging personal 

injury, wrongful death, or damage to property. We did not examine 

product liability cases that only involved disputes over contracts or 

damage to the product itself. 

To ensure sufficient numbers of cases for our analyses, we obtained 

data on cases that went to verdict during a 3-year period. Since appeals 

can take years to resolve, we estimated that 1985 closed cases were the 

most recent for which we could reasonably expect all appeals to have 

been resolved. We treat the 3 years as one period. not three consecutive 

periods. 

In the five states, a total of 305 cases were resolved through a trial verdict during the 3-year period.-l’ Slightly more of these cases were tried in 

state courts (54 percent) than in federal courts. As shown in table I. 1. 

states varied considerably in the relative number of cases tried in the 

two court systems. The majority of cases (244) involved personal injury. 

“‘Insurance Information Institute. Insurance Facts l!%ti-87. pp .51-S 

“In 94 cases. a total of Z-- , , related actions were also filed These actions are called cross-claims. 

counter-claims. or “third-party” complaints and involve defendants suing other defendants. plaintiffs 

sumg other plamtiffs. defendants suing plaintiffs. and defendants suing parties who were not part (11 

the original suit About one-third of the cases studied generated a related action. most of which were 

dismissed by the court We did not follow all related actions to their conclusions nor do we consider 

them further m this report 

Page 20 GAO JHRD-89.99 Product Liability Litigation 
Chapter 1 

Introduction 

Much fewer cases involved property damage (37 cases) or wrongful 

death (31 cases).A:; 

‘able 1.1: Type of Court in Which Cases 

‘ried by State Type of court 

State State Federal 

Arizona 56 3 

Massachusetts 22 44 

~..-~ 

Mlssoun 56 52 

North Dakota 13 3 

South Carolma 

Total 

19 37 ~- 

166 139 

3ata Collection For each case. we collected background information and data on verdicts from court records and, where available, jury verdict reportersa 

For information on posttrial payments and other data not consistently 

available from court records, we surveyed attorneys-for both plaintiffs and defendants-involved in the cases. We were able to collect payment data for 77 percent of the cases. The response rates for other 

information ranged from 35 percent to 80 percent. Appendix I includes a 

description of the data collection and our strategy for identifying product liability cases. Appendix II includes questionnaires used to survey 

attorneys. Appendix III includes background information on the cases, 

as well as descriptions of products, injuries, plaintiffs, defendants. and 

amounts demanded. 

In order to understand the verdicts and judgments in the cases studied 

and to examine the variability of laws across the five states, we 

reviewed state statutes and case law relevant to 10 aspects of the law 

(see app. IV). We reviewed current law (as of 1988) and the law as it 

existed when the majority of our 305 cases were litigated. For the 

remaining 45 states, we reviewed aspects of the law (as of 1988) for 

which summaries of statutes or case law or both already existed [see 

app. VI). We also reviewed recent federal product liability bills introduced in the Congress. 

“Five cases Involved personal u\lury and property damage These cases have been categorized * 

personal Injury cases m our analyses Two cases ukolved personal uyury and death These cases 

haw been categorized as wrongful death cases in our analyses 

“Reporters are hstmgs or digests of court actwitles prepared by the L’S government. state governments. or pnvate orgamzatwns. usually for subscnptlon sale 

Page 21 GAO,‘HRD89-99 Product Liability Litigation 
Chapter 1 

Introduction 

We were able to collect data to address all our objectives with one exception. In the five states studied, we were unable to determine how awards 

and payments compared with plaintiffs’ economic losses. Court files did 

not differentiate economic losses from noneconomic losses: an analysis 

of attorneys’ responses showed that plaintiff and defendant attorneys 

reported inconsistencies that could not be explained. FVe, therefore. rely 

on data from other studies to address this objective. It should also be 

noted that our data do not allow for an assessment of the growth in 

product liability awards over time in the five states. 

Page 22 GAO IHRD8999 Product Liability Litigation 
‘haprc’!. _I ___~ .- _ 

Trial Verdicts: Frequency and Size of Awards 

Findings PlaIntIffs received verdicts In their favor in 45 percen: of cases 

Although this rate was generally consistent across jurtscllctlons 

platntiffs in North Dakota won at a rate greater thaq this and r 

Massachusetts at a rate lower than this In four of the five states 

the rate of plaIntIff victories was higher for cases hearo In state 

courts than in federal courts 

Awards to plaintIffs (for compensatory and punitive damages 

together) ranged in size from $255 to $10 mllllon The average 

award was $845.000. the median $157 000 Twenty percent of 

the awards were for $1 mllllon or more. with such verdicts 

accounting for 81 percent of the total amount awarded 

The size of compensatory awards varied by type and degree of 

Injury, with the highest awards given for permanent total disabilIty followed by wrongful death These differences are generally 

consistent with the relative economic losses for various Injuries 

PunWe damages ranged from $500 to $7 million and were 

included In almost one-fifth of awards or 9 percent of all cases 

These awards were concentrated In three of the five states The 

size of punltlve damage awards and compensatory damage 

awards were highly correlated On average. punitive damages 

were triple the size of the compensatory damages. although 

their relative size vaned conslderably across states 

In 27 percent of the plaintiff vlctorles the basis for the decisons 

In favor of the plaIntIffs was stnct IlabIlIty sometimes in comblna 

tlon with breach of warranty Almost all of the other plaintiff VICtories were based on negligence alone or in combination with 

other theories of Ilability Negligence was the predominant basis 

for IlabIlIty In four of the five states 

Much of the criticism of the tort system has focused on the frequent) 

and size of awards to plaintiffs. These awards have been described as 

erratic and excessive relative to plaintiffs’ economic losses. Critics have 

alleged that awards for punitive damages, which are intended to punish 

outrageous misconduct, are excessive in their frequency and size. The 

basis for finding defendants liable has been described by reform advocates as too unpredictable. particularly under the standard of strict 

liability. 

Page 23 GAO/ HRD-89.99 Product Liability Litigation 
Chapter 2 

Trial Verdicts: Frequency and Size of .4wards 

In this chapter, we report data on the number and size of awards and 

the theories on which liability was based. The first section includes data 

on the number of cases in which liability was awarded and how the incidence of liability varies according to type of court. !l’e next consider the 

size of awards and how compensatory damage awards relate to injur) 

type and severity. The last sections include data on the incidence and 

size of punitive damage awards and the theories on which liability was 

based. Appendix V presents detailed tabular information relating to the 

summary data discussed in the chapter. This appendix also includes 

supplemental information on how liability rates and awards varied 

according to the percentage of urban population. type of injury. and the 

gender of injured parties. 

Frequency of Plaintiff In 45 percent of all cases. plaintiffs received verdicts in their favor (that . 

Victories Varies is, were awarded damages). This success rate holds for the 14 nonjur3 

trials held by judges and the 291 cases decided by juries. Verdicts in two 

Across States and states,’ however. depart from this average (see table 2.1). 0f the small 

Type of Court number of cases (16) decided in North Dakota during the study’s time 

period, 75 percent resulted in verdicts for plaintiffs. In contrast. in Massachusetts, plaintiffs won in 33 percent of cases. Such variation across 

states is consistent with another study of product liability lperdicts rendered in 1980-85.’ 

Table 2.1: Cases Plaintiffs Won by State 

Cases won by plaintiffs 

State Total cases Number Percent 

Arizona 59 28 48 

---___-___ - 

Massachusetts 66 22 33 

Mlssourl 108 50 46 

-__.--.____ ._.- ~~~~. -~~~~. -~~~~~ ~~ 

North Dakota 16 12 73 

~______ ~- 

South Carolina 56 24 43 

Total 305 136 45 

Page 24 GAO ‘HRD-89-99 Product Liabilit? Litigation 
Chapter 2 

Trial Verdicts: Frequency and Size of Awards 

The liability rates of cases tried in state and federal courts differed substantially. Overall. 52 percent of state court cases resulted in decisions 

for the plaintiffs as compared with 37 percent of federal court cases. 

State and federal courts in all states, except Arizona, showed this pattern (see table 1’. 1). In Arizona, cases decided in federal court had a 

higher win rate than state court cases. Although only three cases were 

tried in Arizona’s federal court. the different pattern in -4rizona suggests that plaintiffs’ win rate in each type of court depends on the state. 

as might have been expected. 

iward Size Varies The total amount of money awarded in the 136 plaintiff verdicts was 

substantially by State just under $115 million. Awards ranged in size from $255 to $10 million. Th e average award was $845,000 and the median, $157.000. 

In addition to the average and median awards, we also calculated the 

expected award. This is the average award multiplied by the proportion 

of cases in which liability was found and damages awarded. This measure, therefore. reflects the size of awards as well as the probability that 

the plaintiff will receive an award. Of the three ways of describing the 

typical award, the expected award is the best indicator of what plaintiffs received on the average across all cases going to verdict. In the five 

states studied, the expected award was $377.000. 

Average, median, and expected awards for all cases mask a substantial 

difference between two of the five states. As shown in table 2.2. the 

average and expected awards in Arizona were 4 times as large as those 

in South Carolina; the median was over 10 times as large. When three 

extreme awards in Arizona (all over S7 million) are excluded, however. 

average awards in that state are more comparable with awards in Yassachusetts. Missouri, and North Dakota. L The average awards in the latter three states are consistent with each other. The large expected 

awards in North Dakota relative to Massachusetts and Missouri primarily reflect the higher likelihood of winning in North Dakota. South Carolina had lower a\vards than the other states. 

Page 2.5 GAO ~HRD89-99 Product Liability Litigation 
Chapter 2 

Trial Verdicts: Frequency and Size of Awards 

Table 2.2: Damage Awards by State 

Dollars In thousands 

State 

--__ _--- 

Arizona 

Cases 

28 

Average Median Expected 

award award award 

$1.462 -___-‘- $370 $694 

Vassachusetts 22 709 135 236 

~- -~~ 

MIssour 50 780 225 361 

North Dakota 12 880 - 229 660 

~_-~~- 

South Carolina 24 369 - 32 158 

All cases 136 845 157 377 

Consistent with other studies of liability awards,’ a relatively small 

number of extremely large awards raised the average and accounted for 

a majority of total amounts awarded. Across all states, 27 awards (20 

percent) were $1 million or more. These awards totaled $93 million and. 

as shown in figure 2.1, accounted for 81 percent of the total amount 

awarded. 

Figure 2.1: Percentage of Total Amount 

Awarded by Award Size 

$1 Million or More (N = 27) 

‘Michael G. Shanley and Mark A Peterson. Posttrial Adjustments to Jup Awards (Santa Vww.a 

C’allf The Hand Corporation. Institute for Civil dustIce. 1987), pp. 30-32 

Page 26 GAO, HRD-89-99 Product Liability Litigation 
Chapter 2 

Trial Verdicts: Frequency and Size of Awards 

size of Compensatory Across ail five states. the size of compensatory awards (that is, awards 

Awards Varies by for economic damages and noneconomic damages, such as for pain and 

suffering) varied by type and severity of injury in a manner consistent 

Type and Severity of with underlying economic loss.’ Property damage cases had substanhjury tially lower compensatory damage awards than personal injury and 

wrongful death cases. The average compensatory award for the property damage cases studied was $128,000 (see table V.2 for median and 

expected awards). Property damage cases also had lower alleged damages. as indicated by plaintiffs’ demands. than the other two types of 

cases (see app. III). 

For all personal injury cases, the average compensatory award was 

$672,000. As expected, the average compensatory award was highest 

for permanent total disability ($2.1 million), followed by permanent partial disability ($524,000) and temporary injuries ($78,000) (see table Y.3 

for median and expected awards). The average compensatory award for 

wrongful death cases was $672,000 (see table V.2 for median and 

expected awards). All 2 1 compensatory damage awards of $1 million or 

more in which the severity of injury was specified were cases involving 

either permanent disability or death.‘, 

The pattern of compensatory awards is consistent with a previous 

study; it found that the more severe and disabling the injury. the higher 

the associated medical expenses and lost income, as well as the larger 

the award. ICJ reported that for all tort cases in Cook County, Illinois, 

severity of the injury (as measured by medical costs) could explain onehalf of the differences in award amounts between decisions.: Consistent 

with our findings. ICJ also reported higher awards for permanent total 

‘NIth only mmor departures. these differences in award wze by injury t)-p+ and srventl- were apparent in all five states We do not report the averages for each state, however. because the small 

number of cases m some inJury categories makes these averages unreliable 

“Examples of personal uyuty cases that resulted in % 1 milbon or more verdicts are these a passmgc*r 

m a car who was rendered quadnpleglc after the car crashed because of defective brakes. an opw-artv 

of an asphalt roller who suffered permanent brain damage and multiple fracture% of bones when nln 

over b!. the roller. and a motorcycle rider who suffered second-degree and ttwd-degree burni; OX VI’ 711 

percent of his body when his motorcycle exploded after colhdmg with a cal 

‘Clark A Peterson. Compensation of InJunes Civil duty Vrrdlcts m Cook Counry (Santa Momc~a 

Cahf The Kand Corporatwn. Institute for Cwil .Justice. 1983). p 90 

Page 27 GAOIHRDSS-99 Product Liability Litigation 
Chapter 2 

Trial Verdicts: Frequency and Size of Awards 

disability than death.” Closed claims studies also report higher average 

payments as economic loss increases.” 

The lower average total award for South Carolina is due, at least in part, 

to a high proportion of cases involving property damage and temporary 

disability, which have relatively low award amounts. In South Carolina. 

58 percent of awards were for property damage and temporary disability. Missouri had the next highest percentage of awards (24 percent) in 

those two types of injury categories. 

We could not estimate the degree to which awards are excessive relative 

to actual economic losses because data on economic losses were not 

available. Several previous studies, however, have established that 

although plaintiffs with small economic losses are overcompensated for 

their losses, plaintiffs with large economic losses are undercompensated. 

Although still undercompensated, in recent years plaintiffs with large 

losses have been more adequately compensated than in the past.“’ Previous studies have found that noneconomic damages, such as for loss of 

consortium (right of a husband or wife to the other’s help and love), can 

be a substantial percentage (one-third to over one-half) of the total 

award even when the total compensatory award does not fully compensate for economic losses. i I 

‘Medtcal and support serVtce expenses drove up economtc losses in permanent total dtsabrhty cases 

“Alliance of .4merican Insurers and .4mencan insurance Association, .4 Study of Large Product Lrabtlity Claims Closed in 1985 ( 19813). p 18: Insurance Sentces Office. Product Ltabibty Closed Clatms 

Study A TechnIcal Analysts of Survey Results ( 1977 1, p 19 

“‘E.M. King and .J.P. Smith. Economic Loss and Compensatton m Avtatrcm Accidents (Santa Monica. 

Calif. The Rand Corporatton. Institute for CIVII Justice. 1988 I. pp. G-7 1. Even without subtractmg 

legal fees from compensatton. compensatton m wrongful death cases. on average. rvas well below 

estimates of actual economtc losses Rate of recovery declmed from full compensation for losses 

below $200.000 to compensatron of 60 percent for losses of $500.00(1 to compensation of less than 50 

percent for losses of $1 million or more. .4lso see .4 Study of Large Product Ltabllny Claims Closed in 

1985. p 18: Product Liability Closed Claim Study pp. -17 and -19. 

“See. for example. Economic Loss and Compensation In .4vlatlon Plcctdents. pp 89-91 The results of 

thts study also showed that large palmen& for noneconomtc damages are given even when economic 

Josses are not fully covered. Thus, plaintiffs receiving large noneconomrc awards are not necessanly 

receiving a bonus of noneconomtc damages In addition to full compensation for economic losses 

Page 28 GAO HRD-89-99 Product Liability Litigation 
Chapter 2 

Trial Verdicts: Frequency and Size of Awards 

Three States Show In 23 of 55 cases in which compensatory damages were awarded and 

High Rate of Punitive punitive damages had been sought. juries awarded punitive damages: 

these awards totalled $28.9 million (or about 25 percent of the total 

Damage Awards amount awarded).l’ The awards had an extremely wide range. from 

$500 to $7 million. Their size, however, was highly correlated with the 

size of compensatory damages. Excluding one extreme case in which 

compensatory damages far exceeded punitive damages. these punitive 

damages had a correlation of .71 with compensatory damages. The 23 

punitive damage awards had an average just under $1.3 million and a 

median of $400,000. which are only slightly larger than the average am 

median compensatory damage awards in those 23 cases (average of 

$906.000 and median of $375,000). 

In three states, the incidence of punitive damage awards was high relative to the incidence in the other two states and in other jurisdictions. 

Twenty-five percent of awards in Arizona and South Carolina included 

punitive damages! as did 18 percent in Missouri (see table Y.4). In contrast, no punitive damages were awarded in Massachusetts. which only 

allows punitive damages in wrongful death ca.ses.11 One case in North 

Dakota had a punitive damage award. As discussed in chapter 1, IC.J 

found that punitive damages were awarded in only six product liability 

cases in Cook County and San Francisco in the 25year period ending in 

1984. Only 2 of 32 jurisdictions in another study showed a rate of punitive damage awards as high as we observed.lA 

The size of punitive damages also varied substantially by state. South 

Carolina had much smaller punitive damage awards (average of 

$366.000) than the other three states (average of $1 million or more 

each; see table V.4). The average ratio of punitive damages to compensatory damages was smaller in South Carolina (1 .O) and Arizona (1.8) than 

in Missouri (5.0). Six of the 23 punitive damage awards (four in Missouri 

and two in Arizona) exceeded three times the compensatory damages.‘. 

“Pumt~ve damages were sought m the rmtlal complamts m 108 of the 30.5 cams 

’ ‘In Massachusetts. liability was awarded m onI>- three wrongful death cases 

“Stephen < DameIs. “Pumtive Damages: The Real Son.” ABA .Journal ( Aug 1, 19Al; I, pp 60-W 

‘-‘We chow a cap of three times compensatory damages because It 1s ( 1) the midpoint of caps used m 

a previous study and i ‘7 I wthin the range of caps enacted by various states As of December 198X. I)! 

the states with caps that hmit pumtive damages to a multiple of compensatoF damages. Texas had 

the highest cap. punitlw damages may not exceed $200.000 or four times the compensatory damage\ 

whIchever 1s greater Only 2 of the 23 punitive damage awards m our study were over that tap 

Kansas had the highest absolute cap. limiting pumtlve damages to the defendant’s annual gross 

mcome or $5 mllhcm. ivhlchever IS less 

Page 29 GAO ‘HRD89-99 Product Liability Litigation 
Chapter 2 

Trial Verdicts: Frequency and Size of Awards 

Three of these punitive damage awards were over $1 million. The largest difference in an over $1 million award was in a case with $3.9 million punitive damages, which was 10 times greater than the 5390.000 

awarded in compensatory damages. 

Liability More Often 

Based on Negligence 

Than Previously 

Assumed 

The legal standard(s) on which a finding of liability was based. according to verdict information contained in court records, is shown in table 

2.3. Previous research has assumed that because strict liability is a\.ailable. defendants’ negligence is not an issue in many product liability 

cases. In almost two-thirds of the cases for which data were available. 

however, negligence alone (or in combination with strict liability or 

breach of warranty or both) was the basis for the plaintiff verdict. Strict 

liability, which has been evolving in the courts. was the basis for the 

decision (sometimes in combination with breach of warranty) in only 27 

percent of all plaintiff verdicts. 

We expected that liability would be based less often on negligence in the 

four states that allow actions based on strict liability than in Massachusetts. where strict liability per se is not allowed.“’ Contrary to expectations. in two states with strict liability (that is, Arizona and North 

Dakota). as well as in Massachusetts. liability was based on negligence in 

at least 80 percent of cases. In South Carolina. negligence was the basis 

for liability in 56 percent of the cases. I7 Missouri was the only state in 

which liability was more often (that is. in about 56 percent of cases) 

based on strict liability than on defendants’ negligence. 

Table 2.3: Bases of 

Won by Plaintiffs 

Liability in Cases 

Basis of liability 

Negligence alone or with strict llablllty or breach of 

warranty or both 

Strict llablllty alone or with breach of warranty 

Breach of warranty only 

Total 

Cases won by plaintiffs 

Number Percent 

79 66 

33 27 

8 7 

120” 100 

‘Data on IlabllIty standards tiere no: avaIlable for 16 cases ~“von b, plalrtiffs 

Page 30 GAO HRD89-99 Product Liabilit) Litigation 
Chapter 2 

Trial Verdicts: Frequency and Size of Awards 

2onclusions For the most part, although the amounts awarded varied widely, t’erdiets in the five states studied do not appear to be as out of control or 

erratic as some have implied. Plaintiffs won in fewer than .50 percent of 

the cases. When awards were made, the size of compensatory damages 

was associated with type and severity of injury in a manner consistent 

with what is generally known about the relative economic loss for various injuries. The highest awards were granted for wrongful death and 

permanent total disability, which have high economic losses relative to 

temporary or partial disability. Previous studies indicate that although 

plaintiffs with large losses are more adequately compensated than 

before. the tort system still undercompensates for large losses. 

Awards were based more often on negligence than previous research 

had indicated. Still, liability was based on strict liability in over onequarter of the cases. 

Consistent with previous research, the incidence and size of punitive 

damages varied considerably across states. In two states, punitive damage awards were negligible. In contrast, the incidence of such awards in 

the three other states was high relative to the rate of such awards 

reported for other jurisdictions. Large punitive damage awards that 

were disproportionate to compensatory damages occurred in only a few 

cases. 

Page 31 GAO/HRD89-99 Product Liability Litigation 
Effects of Posttrial Activities on Payments 

Findings Posttrial actlvltles-such as trial court adjustments. appeals 

and settlement negotlatlons-resulted In final outcomes different from the lnltlal verdicts in 30 percent of the cases Most 

changes were reductions of plaintiffs awards 

Appeals were more frequent In cases with large awards or punitlve damage awards or both Lttlgants appealed 73 percent of 

awards over $100.000, but only about one-third of smaller 

awards All but 5 of the 23 punlttve damage awards were 

appealed Plalnttff verdicts were more frequently appealed than 

defendant verdicts State differences In the rate of appeals were 

apparent 

Total payments to platntlffs In all cases were 43 percent less 

than the amount awarded The larger total awards and those 

awards with punitive damages had the largest reductions 

States varied considerably In posttrial reductions to compensatory damage awards Reductions to plaintiff verdicts occurred 

most often as a result of posttnal settlements 

After posttrial reductions payments In cases with awards of $1 

mIllIon or more still constituted the large majority (77 percent) of 

all payments (as compared with 81 percent of total amounts 

awarded i 

Consumer groups have argued that large awards. especially those that 

appear to be excessive. are reduced posttrial.’ Proponents of tort 

reforms contend that even if large awards are reduced.’ they are still 

grounds for concern about the tort system. 

