|
Full
text of Am. Sub. S.B. 80
Review of Comprehensive Tort Reform: Senate Bill 80
Effective: April 7, 20051
Senate Bill 80, sponsored by Senator Steve Stivers (R-Columbus), passed by both houses of the General Assembly in December
2004, was signed by Governor Taft on Thursday, January 7, 2005 and went into effect April 7, 2005.
The provisions and summary details include:
Punitive Damages
Sections 2307.80 &
2315.21
Analysis of the Provisions
1. Limitations
Am. Sub. S.B. No. 80 provides a number of new
provisions in an attempt to establish reasonable guidelines for awards of
punitive damages.
Amended Section 2315.21 limits the amount of
punitive damages recoverable from large employers to two times the amount of
compensatory damages. Section 2315.21(D)(2)(a). The new law also limits the amount of punitive damages recoverable from small employers or individuals to the lesser of two times compensatory damages, ten percent of the employer’s or individual’s net worth, or three hundred fifty thousand dollars ($350,000).
Section 2315.21(D)(2)(b).
This statute defines a “small employer” as
an employer who employs not more than one hundred employees on a full-time
permanent basis. If the employer is classified as being in
the manufacturing sector by the North American Industrial
Classification System2, a “small employer” is
defined as an employer who employs not more than five hundred employees on a
full-time permanent basis. Section 2315.21(A)(5).
The limitations on the amount of punitive damages set forth in
Section 2315.21(D) do not apply in a tort action against a defendant
where the defendant: (1) has acted with the required culpable mental
states of “purposefully” or “knowingly” as defined in Section 2901.22, and (2)
has been convicted of or plead guilty to a felony where the culpable mental
state of “purposefully” or “knowingly” is an element of the criminal offense.
Section 2315.21(D)(6).
2. Defenses
a. Government standards defense
Under current Ohio law, manufacturers of drugs that
have been approved by the Food and Drug Administration (“FDA”)
are not liable for punitive damages if the drug was manufactured in
accordance with applicable FDA standards. Section 2307.80(C).
Am. Sub. S.B. No. 80 expanded this provision to include manufacturers of
medical devices and over-the-counter drugs and manufacturers and suppliers of
all other products. Section 2307.80(C) and (D).
However, if the drug manufacturer or manufacturer or supplier of another
type of product fraudulently withholds information from the applicable
government agency known to be material and relevant, this government
standards defense to an award of punitive damages does not apply.
Section 2307.80(D)(2).
b. Prohibition against multiple punitive damages
In addition to the government standards defense
outlined above, a second defense to an award of punitive damages was
incorporated into Section 2315.21. Such defense prohibits the
imposition of multiple punitive damage awards where an award of punitive
damages has already been imposed and paid by the defendant based on the
same act or course of conduct. Section 2315.21(D)(5)(a). There are two exceptions to the rule against multiple punitive damages set forth in
Section 2315.21(D)(5)(b). This defense does not apply if:
The court determines by clear and convincing evidence that the plaintiff will offer new and substantial evidence of previously undiscovered, additional behavior, or
The court determines by clear and convincing evidence that the total amount of prior punitive damage awards was totally insufficient to punish the defendant and deter others.
3. Other protections
A number of additional protections included in this statute.
Section 2315.21(B) provides that any party,
upon request, is entitled to a bifurcated trial, with the compensatory phase
of the trial proceeding first. “Oppression” and “insult” are
no longer bases for an award of punitive damages. Section 2315.21(C). Prejudgment interest is expressly prohibited on punitive
damage awards. Section 2315.21(D)(3).
Practical Considerations
File a motion requesting a bifurcated trial.
Section 2315.21(B) provides that any party, upon request, is entitled to a bifurcated trial. However, this “right” is not automatic.
Determine which cap applies. Counsel should
determine whether the defendant meets one of the two definitions of a “small employer.”
Does the defendant employ more than one hundred employees on a full-time permanent basis?
Does the defendant meet the definition of a “small employer” under the
North American
Industrial Classification System?
Consider whether there are any applicable government
regulations in product liability cases.
