When the Anchor drops too far

Introduction:

This article summarises a Court of Appeal verdict coming out of the 5th Circuit involving a damages award of $222 million and the defendant’s subsequent successful challenge to this substantial award.

Background:

Jesse Henson was working at a coal fired power plant (owned by Westar Energy) in Kansas when a pressure relief valve failed, exposing him to a release of steam. This caused severe burns which ultimately resulted in his death. 

Following this his widow, Kelli Most, brought various claims against Team Industrial Services (Team) and Westar Energy, seeking remedies for pain and suffering, disfigurement, fear, mental anguish and emotional distress. Punitive damages were also sought.

The Verdict:

The jury decided the facts of the case and negligence was found 90% against Team and 10% against Westar Energy and an award of US$222 million was made. 

Following this Team asked the Court of Appeal to review the factual sufficiency of the evidence supporting the jury’s non-compensatory damages award.

Team argued that the trial court erred in awarding the plaintiff the judgement that it did because the sum was excessive and based upon improper arguments encouraging the jury to punish Team, as opposed to basing their judgement on more tangible evidence.

Reasons for the Appeal:

An excessive damages complaint is a challenge to the factual sufficiency of the evidence supporting a damages award and the excessiveness of compensatory damages (both economic and noneconomic) can only be reviewed for excessiveness in the Court of Appeal under a factual sufficiency standard.  

The party challenging the award must demonstrate that the finding was so contrary to the overwhelming weight of evidence as to be clearly wrong and manifestly unjust. As with a legal sufficiency test the court recognises the jury as the sole judge of the credibility of the witnesses and the weight given to their testimony. 

However, the court must also carefully review non-economic awards (which are damages that do not have a direct monetary value, such as pain and suffering) to ensure they are not the result of passion or prejudice. It is worth noting that the term compensatory damages mean economic and non-economic damages, not exemplary damages (also known as punitive damages). Exemplary damages meaning damages which are awarded as a penalty or punishment and which are, for example, only available under maritime law for claims relating to maintenance and cure. 

This is important because in the Team v Most case the Court of Appeal found that the plaintiff’s attorney involved the use of unsubstantiated anchoring to secure an award which departed from the actual evidence.
 

Anchoring:

Unsubstantiated anchoring is a tactic where the plaintiff attorney suggests damages amounts by reference to objects or values with no rationale connection to the facts of the case in hand. This can result in improper arguments being made, by referencing the value of a painting or a fighter jet or by noting how much money the defendant may have. This can influence a jury and may therefore result in an award which has no logic to it. 

So rather than relying on anchoring the plaintiff instead bears the burden of demonstrating both the existence of pain and suffering, compensable mental anguish and/or, as in the Most case, loss of companionship and must show a rational connection, grounded in the evidence, between the injuries suffered and the amount awarded.

Previous Court Decisions:

This very issue was previously dealt with by the Texas Supreme Court Opinion in Gregory v. Chohan, 2023 (Gregory) which held that appellate courts have a duty to ensure that damages awarded for a noneconomic injury are the result of a rational effort, grounded in the evidence of the case. It went on to hold that unsubstantiated anchoring did not assist a jury in evaluating the amount of damages which would be fair and could result in awards which have no basis in fact. The court in Gregory noted that the cost of a painting or a fighter jet is not evidence and that courts have an obligation to prevent such improper argument from being presented to the jury by a plaintiff attorney. Because there was no rational basis for the verdict in Gregory, other than the unsubstantiated anchoring tactic, the court remanded that case for a new trial.

Analysis of the Court of Appeal decision in Team Industrial Services v Kelli Most:

Despite the recent verdict in Gregory, the plaintiff attorney in Team v Most, referred to objects which had no connection or relevance to the facts of the case. For example, there was reference to a $350M painting and that a human life is worth more, with the inference being that, therefore, this claim must be worth more than $350M. This theme was in evidence throughout the case and at closing argument. 

In addition, the plaintiff’s attorney raised the issue of exemplary damages during voir dire¹ throughout the trial and during closing argument. Another strategy employed in this case was to remind the jury that Team is the largest valve inspection company in the country and publicly traded on the New York Stock, had offices around the world and employed thousands of people. Most’s attorney concluded by telling the jury that they needed to send a message to Team so that they would not get away with what happened and so by sending a message the jury would be protecting others.

These improper arguments meant the jury lacked proper guidance to enable them to determine damages fairly in the case and perhaps decided upon the number they did solely due to an emotional response to plaintiff counsel’s anchoring strategy.  

Because of this the Court of Appeal felt it could not say that the award was not as a result of passion or prejudice because there was no factual evidence presented by the plaintiff’s attorney to suggest otherwise. 

Consequently, the Court held that the damages were not supported by the evidence and that the trial Court erred in entering judgement on the jury’s damages findings. Because the Court was unable to determine what would be a fair amount to award the option of remittitur was unavailable. Therefore, the award was reversed, and the case was remanded for a new trial. 

The court noted that what constitutes evidence in cases of noneconomic damages is difficult to explain. However, there should be some evidence to justify the amount awarded. An attorney asking a jury to award damages should be able to articulate the reason why the amount sought is reasonable and not resort to impermissible appeals to irrelevant considerations, such as the cost of a painting or fighter jet.

Conclusion:

This case is a good example of when a plaintiff attorney strays too far from applying logic to the amount being demanded and instead looks to focus a jury’s attention on considerations which have no relevance to the facts of the case at hand. Where this happens, the plaintiff runs the risk of having their initial damages award either reduced or overturned. Defence Counsel can be guided accordingly when they may be considering employing their own anchoring strategy.

¹ Voir Dire refers to the in-court process of determining whether a juror can serve fairly and impartially in a given case by asking the juror various questions. This can lead to grounds for excusal of jurors for cause. Attorneys receive a limited number of peremptory challenges along with an unlimited number of strikes for cause. However, unlike a peremptory challenge, a strike for cause must be supported by a specific reason.