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New York City

New York City has long been known for its beautiful city skyline, and now it’s known for its sky-high verdicts too. Nuclear verdicts burden businesses in the city and bog down economic growth. Liability-expanding laws have led to a never-ending surge of meritless lawsuits in courts across the state and third-party litigation financing feeds the city’s litigation machine.

The New York Legislature has turned a blind eye to the deteriorating civil justice climate, and rather looks for ways to expand liability by pursuing a pro- plaintiff agenda. It continues to consider legislation that, if enacted, will further entrench New York City on the Judicial Hellholes® report for years to come.

NUCLEAR VERDICTS BOG DOWN BIG APPLE

New York City continues to see a surging number of nuclear verdicts, obtained by plaintiffs’ lawyers who use manipulation tactics like “reptile theory” and “anchoring” to drive up awards using New York’s generous liability laws.

One of the main drivers of nuclear verdicts is a New York law, CPLR 4016(b), which allows plaintiffs’ lawyers to request that a jury award a specific dollar amount for any element of damages. Plaintiffs’ lawyers use this law to engage in a tactic known as “anchoring,” in which they place an extremely high figure into the jurors’ minds to start as a base dollar amount for a pain and suffering award, which, unlike medical expenses or lost wages, lacks a means of objective measurement. Although New York law confines a plaintiff’s recovery to “reasonable compensation,” its courts have repeatedly awarded amounts beyond its former de facto cap of $10 million for

a pain and suffering award. According to a 2022 study released by the New York Civil Justice Institute, in 90% of the cases where a plaintiff’s lawyer asked a jury to award more than $20 million, the jury awarded at least the level requested.

According to a recent study by the U.S. Chamber, there were 151 recorded nuclear verdicts between 2010 and 2019 in New York totaling over $5 billion. New York had the second most nuclear verdicts per capita. New York is unique in the fact that most of the state’s nuclear verdicts are concentrated in two areas – premises liability (29.8%) and medical liability (22.5%). The state’s problematic “Scaffold Law,” which will be discussed later in the report, is a driving factor behind the sky-high premises liability awards.

In October 2022, a former running back for the New York Giants football team was awarded $28.5 million in a lawsuit following an unsuccessful ankle surgery. The injury ultimately ended his football career and the doctors argued that no amount of treatment would have been sufficient to prolong it.

Following this verdict, the American Orthopedic Society for Sports Medicine, as well as other prominent medical organizations, released an open letter stating their concern over the rising liability costs associated with providing care for professional athletes. The letter stated that sports medicine physicians are in a uniquely difficult position as they must go through extensive training in order to provide care to elite athletes that are at an increased likelihood of injury by nature of their profession. These athletes will also typically suffer a loss of future income far greater than the average person.

Given the training needed to work in the specialty of sports medicine and related subspecialities within that field, “testimony in support of critical medical care should come from an expert in their subspeciality.” Dr. Scott Rodeo, head physician for the New York Giants, also stated that the recent trend of cases may discourage physicians from providing care to athletes.

Other recent New York City nuclear verdicts include:

  • October 2022: $80 million verdict (comprised of $10 million in past pain and suffering and $70 million for future pain and suffering) in a medical liability case in Bronx County
  • December 2022: $48 million verdict (including $35 million for past and future pain and suffering) in a construction liability case in Kings County
  • September 2023: $38 million verdict (including $6.5 million in punitive damages) in an asbestos case in New York County (Manhattan)

Things Could Get A Lot Worse…

The state legislature added fuel to the fire by once again passing the Grieving Families Act (GFA). The legislature only made minor changes to a problematic bill that Governor Kathy Hochul vetoed at the end of 2022.

The Grieving Families Act (GFA), introduced by State Senator Brad Hoylman, expands compensable damages in New York’s wrongful death actions. Though state law previously limited recovery to pecuniary losses, plaintiffs’ lawyers will now be able to seek unlimited and subjective damages for grief or anguish as well as other forms of noneconomic damages. The GFA also expands the eligible recipients of these damages to include “close family members,” including, spouses, domestic partners, children, parents, grandparents, stepparents, and siblings.

Whether a person qualifies as a “close family member” would be an issue to be decided by a jury at trial.