In certain instances, Section 2307.80 provides immunity from punitive damage awards for manufacturers of medical devices and over-the-counter drugs and manufacturers and suppliers of all other products.
File evidence reflecting previous payment of
punitive damages for same act or course of conduct. Section
2315.21 prohibits the
imposition of multiple punitive damage awards where an award has already been
imposed for the same act or course of conduct.
However, Division (C)(5) of that section requires the defendant to file a certified judgment, judgment entries, or other evidence showing that an award for punitive damages has already been awarded and collected against the defendant for the same act or course of conduct.
Noneconomic Damages
Sections
2315.18 &
2315.19
Analysis of the Provisions
Am.Sub. S.B. No. 80 enacts a new statute to provide limitations on the
amount of noneconomic damages that can be awarded for non-catastrophic
injuries in tort actions.3 Section 2315.18
limits such amount to the greater of two hundred fifty thousand dollars ($250,000)
or an amount equal to three times the amount of economic damages up to three
hundred fifty thousand dollars ($350,000) for each plaintiff or five hundred
thousand ($500,000) for each occurrence. Section 2315.18(B)(2). There are
no limitations for catastrophic injuries under S.B. 80.4 A catastrophic injury is defined as either a:
Permanent and substantial physical deformity, loss of use of limb, or loss of a bodily organ system, or
Permanent physical functional injury that permanently prevents the injured person from being able to independently care for self and perform life-sustaining activities.
With respect to both non-catastrophic and catastrophic claims, this newly created statute prohibits the trier of fact from considering any of the following evidence in determining the amount of noneconomic damages:
Evidence of a defendant’s alleged wrongdoing, misconduct, or guilt;
Evidence of the defendant’s wealth or financial resources;
All other evidence that is offered for the purpose of punishing the defendant, rather than offered for a compensatory purpose.
Section 2315.18 also requires general verdicts to be accompanied by answers to interrogatories that specify the total compensatory damages, the portion of compensatory damages that represent economic loss, and the portion of compensatory damages that represent noneconomic loss.
Am. Sub. S.B. No. 80 also provides a post-judgment review mechanism and a de novo appellate review standard when awards for noneconomic loss are challenged as being excessive.
Section 2315.19.
Practical Considerations
Identify the applicable noneconomic damages statute. Section 2323.43 applies to “medical claims,” dental claims,” and “chiropractic claims.”
Section 2315.18 applies to “tort actions,” which are defined as a civil action for damages for injury, death, or loss to person or property. Tort action includes a product liability claim and an asbestos claim.
Be prepared to defend or mitigate efforts to create or inflate economic damages.
Counsel should consider using a defense life care planner at trial to rebut plaintiff’s life care planner. Counsel should utilize a life care planner who specializes in physical medicine as this may garner more credibility than the Ph.D. life care planner traditionally retained by plaintiffs and render him or her able to present testimony on which items presented in the plaintiff’s life care plan are unnecessary, or are necessary but not related to the allegations at issue. This would presumably result in a significant reduced life care plan. Also, counsel should consider using a defense economist at trial. If possible, a defense economist should use the tables prepared by the plaintiff’s economist to demonstrate: (a) a reduced present value and (b) the weakness inherent in a present value analysis given the number of assumptions involved. Counsel should also carefully review economic damages and determine whether portions of medical expenses were waived by the billing entities and/or satisfied by third-party payors.
Be prepared to refute claims that even minor injuries
fall within the exception for catastrophic injuries.
Pursuant to Section 2315.18(B), there is no limitation on an award for noneconomic damages for catastrophic claims. As a result, defendants need to be very aggressive from the onset to ensure that the case law that develops allows the catastrophic injury exception to apply only to those cases that are truly deserving.
Prepare to preemptively anticipate and thwart
plaintiff’s efforts to inappropriately introduce statutorily prohibited evidence.
Evidence that a defendant is wealthy may increase the size of a judgment and has nothing to do with the plaintiff’s noneconomic loss.