In this chapter. we examine posttrial activity and the effects of that 

activity on actual payments. Data on adjustments by trial judges and 

appellate court activity are presented first. We then present data on 

payments and the verdicts most affected by these and other posttrial 

activities. The chapter concludes with a discussion of the processes most 

responsible for reductions to plaintiff verdicts. 

‘The term award refers to thr mlrlal award given hy a pry orJudgr ar vcrdlc,t. In this report thv 

amount of this a\vard 15 the focus of all posttnal wtl\-itles. mcludmg posttnal adJuStments made b! 

rrlal COUK Judge 

Page 32 GAO ,HRD89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

We present data on payments that attorneys in 236 cases reported to us. 

Data from court files indicate the following: Cases for which attorneys 

did not provide us with payment data are similar in level of posttrial 

activity to cases for which we have such data; in fact, cases without 

data had a slightly higher rate of appeals (see app. I). 

Posttrial Activities A variety of posttrial activities may result in a payment that differs 

Can Lead to Payments from the award in the initial verdict. As shown in table 3.1, these activities include (1) adjustments resulting from statutes, subrogation? or preThat Differ From judgment agreements that set limits on the amount a plaintiff can 

Awards recover from defendants and (2) activities litigants initiate after the verdict to try to change the verdict (that is, motions to the trial judge. 

appeals, and posttrial settlements). 

Page 33 GAO/HRDW-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Table 3.1: Posttrial Processes That Can Affect Award Amount and Payment After the Verdict 

Mechanisms Definition/Description Possible effect on award 

~._____ ______ 

L r- ‘: x a,*,ards estabrrshed by statute Statutes lrmrtrnq the amount that can be Decreases verdrct to the statutory llmrt (for 

example, under the law prejudgment 

settlements with defendants who did not go 

to verdict would be deducted from the 

award) 

recovered from-defendants (for example, In 

The right of a person who IS secondanly lrable 

1983-85, statutes In four of the five states 

requrred that awards be reduced by the 

to succeed to the nghts of the person he or 

amount of prejudgment settlements wrth 

other defendants) 

she paid for example, if an insurer pays the 

rnfured under an Insurance policy, the 

company can then recover the amount paid 

from any subsequent payment to the Injured 

Decreases verdict by the subrogated 

amount, In the five states. subrogatron 

changed the amount the defendant paid to 

For agreeing defendant, increases payment If 

the plarntrff the defendant stall paid the 

guaranteed amount exceeds verdrct. 

decreases payment If guaranteed amount 

subrogated amount but to the person 

less than verdrct 

secondanly liable 

Gallagher Agreement (or Mary Carter 

Asreerrert, 

bSot TV treq,~est i to !rral judge 

Aobeas 

post!ral settlement 

A prejudgment guarantee by a defendant to 

pay the plarntrff a specific amount, to be 

reduced by payments from other defendants, 

usually in exchange for plarntrffs agreeing to 

pursue their clarms against nonagreeing 

defendants 

Request to the trial judge to either change 

the verdtct or grant a new trial 

Tnal judge may (1) decrease verdict 

(remrttrtur), (2) Increase verdict (addrtur). (3) 

partrally or completely overturn the verdtct. 

thereby elrmrnatrng some or all awards or (4) 

grant a new trial 

Request that an appellate court determine Appellate court may (1) decrease verdict (2) 

whether (1) suffrcrent evidence exists to increase verdtct. (3) partrally or completely 

support the verdict or (2) the trral judge made overturn the verdict, thereby eliminating 

any major errors in ruling on specific matters some or all awards or (4) set astde the 

verdict In whole or in part and remand the 

Negotrated agreement between partres 

spectfyrng how the case will be resolved 

case to the trial court for further proceedtngs 

May Increase the payment so that It IS more 

than the verdict, decrease the payment so 

that It IS less than the verdict or specify a 

payment schedule for the orrginal trial verdict 

Few Adjustments Judges adjust verdicts either as required by statute or by granting a litiMade by Trial Judges gant’s request. In virtually all cases decided by a jury. litigants 

requested the trial judge to either overturn the verdict completely. grant 

a new trial. or, if damages had been awarded, adjust the award amount. 

Because errors alleged in an appeal must have been raised at the trial. 

litigants may make these requests (motions). in part, to ensure that their 

objections to any trial activity are entered into the trial record. 

Page 31 GAO/HRD89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Motions, statutes, or prejudgment agreements did not cause trial judges 

to change many verdicts.:’ As a result of statutes, in 12 cases (9 percent 

of plaintiff verdicts), awards were reduced by the amounts of settlements with defendants who had not gone to verdict. In another 13 plaintiff verdicts, the judge either ordered a new trial or reduced damages for 

other reasons4 In one case, the judge increased the award. 

With these adjustments, the total amount awarded in the final judgments in all cases was $105,124,000, which is 9 percent less than the 

total awarded by verdict. The expected payment per case decreased 

from $377,000 to $345,000. Excluding a trial judge’s reversal of a 

$6 million punitive damage award, the total amount awarded at final 

judgment was 4 percent less than the total awarded by verdict. The trial 

court reversed two verdicts that included punitive damages, leaving 2 1 

punitive damage awards intact. 

Appeals Filed in a 

Large Minority of 

Litigants filed a total of 172 appeals in 137 cases, about 45 percent of all 

cases. Multiple appeals were filed in 29 cases.’ 

Zases Overall, 58 percent of plaintiff verdicts were appealed compared with 

34 percent of defendant verdictstl This difference in percentages, however, was only apparent for personal injury cases. For property damage 

and wrongful death cases, the rate of appeals was about the same 

regardless of who won the trial verdict. Across all cases, wrongful death 

cases were appealed more frequently than cases that involved property 

damage or personal injury (see table Y. 11). 

‘We only collected systematic information on the outcomes of posttrial motions for cases m which the 

jury had found for the plamtiffs. In these cases, the verdicts were unchanged at Judgment in 

81 percent of the cases 

‘In one of these cases. the award was also reduced because of a preludgment settlement 

‘Eleven of these uwolved appeals at the state appellate and supreme court levels. The remammg 18 

cases mvolved cross appeals (both the plamrtff and defendant appealed at the same time 1 or. in thrry 

cases, unrelated appeals 

“Plaintiff verdicts were infrequently appealed by plamtiffs Among plaintiff verdicts unchanged b!- 

theJudge. the plamtiff was the only party to file an appeal m one case In 13 of these cases. hot h the 

defendant and plaintiff appealed. In the 13 cases m which the tnal Judge had either reduced an 

award (other than for a preludgment settlement or lien i or granted a new tnal. plaintiffs alone 

appealed 5 cases: defendants alone. 1 case: and both plaintiffs and defendants. 5 cases 

Page 35 GAO/HFtD-89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Highest Appeal Rates for ICJ has hypothesized that parties are more likely to pursue posttrial 

Large Awards and activities for awards with punitive damages or awards with larger comPunitive Damage Awards pensatory damages. According to ICJ, the larger the award, the more 

likely judges are to reduce the award because (1) the size attracts 

greater scrutiny and (2) the bases for awarding a large amount. especially for punitive damages, may be less precise than smaller awards. 

which may be more directly linked to economic 10~s.~ In addition appealing the verdict for a large award is more likely to be worth the effort 

and cost because the costs are low compared with the benefit-the possibility of a substantial reduction. 

Consistent with the ICJ hypotheses, the rate of appeals varied by award 

size and the presence of punitive damages. Litigants appealed 73 percent of awards over $100,000 as compared with 35 percent of smaller 

awards. Of the 23 cases in which the jury had awarded punitive damages, litigants filed appeals in 18 (78 percent) of the cases (see fig. 3.1). 

Among cases with compensatory awards only, 54 percent were 

appealed. 

Appeal Rates Vary by 

State 

Missouri had the highest appeals rate and Arizona and South Carolina 

had the lowest appeals rate (see table 3.2). Missouri’s higher rate of 

appeals holds for both plaintiff and defendant verdicts. In four states 

(Arizona. Massachusetts, North Dakota, and South Carolina), plaintiffs 

appealed defendant verdicts at about the same rate (between 22 percent 

and 30 percent of cases).” 

When only compensatory awards are examined, a slightly different pattern of state differences emerges. Among cases with compensatory damage awards, Arizona and South Carolina maintained their lower appeals 

rate (about 39 percent each). Missouri’s appeals rate. however. was 

more comparable with that of Massachusetts and North Dakota 

(between 55 and 64 percent for the three states). 

‘.Mrchael G. Shanley and Mark .4 Peterson. Posttrial AdJustments to .Jury .4wards t Santa 51on11 ‘I 

Cahf. The Hand Corporatmn. Instnute for Civil .Justtce. 1987). pp 7-8 

“Dlfferences m appeals rates across states may reflect. at least m part, our success m identrf! mg ,{I: 

appeals. Our sources of appeals mformatton m M~lssoun were the most comprehensive of the fl\ t 

states There. we had access to an appellate court reporter, not available in the other four s:att+ 11) 

states other than M~ssoun. we rehed on court records and national computerized databases 

Page 36 GAO/HRIM9-99 Product Liability Litigatwn 
Chapter 3 

Effects of Posttrial Activities on Payments 

Figure 3.1: Percentage of Cases 

Appealed for Verdicts With and Without 

Punitive Damages Porant 

loo -- 

( ) Not Appealed 

m Awealed 

Note For punWe damages. N = 23 for cases wlthout punltlve damages N = 112 

Page 37 GAO,‘HRD-89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

State 

Arizona 

-___~_~~ ~_ ~~ ~~- 

Massachusetts 

_____.__ .~~ 

MISSOURI ___- 

North Dakota 

___ 

South Carolina 

-_____- 

All Cases 

Cases appealed 

Total cases Number Percent 

59 21 36 

66 27 4’ 

108 63 58 

16 8 50 

56 18 32 

____ ____ 

305 137 45 

Plaintiff Verdicts In 61 percent of appealed cases, the appeal concluded with an appellate 

Affirmed Less Often Than court decision (see table V.12). As shown in table 3.3. for the 84 cases in 

Defendant Verdicts which the appellate courts gave a ruling, the courts affirmed the verdict 

in .iG percent of the cases. Appellate court decisions, however, differed 

markedly according to who had won the initial verdict. Of the verdicts 

on which they ruled, the courts affirmed 7'7 percent of defendant verdicts as opposed to -11 percent of plaintiff verdicts. Of the 12 punitive 

damage awards on which appellate courts ruled, the courts vacated 3 

awards. remanding them to the lower court for retrial: reversed 7 

awards: and affirmed the trial courts’ reversal of 2 awards. In only one 

of the nine cases in which the punitive damage award was reversed ~vas 

the compensatory damage award also reversed. 

Table 3.3: Appellate Court Decisions 

Initial verdict was for 

Plaintiff Defendant All verdicts 

Cases Cases Cases 

Decision Number Percent Number Percent Number Percent 

Affirmed 20 41 27 77 47 56 

Reversed/award reduced 18 37 O-’ 0 18 2’ 

Vacated:remanded 11 22 8 23 19 23 

Total 49 -ioo 35 100 84 100 

‘210 lnitlal #eratc:s for the defermalt ‘nere reversed 

Page 38 GAO HRD89.99 Product Liabilit) Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Posttrial Activities 

Reduce Awards by 

Over 40 Percent 

Seventy percent of all verdicts remained unchanged, but posttrial acti\?- 

ties changed award amounts in a substantial minority of cases (see table 

3.4 and fig. 3.2).‘J In 9 percent of cases, payments exceeded awards.” 

F%‘hen adjustments were made, however, they were most frequently 

reductions to payments in plaintiff verdicts. Payments were lower than 

awards in 22 percent of all cases or in 50 percent of plaintiff verdicts. In 

only six cases, however, did plaintiffs who had been awarded damages 

receive nothing. Although the outcome in a majority of cases was 

unchanged, the net effect of posttrial activities was to reduce by 43 percent the total amount paid across all cases, with the ratio of payments to 

awards about .57.” 

Posttrial activities adjust defendant verdicts much less often than plaintiff verdicts.‘: Ninety percent of defendant verdicts were unchanged. 

When a payment was made, it was relatively small, averaging $72.000. 

“Results are reported for all states combined The only notable state difference was in the Incidence 

and size of reductions among cases in ahrch only compensatory damages had been awarded (see 

pp. 43-45 ). 

‘“For purposes of thus study. payments were defined as all moneys paid to plamtiffs by defendants 

who went to verdrct. excludmg payments for postJudgment mterest. legal fees. hens. and pretrtal 

settlements. When posttrial Interest and fees appeared to have been mcluded m reported payment. 

we escluded those amounts. when posstble In a study of posttrtal payments In all tort cases. 1C.J 

estrmated that mcludmg postJudgment interest m its study would lower the overall ratto at least .04 

but not more than 47 (Shanley and Peterson, Posttnal Aaustments. p. 72 ) 

’ ‘Conststent with previous research, the proportion paid refers to the ratio of payments to awards 

for a group (In thts instance all cases) and not the average of ratios for mdivtdual cases 

“Defendants make payments m cases wtth defendant verdtcts because of either ( 1) a pretnal agrerment. such as a Mary Carter Agreement. or I,?) a posttrtal agreement. in whtch the defendants agrer 

to a payment m order to avoid an appeal 

Page 39 GAO/HRD-89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Table 3.4: Effects of Posttrial Actions on 

Plaintiff Awards and Defense Verdicts Dollars In thousands 

Posttrial action 

PlaIntIff awards 

Reduced 

Unchanged 

-- 

Increased 

Cases Averge Average 

Number Percent award payment 

Ratio 

paid/ 

award 

- 

52 22 $1.337 $548 41 

- 

45 19 467 467 1 00 

6 3 87 194 2 23 

Defense verdicts 

Unchanged 120 51 0 0 a 

__. 

Increased 13 6 0 72 a 

All cases 236 1010 386 221 57 

Note Table format was adapted from Mtchael G Shanley and Mark A Peterson. Posttnal Adjustments 

to Jury Awards (Santa Monica. CalIf The Rand Corporation lnstltute for CIVII Justice. 1987). p 27 

dThe ratlo IS undefined because the base average jury awards IS 0 

@Percent adds to more than 100 because of rounding 

Overall. posttrial adjustments did not appreciably change the percentages of cases in which defendants paid damages. After all posttrial 

adjustments, payments were made in 47 percent of the cases. This percentage is close to the percentage of cases in which liability was 

awarded in the initial verdict (that is, 45 percent). 

Cases With Highest 

Appeals Rates Had Most 

Reductions 

Among plaintiff verdicts, payments were reduced in about two-thirds of 

appealed cases as opposed to about one-third of cases that were not 

appealed. Among cases in which payments were reduced, the paymentto-award ratio was about .42, regardless of whether the case had been 

appealed.’ i 

Consistent with studies by ICJ.‘~ we found more and bigger reductions 

for plaintiff verdicts with large compensatory and punitive damage 

awards.‘- These verdicts were also appealed most frequently. For 

’ ‘For cases not appealed. the ratto was 30. mcludtn~ all cases. and about -I 1, excluding three 

outliers. 

“Shanlev and Peterson. pp. 28-S and 36-38. and Mark Peterscm. Svam Sat-ma. and Michael Shanley. 

Pumttvebama~es: Empuxal FindIngs (Santa Momca. Cahf. The Instttute for CI!-11 .lusttce. The Rand 

Corporation. 1987 1, p 30 

“Regresston analvses indicate that whether or not a case had been appealed was a better predictor of 

how much would be pard than enher stze or type of award. .%mona plamtiff verdrcts. when whether 

or not a case was appealed was entered into the regression equatton. stze and t;vpe of award were no 

longer st@uficant 

Page 10 GAO~‘HRD89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Figure 3.2: How Posttrial Activities 

Changed Cases Won by Defendants and 

by Plaintiffs 

10% 

Increased 

(N = 13) 

-Unchanged 

w (N = 120) 

k-Won by Plamffs 

(N = 103) 

Won by Defendants 

(N = 133) 

~ 

50% 

44% 

,6% 

Increased (N = 6) 

-Unchanged 

(N = 45) 

-- 

Reduced (N = 52) 

1 1 Cases Won by Defendants 

t Cases Won by Plamtlffs 

awards of $1 million or more, we found reductions in 7 1 percent of 

cases, resulting in a payment-to-award ratio of .52 (see table V. 13).“’ 

Posttrial activities led to reductions in 45 percent of awards less than $1 

million and to a payment-to-award ratio of .76. 

Even with large reductions, payments in cases with awards of $1 million 

or more were still substantial, with the average payment being almost 

$2 million. Twelve of the 21 cases with awards of $1 million or more had 

payments of $1 million or more (those 12 comprise all payments of that 

size in the study). In chapter 2, we reported that $1 million awards 

accounted for 81 percent of the total amount awarded. Even though 

“‘we obtamed payment data for 21 of the 26 verdrts of $1 milhon or more m the five Junsdlctlons 

Page 41 GAO/HRD-89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

large awards incurred more and bigger reductions, the amount ultimately paid on them still represents 73 percent of total payment (see fig. 

3.3). 

Figure 3.3: Percentage of Total Amount 

Paid by Size of Verdict Award $loo,ooo to $999,999 (N = 46) 

$1 Million or More (N P 21) 

Among punitive damage awards posttrial activities reduced 18 of the 22 

verdicts for which we have payment data.‘; Interestingly, the total 

reductions in the 18 cases essentially eliminated the payment of the 

punitive damages. The percentage of total award that was punitive damages and the percentage paid are shown in figure 3.4. Awards were 

reduced by 60 percent, which is roughly equivalent to the 58 percent of 

the original award that was for punitive damages. 

Large punitive damage awards sustained frequent and large reductions. 

Among the eight punitive damage awards of $1 million or more, appellate courts completely eliminated three awards and posttrial settlements 

“We recwved payment data for 22 of the 23 pumtive damage awards in the cases studied. 

Page 42 GAO/HRD8899 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Punitive and Compensatory Components 

of Awards Poroult 

Ponxnl Porant 

Awarded Paid 

Portion of Award Paid 

Punitive Damages Awarded 

Compensatory Damages Awarded 

Note: For percentage awarded, N = 23; for percentage paid, N = 22. Payment data was not receive 

for a verdict with a total award of $750. 

reduced the total award (both compensatory and punitive damages) for 

four awards by 67 percent or more. IA The remaining award was reduced 

by 70 percent, but how the case was resolved was not specified. Of the 

three awards for $1 million or more that had exceeded three times the 

compensatory damages, total payments exceeded three times the original compensatory damages in one case.‘!’ 

“For settled cases. we could not determme how much of the final payment ~‘a-5 for compensarop 

damages and how much was for pumtive damages. 

“‘In that case. which had pumtive damages of $3.9 nulhon. the payment of S 1.4 rmlhon ~a\ about 

three-and-a-half times the ongmal compensatory damages I $39O.W0) In two other cases m which the 

total payment exceeded three t ws the compensatoq damages. the compensatop damages tvere relati\ely small (compensatory damages of $3.3UV and S27.000~ 

Page 43 GAO /HRD89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Awards were reduced less often and. as shown in figure 3.5. by a smaller 

percentage when the verdict only included compensatory damages. Posttrial processes reduced 42 percent of those awards and resulted in a 24- 

percent reduction in award amounts. 

Figure 3.5: Average Awards and 

Payments for Plaintiff Verdicts With and 

Without Punitive Damages 2600 Thoromda of Ddhfs 

2400 

2200 

2ooo 

leo0 

1600 

1400 

1200 

1000 

so0 

so0 

400 

200 

0 

Lb 

Punitive 

D8m8g88 

No Punitive 

D8m8g88 

II Award 

Payment 

Note For punWe damages, N = 22. for cases wtthout punWe damages N = 81 

Payments for punitive damages account, to a large extent. for differences in payment-to-award ratios by award size. We compared payments 

with awards by size of award for cases in which ( 1) only compensatory 

damages were awarded and (2) compensatory and punitive damages 

were awarded (see table 35). For size of award, payout rates differ less 

for cases with only compensatory damages than for cases with both 

compensatory damages and punitive damages (see table T.13). 

Page 44 GAO %RDS9-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Activities on Payments 

Table 3.5: Posttrial Outcomes by Award 

Size Dollars In thousands 

Size of award 

Ratio 

Average Average paid/ 

Cases award payment award 

When only compensatory damages were 

awarded 

34 $36 $30 83 

-___--~ 

Less than $100,000 

$1 oo.ooo-$999.999 37 343 277 81 

$1 millon or more 10 2.746 2.022 74 

All cases 81 511 389 76 

When both punrtrve and compensatory 

damages were awarded 

Less than $100.000 

$1 oo.ooo-$999.999 

$1 mullion or more 11 4,226 1,645 .39 

All cases 22 2,260 901 40 

2 29 37 1 28 

9 353 183 52 

States Differed in Posttrial States differed considerably in the payment-to-award ratios when only 

Reductions compensatory damages had been awarded (see table 3.6). These two 

states also had the lowest appeals rate (see table 3.2). In Arizona and 

South Carolina, the ratios were larger than in the other three states. In 

Arizona, the payment was less than the award in a little more than onethird of the cases (6 out of 16); these reductions had a negligible effect 

on the proportion of the award eventually paid (.98). 

Table 3.6: Type of Award and Paymentto-Award Ratios by State 

State 

Arizona 

Massachusetts 

Punitive and 

Compensatory 

damages only 

co~~gyY 

9 All cases’ 

Ratio Ratio Ratio 

paid/ paid/ paid/ 

Cases award Cases award Cases award 

16 98 7 47 45 60 

12 77 cs t 45 77 

Mrssoun 31 74 9 26 88 52 

North Dakota 10 32 1’ 1 00 13 31 

South Carolina 12 1 13 5 41 45 75 

_.-.___ 

All cases 81 76 22” 40 236 57 

‘?ncludes defendant tierdtcts For plaIntiff veralcts payment-to-awara ratios are wIthIn 2 of ratios for all 

cases 

‘In Massachtisetts no punWe damages were awarded 

‘Punltlve damages awarded in only one case 

‘Includes all 22 punitive damage awards for which we have data 

Page 45 GAO;‘HRD89-99 Product Liability Litigation 
Chapter 3 

Effects of Posttrial Acti\+ties on Pa-yments 

In South Carolina. only 2 of 12 compensatory damage awards were 

reduced; 3 awards resulted in payments larger than the award amounts. 

