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Is Joint and Several Liability Alive in Pennsylvania?  The Fair Share Act After Spencer

For the last decade, following the passage of the Fair Share Act, civil defendants in personal injury matters were relieved to only be paying their “fair share” when a jury would award a Plaintiff damages. In other words, if a party was found to be 10% liable, they would pay 10% of the award. However, recently there have been two Superior Court cases that have cast doubt on the intention of the Fair Share Act.

The Fair Share Act, 42 Pa.C.S. § 7102, was passed in 2011. The act was designed to limit the liability of multiple tortfeasors when they were found to be less than 60% at fault. 42 Pa.C.S. § 7102(a)(1)(3)(iii). When there is more than one tortfeasor involved, “each defendant shall be liable for that proportion of the total dollar amount awarded as damages in the ratio of the defendant’s liability to the amount of liability attributed to all defendants” or other individuals determined to be liable. 42 Pa.C.S. § 7102(a)(1)(2). The Fair Share Act effectively prevented individuals and businesses who were only partially responsible for an incident to only pay their “fair share” of the damages. However, Spencer v. Johnson reshaped the legal landscape for tort law in Pennsylvania. 249 A.3d 529 (Pa. Super. Ct. 2021).
 
Spencer involved a pedestrian struck while crossing the street. The vehicle that struck the pedestrian was a company vehicle driven by an employee’s husband. The employee’s husband was not employed by the company. The husband operated the vehicle without the employee’s consent and while the employee was at a family gathering unrelated to her work. It was undisputed that the pedestrian was not at fault for the accident and the driver was at fault.
 
The pedestrian sued the company, employee, and husband under a theory of negligence and several vicarious liability theories. The jury found the company 45% liable, the husband 36% liable, and the employee 19% liable. At this juncture, the Fair Share Act comes into the legal analysis of the case. No party was found to be more than 60% liable. Therefore, under the Fair Share Act, each party was liable only for their percentage of liability. For example, the company would only be responsible for 45% of the damages since they were found to be 45% liable. 
 
 At the trial level, the plaintiff argued the company’s share of liability should be coupled with the employee’s liability since it was a company vehicle. The trial court rejected this argument because the employee was not operating in the scope of her employment when she was attending a non-work-related family party. The plaintiff appealed the trial court’s decision to the Superior Court. Not only did the Superior Court reverse the trial court based on the fact that the employee was required to be available “24/7” and drove the vehicle to her mother’s home, but the Superior Court engaged in a sua sponte discussion of the parameters of the Fair Share Act. This sua sponte discussion set forth a was a complete reversal as to how the Fair Share Act has been interpreted by Courts.
 
Spencer has the potential to significantly reshape the way the Fair Share Act will be applied by the Courts. Previously under the Act, each party was evaluated to determine their liability. Once a single tortfeasor surpassed the 60% threshold, then joint and several liability could apply. After Spencer, if a plaintiff is found to be 0% comparatively negligent, then the Fair Share Act does not apply. Thus, an individual or business tortfeasor could be subject to joint and several liability, meaning they could be held 100% responsible to pay for all the damages even if they are only determined to be 1% liable.
 
After Spencer, the question arises whether or not this interpretation of the Fair Share Act will stand. Will the Pennsylvania Supreme Court address the matter? Will the Superior Court use this interpretation in a holding? In November, eight months after Spencer, the Superior Court in Synder v. Hunt, No. 851 EDA 2020, 2021 WL 5232425, at *6 (Pa. Super. Ct. Nov. 10, 2021) previewed how the Courts would be interpreting the Fair Share Act after Spencer.
 
Synder involved a woman, the plaintiff, tripping over a shared section of driveway and was injured. Several properties had easements to utilize the driveaway. As part of each property’s right to utilize the driveway, they were required to maintain the driveaway. The plaintiff sued the owners of the various properties that utilized the driveway and were required to maintain it. In an unpublished opinion, the Superior Court explained that without finding the plaintiff contributed to her injury, the various property owners are not shielded from liability from the Fair Share Act. The Superior Court’s opinion again sua sponte instructed the trial court to apply joint and several liability to the Defendants due to there being no proven allegation of comparative negligence and cited to Spencer.
 