In addition, the GFA increases the statute of limitations for filing lawsuits to blame someone for a person’s death from two to three years and applies retroactively. In sum, the GFA means more wrongful death lawsuits, by more people, with larger awards will soon arrive in New York. The changes will surely increase litigation costs, settlement demands, and verdicts.

According to Milliman, Inc., if enacted, the legislation will increase general and automobile policy premiums by 11%, or almost $2.14 billion for New York residents and businesses.

The New York medical community also has raised serious concerns over the proposed legislation. According to the Medical Society of New York, “these costs would cause significant damage to our healthcare safety net, imposing staggering new costs for our hospitals, driving physicians out of state, and exacerbating the already challenging patient access to care issues we face, particularly in under- served areas.” It is expected to increase the medical liability costs for doctors and hospitals by 40%.

New York also would be an outlier in its approach to wrongful death liability. Most states that allow subjective damages for emotional harm impose limits, especially in the medical malpractice context. The proposed statute includes no such caps and expands the categories of relief in a way that will lead to duplicative awards.

“By passing this bill, New York lawmakers are ignoring the concerns of local governments, doctors, and hospitals, and feedback from Governor Hochul’s office.”
Tom Stebbins, Executive Director of New York Civil Justice Institute

BIG APPLE IS BIG TARGET FOR FOOD & BEVERAGE LITIGATION

Lawyers filed 214 food and beverage class action suits nationwide in 2022. About one-in-five of these lawsuits – 44 (21%) – were filed in New York.

Plaintiffs’ lawyers regularly abuse the vague language of New York’s consumer protection law (GBL § 349), which does not require a plaintiff to demonstrate that the business intentionally misled consumers or that a consumer actually relied on the misrepresentation to her detriment. Although a plaintiff must demonstrate that a practice is “likely to mislead a reasonable consumer acting reasonably under the circumstances,” some New York courts have refused to assume that a reasonable consumer reads the product’s ingredients.

Lawsuits targeting products marketed as “all natural” continue to surge in Judicial Hellholes® across the country and New York City is one of the preferred jurisdictions. Several class actions were filed in 2023, including one filed against Snapple alleging that Snapple’s all natural label misleads consumers when the drinks contain citric acid and food coloring. A similar lawsuit was filed against Kraft Heinz in January targeting its Capri Sun drink. And in May 2023, lawyers filed a class action against Bayer alleging that it falsely advertises its “One A Day” multivitamins as “natural” when they include synthetic ingredients.

Gig’s Up for Vanilla Vigilante?

After years of meritless filings by the “Vanilla Vigilante,” Spencer Sheehan, New York’s courts finally grew tired of his antics. He redirected his efforts (unsuccessfully, see Cook County section) to Illinois, but not before a New York federal judge tossed yet another lawsuit. Sheehan sued Starbucks, alleging that its French Roast 100% Arabica Coffee was misleadingly labeled since it contains added potassium. A federal court dismissed the lawsuit, finding that the complaint failed to identify any evidence supporting this assertion. The court also observed that, since it’s an ordinary cup of coffee, a reasonable consumer would not assume that 100% Arabica Coffee means it has no additives, vitamins, or minerals.

LIABILITY-EXPANDING LAWS LEAD TO LAWSUIT ABUSE

“Americans With Disabilities Act” Lawsuit Abuse

New York has now surpassed California in the number of Americans with Disabilities Act Title III filings. In 2022, 3,173 cases were filed in New York compared with 2,519 in California. The vast majority of these cases are brought in the Southern District of New York, which includes New York City. Through August of 2023, over 70% of the more than 1,500 ADA cases in New York were brought in this district. While earlier ADA cases often asserted that a store’s physical location or parking lot did not meet all accessibility regulations, many of these cases now claim that a business’s website lacks features to assist those who are visually impaired. A plaintiffs’ lawyer or serial plaintiff can look for lawsuits to file on a computer. Of those filed in 2022, 1,660 (70%) were filed in New York. Five law firms, three of which are based in New York, filed more than 66% of the cases. New York, by far, exceeds all other states in hosting these claims in the first half of 2023.

