December 31, 2001

 

 

 

The Tort Reform Record is published each June and December to record the accomplishments of the latest legislative year.  It includes a two-page, state-by-state summary of the ATRA-supported reforms enacted by the states since 1986.

 

Please note: The Record lists tort reforms enacted since 1986; it does not list legislative reforms enacted prior to 1986, the year of ATRA’s founding.

 

For each issue included in the Record, ATRA provides issue papers and model legislation.

 

 

Contents

                                                                       

                                                                        Number                                                Page

                                                                                                of States

The Record At-A-Glance --------------------------------------------------------------------------               2 Joint & Several Liability Reform -----------------------         35   ----------------------------------        4 Reform The Collateral Source Rule -------------------         22   ---------------------------------       12 Punitive Damage Reform ------------------------------            32   --------------------------------   16 Noneconomic Damage Reform ------------------------         13   -------------------------------         28 Prejudgement Interest -----------------------------------            15   --------------------------------   33 Product Liability Reform --------------------------------          15   ---------------------------------       36 Class Action Reform --------------------------------------            3    ---------------------------------       42 Attorney Retention Sunshine ---------------------------          3    ----------------------------------     43 Fairness in Bonding----------------------------------------           9    --------------------------------   44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reprint permission is granted with due credit to ATRA

 

The Rule of Joint and Several Liability

 

When two or more defendants are responsible for a plaintiff’s injury, the rule of joint and several liability makes each of them liable for the entire amount of damages regardless of the allocation of fault among defendants. This often produces unfair outcomes because a defendant who is only minimally responsible for a plaintiff’s harm may have to pay the entire award since the defendant who is principally responsible is insolvent, uninsured or outside the jurisdiction of the court.  Moreover, the rule often has the unintended effect of turning a lawsuit into a search for a peripherally involved party whose pockets are deep enough to pay a sizeable award.  The rule of joint and several liability is superficially appealing because it increases the probability that a worthy claimant will be fully compensated.  Its injustice, however, is apparent on even a moment’s reflection.  The peripheral defendant very fairly asks, “But why me?”

 

ATRA recommends abolition of the rule of joint and several liability and adoption of a rule of pure several (“proportionate”) liability.

 

Thirty‑five states have modified the rule of joint and several liability.

 

Alaska

 

1988—Proposition Two

Joint and several liability was abolished through a ballot initiative on November 8, 1988.

 

Arizona

 

1987—SB 1036

Abolished joint and several liability except in cases of intentional torts and hazardous waste.

 

The Arizona Court of Appeals upheld the constitutionality of this statute in Church v. Rawson Drug & Sundry Co., No. 1 CA‑CV 90‑0357, October 1, 1992.

 

California

 

1986—Proposition 51

Abolished joint and several liability for noneconomic damages.

 

Colorado

 

1986—SB 70

Abolished joint and several liability (an amendment approved in 1987 allowed joint liability when tortfeasors consciously acted in a concerted effort to commit a tortious act).

 

 

Connecticut

 

1986—HB 6134

Modified joint and several liability to prohibit joint liability except where liable party’s share of judgement is uncollectible. (1987 legislation by opposition limited this reform to noneconomic damages only.)

 

Florida

 

1999—HB 775

Provides for a multi‑tiered approach for applying limits on joint and several liability. 

 

1) 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 to $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.

 

2) 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.

 

1986—SB 465

Abolished joint and several liability for noneconomic damages in negligence actions.  Also abolished for economic damages for defendants less at fault than the 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, or actions involving damages no greater than $25,000.

 

The Florida Supreme Court upheld the statute as constitutional in Smith v. Department of Insurance, 507 So.2d 1080 (Fla. 1987).  The Florida Supreme Court further interpreted the Joint and Several Liability patron of the statute in Allied Signal v. Fox, case No. 80818, Florida Supreme Court, Aug. 26, 1993 and Fabre v. Marin, case No. 76869, Florida Supreme Court, Aug. 26, 1993.

 

Georgia

 

1987—HB 1

Eliminates joint and several liability when a plaintiff is assessed a portion of the fault.

 

Hawaii

 

1994—HB 1088

Abolished joint and several liability for all governmental entities.

 

 

1986—SB S1

Joint and several liability abolished for low fault defendants (25% of fault or less).  Applies for noneconomic damages only.  Does not apply to auto, product, or environmental cases.

 

Idaho

 

1990—HB 744

The term “acting in concert” defined as pursuing a common plan or design which results in the commission of an intentional or reckless tortious act as used in the 1987 joint and several liability modification.

 

1987—SB 1223

Joint and several liability abolished except in cases of intentional torts, hazardous waste, and medical and pharmaceutical products.

