ATRA :: Joint and Several Liability Rule Reform

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Joint and Several Liability Rule Reform

Issue:

Whether joint and several liability provisions should be abolished and replaced with proportionate liability.

Problem:

The common law rule of joint and several liability, sometimes called the "deep pocket" rule, makes each and every defendant in a tort lawsuit liable for the entire amount of the plaintiff's damages regardless of the defendants' relative degrees of fault or responsibility.

Background:

The effect of joint and several liability is to convert lawsuits into searches for financially viable defendants. This causes defendants to settle out of court for fear of being found fully liable for substantial judgments.

On the other hand, proportionate liability is the concept that a party is only responsible for the damages caused by his own negligence.

A Wisconsin case illustrates the rule's unfairness. An uninsured driver of a car with faulty brakes struck and killed a six year old boy at a school crossing, despite a stop sign and a crossing guard. Plaintiff argued that the accident might have been avoided if the crossing guard, instead of signalling the car to stop, had attempted to get the child out of the car's path. The city, as the crossing guard's employer, was found to be simply one percent at fault. Yet because it was the only solvent party, the city had to pay 100%, the full amount of damages. (Zimmer v. City of Milwaukee)

Rationale:

The application of the doctrine of joint and several liability poses a particularly serious problem for professionals whose clients have become bankrupt or are otherwise "judgment proof." For example, many lawsuits that involve professionals are brought by shareholders or creditors of a bankrupt client. The professional is often a co-defendant with the bankrupt party and its directors and officers, who have relatively few assets. The professional, who may also be a victim of the plaintiff's actions, is typically found to have at most a minimal degree of fault. Nevertheless, the solvent professional often has to pay all, or a large part, of the damages awarded. This is the essence of the "deep pocket" rule.

Joint and several liability is not just a problem when other defendants are bankrupt. If one of the defendants settles with the plaintiff, and subsequent trial allocates damages to that defendant in excess of the settlement amount, the remaining defendants may be liable for the difference.

Recommended Action:

The solution is to enact state laws establishing that each defendant in a claim is "severally" liable. Each defendant should only be required to pay its proportionate share of the plaintiff's loss.

Many states have modified joint and several liability. For example, in NewYork, a party who is less than 50% at fault will not be subject to joint and several liability. California retained joint and several liability for economic damage only, requiring that damages for pain and suffering be paid according to fault.

ABOLITION OR MODIFICATION OF THE RULE OF JOINT AND SEVERAL LIABILITY

As of December 31, 2000

Please note that the courts of the following states have never applied the doctrine of joint and several liability: Alabama, Indiana, Kansas and Oklahoma

Alaska -- Proposition 2

Joint and several liability was abolished through a ballot initiative, Proposition 2, on the November 8, 1988 ballot. (1988)

Arizona -- SB 1036

Abolished joint and several liability except in cases of intentional torts and hazardous wastes (1987)

California -- Prop 51

Abolished joint and several liability for noneconomic damages (1986)

Colorado -- SB 70

Totally abolished joint and several liability (an amendment approved in 1987 allows joint liability when tortfeasors consciously acted in a concerted effort to commit a tortious act) (July 1, 1986)

Connecticut -- Public Act 86-338 - HB 6134

Modified to prohibit joint liability except where liable party's share of judgment is uncollectible (1987 legislation by opposition limited this reform to noneconomic damages only) (1986)

Florida -- SB 465

Abolished joint and several liability as to non-economic damages in negligence actions and economic damages for defendants less at fault than plaintiff. This rule does not apply for:

economic damages for pollution
intentional torts
actions governed by a specific statute providing for joint and several liability
actions involving damages no greater than $25,000 (1986)

Florida -- HB 775

Provides for a multi-tiered approach for applying limits on joint and several liability. Where a plaintiff is at fault:

Any defendant 10% or less at fault shall not be subject to joint liability; for any defendant more than 10% but less than 25% at fault, joint liability is limited at $200,000; for any defendant at least 25% but not more than 50% at fault, joint liability is limited to $500,000; and for any defendant more than 50% at fault, joint liability is limited to $1 million.

