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Defense Digest

The Fair Share Act in Spencer Is Not the Law, But It Just Might Become the Law

Defense Digest, Vol. 27, No. 5, December 2021

December 1, 2021

by Thomas McKenzie

Key Points:

  • The Fair Share Act limits a judgment against a defendant to its proportionate share of an award if it is determined to be less than 60% negligent.
  • Dicta in Spencer v. Johnson, 249 A.3d 529 (Pa. Super. 2021) may create headaches for defense practitioners in that it suggests that the proportionate share limitation of the Fair Share Act does not apply if a plaintiff is not negligent.

The Fair Share Act was welcomed by defendants and insurance companies in 2011. For the past ten years, the Fair Share Act has been used to limit judgments against defendants to the defendant’s proportionate share of the damages award if they were determined to be less than 60% negligent. Under the previous joint and several liability, “the 1% negligence” strategy was used against “deep pocket” defendants to obtain a full recovery. It did not matter that other defendants were more liable for the accident. It only mattered that the “deep pocket” defendant, who could pay the entire award was found at least 1% negligent.

An example of the 1% negligence issue for joint and several liability, before 2011 is as follows: Car A disregards a red light and drives into an intersection. Commercial Bus B is proceeding through the intersection on a steady green light and hits the passenger side rear of Car A. The passenger in Car A and several passengers in Bus B are injured. One of the passengers has a claim worth more than $1 million. The driver/owner of Car A purchased the mandatory minimum insurance policy, which covers claims in the amount of $15,000 per injury and $30,000 in the aggregate for general liability, and has no recoverable assets. Commercial Bus B has a primary policy of $1 million and has a $10 million excess insurance policy. 

Generally speaking, most people would agree that the above accident was caused by Car A. The driver of Bus B could not anticipate that Car A would enter the intersection. However, when the injury claims of the individual plaintiff exceed $15,000 or the collective injury claims exceed $30,000 in exposure, then each plaintiff cannot obtain full compensation from Car A’s insurance or from the operator of Car A’s assets. The passengers in each vehicle are not negligent. 

Before the Fair Share Act, personal injury attorneys would develop a claim against the driver of Bus B. The plaintiff’s attorney would investigate whether the driver of Bus B did anything wrong leading up to the accident. When we examine anyone’s conduct thoroughly enough, we typically can find flaws, which may be minimal or even infinitesimal, but they are still flaws. Flaws can be used to obtain a finding of negligence. How long did it take the driver of Bus B to notice that Car A was running the red light? How fast was Bus B traveling when it first noticed the vehicle running the red light? When did Bus B’s driver apply the brakes? Did Bus B driver attempt to steer around the car running the red light and, if not, why not? The answers to these questions may be used to develop a claim of negligence against the driver of Bus B. For instance, if Bus B was traveling at 10 mph over the speed limit but applied the brakes immediately after seeing that the other vehicle was not stopping, then it is possible that Bus B may be assigned some negligence, but probably not more than 50%. Introducing the opinion of a liability expert, who opines that Bus B would have avoided the accident had it been travelling under the speed limit, could cause a jury to find some percentage of negligence against the driver of Bus B. An expert report would typically assist the plaintiff in defeating a summary judgment motion by Bus B. If Bus B’s driver was found 10% negligent, then Commercial Bus B and its insurance carriers could be required to pay the entire jury award for each injured passenger after the $30,000 recoverable from Car A’s insurance, which was found 90% negligent.

This strategy also had a significant impact on settlement negotiations. If a damages claim is potentially worth millions of dollars and the argument against the defendant is that they should have been able to avoid the accident, prior to the Fair Share Act, the defendant had to consider their level of certainty that a jury would find the defendant 0.0% negligent. The question was not whether a jury would find the defendant to be primarily responsible for the accident, but whether the jury would assign any negligence to the driver of Bus B. Certainly, defendants and insurance companies would not be willing to pay the full sum of the exposure in this scenario. However, the defendant and the insurance company would be remiss if they neglected to attempt to avoid responsibility for the full award, which could potentially be foisted upon them, after a finding of 1% negligence relative to the accident.

In the recent case of Spencer v. Johnson, 249 A.3d 529 (Pa. Super. 2021), the Pennsylvania Superior Court examined the Fair Share Act in “dicta.” Dicta basically means that the court is making statements which are not central to the ruling in the case. The ruling in Spencer becomes binding law for lower courts. The facts in Spencer involve an accident between a pedestrian and an unlicensed driver (husband) driving a company vehicle that was entrusted to an employee (wife) by her employer. There was a finding of negligence against the driver-husband in the amount of 36%, the driver’s wife in the amount of 19% and the driver’s wife’s employer in the amount of 45%. 

The actual ruling of the Superior Court in Spencer is that the trial court should have molded the verdict against the employer-defendant because the jury likely separately found vicarious liability for wife and primary liability for employer based on the “general verdict rule.” The finding of vicarious liability for the wife made the employer liable for the entirety of the award because the Superior Court combined it with a finding of primary negligence by the employer. The Superior Court decided that the finding against the wife and the employer should be combined against the employer for a total share of 64% negligence. Therefore, the entirety of the award could be collected against the employer under the Fair Share Act as the wife’s and the employer’s share combined was over 60%. 

The Superior Court did not stop there. Instead, the court created a hypothetical situation which was different than the findings upon which the court based its ruling. This portion of the court’s opinion begins, “Nevertheless, assuming arguendo that the jury’s verdict did not demonstrate PJB was vicariously liable, we would have found the court erred in failing to grant the motion to mold the verdict as the question of whether the Fair Share Act applies to this present matter remains.” “Nevertheless, assuming arguendo” means you are about to read dicta. The Superior Court proceeded to engage in a lengthy statutory interpretation and stated:

As noted, the general rule of the Fair Share Act continues to be focused on cases where plaintiff is found to have negligently contributed to her own injuries. The addition of subsection (a.1) does not clearly or explicitly expand the scope of the Fair Share Act to include cases where the plaintiff has not been found to be contributorily negligent. Therefore, for the minimum finding of 60% negligence portion of the Fair Share Act to apply, the plaintiff’s negligence must be an issue in the case.

Spencer, 249 A.3d at 559 (emphasis added). These statements will be used to argue that, in situations such as the above hypothetical of Car A and Bus B, all injured passengers may potentially recover the entirety of any awards from Bus B. 

Defense counsel will argue that since this was “dicta,” and was not the decision in Spencer, it is not binding on trial courts. Plaintiffs’ attorneys will argue that it is the law. Plaintiffs will also argue that, even if it is not the law, it is the proper way to interpret the Fair Share Act because it is how the Superior Court interprets the statute. It is also how the Superior Court will rule on the issue on appeal. Therefore, the lower courts should interpret the statute the same way to avoid an unnecessary appeal. 

Therefore, from a settlement posture, defendants may once again have to consider whether they could potentially be responsible for the entire award, even if they are found to be less than 60% negligent. Plaintiff attorneys will also consider this when they determine whether or not to file a lawsuit against Commercial Bus B. It is not the law, but it may become the law, which may cause litigants (and courts) to treat it as if it is the law.

*Tom is a shareholder in our Philadelphia, Pennsylvania, office. He can be reached at 215.575.3562 or tjmckenzie@mdwcg.com.

 

Defense Digest, Vol. 27, No. 5, December 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

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