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Insight: Liability Expansions Removed from State Budget — Debate likely to Continue
Deliberations on Wisconsin’s 2009-2011 State Budget legislation have moved so quickly these past two weeks that it has been difficult to keep up with timely reporting on it to our members. Below you will find the Insight that was prepared earlier in the week, prior to the Senate Democrats’ deliberations on the Governor's and Joint Finance Committee’s budget recommendations. I am also providing a link to the Insight that we issued just prior to the Assembly Democrats completing their budget deliberations. The good news that we now have to report to you is that at this writing both legislative bodies have taken action to remove the major liability expansion provisions from the state budget legislation. Next week the two houses will go into a conference committee composed of leadership from both legislative bodies. At this late date, it will be unlikely that they will act to bring the liability expansion provisions back into this legislation. However, it is timely and important for you to contact your legislators — in both parties — and thank them if they have gone on record in opposition to liability expansion. If they are on record supporting liability expansion it is important to educate them on what these changes would do to the Wisconsin economy and to your business.
Last week, Assembly Democrats and Republicans agreed to delete joint and several liability from the state budget, but Senate Democrat leaders and personal injury lawyers want to restore the liability expansion. If the Senate chooses to keep these negligence law changes in the budget, Wisconsin will have the most extreme liability laws in the United States. The damage this will wreak on Wisconsin’s economy is unfathomable, because there is no other liability system to compare to it. Businesses, their workers, and consumers through insurance costs, will pay a hefty price if these changes are approved. Comparative Negligence and Joint and Several Liability First, some background is necessary. Under longstanding law, a plaintiff’s negligence is compared to that of all defendants in a liability suit. A plaintiff cannot collect damages from any defendant whose negligence is less than that of the plaintiff. In many states the plaintiff may collect from any defendant whose negligence is greater than that of the plaintiff’s, for the amount of liability caused by each defendant. However, Wisconsin courts adopted a joint and several liability rule permitting a plaintiff to collect all of their damages from a defendant who was found as little as one percent at fault, if that defendant was the only one with financial resources (the “deep pocket”). In 1995, a bipartisan group of Wisconsin legislators introduced Senate Bill 11, permitting a plaintiff to collect all of their damages for an injury from one of several defendants, only if that defendant’s liability for the injury is 51 percent or greater. That is the law in Wisconsin today—a balanced middle ground. The scenario where a defendant was found to be one percent at fault, but then held jointly and severally liable for all of the damages, was a real life case in Wisconsin. After passage of SB 11, Wisconsin’s 51 percent joint and several liability law conformed to regional states like Iowa, Minnesota and Ohio. Yet, even today states like Michigan and Indiana have pure liability laws where defendants are responsible only for the actual percentage of fault that they bear. No defendant is ever a deep pocket. Senate Bill 11 went through the regular legislative process of public hearings in both legislative chambers, by the Senate and Assembly Judiciary Committees. The bill was approved on a bipartisan vote of 24-8 in the State Senate and 69-27 in the State Assembly. Governor Tommy G. Thompson signed the measure into law as 1995 Act 17.
Since that time, no legislation has been introduced in either Legislative Chamber to amend Wisconsin’s comparative negligence statute. That is until Governor Jim Doyle introduced his state budget bill, Assembly Bill 75 earlier this year—a defining moment. A budget priority for the Wisconsin Governor, during a time of the greatest economic turmoil in generations, was to return Wisconsin to a comparative negligence system where a deep pocket defendant one percent at fault for an injury could be held jointly and severally liable for all of the other defendants’ liability in a claim. However, it gets worse. Wisconsin’s Chief Executive proposed changing the negligence rules further by creating a “combined fault” provision in the law under which a plaintiff could be at greater fault for his own injury than each defendant in a claim. But, so long as the combined liability of multiple defendants was greater than that of the plaintiff, the plaintiff could recover from each defendant to the degree of their fault. Thus, a plaintiff could be 40 percent at fault for their own injury, but could still recover individually from three defendants who were each 20 percent at fault. The Wisconsin Civil Justice Council Inc. (WCJC), whose membership represents virtually every business association in Wisconsin—WCJC members represent in excess of three million Wisconsin jobs—lobbied the Legislature’s budget writing committee, the Joint Finance Committee, long and hard to remove this provision from the budget bill and, at a minimum, address it as freestanding legislation. Each of the members of the coalition, WMC included, lobbied this issue as hard as any in this, or perhaps any