Currently, there is a debate as to whether Spencer  (and now Snyder) is binding law on lower courts or if it is mere dicta. The Synder opinion is not published nor is it precedential. However, Synder displays the Superior Court’s understanding that Spencer was not an anomaly and Defendants who have minimal potential liability in a large damages case must be prepared to potentially “pick up the whole bill” if a jury finds them at 1% negligent and does not find Plaintiff negligent.
 
Zarwin Baum will continue to monitor the status of the proceedings and any impact on the law of damages and liability. For questions or further information, please contact Theodore Schaer ([email protected]; 267-765-9606), Gregory Mallon ([email protected]; 267-765-0344) or another member of the Casualty and Professional Liability Defense Practice Group. Law Clerk Matthew Coughlin contributed greatly to the writing and research for this article.
 

Congress Ends Arbitration for Employee Related Sexual Assualt and Harassment Claims.

By E. Bryan Paul

Clark, May, Price, Lawley, Duncan & Paul, LLC

On February 10, 2022, Congress passed The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2022. The intent of this law is to end any dispute as to whether the Federal Arbitration  Act, 9 U.S.C. § 1 et seq. (FAA), preempted state laws that sought to prohibit mandatory pre-dispute arbitration of employee sexual harassment claims. The law amends the FAA and invalidates pre-dispute arbitration agreements between employers and employees that would obligate the parties to arbitrate claims of sexual assault or sexual harassment. It is expected that President Biden’s will sign the Act into law in the coming weeks.   

It is the desire of Congress and the President that these cases be litigated in open Court, rather than arbitration. Should both parties consent to the process, they could still arbitrate the claims.

This is a significant development for employers and insurers alike. One of the positive aspects of arbitration is that it enables employers to avoid the unpredictability of jury trials while reducing the cost and expense of litigation.  Insurers and employers should take this into account when considering the potential costs of such claims. Arbitration agreements remain valid as to all other forms of discrimination. 

Given this development, Employee Arbitration Agreements need to be revised to take into consideration this new law. This new development reinforces the need for strong and updated handbooks, and Employers taking prompt and remedial action when a complaint of harassment is made.  
 

GVK'S Petition is Partially Successful: Comprehensive Insurance Disclosure Act is Signed Subject to Modification Agreement

By William Parra and Corey Reichardt

Source: Gallo Vitucci Klar LLP

Governor Hochul signed the Comprehensive Insurance Disclosure Act ("CIDA") into law on December 31, 2021. However, she did so subject to a "signing memo" stating that she agreed with the intent of the bill but had reached an agreement with the Legislature to ensure that the scope of the disclosure it required was "properly tailored for the intended purpose," i.e., to ensure litigants were adequately notified about of the potential limits of insurance coverage.

There are two important points to consider. First, the CIDA is presently the law and effective immediately. Defendants' compliance in pending actions is presently due in 60 days (March 1st), and within 60 days of answering in new actions. However, the Governor's agreement with the Legislature refers to chapter amendments modifying the CIDA which must be agreed to and passed by the Legislature and Governor. We understand that proposed amendments have already been drafted that address many concerns raised in our petition against the CIDA's present form. When passed, the proposed changes should significantly lessen the time, expense and burden to defendants and their insurers, in complying with the CIDA.

Since the CIDA is presently law, the proposed amendments have not been agreed to or passed, and it is unclear when they may be, we summarize the CIDA's requirements due by March 1st, as well as the proposed modifications. The CIDA significantly expands defendants and their insurers' obligations, amending CPLR §3101(f) to require the following additional disclosures:

  • Complete copies of all primary and excess policies or other agreements (SIRs, captives, etc.) that may cover any part of a judgment, including their related policy applications, which were previously expressly exempt from disclosure under CPLR §3101(f);
  • Identification of any other lawsuit(s) that have or may deplete the limits of such policies, including their caption, filing date, identity and contact information for each party's attorneys, claims adjusters, TPAs and claims adjusters the TPAs report to;
  • The amount of legal fees/expenses in other suits that have eroded such policy limits, including identity of the receiving attorneys/law firms;
  • The present/remaining amount of such policies' coverage limits;
  • Defendants have an "ongoing obligation," through the course of litigation and for 60 days after any settlement, judgment or appeal, "to make reasonable efforts to ensure" this information remains "accurate and complete," and to provide updated information within 30 days of when defendants or their attorneys become aware of it; and
  • Pursuant to newly created CPLR §3122(b), defendants and their attorneys must each certify that all required disclosures are accurate and that they will take reasonable efforts to ensure that they remain accurate, as described above.

