Deep Pockets Gone With Joint and Several Liability Repeal

Deep Pockets Gone With Joint and Several Liability Repeal

Attorney John W. Zotter of Zimmer Kunz in Pittsburgh represented two trucking companies that were involved in separate multivehicle accidents in the summer of 2011. The liability factors and damages were similar in both cases, Zotter said, but one accident occurred before a law was changed limiting joint and several liability for defendants and the other accident happened after the change was enacted.

“If the first accident had occurred a couple of weeks later, the settlement amount probably would have decreased by 60 to 70 percent,” Zotter said.

According to Zotter and several other attorneys across the state, whether or not an alleged tort occurred before or after late June 2011—when Gov. Tom Corbett signed into law Act 17 of 2011, promoted by its backers as the “Fair Share Act”—is one of the first elements attorneys consider when determining how to handle a case.

Before the law was enacted, any defendant found liable for any percentage of an incident could be made to the pay the entire verdict award. Act 17 made it so defendants are only responsible to pay for the percent for which they are found liable. Defendants can only be made to pay the entire verdict amount if a jury finds them to be more than 60 percent liable.

When the state General Assembly was considering changes to the joint and several liability statute, plaintiffs attorneys argued it would lead to lower recoveries for the injured and would shift the compensation burden from insurance companies to plaintiffs. Three years after the new liability regime was enacted, plaintiffs attorneys said these concerns have now become a reality.

“It took an imperfect system and made it even more imperfect and unpredictable,” said Scott B. Cooper of SchmidtKramer in Harrisburg. “They threw the baby out with the bath water.”

According to Cooper, who led the Pennsylvania Association for Justice’s efforts in fighting the act, the change has made it much more difficult for attorneys to settle claims against multiple defendants.

“Now the other side says, even if it’s a 50-50 [liability split], why not take a chance?” Cooper said. “The people with the lower policy, they’re not going to be able to put up much of a defense.”

Attorneys who spoke with the Law Weekly said the act’s impact affects nearly all areas of tort law, but, so far, has had the most visible impact in motor vehicle cases.

According to Pittsburgh plaintiffs attorney John P. Gismondi, the 2011 amendments were among the most significant changes to tort law in the past few decades. The broadest impact, he said, is that it “does away with the deep pockets.”

“Historically, your only concern was, ‘Can I get 1 percent on a party?’ Now, obviously the initial assessment is much different,” Gismondi said. “You’re not going to file a case if your assessment is, ‘I think I can get 1 percent or 5 percent.’ That’s not going to be real attractive to put in the time and spend the money.”

Plaintiffs attorney Alan Feldman of Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig said cases involving crashworthiness or highway design are inherently difficult when it comes to recovery.

“There’s a fair chance the jury will put most of the responsibility on the driver, instead of putting the manufacture on the hook for making sure the car was safe,” he said. “What I’m seeing more and more is cases getting declined that we would have accepted before.”

The new liability scheme, Feldman said, has been “bad for lawyers and clients. Bad for fairness and justice.”

Slade McLaughlin of McLaughlin & Lauricella said the change did not begin to impact cases until about 2013 because it was not retroactive, but now its effect is pervasive.

“It is one of the nemeses of my practice these days,” McLaughlin said. “It affects just about everything I file.”

McLaughlin and other plaintiffs attorneys said there has been a rise in defendants joining others into litigation in an effort to spread the liability.

“The defendants’ viewpoint now is the more the merrier,” he said. “The more defendants you get in a case, the more likely nobody is going to be found 60 percent liable.”

Defendants have also become much more aggressive at the pleading stage when the claim involves intentional, reckless or careless claims, McLaughlin said, noting that cases involving Dram Shop laws and intentional torts are exempt from the 2011 change.

Attorneys from both sides agreed that the change has led to a decline in settlement amounts for defendants who are not key players, and an increase in the number of cases that settle through a joint tort release.

“The cases are defended more vigorously for defendants who have potentially limited liability,” Zotter said. “As a consequence, the amount of a settlement for a lesser player defendant has decreased and is more in line with the potential liability.”

Raynes McCarty attorney Martin K. Brigham said he has increasingly had to negotiate payout schedules and obtain secured interest in businesses to recover for plaintiffs that would have previously been paid by insurance companies.

“In the past, the other defendants would pick it up; now the shortfall falls on the plaintiff,” he said.

According to McLaughlin, taxpayers are the ones who end up paying when a plaintiff is unable to recover for serious injury claims.

“If a plaintiff is injured and can’t get full compensation … what’s he going to do? He’s going to fall back on some type of unemployment or government program,” McLaughlin said.

Cooper agreed, and said the new regime will have the largest impact on children, the elderly and those who do not typically earn a salary.

“They’re the ones who make no money,” Cooper said, noting that he made similar arguments before the law was passed. “They have no place to go, so they’re going to rely on their parents’ insurance or government assistance.”

Defense attorneys also maintain that their predictions about the law’s effects have come true.

“I think it’s aptly named the ‘Fair Share Act,’” said Swartz Campbell attorney Michael Cognetti. “Unlike years ago when you represented someone and that target defendant was uninsured, you would end up paying more than your fair share. It’s done what it was supposed to do and spread out the amount of payment for liability.”

Attorney Thomas A. McDonnell of Summers, McDonnell, Hudock & Guthrie said that because deep-pocket defendants are no longer required to pay larger sums based on limited liability, the act is still on track to achieve one of its original goals of bringing down insurance costs.

“From an underwriting standpoint, I think it has. That will take more time, but costs are going down for these defendants who may have miniscule or minimal liability,” he said. “Ultimately, it is going to lead to a certain amount of cost containment.”

Max Mitchell can be contacted at 215-557-2354 or mmitchell@alm.com. Follow him on Twitter @MMitchellTLI. •

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