Armed with the first trial as a road map, two San Francisco attorneys turned a nearly $7 million award into an unanimous defense verdict with the aid of extensive jury research.When they agreed to defend the Insurance Company of Northern America and its agent, Gold Cities, against a pizza maker's breach of contract and bad faith claims, Donald W. Carlson and Joyce C. Wang did not start from square one, they started from square negative $ million. The case against the insurers, D.W. Stephan Enterprises Inc. v. Insurance Company of North America, BCO7855 (Los Angeles Sup. Ct., 1999), had been tried five years ago, and a jury had found them liable for almost $7 million in damages. After the 2nd District Court of Appeal reversed that verdict and remanded the case for a new trial, the defendants had one more chance to convince a jury of the propriety of their conduct.
They hired Carlson and Wang, then attorneys with the San Francisco law firm of Long and Levit to undertake this task. Both attorneys believe that their strategy of using extensive jury feedback was their path to trial success.
The story begins April 29, 1992, when a Simi Valley jury handed down a "not guilty' verdict in the criminal trial of four Los Angeles police officers who severely beat Rodney King. Following the verdict, rioters burned down a Domino's Pizza franchise at a strip mall in South Central Los Angeles.
Pizza maker Denis Stephan owned the store, as well as two other Domino's franchises. Stephan had purchased insurance policies on all three Domino's Pizza stores from the Insurance Company of North America and Gold Cities. He claimed that the policies provided $100,000 "contents coverage" for personal property including inventory and equipment, and $100,000 "business income coverage" for up to 12 months lost income, per store. The policies took effect March 6, 1992, but had not been delivered before the riots erupted.
After the riots, Stephan submitted a claim to INA for $225,000. Stephan received his copy of the policy 12 days later. According to its terms, INA claimed that the policy was limited to contents coverage only, up to a maximum of $20,000. INA paid that amount, but Stephan insisted that the insurance company owed him $225,000.
This aspect of the dispute was litigated in 1994, when the plaintiff alleged breach of contract and bad faith. After a 12 day trial, the jury deliberated for three days before awarding the plaintiff $415,693 in compensatory damages, attorney fees and other expenses, and $6.5 million in punitive damages. D.W. Stephan Enterprises Inc. v.Gold Cities Insurance Agency, BCO67855 (Los Angeles Sup. Ct., 1994).
In that trial, Stephan' s attorney had argued that Stephan had paid his premiums in full, that the defendants had engaged in a conspiracy against Stephan, which included altering the policy language or switching policies, and that the defendants had acted in bad faith, oppressively and with malice, warranting punitive damages. The defendants appealed, and the appellate reversed and remanded based on inconsistencies in the jury's verdicts. The defendants then retained Long and Levit partner Carlson as their lead counsel for the new trial.
For Carlson, the road to reversal of the multimillion-dollar plaintiff's verdict began with a close study of the map that the first trial provided.
"Because there was an appeal, there was a complete transcript of the first trial, so we had a script," Carlson said. "We had the story. Our job was to change the ending."
Carlson and fellow Long and Levit partner Wang studied the transcript with an eye toward understanding not only why the defendants lost but also why the jury awarded such high punitive damages. Their job would be to delineate the key points on which the first trial hinged and determine how to alter the presentation of themes and evidence to persuade the jury of the propriety of their clients conduct.
Carlson hired jury consultant David B. Graeven, Ph.D., president of the San Francisco-based Trial Behavior Consulting Inc., to locate and interview the jurors from the 1994 trial. Graeven's questioning focused on what was important to those jurors and how they responded to the previous themes advanced.
His interviews revealed that the jurors had found the plaintiff to be credible, hardworking and honest - a legitimate businessperson who had no choice but to sue because the insurance company wouldn't communicate with him. They also found persuasive in the plaintiff's allegations that the defendants had engaged in malicious, conspiratorial misconduct warranting a punitive damages award.
Through this research, Carlson determined that in order to prevail in the retrial, new counsel had to find ways to discredit the plaintiff and bolster the insurance company's credibility by "emphasiz[ing] the true facts that the company was cooperating and communicating."
First, counsel moved to amend the defendant's answer to include as a defense that the plaintiff committed fraud in the application for coverage. Defense counsel in the first trial moved during the trial to amend the answer to include this defense, but the motion was denied. Thus, Carlson and Wang moved to amend early on in their representation. Their motion was granted.
"We wanted to have the ability to introduce that evidence, not knowing for sure how or whether we were going to do it, but to preserve the ability to do it," Wang explained.
Second, "Since out client lost the first case with such magnitude, we decided the jury shouldn't know there was an earlier trial," Carlson said.
As it turned out, the presence of a Court Administrator on the new jury made it easy for Carlson to argue to the judge that reference to an earlier trial and appeal created the danger that juror's knowledge of procedure could improperly influence the jury. Plaintiff's counsel agreed. Thus, no mention was made of an earlier trial, and testimony given during the prior trial was referred to in the retrial as "earlier sworn testimony"
Third, Carlson and Wang tinkered with the number order and selection of experts and witnesses. Mindful that plaintiff's counsel also had the prior trial transcript to which they refer, they wanted to prevent their opponent from calculating their every move. They retained a different expert on the issue of bad faith claims handling and added experts to testify as to the damages issues of business interruption and the value of equipment and inventory.
With regard to the fact witnesses, defense counsel decided "for a number of reasons" to use fewer in the retrial, though they subpoenaed all of the potential witnesses so that they could wait to make their final determination until they saw how the trial infolded. Ultimately, three witnesses were eliminated because their testimony was deemed superfluous or confusing, other witness testimony was read into the record instead of presented live.