Because of these posttrial adjustments, total payments for all 12 cases 

were slightly more than had been originally awarded at trial.’ 

North Dakota cases had more frequent and larger reductions than cases 

in the other states. Of 10 compensatory damage awards. 6 were reduced, 

resulting in a payment-to-award ratio of .32. 

Reductions Most Often 

Result From Posttrial 

Settlements 

Cases with reduced awards were most often resolved by a post-trial settlement. As shown in table 3.7, a settlement was the final action in onehalf of the cases with reduced awards. 

Posttrial settlements also reduced awards by a greater percentage than 

court action. This lower payment rate for settled cases holds for both 

awards with punitive damages and awards of only compensatory damages. For cases resolved through court action, verdicts that included 

punitive damages accounted for a disproportionate share (87 percent) of 

the total reduction. 

Table 3.7: Posttrial Outcomes in Reduced 

Cases by Reason for Reduction Dollars In thousands 

Reason 

Settlement 

Court action 

Lien or pretrial settlement 

Not speclfled 

All cases 

Cases 

Ratio/ 

Average Average paid 

Number Percent award payment award 

26 50 $1 598 $44 1 26 

-__ 

15” 29 1.405 a93 64 

.~- ~~ ____~ 

6 12 141 a4 60 

5 10 1210 621 51 

-~ ~~ __~_~~ 

52 101: 1.337 548 41 

‘Nine of these cases ended with an appellate court rulrng four with a tnal court adjustment ana TNO 

with a verdict after a neti trial As mtght have been expected among appealed cases whether reauc 

tlons occurred as a result of a settlement or court action depended on the appeal s outcome vVhen +w 

appellate court either afflrmed or reversed the verdict the court actlon determlned the fInal a++ard 

amount 81 percent (N=13) of the time In cases that had been remanded 12 (83 percent1 oi redLc+lo-c 

occurred as a result of posttrial settlements 

[‘Percentage adds to more than 100 because of rounding 

“‘For a sample of cases that went to verdm m 1982-83 m C(wk County. illlno~s. and selec~tv~l JLI~I~I~ 

uons m Cahfoma. 1C.J found the relatively hqh payment-to-award ratlo of RI A fvw of thw, GLY(- 

may have mcluded punGive damages See Shanley and Peterson. Posttnal .~dJti!itrTWnts to .Irlp 

Awards. p. 4.5 

Page 46 GAO HRDBY-99 Product Liabilir? Lirigarion 
Chapter 3 

Effects of Posttrial Actibtties on Payments 

Conclusions Given that payments are reduced substantially after trial. the effects of 

posttrial activities should be examined in any analysis of the tort system. Posttrial activities significantly affected the verdicts for which tort 

reform advocates have shown considerable concern. Large awards of 

compensatory damages (over $1 million) were paid at a rate of .74. 

Awards with punitive damages were paid at a rate of .40. In only one 

case with a $1 million or more punitive damage award did payment 

exceed three times the original compensatory damages. 

Posttrial adjustments to compensatory damage awards. regardless of 

size, varied substantially across states. Payment-to-award ratios ranged 

from .32 to 1.12. The rates of reductions paralleled the rates of appeals. 

States with the lowest rates of appeals also had the fewest and smallest 

reductions. 

Our findings are consistent with tort reform advocates’ concerns that in 

many instances, punitive damage awards are unfounded. According to 

the courts’ decisions, at least a significant minority of the 23 punitive 

damage awards were made in error. Appellate courts reversed OI 

vacated and remanded all 12 punitive damage awards they revriewed. In 

only one of the nine cases in which the punitive damages were reversed 

were compensatory damages also overturned. These reversals, therefore, primarily reflect errors made by the lower court in awarding punitive damages! not in the liability decisions. The tort system, however. 

appears to be correcting these errors. 

Page 47 GAOiHRLMS-99 Product Liability Litigation 
Chapter 4 

Product Liability Cases Are Lengthy and Costly 

Findings On the average. cases took about 2-l/2 years from the filing of 

the complatnt to the begtnnlng of the trial, with the trral Itself lastlng about 2 weeks. Among cases tn whtch an appeal was flied 

the time spent in the appeals process averaged 10 months 

At all phases of the litigation South Carolina cases were handled the quickest and Massachusetts cases required the longest time Across all states. cases In the federal courts required 

sltghtly less time than those In state courts 

IF the cases studied, all of which went to verdict, one-half of 

plaintiff attorneys recetved no fees because the plaIntiffs did not 

recetve verdicts In their favor or reach a settlement On the average. attorneys who were pald recetved about 35 percent of the 

payment recovered by the plalntrffs Consistent with the vanatlon in payment size. the size of plalntrff attorneys fees varted 

widely 

Almost all defendant attorneys were paid for fees and expenses, 

with the range in fee size much narrower than that for plaIntIff 

attorneys Those attorneys who were Involved In appeals on 

defendants’ behalf received double the amount for fees and 

expenses than attorneys who were not 

For product liability cases and the tort system in general, two frequently 

cited concerns are the time and cost of resolving claims through the judicial process.’ After plaintiffs bring suit, it often takes years for the case 

to reach a verdict and even longer for plaintiffs to receive compensation. 

ICJ has estimated that 42 percent of amounts paid by defendants in tort 

cases goes for legal fees and expenses (including fees and expenses for 

both plaintiff and defendant attorneys). Legal fees and expenses are 

only 25 percent less than the net compensation received by plaintiffs.’ 

This chapter presents information on (1) the time involved in processing 

product liability cases and (2) attorneys’ fees and expenses. Information 

across states concerning the time from the filing of a complaint to the 

‘Jane W. Adler. William F. Felstemer. Deborah R. Hensler. and Mark C Peterson. The Pace of LQatlon: Conference Proceedings (Santa Monica, Calif : The Rand Corporation. The Institute for Civil Justice. 1982). pp. iii. 13. and 21 

‘James S. Kakalik and Nicholas M. Pace, Costs and Compensation Paid in Tort Litigation. (Santa 

Motuca, Cahf.: The Rand Corporation. The Institute for Civil Justlce. 1986). p. 71 

Page 48 GAO,/HRD-W99 Product Liability Litigation 
Chapter 4 

Product Liabity Cases Are Lengthy 

and Costly 

end of the case (including any appeals) is presented first. Similar information is then presented for the individual states. folloFved by a discl~ssion of case-processing time in federal and state courts. The chapter 

concludes with information on fees and expenses for both plaintiff and 

defendant attorneys. 

Average Time for Case Many cases took several years to resolve. Cases required about 2-l ;2 

Processing Was 30 

Months 

years to move from the filing of the complaint to the verdict.’ As shown 

in figure 4.1, in general, the trial process itself was relatively short. 

averaging nearly 12 days from the start of the trial to the verdict. 

Across cases, considerable variation in processing time was apparent. In 

18 percent of the cases, the time interval between filing and the verdict 

took 12 months or less. By contrast, 8 percent of the cases required from 

5 to 10 years to go through the same steps. The most lengthy case took 

9.7 years from filing to verdict. 

Figure 4.1: Average Case-Processing i 

Time 

1 In Months 

I 

29.6 3.8 

II I 

10.4 

Filing of Complaint to Beginning of Trial 

1 I 

Appeals Process 

Trial Process .4 .J / I- Verdict to 

Filing of 

Appeala 

aPrlmarlly reflec!s the time required lo resolve partles’ motions (requests) to the tnal judge (for example 

a motion for a new trial or a motion for a reduction In the award) During this time partles sdbmtt briefs 

(arguments) In support of their posItIons on the motion(s) and the judge considers and rules on them 

Among cases in which an appeal was filed, the time spent in the appeals 

process averaged 10 months.-’ In 32 percent of appealed cases. the 

appeals were dismissed before an appellate court decision. Some appeals 

‘See appendix III for mformarmn on how long after the inJuq the case waz filed 

‘We only have data on the time spent to resolve appeals for 110 of the 137 appealed cases 

Page 49 GAO:‘HRD89-99 Product Liability Litigation 
Chapter 4 

Product Liability Cases Are Lengthy 

and Costly 

were dismissed within days of filing: others were dismissed more than 2 

years after filing. Among cases in which appellate courts rendered decisions, the average time spent in the appeal process was 14 months. 

States Vary in Terms of 

Case-Processing Time 

Overall, cases in Massachusetts took the longest time to be processed 

and cases in South Carolina took the least. The average time between 

filing a complaint and the beginning of the trial in Massachusetts was 

almost 43 months compared-with the average of 29.6 months across all 

states (see table 4.1). South Carolina was the quickest. averaging 15 

months from filing to trial. 

Table 4.1: Average Case-Processing Time by State 

lr Vonths 

___- 

North 

Time interval Arizona Massachusetts Missouri Dakota South Carolina All states 

__ --___ 

F~‘~nc; cf complalnt to trial 30 7 428 29 1 235 152 -29 

Beg nnlng o’ trial to verdlctd (In days) 

\Iercxt to fli!ng of appeal’ 

~IIP~‘; of appeal to appeals resolution 

PO’ alI cases that were appealed’ 

Fcr cases wltll an appellate court 

dmsmon 

..__- 

0 3 (10) 0 5 113) 03(8) 0 3 (8) 0 1 13) 04 (12) 

41 45 39 35 21 38 

__~~ 

______--_ 

100 134 99 97 a3 104 

152 149 136 120 122 138 

aThese numbers are fractions of 1 month The actual average number oi days IS shown In parentheses 

beneath the monthly average 

‘Based on data from 123 cases for whicn ‘we have complete InformatIon 

‘The data shown are for the 110 appealed cases for tihich data were avallable 

“InformatIon on processing time was available for 67 of 84 cases In which a declslon was rendered 

South Carolina’s shorter pretrial period may be related to the types of 

cases reaching verdict. These cases may be less complex than cases in 

the other states. As discussed in appendix III, a greater proportion of 

personal injury cases in South Carolina involved temporary disability. 

which has lower demands and awards. Cases in South Carolina also had 

multiple plaintiffs or multiple defendants less often, which could mean 

the cases were less complex. These factors do not appear to explain the 

difference between case-processing time in Massachusetts and the other 

states. 

Page 50 GAO /HRD89-99 Product Liability Litigation 
Chapter 4 

Product Liability Cases Are Lengthy 

and Costly 

State differences in length of trial and appeals-processing time follow 

the same pattern as for pretrial intervals. On average. Massachusetts 

cases took the longest time and South Carolina cases the least. 

When processing time for appeals is examined for only those cases in 

which appellate courts rendered decisions, the pattern was somewhat 

different. Massachusetts no longer took the longest time, but was one of 

the states that took the longest; South Carolina was not the quickest but 

was one of the quickest. 

State Courts Took Longer State court cases took more time than federal court cases at all stages of 

Than Federal Courts in case processing, except for the length of the trial. The largest difference 

Processing Time between type of court was almost 7 months, which occurred in the 

period from filing of complaint to trial (see table 4.2). For cases that 

were appealed, those in state courts took about 3 months longer than 

those in federal courts. For the subset of appealed cases that reached 

the stage of an appellate decision, state court cases took more than 5 

months longer than federal cases. 

Page 5 1 GAO’HRD89.99 Product Liability Litigation 
Chapter 4 

Product Liability Cases Are Length) 

and Costly 

Table 4.2: Average Case-Processing 

Time in State Courts and Federal Courts In months 

Type of court 

Time interval State Federal 

Flllng of complalnt to trlai 33 0 26 2 

Beginning of trial to verdict’ 02 C6 

(In days) 17) (17) 

Verdict to flllng of appeal’ 34 42 

Flllng of appeal to appeals resolution 

____-__ 

For all cases that were appealed- 116 94 

For cases with an aDDellate court declslon” - 168 114 

aThese numbers are fractions of 1 month The actual average number of days IS shown In parentheses 

beneath the monthly average 

‘Based on data from 123 cases for which we have complete informatIon 

‘Data shown are for the 110 appealed cases for whtch speclflc time InformatIon was avaIlable 

“InformatIon on processing time was available for 67 of the 84 cases In which a declslon was rendered 

Legal Fees for 

Attorneys a 

Substantial Part of 

Defendants’ Total 

Payments 

As discussed in chapter 1. plaintiff attorneys usually collect a percentage of any award or settlement paid to their clients. Plaintiff attorneys. 

therefore, risk receiving no fee (when the plaintiff recovers nothing) in 

exchange for the possibility of receiving substantial fees when large 

awards or settlements or both are made. Since most product liability 

cases are settled prior to v7erdicts and with payments, plaintiff attornqs 

receive fees in most product liability cases. 

In the cases studied. all of which went to verdict, about one-half of 

plaintiff attorneys received no fee.’ These attorneys would have 

incurred expenses. which, for plaintiff attorneys. are almost never reimbursed. The average amount of their expenses was $1.5.000. with a 

median of $5,000. 

Plaintiff attorneys who were paid received. on the average, 3.5 percent 

of the money recovered by their clients (from both awards and pretrial 

settlements with other defendants). This amount is very close to the 

contingency fee arrangement of plaintiff attorneys in most civil cases 

(that is. one-third of any award). About 84 percent of plaintiff attorneys 

received between 30 percent and 40 percent of their clients’ recoveries. 

‘We obtamed fee mformatlon from Iti. that IS. 53 percent. of the 313 plamtlff attorneya we SLITveyed. The attomrys reported rhelr fees. escludmp any expenses for which they may have been 

reimbursed 

Page 52 GAO HRD89-99 Product Liabilit: Litigation 
Chapter 4 

Product Liability Cases Are Lengthy 

and Costly 

Because recoveries varied widely, fees for plaintiff attorneys also had a 

wide range, from a low of $1.000 for a $3,000 recovery to $3.4 million 

for a recovery of more than $6 million. Six attorneys (i percent of those 

who received a fee) were paid $1 million or more. These large fees 

account for the relatively large average fee of $227,000 as compared 

with the median fee of $33,000. Seventy-nine percent of the attorneys 

received fees below the average. Including attorneys who received no 

fees, the average fee for plaintiff attorneys was $115.000. 

Defendants pay their attorneys on an hourly basis, plus expenses. 

Unlike plaintiff attorneys, almost all defendant attorneys (98 percent) 

received fees.‘, Their fees, which ranged from $1,500 to $400,000. were 

an average of $41 .OOO and a median of $20,000. Including expenses, 

defendant attorneys received from their clients an average of $61.000 

and a median of $28,000. About 25 percent of total moneys paid by 

defendants was for their own legal fees and expenses. 

The fees and expenses of defendant attorneys varied by a number of 

factors. As might be expected, fees and expenses were considerably 

higher when clients were involved in appeals. Defendant attorneys 

received an average of $84,000 in fees and expenses from clients 

involved in appeals, as compared with $41,000 when clients were not 

involved in appeals. When a client was involved in more than one 

appeal. a defendant attorney received an average of $159.000 in fees 

and expenses. as compared with an average of $7 1,000 when a client 

was involved in only one appeal. The longer the time to resolve an 

appeal, the higher the fees and expenses. These were also higher when 

cases were remanded for retrial. Attorneys who represented at least one 

defendant located outside the state where the litigation took place had 

higher fees and expenses (an average of $70,000) than attorneys of instate defendants (an average of $36,000). 

We were able to obtain information on plaintiff attorneys’ fees and 

defendant attorneys’ fees and expenses for 58 cases (about 20 percent 

of all cases). In those cases, the average paid in fees and expenses was 

$186,000. Since this information is based on a small number of cases. it 

may not be representative of all cases in our study. 

Because some attorneys reported that other firms had also represented 

their clients, our data should be considered the lower limit of fees and 

“We obtained fee data for ‘712 152 percent) of the defendant attorneys who recelvrd questlonnalres 

K’e obtained Information on both fees and expenses from 15 percent of the defendant attorney5 

Page 53 GAO/HRl%t39-99 Product Liability Litigation 
Chapter 4 

Product Liability Cases Are Length) 

and Costly 

expenses. About 26 percent of plaintiff attorneys and 23 percent of 

defendant attorneys reported that firms other than their own had represented their clients at some point in the cases. Plaintiff attorneys 

received a slightly lower percentage (about 33 percent) of the recovery 

when their firms had not been the only ones to represent their clients, as 

might be expected. In contrast, the average fee for defendant attorneys 

doubled when their firms had not been the only ones to represent their 

clients. These larger fees may be related to the fact that defendants who 

used more than one firm were more likely to be (1) located outside the 

.jurisdiction where the litigation was taking place and (2) involved in 

appeals.; 

Conclusions The amount of time and money involved in resolving the cases studied 

are comparable with the amounts that critics of the judicial process 

have labeled as excessive. Just to reach verdict. the average case took 

over 2-l/2 years, with the longest case taking more than 9-l/2 years. 

The average time for cases in the appeals process was 10 months. The 

cost of reaching a verdict averaged $168,000 per case, including plaintiff attorneys’ fees and defendant attorneys’ fees and expenses. This 

does not include court costs, the value of the time parties to the suit 

spent in preparing their cases. and miscellaneous expenses. such as 

transportation.” 

We cannot determine the degree to which the benefits of the judicial 

process balance these substantial administrative costs. In addition to 

serving as a compensation mechanism: benefits thought to accrue from 

the judicial process and verdicts include facilitating the settlement of 

claims and providing incentives for product safety. 

Two factors were associated with higher defendant litigation costs: ( 1) 

the filing of an appeal and (2) a defendant’s being based outside the 

state in which the case was tried. It is commonly recognized that the 

additional effort involved in an appeal drives up litigation costs. !Ve 

have no data bearing on why out-of-state defendants had higher costs. 

This finding is significant, however, since the majority of defendants in 

the cases studied were based outside the states in which the cases were 

‘Our data may especully underestimate out-of-state defendants’ cosf4 because thty uprc mow l~hc~l~ 

to have been represented by multiple legal firms 

‘.See Kakalik and Pace. pp E-33 and ti 142 

Page 54 GAO HRD89.99 Product Liabilit? Litigation 
Chapter 4 

Product Liability Cases Are Lengthy 

and Costly 

tried (see app. III). If this is true generally. defendants in product liability cases may incur proportionately higher litigation costs than defendants in other types of tort cases, such as medical malpractice, that may 

be less likely to involve out-of-state defendants. 

Page 55 GAO/HRDfB-99 Product Liability Litigation 
Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

i I / I 

~ Findings 

I 

Since 1985 41 state legtslatures have enacted various types of 

tort reforms the malorlty of which llmlt the llablllty of manufactur- 

! 

ers and product sellers As a result of these reforms vartatlon 

among state laws has Increased stnce our study period 

A federal law would standardize the law In some major areas No 

federal law would be likely to preempt state laws In all areas 

and therefore. differences would most likely remain 

Many of the federal or state reforms would have affected outcomes tn only a minority of the cases studied. but many of the 

affected cases would have Involved large payments Proposals 

to reduce awards by plaintiffs degree of responslblllty or by 

workers compensation payments would have potentia!ly 

affected payments In more cases than other reforms 

Manufacturers. sellers. and insurers mainly attribute recent problems in 

the availability and cost of liability insurance to unpredictability in ( 1) 

the frequency and size of awards and (2) the circumstances under which 

defendants are held liable. Proposed federal reforms of product liability 

law have been directed at decreasing variation in laws across states. 

thereby decreasing the unpredictability of alvards. These reforms would 

also tend to benefit manufacturers, sellers. and insurers by limiting the 

circumstances under which defendants are held liable. 

Reforms have been proposed at both the state and federal levels. Almost 

every state has enacted at least some reforms in recent years. The Congress has not established uniform federal standards, although a number 

of bills have been introduced toward that end. As of August 1989. seven 

bills affecting product liability litigation were pending before either the 

House Judiciary Committee or the House Energy and Commerce Committee; three of these bills would create uniform liability standards 

across states One bill to create uniform standards was pending. as of 

-4ugust 1989. before the Senate Committee on Commerce. Science. and 

Transportation.- 

Page 56 GAO ‘HFCD-89-99 Product Liabilit? Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

across states.’ One bill to create uniform standards was pending, as of 

August 1989. before the Senate Committee on Commerce, Science, and 

Transportation.: 

>onsiderable Variation Rather than making state laws more uniform, state legislative reforms 

ilxists Across State 

Jaws 

have increased the variation of laws across states.” Since our study 

period (1983-85), 41 state legislatures have enacted tort reforms that 

changed the laws for different areas of product liability in their jurisdictions. States differ considerably in the types of tort reforms passed. The 

seven most frequently proposed reforms, as well as arguments for and 

against them, are shown in table 5.1. Some reforms affected important 

areas of product liability law passed by each state as of December 1988, 

as shown in appendix VI. 

‘i1.K 19. i1.K. 1%. fl K. 3.59. H.R. 362. 1I.K. 1025. H.R. 1636. and H R. 2700. Of theseseven. H R 

3.59. fI K. l(i:3(i. and H.R 2700 would provide for uniform hablhty standards. 

‘Legal analysvs have also noted this increased variation. See Victor E. Schwartz. State Tort ReformHclpmg the Systtlm or Creating More Chaos”. unpubhshed draft (Washmgton. D.C Crowell and Mormg. 1987 1 

Page 57 GAOiHRD-89-99 Product Liability Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

Table 5.1: Product Liability Reform Proposals (State and Federal) 

Reform arguments 

Aspect of the law Reform proposal For Against 

State-of.the-art defense In relevant strict llablllty actlons. Manufacturer should not be held 

allow state of the art evidence to liable If tt was not feasible to 

be presented or to completely design a safer product or If 

bar recovery: manufacturer not product’s dangerousness was 

liable If. at the time of unknowable at time of 

,ianufacture. (1) product could manufacture People injured by 

no? have been more safely unreasonably dangerous 

designed gtven then-exlstlng products should be compensated 

technology or (2) manufacturer under stnct liability regardless of 

could not have known and defendant’s behavior In 

warned plaIntiff about the deslgntng and manufacturing 

Droduct’s danoerous defect product 

Clear and convlnctng evtdence 

standard for punitive damages 

Comparative negligence Reaardless of the theorv on 

whkh IlabIlIty IS based, plaintiff’s recover to the degree own negligence are incompatible jury 

award IS reduced to the degree negligence caused the injury cannot compare product’s 

plaintIff’s or third party s failure to defectiveness with platntiff’s 

discover or guard against a negligent conduct 

product s defect contributed to 

the injury 

JoIn: and several Ilability For all or some (for examDIe Reform would assure that Reform would protect liable 

Caos on awaras 

Collateral source rule 

Raise the standard of evidence PunWe damages are aktn to a PosttrIal actrvtties provtde an 

from preponderance of the CIVII fine a higher standard WIII adequate check on the 

evidence to clear and convtncing assure these damages are limited appropnateness and size of 

evidence to cases that tunes are certain lurles punitive awards 

warrant them. 

