Even when the law is squarely in your favor, you can never be certain of the result when you go to court. Judges can be as unpredictable as juries sometimes. Their broad exercise of discretion sometimes approaches judicial activism, coming dangerously close to changing the law as opposed to merely interpreting it.
Judicial activism steps on the separation of powers between the legislative, the judicial and the executive branches of the U.S. government and is illegal. However, in practice, judicial discretion is akin to a five-lane highway. It is extremely broad and, unless a judge swerves off into the shoulder, appellate courts are loath to use abuse of discretion as a basis for striking down a lower court decision.
You never quite know what lane a particular judge is in. Hugging the far right? Or the far left? Or safely motoring in the middle. As a result, some forums, such as Madison County in Illinois, are more hostile to business interests than others. Lower court decision can be appealed, but again, favorable results are never guaranteed. Sometimes appeals can backfire, leaving the appellant worse off than before.
When CGB Occupational Therapy, for example claimed a nursing home management company had unlawfully interfered with its nursing home contracts by persuading two of the nursing homes to terminate their contract with CGB and then hired away five of its therapists, the jury awarded CGB $685,000 in compensatory damages and $1.3 million in punitive damages for a grand total of $1.985 million.
The court of appeals overturned part of the verdict, reducing the compensatory damages to $109,000 and ordering a new trial on punitive damages. Unfortunately, the new jury came back with a punitive damage award of $30 million.
The excessive damages were later slashed on appeal by $28 million, but do the math: the compensatory and punitive damage totals yo-yoed from $1.985 million after the first trial to $30.109 million after the last appeal. The final tally of $2.109 million is more than the original $1.985 million awarded by the trial court, but the $24,000 price difference grossly understates the direct and indirect legal costs incurred to reach that final number – the legal fees that were incurred as well as the countless hours of management time.
The CGB case is a cautionary tale. It reminds us about the importance of assessing legal risk, the high cost of litigation, most important of all, the uncertainty of the outcome. It is precisely because the results can be unpredictable, even under the best of circumstances that the best business strategy is to avoid court whenever possible.