L.A. Jury’s Mistake A Mere $1.8 Billion

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The latest reason to perhaps tinker with the jury system a bit comes to you (again) from sunny Los Angeles, where a jury awarded $1.8 billion (and change) to class members who had sued a Manhattan Beach man for fraud.

Ben Waldrep had decided to move out of his home in 2000, and planned to offer the house as the prize in an essay contest rather than sell it outright. Entrants would pay $195 to participate, and Waldrep received 1,812 entries. In 2001, he announced the winner: David McNair, of British Columbia.

But then McNair didn’t want the house. At least, that’s what Waldrep said. He also claimed that four people were tied for second, and that the contest rules (his contest rules) didn’t specify what happened if the winner forfeited and then there was a tie for second. So Waldrep kept the house and sold it himself, for $1.2 million. He also kept the entry fees, which totaled about $360,000.

Unsurprisingly, one of the losers felt there was something funny about this. (Apart from the fishy result, he also thought the winning entry sucked.) Eventually, he brought a class action on behalf of himself and the other entrants, claiming that Waldrep had rigged the whole thing in order to defraud them out of the entry money. Last week, a Los Angeles jury agreed. (McNair did not show up to explain, and Waldrep’s lawyer noted that as a Canadian, McNair was outside the subpoena power of the California court).

The real fun started, though, when the jury came back for the punitive damages phase on Monday. Apparently, they meant to award $1 million dollars in order to punish Waldrep in roughly the amount that he got from the sale. But somehow, they awarded $1 million to each of the 1,812 class members, for a grand total of $1.812 billion dollars. Jurors seem to have discovered the mistake whilst chatting with attorneys after the trial, and I would have enjoyed seeing the various attorney expressions during that discussion. They tried to notify the judge of the error but were informed that they had been officially dismissed and could not amend their verdict form.

There is some suspicion that a post-trial motion may follow, whereupon said judge may reduce said punitive award slightly. Waldrep’s attorney says it doesn’t matter, because the money is all “long gone” anyway.

Los Angeles Times