Plaintiff should not be able to Strict llabllltv and comDarative 

noneconomic) damages ‘each 

defendant pays proportlonally to 

his or her degree of llablllty or 

responslblllty for the Injury. 

tradltlonally each defendant who 

was found liable could be held 

liable for all damages awarded 

and defendants could sue each 

other for reimbursement 

Awards for certain types of 

damages (for example 

noneconomtc. compensatory, or 

punitive) may not exceed a set 

statutory limit 

defendants mInImally responsible defendants at the expense of 

would not have to pay all Innocent plaintiffs who would be 

damages undercompensated because 

some defendants cannot pay or 

cannot be sued 

‘.:nllmlted jury discretion results In Caps only deny award money for 

‘tated verdicts for plaintlffs most severely injured: posttrial 

actlvitles adequately reduce 

Inflated awards 

Allow compensation from sources Plaintiffs should not be able to Liable defendants should not 

other than defendants to be (1) recover twice for the same Injury. benefit because the plaIntIffs 

deducted from the amount of reimbursing other sources (for receive money from other 

damages defendants pay or (2) example. employers) out of sources reducing defendants 

consldered by the Jury when damage awards removes their liability decreases thetr Incentives 

determtnlng damages currently, Incentives for helptng to ensure for helping to ensure safety 

compensation from collateral safety 

sources cannot be deducted 

from damage awards or 

considered by the jury 

(continued) 

Page 58 GAO/HRD-f39-99 Product Liability Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

spect of the law 

rodat seller llabllht~ 

Reform proposal 

Limit the liability of product 

sellers to Instances In which (1) 

the manufacturer IS unable to pay 

or cannot be sued or (2) seller IS 

at fault. tradItIonally product 

seller could be held liable for 

harm to consumer even If seller 

did not alter or mishandle the 

product 

Reform arguments 

For Against 

PlaIntiffs often sue product sellers Llmttrng product seller liability 

even though they are not at fault decreases sellers Incentive to 

although most sellers are not inspect products and safeguard 

ultimately held liable they must them from dangerous defects 

pay litigation costs sutng a seller can facilttate 

discovery of Important evidence 

Laws in the five states studied show the enhanced variation introduced 

by state reforms4 As a result of reforms enacted in the five states (see 

table 5.2). the states now differ in three areas that were the same in 

1985. For example, under the 1985 law of all five states, each defendant 

could be held liable for all damages regardless of that defendant’s share 

of fault (that is, the states followed the traditional rule of joint and several liability). Under 1988 law, three states (Arizona: Missouri, and 

North Dakota) now restrict, to different degrees, the damages for which 

each defendant may be held liable. In Arizona and Sorth Dakota. each 

defendant now may be held liable only for that defendant’s share of 

damages decided by the jury. In Missouri, defendants are jointly and 

severally liable, but the plaintiff shares responsibility for unpaid portions to the extent the plaintiff was partially at fault for the injury. 

‘.Is dlscussc,d 111 chaprt>r 1. the five states studled may not necessarily represenr the entw spectrum 

of product llahlliry la\v\. Thus. the estent to which vanatlon exists among all state laws ma! be 

understated 

Page 59 GAO/HRD89-99 Product Liability Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

Table 5.2: Product Liabilitv Laws: 1988 Laws for Five States Studied Versus H.R. 1115 

Aspect of the law AZ MA 

State of-tne-art evidence Yes (all a 

aliogVed tn strict lrabrlrty actions) 

cases 

Fiule or ,orit& several Yes No 

lrabrlrty modlfred 

Comparatrve neglrgence Yes Yes 

made available under 

negligence theory 

Comoaratrve neghgence No a 

made avallabe under 

slrlct lrabrlrty theory 

Caps on awards set No No 

Avarlabrlrty of punrttve No Yes 

damagesbmrted 

Clear 8 convrncrng evidence Yes No 

requrred for punttrve 

damages 

Collateral source rule No No 

modlfred 

Statute of limttatlons for 2 3 

most actions (in vearsic 

MO ND 

Yes (warning No 

cases) 

Yes Yes 

Yes Yes 

Yes Yes 

No No 

No No 

No Yes 

Yes Yes 

5 6 

H.R. 1115 H.R. 1115 

cleared by cleared by 

SC SubcommitteeCommittee 

Yes (desrgn & Yes (all Yes (all 

warning actions) actions) 

cases) 

No Yes b 

No D 0 

No iJ 0 

No b 0 

No Yes 3 

Yes Yes Yes 

No Yes Yes 

3 2 2 

Legend 

Yes = areas In which state has enacted a reform or H R 1115 would reform 

f’vo = areas in which state has not enacted a reform 

aNot applicable 

DB~ll does not address this Issue state law would control 

‘Only state law I” South Carolina was modified by recent reforms (see table IV 1) 

Page 60 GAO.XRD-89-99 Product Liability Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

7ederal Reforms 

Xould Decrease 

, Tariation Across 

A federal product liability law. if sufficiently unambiguous. ivould 

undoubtedly decrease variation among state laws.’ Because federal law 

would most likely preempt only some of the major state la\vs go\.erning 

product liability actions. however. state laws would still differ in some 

States areas.’ 

No product liability bill has ever been passed by either house of the Congress.; although at least 24 bills to create uniform standards have been 

introduced over the past 10 years (14 in the House and 10 in the Senate). The bill that progressed the farthest in the 100th Congress was 

H.R. 1115. the ‘C’niform Product Safety Act of 1988. Passed by the Subcommittee on Commerce, Consumer Protection, and Competitiveness, 

House Committee on Energy and Commerce. in December 198’7, and b> 

the Committee in June 1988. this bill would have had a major effect on 

some of the areas of state product liability law (see the last two columns 

of table 5.2). State law, however, would have continued to control areas 

not addressed by the bill. For example, since H.R. 111.5. as passed by the 

House Committee on Energy and Commerce, was silent on the issue of 

joint and several liability, state laws would continue to differ on 

whether each defendant may be held responsible for all damages. I7nder 

current law in the five states studied, only defendants in Massachusetts 

and South Carolina would be held jointly and severally liable in all 

cases. 

Reform opponents argue that although some federal reform proposals 

would introduce some degree of uniformity in the product liability laws 

across the states, it would introduce variation among laws applying to 

‘Some commentators have argued that the enactment of a federal law may not guarantee unlformlt> 

Since courts in the 50 states. as well as federal courts in various districts. would undoubtedly mtvrpret the law differently for different areas For further discusslon. see Henry Cohen. “l’roduc~ts 1.1~1. 

lxlity Some Legal Issurs.” CRS Report 84-189.4 (Washmgton: I..S. Library of Congress. Congrcvlonal 

Research SWWI~, No\. 1. 198-l 1 Others have argued that federal proposals have now been so rvfmt*d 

as to bnng about a mmmlum of conflictmg interpretations These commentators nottl that a fcdt~i 

law would be subJ?ct to different interpretations. but would prollde more umformny than thcl ctatv 

common law systems It would replace. 

“Some reform propontmts agree that a federal bill should address onI!- thv most Important produh t 

Ilablhty area> and. m sio doing. achieve a comprormse between federal preemption and start+ rIglit\ 

‘The* only rna,lclr federal IrRislation affecting the product hablht?- area to pa.~ thv COII~I.CW m ttrc, I:t\r 

5 years are the Product Llabihty Risk Retention Act of 1RM iP L 9%%i3). which p+mmlt\ mwnut’,iv 

turers and svller5 to purc,hasc insurance on a group basis or to self-msurta through nkk rtxtent ion 

groups. and thf, Childhood \.accme InJuT Act of 1986 and Its amendments ( P 1,. Wti(iO. E’ L I()( I-?I:i 

begmnmg with sections -I:301 and 9901. P L 100-17;. sectmn 1 lO[aj 1 I] [Cl: and I’ 1,. IOO-X3li 1. \vhilh 

reqrnre thosca suffcnng from vaccine-related LnJunes to & compensated from a special fund I 

Page 61 GAO/‘HRD89-99 Product Liability Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

various tort categories within a state.” Such differences may introduce 

inequity among defendants who are sued under different tort categories 

since they would be held to different standards. For example, a plaintiff 

in a product liability case suing under a federal law similar to H.R. 1115 

would recover punitive damages from a manufacturer only after meeting the “clear and convincing evidence” standard.” On the other hand. if 

the case involved an additional defendant’s being sued under a different 

tort category (such as personal violence), the plaintiff would only have 

to meet the lower “preponderance of the evidence” standard to recover 

punitive damages from that defendant. lo Reform advocates note that in 

some respects, a federal law would actually reduce differences across 

tort areas. Manufacturers and sellers, unlike other types of tort defendants, can be held strictly liable; thus, plaintiffs do not have to prove 

negligent conduct. A federal bill that would allow juries to consider 

whether defendants’ actions were negligent in product liability cases, 

reform advocates argue, would bring this category of tort law more in 

harmony with other existing state tort laws. 

Most Reform Most proposed reforms, in whatever area, would potentially have 

PrOpOSalS Would Have affected only a minority of the cases we studied. Many of the cases, h owever, that would have been affected would have involved large 

L4ffected Only a Few awards. For several of the reform proposals, the most significant effect 

Cases Studied would have been on the defendants’ litigation costs. 

In our analysis of the possible effects of various reforms, we estimated 

the number of cases potentially affected and how reforms would have 

affected (1) whether a defendant was held liable and. therefore, a plaintiff’s ability to recover damages! (2) the amount of damages awarded 

and paid by each party, and (3) litigation costs. The results of our analysis are summarized in table 5.3. 

hA tort category ts a type of civil wrong-such as product babrhty. medical malpractice. hbcl. slander. or personal violence--which results in personal mjuy. wrongful death. or property damage and 

for which a person can sue to recover damages. 

““Clear and convincing evidence” of a matter to be proved IS defined a.+ evtdence that will produce In 

the mmds of the JUT (or judge, m a case tried without a JUT I a fn-m belief that the truth of the 

matter IS more hrghly probable than not 

“‘“Preponderance of the evtdence” of a matter to be proved is defmed as evtdence that WIII produce 

In the mends of the jury (or judge, m a case tned wxhout a JUT I a belief that the truth of the matter 

LS more probable than not. 

Page 62 GAO;HRD89-99 Product Liability Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

able 5.3: Potential Effects of Selected Reform Proposals on Case Outcomes 

eform Cases potentially affected Possible effects Comments 

ion s!ate-of-the- The 33 cases for whrch we have-data P1atnttff.s prospects for recovery Proposed reforms doffer as to whether 

.: defenses for all in whtch awards based on strict would have been reduced In cases In state-of-the-art evidence acts to 

‘1ct liabtil’~ ltabrlity alone or wrth breach of which defendant can show product completely bar plaintiff s recovery or IS 

3ses warranty (out of 120 cases In which desrgn or warntng conformed wtth merely one factor for jury to consider 

defendants found Irable) we cannot state-of-the-art at the ttme of 

determine the number of those cases manufacture 

In which state-of-the-art defenses 

were used 

arse the standard 

croo! for 

,nrtlve damages 

loi\ comparative 

?qlrgence in all 

501s 

“II~ or abolrsh 

it 8 several 

5 Iit, 

The 23 cases In which punrtrve 

damages were awarded under the 

lower (preponderance of the evidence) 

standard (out of 55 cases in which 

punrtrve damages were requested and 

plaIntIffs won a verdict) 

About one-half of the plarntiff verdicts 

(55 out of 120) for which comparative 

negligence was not avatlable as a 

legal defense plarnttff was found 

partially at fault in half of the cases for 

whtch comparative negltgence was 

available 

In 36 cases multrple defendants found 

liable (out of 136 cases wtth awards) 

number of cases in which a defendant 

failed to pay IS unknown 

Amount plarnttff recovers mrght have 

decreased. to the extent higher 

standard would have resulted In fewer 

punittve damages awarded at trial 

ultrmate payout may have been 

affected less than amounts awarded 

srnce most punrttve awards reduced 

or elrmrnated posttnal. ttme and cost 

of appeals for cases wtth punittve 

damages would have been reduced 11 

higher standard resulted in fewer 

awards 

Platntiff‘s prospects for recovery 

would have Increased in negltgence 

cases in whtch plaintiff partially at fault 

Amount plaintiff recovers would have 

decreased in strict ltabrlrty and breach 

of warranty cases In which plarntrff 

partially at fault. would decrease In 

neglrgence cases to the extent jury 

was hesitant to asstgn plaintiff fault 

and, thus. bar recovery under 

contrtbutory neglrgence 

Amount plarntrff recovers would have 

decreased in cases In which a 

defendant fails to pay Its share, even if 

platntrff not at fault, since other 

defendants would have been 

responsrble for paying only their own 

shares 

Amount some defendants pay may 

have changed because defendant 

payments would have been more 

consistent with their respectrve shares 

of responsrbrlrty 

Our frndtng that appellate courts 

reversed or remanded all punrtrve 

damage cases that they revrewed 

suggests that tunes often Incorrectly 

award such damages under the iower 

standard 

In South Carolrna and a few states not 

studied law provided that plaintiff 

arguing neglrgence recerves nothing If 

parttally at fault we cannot determrne 

number of cases potentially affectea 

In whtch defendants found not liable 

because platntiff was partially at fault 

Defendants’ costs of litrgation may be 

reduced since one defendant need 

not sue other defendants for 

reimbursement totally faultless 

plarnttff may bear some of the IOSS 

- 

Page 63 

(continued) 

GAO/HRD89-99 Product Liability Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

Reform Cases ootentiallv affected 

Place a caD or7 

1onec31om1c 

a.:aros (assumed 

cat of $500 000)’ 

place a cap on 

p,n:tm~e damage 

ai;ards 

dloCllf> coliateral 

soilrce rule by 

allowrg *orKers 

c3mpensatlon 

rerjbctlcns 

,lrn t ftie llablllty of 

crc3uct sellers i 

The 32 cases (out of 136 awards) had 

total compensatory (economic + 

noneconomlc) awards over $500 000 C 

21 cases had total compensatory 

payments over $500,000 

Eight punltlve damage awards (out of 

23) exceeded two times the 

compensatory damages, SIX punWe 

awards exceeded three times 

compensatory damages two awards 

exceeded four times the 

compensatory damages payments to 

plaintiffs In three cases exceeded 

three times the original compensatory 

damages3 

The 60 work-related cases tn which 

liability was found on the basis of 25 

responses from the 60 cases. most 

plalntiffs received workers 

compensation and most reimbursed 

workers compensation from thetr 

award9 

The 15 cases In which sellers and 

manufacturers both found liable 34 

cases In which sellers were parties at 

verdict along with manufacturers, but 

sellers found not liable 

Possible effects Comments 

Amount plalnttff recovers may have 

decreased. however, to the extent a 

cap sets the standard for award size, 

the average plaintiff award size may 

have Increased If the jury was told of 

the cap and used It as the standard. 

cap may have less effect on payments 

than on awards since most awards 

were reduced after trial 

Amount plaintrff recovers would have 

been the same in almost all cases 

since almost all payments fell within 

proposed caps, caps would have 

reduced the few large awards. may 

have lead to larger awards and 

payments If caps set the standards for 

punitive damage award size 

Since award size IS related to seventy 

of plaintrff InJury. cap would most ltkely 

affect award size for the most 

seriously Injured 

Since largest punitlve damage awards 

went to those with the most severe 

injuries. caps would have decreased 

amounts received by those most 

seriously harmed 

Amount Dlalntlff recovers would have Of the 305 cases 42 Dercent 1130) 

decreased only In cases In which the were work-related 

plaintiff received payment from both 

the defendant and workers 

compensation 

Amount each defendant pays would 

have been reduced by the amount of 

workers’ compensation received 

Amount each defendant pays may not Sellers found liable at the same rate as 

have changed since, under current manufacturers (36% versus 39%) 

system manufacturers sometlmes pay sellers’ llabtllty was more often based 

the damages and litigation costs of on negligence alone than was 

sellers and sellers can sue for manufacturers llablllty (52% versus 

reimbursement from manufacturers, 41%) 

primary savings in terms of product 

sellers litigation costs, some 

manufacturers would have had to pay 

more damages 

aThls standard addressed by H R 1115 as passed by the House Energy and Commerce CommIttee 

’ A cap of $500 000 was assumed since that IS the most common cap exlstlng tn states thal have 

enacted them (Alaska Colorado and Oregon) 

-We could not dtfferentlate economtc ana noneconomic damages 

‘These ratios span most of the range of state caps which vary from not allowing punltlve damages to 

exceed compensatory damages (Colorado Revtsed Statutes sectlons 3-2-102 and 13.21-102 5 

Oklahoma Statutes title 23 secllon 91 to allowIng punltlve damages to exceed four times the size of 

compensatori damages (Texas CIW Statutes sectlons 41 007 and 41 008) Although caps relating the 

size of puni!ive damages to compensatory damages are the most common some states have lImIted 

punftlve damages to a set amounl 

‘Because of the ‘OV+ response rate to the questlon concerning workers compensation paymenls we 

cannot assume our data are reoresentallve of all cases 

As a result of our analysis. we estimate that reforms to reduce awardsby the plaintiff’s degree of responsibility for the injury (comparative 

Page 61 GAO,/HRW?9-99 Product Liability Litigation 
Chapter 5 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

negligence) or payments from workers’ compensation-would have 

affected more cases than would other reforms. A reform allowing stateof-the-art defenses in all appropriate product liability actions (failureto-warn as well as design defect cases) would have affected few cases 

studied. This is because, during the period studied, (1) state-of-the-art 

evidence was barred only in Missouri defective design cases and (2) verdicts were based solely on strict liability in only 27 of the cases (33 of 

123) in which defendants were found liable. Reforms to raise the standard of evidence for punitive damages or to place caps on awards would 

have affected cases with the largest awards. 

Two limits of our analysis are important to note. First, because the 

effects of reforms are largely unknown, many of the estimated effects in 

the analysis are tenuous. For example, posttrial activities already 

reduce payments substantially; therefore, we estimated that reforms, 

such as those requiring a higher standard of evidence for punitive damages or establishing caps, may have less of an affect on the amount of 

plaintiffs’ ultimate recoveries than on the amount originally awarded by 

juries or judges.” This may not result, however, if a reform was to alter 

the posttrial bargaining positions of the parties in certain ways. For 

example, a defendant may be more likely to appeal an award given 

under a higher standard of evidence; alternatively, a plaintiff may be 

less willing to accept a posttrial reduction of an award that is within a 

statutory cap. 

Second, the analysis does not address the effects of reforms on the 

larger body of product-related cases that do not go to verdict (either 

because of a settlement or because a party drops out) and cases for 

which a lawsuit is not filed. Because our study consisted entirely of 

product liability cases that reached trial, our analysis of the possible 

effects of reforms has necessarily centered on verdicts. Although an 

enacted reform might affect only a small number of verdicts, the impact 

on cases that never reach verdict or for which a suit is not filed could be 

more substantial, though less directly quantifiable. For example, a 

reform that makes it more difficult to recover punitive damages may 

reduce (1) the number of requests for such damages or (2) the degree to 

’ ‘For example. rakmg the aggregate ratios of payments to awards m the cases studied (see table 3.5). 

WY’ would expect an ultlmatc payment of about $4OO.O00 for an award of $1 million. $900.000 of 

whwh was for pumtlx’e damages If a reform was to hmlt pumtlve damages to three times the compensatory damages. the total award would be reduced to $400.000 !$300.000 for pumtlve damages I 

On the bws of our fmdlngs,. \ve \vould expecr that award to be reduced to $240.000 at payment 

Page 6.i GAO/HRD89-99 Product Liability Litigation 
Chapter 6 

Effects of Proposed Federal Reforms on State 

Laws and Case Outcomes 

which plaintiffs could use the threat of punitive damages in pretrial bargaining. Because such reforms downgrade plaintiffs’ bargaining position these reforms may result in lower and earlier settlements or in 

different types of cases reaching verdict. 

The implications of our findings for federal product liability law are discussed in chapter 6. 

Page 66 GAO ,HRD-89-99 Product Liability Litigation 
‘haptc~! ’ 

Implications of Our Review 

Over the past few decades, the tort system as it applies to product liability has been changing. The size of awards has increased. although the 

extent of the increase and its causes have been matters of considerable 

debate. Liability has been expanded by varying degrees in different 

states, creating increased variation among state laws. Insurers and 

defendant groups have complained that these changes are indications of 

a malfunctioning tort system that has undermined their ability to predict risks. These insurers and defendant groups have joined with some 

legal scholars in advocating product liability reform to curb these 

trends. Consumer groups have (1) defended the changes as redressing 

prior restrictions on plaintiff’s ability to recover damages and (2) attributed problems in liability insurance to economic factors. 

In this chapter, we discuss the implications of our findings for proposed 

federal tort reforms. We first discuss the implications of our analyses 

for federal reforms in general. We then examine whether our data are 

consistent with concerns underlying specific reform proposals. We consider reforms related to (1) the time and costs of litigation, (2) punitive 

damage awards, (3) award size, (4) liability standards, and (5) product 

sellers’ liability. We also discuss reforms related to assessing the effects 

of tort reforms on case outcomes and insurance rates.’ 

Although we studied a cross section of states. our findings and their 

implications cannot be considered representative of all states. They vary 

considerably in their laws, award size and frequency, use of the various 

liability standards, and posttrial adjustments. Different conclusions may 

be reached, therefore, depending upon the states studied. Where relevant, we use information from other studies to give as broad a view as 

possible. 

