Comparative Fault: The Dilemma Posed in Negligence / 402A Cases
When a lawsuit involves several defendants, some of whom are sued on negligence theories and others on a strict liability basis, certain problems present themselves to the judge and the litigants. These problems include: the proper apportionment of fault among the defendants; the effect of a joint tortfeasor release; and the impact of the plaintiff’s contributory negligence.
To put these problems in context, one must first view them against the backdrop of a “normal” case in which all defendants are sued on a negligence theory. For example, let us assume a case involving three defendants (D1, D2, and D3), all of whom are sued only on a negligence theory. In this sort of case, there are no problems in resolving issues of apportionment, joint tortfeasor releases, and/or the impact of contributory negligence, for all of the answers are readily provided by an application of either the Comparative Negligence Act 42 Pa. C.S. §7102 or our Supreme Court’s interpretation of the Uniform Contribution Among Tortfeasors Act 42 Pa. C.S. §8321 et seq. as set out in Charles v. Giant Eagle, 522 A.2d 1 (1987), and Walton v. Avco, 610 A.2d 454 (1992). To illustrate this, let us assume such a case goes to trial and leads to a verdict of $100,000 with liability apportioned as follows:
- D1 – 20 percent
- D2 – 20 percent
- D3 – 40 percent
- P’s contrib. – 20 percent
1. APPORTIONMENT – This is quite easy. Under the Comparative Negligence Act, D1 pays $20,000, D2 pays $20,000, and D3 pays $40,000 to the plaintiff. (Bear in mind that, technically speaking, a plaintiff can collect his full verdict against any of several defendants found to be jointly liable to him. Indeed, that is often the case when plaintiff has but one “deep-pocket” defendant from whom to collect his award. Thus, as used in this article, the term “apportionment” is most critical in defining the relationship inter se among the defendants, i.e., in establishing their respective rights of contribution.)
2. EFFECT OF JOINT TORTFEASOR RELEASE – If prior to trial plaintiff accepted a joint tort from D2 for $10,000 and executed the standard joint tort release, the following would happen under the law established in Charles and Walton: From the non-settling defendants, D1 and D3, the plaintiff would collect exactly the percentage of liability attributed to each of those defendants, namely, $20,000 from D1 and $40,000 from D2. Furthermore, the plaintiff would collect nothing from D2 since the release no doubt provided that the settlement amount would be received in full satisfaction of whatever share of liability is ultimately attributed to D2. Thus, under this example, the plaintiff ends up with a total of $70,000 in his pocket ($10,000 prior to trial and $60,000 from the non-settling defendants). If he had refused to settle with anybody and gone to trial, plaintiff would have ended up with $80,000. In short, he made a “bad deal” with D2 because he accepted $10,000 in exchange for what turned out to be $20,000 worth of fault.
NOTE: Unlike this example, it is possible for a plaintiff to make a “good deal” with the settling defendant and, therefore, end up with more money than the jury awards. For example, if in the hypothetical situation above plaintiff had extracted a $30,000 settlement payment from D2, consider what happens. From the non-settling defendants, D1 and D3, plaintiff collects exactly the amount the jury wanted them to pay, i.e., $20,000 and $40,000 respectively. That totals up to $60,000. Added to that is the $30,000 plaintiff already has in his pocket from the joint tort settlement. Thus, because plaintiff made a “good deal” with D2 (He settled for an amount that was greater than what D2’s share of the verdict turned out to be), the plaintiff ends up with $90,000, which is $10,000 more than the jury wanted him to receive.
3. IMPACT OF CONTRIBUTORY NEGLIGENCE – Again, this poses no problem in the situation where all defendants are sued on a negligence basis only. Under the Comparative Negligence Act, the plaintiff’s percentage of fault is merely deducted from the total damages awarded by the jury. In our hypothetical case, plaintiff would have $20,000 deducted from his $100,000 award since he was found to be 20 percent at fault.
With that background in mind, let us consider the problems that arise if one of several defendants is sued on a strict liability theory. Assume that you have a case in which the plaintiff sues three defendants, the first two on negligence theories and D3 on a strict liability theory. (To make matters simple at the outset, let us further assume that there is no allegation of contributory negligence.)