Compliance with these directives will significantly increase the time and expense required of defendants, their attorneys and adjusters alike. There is understandably confusion and concern over whether to immediately begin complying with them in pending matters or wait and see whether less onerous changes will be enacted in time to render the present requirements moot.

The most significant proposed amendments to the CIDA, include:

  • Deleting the CIDA's retroactive effect, limiting its application to actions commenced after the amendments' effective date;
  • Increasing the disclosure deadline in new actions from 60 to 90 days;
  • Deleting the obligation to disclose policies and all other suit/attorney/adjuster information in other actions that have or may erode policy limits;
  • Deleting the policy application disclosure requirement; and
  • Limiting the "ongoing [disclosure] obligation" to require reasonable efforts to provide accurate information initially, at the note of issue filing, and when engaging in court-conducted settlement negotiations, mediations or at trial.
The difference between the enacted CIDA's requirements and the proposed changes are significant. We will continue monitoring the legislative and executive branches' progress in agreeing to and passing less onerous amendments to the CIDA.
 

Settlor Beware: A Cautionary Tale When Negotiating A Pre-Trial Settlement

August 02, 2021

A recent case decided by the Federal District Court of Massachusetts, Lane v. Powell, No. CV 17-12356-PBS (D. Mass. June 19, 2020), serves as an important cautionary tale for practitioners, litigants, and other interested parties (such as insurers) with respect to their handling of pre-trial settlement negotiations. In that case, claims of personal injury and wrongful death were asserted following the sinking of the fishing vessel, “the Orin C,” and the tragic passing of its captain, David Sutherland. After the Plaintiffs (two crew members and Mr. Sutherland’s Estate) filed suit, the proceedings became quite acrimonious among the parties and their counsel. Nevertheless, the parties engaged in settlement negotiations to try to resolve the case.

On May 6, 2020, Defense Counsel sent an email enclosing a purported “final offers to settle” the case with $100,000 designated for Mr. Sutherland’s estate and $2,500 for each of the remaining Plaintiffs. This offer (1) did not require global settlement, i.e. each Plaintiff could accept or reject it individually, (2) had no confidentiality clause, and, (3) required a “full and complete general release of all claims, including 93A/176D, and entities.” Six days later (on May 12, 2020), Defense Counsel increased the offer to $120,000, for all claims.

On May 14, 2020, Plaintiffs’ Counsel replied: “$120,000 is accepted. Palmer accepts $10,000. Lane accepts $10,000. The estate accepts $100,000. The releases will include the 93A [Bad Faith] case, but no confidentiality.” Twelve minutes later, Defense Counsel responded, “Excellent, that’s great. I'll order the checks...I'll draft releases and get them to you. Let me know what you want to do with the court – a Notice of Settlement followed by Stip [sic] of Dismissal?” To which, Plaintiff’s Counsel replied, “Send to me what you propose and I'll review.”

Defense Counsel’s proposed releases included the parties’ attorneys as released individuals, but the reference to the lawyers was removed during subsequent negotiations. However, regarding the possibility of later claims being made against the parties or attorneys arising from the handling of the litigation, Plaintiffs’ Counsel wrote:

“The content of the releases that [you] sent to me for my clients to sign looks fine.... We have a remaining problem, however before my clients can sign the releases and that is the claims that were threatened against my clients and me… One thing I'd like to avoid is further litigation (something I'm sure we can all agree on), so I'm drawing up a release that I'd like [Defendants] and [their insurer] to sign, as well. I'll get it over to you by tomorrow for your review.”

Defense Counsel responded that releases of the attorneys were not part of the agreed-upon settlement, writing, “The deal is done.... We don't get to leverage the case for our own security. By proposing new elements to an already done deal you are putting your clients’ settlements at risk.”

The next day, on May 20, 2020, Plaintiffs’ Counsel replied, “Continued settlement talks (about the content of the release) hinge on a total resolution of all claims, both pending and planned.” The Defendants then filed a motion to enforce the settlement purportedly reached on May 14, 2020, which the Plaintiffs opposed.

