Home » OPINION » Columns » As I See It
Risking a trial not so risky for a few companies

As I See It

Mississippi is mired in debate over reforming our judicial system to limit some of the outlandish punitive damage awards handed out by juries in recent years. This situation seems to be unique to Mississippi and is daily tainting our reputation in the global business community. Hopefully, reform can be passed and we can begin to repair the damage that has been done.

Companies in other states, though not facing our runaway jury awards, have also had their trouble with quick-draw trial lawyers. Over the years, corporate attorneys have frequently recommended their clients settle lawsuits rather than risk the unknown of going through with a trial.

Getting the smell of blood on the water, the sharks moved in for the kill. The trial lawyers learned that they could threaten frivolous lawsuits and companies would knuckle under and settle rather than face the exposure of a trial. Success begot success and the system got out of control.

In recent years, more and more companies have decided that slugging it out in court was a better choice than settling. This toughening up was the result of good intentions being rewarded by frivolous lawsuits.

DuPont is one company that has changed its legal strategy as a result of being abused by trial lawyers. Though it could find no defect in its Benlate-brand fungicide, DuPont elected to voluntarily reimburse some plant growers who claimed that their plants died after Benlate was applied. When word spread of DuPont’s generosity, trial lawyers filed hundreds of lawsuits. Instead of closure, each settlement brought more lawsuits.

Since plaintiffs’ lawyers have turned America’s tort system into a business, attempts to be good corporate citizens have repeatedly backfired. Accordingly, DuPont has joined the ranks of companies who rarely settle lawsuits.

DuPont is not alone.

DaimlerChrysler recently earned a big payoff from its decision to try, and then appeal, what in 1987 was the biggest punitive damage award ever assessed against an automaker in a product liability case. The case, which involved the death of an unbelted child thrown from a minivan, might have seemed ideal to plaintiffs’ lawyers seeking a quick settlement.

However, DaimlerChrysler has adopted a tough stance on settling lawsuits and refused to knuckle under in this case. They have a blanket policy against settling such cases. In this case, their policy paid big dividends when the Fourth U.S. Circuit Court of Appeals struck down and remanded for retrial the $250-million award given by the trial court.

Similarly, Wal-Mart recently adopted a policy of not settling.

Following that decision the sharks have moved on to other victims. Wal-Mart’s rate of new lawsuits has declined substantially over the past five years.

Is this toughening attitude toward settlement of lawsuits a good thing? Not necessarily. Required, no doubt, but not necessarily good. Settlement has always been an important tool for ending legal disputes — benefiting both plaintiffs and defendants, as well as the legal system itself. Last year, there were about 250,000 civil suits pending in federal courts. The only reason our courts have not buckled under the load of so many lawsuits is that about 95% of them settle out of court.

For real victims of harm, settlement provides a faster route to compensation than a trial. For those whose claims are a little shaky, settlement gives at least some compensation. For defendants, the avenue of settlement offers some degree of control over the financial outcome and provides a way to compensate real victims of corporate errors.

If everyone, or even most, litigants took a hard-line approach against settlement of lawsuits, the court system would crumble under the strain. It is unfortunate that the greedy few are threatening a system that works — and has worked for a long time. Such is life, I suppose.

Thought for the Moment — There’s no such thing as being Nobody or having Everything. More than enough is too much. Very often less is more. — “The Further Sayings of Chairman Malcolm,”

Malcolm Forbes (1919-1990)

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.


… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Joe D. Jones

Leave a Reply

Your email address will not be published. Required fields are marked *