1. APPORTIONMENT – This is going to present the first problem for the trial judge and the litigants. Suppose the defendants are all in chambers going over points for charge. They know that they are going to be found at fault and that the plaintiff is going to be awarded substantial damages. Each defendant, however, is going to try to “hold down” their individual share of liability. Thus, the defendant who thinks he is least exposed on the case is going to want all three defendants’ liability described in percentage terms. Conversely, the defendant who feels most exposed would prefer to have the liability apportioned on a per capita basis, i.e., if there are three defendants and they are all found to be liable, each one would be responsible for 1/3 of the verdict.
NOTE: In the days prior to comparative negligence, relative fault among multiple defendants found liable to the plaintiff was not apportioned on a percentage basis. Instead, every defendant found to be liable simply paid an equal share, i.e. if there were four culpable defendants, each defendant owed 1/4 of the verdict; if there were nine culpable defendants, each defendant owed 1/9 of the verdict. In pre-comparative days, this was some times referred to as pro rata contribution among defendants.
With the advent of comparative negligence, however, the author believes the use of the term pro rata has met with some confusion. Strictly speaking, pro rata means “proportionately; according to a certain rate, percentage or proportion.” Black’s Law Dictionary, 6th Ed. (1990). As such it is a rather general term and can be used to refer to a variety of proportions. Indeed, some people currently use the term pro rata to refer to a defendant’s percentage share of liability under the Comparative Negligence Act. The problem, however, is there can be different bases for creating proportionate shares, and to use the term pro rata in referring to more than one such bases only invites confusion.
In the author’s view, the preferable usage is as follows. When referring to liability which is apportioned in equal shares based on the total number of culpable defendants, that should be referred to as per capita apportionment. On the other hand, when the relative liability of multiple defendants is assessed in percentage terms that should simply be referred to as percentage apportionment. Technically speaking, therefore, per capita and percentage apportionment would represent specific types of pro rata apportionment since they are both assessing a proportionate share of fault to an individual defendant, albeit by the use of different methods.)
Returning to the issue at hand, the judge must decide whether to apportion fault on a per capita or percentage basis in this mixed cause of action. What is the correct approach?
At first blush, the judge may feel that a ready answer is provided by McMeekin v. Harry Stevens Inc., 530 A.2d 462 (1987), a Superior Court decision which indicated that, as between a negligence defendant and a 402A defendant, fault could simply be apportioned on a percentage basis just as if the defendants were both sued on negligence theories. However, upon researc
hing the matter further, the judge would soon discover that the 1992 Supreme Court decision in Walton casts some doubt on the applicability of percentage apportionment in any case involving a strict liability defendant.
Walton involved a case in which two defendants were sued, solely on strict liability theories. No negligence cause of action was asserted. The Superior Court had permitted fault to be apportioned between the two 402A defendants on a percentage basis, the rationale being that percentage apportionment represented a more fair and exact measure of their relative degrees of culpability. However, the Supreme Court reversed saying that percentage apportionment is a principle derived from the Comparative Negligence Act, and negligence concepts have no place in strict liability cases. Instead, the court said that liability is to be apportioned the same way it was prior to comparative negligence, namely, by making each liable defendant pay an equal share of the verdict.
While admittedly Walton did not deal with defendants sued on negligence and 402A theories, the fact that it so pointedly rejects application of percentage apportionment to a 402A defendant makes one question the continuing validity of McMeekin. Unfortunately, since the time of the Walton decision, there has not been another appellate case dealing with apportionment between a negligence defendant and a 402A defendant. Thus, until there is some further direction from the Supreme Court, a trial judge or a party is left to ponder what the correct answer is to this problem.
Let us return to the example to see what a difference it can make to the litigants depending on how this dilemma is resolved. Assume that one had a crystal ball and could predict that the jury was going to return a verdict of $100,000 and, if asked to do so, that it would apportion fault on a percentage basis as follows:
- D1 – 20 percent
- D2 – 20 percent
- D3(402A def.) – 60 percent
In that example, D1 and D2 definitely would profit by having liability apportioned on a percentage basis. On the other hand, D3 would profit if the court merely apportioned fault on a per capita basis so that each defendant was responsible for 1/3 of the verdict.
It would seem that the percentage formula represents a more fair method of apportionment than the per capita formula. For example, why should two minor defendants be responsible for contribution in the same amount as the prime defendant? Yet that will happen if the court simply awards contribution on a per capita basis.
