When the Minnesota Legislature modified Minnesota’s joint and several liability statute in 2003, the changes rendered it less likely that defendants involved in multiple-defendant litigation would be held responsible for any uncollectible amounts allocated to other defendants. Since 2003, the general rule is several liability: a person is responsible for contributing to the award based on the percentage of fault attributed to the person. The modified statute includes four exceptions to the general rule. If one or more of the four exceptions applies, then a person may be both severally and jointly liable: the person is responsible for contributing to the award based on the percentage of fault attributed to the person and the person is responsible for contributing any amounts allocated to other defendants that are uncollectible from those defendants.  

Though it has been nearly eight years since Minnesota’s joint and several liability statute was modified, Minnesota courts have yet to consider some of the ambiguous language used to describe the exceptions to the general rule. As a result, defendants involved in multiple-defendant litigation in Minnesota should be cognizant of the possibility that courts may interpret these ambiguous provisions to find them both severally and jointly liable in certain situations that are not readily apparent from the statutory language.  

Minnesota Statutes Section 604.02 (2010) governs the apportionment of damages.  

604.02 APPORTIONMENT OF DAMAGES

Subdivision 1. Joint liability.

When two or more persons are severally liable, contributions to awards shall be in proportion to the percentage of fault attributable to each, except that the following persons are jointly and severally liable for the whole award:  

  1. a person whose fault is greater than 50 percent;  
  2. two or more persons who act in a common scheme or plan that results in injury;  
  3. a person who commits an intentional tort; or  
  4. a person whose liability arises under chapters 18B – pesticide control, 115 – water pollution control, 115A – waste management, 115B – environmental response and liability, 115C – leaking underground storage tanks, and 299J – pipeline safety, public nuisance law for damage to the environment or the public health, any other environmental or public health law, or any environmental or public health ordinance or program of a municipality as defined in section 466.01.

This section applies to claims arising from events that occur on or after August 1, 2003.  

Subdivision 2. Reallocation of uncollectible amounts generally.  

Upon motion made not later than one year after judgment is entered, the court shall determine whether all or part of a party’s equitable share of the obligation is uncollectible from that party and shall reallocate any uncollectible amount among the other parties, including a claimant at fault, according to their respective percentages of fault. A party whose liability is reallocated is nonetheless subject to contribution and to any continuing liability to the claimant on the judgment.  

Subdivision 3. Product liability; reallocation of uncollectible amounts.  

In the case of a claim arising from the manufacture, sale, use or consumption of a product, an amount uncollectible from any person in the chain of manufacture and distribution shall be reallocated among all other persons in the chain of manufacture and distribution but not among the claimant or others at fault who are not in the chain of manufacture or distribution of the product. Provided, however, that a person whose fault is less than that of a claimant is liable to the claimant only for that portion of the judgment which represents the percentage of fault attributable to the person whose fault is less.

Three ambiguous provisions present challenges for defendants attempting to predict how Minnesota courts might interpret them. The first two ambiguities affect defendants who may have acted in a common scheme or plan. The third ambiguity affects defendants in litigation where fault is allocated to non-parties. In all three instances, defendants are left to assess whether the statutory provisions apply to them without any direction from Minnesota courts. As a result, defendants may not have a clear sense of whether they ultimately may be held jointly and severally liable for the entire award (rather than severally liable for only the percentage of the award attributed to them).  

Who acted in a “common scheme or plan”?

The first ambiguity affects those defendants who may be considered to have acted in a common scheme or plan. Subdivision 1 states that “two or more persons who act in a common scheme or plan that results in injury” are jointly and severally liable for the entire award. However, the statute fails to define what constitutes a “common scheme or plan”. Minnesota courts have not yet considered this statutory ambiguity. Thus, defendants are left without the courts’ guidance about whether they might have acted in a common scheme or plan that would render them jointly and severally liable for the entire award.  

