ATRA :: Tort Reform Record

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.

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.

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 outrageous” conduct.

Illinois

1995—HB 20

1) Limits punitive damages to three times economic damages.

2) Prohibits punitive damage awards unless conduct is “with an evil motive or with a reckless indifference to the rights of others.”

3) Bifurcated trials allow the claim for punitive damages to be considered separately at the request of the defendant.

4) Requires courts to reduce awards in excess of limit.

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

1986—SB 1200

Plaintiffs no longer able to plead punitive damages in original complaint; subsequent motion to add punitive claim must show at hearing reasonable chance that the plaintiff will win punitive award at trial; defendant must be shown to have acted “willfully and wantonly;” court has discretion to award among plaintiff, plaintiff’s attorney, and State Department of Rehabilitation Services.

Indiana

1995—HB 1741

1) Limits punitive damages to the greater of three times compensatory damages or $50,000.

2) Redirects 75% of punitive damage awards to state fund.

Iowa

1987—SF 482

Changed the standard for awarding punitive damages to “preponderance of clear, convincing, and satisfactory evidence that the conduct of the defendant from which the claim constituted willful and wanton disregard for the rights or safety of another”.

1986—SB 2265

Punitive damages may only be awarded where “willful and wanton disregard for the rights and safety of another” is proven; 75% or more of the award goes to State Civil Reparations Trust Fund. In 1987 the evidence standard was elevated to “clear, convincing, and satisfactory” evidence.

Kansas

1988—HB 2731

1) Limits punitive damage awards at lesser of defendant’s annual gross income or $5 million. The 1992 legislature amended this statute to allow a judge who felt annual gross income was not a sufficient deterrent, to look at 50% of the defendant’s net assets, awarding the lesser of that amount or $5 million.

2) 1987 legislation had required the court, not the jury, to determine the amount of the punitive damages award and required “clear and convincing” evidence.

3) Punitive damages are to be awarded only if the trier of fact finds defendant acted with willful or wanton conduct, fraud, or malice.

4) The determination of punitive damages will be made in a separate proceeding.

1987—HB 1

Requires “clear and convincing” evidence; judge sets amounts; punitives cannot be awarded unless plaintiff has proven “actual damages” were sustained because of defendant’s “malice, aggravated or egregious fraud, oppression or insult;” provided a government standard defense for FDA approved drugs.

Oklahoma

1995—SB 263

Codifies factors which the jury must consider in awarding punitive damages, then provides three separate “categories” for limiting punitive awards. When the jury finds by “clear and convincing” evidence that the defendant:

1) Acted in “reckless disregard for the rights of others,” the award is limited to $100,000 or actual damages awarded, whichever is greater.

2) Acted intentionally and with malice, the limit is either $500,000; two times actual damages awarded; or the increased financial benefit derived by the defendant or insurer as a direct result of the conduct causing injury.

3) If the court finds evidence beyond a reasonable doubt that the defendant acted intentionally and with malice in conduct life‑threatening to humans, the limit is lifted.

1986—SB 488

Limits punitive award at amount of compensatory damages unless plaintiff establishes his case by “clear and convincing” evidence, in which case there is no limit.

Oregon

1995—SB 482

1) Provides that 40% of the punitive award is paid to the prevailing party and 60% is paid to a state fund, and no more than 20% of the award may be paid to the attorney of the prevailing party.

2) Imposes a “clear and convincing” evidence standard to prove defendant “acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety and welfare of others.”

3) Provides court review of jury awarded punitive damages.

4) Prohibits punitive damages in the original complaint. A prima facie case for liability is required before the complaint can be amended to include a punitive damages claim.

1987—SB 323

1) Requires “clear and convincing” evidence.

2) Provides an FDA standards defense to punitive damages.

3) Applied statutes of repose on all product liability cases to bar an action after 12 years from first sale or 10 years from first sale to a user or consumer, whichever occurs first.

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

Indiana

1995—HB 1741

1) Abolishes joint liability in product liability actions.

2) Provides a rebuttable presumption that the product was not defective if

a) the manufacturer of the product was in conformity with recognized “state of the art” safety guidelines; or

b) the manufacturer of the product complied with government standards (i.e. approved by FDA, FAA etc...).

3) Restricts strict liability actions to the manufacturer of the product.

Iowa

1997—HF 693 Statute of Repose

Establishes a 15‑year statute of repose for product liability lawsuits with an exception for fraud, concealment, latent diseases caused by harmful materials, and specified products.

Louisiana

1988—SB 684

1) A product may be unreasonably dangerous only because of one or more of the following characteristics:

a) defective construction or composition,

b) defective design,

c) failure to warn or inadequate warning,

d) nonconformity with an express warranty.

2) A manufacturer of a product shall not be liable for damage proximately caused by a characteristic of the product’s design if the manufacturer proves that at the time the product left his control:

a) he did not know and, in light of then‑existing reasonably available scientific and technological knowledge, could not have known of the design characteristic that caused the damage;

b) he did not know and, in light of then‑existing reasonable available scientific and technological knowledge, could not have known of the alternative design identified by

the claimant;

c) the alternative design identified by the claimant was not feasible, in light of then‑existing reasonably available scientific and technological knowledge or existing economic practicality.

