Verdict Allocations Among Multiple Defendants
If there are multiple defendants remaining in a case at the end of trial, and the jury verdict favors the plaintiff, which defendants will be subject to paying what portion of the damages? For obvious reasons, all parties had better have a good handle on the answer if they want to make informed and intelligent decisions on how best to proceed at trial and in settlement negotiations. Let’s start with a few basic principles.
People or entities that have not been impleaded in the action are not parties and therefore will not appear on any verdict sheet. If they are not listed on the verdict sheet, no allocation of liability will be made against them, no matter how much one might believe such a finding should be made on a common sense or moral basis. A common example of this situation has been the employer in a workplace accident, protected by the Workers’ Compensation Bar to tort suits by injured workers, or a government agency protected by the Tort Claims Act. A party in whose favor summary judgment has been granted has also been removed as a party by operation of law, and will not be listed on the verdict sheet. There are other instances.
Conversely, parties that in fact have little or no ability to pay are nonetheless parties and will appear on the verdict sheet. For example, a bankrupt party with no insurance or assets or an individual without means will receive whatever portion of liability a jury determines, without regard to their ability to pay. The New Jersey Supreme Court recently underscored that point, prohibiting a jury from being told in the charge of the creditworthiness of any particular defendant prior to an allocation of liability. A jury can still be given the ultimate outcome charge, which in essence informs the jury in a comparative negligence case that a finding of more than 50% negligence against the plaintiff can and will bar recovery of any damages.
The jury will be told that their allocations, however apportioned, must add up to a combined 100% as to all parties on the verdict sheet. Once the jury has made its allocation of liability among the various defendants in a multi-defendant case, New Jersey’s “modified deep pockets” statute comes into play. See N.J.S.A. 2A:15-5.1, et seq. A plaintiff can recover the full verdict amount, however apportioned among the parties, from a single party if that party has been determined to be 60% or more responsible for the total damages. That party can recover the amount it has overpaid from the other responsible defendants – if it can. A plaintiff can collect from any party less than 60% responsible for the total damages only that percentage of the damages attributable to that defendant.
By way of example, assume no comparative negligence is assessed against plaintiff but defendant A is found 70% liable and defendants B and C each 15% liable. The allocations total 100%. The verdict is $1M. Plaintiff can collect the entire verdict - $1M – from the 70% responsible defendant A or its insurer. After A pays $1M, or 100% of the award, A can then seek contribution under another statutory section – N.J.S.A. 2A:53A-1 et seq. – from B and C of their respective 15% shares, namely $150,000 each. Rather than plaintiff, A now has the burden of collection. If B is bankrupt and uninsured and can’t pay, A winds up “out” B’s share. If C only has assets to pay $50,000, A winds up “short” to that extent as well.
If, however, the jury held A 40% responsible and B and C each 30% liable, plaintiff would bear the burden and risk of collection against each defendant. Plaintiff would collect A’s 40% from A, find B’s share uncollectible and collect only $50,000 of the 30% - or $300,000 – for which C is rightfully responsible. Rather than $1M as above, plaintiff’s actual net recovery would be $450,000, less than half of what the jury felt was the appropriate amount of damages owed to plaintiff.
This creature of New Jersey law, N.J.S.A. 2A:15-5.1 et seq., must be kept in mind by counsel for plaintiffs and defendants as a case nears trial, especially when the ability of one of the named defendants to pay is questionable.