In the absence of direction from Minnesota courts, law professor Michael Steenson of William Mitchell College of Law has proposed five approaches to defining what constitutes a “common scheme or plan” for purposes of Subdivision 1.[1] The first proposed approach defines a “common scheme or plan” using the Minnesota Supreme Court’s definition of a “joint enterprise”, as articulated by the Court in its decision in Delgado v. Lohmar.[2] In Delgado, the Court established that in Minnesota, a “joint enterprise” requires: “(1) a mutual understanding for a common purpose, and (2) a right to a voice in the direction and control of the means used to carry out the common purpose.”[3]  

The second approach proposed by Professor Steenson defines a “common scheme or plan” using the Minnesota Supreme Court’s definition of a “joint venture” as articulated by the Court in its decision in Krengel v. Midwest Automatic Photo.[4] In Krengel, the Court established that in Minnesota, a “joint venture” requires: “(1) contribution – combining either money, property, time, or skill in a common undertaking; (2) joint proprietorship and control – the parties having a proprietary interest and a right of control over the subject matter; (3) sharing of profits – but not necessarily of losses; and (4) contract – either express or implied.”[5]  

The third proposed approach defines a “common scheme or plan” by reference to the dictionary definition of the words “common”, “scheme”, and “plan”.[6] Professor Steenson proposes a dictionary definition of “common scheme or plan” such as, “A common scheme or plan is a systematic plan of action or method that has to be worked out beforehand together by two or more persons for the accomplishment of a particular result.”[7]  

The fourth proposed approach defines a “common scheme or plan” according to the type of conduct at issue in the litigation.[8] Professor Steenson provides examples of how considering the type of conduct at issue might help to define what constitutes a “common scheme or plan”. For instance, if the issue is whether there is a joint venture, he proposes instructing the jury on the elements of a joint venture and allowing the jury to decide whether there is a joint venture.[9] If instead the issue is whether there is aiding and abetting, he proposes instructing the jury on how the Minnesota Supreme Court has defined aiding and abetting and allowing the jury to decide whether aiding and abetting occurred in that situation.[10]  

Professor Steenson suggests a fifth approach that involves turning to the comments to the discussion of apportionment liability in the Restatement (Third) of Torts Section 15 (which relies upon the Restatement (Second) of Torts, Section 876) for additional guidance on how Minnesota might define a “common scheme or plan”.[11] Those sections define “persons acting in concert” as those who: “(1) do a tortious act in concert with the other or pursuant to a common design with him; or (2) know that the other’s conduct constitutes a breach of duty and give substantial assistance or encouragement to the other so to conduct himself; or (3) give substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person.”[12]  

Professor Steenson’s five proposed approaches provide defendants in multiple-defendant litigation in Minnesota with some guidelines by which to assess whether they may have acted in a common scheme or plan that may render them jointly and severally liable for the entire award. It is prudent for defendants involved in multiple-defendant litigation to consider each approach as it relates to the defendants’ conduct in assessing potential exposure in the litigation.  

How are uncollectible amounts reallocated among those who acted in a common scheme or plan?  

The second ambiguity affects those defendants who acted in a common scheme or plan that resulted in injury and thus are jointly and severally liable. Subdivision 2 of the statute is ambiguous with respect to which uncollectible amounts will be reallocated to them. Will uncollectible amounts be reallocated to defendants who acted in a common scheme or plan that resulted in injury only if the uncollectible amounts were attributed to defendants who also acted in the common scheme or plan? Or will all uncollectible amounts be reallocated to defendants who acted in a common scheme or plan that resulted in injury, without regard to whether the uncollectible amount was allocated to a co-defendant who also acted in the common scheme or plan? These two possible interpretations could result in widely varying exposure for those defendants who act in a common scheme or plan.      

Professor Steenson acknowledges this ambiguity and offers his interpretation of the statute: only uncollectible amounts allocated to those who acted in a common scheme or plan should be reallocated to others who acted in the common scheme or plan.[13] Professor Steenson contends that to remain consistent with the legislature’s intent to move away from joint and several liability and toward several liability in most instances, “If two or more defendants have participated in a common scheme or plan that results in injury or damage to the plaintiff, they are jointly and severally liable to the plaintiff. If one of the defendants in the scheme or plan is unable to satisfy his or her share of the judgment, that defendant’s share would be reallocated to the other defendant or defendants in the scheme or plan. In effect, a unit rule applies. Even if the plaintiff is at fault, there would be no reallocation of the uncollectible share to the plaintiff because of the unit rule.”[14]  

Under this interpretation, uncollectible amounts allocated to defendants who did not act in a common scheme or plan would not be reallocated to those who acted in the common scheme or plan. Professor Steenson’s interpretation creates a limited form of joint and several liability for common schemers/planners. Instead of being jointly and severally liable for all uncollectible amounts, the common schemers/planners are jointly and severally liable only for uncollectible amounts attributed to other common schemers/planners.  

