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Sunday, February 01, 2004

Juries in complex civil cases

The Curmudgeonly Clerk argues persuasively in favor of the jury system even in complex civil cases, with this conclusion:

The jury system has shortcomings that are fairly obvious. These shortcomings are, no doubt, pronounced in complex civil cases. Nonetheless, I think that the contempt sometimes expressed for jurors is overstated (e.g., the derisive observation that cases are decided by twelve persons too dim to avoid jury duty).

I agree entirely, and reprint here a lengthy comment I left on his blog with a personal anecdote:

A few years ago I spent six weeks in a Harris County District Court trying a "bet-the-company" securities/accounting fraud case to a jury of twelve citizens good and true. The plaintiffs were two Middle Eastern investment trusts incorporated in the Netherlands Antilles; the defendant was an American Stock Exchange-listed New York-based company that was an early investor in international cellular telephone licenses.

In addition to about a dozen lay witnesses, over a dozen different lawyers or accountants — from Houston, Washington, New York, and London — gave expert testimony on topics including GAAP (generally accepted accounting principles), corporate finance, international intellectual property rights, and the proper discount to apply to restricted shares of stock in a company whose unrestricted shares traded on the London Stock Exchange. All of those subjects were important to understand in order to evaluate what was, necessarily, a largely circumstantial case regarding the defendant's subjective intent to commit fraud. There were over 600 written exhibits, many of them hundreds of pages long and extremely technical (including SEC filings, corporate charters and minutes, and patent applications).

In short, the case was a textbook example of a complex commercial case of the sort that many "experts" insist cannot be effectively evaluated by lay jurors.

The plaintiffs were represented by a first-string team from one of Texas' largest, oldest, and most prestigious law firms. Their lawyers were very experienced, very ethical, and very, very good, and they employed professional jury selection consultants, a "shadow" jury, and a professional graphics/demonstrative exhibits firm. The defendant was represented by a much leaner, but still very competent team that I had the privilege of leading. Each side's pretrial legal fees and expenses ran into seven figures, but the amount in controversy ran well into the eight-figure range and the underlying business transaction was in nine figures — so each side had ample incentive to do its best. The plaintiffs were sufficiently wealthy that they could well afford to pay their counsel's regular hourly rates, and they were under no pressure to settle; and indeed, the parties were still tens of millions of dollars apart when pretrial settlement negotiations (including a court-ordered mediation) were exhausted. The case had to be tried.

The trial judge was a very experienced veteran who specifically chose this trial to be the last he presided over before his retirement. Like many state-court judges, his natural inclination was to give the lawyers wide latitude — to "let it all hang out" — although we had several days of pretrial conferences before the jury was picked to sort through a great many legal and procedural issues.

It took about six hours for the jury to reach its unanimous verdict (although 10/2 would have sufficed) for the defendant.

Talking to the jurors afterwards, I concluded that probably four or five of them had understood essentially every word of testimony they had heard. Another third of the panel followed all the main points, but probably zoned out on some of the technicalities. The last third of the panel understood the main issues at least well enough to have recognized the main themes and the "gotchas" of cross-examination; their intuitive evaluation of both the expert and lay witnesses' credibility was spot on.

An appeal was of course possible, and one might have thought it inevitable simply given the stakes. To their credit, however, the plaintiffs' counsel, after themselves polling the jury, quickly concluded that although they had taken their best shot, they'd lost fair and square and were unlikely to do any better in a retrial. Within forty-eight hours, they abandoned their appellate rights in exchange for a waiver of the defendant's right to recover a comparatively trivial amount of money (a few tens of thousands of dollars) in "court costs" (mostly deposition transcript fees). And thus ended the case.

The system worked exactly as it was designed to work.

That's just one anecdotal example, of course, and I am certainly aware of other complex cases in which juries have gone far astray. Almost always, skilled and impartial observers can trace the seeds of the problem to faults in lawyering, or more rarely, judging.

As someone who's tried jury cases over the last twenty-three years with amounts in controversy ranging between $200 and $200 million, I am still a believer in the system.

Posted by Beldar at 09:23 PM in Law (2006 & earlier), Trial Lawyer War Stories | Permalink


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