One must wonder, however, whether percentage apportionment, fair as it may seem, would be sanctioned by the Supreme Court given its statement in Walton that percentage apportionment is a negligence concept, and negligence concepts do not belong in strict liability cases. On the other hand, one may logically argue that Walton is readily distinguishable on the ground that all defendants in that case were sued only on strict liability theories, and in such a “pure” 402A case there was no reason to inject percentage apportionment if, in the court’s mind, that is a negligence concept. Where, however, the defendants are sued on different legal bases, it would be reasonable to “borrow” the negligence concept of percentage apportionment where to do so seems most equitable to all of the litigants. Hence, it would not be surprising if our Supreme Court would reach just such a result when faced squarely with a case involving both negligence and 402A defendants.
EFFECT OF JOINT TORTFEASOR RELEASE – Having discussed the basic issue of apportionment in the previous section, let us complicate the problem a little further by injecting a joint tortfeasor release into the equation. Let us assume, for example, that plaintiff settles with D1 for $10,000. Under the principles set out in Charles and Walton, that $10,000 will be received by the plaintiff in full satisfaction of whatever the settling defendant’s share of the verdict turns out to be. However, that raises this question: How shall the settling defendant’s “share” of the verdict be defined: In percentage terms or on a per capita basis? Obviously, the answer to that question can make a huge difference to the plaintiff and the non-settling defendants.
For example, if the verdict is $100,000 and we knew (again relying on our crystal ball) that the settling defendant would be found less than 33 1/3 percent at fault if the jury were asked to apportion liability on a percentage basis, the plaintiff would be better off with percentage apportionment. Why? Because we know that the settlement amount is deemed to be received in full satisfaction of the settling defendant’s share of responsibility, and if per capita apportionment is done, the plaintiff is going to lose 1/3 of his verdict, whereas if percentage apportionment is used he is going to face something less than a 1/3 reduction in his verdict.
On the other hand, if one were to project that the settling defendant’s share of responsibility, if apportioned on a percentage basis, would exceed 33 1/3 percent, the plaintiff would be better off with per capita apportionment. However, rest assured that the two non-settling defendants are going to urge the trial judge to apportion fault on a percentage basis. Indeed the one non-settling defendant who has been sued on a negligence theory is going to insist that he has an absolute right to percentage apportionment under the Comparative Negligence Act.
Again, it is submitted that the Supreme Court, if faced with this issue, would permit percentage apportionment among defendants sued on different theories because it represents the most fair method of distributing fault. Otherwise, if one employs per capita apportionment simply because there is one 402A defendant in the case, some very absurd results can occur. For example, take a case in which there are ten defendants, one of whom is the prime defendant and the other nine of whom are only marginally at fault. Assume the plaintiff settles with the prime defendant for an amount of money which fairly approximates the full value of the case. The plaintiff then goes to trial against the nine non-settling defendants and, while they are all held in on liability, the jury definitely feels these nine, as a group, are minor players. In fact, assume that, if asked to do so, the jury would have ascribed only 1 percent of liability to each of those nine non-settling defendants. In that situation, if the court apportions fault on a per capita basis, that large settlement received by the plaintiff is only going to cause a 1/10 reduction from the verdict, and the other 9/10 can be collected from the nine minor players. Obviously, this is not a result one would expect the court to countenance. Again, the solution is to simply apportion fault on a percentage basis among all of the defendants.
IMPACT OF PLAINTIFF’S CONTRIBUTORY NEGLIGENCE – Even if the court accepts the premise that the most fair basis upon which to apportion fault among defendants sued on mixed causes of action is the percentage method, there remains the thorny problem of the impact of plaintiff’s contributory negligence. Let us go back to our original example in which three defendants were sued and contributory negligence is an issue in the case. As with the original example, let us assume that the jury apportions fault as follows:
- D1 – 20 percent
- D2 – 20 percent
- D3 – 40 percent
- P’s contrib. – 20 percent
The only change from the original hypothetical situation is this: D3 is sued on a strict liability theory. How does the judge mold the verdict when the jury returns an award of $100,000?