While Professor Steenson’s interpretation seems reasonable in the practical context of common schemes or plans, where those who act in common schemes or plans should be willing to assume liability for their fellow common schemers/planners, it is contrary to a plain reading of Subdivision 1 of the statute. Subdivision 1 of the statute says simply, “the following persons are jointly and severally liable for the whole award: … two or more persons who act in a common scheme or plan that results in injury …”. The provision clearly states that persons who act in a common scheme or plan that results in injury are jointly and severally liable for the whole award, not just that portion of the award attributed to the persons involved in a common scheme or plan. The legislature does not appear to insert the limitation that Professor Steenson proposes for interpreting this statute.  

Are amounts allocated to non-parties reallocated to jointly and severally liable parties?  

The third ambiguity affects those defendants involved in litigation where fault is attributed to non-parties. Subdivision 2 of the statute is ambiguous with respect to whether amounts allocated to non-parties are “uncollectible” within the meaning of the statute such that they will be reallocated to parties to the litigation who are jointly and severally liable. A plain reading of Subdivision 2 suggests that only amounts allocated to parties may be reallocated.  

While Subdivisions 1 and 3 use the term “person” or “persons” to refer to those who are attributed fault and/or subject to reallocation, Subdivision 2 uses the term “party” or “parties” to refer to which shares may be considered uncollectible and therefore may be reallocated. Subdivision 2 states, “the court shall determine whether all or part of a PARTY’S equitable share of the obligation is uncollectible from that PARTY and shall reallocate any uncollectible amount among the other PARTIES” (emphasis added). A plain reading of Subdivision 2 seems fairly clear that only those shares attributed to a party to the litigation that are uncollectible, in whole or in part, may be reallocated to other parties who are jointly and severally liable.  

However, a plain reading of Subdivision 2 may not be entirely reliable given that the three subdivisions contained within Minnesota’s joint and several liability statute use the terms “person”, “persons”, “party”, and “parties” in a potentially inconsistent manner. In Subdivision 1, the term “person” is used to refer to those who are attributed fault. In Subdivision 2, the term “party” is used to refer to those whose uncollectible amounts should be reallocated and to whom the uncollectible amounts should be reallocated. In Subdivision 3 (which applies only in product liability cases), the term “person” is used to refer to those whose uncollectible amounts should be reallocated and to whom the uncollectible amounts should be reallocated.  

At least two possible explanations exist for the inconsistent use of the term “party” versus the term “person” in Subdivisions 2 and 3 when referring to those whose uncollectible amounts should be reallocation and to whom the uncollectible amounts should be reallocated. It is possible that since the legislature chose to treat product liability cases differently from all other cases, it intended to treat all “persons” involved in product liability cases jointly and severally liable and subject to reallocation, without regard to whether they are “parties” in the case. The other possible explanation for the use of the term “persons” in Subdivisions 1 and 3 and the use of the term “parties” in Subdivision 2 is that Subdivisions 1 and 3 were modified by the legislature in 2003, while Subdivision 2 remained unchanged. It is possible that the legislature inadvertently used the terms “person” and “persons” in its modifications to Subdivisions 1 and 3 without realizing that Subdivision 2 still utilized the terms “party” and “parties” to discuss related concepts.  

If the legislature intended to use the terms “person” and “persons” consistently throughout the entire joint and several liability statute, Subdivision 2 would be interpreted to reallocate all amounts attributed to non-parties to those parties in the litigation who are jointly and severally liable for the entire award. Such an interpretation could significantly increase the liability exposure for those jointly and severally liable defendants involved in litigation where fault is attributed to non-parties.  

Assessment of potential exposure in multiple-defendant litigation  

Defendants involved in multiple-defendant litigation in Minnesota should remain aware of the potential ramifications of these varying interpretations when assessing their potential exposure in the litigation. A finding that a defendant is jointly and severally liable could result if any one of the four exceptions to the general rule of several liability applies: (1) the defendant’s fault is greater than 50%; (2) the defendant acted in a common scheme or plan; (3) the defendant committed an intentional tort; or (4) the defendant’s liability arose from violating certain environmental or public health laws. A jointly and severally liable defendant may be subjected to contributing a substantially greater amount toward the entire award than the percentage of fault allocated to the defendant if amounts are uncollectible from other defendants. Those defendants who arguably may have acted in a common scheme or plan and those defendants involved in litigation where fault may be allocated to non-parties should be particularly conscious of the statutory ambiguities and possible statutory interpretations.