 

Illinois

 

1995—HB 20 

Abolished joint liability for economic and noneconomic damages so that a given defendant is only liable for damages in proportion to the assigned degree of fault.

 

Held unconstitutional by the Illinois Supreme Court in Best v. Taylor Machine Works, Inc., December 1997.

 

1986—SB 1200

Abolished joint and several for defendants 25% or less at fault; applies for noneconomic damages only, but does not apply to auto, product, or environmental cases.

 

Iowa

 

1997—HF 693

Amended the 1987 statute on the doctrine of joint liability to provide that defendants 50% or more at fault are jointly liable for economic damages only. 

 

1985

Abolished joint liability for defendants who are less than 50% responsible.

 

Kentucky

 

1996—HB 21

Abolished joint liability in all civil actions so that a given defendant is only liable for damages in proportion to the assigned degree of fault.

 

1988—HB 551

Codified common law rule that when a jury apportions fault, a defendant is only liable for that share or fault.

 

Louisiana

 

1996—HB 21

Abolishes joint liability in all civil actions.

 

Michigan

 

1995—HB 4508

Abolished joint liability making parties responsible for their own percentage of fault except for employers’ vicarious liability.  In medical malpractice cases where the plaintiff is determined not to have a percentage of fault, defendants are jointly liable.  Provides venue control in product liability cases.

 

1986—HB 5154

Limited joint and several liability (except in products liability actions and actions involving a blame‑free plaintiff), held 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 was abolished for municipalities.

 

Minnesota

 

1988—HF 1493

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

 

Mississippi

 

1989—HB 1171

Modified joint and several liability such that the doctrine of joint and several liability only applies to the extent necessary for the injured party to receive 50% of his or her recoverable damages.

 

Missouri

 

1987—HB 700

Limited several liability only when plaintiff is assessed a portion of the fault.

 

Montana

 

1997—HB 571

Retained the current system of modified joint and several liability where joint liability does not apply to defendants less than 50% at fault.  Revises the comparative negligence statute to permit the allocation of a percentage of liability to defendants who settle or are released from liability by the plaintiff.  Allows those defendants to intervene in the action to defend against claims affirmatively asserted.

 

 

 

1997—HB 572

Abolished joint liability, and retains the modified comparative fault system.

 

Takes effect only if HB 571 is held unconstitutional.

 

1995—SB 212

Restored joint and several liability reforms of 1987 which had been weakened by the Montana Supreme Court. Provides procedural safeguards to allow joint liability to apply only when a defendant is more than 50% at fault.

 

1987—SB 51

Abolished joint liability for defendants who are 50% or less responsible.

 

Nebraska

 

1991—LB 88

Modified the joint and several liability doctrine by replacing 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; and eliminates joint and several liability for noneconomic damages for all defendants in all types of cases.

 

Nevada

 

1987—SB 511

Abolished joint and several liability for both economic and noneconomic damages except in product cases; cases involving toxic wastes; cases involving intentional torts; and cases where defendants acted in concert.

 

New Hampshire

 

1989—SB 110

Abolished joint and several liability for defendants who are less than 50% responsible.

 

New Jersey

 

1995—SB 1494

Provides 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 noneconomic damages only.

 

1987—SB 2703, SB 2708

Modified joint and several liability.  If the defendant is found to be less than 20% liable, the defendant is held responsible for his degree of fault; between 20% and 60% the defendant can be held responsible for full economic damages and only his share of noneconomic damages; and over 60% the defendant can be held liable for payment of all damages.

 

 

 

New Mexico

 

1987—SB 164

Codified common law application of several liability except in cases involving toxic 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); and in situations “having a sound basis in public policy.”

 

New York

 

1986—SB 9391

Limited joint and several liability; a defendant who is 50% or less at fault is only severally liable for noneconomic 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, and construction cases and other specific actions.

 

North Dakota

 

1987—HB 1571

Abolished joint and several liability except for intentional torts, cases in which defendants acted in concert, and products liability cases.

 

Ohio

 

1996—HB 350

Abolished joint and several liability except for defendants who are more than 50% at fault who would then be jointly liable for economic damages only.

 

Held unconstitutional in Ohio Academy of Trial Lawyers v. Sheward, August 1999.

 

1987—HB 1

Abolished joint and several liability for noneconomic damages when the plaintiff is also assessed a portion of the fault.

 

Oregon

 

1995—SB 601

Abolished joint liability except for cases in which one of the defendants within one year of the final judgement is determined to be insolvent.  In those cases, a defendant less than 20% at fault would be liable for no more than two times their original exposure and defendant more than 20% liable would be liable for the full amount of damages.