Maine

1996—LD 346

Provides that “subsequent remedial measures” or steps taken after an accident to repair or improve the site of injury are not admissible as evidence of negligence.

Michigan

1995—SB 344

1) Abolishes joint liability in product liability actions.

2) Provides statutory defenses including government standards, FDA, and sellers’ defense; provides absolute defense if claimant was 50% or more at fault due to intoxication or a controlled substance.

3) Limits noneconomic damages at $280,000 unless death or loss of vital bodily function which extends limit to $500,000 in product actions.

Mississippi

1993—HB 1270

1) Provides that product liability cases must be based on a design, manufacturing or warning defect, or breach of an express warranty, which caused the product to be unreasonably dangerous.

2) Provides that a product which contains an inherently dangerous characteristic is not defective if the dangerous characteristic cannot be eliminated without substantially reducing the product’s usefulness or desirability and the inherent characteristic is recognized by the ordinary person with ordinary knowledge common to the community.

3) Provides that a manufacturer or seller cannot be held liable for failure to warn of a product’s dangerous condition if it was not known at the time the product left the manufacturer’s or seller’s control.

4) Completely bars from recovery a plaintiff who knowingly and voluntarily exposes himself or herself to a dangerous product condition if he or she is injured as a result of that condition.

5) Relieves a manufacturer or seller from the duty to warn of a product that poses an open and obvious risk.

6) Provides that a properly functioning product is not defective unless there was a practical and economically feasible design alternative available at the time of manufacture.

7) Provides for indemnification of innocent retailers and wholesalers.

Montana

1987—SB 380

Authorizes product liability defenses of assumption or risk and misuse of product.

New Hampshire

1993—SB 76

Established New Hampshire manufacturers’ rights of indemnification from the original purchaser of a product for damages caused by the product if it is significantly altered after it leaves the New Hampshire manufacturer’s control.

1992—SB 339

Establishes a committee to study the impact of product liability on New Hampshire businesses.

New Jersey

1995 —SB 1495

Excludes product sellers from strict liability in product liability actions.

1987—SB 2805

1) Provides that a manufacturer or seller of a product is liable only if the claimant proves by preponderance of evidence that the product was not suitable or safe because it:

a) deviates from the design specifications or performance standards;

b) fails to contain adequate warnings;

c) is designed in a defective manner.

2) Provides that a manufacturer or seller is not liable if at the time the product left the manufacturer’s control there was not available a practical and feasible alternative design that would have prevented the harm.

3) Provides that a product is not defective in design if harm results from an inherent characteristic of the product that is known to the ordinary person who uses or consumes it.

4) Provides that a manufacturer or seller is not liable for a design defect if harm results from an unavoidably unsafe aspect of a product and the product was accompanied by an adequate warning.

5) Provides that the state of the art provision does not apply if the court makes all of the following determinations:

a) that the product is egregiously unsafe;

b) that the user could not be expected to have knowledge of the product’s risk;

c) that the product has little or no usefulness.

6) Provides that a manufacturer or seller in a warning‑defect case is not liable if an adequate warning is given. (An adequate warning is one that a reasonably prudent person in the similar circumstances would have provided.)

7) Establishes a rebuttable presumption that a government (FDA) warning is adequate.

North Carolina

1995—HB 637

1) Expressly provides that there shall be no strict liability in tort for product liability actions.

2) Provides several statutory defenses for manufacturer or sellers including an assumption of the risk defense.

North Dakota

1995—HB 1369

1) Creates a ten‑year statute of repose in product liability actions.

2) Provides for a government standards defense.

3)Prohibits punitive damage awards when manufacturer complies with government standards

The 10‑year statute of repose was found unconstitutional in Dickie v. Farmers Union Oil Co., 2000 ND 111 (N.D. May 25, 2000).

Ohio

1996—HB 350

Amends product liability law to include additional requirements for establishing liability; prohibits expanding theories of liability including enterprise liability; and adopts a fifteen‑year statute of repose in product liability cases unless there is latent harm or fraud.

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

1987—HB 1

1) Codifies product liability law including the consumer‑expectancy standard, for design defect cases providing that a product is not defective in design if:

a) an injury occurs due to the inherent characteristics of a product provided the characteristics

are recognized by the ordinary person with ordinary knowledge common to the community;

b) an injury occurs because of a design which is state of the art unless the manufacturer acted unreasonably in introducing the product into trade or commerce.

2) Provides that a product is not defective due to lack of warnings if the risk is open and obvious or is a risk that is a matter of common knowledge; establishes a complete defense for manufacturers and sellers of ethical drugs/and or devices if they have supplied adequate warnings to learned intermediaries unless the FDA requires additional warnings; provides that a drug manufacturer shall not be liable for punitive damages if the drug was approved by the FDA.