Plaintiffs’ lawyers take advantage of New York’s unique set of disability laws. New York is one of just a few states whose state disability laws go far beyond what the federal Americans with Disabilities Act (ADA) provides. New York does not require a plaintiff to show that a disability “substantially limits” any major life activities. Plaintiffs may also obtain statutory damages that are unavailable under the federal ADA. Few lawsuits are filed by plaintiffs who face real injury from lack of access, and most of these cases are filed by firms and serial plaintiffs who make vague and conclusory allegations about the inaccessibility of websites to those who are visually impaired.

These website accessibility lawsuits are increasingly targeting small businesses. After several years of these lawsuits, plaintiffs’ firms have hit larger companies with website accessibility claims, sometimes multiple times. For that reason, lawyers are not focusing on smaller companies. These businesses are extorted into low-dollar settlements, as the alternative is to spend more money on defense costs.

The high concentration of ADA filings in New York places a serious strain on judicial resources. In 2022, ADA-related case filings accounted for nearly 21% of all the civil cases in the Southern District of New York, which includes New York City.

SCOTUS Seemed Poised to Weigh in on ADA “Serial Testers” … Until They Didn’t

In March 2023, the U.S. Supreme Court agreed to decide whether serial “testers,” individuals who bring suits against numerous entities for alleged violations of the ADA without necessarily planning on using the service, have standing to sue. The question regarding standing turns on whether the plaintiff suffered a “sufficiently concrete injury.” While the case targeted a hotel in Maine, the outcome could have significant implications for such cases in New York and nationwide.

As pointed out in an amicus brief, “Serial tester plaintiffs run roughshod over the constraints on federal court jurisdiction imposed by Article III. Some, like Respondent here, do not even contend that they intend to visit the allegedly violating business at all. Predictably, this opens the floodgates to litigation, as Respondent and other serial filers can identify new targets from their homes, armed with only an internet connection.”

While it looked like the U.S. Supreme Court would have the opportunity to weigh in on this vexatious form of litigation, the plaintiff in this case voluntarily dismissed the lawsuit prior to oral arguments. In October, during oral arguments, some of the justices signaled that the case may now be moot as a result, meaning that it may take another case for the Court to address the standing question. Notably, Chief Justice John Roberts did express concern about leaving this question for a later date, stating that plaintiffs could “manipulate the court’s jurisdiction” by dismissing their cases after the court grants certiorari.

While it is unclear why the plaintiff decided to dismiss her case, one possible reason is that a three- judge panel of the federal district court in Maryland recommended a six-month suspension of the plaintiff’s lawyer for ethics violations related to ADA litigation, including filing over 600 “tester” complaints across the country on behalf of just two clients. Investigations into the lawyer’s filings revealed a pattern of behavior in which the two parties filed identical pleadings in different actions, before then requesting thousands of dollars in legal fees during settlement negotiations. This behavior suggests that the real motive behind these “tester” cases is not to promote compliance with ADA, but instead to harass and pressure defendants into paying out tens of thousands of dollars in fees.

Scaffold Law

New York City is now tied as the most expensive city to live in worldwide. One root cause of the high cost of living in New York is excessive construction costs due in part to the state’s “Scaffold Law.” Over a century ago, the state legislature enacted the Scaffold Law to protect construction workers who helped build the concrete jungle known as New York City today. After Illinois repealed a similar law in 1995, New York is the only state that maintains this form of absolute liability.

Written in New York Labor Law’s Section 240/241, the Scaffold Law assigns strict liability for any gravity-related injury. Contractors and employers are virtually defenseless from lawsuits regardless of the workers’ negligence or recklessness. Eliminating the strict liability component would create over 27,000 new jobs and 12,600 additional housing units.

There is now a growing concern about “suspicious” injury claims. Members of the New York City Special Riggers Association (NYCSRA) believe there is an increasing trend of false scaffold injury claims, where new hires “fall from a very, very low height.” According to the Association, these accidents appear to be staged and never have witnesses.

Court’s Expansive View of Law

While the legislature turns a blind eye to the abuses under this law, the courts continue to expand liability. In May 2023, an appellate court found a defendant liable for a New York City plaintiff’s injuries that occurred when he and other coworkers attempted to transport a piece of machinery from the sidewalk to the street. The workers had placed a ramp to cover a trench which was two feet deep. When the machine went down the ramp it broke and injured the plaintiff’s foot. While the distance between the curb and the street was minor, the court found that the failure to provide safety devices while moving machinery to a different elevation is within the scope of the Scaffold Law.