While there are no appellate decisions directly on point, the Supreme Court’s very recent decision in Kimco Development Corporation v. Michael D’s Carpet Outlets, 637 A.2d 603 (1993) provides some insight into the problem. This case involved multiple lawsuits aris
ing out of a fire which occurred when some foam padding ignited in the basement of a carpet store located in a shopping center. The fire caused extensive property damage to the carpet store and several adjoining businesses. For purposes of this discussion, the other relevant facts are these. The tenant who occupied the carpet store in which the fire started (Michael D’s) was both a defendant in several lawsuits brought by other tenants, and a plaintiff in an action against the manufacturer of the foam padding which allegedly caused the fire.
In the action brought by the other tenants, the jury determined that Michael D’s negligent storage of the padding was 80% responsible for the fire and the manufacturer’s sale of a defective product (the foam padding lacked adequate warnings) was 20% responsible for the fire. Although it was not an issue in front of the Supreme Court, these two defendants apparently paid for the damage suffered by the other property owners in the same 80/20 ratio. The issue before the Supreme Court concerned the handling of Michael D’s claim as a plaintiff against the manufacturer.
The jury awarded Michael D’s nearly $600,000.00 in property damage on its strict liability claim against the manufacturer. As one might expect, the manufacturer argued that it should not be liable for that entire sum since, in the consolidated cases brought by the other property owners, Michael D’s own conduct was found to be 80% responsible for the fire. According to the manufacturer, therefore, it should only have to pay 20% of Michael D’s damages, i.e., the same percentage that it paid to other property owners.
In essence, that argument required the Supreme Court to consider whether a finding of contributory negligence on the part of Michael D’s served to reduce the damages otherwise owed by a defendant found to be strictly liable. The Supreme Court answered the question in the negative, claiming that to permit a percentage reduction in the manufacturer’s liability based on a finding of contributory negligence of the plaintiff would represent an improper injection of negligence concepts into a strict liability claim, something which, in the Court’s view, would undermine the purposes of strict liability law. Thus, in so holding, the Supreme Court once again echoed the sentiments expressed in Walton v. Avco concerning the clear line of demarcation between strict liability and negligence concepts.
The Kimco v. Michael D’s case differs from our hypothetical in this respect: Kimco involved only one strictly liable defendant, whereas our hypothetical situation involves both a 402A defendant and a negligence defendant. Nevertheless, it is suggested here that our hypothetical riddle can be solved by reference to the holding in Kimco and the two following propositions which seem to represent implicit truths in the law: First, a plaintiff’s contributory negligence cannot have a detrimental impact on his right to collect damages from a strictly liable defendant. Second, a defendant sued on a negligence theory is entitled to have his degree of responsibility reduced if the plaintiff is contributorily negligent.
Bearing in mind those two principles, the following answer to our hypothetical is suggested. The two negligence defendants, D1 and D2, should pay exactly what the jury determined their percentage of the verdict to be, namely, $20,000 each. We should then make the strictly liable defendant pay whatever else is necessary for the plaintiff to be “made whole” by putting a total of $100,000 in his pocket. In this example, that would mean the strict liability defendant would have to pay $60,000. In other words, the strictly liable defendant would be paying his share of the verdict plus the percentage of the verdict attributed to the plaintiff’s contributory negligence.
This seems to accommodate all of the competing interests without violating any of the basic principles under the Comparative Negligence Law or well-accepted strict liability principles, i.e., the negligence defendants end up paying only their percentage of the verdict, and the plaintiff’s contributory negligence causes no set-off in a case where a strict liability defendant was a substantial factor in causing the accident.
Because of some uncertainty in the law and lack of direction from the Supreme Court, there are some vexing problems which face litigants and trial judges in cases involving both negligence and 402A defendants. Until the Supreme Court resolves the question of whether fault among such defendants should be apportioned on a percentage or a per capita basis, those problems will persist. The author suggests that the Court should rule that percentage apportionment applies to all defendants sued in mixed causes of action.
While such a ruling would resolve the uncertainties concerning apportionment among defendants and the impact of a joint tortfeasor release, there would remain the problem of how to mold a verdict where the plaintiff is found to be contributorily negligent in this sort of case. In the author’s view, the Court should hold that such a finding only serves to reduce the damages owed by the negligence defendants, but does not relieve the strictly liable defendants of the responsibility for paying whatever is necessary for the plaintiff to be “made whole.” Such a result is strongly suggested by the recent Kimco decision.