Under Section 2315.18(C), evidence of a defendant’s wealth or any evidence offered for the purpose of punishing the defendant is prohibited in determining noneconomic damages. Now that this evidence is expressly prohibited, defendants need to be prepared to anticipate and preemptively prevent plaintiffs from bringing it in indirectly through motions in limine that are followed up with motions seeking sanctions and/or new trials.
Carefully draft interrogatories. With the new limitation on noneconomic damages, carefully crafted interrogatories could prove extremely helpful. Therefore, itemize all damages, such as “past medical expense” and “future medical expenses,” so that defense counsel can confirm the propriety of what has been awarded for economic damages.
Do not expect courts to reduce verdicts reached by a jury. While there is now a
prescribed manner in which an excessive verdict can be reviewed, this may be a provision with little teeth.
Judges have long enjoyed the ability to reduce excessive verdicts through remittitur, but historically
have not done so under the premise of not wanting to interfere with the decision of the jury.
Reduction of the amount of the verdict will probably still only occur in the most extreme cases.
Statutes of Repose
Sections 2305.10 & 2305.131
Analysis of the Provisions
Am.Sub. S.B. No. 80 enacts two new statutes that establish statutes of repose for both products and construction-related claims.
Section 2305.10 provides a 10-year statute of repose for product liability claims. Section 2305.131 provides a 10-year statute of repose, which begins 10 years from the date of substantial completion,” 5 for construction-related claims.
Both Section 2305.10 and Section
2305.131 prohibit the application of the statute of repose if the defendant engaged in fraud. In addition, both provisions prohibit such immunity if the defendant has provided an express warranty as to the life of the product or improvement.
Section 2305.131(B) provides an additional exception and prohibits the application of the 10-year statute of repose where the defendant is an owner of, tenant of, landlord of, or other person in actual possession and control of the improvement to real property at the time the unsafe condition caused the plaintiff’s injury.
Practical Considerations
Consider whether any of the exceptions to the
statutes of repose are applicable. Counsel should determine whether any of the exceptions to the statutes of repose are applicable to the case. The statutes will not apply if the defendant engaged in fraud or provided an express warranty as to the life of the product or improvement. An additional exception might apply if the claim is a construction-related claim and the defendant is an owner, tenant, or landlord of the property.
In construction-related claims, be prepared to
demonstrate the “date of substantial completion.”
In construction-related claims, the “date of substantial completion” is the trigger for the running of the 10-year statute of limitation. As a result, counsel should be prepared to thwart plaintiff’s efforts to argue that that date occurred later in time.
Collateral Sources
Section 2315.20
Analysis of the Provision
Am. Sub. S.B. No. 80 revises Ohio’s collateral source rule for tort actions6 by allowing defendants to introduce certain evidence of benefits that have been paid to the plaintiff as a result of damages that resulted from the injury or loss that is the subject of the pending claim. A defendant, however, is prohibited from introducing evidence of benefits paid if the source of the benefits has a mandatory self-effectuating federal right of subrogation, a contractual right of subrogation, or a statutory right of subrogation. In addition, unless the plaintiff’s employer paid for the life insurance or disability policy and the employer is a defendant in the tort action, a defendant is also prohibited from introducing evidence of benefits paid if the source pays the plaintiff a benefit that is in the form of a life insurance payment or a disability payment.
Section 2315.20(A).
If the defendant elects to introduce evidence as described above,
the plaintiff may introduce evidence of any amount the plaintiff has paid
or contributed to secure any of the benefits that the defendant introduced into evidence.
Section 2315.20(B).
Practical Considerations
Identify the correct collateral benefits statute. Section 2323.41 applies to “medical claims,” “dental claims,” and “chiropractic claims.”
Section applies to a “tort action,” which is defined as a civil action for damages for injury, death, or loss to person or property. Tort action includes a product liability claim and an asbestos claim.
Conduct a thorough discovery of collateral benefits. Counsel should ensure that the collateral benefits evidence admitted relates to the injury at issue.
Determine whether workers’ compensation may be admitted. Counsel should determine whether or not workers’ compensation benefits are the subject to the right of subrogation. See
Holeton v. Crouse Cartage Co. (2001), 92 Ohio St. 3d 115 and S.B. 227 (124th General Assembly), effective April 9, 2003.
