If enacted, Pennsylvania’s Fair Share Act will eliminate the common law rule of joint and several liability among joint tortfeasors in Pennsylvania and join the majority of states that have adopted some form of proportionate share liability. Insurance companies and other businesses strongly support adoption of this Act, arguing the common law rule disadvantages defendants by holding those with the “deepest pockets” accountable for the entire or a significant part of a judgment even where such defendants are only minimally liable.6 Despite support for the Act, this is not the first or second time that Pennsylvania legislators have unsuccessfully sought to change the law on joint and several liability. Previous impediments to the Act’s passage, however, do not appear to be present on this goaround, and we are cautiously optimistic that it will become law in Pennsylvania. If passed, the Act could have considerable favorable implications for product manufacturers who are often sued jointly in various product liability lawsuits.
Pennsylvania is among a minority of states that follow the common law rule of joint and several liability.7 Section 7102(b) of Pennsylvania Statutes provides:
Where recovery is allowed against more than one defendant, each defendant shall be liable for that proportion of the total dollar amount awarded as damages in the ratio of the amount of his causal negligence to the amount of causal negligence attributed to all defendants against whom recovery is allowed. The plaintiff may recover the full amount of the allowed recovery from any defendant against whom the plaintiff is not barred from recovery. Any defendant who is so compelled to pay more than his percentage share may seek contribution. 42 Pa. Cons. Stat. § 7102(b).
Under the common law rule, a plaintiff can recover the full amount of its judgment from any joint tortfeasor defendant even if the defendant that is 99% liable is not able to pay and the 1% liable tortfeasor is able to pay the entire judgment. Id. As a consequence, those defendants with the most financial means are routinely on the hook for a significant component or an entire judgment. Furthermore, corporate defendants are often pulled into lawsuits for the very purpose of having a party that is able to satisfy large judgments even though their proportionate fault is minimal.8 Although Pennsylvania provides a right of contribution among joint tortfeasors, the availability of a contribution action has limited utility where the non-contributing party is not able to pay its share of the original judgment in the first instance. 42 Pa. Cons. Stat. § 7102(b).
The majority of states have eliminated pure joint and several liability and adopted some form of proportionate share liability.9 In general, proportionate liability means a defendant who is 1% liable to a plaintiff is required to pay its proportionate 1% of the judgment. If the other co-defendants responsible for 99% of the judgment are not able to pay, plaintiff only recovers 1% of the judgment. No defendant is responsible for paying more than its proportionate share even if that means a plaintiff may not recover 100%.
In an effort to bring proportionate share liability to Pennsylvania, State Representative Schroeder has proposed the Fair Share Act (House Bill 1).10 Except in limited situations, the Act holds defendants accountable only for their proportionate liability. Specifically:
Where recovery is allowed against more than one person, including actions for strict liability, and where liability is attributed to more than one defendant, each defendant shall be liable for that proportion of the total dollar amount awarded as damages in the ratio of the amount of that defendant’s liability to the amount of liability attributed to all defendants and other persons to whom liability is apportioned under subsection (c). H.B. No. 1, at §7021.1(b)(1).
Joint and several liability will continue to apply where there is an intentional misrepresentation, an intentional tort, a claim under section 702 of the Hazardous Sites Cleanup Act, or a violation of section 497 of the Liquor Code. Id. Additionally, if a defendant is at fault for 60% or more of the total liability apportioned to all parties, that defendant will be jointly and severally liable for the entire judgment. Id. These exceptions provide appropriate relief to plaintiffs in limited situations while alleviating the concern that minimally involved defendants will be held responsible for judgments in their entirety.
The Fair Share Act has been proposed in Pennsylvania on two previous occasions. In 2002, Governor Schweiker signed the Fair Share Act into law. The Act was subsequently challenged on constitutional grounds based solely on a procedural deficiency. Deweese v. Weaver, 880 A.2d 54, 60 (Pa. Commw. Ct. 2005). Relying upon the “single subject rule” in Article III, Section 3 of the Pennsylvania Constitution, the Commonwealth Court declared that the procedure in which the Fair Share Act was passed was unconstitutional because it also contained a law requiring DNA samples from incarcerated felony sex offenders and the DNA testing law did not bear a proper relation to joint and several liability for acts of negligence. Id. On appeal, the Pennsylvania Supreme Court affirmed the Commonwealth Court’s decision without opinion. Deweese v. Cortes, 906 A.2d 1193 (Pa. 2006). Later, in 2006, the Fair Share Act again was introduced in Senate Bill 435 but without the procedural defect. Senate Bill 435 passed both the House and the Senate by a clear majority, but Governor Rendell then vetoed the bill.
Now, the Fair Share Act is up again for consideration. Pennsylvania State Representative Schroeder introduced House Bill 1 in January 2011. House Bill 1 was referred to the House Judiciary Committee on January 27, 2011, and the Committee scheduled a public hearing to discuss this proposed legislation on March 29, 2011. The Senate Judiciary Committee also held a public hearing to discuss the issue of joint and several liability. On April 11, 2011, the Pennsylvania House of Representatives approved the Fair Share Act by a vote of 112- 88.11
The Pennsylvania Senate will now consider the Bill. One potential barrier to passage of the Fair Share Act in the Senate is another pending bill (S.B. 500). This bill is sponsored by Senator Stewart Greenleaf and proposes a more limited revision of Pennsylvania’s current joint and several liability law. Under S.B. 500, joint and several liability would be eliminated only where a defendant’s percentage of fault is less than the plaintiff’s share of fault.12 Supporters of this bill view it as a compromise between Pennsylvania’s current joint and several liability law and the proposed Fair Share Act.13 Opponents of S.B. 500 argue that the bill does not go far enough to reform joint and several liability law.
S.B. 500 represents another viewpoint in the joint and several liability reform debate in Pennsylvania. While S.B. 500 maintains some recent support, the Fair Share Act already has approval from the Pennsylvania House of Representatives. Moreover, the prior procedural impediment to the Fair Share Act’s passing has been removed and the prior political impediment appears not to exist given that campaign materials from newly elected Governor Corbett suggest that the passage of the Fair Share Act is on his Agenda.14
Drinker Biddle & Reath will keep you posted on the passage of this important legislation in Pennsylvania. Other states that have reformed their joint and several liability statutes have reported an “improved business climate” as a result of the change in law.15 If the Fair Share Act does become law, this will be a significant tort reform in Pennsylvania that will directly benefit product manufacturers, insurance companies and other businesses who are often named as codefendants in various litigations.