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Georgia

Georgia vaulted to the top of the Judicial Hellholes® report in 2022 thanks in large part to a massive $1.7 billion punitive damages award in a product liability case in Gwinnett County that was riddled with ethically questionable events and severely biased court orders.

Unfortunately, 2023 brought about more of the same for the Peach State. Courts across the state continue to award nuclear verdicts and the Georgia Supreme Court issued a disappointing premises liability decision and other liability- expanding decisions that will only make a terrible environment worse.

In addition, Georgia continues to embrace an archaic seatbelt gag rule that precludes a jury from hearing evidence about whether an occupant wore a seatbelt at the time of a crash, and third-party litigation financing provides the resources to drive the litigation machine. Both lawyers and lenders profit off the litigation, as unregulated cash-for-lawsuit companies offer plaintiffs loans at excessive rates, then take a substantial share of their awards.

In recent years, neither the judiciary nor the legislative branches have been willing to take responsibility for the state’s poor civil justice system. The judicial branch blames the legislature for enacting bad laws while ignoring the damage it continues to do by permitting frivolous claims to be heard and expanding liability like it has done in a litany of premises cases. While the Georgia General Assembly has enacted moderate reforms in years past, several much-needed reforms have failed to move.

Governor Brian Kemp demonstrated important leadership by recently acknowledging the need for “an even playing field” in Georgia courts and has positioned civil justice reform as a top priority for his administration in 2024, which has not been done in nearly 20 years. All eyes will be on Georgia in 2024 to see if it’s finally the year for much-needed change.

LITIGATION TOURISM

This year, the United States Supreme Court missed its opportunity to rein in litigation tourism and prevent plaintiffs’ lawyers from filing lawsuits in plaintiff-friendly courts that have no direct tie to a claim. In Mallory Norfolk Southern Railway, the U.S. Supreme Court ruled that it is constitutional to statutorily grant state courts jurisdiction over out-of-state companies that have registered to do business in that state regardless of where the parties are from and where the injury occurred.

While the case originated in Pennsylvania, the Georgia Supreme Court had reached a similar decision in 2021. Very few states grant courts this expansive jurisdiction over out-of-state defendants. There is real concern that this decision has opened the door to plaintiffs’ lawyers flocking to Georgia to take advantage of the courts’ reputation for nuclear verdicts, pro-plaintiff rulings, and liability-expanding decisions.

NUCLEAR VERDICTS

Georgia is one of the most prolific producers of nuclear verdicts (awards of $10 million or more) nationwide. From January 1, 2018 through April 10, 2023, 39 nuclear verdicts in personal injury and wrongful death cases were reported, with 12 awarded in 2022 alone. Included in the 2022 verdicts was the previously mentioned eye-popping $1.7 billion punitive damages award out of Gwinnett County. Fulton, DeKalb and Gwinnett Counties produced 41% of the state’s nuclear verdicts during this time.

In June 2023, a Fulton County jury awarded $32.5 million to the parents of a 21-year-old college student who was killed in a single-vehicle accident when he struck an ornamental planter off the side of the road, possibly to avoid either an animal that had entered the road or another vehicle. The City of Milton was found to have maintained a “dangerous public nuisance” by leaving the planter in place. The City requested a new trial, arguing that it had no liability because the planter was over 6 feet from the road – not in the right-of-way – and had been located there for decades without incident. The trial court denied the City’s motion and upheld the nuclear verdict. Ultimately, it will be the taxpayers that foot this bill.

In another case out of Cobb County, plaintiffs’ lawyers lamented that their near-record setting $80 million verdict in a tragic auto accident case was too low and that they were wrongly deprived of an additional $30 million in attorneys’ fees due to “stubborn litigiousness” by defendants. The jury disagreed; however, the lawyers plan to appeal.

Other recent nuclear verdicts in Georgia courts includes:

  • December 2022: $118 million verdict (including $90 million in punitive damages) in a premises liability case in Bibb County
  • December 2022: $160 million verdict in a premises liability case in DeKalb County
  • January 2023: $10.5 million verdict in a medical liability case in Cobb County
  • March 2023: $28.5 million verdict (including $6.5 million in attorneys’ fees and costs) in a premises liability case in Greene County
  • April 2023: $135.5 million verdict (including $125 million in punitive damages) in a lawsuit against the owners and developers of a solar farm brought by neighboring property owners in the federal district court in Columbus. (On October 23, the judge issued a remittitur order that decreased the award to $5 million. The plaintiffs asked the judge to reconsider and filed an appeal)
  • June 2023: $40 million verdict in a medical liability case in Bibb County

The dramatic rise in nuclear verdicts can be attributed to several factors, including the courts allowing the use of “anchoring” by plaintiffs’ lawyers. Anchoring is a tactic that lawyers use to place an extremely high amount into jurors’ minds to start as a base dollar amount for a pain and suffering award. While some courts prevent or limit this tactic, Georgia is one of a few that has a specific state statute allowing the practice.

