What Is a Nuclear Verdict?
Nuclear verdicts refer to exceptionally high jury awards—generally, those exceeding $10 million. Such verdicts have become increasingly common in the past decade. A public relations firm Marathon Strategies report stated that nuclear verdicts reached a 15-year high in 2023, with the number of such verdicts rising by 27% over those in 2022. Additionally, the report found that 27 of these verdicts were categorized as “thermonuclear,” indicating jury awards above $100 million.
Various factors have contributed to these trends, including rising litigation funding, a changing legal landscape concerning liability laws and deteriorating public sentiment toward businesses. Amid growing corporate distrust, businesses are expected to meet higher operational standards and are being held more accountable for their wrongdoings. Upon being sued and taken to court, businesses frequently encounter juries sympathetic to plaintiffs. Moreover, there’s a rising perception that businesses (especially large ones) can afford the cost of damages. This means juries may have fewer reservations when awarding substantial damages to plaintiffs, resulting in nuclear verdicts.
Nuclear verdicts can have significant consequences for businesses of all sizes and sectors, causing lasting reputational harm, posing underinsurance concerns and creating substantial financial disorder. So it’s essential for businesses to better understand these verdicts and implement protective strategies. This case study summarizes a recent nuclear verdict, outlines factors that led to the verdict, highlights associated compliance considerations and provides related risk-mitigation measures.
$78 Million Product Liability Verdict
Case Details:
In 2017, an amusement park ride at the Ohio State Fair called the Fireball catastrophically failed during its operation, causing multiple serious injuries and the tragic death of one rider. Manufactured by Netherlands-based KMG International BV (KMG), the ride swung back and forth up to 22 feet in the air while spinning 24 riders in a circle. Structurally, the ride had a single swing arm attached to a pivot point and six gondola support arms stemming from a central hub. Ten bolts connected each of the four-seat gondolas to the end of a hollow vertical tube.
On the date of the tragedy, a gondola carrying four individuals detached during the ride, causing two victims to be thrown through the air while two others remained constrained in the gondola as it crashed onto the parking lot below. One rider,
an 18-year-old man, died instantly after being thrown 60 feet and landing on a tractor-trailer. Another rider, a 19-year-old woman and girlfriend of the 18-year-old man, suffered head trauma and numerous broken bones. She required 12 surgeries, developed post-traumatic stress disorder and word-finding difficulty, and is partially wheelchair-bound.
Another gondola occupant, a 36-year-old man who remained constrained to the ride as it fell, suffered a traumatic brain injury and multiple fractures, including a depressed skull fracture. He can no longer work and suffers from incontinence, severe weakness, erectile dysfunction and depression. A 30-year-old woman who was also in the gondola as it fell suffered multiple fractures, requiring eight surgeries and ongoing care. Four others were also injured in the incident.
Investigators determined that corrosion had weakened the gondola’s support beam, reducing its wall thickness. Additionally, evidence surfaced that KMG knew the ride had a design flaw that made it susceptible to internal corrosion at least five years before the incident. However, they did not share that information with the public, regulators, ride owners or ride operators, including the company that owned and operated the ride at the Ohio State Fair.
The estate of the deceased individual filed a wrongful death lawsuit, alleging the manufacturer’s negligence and defective product caused the young adult’s death. The 19-year-old, 36-year-old and 30-year-old victims also filed negligence and product liability lawsuits for their injuries. Among the allegations were that KMG did not address known corrosion issues, maintain proper safety standards or provide adequate warnings regarding the ride’s safety issues.
The lawsuit was filed in New Jersey, where KMG does extensive business. KMG, the only remaining defendant in the case, failed to appear at the trial and did not provide a defense against the allegations. Due to the nonappearance and failure to defend, the court granted summary judgment to the plaintiffs in 2023. A bench trial to focus on damages then followed.
In July 2024, the jury awarded damages to the four plaintiffs. The estate of the deceased received $7 million in compensatory damages and $10 million in punitive damages. The woman who was 19 at the time received $10 million in compensatory damages and $10 million in punitive damages. The victim who was 36 when he was hurt received $12 million in compensatory damages and $10 million in punitive damages. The woman who was 30 when the incident occurred received $9 million in compensatory damages and $10 million punitive damages. The total jury award amounted to $78 million.
Factors that Led to the $78 Million Product Liability Verdict
A design defect refers to a flaw in the product’s design that makes it unsafe for consumers. Such defects are present even if the product is manufactured correctly, and they can cause serious injuries or death. Designers, manufacturers or retailers may be held liable for any harm consumers experience upon using defective products. Regarding this case, the ride’s gondola support beam, which was prone to corrosion and had inadequate thickness, was a design defect.
Failure to warn, or a marketing defect, occurs when a product designer, manufacturer or retailer neglects to educate consumers properly about the possible risks associated with using a product, particularly when these parties knew or should have known such risks existed. Failure to warn may involve providing insufficient product warnings (e.g., giving limited details about various product hazards) or omitting warnings altogether. Regardless, failure to warn typically results in consumers operating a product differently than they would have if they knew about the product’s potential risks, thereby increasing the likelihood of injuries.
As it relates to this case, KMG failed to warn the public, regulators, ride owners and ride operators about the risks of corrosion and inadequate support created for the ride, despite evidence showing they were aware of safety concerns and had knowledge of detailed inspection and corrective measures that could have been performed.
Compliance Considerations
This case presents compliance considerations related to product liability. Such liability refers to the legal responsibility of product designers, manufacturers and retailers to compensate consumers who experience bodily injuries, property damage or other losses due to product use. While no federal product liability laws exist, most states possess such legislation. Product liability claims may fall into one of the following categories:
- Defects—These claims can result from designers, manufacturers or retailers neglecting to address or ignoring defects in their products, leading to consumer harm. They may also stem from the failure to equip products with essential safety features or provide adequate warning labels and instructions. Defects often arise without proper product testing and quality control measures.
- Post-sale duties—Such claims can result from failing to uphold a duty to warn consumers if hazards are or should have been discovered after a product has been sold or distributed. Several states operate under the principle of strict liability, meaning consumers don’t need to prove negligence—only that a product was defective when designed, manufactured, distributed, or sold, and that the defects caused harm.
Risk Mitigation Measures
- Minimize product liability exposures. Businesses should prioritize investing in high-quality manufacturing processes and equipment. Regular inspections and tests are essential to ensure their product‘s safety and functionality. When creating warning labels and instructions, leveraging consumer focus groups can ensure clarity and accessibility. After products are sold, businesses should take consumer feedback seriously and investigate any reports of product defects. They may also transfer a portion of their product liability risks through supplier contracts (e.g., hold harmless agreements). Established product notification and recall plans are crucial for addressing post-sale concerns, including removing products from shelves and informing consumers. Finally, all processes and risk-management measures throughout the product lifecycle should be documented thoroughly.
- Ensure compliance. Workplace policies should be regularly assessed to maintain compliance with product liability laws and safety standards, as well as any other applicable federal, state and local regulations. Businesses can work with legal counsel for additional compliance assistance.
- Secure proper coverage. In this increasingly litigious environment, it’s crucial for businesses to purchase adequate insurance. Employers can reach out to trusted insurance professionals to discuss specific coverage needs.
We Can Help
If you have questions, reach out to one of our insurance advisors to discuss specific coverage needs, so you can avoid a nuclear verdict or product liability loss.