Legal Intelligencer: Taking a Plaintiff’s Case to the Next Level, Part II: It Does Not Always Take Two—Why Naming Individuals as Defendants Is Not Always the Best Strategy

A month ago, we published a column about a topic we are passionate about, particularly in our qui tam practice: holding individuals liable for their misconduct alongside corporate defendants. But naming individuals alongside corporate entities is not always the optimal strategy for achieving the result your plaintiff-client deserves. Knowing when to name an individual as a defendant—and when not to—is essential, especially in matters destined for a jury rather than a bench trial. While suing individual owners, officers, or directors alongside their corporate entities can work to a plaintiff’s advantage, this strategy carries a distinct risk: juries may personalize the corporate defendants, leading to smaller verdicts.

As we discussed in our recent column, if a plaintiff names an individual defendant under Pennsylvania’s participation theory, a necessary prerequisite is that the individual actually participated in the wrongful conduct. See Wicks v. Milzoco Builders, 470 A.2d 86 (Pa. 1983). But beyond that threshold requirement lie critical strategic considerations about case presentation at trial—particularly jury trials—that determine whether naming an individual is wise.

The Juror Psychology of Corporate versus Individual Defendants

It is no secret that jurors, particularly those in Philadelphia, often view corporations with skepticism and are willing to return substantial verdicts against them, especially when those corporations have deep pockets. In October 2019, a Philadelphia jury awarded $8 billion in punitive damages against a Johnson & Johnson subsidiary for illegally marketing the antipsychotic drug Risperdal, exposing young boys to the risk of developing gynecomastia. No comparable award against an individual defendant comes close. (The Risperdal award was later reduced by a judge to $6.8 million, but the initial verdict underscored juror sentiment toward large corporations.)

Empirical data support this intuition. In 1989, Valerie P. Hans and David M. Ermann conducted a landmark study presenting mock jurors with identical factual scenarios involving toxic exposure at a workplace. The only variable was whether the defendant was an individual or a corporation. The sample jury awarded $151,584 against the individual and $247,610 against the corporate defendant—a differential of more than 60%.

Similarly, in 2013, Chris Denove conducted a study for Plaintiff Magazine using three mock trials based on the same trip-and-fall fact pattern. The sole variable was the defendant’s identity: an individual, a local store, or a national retail chain. Perhaps unsurprisingly, the jurors awarded $100,000 against the national chain, $70,000 against the local store, and only $22,000 against the individual.

These studies confirm what experienced trial lawyers suspect: jurors calibrate damages not only to harm suffered but also to their perception of who should bear the loss and who can afford to pay.

Calibrating the Decision: Key Factors to Consider

Before adding an individual defendant, practitioners should assess three intersecting factors: the level and nature of the individual’s involvement, the egregiousness of the conduct, and whether the individual is likely to be seen as likable or sympathetic. These factors exist on a spectrum.

The faces behind Purdue Pharma’s manufactured opioid crisis—which injured hundreds of thousands for financial gain—bear little resemblance to the owner of a mom-and-pop corner shop where a customer slipped on a wet floor. The former involves masterminds who engaged in a pattern of intentional, systematic misconduct over many years; the latter involves an unintentional, isolated incident arising from potentially negligent conduct. These contrasting scenarios highlight two crucial distinctions: systematic pattern versus isolated incident, and intentional misconduct versus negligence.

A systematic pattern need not span years; it can simply involve an individual engaging in a repeated pattern of misconduct. Egregiousness matters, and egregious misconduct often involves multiple acts and repetition over time. Regarding the distinction between intentional misconduct and negligence, juries—as collections of human beings—are naturally more forgiving of individuals who made a single mistake, even if that negligence caused significant harm, than of individuals who engaged in repeated intentional wrongdoing. That said, the analysis is not straightforward even with negligence claims. Significant verdicts against individuals for medical malpractice, for example, are common, but there, plaintiffs often have no choice but to name the individual responsible if they are to obtain compensation.

Because jurors naturally resist ruining or punishing an individual for a simple mistake, naming an individual defendant in a scenario where negligence produced an unfortunate, isolated incident can easily backfire, particularly if the individual is likable and sympathetic. Adding an individual defendant allows the corporate defendant to be humanized (something defense counsel will attempt anyway) and may cause juries to hesitate before returning a larger verdict that will be joint and several against both individual and corporate defendants. In these scenarios, if the jury is likely to want to make the injured plaintiff “whole” and the corporate defendant has sufficient funds, foregoing the individual defendant may be the wiser course.

When Individual Liability Serves the Case

Conversely, in situations resembling Purdue’s OxyContin distribution, the calculus shifts. While the Sackler family was never held civilly or criminally liable by a jury, public sentiment strongly favored holding them responsible. The Purdue scenario exhibits all the hallmarks of a case where individual liability is appropriate: the individuals directed the misconduct, the misconduct was egregious, and the individuals involved are unsympathetic, perceived as having acted for financial gain. In such cases, naming individuals can be powerful. Jurors are weary of corporations—which are run by and can act only through humans—hiding behind the corporate veil when their misconduct is exposed, and paying damages that amount to little more than a slap on the wrist. We explored this concept in our recent column, discussing the 2015 Yates Memorandum and what inspired it. Without humans, corporations cannot act, and where repeated corporate misconduct occurs, people want to see individuals held accountable.

The Role of Corporate Size and Type

Another important consideration is the size and financial wherewithal of corporate defendants. Denove’s 2013 study demonstrated that juries are more likely to return larger verdicts against national companies than smaller regional ones. This reflects a perception that large companies have deep pockets and the ability to pay. Individuals often lack the same capacity, so juries may be less inclined to issue large joint-and-several verdicts unless the individual is unlikable or engaged in egregious misconduct. Conversely, if your case involves a smaller company that may not be able to satisfy a full verdict, adding an individual may have strategic benefit—or it may not.

The type of company also matters. While juries may inherently distrust large pharmaceutical companies like Johnson & Johnson, other entities—nonprofits, for example, or retailers like Trader Joe’s—enjoy greater public goodwill. In those situations, it may be preferable to name the individual defendant actually responsible for the plaintiff’s injuries, rather than rely on the corporate defendant’s favorable reputation.

Practitioners should keep in mind whether adding an individual is an option that is only available when the facts support adding the individual as a defendant. In many situations, this option may not exist.

Conclusion

Determining whether to add an individual as a defendant is a complex strategic decision requiring analysis of multiple factors. When preparing a case for initial filing, it may be tempting to name every involved individual as a way to maximize recovery. But before doing so, take a step back and analyze whether that approach will actually produce the result you want. Just because you can name an individual as a defendant under the facts does not mean you should. Sometimes the best way to hold a corporation accountable is to let the corporation stand alone—and let the jury decide what justice requires.

Edward T. Kang is the managing member of Kang Haggerty. He devotes the majority of his practice to business litigation and other litigation involving business entities. Contact him at ekang@kanghaggerty.com.

Kandis L. Kovalsky, a member with the firm, focuses her practice on a broad range of high stakes business-related civil litigation in Pennsylvania, New Jersey, and New York state and federal courts and arbitral tribunals, and representing relators in high stakes qui tam actions filed under the federal and state False Claims Acts. Contact her at kkovalsky@kanghaggerty.com.