 

1987—SB 323

Abolished joint and several liability with regard to noneconomic damages and a 15% threshold for economic damages.

 

South Dakota

 

1987—SB 263

Modified joint and several liability so that “any party who is allocated less than 50% of the total fault allocated to all parties may not be jointly liable for more than twice the percentage of fault allocated to that party.”

 

Texas

 

1995—SB 28

Eliminated joint liability for defendants less than 51% at fault.

 

1987—SB 5

Abolished joint liability for those who are 20% or less responsible except when plaintiff is fault free and defendant’s share exceeds 10% and when damages result from environmental pollution or hazardous waste.

 

Utah

 

1999—HB 74

Clarified the 1986 statute that totally abolished joint liability to address the Utah Supreme Court decision in Field v. The Boyer Company.

 

1986—SB 64

Totally abolished joint and several liability.

 

Vermont

 

1985

Totally abolished joint and several liability.

 

Washington

 

1986—SB 4630

Abolished joint and several liability 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, and manufacturing of generic products is involved.

 

Wisconsin

 

1995—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.

 

 

 

 

 

Wyoming

 

1994—SF 35

Amended the joint and several reform passed in 1986.  Defines when an individual is at fault as well as specifies the amount of damages recoverable in cases where more than one party is at fault. This new law clarifies the relationship between fault and negligence.

 

1986—SB 17

Totally abolished joint and several liability.

 



 

The Collateral Source Rule

 

The collateral source rule of the common law says that evidence may not be admitted at trial to show that plaintiffs’ losses have been compensated from other sources such as plaintiffs’ insurance, or worker compensation  As a result, for example, 35% of total payments to medical‑malpractice claimants are for expenses already paid from other sources. 

 

Twenty‑two states have modified or abolished the collateral source rule.

 

Alabama

 

1987

Collateral sources allowed as evidence—reduction not mandated.

 

Alaska

 

1986—SB 337

Collateral sources admissible as evidence and offset with broad exclusions.

 

Arizona

 

1993—SB 1055

Extended the existing collateral source legislation from medical malpractice issues to other forms of liability litigation (under this legislative approach, a jury would not be bound to deduct the amounts paid under a collateral source provision, but would be free to consider it in determining fair compensation for the injured party).

 

Colorado

 

1986—SB 67

Collateral sources admissible as evidence and offset with broad exclusions.

 

Connecticut

 

1986—HB 6134

Collateral sources admissible as evidence and offset with broad exclusions.

 

Florida

 

1986—SB 465

Mandatory offset with broad exclusions.

 

The Florida Supreme Court upheld the collateral source provision as constitutional in Smith v. Department of Insurance, 507 So.2d 1080 (Fla. 1987).

 

 

 

 

Georgia

 

1987—HB 1

Allows evidence of funds received from collateral sources.

 

The Georgia Supreme Court held the collateral source provision unconstitutional in Georgia Power v. Falagan, No. S90A1245, April 1991.

 

Hawaii

 

1986—SB S1

Provided for payment of valid liens (arising out of claim for payment made from collateral sources for cost and expenses arising out of injury) from special damages recovered.  

 

Prevents double recoveries by allowing subrogation liens by insurance companies or other sources; third parties are allowed to file a lien and collect the benefits paid to the plaintiff from the plaintiff’s award; and the amount of damages paid by the defendant to the plaintiff is not affected.

 

Idaho

 

1990—HB 745

Allowed the court to receive evidence of collateral source payments and reduce jury awards to the extent that they include double recoveries from sources other than federal benefits, life insurance, or contractual subrogation rights.

 

Illinois

 

1986—SB 1200

Only collateral sources for benefits over $25,000 can be offset.  Offset cannot reduce judgement by more than 50%.

 

Indiana

 

1986—SB 394

Admissible as evidence with certain exclusions; court may reduce awards at its discretion; and jury may be instructed to disregard tax consequences of its verdict.

 

Iowa

 

1987—SF 482

Collateral sources allowed as evidence—reduction not mandated.

 

 

 

 

 

 

Kansas

 

1988—HB 2693

In cases in which damages exceed $150,000, the trier of fact can hear evidence of collateral sources.  When the court assigns comparative fault, it must make a setoff of the collateral sources determined.

 

The $150,000 threshold for the admissability of collateral sources into evidence was held unconstitutional by the Kansas Supreme Court in Thompson v. KFB Insurance Company, Case No. 68452 (1993).

 

Kentucky

 

1988—HB 551

The jury must be advised of collateral source payments and subrogation of rights of collateral payers.

 

Maine

 

1990

Mandatory offset of collateral sources that have not exercised subrogation rights within 10 days after a verdict for the plaintiff.