Tederal Reforms 

Hould Reduce 

Cariation in State 

Jaws 

Manufacturers sellers, and insurers contend that (1) the variation in 

state laws causes defendants to be held to different liability standards 

and (2) a federal law is needed to supplant the patchwork of state laws 

(see ch. 1). Because federal reforms would establish the same standards 

in each state. these reforms if sufficiently unambiguous, would make 

the application of product liability law for the subjects addressed more 

uniform in the 50 states. For some reform advocates. however. achieving uniformity may be secondary to the goal of achieving favorable 

‘We do not address concerns underlying proposals tn ( 1 ) limit attorneys‘ legal fees. t, 2’1 rc,dllr,tn a\\ ard~ 

for comparative negligence. and (3) abohsh Jomt and several llablhty or the collateral sourc’t~ rull, M 1’ 

ha\.? no mformation bearing on those proposals other than estimates on the number of cast’5 IN IT,*~ 

tlally affected by each reform isee table 5.3) 

Page 67 GAO 4RD89-99 Product Liability Litigation 
Chapter 6 

Implications of Our Review 

reforms in at least a subset of states. While arguing for federal reforms 

to achieve uniformity, tort reform advocates have also continued their 

efforts to pass reforms at the state level. Most state reform proposals 

have been directed at the tort system in general; a few reforms have 

been specifically targeted to perceived problems concerning product liability. Since 1985, a majority of states have enacted reforms that would 

affect product liability. Those recent state reforms have had the effect 

of increasing the variation among state laws. 

Proposed federal reforms may have a limited impact in two respects. 

First, we found that payments in only a minority of the cases studied 

were so extreme (in terms of award size or departures from traditional 

standards of liability) that they would have been affected by proposed 

reforms. The reforms, however! may have a broader impact on litigation 

costs and the large number of cases settled before verdict. 

Second, federal reforms specifically targeted at product liability would 

have a limited effect on some problems in the tort system in general. The 

large amount of time and cost required to resolve claims are problems 

encountered in many types of civil cases, of which product liability 

cases are a small portion. Federal reforms that dealt only with product 

liability would do little to remedy the general problem of court 

congestion.’ 

Findings Consistent In response to criticisms that litigation is too costly and lengthy, reforms 

With Concerns About have been proposed to institute alternative dispute resolution procedures to expedite the resolution of claims.“,4 Consistent with arguments 

Time and Costs by those who advocate these reforms, in the five states studied, we 

found that (1) cases took years to reach verdict and (2) a substantial 

percentage of defendants’ payments and plaintiffs’ recoveries went for 

legal fees and expenses. 

‘Reforms providing for alternate dispute resolution procedures (such as mediation or arbltratlon I 

might reduce the time and cost for those product liablhty cases resolved under these procedures and 

reduce slightly some civil courts’ congestion. 

.‘To the e?itent other reforms make It more difficult for plamtiffs to recover, those reforms ma! 

increase the percentage of caws settled before trial. This would reduce litigation costs and also. b> 

reducmg courts’ dockets. potentially shorten the time required to process cases gomg to verdict 

‘Because of their compleslty. these reforms were not considered in chapter 5 

Page 68 GAO/HRWW-99 Product Liability Litigation 
Chapter 6 

Lmplications of Our Review 

Findings Consistent One of several types of proposed reforms concerning punitive damages 

With Concerns About is the proposal to raise the standard of evidence required to award such 

damages.’ This reform is designed to ensure that punitive damages are 

Punitive Darnages awarded only when truly merited. 

Tort reform advocates contend that many punitive damage awards are 

unjustified. Our review showed, however, that the judicial reviews currently built into the tort system eliminate many punitive damage 

awards. In the cases studied, appellate courts reversed or sent back for 

further action at the trial court level all 12 of the punitive damage 

awards on which they ruled.” 

The question of whether to raise the standard of evidence for punitive 

damages comes down, mainly, to the issue of whether to continue to rely 

on controls currently in the system. Drawbacks to the present system 

include the additional cost and time of the appeals process.7 In the five 

states studied, on average, cases were in the appeals process for 10 

months. Defense costs (for attorney fees and expenses) in appealed 

cases were double the costs in cases that were not appealed. If reforms 

were to help juries and judges make more accurate decisions at the trial 

court level, defendants could potentially save these costs. Some critics 

caution. however, that reforms that make the award of punitive damages extremely difficult may dampen the deterrence function those 

awards are believed to serve. 

‘Our data are not relevant to other proposed reforms related to pumtrve damages. Some bills mclude 

proposals to Institute a two-stage tnal in which the amount of punitive damages is set in a separate 

hearmg after the trial to determine compensatory damages and whether the defendant’s conduct 

merits punitive damages. The goal of thus reform IS to eliminate any inflatronary effects that evtdence 

on punitive damages may have on the srze of compensatory damages. Other reforms related to punittve damages include c 1) establishmg a umform defiition of the conduct for whtch punitive damages 

should be awarded and (2) requiring that Junes be mstructed to consrder certam factors when setting 

the pumttve damages amount (see ch. 5). 

“An addttional 7 cases wtth pumtrve damage awards were appealed but settled before an appellate 

court rulmg. In general. posttrial settlements had the effect of eltmmatmg punltlve damages: that IS. 

they resulted m payments that were lower than the orrginal award by an amount equal to or greater 

than the punltrve portton of the ongmal award. 

‘On the basis of our data, we cannot evaluate other alleged drawbacks to the currenr system. such as 

the posstble negattve effects that mrght accrue from having made the award m the first place or the 

number of cases that would have been reversed on appeal but were never appealed because of the 

anttcrpated additional legal costs Tort reform advocates believe that the posstbtittg of recovenng 

large pumttve damages, even if the award IS reduced posttnal. increases the mctdence of requests for 

pumttve damages and compbcates the settlement process 

Page 69 GAO;HRD89-99 Product Liability Litigation 
Chapter 6 

Lmplications of Our Review 

Concerns About 

Award Amounts 

Largely Unfounded 

To control the size of awards and make their amounts more predictable. 

some federal bills have included proposals to place caps on certain types 

of damages. Caps have been proposed for compensatory awards for 

noneconomic damages- such as for pain and suffering-and for punitive damage awards. 

Noneconomic damages have been criticized as being unpredictable and 

excessive relative to the amount of harm done. But even if the portion of 

an award labeled as noneconomic damages was unpredictable from case 

to case, total awards for compensatory damages-which include both 

economic and noneconomic damages-still show a strong relationship to 

the severity of the injury and underlying economic losses.4 In the cases 

studied, average and median compensatory awards differed substantially according to injury severity, with awards being higher the more 

severe the injury. Similarly, ICJ reported that for all tort cases in Cook 

County, Illinois, severity of the injury, as measured by medical costs, 

accounted for a significant proportion of the differences in award 

amounts across cases. Historically, studies in which economic loss could 

be measured have shown that rather than being excessive relative to the 

loss, payments of compensatory damages do not fully compensate for 

large economic losses (for example, $100,000. $200,000, or larger. 

depending on the study).” In a recent study of wrongful death claims 

resulting from airplane accidents, payments of compensatory damages 

inadequately compensated for large economic loss. Even when the 

awards included large noneconomic damage components, the total 

amount of compensation provided was less than economic losses 

sustained.“’ 

Like noneconomic damages, punitive damage awards have been criticized as excessive relative to the amount of harm done. as measured b!T 

the size of compensatory damages. Some states have enacted caps that 

limit punitive damages to some multiple of the amount awarded for compensatory damages: one state has set a cap as high as four times compensatory damages. ‘I We found that the size of punitive damage awards 

‘&cause we could not separate economic from noneconomw damages m rhe cases srudwd. !vt’ (an 

only examme awards for all compensatory damages 

“Our data have no bearing on whether noneconomtc damages are c~scess~e relative to xtual 

noneconomlc 10~s. such as the amount of pam and suffcrmg or loss of consortium 

‘“E.&l. JGng and .l.P Smith. Economic Loss and Compensation m .Avlatlon ,\ccldents [Santa \lww;t 

CalIf: The Rand Corporation. the Institute for Civil .Justwe. 1988 ,, pp 88-89 

“Texas CIVII Statutes sewons 11 1)07 and 11 008 

Page 70 GAO HRD89-99 Product Liabilit? Litigation 
Chapter 6 

Implications of Our Review 

was for the most part, within the statutory limits that have been established in some states. Only two awards exceeded four times the compensatory damages, and only three large awards (of $1 million or more) 

were greater than the more moderate cap of two times compensatory 

damages. Therefore, in a few cases studied. punitive damage awards 

were large in comparison with the compensatory damage awards; large 

punitive damage awards have also been documented in product liability 

cases in other jurisdictions. A study by ICJ found that such awards were 

more frequent in business contract cases than in personal injury cases. 

such as product liability.” 

As with unjustified punitive damage awards, the present system already 

includes controls on the amounts plaintiffs ultimately recover. For 

extreme awards in the cases we studied, appellate processes and posttrial settlement negotiations, when used, reduced those awards. These 

mechanisms resulted in large reductions in cases of the most concern to 

insurers-verdicts of $1 million or more, especially those with large 

punitive damage awards. 

Relying on posttrial processes to guard against excessive recoveries has 

some disadvantages. As discussed earlier, posttrial activities add to the 

already substantial time and costs required to resolve cases. Further, for 

compensatory damage awards. appellate processes were not used to the 

same degree in ail states and. therefore, may not be relied upon to guard 

against excessive recoveries in all states. Where posttrial processes do 

not reduce extreme awards, other mechanisms, such as caps. may have a 

role to play in controlling the size of awards. Reforms imposing caps 

should guard against the possibility of indirectly reducing the economic 

damage component of awards. Little is known about how juries or parties to a settlement decide on the amounts of economic and noneconomic 

damages. As shown in a previous study, noneconomic damages are not 

necessarily a supplement received after plaintiffs are fully compensated 

for their economic loss. Rather, payments with large noneconomic components still fail to fully compensate for economic loss when that loss is 

large. If juries decide the total damages and then, at least to some 

extent. arbitrarily divide that total between economic and noneconomic 

“The Court recently held that the awarding of pumtive damages far in excess of compensatory dam 

ages does not violate the Eighth .I\mendment’s prohibition against excessive fines (Browning-Ferris vDelco Disposal. lnc S.Ct. No. 88-556 [June 26. 19891). Without ruling on the subject, however. a 

number of justices in that case noted thar juries‘ awarding punitive damages in absence of guidelines 

might be an unconstitutional violation of the Fourteenth Amendment due process clause The Court 

did not rule on the due process question m the Brovt-rung-Ferns case because the issue had not been 

promptly raised. 

Page 71 GAO/HRD-89-99 Product Liability Litigation 
Chapter 6 

Implications of Our Review 

damages, placing a cap on noneconomic damages might in effect eliminate some money that might have gone for economic damages. 

Defendants’ Liability Concerns that juries award damages without considering the defendMost Often Based on 

ants’ conduct or degree of fault have led to a number of proposals to 

limit defendants’ liability. One proposed federal reform would establish 

Negligence that defendants would not be liable for a design defect or a failure to 

warn if, given the state of the art at the time the product left the defendants, they could not have designed a safer product or foreseen the 

defect.’ I Underlying this proposal are concerns that under strict liability, 

defendants are being held liable in unreasonable situations such as, for 

example. when they had not warned against a danger from misuse that 

they could not have anticipated when the product left them. 

In the cases we studied, liability was based on negligence in a majority 

of decisions. Even in those cases in which defendants were accused of 

being strictly liable for a design defect or for failing to warn, defenses 

were almost always available that would have allowed juries and judges 

to consider the propriety of the defendants’ conduct in light of the thenexisting technology or the foreseeability of the defect. In a few cases in 

other states and in one Missouri case and one Massachusetts case (both 

of which fell outside our study time period), however, appellate courts 

have held that defendants were liable for design defects or failing to 

warn-even though defendants’ actions were in accord with the state of 

the art at the time the product was manufactured.‘-’ 

Empirical data on the frequency of certain liability decisions cannot 

resolve some of the key issues surrounding the proposed reforms. A key 

issue is whether (1) manufacturers should be liable for all injuries 

caused by product defects, even those resulting from ur.forseen defects. 

or (2) those injuries should be compensated for in some other way (for 

example, first-party insurance or victim compensation funds). 

’ ‘Another. more extreme proposal would limit Ilability to negligence and. therefore. abolish hablllt> 

based on the standard of strict hablhty or breach of warranty Since most of the debate has focused 

on the proposal to allow the state-of-the-art defense under strict llabiht)-. we evaluate the validity of 

concerns rele\xnt to that proposal. 

“In 1987. the ,MWKNXI legislature passed a statute alloumg state-of-the-art evidence in failure-towarn cases In one Llassachusetts failure-to-warn case, which fell outslde our study time. the defendant was not allowed to mtroduce state-of-the-an evidence. Subsequently, Massachusetts courts have 

questioned this earher decision. however. and have allowed such evidence to be admitted 

Page 72 GAO, HRD89.99 Product Liability Litigation 
Chapter 6 

Implications of Our Re\ielr 

Some Concerns About Tort reform advocates complain that product sellers who have minimal 

Product Sellers’ 

Liability Do Not 

Appear to Be 

Supported 

contact with the product are often named in complaints. only to drop 

out before the trial because of the lack of a valid case. Reforms have 

been proposed to limit product sellers’ liability to situations in which ( 1) 

the seller has more than minimal contact with the product (that is, committed a specific act of negligence or breached an express-usually. 

written -warranty). (2) the manufacturer may not be sued because it 

does not do business in the state where the case is filed, or (3) the manufacturer does not hold assets sufficient to pay a judgment. These 

reforms are primarily designed to reduce the litigation costs incurred by 

sellers because of frivolous suits against them. 

Although we found instances in which sellers who had minimal contact 

with the product were brought to trial, in general. our data do not support concerns that frivolous suits are more often brought against sellers 

than other types of defendants. If many of the cases brought against 

sellers were frivolous, we would expect to find that cases against them 

were being dismissed by the courts at a higher rate than for cases 

against other types of defendants. We found, however, that cases 

against sellers were dismissed at the same rate as cases against other 

types of defendants (see app. III). In addition, sellers were found liable 

at about the same rate as manufacturers (see table 5.3). Sellers’ liabilit) 

was less often based on strict liability than manufacturers’ and more 

often on negligence alone (see table 5.3). 

Although these findings do not support concerns that a greater number 

of frivolous suits are being brought against product sellers. our data are 

limited in the degree to which we can fully assess those concerns. For 

example, because we could not determine the reasons suits against individual defendants were dismissed, we cannot conclusively say that frivolous suits were no more prevalent among sellers than other types of 

defendants. 

Unavailability of Data In the mid-1970s and again in the mid-1980s. when asked to enact tort 

to Assess Tort 

Reforms Confirmed 

reforms to ease a crisis in liability insurance. the Congress found little 

information with which to evaluate the validity of tort reform advocates’ concerns or the potential effects of tort reforms on insurance 

rates. Some federal bills have contained proposals designed to ensure 

that the effects of reforms could be assessed in the future. Among these 

are proposals to ( 1) mandate a study of reforms’ effects and (2 1 require 

that insurers’ data on claims. their resolution, and the impact of reforms 

on claims be made available and reported regularly to the Congress. 

Page 73 GAO MRD-89-99 Product Liability Litigation 
Chapter 6 

Implication5 of Our Review 

Our experience in this study confirms that data with which to assess the 

effects of tort reforms are not readily available. The data contained in 

court records or the files of attorneys are neither comprehensive enough 

to assess reforms’ effects nor easily retrieved. In the past, insurers’ 

closed-claims files have proved to be comprehensive. Although such 

files were unavailable to us, state insurance commissioners, as part of 

their responsibilities for regulating the insurance industry, can require 

insurers to submit data. Obtaining data through the cooperation of state 

insurance commissioners, therefore, may be a possible alternative to 

requiring federal data collection. 

Even if data were available, assessing the effects of federal reforms 

would be difficult, though not impossible. Previously, GAO testified that 

it believes a well-designed and well-executed study could evaluate 

whether tort reforms at the state level reduce liability insurance premiums or prevent their increase.li Such a study would involve comparing 

claims resolved in states that had enacted reforms with those in states 

that had not enacted reforms. Evaluating the effects of federal reforms 

might be more difficult. An evaluation to determine the effects of federal reforms would most likely involve comparing information on claims 

before reforms with information after reforms. With the exception of 

one study of claims arising out of policies written in 1983 and one on 

large loss claims closed in 1985, we currently lack systematic information on claims before reforms.“! 

Establishing mechanisms for obtaining information could ensure that 

data not available to us for this study would be available to address 

future issues concerning the relationship between tort reform and insurance rates. Such data might enable the Congress to (1) answer some 

questions that are very difficult or impossible to answer currently and 

(2) look at all claims, not just those resolved through verdicts. These 

mechanisms, however, would do little to resolve the debate over current 

tort reform proposals. 

‘“Conslderatlons m Measuring the RelationshIp Between Tort Reform and Insurance Premiums. statement by Joseph F. Delfico. GAO. before the House Comnuttee on Small Business (GAO/m-l 1, 

Apr 28. 19Ri1 

“‘Claim File Data Analysis: Techmcal Analvsls of Survev Results (IS0 Data, Inc., 1988) exammed 

commercial IlabIlity claims ansmg out of policies wnttei during 1983. In addition. see Alliance of 

American Insurers and American Insurance Association. A Study of Large Product Liability Claims 

Closed m 1985 ( 1986 ). 

Page 74 GAO/HRD-W-99 Product Liability Litigation 
Page 75 GAO,,HRD-89-99 Product Liability Litigation 
Appendix I 

Detailed Description of Methodology 

This appendix provides additional details concerning our methodology, 

discussed in chapter 1. Information is included about (1) the selection of 

states, (2) the databases from which the cases were drawn (3) data collection from case files, (4) questionnaire mailings and responses, and (,5) 

an ar Aysis of the effects of nonresponse on our findings. 

Selection of States Our selection of states was based primarily on the availability of data on 

cases filed in state court. One of the greatest obstacles to gathering data 

on product liability litigation is the unavailability in most states of centralized databases through which product liability cases can be identified. Because product liability cases represent a small percentage of all 

tort filings, identifying product liability cases without a centralized listing would entail very time-consuming searches of thousands of docket 

sheets or case filings or both. 

To determine jurisdictions in which we could identify product liability 

cases without manually searching court records, we conducted telephone interviews across the 48 states in the continental United States 

and the District of Columbia; we interviewed court officials, attorneys, 

and private organizations that track product liability litigation. We identified several possible sources through which product liability cases 

could be identified. These included computerized databases maintained 

by state court administrative offices, commercial jury verdict reporters, 

and previous st.udies in which product liability cases had been identified 

by searching court records. 

For 10 jurisdictions, we found sources that we could use to identify 

product liability cases. Because of resource constraints, we limited our 

review to 5 of the 10 jurisdictions. Our final selection was based on the 

(1) amount of information available on product liability litigation in the 

jurisdictions and (2) relative costs associated with obtaining information. We eliminated two jurisdictions (Cook County, Ill., and San Francisco, Calif.) because product liability verdicts in those jurisdictions 

have been reported by the Institute for Civil Justice (ICJ). We excluded 

three jurisdictions (the states of Colorado, Michigan, and Oregon) 

because the costs of obtaining case listings would have exceeded OUI 

resources. 

The cases covered in this study are not to be viewed as statistically. representative of all product liability cases across the country. In particular, the most populous states are not included in this study either 

because complete data were unavailable in those states or, in the case of 

Page 76 GAO.‘HRDW-99 Product Liability Litigation 
Appendix 1 

Detailed Description of Methodoloa 

California. we did not want to duplicate previous 1C.J work. The most 

populous state in our study is Massachusetts, which ranks 12th among 

the 50 states. Two of the states-Missouri and South Carolina-however, ranked above the U.S. median state population as estimated by 

the Census Bureau in 1984, the middle year of our study period. 

The five states that we chose offered a mix on a variety of dimensions. 

They are diverse regionally and in terms of urbanization. Some 

researchers believe greater urbanization is associated with a higher incidence and size of jury verdicts. The five states ranged from Massachusetts and Arizona-ranked ninth and tenth. respectively, among the 50 

states (both with an urban population of about 84 percent)-to Korth 

Dakota, which ranks 44th (with an urban population of about 49 

percent). 

In terms of the dollar value of manufacturing shipments and the numbers of manufacturers and manufacturing employees, Massachusetts 

and Missouri rank among the top one-third of states; Arizona and South 

Carolina. the middle one-third; and Korth Dakota, the lowest one-third. 

Sources Used to 

Identify Product 

Liability Cases 

State Courts For each of the five states, summaries of the following are given in table 

1.1: the number and type of courts studied; the type of source(s) used to 

identify product liability cases; the proportion of the state’s population 

covered by those sources; and our success in sampling both jury and 

bench (that is, nonjury) trials. Although we attempted to gather data on 

verdicts rendered by either a jury or a judge. we successfully obtained 

data on bench verdicts only in Massachusetts’s and Missouri’s state 

courts. 

Federal Courts From the Administrative Office of the U.S. Courts, for the five states, 

we obtained a listing of cases that were resolved through trial verdicts 

in the C’S. district courts. The Administrative Office’s data are generally 

considered to be the best source for information on product liability 

Page 77 GAO: HRD8499 Product Liability Litigation 
Appendix I 

Detailed Description of Methodology 

cases. Six district courts cover five states, one per state. except Missouri, which has two districts-Western Missouri and Eastern Missouri. 

Table 1.1: Cases Covered and Sources Used in State Courts 

State 

Arizona 

Vassacnusetts 

MlssoLrl 

North Dakota 

Extent of state coveraqe 

Percentage 

of state Cases tried in courts not included in 

Number of courts population Sources used to identify cases this studya 

9 of 15 circuit 88 Jury verdict reporters All claims under $500. any claims 

courts between $500 and $2.500c tned by 

justce of the peace 

All 14 superior 100 Records of the Office of the Chief All claims under $7.500. which are tried 

courts AdmInIstratIve Justlce and the court of in dlstrlct court municipal court or 

appeals housing court 

-______ 

All 44 judicial 100 Jury verdict reporters records of the None 

circuits Office of State Courts Admlnlstrator. 

“MIssour Appellate Court Opinton 

Summary” 

All 53 dtstnct 100 Private study Any claims under $10.000” tried in 

South Carolina 

courts 

26 of 46 clrcult 

courts 

78 Pnvate study 

cointy court 

Any claims under $1 ,OOOc tried in 

maqistrate court 

‘In all states but MIssour product liablllty cases with small claims could be heard In courts other than 

the trial courts we examined Our sources did not cover these courts with small claims 

bCases with claims of $2 000 and over could also be Wed In the courts we studled 

When a complaint is filed, the plaintiff attorney indicates which standard case type (for example. “torts/personal injury-product liability”) 

best describes the nature of the suit. To help ensure accuracy. the court 

clerk verifies the attorney’s selection, correcting any mistakes. The 

clerks also record when and how the case was disposed. 