other, budget. Astonishingly, the Joint Finance Committee modified Governor Doyle’s proposal to expand Wisconsin’s liability laws further, disguising their expansion under what purported to be a compromise 20 percent threshold for joint and several liability. It was not a compromise however. Through manipulation of the number of defendants brought into the suit, defendants less than 20 percent at fault could have their fault magnified to be held liable for a larger share of the damage. Any legislation that allows for this manipulation of the assignment of liability moves Wisconsin law back in the direction of making a defendant who is one percent at fault potentially 100 percent liable for damages. Here is the roll call of the vote on Motion 700 to Assembly Bill 75. Those Committee members voting for the Motion 700—voting for these expanded liability provisions are: Senators Miller, Hansen, Taylor, Lehman, and Robson; along with Representatives Pocan, Colon, Mason, Shilling, Sherman and Grigsby. Those Committee members voting against Motion 700 are: Senators Darling, Lassa and Olsen; and Representatives Vos and Montgomery. One Senate Democrat has already voted against the Doyle/Finance Committee liability law expansion—Senator Julie Lassa (D – Stevens Point). That vote took courage. We strongly urge her fellow Senate Democrats to show equal courage, with the budget legislation now before them. The Joint Committee on Finance members’ defining moment has come and gone. We know where they stand on dramatically expanding liability on Wisconsin businesses, health care professionals and automobile drivers, to name just a few. Fortunately, the State Assembly Democratic leadership allowed their caucus to vote to remove the liability expansion provisions entirely from the budget bill. Because these actions occurred behind closed doors, we do not have a roll call vote to report to you. We do however, know who authored the motion to remove these provisions—State Representatives Mary Hubler (D – Rice Lake) and Louis Molepske Jr. (D – Stevens Point). Representative Hubler and Molepske are attorneys. They are aware of the constitutional principles surrounding due process of law. We laud them for their leadership. And, to their credit, Assembly Republicans stood firm from the beginning and oppose joint and several liability despite incredible pressure from personal injury lawyers. The action on this budget provision in the State Assembly was a defining moment for Speaker Sheridan. It certainly took courage for the majority Democrats as they face re-election less than a year and a half from now to stand up to the interest groups promoting liability expansion. We asked the State Assembly last week if they were willing to slip through Governor Doyle budget provisions as modified by the Joint Finance Committee. Changes that would most certainly damage Wisconsin’s economy, causing further job loss. The State Assembly Democratic leadership allowed its members to join Assembly Republicans in objecting to these liability law expansions.
Procedurally, legislation that will have the impact of the magnitude of these liability law changes must not be enacted under the cover of budget legislation. In substance, these proposed liability law changes, as near as our experts can tell, are like no other in effect in any state in this nation. Wisconsin businesses across the spectrum of the economy, at a minimum will face higher liability insurance costs that will, at best, be passed through to consumers. More likely, the higher risk management costs will make Wisconsin produced goods and services non-competitive in the market place. Finally, there are segments of the economy that will most certainly become uninsurable, forcing them out of business and leaving workers without jobs. Liability laws should be structured in ways that assign fault to those who cause harm. Joint and several liability in any form shifts fault away from those cause harm. The 1995 reforms struck a balance, assigning joint and several liability to those who cause harm and are at fault more than anyone else for an injury—the plaintiff and any other defendants. Assigning liability for all of an injury to a single defendant, minimally at fault, discourages responsible behavior and is fundamentally unfair. It is doubtful that the State’s Chief Executive or the 132 members of the Wisconsin Legislature would find it fair if they were asked to take full responsibility for the wrong doing of others. The Wisconsin business community is keenly aware of this issue—to a degree beyond any other in decades. At a time when businesses are facing the greatest economic challenges of a generation, your business and the jobs you have created will be placed at even greater risk if these negligence provisions in AB 75 become law. If you have not yet contacted your legislative representatives on this issue, you must do so immediately. If your representatives serve on the Joint Finance Committee, contact them and tell them what you think of their defining vote on this liability expansion. If you are represented by any of the Assembly members identified for their leadership in removing this issue from the budget, call them and thank them. We will continue our efforts here in the Capitol to oppose this legislation, and to report roll call votes and other relevant actions as they occur. Your Legislators’ votes and actions on AB 75 will likely determine the outcome of this issue in the coming days, but your vote will count in November of 2010. Related Material:
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