In their opposition, the Plaintiffs argued that any release of claims must also cover all future claims arising out of litigation conduct, including claims against attorneys or other individuals, and that the failure to reach an agreement on that point precluded, “a meeting of the minds,” as to the material elements of the settlement.

In its ruling on the motion, the Court noted that, “to create an enforceable contract, there must be agreement between the parties on the material terms of that contract, and the parties must have a present intention to be bound by that agreement.” “A term is material if it is, “an essential and inducing feature of the contract,” “judged in the specific context of all relevant facts and circumstances.” However, “[a] reply to an offer which purports to accept it but is conditional on the offeror’s assent to terms additional to or different from those offered is not an acceptance but is a counter-offer.”

The Court then evaluated the communications exchanged by counsel, concluding that the May 12, 2020 offer consisted of a payment of $120,000 but no other terms. Although Plaintiffs’ Counsel “accepted” that offer, his May 14, 2020 email was deemed to be a counter-offer because it added additional material terms, including that the related “releases” would “include the 93A [Bad Faith] case, but no confidentiality.” This counter-offer made no reference to a release of any claims related to collateral allegations of unlawful conduct, “arising out of litigation conduct,” by the attorneys, parties, or other related parties. When Defense Counsel agreed to the added terms on May 14, 2020, a meeting of the minds was reached, and the parties no longer had the power to propose additional material terms, such as a release for attorneys.

The Court added, “while Plaintiffs’ counsel may subjectively have intended to also cover all potential claims arising out of the case, including against his law firm, a party’s “subjective intent is irrelevant when [he] knows or has reason to know that [his] objective actions manifest the existence of an agreement.” Accordingly, the Court allowed Defendants’ motion to enforce settlement. Accordingly, the settlement consisted of the Defendants’ agreement to pay $100,000 to the estate of David Sutherland, and $10,000 to each of the remaining Plaintiffs; a release of all claims against the Defendants, including potential 93A/176D claims against their insurer, and no confidentiality provision, but left open potential claims arising from the conduct of the litigation,

This case serves as an important reminder that special care should be taken by practitioners when negotiating and communicating pre-trial settlement offers. This case further demonstrates how quickly, and potentially unexpectedly, a party may bind itself to disadvantageous terms or, worse yet, expose itself to additional liability, in the event that appropriate care is not exercised. Therefore, Counsel should be explicit in all communications to opposing counsel regarding the specific terms of any proposed settlement agreement.
 

The Need For Precision In High-Low Agreements

October 26, 2021

Source: Melick & Porter, LLP

High-low agreements are intended to manage the risks of civil trials. The defendant agrees to pay a minimum amount, and the plaintiff agrees to accept a maximum recovery, no matter the outcome of a trial. Thus, the plaintiff eliminates the risk of recovering nothing, and the defendant eliminates the risk of a run-away jury. While a high-low agreement can be a sensible means of resolving a lawsuit, it is important that it be properly drafted so as to conclusively terminate any further litigation. The case of David v. Kelly, 2021 WL 4944478 (Mass. App. Ct. 2021) demonstrates the need to include specific language waiving appellate rights in a high-low agreement.

David is a textbook dog bites mailman case. Liability was admitted, but damages were vigorously contested. The parties entered into a high-low agreement on the last day of trial, and memorialized it in a handwritten document drafted in the courtroom. The hastily-written terms set a floor of $150,000 and a ceiling of the available $1 million liability policy limit, but made no mention of appellate rights. After the jury awarded $375,000, the defendants unsuccessfully moved for a new trial, and then appealed. Plaintiff argued that the high-low agreement constituted a waiver of the defendants’ appellate rights, but the Massachusetts Appeals Court disagreed. It held that a high-low agreement is a contract like any other, and ordinary rules of contract construction apply. As such, the Court observed that waiver must be shown “clearly” and “unequivocably.” The handwritten high-low agreement made no reference to post-verdict or appellate rights. In the absence of explicit language, the Court ruled that the agreement was not susceptible of a reading that included a waiver of appellate rights.

A courtroom in the middle of a trial is a busy place. Trial counsel are often juggling several things at once. The burdens on trial counsel are immense. A lesson that might be learned from the David case is that these burdens can be lessened by anticipating potential settlement discussions and keeping draft settlement agreements handy in the trial bag.
 
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