Data Collection We gathered data using the following sources: 

l case files maintained at federal, state. and county courthouses: 

l commercial reporters of verdicts and appeals: and 

l questionnaires sent to attorneys representing plaintiffs and defendants. 

Review of Court Records 

2nd Jury Verdict 

Reporters 

In each state, we gathered information from case files. docket sheets 

maintained by the courts and, when available, jury verdict reporters. 

We relied primarily on court records and only used reporters to fill in 

information missing from court records. 

Page 78 GAO HRD89-99 Product Liability Litigation 
Appendix 1 

Detailed Description of Methodology 

From these sources. we obtained background information, including a 

description of the incident and the parties to the suit. the disposition of 

the case against each defendant, the amount of compensatory and punitive damages demanded and awarded, and dates of various stages of 

case processing from filing to disposition. We also recorded information 

on posttrial activities, including appeals and settlement negotiations as 

well as, when acTailable, their outcomes. 

To supplement information on appeals, we searched appellate court 

records-when possible-and WESTLAW, a commercial service that provides information on appeals nationwide. 

Survey of Attorneys To gather information not consistently available from court files, we 

sent questionnaires to plaintiff and defendant attorneys who represented the parties in the cases. For the 305 cases in our study, we surveyed 313 plaintiff attorneys and 407 defendant attorneys. Attorneys 

were asked to report the status of the case; payments made to date and 

how the amounts were determined; legal fees and expenses; various 

legal aspects including the liability standards used to decide the case, 

affirmative defenses, and alleged defects; estimated special damages for 

medical costs and lost wages; and collateral source payments and reimbursements. Attorneys were assured that we would keep confidential all 

information that was not already on the public record, such as confidential settlements and payments as well as attorneys’ fees. Appendix II 

contains copies of the questionnaires used to survey attorneys. In an 

attempt to ensure a high response rate, we followed the initial mailing 

with at least one more mailing of copies of the questionnaires as well as 

telephone calls. 

Across the five states we obtained information from 67 percent of 

plaintiff attorneys and 66 percent of defendant attorneys. For questions 

concerning payments and legal aspects of the cases, the questionnaires 

were designed such that a response from only one side in a dispute provided complete case data. As shown in table 1.2, the 1 her case response 

rates from payment data ranged between 68 and 80 percent. Only in 

Massachusetts did the response rate for information on posttrial payments drop below ‘70 percent. 

We received information on fees from 53 percent of plaintiff attorneys 

and 52 percent of defendant attorneys. For 56 cases. we obtained complete information on fees and expenses for both sides of the dispute. For 

Page 79 GAO/HFtD&%99 Product Liability Litigation 
Appendix I 

Detailed Description of Methodolog 

items concerning special damages and collateral source payments. all 

response rates (either per party or per case) were less than 50 percent 

Table 1.2: Percentage of Cases for Which 

Payment Data Obtained Cases with 

State data Total cases Percent responding 

Anzona 45 59 76 

-..__~ ~~- ~~~~ 

Massachusetts 45 66 68 

MIssour 88 108 81 

North Dakota 13 16 81 

South Carolina 45 56 79 

All cases 236 305 77 

In 69 cases, we were unable to obtain payment data. In 6 cases for which 

a court action was still pending, final outcomes had yet to be determined. Payments in 11 cases were part of confidential agreements. In 1 

case, the attorney could not recall the size of the payment. Finally. in 51 

cases, neither plaintiff nor defendant attorneys responded. 

Cases for which we do not have data on payments appear very similar 

to those for which we have data (see table 1.3). The most notable differences are in the size of compensatory damages, number of punitive damage awards, and rate of posttrial activity. The 69 cases for which we 

lack payment data had higher average compensatory damages. but 

included only 1 of the 23 cases in which punitive damages were 

awarded. These 69 also had a slightly higher rate of adjustment by trial 

judges and a slightly higher rate of appeal. These higher rates (as well 

as the higher average award) suggest that the cases for which we lack 

data would have had at least as many, if not more, posttrial adjustments 

as we found for compensatory awards. 

Table 1.3: Comparison of Cases With and 

Without Payment Data Payment data 

With Without 

Cases 236 69 

Percent liable 44 48 

.~~ 

Cases with punltlve damages awarded 22 1 

Average compensatory award $604 000 $723 000 

Percent adjusted by trial judge 6 10 

Percent aDpealed ’ 

__~-~-__ 

44 49 

Page 80 GAO/HRD89-99 Product Liability Litigation 
..Ijpendls II 

U.S. General Accounting Office Surveys: 

Part A: Plaintiffs’ Attorneys 

U.S. GENERAL ACCOUNTING OFFICE 

‘SURVEY OF PLAINTIFFS’ ATTORNEYS REGARDING PRODUCT LIABILITY CASES 

The U.S. Generel Accounting Office is 

collecting information from l ttorneys for 

all product liebility ceeee that went to 

trial in selected states in calender yeerf 

1983 through 1985. Pleese provide 

information for the ceee specified above. 

Individual responses will be kept 

confidential. 

If you represented more then one client in 

this case, please complete a questionnaire 

for each. If you do not have separate 

information for each of your clients, please 

report the information on one questionnaire 

and write-in the names of the applicable 

clients. 

NAME OF CLIENT(S): 

01. Is this cese completely closed in regard 

to this client(s). or is it still 

pending? 

1. [ 1 Case closed 

Date case closed: 

I 

(GO TO 

QUESTION 02) 

MO/YR 

OR (CHECK ALL THAT APPLY.) 

2. 1 1 Pending motion for 

remittitur/rdditur 

3. 1 1 Pending a new trial or 

motion for new trial 

(GO TO 

4. t 1 Pending appeal QUESTION 05) 

5. [ I Pending execution of 

judgment only 

6. [ 1 Other (PLEASE SPECIFY.) 

i 

02. Did this client(s) receive eny post-trial 

peyments from any defendent(s) involved 

in the originel trial verdict? 

(IF RECEIVED, INCLUDE PAYMENTS OF (1) 

AWARDS PLUS PRE-JUDGMENT INTEREST, IF 

ANY, AND (2) POST-TRIAL SETTLEMENTS; IF 

SPECIFIC PAYMENT TO THIS CLIENT(S) IS 

NOT AVAILABLE, ENTER THE PAYMENT TO BE 

SHARED UITH OTHER PLAINTIFFS.) (ENTER 

AMOUNT; IF NONE, ENTER ‘O’.) 

1. Specific to this client(s) 5 _ 

2. Shered with other plaintiffs 5 

03. How YBS this amount in question 02 

determined? (CHECK ALL THAT APPLY.) 

1. [ I Verdict es initially specified 

2. [ I Verdict less lien amount 

3. 1 I Verdict adjusted by pro-trial 

settlement amount received 

from others 

4. [ 1 Verdict l djusted by triel court 

5. [ I Verdict adjusted by appellate 

court 

6. C 1 New triel verdict 

7. [ 1 Post-trial settlement 

negotiations 

8. C 1 Payments from structured 

settlement 

9. [ 1 Defendant(s)’ i.lability to pay 

full l mount due 

10. [ 1 Defendant’s verdict 

11. [ 1 Other (PLEASE SPECIFY.) 

1 

Page 81 GAO/HRD439-99 Product Liability Litigation 
Appendix II 

U.S. General Accounting Office Surveys: 

Part A: Plaintiffs’ Attorneys 

04. Is the payment in Puestion 02 the total 07. What would you estimate are the total 

amount this client(s) is/was legally legal fees ol- contingency fee. if any, 

obligated to receive from defendants that you and your firm received from 

involved in the initial verdict? (CHECK this client(s)? (DO NOT INCLUDE 

ONE; IF 'NO', ENTER. AFTER OFFSETS, REIMBURSEMENTS FOR EXPENSES BY THIS 

TOTAL AMOUNT DUE FROM (0 AWARDS PLUS CLIENT(S)). (ENTER AMOUNT; IF NONE, 

PRE-JUDGMENT INTEREST, IF ANY, AND ENTER 'O'.) 

(2) POST-TRIAL SETTLEMENTS.) 

5 or 

1. c I Yes 

!4 contingency fee 

2. C 1 No (ENTER TOTAL AMOUNT DUE. 

INCLUDING PAYMENTS TO DATE) 

S 

Total Amount Due 

3. C I Not applicable 

C 1 Case still pending 

01. To date, what were your total .xpenser 

to handle this client(s)’ case (include 

those for which you may have been 

reimbursed)! (ENTER AMOUNT.) 

05. Did this client(s) receive payments from $ 

l “Y s k&Q rettled bfam kbs 

verdict? (CHECK ONE; IF 'YES'. ENTER 09. What us (1) the dollar amount claimed 

AMOUNT.) by this client(s) for special damages 

incurred w the trial and (2) the 

1. 1 1 Yes (ENTER AMOUNT.) estimate of special damages that would 

be incurred & the trial? 

t 

2. [ 1 No 

3. 1 1 Don't know 

lpecirl damaos: include medical costs. 

wage loss. end other monetary losses; 

exclude legal fees and expenses 

4. C 1 Not applicable (no 

other dofondant( 

(IF YOU DO NOT HAVE A BREAKDOWN OF PAST 

AND FUTURE SPECIALS, PLEASE PROVIDE 

TOTAL SPECIAL DAMAGES CLAIMED.) (ENTER 

AMOUNTS.) 

06. Do you know hou much the m 

plaintiff(s) who went to verdict 

ultimately received directly from 

defendant(s) who vent to verdict? (DO 

NOT INCLUDE THIS CLIENT(S)). (CHECK 

ONE.) 

1. C I Yas (ENTER TOTAL AMOUNT RECEIVED 

BY OTHER PLAINTIFF(S)) 

1. Special damages incurred S 

w the trial 

2. Special damages to be S 

incurred & the trial 

OR 

f 

2. [ I No payment to other plaintiff(s) 

3. [ 1 Don't know 

3. m special damages S 

(incurred before and to 

be incurred after trial) 

4. C 1 Not applicable (no other 

plaintiff(s)> 

2 

I 

I 

Page 82 GAO/HR.D89-99 Product Liability Litigation 
Appendix Ii 

U.S. General Accounting Office SU~V~S: 

Part A: Plaintiffs’ Attorneys 

10. Pleese (A) indicrto whether or not each of the following sources 

compensated or paid benefits to this client(s) es e result of his/her 

losses; (8) if this client(s) received payment, please estimate the 

amount received from each source; and LC) where applicable. indicate 

whether or not the source wds reimbursed es e result of l subrogation 

lien. (IF CASE IS STILL PENDING, DO NOT COMPLETE ‘REIMBURSED THROUGH 

SUBROGATION LIEN’.) 

I I CA) I (6) I CC) I 

I I I I REIMBURSED I 

I I I IF SOURCE I THROUGH I 

I l SOURCE COMPENSATED ICOMPENSATED CLIENT,~ SUBROGATION l 

I SOURCE 1 THIS CLIENT(S)? I AMOUNT PAI D I LIEN I 

I I (CHECK ONE.) ICENTER AMOUNT.1 I (CHECK ONE. ) l 

I I I I I 

I I I I DON’T1 I I I DON’T1 

I I YES I NO I KNOW I I YES I NO I KNOW I 

I I (1) I (21 I (3) I I (1)I (2) I (3) I 

I1 . Workers compenset i on I I I I I I I I 

I I I 

Y-1 

I I I 

12. Disability payments (include I 1 1-1-i 

-1 

I 

I payments from social I I I 

I 

I I I 

I security. private insurance, I I I I I I 

I pension plans. etc. I I I I I I I I I 

I I --- --- I 

13. Private health insurance I I I I I I I I 

I I I --- 

14. Medicaid or Medicare I I I I 

I I I-I 

IS. Unemployment componsetion i-1-1 l 

I I --- 

16. Compensation from employer l l I I 

l (other than workers I I I I 

l compensation end payments I I I I 

l of awards end post-trial I I I I 

I settlements from an employer l I I 

I who wes e defondent in the l I I I 

I case.) I I I 

I-I-I-l I 

17. Public assistance programs l I I I 

l (Include AFDC. SSI. etc.) I I 

I I-I-I- I 

18. Life insurrnce I I I I 

I I I-1 

19. Property end accident i-1-1 I 

l insurance (other then I I I I 

l payments from defendant(s)) l I I I 

I I I I-I 

llO.Other (PLEASE SPECIFY.) l-l-l I 

I I I I I 

I I I I I 

I --- I 

I I I I 

-- -I 

I I I I 

--- 

I I I I 

I I I I 

I I I I 

I I I I 

I I I I 

I I I I 

I 

I-II I 

I-I 

I I I I 

I 

I-II I 

I-I 

I I 

I-I-I 

I 

-I 

I I I I 

I I I I 

I 

I-II I I-I 

I I I I 

I I I I 

I I I I 

3 

Page 83 GAO ‘HRD89-99 Product Liability Litigation 
Appendix II 

U.S. General Accounting Office Surveys: 

Part A: Plaintiffs’ Attorneys 

11. In this case, was your firm the only one 

which represented this client(s) et l ny 

time? (CHECK ONE.) 

1. r 1 Ye+ 

2. [ I No 

IIF YOU HAVE ALREADY ANSWERED I 

IQUESTIONS 12-15 ON ANOTHER I 

IQUESTI~NNAIRE FOR THIS CASE, DO NOT 1 

IANSWER QUESTIONS 12-15 ON THIS I 

IQUESTIONNAIRE. I 

I I 

12. In the initial triel. uhet legal theory 

or theories did the judge instruct the 

jury to consider in deciding the cese 

Of-r if a bench judgment. what wes the 

legal theory/theories considered by the 

judge? (CHECK ALL THAT APPLY.1 

1. C I Strict liability 

2. 1 1 Negligence 

3. [ I Breech of express uarrenty 

4. C I Breech of implied warranty 

5. I 1 Intentionel tort 

6. I 1 Misrepresentetio". fraud. 

end deceit 

7. I I willful end wanton 

negligence 

1. 1 1 Breech of express contract 

9. C I Breech of implied contract 

10. I I Other (PLEASE SPECIFY.) 

13. I” your opinion, in eddltion to whether 

or not the product w., unreesonebly 

dengereus, to whet extent, if et all, 

wet negligence on my of the 

defendent(sI' pert en issue in the 

triel? (CHECK ONE.) 

1. t 1 Little et- na extent 

2. [ 1 Some extent 

3. C 1 Hoderete extent 

4. C 1 Greet extent 

5. I 1 Very great extent 

14. At the trial, whet types of product 

defects were alleged to have caused the 

incident? (CHECK ALL THAT APPLY.) 

1. I 1 

2. I I 

3. 1 I 

4. [ I 

15. If you 

Design defect 

Defect in menufacture 

Feilure to YET" et- insufficient 

instructions 

Other (PLEASE SPECIFY.) 

heve l ny comments related to this 

questionnaire or the items in this 

questionnaire, please write them in the 

spece provided below or, if mere space 

is needed, attach another sheet of peper 

Thenk you for completing this questionnaire. 

Please provide the "eme end phone number of 

the person we mey contect should we need to 

clarify l ny responses. 

Name : 

Tel. No.: 

If you would like e copy of the report, 

please check the box. I I 

4 

Page 84 GAO/HRD8499 Product Liability Litigation 
Appendix II 

1’S General Accounting Office Surveys: 

Part B: Defendants’ Attorneys 

U.S. GENERAL ACCOUNTING OFFICE 

/ iSURVEY OF DEFENDANTS' ATTORNEYS REGARDING PRODUCT LIABILITY CASES 

The U.S. General Accounting Office is 

collecting information from attorneys for 

all product liability cases that wont to 

trial in selected states in calendar yews 

1983 through 1985. Please provide 

information for the case specified l bovo. 

Individual responses will be kept 

confidential. 

If you represented more than one client in 

this case, plsase complete s quostionnsire 

for each. If you do not hrve sepsrste 

information for each of 'our clients, pleese 

report the information o,$ one questionnaire 

and write-in the names of the spplicsblo 

clients. 

NAME OF CLIENT(S): 

01. Is this case completely closed in regard 

to this client(s). or is it still 

pending? 

1. [ 1 Case closed 

Date case closed: 

I 

(GO TO 

QUESTION 02) 

MO/YR 

OR (CHECK ALL THAT APPLY.) 

2. [ 1 Pending motion for 

remittiturfadditur 

(GO TO 

3. t 1 Pending a new trial a~ QUESTION 06) 

motion for new trial 

4. [ 1 Pending appeal 

5. [ 1 Pending execution of 

judgment only 

6. t I Other (PLEASE SPECIFY.) 

02. What post-trial psymonts, if sny. hss 

this client(s) mado to plsintiffs 

involved in the originel trial verdict 

or to other defondsnts ss contributions? 

(INCLUDE PAYMENTS OF (1) AWARDS PLUS 

PRE-JUDGMENT INTEREST, IF ANY. AND 

(2) POST-TRIAL SETTLEMENTS. ENTER 

AMOUNT IF NONE. ENTER 'O'.) 

Amount directly to plsintiff(s) or prid 

to other defendants ss contribution: 

s 

OS. How wss this amount in question 02 

determined? (CHECK ALL THAT APPLY.) 

1. 1 1 Verdict ss initirlly specified 

2. t 1 Verdict less lien l mount 

3. C I Verdict rdjustod by pro-trial 

settlement amount received 

from others 

4. [ 1 Verdict adjusted by trial court 

5. C 1 Verdict sdjusted by appellate 

court 

6. I 1 Now trial verdict 

7. t 1 Post-trial settlement 

negotiations 

8. [ 1 Defendant(s)' inability to pay 

full amount due 

9. C I Defendant's verdict 

10. I 1 Other (PLEASE SPECIFY.) 

1 

Page 85 GAO/HRD89-99 Product Liability Litigation 
Appendix II 

U.S. General Accounting Office Surveys: 

Part B: Defendants’ Attorneys 

04. Did the plaintiff(s) receive the amount 

in qwstion 2 in one lump sum or in 

periodic payments according to a 

structured settlement? (CHECK ONE.) 

1. [ 1 

2. 1 1 

3. 1 1 

05. Is the 

Lump sum 

Periodic payments 

Not applicable 

payment medo in question 2 the 

total amount this client(s) yes legally 

obligated to pay to all plaintiffs 

involved in the initial verdict? (CHECK 

ONE. IF ‘NO’, ENTER, AFTER OFFSETS. 

TOTAL AMOUNT DUE FROM (1) AWARDS PLUS 

PRE-JUDGMENT INTEREST. IF ANY, AND 

(2) POST-TRIAL SETTLEMENTS.) 

1. [ 1 Yes 

2. [ 1 No (ENTER TOTAL AMOUNT DUE) 

07. What would you estimate are the total 

3. t 1 Not applicable 

06. Do you know how much the elljntiffcd 

& & h ywdict ultimately received 

directly from other s w 

w b yordict? (DO NOT INCLUDE THIS 

CLIENT(S).) (CHECK ONE.) 

1. [ I Yes (ENTER TOTAL AMOUNT PAID BY 

OTHER DEFENDANT(S)) 

f 

2. [ I No payment by other defendant(s) 

3. [ 1 Don’t know 

4. t 1 Not applicable (no other 

defendant(s)) 

2 

legal fees, if any. that you and your 

firm received from this client(s)? 

(DO NOT INCLUDE REIMBURSEMENTS FOR 

EXPENSES FROM THIS CLIENT(S)). (ENTER 

AMOUNT. 1 

S 

I I Case still pending 

To date, what were your total expenses 

to handle this client(s)’ case (include 

those for which you may have been 

reimbursed)? (ENTER AMOUNT. 1 

s 

For b plaintiff involved in the 

initial trial verdict. what was (11 your 

estimate of special damages which the 

plaintiff incurred w the trial and 

(2) your estimate of the special damages 

that would be incurred u the trial? 

secial damaqeq: include medical costs. 

wage loss. and other monetary losses; 

exclude legal fees and expenses 

(IF YOU DO NOT HAVE A BREAKDOWN OF PAST 

AND FUTURE SPECIALS, PLEASE PROVIDE 

TOTAL ESTIHATED SPECIAL DAMAGES.) 

(ENTER AMOUNTS.) 

(WE HAVE PROVIDED SPACE FOR UP TO 5 

PLAINTIFFS. IF YOU NEED ADDITIONAL 

SPACE, ATTACH ANOTHER SHEET WITH THE 

INFORMATION ON IT.) 

NAME OF PLAINTIFF 1: 

1. Special damages incurred S 

w the trial 

2. Special damages to be S 

incurred aftor the trial 

OR 

3. J&& special damages S 

(incurred before and to 

be incurred after trial) 

(CONTINUE TO NEXT PAGE) 

Page 86 GAO HRD89.99 Product Liability Liti@rlon 
Appendix II 

C.S. General Accounting Office Surveys: 

Part B: Defendants’ Attorneys 

(QUESTION 9 CONTINUED) 

NAME OF PLAINTIFF 2: 

1. Special damages incurred 8 

w the trial 

2. Special damages to be $ 

incurred w the trial 

OR 

3. u special damages S 

(incurred before and to 

be incurred after trial) 

NAME OF PLAINTIFF 3: 

1. Special damages incurred 5 

before the trial 

2. Special damages to be S 

incurred after the trial 

OR 

3. u special damages t 

(incurred before and to 

be incurred after trial) 

NAME OF PLAINTIFF 4: 

1. Special damages incurred S 

before the trial 

2. Special damages to be S 

incurred m the trial 

OR 

3. m special damages 5 

(incurred before and to 

be incurred after trial) 

NAME OF PLAINTIFF 5: 

1. Special damages incurred 5 

bpforo the trial 

2. Special damages to be t 

incurred pfter the trial 

OR 

3. Total special damages 8 

(incurred before and to 

be incurred after trial) 

10. In this case, ,.~a, your firm the only one 

which represented this client(s) at any 

time? (CHECK ONE.1 

1. [ I Yes 

2. t 1 No 

IIF YOU HAVE ALREADY ANSWERED I 

lQUESTIONS 11-15 ON ANOTHER I 

IPUESTIONNAIRE FOR THIS CASE. DO NOT I 

IANSWER QUESTIONS 11-15 ON THIS I 

IQUESTIONNAIRE. I 

I I 

11. In the initial trial, what legal theory 

or theories did the judge instruct the 

jury to consider in deciding the case 

or, if a bench judgment, what was the 

legal theory/theories considered by the 

judge? (CHECK ALL THAT APPLY.) 