The trucking industry has been a primary target of runaway verdicts, as has been well chronicled by recent Judicial Hellholes® reports. The nuclear verdicts against the trucking industry not only affect the companies named in those lawsuits, but the industry itself. According to a study by the American Transportation Research Institute (ATRI), the average auto liability premium has increased significantly for fleets of all sizes. With the average size of verdicts in excess of $1 million increasing from $2,305,736 to $22,288,000 nationwide between 2010 and 2018, insurance companies are charging more to cover these excessive litigation risks. These rising insurance premiums often hit small businesses the hardest and have driven many out of business.

Businesses are aware of Georgia courts’ propensity to award nuclear verdicts, and as a result, feel great pressure to settle prior to trial. In April, a defendant “accused of knowingly manufacturing a defective recreational vehicle” settled for $105 million, the largest pre-trial settlement in Georgia history.

Automakers in Crosshairs Thanks to Archaic Law

Under what’s known as the “seatbelt gag rule,” lawyers defending a product liability claim in Georgia cannot inform the jury that someone hurt in an auto accident was not wearing – or was misusing – a seatbelt.

Enacted by the Georgia legislature in 1988, critics of the statute argue that the policy behind the seatbelt gag rule has long ended. At the time of enactment, people questioned the effectiveness of seat- belts in preventing injuries. Some legislators believed that air bags were sufficient and seatbelt use was not widespread. Since then, forty-nine states have mandated the use of safety belts and numerous studies have proven the protection that modern seatbelts provide. With clear evidence that seatbelt usage is crucial to both a driver’s and a passenger’s safety, many states are discarding the seatbelt gag rule as an anachronistic law that “may have been appropriate in its time,” but has become outdated by further studies. Instead, these states allow juries to consider seatbelt use when allocating fault or determining the cause of an injury. Further, Georgia is a primary enforcement state, which requires seat belt usage or one can be given a citation.

Unfortunately, in 2022, the Georgia Supreme Court passed on an opportunity to constrain the state’s gag rule; however, the justices did leave the door open to a future change. The Georgia Legislature has had opportunities to eliminate the rule the past several years but has chosen not to move the legislation.

Update on Record $1.7 Billion Verdict

As mentioned earlier, in August 2022, a Georgia jury returned a $1.7 billion punitive damage verdict against Ford, finding that the company sold millions of “Super Duty” models with defectively weak roofs. This astronomical verdict helped propel Georgia atop last year’s Judicial Hellholes® list. The case was riddled with ethically questionable events and severely biased court orders, all of which were outlined last year. Additionally, Ford was prohibited from informing the jury that the plaintiffs were improperly wearing their seatbelts during a rollover crash.

Following the verdict, Ford promptly filed post-trial motions for a new damages trial and judgment notwithstanding the verdict. In September 2023, Judge Joseph C. Iannazone rejected Ford’s motions, finding that there was sufficient clear and convincing evidence for a jury to conclude that Ford was liable for punitive damages.

While Ford had argued that the excessive verdict was a product of “trial by sanctions” on account of a biased sanctions order that tainted the jury’s damage calculations, Judge Iannazone decided that his order did nothing of the sort. He also outright rejected Ford’s argument that the verdict was unconstitutionally excessive despite blowing past guideposts laid out by the U.S. Supreme Court. Even after acknowledging that the punitive damage award was “quite high,” he merely pointed out that the state’s cap on punitive damages does not apply to product liability cases. As a whole, Judge Iannazone decided that Ford had not proven that the jury verdict was “manifestly the result of prejudice, or bias, or corrupt motive,” or that it contravened the “principles of justice and equity.”

The court’s refusal to reduce the astronomical punitive damages award is particularly troublesome because this verdict practically tripled the prior record in Georgia for largest punitive damages verdict. For reference, the same plaintiff’s lawyer obtained a $150 million verdict against Chrysler back in 2014 in a small county in South Georgia – the trial judge in that case reduced the verdict all the way down to $40 million.

The saga will continue as Ford expressed that it will “seek a deserved new trial from the Georgia Court of Appeals.”

Good News

On March 15, 2023, the Georgia Supreme Court upheld the constitutionality of the state’s $250,000 cap on punitive damages in non-product liability cases in Taylor v. Devereux Foundation, Inc.

PHANTOM DAMAGES AWARDED BY GEORGIA COURTS

Courts across Georgia routinely award phantom damages to plaintiffs, driving up awards and providing a windfall to plaintiffs and their attorneys. “Phantom damages” occur when courts calculate a plaintiff’s medical expenses using the amount a patient was billed for a medical service (chargemaster rate) instead of the amount the patient, their insurer, Medicare, Medicaid, or workers’ compensation actually paid, and the healthcare provided accepted, for treatment. For example, a hospital may bill $20,000 for an emergency room visit, while the amount the hospital actually receives after adjustments may be $8,000. The $12,000 difference is not owed or ever paid for the treatment – that is the amount of phantom damages.