Determine the availability of additional arguments for employer defendants.
Section (A) permits employer defendants to introduce evidence of a life insurance payment or a disability payment if the employer paid for the life insurance or disability policy. Also, employer defendant who are self-insured may have some additional argument to set-off workers’ compensation benefits.
Asbestos Claims & Successor Liability
Section 2307.97
Analysis of the Provision
A newly created provision provides protection to companies from exposure to asbestos claims under very narrow circumstances.
Section 2307.97. This provision was designed to provide protection from additional liability for injury claims alleging exposure to asbestos to companies that never manufactured asbestos, but have paid out millions to defend and settle such claims as a result of subsidiaries they acquired decades ago.
Specific criteria need to be met in order to qualify for the protection. Significantly, the protection only applies to companies that became successors
before January 1, 1972.
Section 2307.97(B).
If a stock or asset purchase was involved, the successor
qualifies only if the successor paid less than fifteen million dollars ($15M) for the stock or assets of the transferor.
Section 2307.97(B)(1)(a).
If a merger or consolidation was involved, the successor qualifies only if the
fair market value of the total gross assets of the transferor at the time of
the merger or consolidation was less than fifty million dollars ($50M).
Section 2307.97(B)(1)(b).
When the statutory criteria are met,
Section 2307.97(C)(1)(a) and (b) limits the cumulative successor liability for asbestos claims.
The statute makes clear that a corporation described in
Section 2307.97(C)(1) or (2) “shall have no responsibility for any successor asbestos-related liabilities in excess of the limitation of those liabilities” as set forth in this statute.
The liability limitations applicable to successors in
Section 2307.97(C) apply to all asbestos claims pending on the effective date of the Bill.
Practical Considerations
Be prepared to establish “successor” criteria. While
Section 2307.97 provides protections to successor corporations from certain asbestos-related liabilities of transferors, a “successor” must be able to establish that the criteria for such classifications are met in order to qualify under the statute. A “successor” for purposes of this provision means “a corporation or a subsidiary of a corporation that assumes or incurs, or has assumed or incurred, successor asbestos-related liabilities or had successor asbestos-related liabilities imposed on it by court order.”
Be prepared to defend the labeling of liabilities as “successor asbestos-related liabilities.”
Counsel must be able to demonstrate that the liabilities qualify as “successor asbestos-related liabilities.” “Successor asbestos-related liabilities” are defined in the statute.
Section 2307.97(A)(5)(a).
Develop a defense to fair market value and total gross assets determinations.
Plaintiff’s counsel will likely focus significant attention on the determination and methodology of determining the fair market value and total gross assets, since the successor’s liability is limited to the fair market value of the acquired stock or assets or the fair market value of the total gross assets. Under
Section 2307.97, a corporation may establish fair market value or total gross assets by any method that is “reasonable under the circumstances.” While the statute provides guidelines as to what types of assets and values ought to be included in that calculation, defense counsel ought to anticipate litigation as to what “reasonable under the circumstances” means.
Be prepared to defend constitutional challenges to retroactive legislation.
Because Section 2307.97 applies to all pending asbestos claims, counsel should anticipate constitutional challenges relating to retroactivity.
Limited Immunity For Certain Property Owners
Sections
901.52, 1519.07 & 1533.18
With limited exceptions, Am.Sub. S.B. No. 80 enacts a new statute that provides immunity for owners, lessees and renters of premises that are open to the public for direct access to growing agricultural produce.
Section 901.52.
Section 1519.07 of Am.Sub. S.B. No. 80 provides certain limited protections to property owners with land adjacent to recreational trails and expressly states that such owners owe no duty to users of recreational trails to keep trails safe.
Am.Sub. S.B. No. 80 also expands the applicability of Ohio’s “recreational user” statutes to apply to
privately owned lands, ways and waters by amending the definitional section applicable to Chapter 1533, which governs hunting, fishing and other recreational uses of property. Prior to the amendment, these statutes only applied to state-owned property.
