Nuclear verdict fallout against trucking companies doesn’t stop there

Runaway lawsuits and nuclear verdicts are hammering the trucking industry – and, it turns out, your grocery bill. Researchers say sweeping tort reform could pump the brakes on lawsuit abuse and ease one of America’s top frustrations: the cost of food.

Tort reform was the second-biggest concern among motor carriers, according to the American Transportation Research Institute’s latest survey. In just the past year, Wabash had to pay a severely discounted $30 million settlement to end a case that initially put it on the hook for nearly half a billion dollars. Daimler Truck North America got it with a $160 million verdict around the same time.

Trucking stakeholders have sounded the alarm, and some are listening. Reps. Tom Barrett, R-Mich., and Ashley Hinson, R-Iowa, have introduced a bill that protects trucking companies from lawsuit abuse. Oklahoma enacted tort reform earlier this year. Nevada and Texas are looking into it.

Perhaps more lawmakers would take tort reform for the trucking industry seriously if they realized lawsuit abuse affects everybody. That was what the U.S. Chamber of Commerce’s Institute for Legal Reform recently discovered.

Lawsuit abuse has driven up costs in the trucking industry, both in litigation costs and insurance premiums. But a new report from the Institute for Legal Reform shows the increase in trucking lawsuits has hindered broader economic growth, reducing both GDP and employment.

The study looked at the litigation costs per $1,000 of revenue across all states in the trucking sector. North Dakota had the lowest at $25. Mississippi had the highest at nearly $58.

“Because of its central role, disruptions or rising costs in trucking can ripple across manufacturing, retail, agriculture, construction, and many other sectors of the U.S. economy,” the report states.

The report even concluded that the long-term effects of nuclear verdicts on food prices would hit the most vulnerable – low-income households.

What would happen if the cost of litigation in all states dropped to North Dakota’s low level? According to the Institute for Legal Reform, the U.S. GDP would increase by an average of $523 billion a year and add nearly 6 million jobs across all industries.

The reason is simple: lower litigation costs would lead to higher economic activity. In fact, if nuclear verdicts against trucking companies were reduced from the current levels, future increases in food costs would be reduced by 15%.

To put that in the context most Americans would understand, the study calculated what that means for food costs. Significant tort reform could lower the expected inflation of “food at home” prices by up to 15%. That’s because food is among the most ground-transport-intensive goods.

That would have a more pronounced effect on lower-income households. Households in the lower 20% of income would see savings from food spending four times those of median-income households. Essentially, substantial tort reform could have a meaningful effect on food insecurity concerns across the country.

Conversely, the reverse holds true as well. For every additional $1 million in trucking litigation costs, the U.S. GDP would drop by $2 million. Consequently, production and economic activity would take a hit.

Essentially, lawsuit abuse in the trucking industry is costing the United States billions of dollars, millions of jobs and driving up the cost of food. Meaningful tort reform could fix the problem. Although the study does not suggest specific policies, it explains how tort reform benefits all Americans, not just truckers. LL