New Laws

Auto Insurance Coverage

In August, legislation went into effect that requires all New York drivers to pay for auto insurance policies that include “supplemental spousal liability coverage,” whether they are married or not. This coverage allows a person to sue his or her spouse when injured in an accident caused by the spouse’s negligent driving. The legislation is expected to drive up insurance premiums and New Yorkers already are paying some of the highest rates in the country. The bill received strong support from the New York Trial Lawyers Association and the state’s Academy of Trial Lawyers, as their members will certainly benefit from the expected increase in litigation.

Personal Jurisdiction

The New York legislature once again passed legislation that would require any corporation registered with the state to do business to consent to general jurisdiction for disputes which lack a connection to the state. The bill is on Governor Hochul’s desk awaiting a decision. Governor Hochul vetoed a similar version in 2022.

Enacting this legislation would have significant implications for some of the world’s largest corporations. Many multinational corporations are registered to do business in New York, regardless of where they are headquartered and incorporated. If S.7476 is enacted, these corporations could be dragged into New York courts for conduct occurring anywhere worldwide. The legislative findings which accompanied the bill showed that businesses in the state are concerned about the “high administrative costs” which the bill will impose. The bill will also burden the New York court system, which is already experiencing a massive backlog of cases coming out of the COVID-19 pandemic.

‘CASH FOR LAWSUITS’ FEEDS THE BEAST

Plaintiffs’ lawyers are not the only ones profiting off litigation in New York City. An industry offers “pre-settlement” funding or advances, which prey on vulnerable consumers, while making it more difficult to resolve cases for rea- sonable amounts.

These businesses operate like payday lenders, encouraging individuals with lawsuits to take a relatively small “advance” on their expected settlement. Examples abound of consumers taking a small loan ($350 to $1,200) while a run-of-the-mill claim like a slip-and-fall is pending and then being on the hook to pay the lender five or ten times that amount. These amounts are taken from the plaintiff’s settlement, after payment of the personal injury attorney’s contingency fee. When a settlement is reached, a consumer may have little or nothing left. In one instance, a lawsuit lender reportedly charged New Yorkers interest rates as high as 124%. According to a New York City Bar Association report, lawsuit lenders avoid state usury laws that prohibit excessive rates by characterizing the loans as “non-recourse,” meaning that the borrower’s obligation to repay the loan is not absolute, but contingent on receiving recovery in the lawsuit (which is virtually certain).

Unlike some jurisdictions, New York does not require litigants to disclose the existence of a litigation funding agreement.

Fall Out from Funding Scheme Continues

In April 2023, Adrian Alexander, a New York litigation funder, was sentenced to 36 months in prison for his role in an illegal scheme to obtain settlements and judgments related to fake slip-and-fall cases. Other members of the scheme, including the fake plaintiffs and doctors who offered expert testimony had previously been convicted at trial in 2020 and 2021.

The defendants were caught recruiting vulnerable individuals, also referred to as “patients” by the perpetrators, to stage trip-and-fall accidents in various areas of New York City. After the patient staged an accident, the two attorneys would file personal injury lawsuits on their behalf against businesses and insurers. The two doctors would then instruct patients to undergo unnecessary medical and chiropractic treatments to maximize the value of their claims. Afterwards, the patients received a mere post-surgical stipend of $1,000 to $1,500.

The litigation funder would offer to pay for patients’ medical and legal costs in exchange for up to 50% interest rate on medical loans and up to 100% on personal loans.

The scam, which began in 2013, involved more than 400 patients and generated almost $31 million, according to prosecutors.

 

NEW YORK CITY ASBESTOS LITIGATION

New York City saw 283 asbestos- related lawsuits filed in 2022, a 12.3% increase year over year.

As of July 2023, filings had increased more than 30% year over year. New York City courts continue to serve as the third most popular jurisdiction for asbestos litigation. Only Madison and St. Clair counties in Illinois host more. Talcum powder filings now make up nearly 20% of all asbestos-related lawsuits filed in New York.

Asbestos litigation can result in nuclear verdicts. Recent asbestos nuclear verdicts in New York City include a $15 million pain and suffering award to the family of a drywall installer who claimed 11 companies contributed to his exposure and $23 million to an 81-year-old former steamfitter who developed cancer, including $10 million for future pain and suffering.

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