Economic, Political Interests Complicate Tort Reform

As the Maryland General Assembly heads into its final weeks, the debate over whether our state’s current tort law which bars the recovery of damages by any plaintiff who is at all responsible as a result of his own “contributory negligence” for an event which injures him or his property should be changed to a “comparative fault” approach is noticeably heating up. Indeed, as those of us who have enjoyed participating at times and at all times been entertained or at least amused by observing this debate, have noticed the discussion more involves interest group politics than policy and more economics than philosophy. This of course delights the media who can cover stories of “strange bedfellows”, “quiet efforts to hill the bill” and other instances of political intrigue which excite the reporter if not the reader.

Where all this comes from are two unalterable facts as I pointed out in a previous column. One is that since 1950, when there were only fives states who had adopted “comparative fault” systems, forty-one states have changed from “contributory negligence” to some form of “comparative fault”. If that change was occurring without any other change accompanying or linked to it, then the economic interests affected would be clear and the impact of the change on those interests would be comparatively simple to determine and therefore easy to debate. But as is often the case, the price we pay for living in a democracy, particularly one where there is a bicameral legislature, the election to which is not publicly financed, is that economic interests intrude on purely philosophical debates about what is fair and what isn’t. That question often gets reframed in the halls of the legislature into “whose economic ox is being gorged and whose side are you on”.

The second unalterable fact is that between 1950 and 1995, thirty-four of the now forty-six “comparative fault” jurisdictions amended or completely eliminated their law on “joint and several liability” through legislative action, or as I previously pointed out in two states, case law. So, if you are a betting gentlewoman or gentleman, aren’t those good enough odds for you to place your financial planning and political energy on the assumption that with any change from “contributory negligence” to “comparative fault” comes with at least a modification, if not the elimination, of “joint and several liability”.

Joint and several liability is defined in the Restatement of Torts (2nd) as “Each of two or more persons whose tortuous conduct concluded in a legal cause of a single and indivisible harm to the injured party is subject to liability to the injured party for the entire harm”. That having been said, the Restatement of Torts is not often the subject of discussion in the halls of the legislature. More likely, in that venue “joint and several liability” is described as “deep pocket theory” and is thought by among legal writers, including former US Attorney General Benjamin R. Civilette in a University of Maryland Law Review article, as a system which will “entice successful plaintiffs to seek payment on a judgment from those defendants who are most likely to be able to pay or who are best insured”.

As Eric S. Namrow, citing other authorities, has pointed out historically, including at English common law, “joint and several liability” was applied in “shared tort” cases in which multiple defendants injured a plaintiff by acting in concert or breaching a common duty. Thus no joinder of liability was possible if the defendants did not act in concert. Under that system, more than one legal writer and professor, particularly Professor Keeton, noted that plaintiffs had a “great incentive” to “conspire” with one of the defendants against the other targeted defendant in seeking recovery from the “deepest pocket”.

The Rule was later extended in the U.S. to include “concurrent torts” defined as “torts where independent tortfessors act as the same time to inflict a single, indivisible injury”. This remains the law of Maryland subject to the will of the General Assembly unless the highest Court of this state, the Court of Appeals, reconsiders its express deference to the legislative branch of government on the issue.

As Eric Namrow has pointed out, the rationale for “joint and several liability” is that it “relieves a plaintiff from the risk of trying to recover damages from an insolvent, unavailable or otherwise protected defendant”. In other words, if the law has to choose between imposing an unfair burden on an innocent plaintiff as against a wrongdoing defendant, it should target the wrongdoing defendant even if he is only one of multiple parties responsible for the injuries or damages of the plaintiff.

This rationale for continuation of “joint and several liability” has particular appeal to those legal theorists in academia, including the legal writer Richard W. Wright, who subscribe to and articulate the “Corrective Justice” model of the tort system. As Professor Wright explains on their behalf, “it first seeks to make plaintiffs whole by providing for full compensation for injury; and, second it demands compensation from those whose negligence, however small, was found to be a necessary cause of another’s injury”.

Ironically, there is also support for joint and several liability from what is often considered the opposite end of the legal and jurisprudential spectrum, the Law and Economics School. As they view it, if joint and several liability is the law, all potential tortfessors will take precautions that are optimally efficient in proportion to their risk of liability.

The legislative policy maker must consider these legal justifications for continuing joint and several liability against the criticism of the system which has emerged particularly in the last 35 years. For example, the New Mexico Court of Appeals in 1982 concluded that justifications for joint and several liability were “indefensible” finding that as Eric Namrow explains, “the notion that a plaintiff’s injuries are indivisible is an outdated application of English common law – if a jury can apportion fault between plaintiff and defendants, it can apportion fault among co-defendants as well”. That Court also rejected the proposition that joint and several liability was necessary to protect injured plaintiffs from having to bear the burden of being unable to collect a judgment and that society should choose the innocent plaintiff at the expense of the even slightly wrongdoing defendant. In language direct and confrontational, the New Mexico Court of Appeals clearly drew the line in the debate when it said, “We fail to understand the argument. Between one plaintiff and one defendant, the plaintiff bears the risk of the defendant being insolvent, on logical what basis does the risk shift if there are two defendants and one is insolvent?”

Finally, the greatest opposition to continuing joint and several liability comes from the business community which echoes its opposition to replacing contributory negligence with comparative negligence on the basis that it will harm industry’s ability to innovate and reduce costs as well as compete with international firms who are not encumbered with the costs and risks of these systems.

It is unclear where the debate or the law goes after the legislature considers these issues although, as I predicted in my last column, I do not think legislation will be enacted to resolve the debate in the 2007 Session of the General Assembly. In my next column I will explore where other states have gone and what models Maryland has to choose from when it does decide to choose. The only evidence that is clear is that any consideration of changing from a system of “contributory negligence” to “comparative negligence” carries with it the further choice of whether to retain “joint and several liability” with it.

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