Where a plaintiff is without fault:

Any defendant less than 10% at fault shall not be subject to joint liability; for any defendant at least 10% but less than 25% at fault, joint liability is limited to $500,000; for any defendant at least 25% but not more than 50% at fault, joint liability is limited to $1 million; and for any defendant more than 50% at fault, joint liability is limited to $2 million. (1999)

Georgia -- HB 1

Limited to several only when plaintiff is assessed a portion of the fault (1987)

Hawaii -- HB 1088

Abolished joint and several liability for all government entities. Earlier drafts of the bill would have abolished joint and several for any tortfeasor whose individual degree of negligence was found to be no more than the degree of negligence of the person seeking recovery of damages. The 1986 statue abolished joint and several liability for low fault defendants (less than 25% at fault). However, the 1986 statute exempted auto, products and environmental cases. (1994)

Idaho -- SB 1223

Abolished joint and several liability except in cases of:

intentional torts
hazardous wastes
medical and pharmaceutical products (1987)

Iowa -- Section 668.4

Abolished joint liability for defendants who are less that 50% responsible. (1987) Applies joint liability for economic damages only for defendant's 50% or more at fault. (1997)

Kentucky -- HB 551

Codified common law rule that when jury apportions fault, defendant is only liable for that share of fault (1988)

Louisiana--HB 21 Modified the doctrine by:

Abolishing joint and several liability holding defendants liable only for their degree of fault. (1996)

Michigan -- HB 5154 - Public Act 1986-178

Limited joint and several (except in products liability actions and actions involving a blame-free plaintiff) holds defendants severally liable except when uncollectible shares of a judgment are reallocated between solvent co-defendants according to their degree of negligence, joint and several liability is abolished for municipalities. (1986)

Minnesota -- HF 1493

Limited joint and several liability for those who are 15% or less responsible -- they pay no more than four times their share. (1988)

Mississippi -- HB 1171

Modified joint and several liability -- by applying the doctrine of joint and several liability only to the extent necessary for the injured party to receive 50% of his recoverable damages. (1989)

Missouri -- HB 700

Limited to several only when plaintiff is assessed a portion of the fault (1987)

Montana -- SB 51

Abolished joint liability for defendants who are 50% or less responsible (1987)

Nebraska -- LB 88

Replaces Nebraska's current slight-gross negligence rule with a 50/50 rule in which the plaintiff wins if the plaintiff's responsibility is less than the responsibility of all the defendants. In addition, the bill eliminates joint and several liability for noneconomic damages for all defendants in all types of cases. Nebraska's common law defense of assumption of the risk is also codified in this enactment. (1991)

Nevada -- SB 511

Abolished joint and several liability except in:

product cases
cases involving toxic wastes
cases involving intentional torts
cases where defendants acted in concert (1987)

New Hampshire -- SB 110

Abolished joint and several liability for defendants who are less than 50% responsible (1989)

New Jersey -- SB 1494 Modified the doctrine by:

Providing a 60% threshold for joint and several liability for both economic and noneconomic damages, and contains a toxic tort exception. Previous law extended the 60% threshold for non-economic damages only. (1995)

New Mexico -- SB 164

Codified common law application of several except in:

cases involving intentional torts;
cases in which the relationship of defendants could make one defendant vicariously liable for the acts of others
cases involving the manufacture or sale of a defective product (In these cases the manufacturer and retailer can be held liable for their collective percentage of fault but not the fault of other defendants.)
situations "having sound basis in public policy" (1987)

New York -- S 9351

Limited joint and several liability; a defendant who is 50% or less at fault is only severally liable for non-economic damages. However, the limitation does not apply to:

actions in reckless disregard of rights of others
motor vehicle cases
actions involving the release of toxic substances into the environment
intentional torts
contract cases
products liability cases where the manufacturer could not be joined
construction cases
other specific actions (1986)

North Dakota -- HB 1571

Abolished except for:

intentional torts
cases in which defendants acted in concert
products liability cases (1987)

Ohio -- HB 1

Abolished for non-economic damages when the plaintiff is also assessed a portion of the fault (1987)

Oregon -- SB 601 Modified the doctrine by:

Abolishing joint liability and establishes a modified comparative fault system. However, if one of the defendants is determined to be insolvent within one year of the final judgment in the case, the relative fault of the parties is reapportioned so that the plaintiff and other defendants share in the financial burden of the insolvent defendant.

A defendant less than 20% at fault would be liable for no more than 2 times their original exposure, and if greater than 20% liable subject to joint liability for the full amount of damages. (1995)

South Dakota -- SB 263

Limited joint for those who are 50% or less responsible -- they pay no more than twice their share. (1987)

Texas -- SB 28 Modified the doctrine by:

Eliminating joint liability for defendants less than 51% at fault. (1995)

Utah -- SB 64

Totally abolished joint and several liability (1986)

Vermont -- Tit. 12 Section 1036 (Supp 1988)

Totally abolished joint and several liability (1985)

Washington -- SB 4630 - Chapter 305, 1986

Abolished except for cases in which:

defendants acted in concert
plaintiff is fault free
hazardous or solid waste disposal sites are involved
business torts are involved
manufacturing of generic products is involved (August 1, 1986)

Wisconsin -- SB 11

Abolished joint liability for defendants found to be less than 51% at fault. Additionally; a plaintiff's negligence will be measured separately against each defendant. (1995)

Wyoming -- SB 17