If we want to see the impact of litigation growth in a specific area of law, an excellent place to begin is with product liability law. No other area of contemporary litigation more graphically demonstrates the destructive impact litigation growth has had on the free market. As product liability law has shifted the balance from employer decision-making authority to the complaining individual's right to suit and recovery, the consuming public has suffered a measurable lass of freedom of choice both in terms of product availability and job availability.

The increase in the number of product liability lawsuits in recent years has been particularly staggering. According to the Working Group [11], the number of product liability cases filed in federal court alone increased from 1,579 in 1974 to 13,554 in 1985 – a 758% increase. Even if one removes the large number of asbestos-related cases from this statistic, as suggested by supporters of the current litigation system (and even though there is no sensible reason for doing so), the increase would still be well over 500%, which is an equally absurd figure. Indeed, the fact than the 12-month period ending June 30, 1985 saw the filing of over 9,000 non-asbestos product liability law suits in federal court (when the traditional place of filing has been in state court) is more than enough to demonstrate a contemporary case filing frenzy in the product liability area. According to the analysis by the Institute [12], product liability cases now account for about 30 percent of all federal tort filings.

As the number of product liability cases has increased, so has the size of the verdicts. A 1986 Study by Jury Verdict Research, Inc. (Jury Verdict) revealed that the average jury verdict in a product liability case had increased from $393,580 in 1975 to $1,850,452 in 1985. The median verdict had increased over the same period from $121,475 to $550,000. [13] These figures, and particularly the more meaningful average figures (which reveal the real potential for out-of-pocket liability) should send terror into the heart of a11 manufacturers.

The Institute study of Cook County and San Francisco [14] confirms the current popular perception that product liability awards are among the largest and that they continue to increase at among the highest rates. The average product liability award. adjusted for inflation, increased by 212% in Cook County and by 1,016% in San Francisco between 1960-64 and 1980-84. Over the same period of time, the expected product liability jury award went from an inflation-adjusted $76,000 to $414,000 in Cook County, and from $56,000 to $575,000 in San Francisco.

One of the most interesting statistical analyses performed by Jury Verdict compares the Annual Deviation in Award Size to the Consumer Price Index and Total Health Care spending. Without product liability awards included in the calculation, the average overall increase in verdict awards for the entire 1980-84 study period was 12.7°l°, compared with 12.1% for health care costs, and a mere 6.9% for consumer prices. However, if you include product liability verdicts in the total, the average annual deviation goes up to 20.8%, a very dramatic increase. This analysis demonstrates clearly the prominent role played by product liability in the litigation explosion. The phenomenon of disproportionately high product liability litigation growth cannot be explained by merely pointing to more severe injuries in product liability cases. Even after accounting far more severe injuries and larger special damages in product liability cases, the Institute study found that awards to plaintiffs with similar injuries and losses were up to four times larger in product liability cases (and also medical malpractice cases) than in other tort cases. For example, the median award for a plaintiff who lost two limbs in a workplace injury and sued the manufacturer under product liability law exceeded $750,000, but was only $200,000 if the injury occurred in an auto accident.

A noteworthy factor which may contribute to high product liability awards (and the overall litigation growth crisis in general) is that juries appear to have a natural bias in favor of individuals over business entities. They make particularly large awards against business defendants, with the average award totaling over six times the amount paid by individual defendants. According to the Institute study, the average award against a business defendant was $120,000, while hospitals and nonprofit organizations paid an average of $97,000, government agencies paid an average of $38,000, and individuals paid an average of only $18,500. Some of the difference in average awards is due to a few extremely large awards given against business defendants in cases of severe injury. Yet, even the median or typical award against corporate defendants was four times as large as that against individuals.

One way businesses defend themselves against the worst risk of astronomical awards is by settling cases early, regardless of the "fault" associated with their products. Although statistics about settlements are closely guarded by corporate attorneys wary of prompting plaintiff attorney discovery motions, the impact of frequent and high jury awards is still occasionally revealed. Testifying before the Michigan Senate Commerce Committee in 1987 hearings on proposed product liability statutory reforms, the self-insured corporations Lear Siegler and Whirlpool testified that the settlement value of product liability cases had increased by as much as 300% to 400% in the previous five years alone. Such an increase should come as no surprise in the context of the statistical evidence on jury verdicts, and such increase is of great importance when one considers the 92% settlement figure for liability cases.