Update (9/10/2014): [Editor’s note: The Minnesota Supreme Court’s decision came down today in favor of the Diocese of St. Cloud with a forceful dissent by Justice David Lillihaug (joined by Justice Page), who favored affirming the trial court’s decision and the Court of Appeals’ decision in favor of plaintiff Alice Ann Staub.]
Original Post (11/12/13): Once again it is the unenviable task of the Minnesota Supreme Court to make sense of a “tort reform” law enacted by the legislature with seemingly contradictory provisions. On November 4 the Minnesota Supreme Court heard arguments in a case that may answer the question: whatever happened to joint and several liability in Minnesota?
Staab v. Diocese of St. Cloud is the case. Sound familiar? This case has been up to the Supreme Court before.
This time around the Court must tackle an issue that may determine whether any “minority” tortfeasor can ever be responsible for damages beyond their own proportionate “share” of fault. The Court’s decision could leave much of the burden of injury on the plaintiff, even in cases when the injured plaintiff was totally blameless. This decision not only affects injured plaintiffs. It will also affect the government and private health insurers whose “subrogation” interests have become ubiquitous in personal injury litigation. (That, in turn, may affect those who subsidize those health insurers, whether through taxes for the public insurers, or by premiums to the private health insurers.)
In Staab the plaintiff was injured while riding in a wheelchair being pushed by her husband on the premises of a Catholic church. Plaintiff sued the Diocese as owner of the premises, alleging a hazardous condition. Although the Diocese argued that plaintiff’s husband was at fault, they never sought to add the husband as a party, presumably preferring to leave him undefended by a lawyer during the trial. The jury found the Diocese negligent, but split the fault 50/50 with the unrepresented husband. No fault was assigned the injured plaintiff.
The case now raises the question of whether the Diocese may be held responsible to pay more than 50% of the damages under the provisions of Minn. Stat. §604.02. This is a statute which provided, with a few exceptions, that joint tortfeasors with 50% or less fault, would only be “severally liable” to pay damage awards in proportion to their fault.
This reform is provided in Subdivision 1 of the statute. The current appeal raises the question of how to apply Subdivision 2 of this same statute. This part of the statute allows “reallocation” of damage liability where the equitable obligation of a person is found to be “uncollectible”.
The Diocese contends the reallocation clause should have no application to cases involving “several liability” under Subdivision 1, and that the provisions of Subdivision 2 are only meant to deal with the few remaining Subdivision 1 categories in which “joint and several” liability was preserved. (One is tempted to ask, what is the point of Subdivision 2 if it only applies to parties already deemed to be jointly and severally liable for the whole award? Why is there need for “reallocation”?) The main argument advanced for the defense position is the idea that any other application would, in the words of their able counsel at oral argument, “wholly eviscerate” the provision of Subdivision 1. The Diocese contends that Subdivision 1 meant to limit the liability of most joint tortfeasors to the share of damages that is proportionate to the finding of their fault, and that allowing “reallocation” under Subdivision 2 renders the provision of Subdivision 1 meaningless.
While the application of these provisions of the statute raise many questions, this idea that Subdivision 2 would gut Subdivision 1 does not seem right to me. In point of fact, if Subdivision 2 does apply to reallocation of all shares of fault, the practical effect is to still leave largely intact the modification of the common law under Subdivision 1.
During the oral argument, Justice Barry Anderson raised a question that hints at limited practical effect of allowing reallocation of “several liability”. He pointed out that this case may be the first instance of this issue arising from an attempted reallocation among “severally” liable persons under the current provision of the law. These two provisions of the law have coexisted for a decade. The rarity of this issue– the fact that it has taken nearly a decade for this issue to surface in the appellate courts—suggests the limited practical effect of Subdivision 2 reallocation. If it applies, it will rarely be called into play.
If reallocation is allowed, then perhaps the purpose of Subdivision 1 is more nuanced than to simply end joint and several liability. Instead, the effect of Subdivision 1 is to seriously curb “joint” liability by softening its sharp edges, but still retaining, under Subdivision 2, some remnant of the common law principle that prefers to allocate loss to the party at fault, rather than an innocent party.
At common law, the plaintiff could simply target the “deep pocket” defendant, and collect everything from them under the threat of joint and several liability. The plaintiff could let the deep pocket defendant chase others for contribution if they wish and force the joint tortfeasors to deal with the allocation issues. After the adoption of Subdivision 1, that has changed.
Even with a reallocation provision, the plaintiff cannot use the “coercive” threat of joint liability anymore prior to obtaining a judgment. Joint liability is no longer the norm. To the extent that the reallocation provision allows any “return” to shared liability, it is in a rare circumstance. The burden of collection of damages is now shifted to the plaintiff. With Subdivision 2, the plaintiff’s only hope to collect from a “severally liable” defendant for more than their “at fault” share of damages is after a case has been actually tried, the persons at fault have been determined by a jury, and the plaintiff can prove to a court that some share of the award is “uncollectible”. Then, and only then, may a plaintiff apply for the court to shift damage liability.
In other words, Subdivisions 1 and 2 working together, still leave a lot of hoops for a plaintiff to jump through. Since a plaintiff seeking to use Subdivision 2 may only do so after obtaining a verdict and proving there is an “uncollectible” equitable obligation on the part of someone, it is little wonder this issue hasn’t come up before. The vast majority of cases are resolved without a trial or a verdict. Justice Anderson ‘s observation that this issue is a rarity is spot on. The rarity of this situation shows that Subdivision 1 has great effect, even with the reallocation provision available.
Applying Subdivsion 2 reallocation merely means that Subdivision 1 may not be quite as advantageous to tortfeasors, or their insurers, as they would like. On the other hand, the availability of reallocation under Subdivision 2 still offers hope for the injured, and their health insurers, that the burden of loss may still be more appropriately placed on those whose fault contributed to the harm. Whether that hope will remain is now in the hands of the Supreme Court.