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Jury nullification takes place when jurors acquit a defendant who is factually guilty because they disagree with the law as written. For example, during Prohibition, juries who disagreed with alcohol control laws often acquitted defendants who had been caught red handed smuggling alcohol.
Jury nullification also occurs when a jury convicts a defendant because it condemns the defendant or his actions, even though the evidence at trial showed that he technically didn't break any law. For example, all-white juries in the post-civil war South routinely convicted black defendants accused of sex crimes against white women despite minimal evidence of guilt.
In the modern era, jury nullification is most common in drug cases, where some jurors refuse to convict on drug possession charges either because they believe in legalization or feel that the drug laws discriminate against certain groups.
A jury's verdict only decides the particular case before the court in that trial—it doesn't change the law. But a consistent pattern of acquittals for prosecutions of a certain offense can have the practical effect of invalidating a statute. In fact, the pattern of jury nullification in alcohol prosecutions contributed to the adoption of the 21 st Amendment, which repealed Prohibition.
Jury nullification has happened since the beginning of the trial system and persists because of a number of idiosyncrasies in the legal system that are designed to protect the integrity of the jury process. The law limits the courts' ability to inquire into jurors' motivations during or after a verdict. Jurors cannot be punished for their verdict, even if they reached it improperly. In addition, someone acquitted because of jury nullification cannot be tried again for the same crime because of the prohibition against double jeopardy. On the other hand, a conviction reached via nullification can be overturned on appeal or voided by a judge in some jurisdictions.