1. C 1 Strict liability 

2. C 1 Negligence 

3. [ I Breach of express warranty 

4. [ I Breach of implied warranty 

5. [ 1 Intentional tort 

6. 1 1 Misrepresentation, fraud, 

and deceit 

7. C I Willful and wanton 

negl i gence 

8. C 1 Breach of express contract 

9. C I Breach of implied contract 

10. C I Other (PLEASE SPECIFY.) 

3 

Page 87 GAO/HFUl-89-99 Product Liability Litigation 
Appendix II 

U.S. General Accounting Office Surveys: 

Part B: Defendants’ Attorneys 

I2. What effirmetivo defonse(sl did the 

judge instruct the jury to consider in 

deciding the case or, if l bench 

judgment, what was the defense(s) 

considered by the judge? (CHECK ALL 

THAT APPLY.) 

15. If you heve l ny comments roleted to this 

quostionneiro or the items in this 

questionneire, ploeso write them in the 

spece provided below. 

I. [ I Assumption of risk 

2. [ I Contributory negligence 

3. [ I Product misuse or l bnormel misuse 

4. 1 I State of the art 

5. t I Alteration of the product 

(intervening cause) 

6. 1 I Useful life 

7. [ I Other (PLEASE SPECIFY.) 

13. In your opinion, in addition to whether 

or not the product was unreasonably 

dangerous, to what extent. if et ell. 

was negligence on any of the 

defendant(s)’ part an issue in the 

trial? (CHECK ONE.) 

I. I I Little or no extent 

Thank you for completing this questionnaire 

Please provide the name and phone number of 

the person we ney contact should we have to 

clrrify l ny responses. 

Name : 

2. 1 I Some extent Tel. No.: 

3. [ I Moderato extent If you would like e copy of the report, 

please check the box. c I 

4. [ I Great extent 

5. C 1 Very greet extent 

14. At the trial. what types of product 

defects Were alleged to have caused the 

incident? (CHECK ALL THAT APPLY.) 

1. [ I Design defect 

2. 1 1 Defect in manufacture 

3. [ 1 Failure to warn or insufficient 

instruction 

4. t I Other (PLEASE SPECIFY.1 

Page 88 GAO,‘HRD-89-99 Product Liability Litigation 
jppendix III 

3ses That Reach Verdict: Incidents and Parties 

‘;o the Suits 

This appendix includes background information on the 305 cases we 

studied. We first report the types of products and injuries in the incidents giving rise to the cases. Then, the parties (plaintiffs and defendants) to the suit and the amount of damages requested by plaintiffs are 

described. The appendix concludes with a discussion of the number of 

cases that qualified for litigation in federal court and the time between 

the incident and the filing of the complaint. 

Wide Array of 

‘roducts Cited in 

3ses 

A wide array of products was cited as causing injury in the 305 cases we 

studied (see table 111.1). A substantial minority (44 percent) of the cases 

were in the category of machinery-related. Vehicles were the only other 

single category involved in more than 10 percent of the cases. 

‘ersonal Injury Cases Although there was some variation, personal injury cases predominated 

Were Most Common in all five states (see table 111.2). Some examples of these injuries include 

a fall from a ladder, resulting in fractured bones; food poisoning; tempoZase Type rary hair loss after using a hair relaxer; quadriplegia from a car accident; and amputation of a limb caused by a machine. 

The remaining cases are split about evenly between claims of property 

damage, 10.8 percent. and wrongful death. 10.1 percent. An example of 

a property damage case is a plaintiff’s alleging that defective wiring in 

an appliance caused a fire that destroyed a home. Wrongful death cases 

involved a wide variety of products, with machinery predominating. 

On the basis of descriptions in the court records, we classified the physical injuries sustained as (1) temporary or permanent and (2) partial or 

total. As shown in table 111.3. two-thirds of the cases fell into the category of permanent partial disability. An example of such a disability is 

blindness in one eye-an injury that is permanent but only partially disabling. Examples of the three other severity categories are permanent 

brain damage (permanent total disability), a fractured tibia (temporary 

partial disability), and a short-term infection or illness requiring hospitalization (temporary total disability). 

Page 89 GAO +IRD89-99 Product Liability Litigation 
Appendix Ill 

Cases That Reach Verdict: Incidents and 

Parties to the Suits 

Table 111.1: Types of Products 

Product category 

iilachlnery 

?ihlcle 

Food 

ChemIcala 

Medical device 

Ladder 

Apollance 2 

Drug 

Othe? 

Not speclfled 

Total 

Cases 

Number Percent 

134 44 

-- 

39 13 

20 7 

17 6 

13 4 

12 4 

10 3 

10 3 

52 .-- 17 

2 1 

309 102c 

‘We had only three asbestos cases, far fewer than mtght have been expected given (1) the large 

number of asbestos cases flied after 1979-see Product Llablllty Extent of Lltlgatlon Exploston’ In 

Federal Courts Ouestloned (GAO/HRD-68.36BR Jan 28 1986)-and (2) our tnclusion In the study of 

one state, Massachusetts, which has had a relatively large number of asbestos flltngs Few tnal verdicts 

involved asbestos at least In part because asbestos cases are much less likely than other proauct 

llablllty cases to be resolved through a trial 

” Other’ comprises a variety of products such as tires aIrplanes and clothing each of which was 

Involved In a small number of cases 

‘Because a few cases Involi multrple products case total IS more than 305 and percentage total IS 

more than 100 

Table 111.2: Types of Injury Category by 

State Types of injury 

State 

Arizona 

Property 

damage Personal injury Wrongful death 

Cases Percent Cases Percent Cases Percent 

4 7 49 03 6 10 

Total cases 

59 

Massachusetts 4 6 58 00 4 6 66 

MIssour 14 13 81 75 13 12 108 

North 

Dakota 2 12 13 81 1 6 16 

South 

Carolina 

Total 

0 14 41 73 7 12 56 

32 11 242 79 31 10 305 

South Carolina differed notably in severity of injury. About 4 in every 

10 South Carolina personal injury cases involved temporary partial disability. In no other state did this category exceed 10 percent of all cases. 

South Carolina also had the lowest proportion of the most severe category-permanent total disability. 

Page 90 GAO.;HRD69-99 Product Liability Litigation 
Appendix III 

Cases That Reach Verdict: Incidents and 

Parties to the Suits 

In 42 percent of the cases across states. the injury occurred on the job 

Fewer cases had work-related injuries in South Carolina (30 percent) 

than in the other four states (between 43 and 47 percent). The typical 

work-related injury was an accident involving machinery. 

able 111.3: Severity of Plaintiff’s Disability 

.dmDers in percent 

)everity of disability 

emporary partial 

em%rary total 

ermanent pa& 

ermanent iOtaI 

ot specified 

North 

Arizona Massachusetts Missouri Dakota South Carolina All states 

10 9 9 8 42 14 

8 3 4 0 10 5 

66 78 74 77 37 67 

16 7 10 15 2 s 

0 3 4 0 10 4 

otai - 100 100 101’ 100 101a 99’ 

aColumns may not aad to 100 percent because of rounding 

Jarge Majority of As shown in table 111.4, almost two-thirds of the 471 plaintiffs who went 

‘laintiffs Were Parties to verdict were injured parties, that is, parties who sustained physical 

injury or loss of property. Other plaintiffs included relatives of these 

Xrectly Injured by injured parties and, in a few cases, an insurer or another business that 

‘roducts was suing for reimbursement of compensation paid to injured parties. 

Less than 10 percent of the cases involved multiple injured parties. 

On the basis of the demographic data we collected, the typical injured 

party was male, 34 years of age. and married (see table 111.5). Of adult 

injured parties. almost 90 percent of them were employed full-time. 

About 11 percent of the injured parties were children. 

Page 91 GAO,%RD89-99 Product Liability Litigation 
Appendix III 

Cases That Reach Verdict: Incidents and 

Parties to the Suits 

Table 111.4: Types of Plaintiffs Who Went 

to Verdict Plaintiffs 

Type of plaintiff Number Percent 

Injured party 299 63 

Spouse of Injured party 88 19 

Parent of mwred partv 29 6 

Chtld of Inlured party 27 6 

Estate of Injured party 7 2 

Slblmgs and other relatwes of injured party 4 1 

Others and not specified 17 4 

Total 471 101* 

%olumn may not add to 100 percent because of rounding 

Page 92 GAO:‘HRD-89-99 Product Liability Litigation 
Appendix III 

Cases That Reach Verdict: Incidents and 

Parties to the Suits 

able Ill.5 Demographic Characteristics 

If Injured Parties at the Time of Incident 

Characteristica 

Percentage of injured 

partiesb 

--.-______ 

Gender 

- 

Male 64 

Female 3; 

Not applicable (businesses) -- 4 

Total 100 

Average age 

Age category 

Children (l-1 7 years old) 

Adults (1 ~-PIUS) 

Not applicable (businesses) 

Total 

34 years old 

il 

84 

4 

100 

Manta1 status (adults only) 

Married 

Single 

Divorced. separated. or widowed 

75 

19 

6 

Total 100 

Employment status (adults only) 

Employed full-tlme 

Employed part-time 

Not working 

Total 

9c 

-5 

6 

101 

Cases heard 

In home state 

Not In home state 

97 

____- 

3 

Total 100 

%esponse rate vanes by characteristrc (1 jGender 100YO (2) Average age 60% (3) Age category OF, 

(4) Manta1 status 75% (5) Employment status 81% and (6) Cases heard 1OO?0 

‘Categones may not add to 100 percent because of roundrng 

Across the five states, slightly less than half of the cases had multiple 

plaintiffs at the time of filing,’ and 40 percent had more than one plaintiff at the time of verdict. South Carolina was a notable exception-onl!- 

16 percent of cases had multiple plaintiffs at verdict. 

Ninety-seven percent of the plaintiffs lived in the states in which their 

cases were tried. Residents from other states rarely had cases litigated 

I.4 total of 553 plamttffs \~a.~ named in the complamts filed in the 305 cases Of that numht~r 1;:: 

plamttffs iR5.3 percent) went to trial. We did not track the reasons an! plamtiffs or drftndanr\ 

removed themselves from cases before trial. but tndi\-tduals r in multtple platnttff cast’s) may ha! (’ 

reached settlement H.ith one or all of the defendants or removed themselves for sorw other reasr II? 

Page 93 GAO.‘HRD89-99 Product Liability Litigation 
Appendix III 

Cases That Reach Verdict: lncidents and 

Parties to the Suits 

in the five states we studied. We have no data with which to determine 

whether residents of these five states filed suits or had cases tried in 

other states. 

Demands for Awards In 84 percent of the cases across the five states. plaintiffs requested speRanged Widely cific amounts for compensatory damages or punitive damages or both.’ 

In the 256 cases with recorded demands, a total of $781.419.000 was 

requested. ,4s shown in table 111.6, the average demand was much higher 

than the median. This large difference was due to the huge demands of a 

relatively few cases. Of the cases with specific amounts demanded, 23 (9 

percent) had requests of $10 million or more (the largest being $55 million). On the ot,her hand, in 52 cases (20 percent), the demand amount 

was $100,000 or less. Sixty-one percent of the cases had demands of 

under $1 million. 

Table 111.6: Monetary Demands by Injury 

Category Dollars In thousands 

Type of injury Cases 

--..-____ 

Property damage 25 

-_-. 

Wrongful death 19 

Personal injury 212 

All cases 256 

Cases with demands of 

Average Median more than $1 million (in 

demand demand percent) 

$943 $92 16 

____~~~~.~ ~_~ 

7,355 2,000 68 

2.916 600 40 

3,052 600 39 

The average and median demand in cases varied according to type of 

injury claimed (see table 111.6). Property damage demands were far less 

than those for personal injury or wrongful death. Demands for $1 million or more were far more frequent in cases of wrongful death (68 percent) and personal injury (40 percent) than in property damage cases 

(16 percent). As might be expected, demands in personal injury cases 

varied by injury severity (see table 1II.i). 

‘In some cases. the complaint did not distmgulsh between the amount of pumtwe damages and tht, 

amount of compensatory damages demanded As a result, this discussion focuses on total amount 

demanded ( for compensatory and pumtive damages combmed 1 

Page 94 GAO ‘HRD-8%99 Product Liabilit) Litigation 
Appendix III 

Cases That Reach Verdict: Incidents and 

Parties to the Suits 

-able 111.7: Monetary Demands by 

severity Category of Personal Injury Dollars In thousands 

Severity of injury 

Temporary partial 

Temporary total 

Permanent partial 

Permanent total 

All cases 

Cases 

30 

11 

146 

22 

212a 

Average Median 

demand demand 

$1.027 $148 

622 300 

2 954 641 

6 593 4 250 

2 916 600 

jThls Includes three personal InJury cases that had speck monetary demands but for which the sever 

lty of qury was not speclfted 

Plaintiffs asked for punitive damages in 108 cases (35 percent):’ Punitive damages were more frequently demanded in wrongful death cases 

(nearly 50 percent) and personal injury cases (36 percent). Just 20 percent of the property damage cases included requests for punitive damage. Plaintiffs stated specific amounts of punitive damages in 55 cases. 

ranging from $10,000 to $50 million, with a median of $3 million. 

r’ariety of Defendants In 57 percent of the cases, plaintiffs named more than one defendant in 

Guned in Cases the complaint. By the time a verdict was reached, only about 40 percent 

of the cases (114) had multiple defendants. 

The majority of the 468 defendants whose cases went to verdict in the 

305 product liability cases were manufacturers (see table 111.8).’ Eightyeight of the product sellers’ cases went to verdict. In 117 cases, a total of 

130 product sellers were named as defendants in the initial complaints. 

In most of these cases (102), the manufacturers of the products in question were also defendants. 

‘In four of the five states, plamtlffs could demand pumtlve damages in all product liahhty cases In 

Massacmount tgpitally confidential. 

Page 95 GAO/HRD-89-99 Product Liability Litigation 
Appendix III 

Cases That Reach Verdict: Incidents and 

Parties to the Suits 

Table 111.8: Types of Defendants 

Defendants 

Defendant type Number Percent 

-~___ 

Manufacturers” 308 66 

Sellers or distnbutors 88 19 

_---.-___ ____.~ 

Assemblers or installers 20 4 

~__________________ ~~~~~ 

Other defendants 51 11 

-.-- --. -- 

Not specified 1 0 

- 

Total 468 100 

“In thls category 22 were manufacturers of component parts and 286 the firxshed products 

Only 20 percent of defendants whose cases went to verdict were headquartered in the states in which the cases were litigated (see table 111.9). 

This is consistent with past anecdotal and research evidence indicating 

that a majority of defendants in product liability cases are from outside 

the states in which their cases are litigated. 

Table 111.9: State of Defendants’ 

Headquarters Compared With the State 

in Which the Case Was Tried Location of headquarters 

State In which case tried 

Defendants 

Number Percent 

94 20 

Outslde state In which case tried 

Not available 

..-____ 

Not applicable (that IS. defendant was not a business) 

Total 

324 69 

29 6 

21 4 

468 99a 

‘Column does not add to 100 because of rounding 

Majority of Cases 

Could Have Been 

Tried in State or 

Federal Court 

Many product liability cases may be filed in either state or federal court 

because of diversity of citizenship (that is. plaintiffs and defendants 

reside in different states). To qualify for federal jurisdiction. the home 

states of all plaintiffs have to be different from the home states of all 

defendants: during our study period, in addition, the amount of damages 

in question had to exceed $10.000. Two-thirds of all cases we studied 

met these requirements and. therefore. could have been tried in eithct 

state court or federal court. 

If a case is filed in state court but meets the requirements for being tried 

in federal court. a party to the case can ask the court to transfer tht> 

case to federal court. In 34 cases, the courts granted a defendant’s 

request to transfer the case from state court to federal court. -4nothvr 

66 cases filed in state court could have been transferred to federal c~)r~rt. 

Page 96 G.40 HRD89.99 Product Liabilit) Litigation 
Appendix III 

Cases That Reach Verdict: Incidents and 

Parties to the Suits 

but were not. We lack data on transfers from federal court to state 

court. 

Few Cases Filed After On the average, plaintiffs filed their cases 20 months after their injuries 

Statute of Limitations were discovered. Statutes of limitations existed in all five states studied, 

limiting the time in which a plaintiff could file a product liability action 

(see table IV. 1). If the time between the date the plaintiff discovered the 

injury and the filing date exceeded the statute of limitations, the defendant had a basis to have the court dismiss the case. Out of 305 cases only 

7 were filed after the statute of limitations (see table 111.10). In Arizona. 

where the statute of limitations for all actions was the shortest (2 

years), the average length of time before a case was filed was also the 

shortest (just over 1 year). 

Table 111.10: Time Between Incident and 

Filing 

State 

Arlzona 

In months 

Cases exceeding 

statute of 

Average Range _ limitations’ 

13 2-31 1 

Massachusetts 21 o-55c 4 

MIssour 22 o-99 1 

--~. --~ ___..~ 

North Dakota 27 2-97 1 

South Carolma 18 l-62 0 

All cases 20 o-99 7 

aF~r each state’s statute of Ilmltatlons. see table IV 1 

bCases that were flied within 2 weeks of the lncldent are shown as having 0 months 

Page 97 GAO/HRDW-99 Product Liability Litigation 
How the Five States Studied Exemplify 

Variability of State Laws 

Introduction Product liability cases are almost exclusively governed by state law. 

State legislative and judicial action, at varying rates over the past two 

decades, has created considerable variation in the legal standards for 

product liability in different states. Business groups allege that the 

diversity and inconsistency in these standards complicates and impairs 

the legal process to the detriment of sellers, claimants. and consumers. 

We examined product liability cases tried in five states between 1983 

and 1985. The differing legal standards under which these cases were 

tried exemplify the variation in state laws throughout the country. How 

different laws may have affected defendant liability and how legal standards have evolved since 1985 are discussed in chapter 5. 

The major differences in laws relating to product liability cases tried in 

the five states between 1983 and 1985 are shown in table IV.l. Many of 

the legal standards then in existence have changed since 1985 (compare 

table IV.1 with table 5.2). Although some legal standards differed during the period studied, many laws for the five states were the same. 

Six differences and four similarities among the 1983-85 laws of t,he five 

states are discussed below. 

Differences in Laws of 

the Five States 

Studied (1983-85) 

Four of the Five States 

Allow Strict Liability 

Four of the five states (Arizona, Missouri. North Dakota, and South Carolina) allow product liability plaintiffs to plead their cases under the 

theory of strict liability. Massachusetts law has not adopted strict liability per se, but its courts have indicated that Massachusetts’s form of 

breach of warranty offers plaintiffs as complete coverage as would 

strict liability. 

Page 98 GAOj’HRDfS99 Product Liability Litigation 
Appendix II’ 

How the Five States Studied Exemplify 

Variability of State Laws 

Table W-1: Variations in Product Liability Law for the Five States Studied (1983-85) 

Comparative negligence Ad damnum Punitive 

Strict liability available Pre-judgment Statute of clause 

State available Negligence Strict liability interest limitations allowed :FEi%s 

42 Yes No (1983-84j No None 2 yrs No Yes 

Yes (1984-85) 

‘JIA No Yes a 12% (Injury & 3 yrs Yes Yes (but only for 

property) 6% death cases) 

death 

‘/“c; Yes No (1983’ No None 5 yrs (neg & Yes Yes 

Yes (19841985) strct llab ) 

4 yrs (breach of 

warranty) 

\D Yes Yes No (1983-84) 6% 6 yrs (Injury & Yes (claims less Yes 

Yes (1984-85) property) 2 yrs than $50.000) 

(death) 

SC Yes No No None 6 vrs Yes Yes 

aNot applicable 

States Differed in Some of the defenses that a manufacturer or seller may use vary by 

Circumstances for Award state; for cases based on negligence, in four of the five states (Arizona. 

Reduction Massachusetts, Missouri, and Pu’orth Dakota), the jury is instructed 

(1) to compare the negligence of the defendant with any negligence of 

the plaintiff and (2) reduce the damages awarded accordingly.’ In South 

Carolina, however, the plaintiff in a suit based on negligence theory is 

completely barred from recovering any award if the injured party’s 

actions in any way contributed to the injury, death, or property damage. 

Two of the states (Missouri and South Carolina) that allow strict liability did not allow comparative negligence as a defense in strict liability 

actions in 1983-85. Plaintiffs pleading strict liability in Missouri and 

South Carolina could recover the total amount of their damages. even if 

the injured party’s negligence contributed to or worsened the loss. Arizona’s laws were changed in 1984 to allow the comparative negligence 

defense in strict liability actions when that theory is pleaded in conjunction with negligence. The North Dakota Supreme Court. in a 1984 decision, made the comparative negligence defense available in any strict 

liability action. 

‘Comparative ne@iRence prmciples were adopted for negli@nce-based actlons m Ll~~un m latr 1 !%:I 

and m Anzona and North Dakota in 1984. mIdway through our study pwitd. 

Page 99 GAO/HRD-89-99 Product Liability Litigation 
Appendix Iv 

How the Five States Studied Exemplify 

Variability of State Laws 

Recovery of Punitive 

A\vards Limited in 

Massachusetts 

Four of the five states allow the plaintiff to recover punitive awards 

from the defendant to punish the defendant for willful, wanton, or malicious conduct. In Massachusetts, punitive awards are available only for 

wrongful death cases. but not in personal injury or property damage 

cases. 

Two of the Five States 

Allowed Prejudgment 

Interest 

During our study period, only Massachusetts and North Dakota provided that interest accruing from the date of the filing of the claim be 

added on to the final judgment. Such prejudgment interest is designed to 

(1) create the incentive for a quick resolution of the claim and (2) compensate the plaintiff for the loss of the award money during the litigation period. Many states do not allow prejudgment interest in tort cases. 

In the states that do allow such interest, the rates vary. In Korth 

Dakota, the rate is 6 percent simple interest. In Massachusetts, the rate 

for cases involving personal injury and property damage is 12 percent 

simple interest; for death cases, the rate is 6 percent simple interest. 

Time Allowed for Filing a As indicated in table IV. 1, the time period in which a product liability 

” -~ C!caim Lallll 77-3rior 

, ,,-l Greatly claim may be filed after the injury is, or should have been discovered 

A mong States varied considerably among the states we studied. This time period 

ranged from 2 years in Arizona to 6 years for most actions in North 

Dakota and South Carolina. 

