California Proposition 51: The Deep-Pockets Law
California's Proposition 51, the California Fair Reponsibility Act of 1986 (also known as the "Deep Pocket Initiative") was intended to reduce the amount of non-economic damage awards being paid by defendants who were only partly to blame for the tort.
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History
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Before Proposition 51, California imposed joint and several liability on tort defendants ("tortfeasors") for both economic and non-economic damages. Under joint and several liability, if multiple tortfeasors were at fault but only one tortfeasor had enough money to pay the damages, the one wealthy tortfeasor could then be found liable for the full amount of the damage award. Such wealthy defendants are known colloquially as "deep pockets."
Fair Responsibility Act
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The California Fair Responsibility Act passed as Proposition 51 on June 3, 1986. The act is codified as California Civil Code Section 1431.2. The act effectively removed joint and several liability for non-economic damages awarded at trial. The stated purpose of the act was to protect local governments, which often had to pay the lion's share of damage awards and had been thrust into dire economic straits as a result.
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CFRA Changes
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Under the new rules of the act, in cases with multiple defendants, each defendant is still jointly and severally liable for all economic damages (such as lost wages and loss of future income) but each defendant is only liable for the amount of non-economic damages that is proportional to that defendant's percentage of fault for the injury. For instance, if two defendants simultaneously crash into the plaintiff's car, and one defendant is found to be only 40 percent at fault for the accident, then he will only be liable for 40 percent of non-economic damages awarded to plaintiff at trial, even if the other defendant cannot pay his proportional share.
Non-Economic Damages
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Non-economic damages are defined by Section 1431.2 to as "subjective, non-monetary losses." Such losses include (but are not limited to) the following: pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation. Tort law often refers to these non-economic damages as "general damages."
Settlement Issues
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While the act has largely addressed the deep pockets issue for purposes of non-economic damages awarded at trial, it has created a wrinkle in the process of settlement. Before the act, if the plaintiff reached a settlement with one defendant, the amount of that settlement could theoretically offset the amount of damages awarded at a subsequent trial involving another defendant. Now, when the plaintiff reaches such a settlement, Callifornia courts have ruled that the settlement will not be considered when assessing damages in subsequent trials for non-economic damages. Thus, a plaintiff who "settles high" could theoretically end up with a greater aggregate damage award.
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