Section 1533.18(A) defines “premises” as:
(A) . . . all privately-owned lands, ways, and waters, and any buildings and structures thereon, and all privately owned and state-owned lands, ways, and waters leased to a private person, firm, or organization, including any buildings and structures thereon.
Similarly, the definition of “recreational user” has been amended to reflect that persons granted permission to enter privately
owned property to hunt, fish, trap, camp, hike, swim, operate a snowmobile or all-purpose vehicle, or engage in other recreational pursuits are recreational users.
Section 1533.18(B).
Immunity From Cumulative Consumption/Obesity Claims
Section 2305.36
Am.Sub. S.B. No. 80 enacts a new statute that provides immunity to defendants sued by persons who consumed food, beverage, and chewing gum products.
The new statute provides broad protection to manufacturers, sellers and suppliers of "a qualified product." "Qualified product" is broadly defined in
Section 2305.36(A)(4) as:
Articles used for food or drink for a human being or other animal;
Chewing gum;
Articles used for components of any article listed in division (A)(4)(a) or (b) of this section.
With limited exceptions, this statute provides that no manufacturer, seller or supplier of a "qualified product" and no trade association is liable in damages for injury, death, or loss, resulting from or related to cumulative consumption, weight gain, obesity, or any other health condition that is related to cumulative consumption, weight gain or obesity.
The limited exceptions to the immunity are set forth in Section
2305.36(D):
The misbranding of the qualified product involved;
Any knowing and willful violation of state or federal law that applies to the qualified product involved;
Any breach of express contract or breach of express warranty in connection with the purchase of the qualified product involved.
The statute itself expressly provides for the recovery of attorney fees to a party that prevails on a motion to dismiss an action alleging an injury or seeking relief related to “cumulative consumption, weight gain, obesity or any other health condition that is related to cumulative consumption, weight gain, or obesity.”
Section 2305.36(C).
Additional Provisions
Am.Sub. S.B. No. 80 incorporates a number of additional reforms ranging from eliminating the consumer expectation test for certain product liability claims to permitting non-use of seat belt evidence in tort actions to mitigate noneconomic damages. Am.Sub. S.B. No. 80, as passed by the Ohio General Assembly, includes the following additional provisions:
Product liability & the consumer expectation test.
Section 2307.75 eliminates the consumer expectation test as a stand-alone
test for design defect causes of action and modifies the risk utility test to:
(1) include the consumer expectation test and (2) require a plaintiff to
prove the existence of a “reasonable alternative design."
Subrogation. Section 2323.44 creates the Ohio Subrogation
Rights Committee, which will include 6 voting members and 7 non-voting members,
to study the issues surrounding Northern Buckeye Educ. Council Group Health Benefits Plan
v. Lawson (2004), 103 Ohio St.3d 188, a decision regarding subrogation.
Seat belt evidence. Section 4513.263(F) allows
evidence of non-use of a seat belt to be introduced in tort actions for the
purpose of reducing noneconomic damage awards.
Foreign causes of action. Section 2305.03(B) creates a
“borrowing statute” for purposes of a statute of limitations and bars a
claimant from bringing a claim in Ohio if he/she is time barred in his/her own state.
Product liability & common law. Section 2307.71
eliminates common law negligent design actions by abrogating Carrel v. Allied Products
Corporation (1997), 78 Ohio St.3d 284.
Jury instructions. Section 2315.01(B) requires
jury instructions regarding the tax implications of compensatory and
punitive damage awards.
Frivolous conduct. Section 2323.51 permits courts,
on their own initiative, to impose sanctions for frivolous conduct.
Final appeal order statute. Section 2505.02, Ohio’s
final appealable order statute, now provides for immediate appeals of
constitutional challenges related the statutes of repose for products and
construction, the limitations on noneconomic damages, the limitations on punitive
damages and amendments to the wrongful death statutes under S.B. 80.
Health care immunity. Sections 2305.113, 2305.234,
3719.81, 4713.02, 4715.42, 4723.01, 4723.28, 4723.43, 4723.44, 4723.48, 4723.482,
4729.01, and 4731.22 modify the civil immunity provided to health care professionals and health care workers.
Footnotes
|
