|
THE RULE OF JOINT AND SEVERAL LIABILITY
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 |