Two States Limited Abi 

of Plaintiffs to Claim a 

Specific Dollar Amount 

Damages 

,lity In three states (Massachusetts, Missouri, and South Carolina), the plaintiff was permitted, during our study period, to ask for a specific dollar 

of amount of damages in the complaint filed with the court. This section of 

the complaint is known as the ad damnum (literally, “to the damage”) 

clause. Although juries are not permitted to see the plaintiffs’ complaints and should not be influenced by an overly inflated request for 

damages, some states have prohibited the use of this clause. for example. in Arizona; in North Dakota, the plaintiff may not use such a clause 

if the amount demanded exceeds $50,000. 

Similarities in Laws of The five states studied had similar provisions for some standards of 

the Five States product liability law, such as joint and several liability. caps on awards. 

the level of evidence required for a showing of conduct warranting puniStudied (1983-85) tive damages, and the collateral source rule. Each defendant found liable in a product liability action tried in the five states during 1983-8.5 

could have been made to pay for the entire amount of damages awarded 

Page 100 GAOs’HRD89-99 Product Liability Litigation 
Appendix IV 

How the Five States Studied Exemplify 

Variability of State Laws 

(that is. each defendant was held jointly and severally liable for the 

damages). Ko statutory cap was in effect in any of the five states in 

1983-85. In order to recover punitive damages, plaintiffs in the five 

states needed to prove the defendant’s malicious, willful. or wanton conduct by a preponderance of the evidence (that is, it was more probable 

than not that such conduct existed); none of the states required the 

tougher standard of clear and convincing evidence (highly probable). In 

all five states, the defendant at trial was not permitted to introduce evidence of payments made to the plaintiff (by someone other than a 

defendant-for example. the workers’ compensation insurer) as compensation for the injury. In addition, the defendant was not entitled to 

have the award amount reduced by the amount of such payments to the 

plaintiff. These other sources of compensation, however, are usually 

entitled to reimbursement (that is, subrogation). 

Page 101 GAOMRD89-99 Product Liability Litigation 
Detailed Tabular Information and 

Supplementary Data on Verdicts and Payments 

Table V.l: Percentage of Cases Won by 

Plaintiffs in State Courts and Federal 

courts 

State 

State court Federal court 

Percentage of Percentage of 

Cases going cases won by Cases going cases won by 

to verdict plaintiffs to verdict plaintiffs 

Arizona 56 45 3 10 

Massachusetts 22 45 44 27 

Mlssoun 56 54 52 38 

North Dakota 13 85 3 33 

South Carolina 19 53 37 38 

All cases 166 52 139 36 

Table V.2: Compensatory Damage 

Awards by Types of Injury Dollars In thousands 

Injury type Cases 

Property damage 18 

Wrongful death 17 

Personal injury 101 

All cases 136 

Average Median Expected 

award award award’ 

$128 $56 $72 

937 500 513 

672 150 280 

633 150 282 

aExpected award IS the average award across all cases. mcludmg those won by defendants 

Table V.3: Compensatory Damage 

Awards by Severity of Personal Injury Dollars In thousands 

lniurv severitv Cases 

Average Median Expected 

award award awarda 

Temporary partial dlsablllty 

Temporary total dlsablllty 

Permanent partial dlsablllty 

-__ 

Permanent total disabllltv 

15 $75 $5 $33 

4 89 54 27 

70 524 172 225 

9 2.073 1.579 811 

All cases 1OlC 672 150 280 

“Expected award IS the average award across all cases mcludmg those won by defendants 

‘Thts mcludes 3 cases for which the severIt): of Injury was not speclfled In the court flies 

Page 102 GAO/IfRW39-99 Product Liability Litigation 
Appendix k’ 

Detailed Tabular Information and 

Supplementary Data on Verdicts 

and Payments 

Table V.4: Incidence and Size of Punitive 

Damage Awards Dollars In thousands 

.-~--. 

Average ratio of 

punitive to 

Averge Median compensatory 

State Cases award award damages 

Anzona 7 $2.245 $750 18 

Massachusetts 0 d 

Mlssoun 9 1 107 750 50 

North Dakota 1 1,000 1.000 4 

South Caroltna 6 367 175 10 

All cases 23 1,255 400 -- 28 

% Massachusetts. no punittve damages were awarded 

Table V.5: Total Damage Awards by 

Types of Injury Dollars In thousands 

Injury type 

Prooertv damaae 

Cases 

18 

Average 

award 

$128 

Median 

award 

Ewra’redd a 

$56 $72 , 

Wrongful death 17 1,120 567 614 

Personal Injury 101 927 153 387 

All cases 136 845 157 377 

aExpected award IS the average award across all cases Including those won by defendants 

Table V.6: Total Damage Awards by 

Severity of Personal Injury Dollars rn thousands 

- 

Average Median Expected 

Injury severity Cases award award award* 

Temporary partial dlsablllty 15 $335 $5 $148 

Temporary total dlsablllty 4 226 154 70 

Permanent partial disability 70 749 190 321 

..-.~- 

Permanent total &ablllty 9 2,358 1 750 921 

All cases 101” 927 153 387 

‘Expected award IS the average award across all cases lncludlng those won by defendam 

Thts Includes 1 cases for which the seventy of Injury was not specified In the court files 

Page 103 GAO/HRLk89-99 Product Liability Litigation 
Appendix \ 

Detailed Tabular Information and 

Supplementary Data on Verdicts 

and Payments 

Table V.7: Cases Won by Plaintiff in State 

Court and Federal Court by Type of Injury State court Federal court 

Percentage of Percentage of 

Cases going cases won by Cases going cases won by 

Injury type to verdict plaintiffs to verdict plaintiffs 

Property damage 19 74 13 31 

Wrongful death 18 61 13 46 

Personal injury 129 47 113 35 

All cases 166 52 139 37 

Table V.8: Cases Won by Plaintiff by 

Percentage of Urban Population Percentage of urban population in Cases going to Percentage of cases 

county where case tried verdict won by plaintiffs 

80 percent or less 72 42 

Over 80 percent 233 45 

All cases - 305 45 

Table V.9: Cases Won by Plaintiff by 

Gender of Injured Party 

Gender 

Male 

Female 

Percentage of cases 

Cases going to verdict won by plaintiffs 

194 47 

.-~~ 

86 35 

Both male and female 18 57 

___-.. __-___-- 

Not appllcable3 7 45 

All cases -705 45 

““Not appkable includes plaintIffs that were businesses or other groups When a case had both per 

sons and such groups as Injured parties the case was categmzed according to the gender of the 

person(sl 

Page 104 GAO ‘HRD-89-99 Product Liability Litigation 
Appendix \ 

Detailed Tabular Information and 

Supplementary Data on Verdicts 

and Payments 

Table V.10: Incidence of Comparative 

Negligence and Effect on Award Dollars in thousands 

___-. .- __~-~~-. 

Cases in which Average 

comparative percen;;;; ;I Total dollar 

Average 

percentage 

negligence reductions reduction in 

Effect on award found nondefendants in awards awards ~-.-- _~ ~~___ -~~ 

Award 

unchanged” 7 31 $0 0 

-____ 

Award reduced’ 27 40 1 944 30 

All cases 34 - 38 1 944 30 

‘In these cases the award was unchanged because In addltlon to neglrgence defendants were founa 

lrable under strrct lrabrlrty or breach of warranty standards (or both) to whrch comparatrve neglrgence 

pnncrples drd not apply 

‘In 21 cases the percentage reductron in award equaled the percentage of comparattve neglrgence 

assessed In 3 cases the entrre award was eltmrnated because the percentage of fault exceeded the 

percentage above that for whrch by statute plaintrffs cannot get an award In 3 cases the percentage 

reduction was lower than the percentage of comparatrve neglrgence because of the effects of pretnal 

settlements and the doctnne of fount and several lrabrlrty 

Table V.11: Appeals Rate for Cases 

Plaintiffs Won and Cases Defendants 

Won by Injury 

Type of injury ~~~ 

Property damage 

Wrongful death 

Personal Injuryz 

All cases” 

Plaintiffs Defendants 

Cases Cases appealed Cases Cases appealed 

won Number Percent won Number Percent 

~- 

18 7 39 14 6 43 

17 10 59 14 8 57 

100 62 62 139 44 32 

.-~__ 

135 79 58 167 50 35 

“Excludes 3 personai Injury cases (1 case aon by prarnttff and 2 cases won by defendants) for whtch 

court records drd not indrcate whether an appeal had been filed 

Table V.12: Disposition of Appeals 

Cases won by Cases won by 

plaintiff defendant All cases 

Disposition Number Percent Number Percent Number Percent 

Court decision on the 

mertts 49 62 35 60 84 61 

---. ~.-.- 

Dismissed 27 34 I? 29 44 32 

Not specified 3 4 6 10 9 7 

Total 79 100 58 99a 137 100 

dDoes not add to 100 because of roundrng 

Page 105 GAO HRD89-99 Product Liability Litigation 
Appendix V 

Detailed Tabular Information and 

Supplementary Data on Verdicts 

and Payments 

Table V.13: Effects of Posttrial Actions 

by Size of Jury Award Dollars In thousands 

Size of award 

Less Than $100,000 

$100.000-$999.999 

$1 mtlllon or more 

All cases 

Average Average Ratio paid/ 

Cases award paid award 

36 i35 $30 86 

46 345 259 - 75 

21 3 521 1 825 52 

103 884 498 56 

Page 106 GAO HRD89.99 Product Liability Litigation 
\pptmil\ \‘I ____ ~- 

State Product Liability Laws (1988) 

Clear & 

5 states in 

review 

AZ 

“i A 

“0 ” 

\- Id 

SC 

Comparative negligence 

Joint & several available for 

liability limited Negligence Strict liab. 

Yes Yes Noa 

No Yes ? 

Yes Yes Yes 

Yes Yes Yes 

-- No No No 

Caps on nonconvincing evidence for Collateral Ad damnum 

economic punitive source rule clause 

awards damages modified modified 

- 

No Yes No Yes 

No No No Yes 

-- . . __-__ 

No No Yes Yes 

No Yes Yes Yes 

_.___~__ ~ 

No Yes NO No 

Other 45 

states 

AL 

AK 

AR 

CA 

co- 

-- td ! 

3E 

;I 

SA 

41 -~ 

A 

No No 

Yes Yes 

NO Yes 

Yes Yes 

Yes Yes 

Yes Yes 

No Yes 

Yes Yes 

Yes No 

No Yes 

Yes Yes 

-~--___- 

No NO No Yes No 

-__.-~~ 

Yes Yes Yes Yes No 

Yes No No No No 

Yes No Yes No No 

Yes Yes No Yes NTYes No No Yes No 

t No NO No No 

Yes No Yes Yes No 

________-- 

No No No Yes No 

No VeS No No No 

Yes No Yes Yes No 

i Yes Yes Yes Yes No No Yes 

Yes ~- ~___ 

Yes 

Yes 

Yes 

Yes 

NO 

No 

NO 

Yes 

NO 

Yes 

No 

No 

No 

Yes 

Yes 

Yes 

Yes Yes No No Yes No 

__ -~____ 

Yes No No Yes Yes No 

___~ ~~ 

Yes Yes Yes No Yes No 

No No No Yes Yes No 

_____-______-___ 

Yes Yes NO No No No 

___-__ ~- 

Yes Yes No No No No 

No No Yes No No -No-- 

Yes 5 No No Yes No 

__..- .__I_ 

Yes Yes Yes Yes Yes No __~- 

Yes Yes No -No No No 

Yes Yes No Yes Yes NO ~.~ 

Yes Yes 

No-- -~.~~-rNo No 

__-___ __-~ 

Yes No NO No No No 

Yes Yes Yes t No Yes 

Yes Yes No No Yes No 

Yes Yes No No No No 

-__~__~ ~.~~~ ~~ 

Yes Yes No No Yes No 

(continued) 

Page 107 GAO/HRDW-99 Product Liability Litigation 
Appendix M 

State Product Liability Laws (1988) 

5 states in 

review 

LC 

0” 

0; 

GC 

Pi 

a 

Clear & 

Comparative negligence 

available for Joint & several 

liability limited Negligence Strict liab. 

convincing 

Caps on non- evidence for Collateral Ad damnum 

economic punitive source rule clause 

awards damages modified modified 

No No 

-__ 

Yes Yes 

____. 

NO Yes 

~~-__.-_ 

Yes Yes 

NO Yes 

NO Yes 

c 

No 

No 

~~- 

Yes 

-No 

Yes 

.- 

No No 

No Yes 

NO Yes 

Yes Yes 

No ~-- No 

-__---- 

No NO 

No 

Yes 

No 

Yes 

No 

No 

Yes 

QUO 

Yes 

Yes 

No 

NO 

Yes 

No 

No 

Yes 

Yes 

NO 

Yes 

Yes 

Yes 

No No Yes No No 

NO No-- No No No 

Yes No No NO No 

Yes No No No Yes 

Yes No NO No No 

No 

Yes 

Yes 

Yes 

c NO No No No 

______ 

No Yes b Yes No 

Yes No No No -77--- -~ 

- 

Yes No No No NO 

Yes Yes No No No Yes 

Total “Yes” 28 42 30 10 _-___- 15 21 10 

%omparatwe negligence 1s avaIlable as a defense II? actlons In which both strict llablltty and negligence 

are claimed 

DNot applicable 

Page 108 GAO HRDW-99 Product Liability Litigation 
\ppendis \I1 

Major Contribut.ors to This Report 

Human Resources Joseph F. Delfico. Director, Income Security Issues (Retirement 

Division, Washington, and Compensation), (202) 275-6 193 

Laurie E. Ekstrand, Assistant Director 

D.C. Susan E. Arnold, Assignment Manager 

Paul C. Wright, Evaluator-in-Charge 

Gerard V. Grant, Evaluator 

Daniel W. Coffey, Evaluator 

Elsie A. M. Picyk, Evaluator (Computer Science) 

Luann M. Moy, Social Science Analyst 

Sharon Mack, Secretary 

Office of General Julian P. Klazkin, Attorney-Advisor 

Counsel 

Page 109 GAO/HRD#?-99 Product Liability Litigation 
Glossary 

Ad Damnum Clause The portion of a plaintiff’s complaint that specifies the dollar amount of 

damages sought. 

Xddi t ur Process by which a judge assesses damages or increases a jury verdict 

amount as a condition of denial of motion for a new trial. This procedure 

is not allowed in federal courts. 

Appeal Petition to a superior court to review the decision of a lower court. 

Breach of Warranty Legal theory of liability whereby defendant is held liable for harm to 

plaintiff if, in product liability cases, the product failed to perform as 

warranted or promised. This warranty may either be express or implied. 

Cap A statutory ceiling on the amount of noneconomic or punitive damages 

recoverable in any one suit. 

Case Law As distinguished from statutes enacted by legislatures, case law consists 

of the body of law on a particular subject as formed by court judgments. 

Clear and Convincing 

Evidence 

Evidence that will produce in the mind of a jury (or judge, in a case tried 

without a jury) a firm belief in the truth of the matter to be proved (that 

it is highly probable a plaintiff’s allegation is correct). This standard of 

evidence requires more evidence than the preponderance of the evidence 

standard, which is used in most civil actions, but less than the beyond a 

reasonable doubt standard, which is used in criminal cases. 

Collateral Source Rule Court-made rule that prohibits deducting from a plaintiff’s damages any 

compensation he or she received from a source other than the defendant 

wrongdoer, such as health insurance or government benefits. In addi: 

tion, the jury cannot consider such payments when deciding the award 

amount. Iinder the principle of subrogation. the source is usually entitled to reimbursement from an award. 

Page 110 GAO ‘HRDS9-99 Product Liability Litigation 
Glossary 

Common Law As distinguished from statutes enacted by legislatures, the common law 

comprises the body of principles and rules of action that derive their 

authority solely from use and custom or from court judgments (case 

law). 

Comparative Negligence Under the comparative negligence statute or doctrine, negligence is measured in terms of percentage, and any award is diminished by the percentage attributable to any person other than the defendant(s). 

Although most states have adopted comparative negligence for negligence actions, there is some dispute as to whether it applies to strict 

liability actions. 

Compensatory Damages Damages paid to plaintiffs to replace the loss caused by injury. They 

consist of economic and noneconomic damages. 

Complaint A document filed with a court in which the plaintiff gives the basis for a 

suit against the defendant(s). This document initiates a legal action. 

Contingency Fee A fee arrangement in which the attorney agrees to represent the client 

for a percentage of the recovery (that is, the plaintiff’s award) in the 

event the plaintiff receives a favorable judgment. 

Contribution Under the principle of contribution, defendants may recover from other 

defendants also found liable any portion of the payment to plaintiffs 

that exceeds these plaintiffs’ allocated share of damages. 

Contributory Negligence Negligence by the plaintiff that contributes to that plaintiff’s injury. 

Traditionally, in a negligence action, a plaintiff found contributorily 

negligent could not collect any damages. This defense was traditionally 

not available in strict liability actions, although the related defenses of 

product misuse and assumption of risk were available. Many states have 

replaced contributory negligence with comparative negligence. 

Economic Damages Actual out-of-pocket expenses incurred by plaintiffs, such as medical 

expenses or loss of income. 

Page 111 GAO/HRD89-99 Product Liability Litigation 
Glossary 

Forum Shopping Attempt by a party to have an action tried in a particular court or jurisdiction where that party feels he or she will receive the most favorable 

verdict outcome. 

Joint and Several Liability Court-made rule that holds each defendant loo-percent responsible for 

all the damages awarded to the plaintiff. Under this rule, a plaintiff may 

collect all damages from any one of the defendants found liable, regardless of the amount each defendant contributed to the plaintiff’s injury. 

,4 defendant is generally entitled to sue other liable defendants for 

contribution. 

Judgment The final decision of a court resolving a dispute and determining the 

rights and obligations of the parties. It follows the verdict and granting 

or denial of posttrial motions. 

Motion A formal request to the court to take an action, for example, to change 

the verdict or to grant a new trial. 

Kegligence Breach of a duty to exercise due care; it is the traditional nonintentional 

tort action. Unlike strict liability, which depends on the danger and 

defectiveness of the product, recovering under negligence depends on 

the defendant’s lack of due care. 

Noneconomic Damages Damages paid to the plaintiff to compensate for intangible injuries such 

as pain and suffering. 

Postjudgment Interest Interest computed from the time judgment is issued to the time judgment 

is paid by the defendant(s). 

Prejudgment Interest Interest computed from the date a complaint is filed or the date the 

injury occurred to the date judgment is issued. 

Preponderance of the 

Evidence 

Evidence that will produce in the mind of a jury (or a judge. in a case 

tried without a jury) a belief that it is more probable than not that a 

plaintiff’s allegation is correct. This is the lowest standard of evidence. 

Page 112 GAO ;HRD89-99 Product Liability Litigation 
Glossary 

compared with the standards of clear and convincing evidence and 

beyond a reasonable doubt; it is the traditional standard required for 

recovery of punitive damages. 

Punitive Damages In cases in which it is proved that the defendant has acted willfully. 

maliciously, or fraudulently, a plaintiff may be awarded punitive or 

exemplary damages in addition to compensatory damages to punish the 

defendant or to set an example for similar wrongdoers. 

Remittitur Process by which a judge reduces a jury verdict that he or she finds to 

be grossly excessive in relation to the law. 

Strict Liability A concept applied by the courts in which one who sells a product in a 

defective condition unreasonably dangerous to a consumer is held liable 

for harm caused by the defect. The plaintiff in a strict liability action 

need not prove that the manufacturer or seller was negligent, as is 

required in a negligence action. 

Subrogation The right of a person (or insurer) to be reimbursed for payments made 

to the plaintiff. 

Tort Any civil legal wrong other than a breach of contract that results in 

personal injury, wrongful death, or property damage. and for which a 

person can sue to recover damages, for example, product liability or 

medical malpractice. 

Vacate To annul (render void) a previous court’s decision. 

I’erdict Formal decision by the jury or judge on matters considered at trial. 

When the decision is made by a judge, it is called a bench verdict. The 

verdict precedes a judgment. 

Wrongful Death Action A type of lawsuit brought on behalf of a dead person’s beneficiaries. 

alleging that death was attributable to the wrongdoing of another. 

Page 113 GAO/HRD89-99 Product Liability Litigation 
Page 114 GAO HRD-89-99 Product Liability- Litigation 
Page 115 GAO/HRD-89-99 Product Liability Litigation 
Related GAO Products 

Property and Casualty Insurance: Thrift Failures Provide \‘aluable Lessons (G.~o~--AFMD-~~-'~, -4pr. 19.1989). 

Liability Insurance: Effects of Recent “Crises” on Businesses and Other 

Organizations (GAO;HRD-88-64, July 29, 1988). 

Product Liability: Extent of *‘Litigation Explosion” in Federal Courts 

Questioned (GAO:HRD-88-36BR, Jan. 28, 1988). 

Insurance: Profitability of the Medical Malpractice and General Liability 

Lines (GAO :GGD-87-67. July 13, 1987). 

Medical Malpractice: A Framework for Action (GAO,HRD-87-73. May 20, 

1987). 

Considerations in Measuring the Relationship Between Tort Reform and 

Insurance Premiums (GAO/T-HRD-87-11, Apr. 28, 1987). 

Medical Malpractice: Characteristics of Claims Closed in 1984 (G-40 

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Profitability of the Medical Malpractice and General Liability Lines of 

Insurance (GAO/T-GGD-8i-13. Apr. 2 1, 1987). 

Medical Malpractice: Six State Case Studies Show Claims and Insurance 

Costs Still Rise Despite Reforms (GAOfHRD-87-21. Dec. 31, 1986). 

Liability Insurance: Changes in Policies Set Limits on Risks to Insurers 

(GAO;HRD-87-18BR, Nov. 21. 1986). 

Medical Malpractice: Insurance Costs Increased but Varied Among Physicians and Hospitals (G4O,,HRD-86-112. Sept. 15. 1986). 

Insurance: Activitv Under the Product Liabilitv Risk Retention Act of 

1981 (GAO:HRD-86-l;OBR. July 22, 1986). ” 

Tax Policy: Financial Cycles in the Property,Casualty Industry (G.40 

~~~-86-56~5. Apr. 9, 1986). 

Tax Xdministration: Information on How the Property:Casualty Insrnante Industry is Taxed (GAO~'C&D-86-16FS. Oct. 16. 198.5). 

Page 116 GAO ‘HRD89-99 Product Liability Litigation 
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