Georgia courts have misinterpreted the collateral source rule by holding that it applies to the discounted price of the plaintiff’s medical treatment – so plaintiffs can recover expenses based on chargemaster rates that no party actually pays and juries cannot hear evidence of the amount accepted by a healthcare provider instead as full payment.

But – there is no actual discount since hospitals set the fee schedules for treatments offset by Medicaid/ Medicare/insurance far in advance (patients are never actually responsible for paying the chargemaster rates).

A variety of civil justice abuses contribute to the growing litigation costs in Georgia, none more so than judges permitting “phantom damages.” The use of inflated billed amounts only increases the overall cost of the judicial system, spreading the financial burden on the backs of consumers through higher costs on goods and services. These amounts become a driving factor for settlements or jury awards in personal injury cases when juries are asked to assign a verdict amount of three to four times the actual value of the medical bills.

But juries are only told the “phantom” inflated dollar amount billed. They are not informed of the actual amount paid by a patient or his or her insurer. They’re not made aware of the financial interest of medical finance companies or their impact on health care costs. Consequently, we see higher and higher damage awards and settlement amounts based on exaggerated (phantom) numbers intended to produce a larger payout for trial lawyers.

GEORGIA SUPREME COURT DRAMATICALLY EXPANDS PREMISES LIABILITY

Premises liability cases have generated some of the most eye-popping nuclear verdicts in Georgia, particularly law- suits blaming businesses for the criminal conduct of others on or near their property.

Despite the abuses in this area, the Georgia General Assembly has failed to address the problem. During the 2023 legislative session, Senator Greg Dolezal introduced a bill that would have protected landowners from civil liability in most instances when a crime occurred on their property without their knowledge and ability to address it.

The bill was proposed in response to a case in which a person who was shot in a CVS parking lot sued the pharmacy for his injuries. In that instance, the plaintiff had arranged to meet an acquaintance at the store parking lot to purchase an electronic device. After the transaction, an unknown assailant entered the plaintiff’s car, threatened to kill him, and ordered him to hand over his money. The plaintiff tried and failed to shoot the assailant with his own pistol, at which point the assailant shot the plaintiff several times and fled. The plaintiff survived but sustained severe injuries. The lower court awarded $45 million to the plain- tiff, assigning 95% of liability to CVS, 5% to the plaintiff, and zero liability to the shooter. Unfortunately, the Georgia General Assembly failed to act.

As a result, the Georgia high court’s decision during the appeal led to further deterioration of the state’s civil justice system. In June 2023, the Georgia Supreme Court upheld the lower courts’ verdict in Georgia  CVS Pharmacy LLC v. Carmichael, and embraced an overly broad test for “foreseeability,” significantly expanding the scope of liability for property owners.

The Court held that a premises owner is liable for injuries caused by a third party’s criminal acts if it was “reasonably foreseeable” the act would occur. The Court said the jury must consider the “totality of circumstances relevant to the premises” and it must be decided on a “case-by-case basis.” The decision seems to allow even crimes occurring near a landowner’s premises to be considered in the foreseeability test. The Court rejected a bright-line approach that requires a plaintiff to identify a “substantially similar” crime occurring on the premises – a standard that the Georgia Supreme Court used in prior cases.

The Court said that prior crimes are still relevant to the reasonable foreseeability inquiry, but they are no longer controlling. This new totality-of-the-circumstances standard greatly expands the potential liability of landowners because it no longer requires criminal acts to have occurred on the property before a landowner can be held liable.

The impact of this decision is far-reaching and will specifically burden those that live in high-crime areas. Businesses will be forced to either close their stores or charge higher prices to offset the high costs of additional security measures, concerns Justice Shawn Ellen LaGrua raised in her concurring opinion.

OTHER OVER-BURDENSOME LIABILITY EXPANDING DECISIONS

Expansion of Wrongful Death Liability

In February 2023, the Georgia Supreme Court expanded who may bring wrongful death lawsuits to additional persons. In Hamon v. Connell, the Court held that in cases where a decedent’s surviving spouse cannot be found or opts not to sue, the decedent’s adult children can file a wrongful death claim, which the statute does not permit. In a surprising twist for this Court, the justices openly ignored the plain language of the Wrongful Death Act, which prescribes only a spouse or minor children to bring a claim, and the Court instead chose to rely on “equitable principles.”

This decision is part of the concerning trend of Judicial Hellholes® across the country expanding wrongful death liability, which is explored in a “Closer Look” section.