 

Michigan

 

1986—HB 5154

Admissible after the verdict and before judgement is entered.  Courts can offset awards but cannot reduce the plaintiffs’ damages by more than amount awarded for economic damages.

 

Minnesota

 

1986—SB 2078

Admissible as evidence only for the court’s review; offset is provided for but collateral sources having rights of subrogation are excluded.

 

Missouri

 

1987—HB 700

Collateral sources allowed as evidence but if used as evidence, defendant waives the right to a credit against the judgement for that amount.

 

Montana

 

1987—HB 567

Collateral source rule abolished.  Reimbursement from collateral sources is admissible in evidence, unless the source of reimbursement has a subrogation right under state or federal law, court is required to offset damages over $50,000.

 

New Jersey

 

1987—SB 2703, SB 2708

Mandatory offset of collateral source benefits other than workers’ compensation and life insurance benefits.

 

New York

 

1986—SB 9351

Mandatory offset of collateral source benefits by the court.

 

North Dakota

 

1987—HB 1571

Mandatory offset of collateral source benefits other than life insurance or insurance purchased by recovering party.

 

Ohio

 

1996—HB 350

Allowed collateral source payments, including workers’ compensation benefits, to be submitted as evidence to the trier of fact, but only if there is no right of subrogation attached or the plaintiff has not paid a premium for the insurance.

 

Held unconstitutional by the Ohio Supreme Court in Ohio Academy of Trial Lawyers v. Sheward, August 1999

 

1987—HB 1

Provides for a mandatory postjudgement deduction of collateral source benefits (which are not subrogated) which have been paid or are likely to be paid within 60 months of judgement.

 

Oregon

 

1987—SB 323

Allows  a judge to reduce awards for collateral sources excluding: life insurance and other death benefits; benefits for which plaintiff has paid premiums; retirement, disability, and pension plan benefits; and federal social security benefits.

 



 

 

 

Punitive Damages

 

Punitive damages are awarded not to compensate a plaintiff but to punish a defendant for intentional or malicious misconduct and to deter similar future misconduct.  While punitive damage awards are  infrequent, their frequency and size have grown greatly in recent years.  More importantly, they are routinely asked for today in civil lawsuits.  The difficulty of predicting whether punitive damages will be awarded by a jury in any particular case, and the marked trend toward astronomically large amounts when they are awarded, have seriously distorted settlement and litigation processes and have led to wildly inconsistent outcomes in similar cases. ATRA recommends four reforms:

 

■             Establishing a liability “trigger” that reflects the intentional tort origins and quasi‑criminal nature of punitive damages awards ‑ “actual malice.”

■             Requiring “clear and convincing evidence” to establish punitive damages liability.

■             Requiring proportionality in punitive damages so that the punishment fits the offense.

■             Federal legislation to address the special problem of multiple punitive damages awards; this would protect against unfair overkill, guard against possible due process violations, and help preserve the ability of future claimants to recover basic out‑of‑pocket expenses and damages for their pain and suffering.

 

Thirty‑two states have reformed punitive damage laws

 

Alabama

 

1999—SB 137

                In non‑physical injury cases:

 

1) General rule: limits punitive damages to the  greater of three times compensatory damages or   $500,000.

 

2) For small businesses: with a net worth of less  than $2 million, limits punitive damages to       $50,000 or 10% of net worth up to $200,000, whichever is greater.

 

3) In physical injury cases: limits punitive damage  awards to the greater of three times compensatory  damages or $1.5 million.

 

4) Prohibits joint liability in all punitive damage  actions by requiring a punitive damage award be specific to each defendant and in an amount  commensurate with each defendant’s conduct.  (Exceptions include: wrongful death, intentional  infliction of physical injury, and class actions.)

 

5) The limit will be adjusted on January 1, 2003 and increased at three‑year intervals in accordance with the Consumer Price Index.

 

1987

1) Requires proof of “wanton” conduct by “clear and convincing” evidence.

 

2) Limits punitive damages at $250,000. 

                The Alabama Supreme Court held the $250,000 limit on punitive damages unconstitutional in Craig Henderson v. Alabama Power Co., case No. 1901875, June 25, 1993.

 

3) Requires trial and appellate judges to review  all punitive damage awards reducing those that are excessive based on the facts of the case—Chapter 87‑185. 

 

                The Alabama Supreme Court held the judicial review of all awards unconstitutional in Armstrong v. Roger’s Outdoor Sports, Inc., May 10, 1991.

 

Alaska

 

1997—HB 58

                Limits amount of punitive damages to the greater of three times compensatory damages or $500,000. 

