Differential Treatment of Corporate Defendants by Juries: An Examination of the “Deep-Pockets” Hypothesis

Abstract

Evidence that juries treat corporate defendants less favorably than individual defendants is often cited in support of the widely held view that juries are biased against wealthy “deep-pocket” defendants. Such evidence confounds defendant wealth and defendant identity. In two juror simulation experiments involving citizens on jury duty, these factors were separated by manipulating whether the defendant was described as a poor individual, a wealthy individual, or a corporation; the defendant's assets were described identically in the latter two conditions. In Experiment 1, liability was significantly more likely, and awards were significantly greater, for corporate defendants than for wealthy individual defendants, but verdicts against poor versus wealthy individuals did not differ. In Experiment 2, awards were larger against wealthy individuals who engaged in commercial rather than personal activities, and awards in the personal activity condition were larger against corporations than wealthy individuals. There was little evidence for a defendant wealth effect on juror judgments. While juries do appear to treat corporations differently, the explanation may have more to do with citizens' views about the special risks and responsibilities of commercial activity.

The effects of limiting punitive damage awards.

“…In theory, it should not matter whether the defendant is a small locally owned automobile repair shop or the Ford Motor Corporation. Jurors should 1 A number of studies have shown that corporate defendants pay greater compensation than individual defendants in both actual (Chin & Peterson, 1985)and simulated trials (Hans & Ermann, 1989;Wasserman & Robinson, 1980) although what might appear on the surface as a deep-pocket effect may actually be a defendant-identity effect (MacCoun, 1996). Wealthy defendants were not necessarily at a disadvantage.…”

Factors Influencing Compensation Demanded for Environmental Impacts Generated by Different Economic Activities

“…This theory postulates that people are inclined to demand greater compensation from those whom they believe are wealthier and more able to afford such compensations [74]. Second, the "defendant identity effect", where damage compensations are biased according to the identity of the sued party [75].…”

The effects of defendant account on damage award decisions

“…Damage awards differ when the defendant is a corporation rather than an individual, even when all other facts of the case are held constant (Hans & Ermann, 1989;MacCoun, 1996). Several theories have emerged to explain why jurors hold corporations to a different standard than they hold individuals.…”

“…When findings indicated that corporate defendants were required to pay larger awards than individuals, experimenters cited such results as support for the deep pocket hypothesis. MacCoun (1996) noted that such experiments confound wealth with defendant's status as a corporation or individual. To eliminate this confound, the author designed an experiment with three defendant conditions: a wealthy corporation, a wealthy individual, and a poor individual.…”

“…Indeed, the authors did find that the corporate conduct, although identical to the individual conduct, was viewed as more reckless and the resulting injuries as more foreseeable. MacCoun (1996) tested the "deep pockets" theory versus the "higher standard" theory more directly. Past experiments testing the deep pockets hypothesis contained a confound.…”