Expansion of Georgia’s Statute of Repose

“Reckless” Conduct Independently Exempted from Statute of Repose

The Georgia Supreme Court recently narrowed the applicability of the state’s statute of repose for product liability cases. Typically, this statute prevents lawsuits alleging that a product is defective when more than 10 years have passed since the product’s initial sale. The statute includes an exception for negligence claims “arising out of conduct which manifests a willful, reckless, or wanton disregard for life or property.”

In a negligent design case brought against Ford 18 years after a vehicle’s sale, the Court chose to read “reckless” as an independent exception from the statute of repose, one that requires a lower level of culpability than “willful or wanton” conduct. Consequently, manufacturers may now face an increased number of lawsuits brought long after their products are sold.

Case to Watch

In June 2023, the Chatham County Court issued a liability-expanding decision that, if not overturned, will drastically expand product liability for manufacturers. The plaintiff sued L’Oreal, alleging that its hair relaxer products caused her to develop uterine fibroids. As discussed earlier, Georgia law requires product liability claims to be brought within 10 years of when the product is first sold or used. In this instance, the plaintiff began using hair relaxer products in 1995, and began purchasing L’Oreal products in 2003, yet she did not sue until 2022. The trial court denied dismissal of the suit on June 15, 2023, finding the statute of repose did not begin to run until 2014 because the plaintiff was exposed to a “new product” every time she applied the hair relaxer.

In its application for interlocutory appeal, defendant aptly pointed out, “If every application of a single- use product (like hair relaxer) involved a ‘new product,’ by definition there would be no such thing as a ‘first’ sale, because every sale would be the first (and last) sale of that particular ‘product.’”

In July, the Georgia Court of Appeals agreed to review whether the 10-year statute of repose bars the plaintiff’s claims.

Mirror-Image Rule

As noted above, plaintiffs’ lawyers in Georgia engage in gamesmanship in which they make settlement demands full of tricky conditions, then claim that an insurer did not comply with one of their many trick requirements. The goal is to work around the insurance policy limits and claim the insurer is operating in “bad faith” by tricking them into innocuously overlooking one of the trick conditions.

Georgia courts require that “an insurer’s response to a demand must be a mirror image of the demand” to be an enforceable settlement. Any deviation from the demand, no matter how immaterial, voids the settlement agreement.

This has incentivized plaintiffs’ attorneys to insert needless technical requirements into a proposed agreement, then assert that an insurer’s response does not comply, thus nullifying a settlement. When there is no settlement, the plaintiff can then bring bad-faith-failure-to-settle claims against the insurer. Despite Georgia law favoring settlements, the mirror-image rule penalizes insurers for trying to settle.

In June 2023, the Georgia Court of Appeals issued a ruling that demonstrates just how imbalanced this area of the law has become. After receiving a plaintiff’s demand which included a provision stating that a payment of $25,000 was to be “received 15 days after [the Insurer’s] written acceptance of th[e] offer,” an insurer sent a timely acceptance letter including a settlement check that said it was “void after 180 days.” The plaintiff then moved forward with filing a personal-injury claim, arguing that the insurer did not accept the pre-suit settlement offer because the check was delivered before the 15th day after acceptance, there was a missing comma in the law firm’s name on the check, and the check included an expiration date.

The trial court ruled in favor of the insurer; however, the Court of Appeals reversed, finding the acceptance was not a “mirror image” of the demand. Instead, the Court of Appeals found the insurer’s response constituted a counteroffer and there was no settlement agreement.

THE PREDATORY CASH FOR LAWSUITS INDUSTRY

Companies that provide loans to plaintiffs in personal injury suits in exchange for a percentage of their awards are permitted to charge extremely high interest rates despite Georgia’s usury law.

Unfortunately, the legislature has not acted to address these practices, which take advantage of vulnerable consumers and complicate the ability of parties to resolve litigation.

Georgia finds itself in this situation after the Georgia Supreme Court ruled in Ruth v. Cherokee (2018) that litigation funding companies are not subject to the state’s Payday Lending Act because their repayment of lawsuit loans is contingent upon the success of the underlying case. In January 2020, a federal judge, bound by the Georgia Supreme Court decision, reluctantly found that lawsuit lenders can charge any usurious rate they want in the state.

In its 2018 ruling, the Georgia Supreme Court noted that the Georgia General Assembly may revisit the scope of the law should they disagree with the decision. There has been no movement, however, in the Georgia legislature to address the growing concern posed by unbound lawsuit lending, which leads to unreasonable settlement demands, and lengthier, more costly litigation.

In addition, Georgia does not require companies that provide lawsuit loans, or who otherwise invest in litigation to disclose their involvement. Lack of funding transparency permits predatory financing companies or lenders who act unethically to operate without any regulatory oversight.

Other states like Indiana, Montana, Wisconsin and West  Virginia have recently enacted legislation that requires disclosure of consumer litigation financing.

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