 

                Exceptions include:

 

1)When the defendant’s action is motivated by financial gain in which case punitive damages are limited to the greater of four times compensatory damages; four times the aggregate amount of financial gain; or $7,000,000. 

 

2) In an unlawful employment practices suit, punitive damages are limited to $200,000 if the employer has less than 100 employees in the state;  $300,000 if the employer has more than 100 but less than 200 employees in the state; $400,000 if the employer has more than 200 but less than 500 employees in the state; and $500,000 if the employer has more than 500 employees in the state.

 

3) Establishes a “clear and convincing” evidence standard to prove conduct was “outrageous” or evidenced “reckless indifference.”

 

4)  Provides for a bifurcated trial when punitive damages are awarded.

 

1986—SB 337

                Requires “clear and convincing” evidence for punitive damage recovery.

 

Arizona

 

1989—SB 1453

                Provides a government standards defense for FDA approved drugs and devices.

 

California

 

1987—SB 241

                Requires “clear and convincing” evidence of oppression, fraud, or malice; the trial is bifurcated allowing evidence of defendants’ financial conditions only after a finding of liability.

 

 

 

 

Colorado

 

1991—HB 1093

                Expanded 1990’s prohibition against seeking punitive damages in cases in which FDA‑approved drugs are administered by a physician, to include medically prescribed drugs or products used on an experimental basis (when such experimental use has not received specific FDA approval) and when the patient has given informed consent.

 

1990—HB 1069

1) Provides that punitive damages may not be alleged in a professional negligence suit until discovery is substantially completed.

 

2) Provides that discovery cannot be reopened without an amended pleading.

 

3) Provides that physicians cannot be liable for punitive damages because of the bad outcome of a prescription medication as long as it was administered in compliance with current FDA protocols.  The bill also prohibits punitive damages from being assessed against physicians because of the act of another unless he directed the act or ratified it.

 

1986—HB 1197

                Punitive damage award may not exceed compensatory award: court may reduce if deterrence achieved without award, but also may increase to three times compensatory if misbehavior continues during trial.  One third of the award goes to the state fund.

 

                The Colorado Supreme Court held the state fund portion of this statute unconstitutional in Kirk v. The Denver Publishing Company, 15 Brief Times Reporter, No. 88SA405, September 23, 1991.

 

Florida

 

1999—HB 775

1)  Limits punitive damages to three times compensatory damages or $500,000, whichever is greater.

 

2)  The limit is increased to four times compensatory damages or $2,000,000, whichever is greater, if the defendant’s wrongful conduct was motivated by unreasonable financial gain or the likelihood of injury was known.

 

3)   Prohibits multiple punitive damage awards based on the same act or course of conduct unless the court makes a specific finding that earlier punitive damage awards were insufficient.

 

4)  Establishes a “clear and convincing” evidence standard for intentional misconduct or gross    negligence.

 

5)  Outlines circumstances when an employer is liable for punitive damages arising from an employee’s conduct.

 

6)  Exceptions include: abuses to the elderly, child abuse cases, or cases where the defendant is intoxicated.

1986—SB 465

                Punitive damage awards may not exceed three times compensatory damages unless plaintiff can demonstrate by “clear and convincing” evidence that a higher award would not be excessive.  Sixty percent of the award goes to the state’s General Fund or Medical Assistance Trust Fund. (Amended in 1992 so that 35% of any punitive damage award goes to the state’s General Fund or Medical Assistance Trust Fund.)

 

                The Florida Supreme Court upheld the constitutionality of the punitive damages limit and “clear and convincing” evidence requirement in Smith v. Department of Insurance, 507 So. 2d 1080 Fla. 1987. The Florida Appellate Court upheld the constitutionality of the state fund provision in Harvey Gordon v. State of Florida, K‑Mart Corp. et al., No 90‑2497, August 27, 1991.

 

Georgia

 

1987—HB 1

1) Limits punitive damages at $250,000 except in product liability cases, however, in product liability cases only one award of punitive damages can be assessed against any given defendant. 

 

                The Georgia Supreme Court upheld the constitutionality of the $250,000 limit on punitive damages in Bagley, et al. V. Shortt, et al. and vice versa, Nos. S91X0662, S91X0663, September 5, 1991.

 

2) Requires that 75% of all punitive damage awards be paid to the State Treasury.

 

                The Federal District Court for Georgia held the state fund provision for punitive damages unconstitutional in McBride v. General Motors Corp., M.D. Ga., No. 89‑110‑COL, April 10, 1990.

 

Idaho

 

1987—SB 1223

                Requires preponderance of evidence of “oppressive, fraudulent, wanton, malicious or o