Reality shrinks big jury verdicts
An analysis of top verdicts in Pinellas shows few people walk away rich.
Most settle for considerably less.
St. Petersburg Times December 30, 2003 By WILLIAM R. LEVESQUE http://sptimes.com/2003/12/30/Northpinellas/Reality_shrinks_big_j.shtml
It took three trials, a fortune in expenses and years of worry. But Clifford Zalay got his vindication when a Pinellas jury awarded him $26-million in 1989.
Then came the hard part: collecting.
Nearly three years later, after the verdict was thrown out on appeal and before the start of a fourth trial, Zalay settled with the John Hancock Insurance Co., which he accused of ruining his reputation as a sales agent.
"I settled for peanuts," said Zalay, who couldn't release the amount because of a confidentiality agreement. "I didn't see the light at the end of the tunnel."
The euphoria of the big verdict often runs headlong into hard financial reality for litigants soon after newspaper headlines announce their "riches."
A St. Petersburg Times review of some of the top verdicts in Pinellas County history shows that few people wring every penny out of a large jury award. Most cases are settled for far less while an appeal is pending, sometimes years after the verdict. Some people never collect anything.
"The public thinks these people have won the lottery," said Bradenton attorney Richard Shapiro. "The public is totally misinformed ... that people end up with zillions of dollars in their pockets."
Pinellas has seen a number of large verdicts recently: $5-million on Dec. 4 to a violinist whose promising career was ended in a car crash; and $16-million in a medical malpractice case in October for the family of a man who died after surgery.
"Winning the verdict is often half the battle," said Pinellas-Pasco Circuit Judge John Lenderman. "Then you have to figure out how to collect it."
Pinellas is hardly unique. The same holds true for Florida and the nation, lawyers say.
In a nine-year period ending in 1995, the state Comptroller's Office estimated that a jury award was paid in 36 percent of cases with punitive damages. In the remaining 64 percent, the money either could not be collected or had yet to be collected.
The study showed that total collections were only 13.2 cents on the dollar.
For many people, the risk of an appeal is too great, the delay of an eventual payout too distant to resist a quicker settlement, even for a lesser amount. Legal expenses mount. For some, medical or business expenses can't wait.
A judge can reduce the award, or throw it out. An appeals court can do the same. Sometimes, a defendant simply can't afford to pay or, lawyers say, proves adept at hiding assets.
"O.J. Simpson lives in Florida for a very good reason," said Tampa attorney Alan Wagner, referring to the former football star acquitted of murder only to face an enormous civil judgment. "It's a good place to live if you owe people money."
Lawyers, he said, can't get a defendant's house in Florida, even if it is a $20-million mansion. And the salary of a head of household also is free and clear.
The bottom line for litigants: a settlement for a fraction of their judgment.
"What's that old saying? Justice delayed is justice denied?" said Zalay, who accused John Hancock of telling his clients he was guilty of shady dealings after he had a falling out with the company.
Zalay said he didn't care about the money anyway. He wanted his good name back.
"The problem was, I was up against a big corporation," Zalay said. "What's money to them? Nothing. They do the legal maneuvers to string you out and bankrupt you."
Consider what is widely believed to be the largest civil award in Pinellas history: the $100-million a jury awarded to GTE Corp. in 1989 after it accused the Home Shopping Network of libel. Home Shopping Network wronged it, GTE said, in a lawsuit accusing GTE of being unable to handle the fast-growing company's needs.
Home Shopping Network later settled the suit by paying GTE $4.5-million, which didn't even cover GTE's legal expenses.
In the case of a north Pinellas couple awarded $33.5-million in 1998 from a jury after a cremation company mishandled a mother's ashes, a settlement of $44,000 ended the case.
Defendants had no insurance and few assets available to attach, said Wagner, whose firm worked on the case.
"A $600,000 verdict is something you can post on the bathroom wall unless someone has insurance or assets sufficient to cover it," Wagner said.
Lawyers know even before a trial that collection can be difficult. Most warn their clients that a verdict is simply the end of Round One.
That's when the real bargaining usually begins. And a big verdict gives the losing party great incentive to settle.
"It triples the original offer made before the trial," said Tampa attorney Bennie Lazzara Jr. "It establishes the value of a case."
Or as Judge Lenderman describes negotiations to settle a huge verdict: "The plaintiff comes to a fist fight carrying a bazooka."
Too often for many lawyers, a client sitting through hours of testimony sometimes become intractable, refusing to settle.
"One of the problems with a large verdict is that it can raise your client's expectations unreasonably high," said Houston attorney Michael Stanley, who helped win a $32.5-million verdict for a client who said he was victimized by an investment scheme.
"The client starts to buy into it all and will often turn down a reasonable settlement offer and go for the home run," he said.
Lawyers and their clients sometimes use strategies to eliminate the risk. Judgments are often sold for pennies on the dollar.
Stanley recalled a company that hired him to work on a $10-million jury judgment it had purchased from the plaintiff for $1,000. Eventually, he said, "we pursued it and settled for a couple of million dollars", which the company got to keep.
Another tool used by lawyers, with their client's permission, is high-low agreements with the people they are suing.
Lawyers on both sides agree that whatever the verdict, the defendant will pay out a minimum amount of money. But no matter how high the verdict, both sides agree on a maximum figure, too.
"A person bringing a case doesn't want to get stuck with a zero from the jury," said Clearwater attorney Tom Carey, who won the $5-million violinist verdict earlier this month. "And the defense doesn't want to get stuck with a blow-out verdict."
In the case of the violinist, a high-low agreement was in play, providing a guarantee there would not be years of appeal. Carey wouldn't reveal the exact amount.
Lenderman said the American civil court system, despite the costs of litigation and the endless delays of appeal, is one that protects the rights of litigants.
"When you get run over by someone, you would like to say, "Sign a check, and I'll fill in the amount,"' Lenderman said. "But we provide everyone due process and the right to be heard. And that's one of those things that takes time."