In December 2019, an 83-year-old woman was robbed and killed by a cable technician in her Texas home. When the victim’s family went to check on her in the coming hours, they found her body. The technician was arrested soon after and sentenced to life in prison for murder. Following the technician’s arrest, the victim’s family filed a lawsuit against the technician’s employer, alleging that the company’s negligence contributed to her death.
Specifically, the victim’s family’s legal team asserted that the cable company failed to verify the technician’s employment history before hiring him — a step that would have revealed he misrepresented his work history. Court documentation also showed that the technician was on a six-month disciplinary action plan at the time of the attack and had previously written to his workplace supervisors regarding “severe distress over financial and family problems.”
Throughout the trial, multiple company employees attested that, although he was off duty at the time, the technician’s crimes occurred within the course and scope of his employment. Additionally, these employees described a pattern of thefts and similar crimes being committed by company staff against customers over the past few years — more than 2,500 incidents in total — which the company declined to investigate or report to the authorities.
This past summer, a Dallas County jury found the company 90% responsible for the victim’s death, claiming its systemic safety failures played a role in the killing. The verdict also found that the company was guilty of using forged documents in an attempt to prevent a jury from hearing the lawsuit. As a result, the company was held liable for $7 billion in punitive damages and $337.5 million in compensatory damages, totaling nearly $7.34 billion in overall damages.
It was only the latest in a growing number of so-called nuclear verdicts that have been in the headlines in recent years.
The term “nuclear verdict” refers to exceptionally high jury awards — generally, those exceeding $10 million. Such verdicts have become increasingly common in the past decade. In fact, the National Law Journal reported the average jury award among the top 100 U.S. verdicts more than tripled between 2015 and 2019, skyrocketing from $64 million to $214 million. Furthermore, 30% more verdicts surpassed the $100 million threshold in 2019 compared to 2015.
A variety of factors have contributed to this trend, including rising litigation funding, eroding tort reform and, perhaps above all, deteriorating public sentiment toward businesses. Amid growing corporate distrust, businesses have not only been expected to meet higher standards in their operations but have also been held more accountable for their wrongdoings.
In the Texas case, a judge ultimately reduced the overall damages to $1.15 billion, largely based on precedents set by past verdicts establishing a smaller acceptable ratio between punitive and compensatory damages.
Understanding the Verdict
In taking a closer look at the case, it’s clear that the main factors that contributed to this particular nuclear verdict were negligent hiring, retention, and supervision.
In other words, the verdict clearly signals that if a business knew or should have known (had it taken appropriate measures) that an employee was unfit for their role upon hiring them, and this unfitness results in illness, injury or other damages to another party, the business can be held liable for such damages.
Similarly, if a business realized or should have realized during the course of a worker’s employment that they presented a foreseeable risk to others and failed to discipline or discharge that worker before they harmed another party, the business may be held responsible for the associated damages.
In addition, if a business neglected to reasonably control or monitor an employee’s actions, and this lack of supervision permitted the employee to harm another party, the business could be held liable for the related damages.
To avoid a nuclear verdict similar to the one seen in the Texas case, businesses should follow these risk mitigation tactics:
- Implement vigilant hiring processes for all positions. These processes should include having job candidates fill out detailed applications, verifying their employment and educational history, contacting provided references, leveraging in-depth interviews, and conducting background checks. Also, upon hiring employees, be sure to provide them with proper training and supervision to set them up for success in their roles. Utilize periodic, documented reviews to better gauge employees’ work performances over time and take any complaints filed against staff seriously.
- Ensure compliance. Regularly assess workplace policies to maintain compliance with hiring, retention, and supervision laws as well as any other applicable federal, state, and local regulations. Consult your legal counsel for additional compliance assistance.
- Secure proper coverage. In our increasingly litigious world, it’s crucial to purchase adequate insurance and be especially cautious about assault and battery exclusions. The explosion we’ve seen in nuclear verdicts especially underscores the need for an Excess Liability policy. These policies will provide you with an extra layer of protection to handle losses that exceed the underlying primary coverage afforded by a General Liability policy. Reach out to a trusted insurance professional to discuss your specific coverage needs.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. An employee-owned organization, we’ve been providing our clients with the confidence to face whatever lies ahead for more than 100 years. For more information, contact us online or call 877-440-3304.