Next, Carlson and Wang tested their themes and new evidence on two mock juries. Carlson uses mock juries "for most cases I've tried. Many times I use two," he said.
In his article "How to make the most of a mock trial," printed in the December 1992/January 1993 issue of San Francisco Attorney Magazine, Carlson explained that the "the use of a second jury avoids unduly skewed feedback caused by a particularly aberrant or strong juror" and allows an attorney "to experiment with different techniques or different themes."
Carlson recommends mock juries to prepare for trial in cases in which the stakes are high, there are only a few key issues or there is potentially a very sympathetic plaintiff. He cautions against using mock juries in smaller cases in which the simplicity of the issues or the relatively low financial stakes may not justify the expense. Nor would he use the process in cases in which the issues "are so complex that you can't chop it into pieces [so] there is no real way to put questions out for a mock jury to decide."
The value of jury research in preparing for a trial lies not in the outcome of the mock trials but rather in the information the mock jurors provide. "What you get out of it is the feedback." Carlson said. "Afterwards you watch the video tape, and you learn the information, not the result."
"You have to orchestrate it to make sure you're testing the right things," Wang said. "In every case, we know what the key issues are going to be and we make sure we present it in a way that's fair. If you slant it toward you side, it's not very helpful."
Accordingly, in order to prepare for the retrial Carlson and Wang flew to Los Angeles and conducted two separate trials before mock jurors "who met the general Los Angeles county profile".
In the simulation, counsel focused on three major issues; whether or not they could discredit the plaintiff by showing that he had lied in his insurance application; whether or not the juries would respond as well to the plaintiff's conspiracy theory in light of new evidence that they had uncovered; and what effect the plaintiff's consultation with an attorney early on in the dispute had on the jurors.
"We put forth the defense that the plaintiff had lied and misrepresented facts on his application," Carlson said, "We had pretty good evidence that what went to the insurance company was incorrect."
"The feedback wasn't that positive. It wasn't successful in either of the mock trials in defeating the plaintiff's claims, but we did get some valuable feedback on the way that it was presented, and we used that to shape the way we presented it at trial," Carlson said.
"The learning point was not to drop that as a theory but rather that we don't overplay that hand," Wang explained. "As it turned out, that theory sort of gained momentum as the trial progressed, and at the end of the trial we were able to play that card pretty aggressively. The lesson was that you couldn't come out of the box too aggressively. You have to make sure the jury has all the information first."
Ultimately, Carlson said, "We won on the application issue because we were able to destroy his credibility on that particular issue." Credibility had been the plaintiff's strong suit in the first trial, but in the retrial, "we were essentially able to switch that 180 degreed," he said.
Similarly, in the first trial, plaintiffs counsel argued in his closing the there had been a conspiracy by the insurance agents to change Stephan' s policy after the loss occurred. When Graeven interviewed the jurors from the first trial, he learned that they were in fact persuaded that there had been conspiratorial misconduct.
Carlson and Wang "uncovered enough evidence to debunk the conspiracy theory" and then tested it on the mock juries. According to Graeven, the mock jurors did not believe the plaintiff's conspiracy theory and viewed it as a sign that the plaintiff had a weak case and "was just fishing."
Armed with the data that neither mock jury found the conspiracy theory persuasive, Carlson entered into the retrial "confident with our new evidence, we were going to be successful," he recalled. In the end, the jury in the retrial also found that there had been no conspiracy.
In addition to testing the effects of new evidence, Carlson also introduced a new idea to the mock juries. One of plaintiff's arguments in the first trial had been that the insurance company failed to adequately communicate with him. Carlson theorized that the plaintiff's retention of an attorney early in the dispute showed that the plaintiff had less honorable motives than facilitating a cooperative relationship with the insurers. However, when he tested this theory, he found that the mock jurors "thought that it was okay and probably good that he got an attorney early on." Carlson said.
As a result, in the retrial Carlson did not suggest that there was anything untoward about the plaintiff's retention of an attorney. Instead, he emphasized that "handling an insurance claim is a two-way street," and because the plaintiff had legal representation from very early on, he was on a level playing field with the insurer and was therefore as much to blame as the defendants for any deficits in communication.
After shaping his themes and theories with the feedback he obtained from the mock juries, Carlson applied what he learned to his jury selection for the retrial. Counsel were permitted to engage in very limited voir dire, "so it was very targeted," Carlson said.
In this particular jury pool, several jurors talked about bad experiences with insurance companies. Based on his jury research, Carlson left them on the panel because "I felt that they had other characteristics that made them better jurors." This choice lent credibility to the defense position; in the interviews that Graeven conducted after the retrial, jurors reported that Carlson's willingness to keep them on the jury despite their past experiences indicated his faith in their trustworthiness, and they attempted to honor that trust in their decision-making.
Carlson solicits post-trial juror interviews whenever possible. The information obtained provides future counsel with a guide of what went right and wrong in the event of a retrial. A more practical benefit, however, is that juror interviews provide feedback for the attorney to measure the efficacy of themes, tactics, style and demeanor.
"Sometimes you don't know whether you won despite yourself or whether what you did helped what happened," Carlson explained. "Juror feedback is a way to know [if what you are doing] has been favorably received."
Perhaps most importantly, however, post-trial juror interviewing benefits the client by providing indispensable information about the risks involved in their cases. Such information is particularly important for those clients who are "in the business of litigation," Carlson said, listing insurance companies, lawyers and products manufactures as examples. "They get more information about how to evaluate other similar cases for settlement.