The 1995 Legislature made sweeping changes to Oregon's comparative fault and joint and several liability statutes. 1995 Oregon Laws chap. 696. The amendments apply to causes of action for wrongful death, personal injury, and property damage arising on or after September 9, 1995. Most of these cases now pending in Circuit Court are subject to the 1995 changes. This article examines some questions regarding the practical application of the law. The author thanks Judge Robert P. Jones who has articulated important questions that trial lawyers need to consider in handling cases subject to the amendments. Robert P. Jones, "Tips From the Bench," Multonamah Lawyer (November 1998) 17.

The driving force behind the amendments was the desire of tort reform, insurance, and defense interests to have juries compare the fault of persons and entities who were not parties to the lawsuit and to further limit the joint liability of tortfeasors. The legislature rejected proposals that would have allowed for the comparison of fault of nonparties and phantom tortfeasors. Under the enacted statutes, a defendant may request that the jury company the fault of anyone with whom the plaintiff settled before verdict and any proper third party defendant. The legislature codified the common law practice of permitting a party to blame all of plaintiff's damages on a person not sued. However, an entity that allegedly was the "sole cause" which has not been properly sued as a third party defendant does not appear on the verdict form.

Because the contribution statute of limitations of ORS 18.450(5) and not the statute governing plaintiff's underlying claim governs third party actions, a defendant will rarely be precluded by the statute of limitations from bringing the third party claim.

Whose Fault is Compared?

As amended, ORS 18.470(2) requires the trier of fact to compare the fault of the following persons (i.e., their names appear on the verdict form): (1) anyone from whom plaintiff seeks recovery; (2) the plaintiff, if contributory negligence is alleged; (3) anyone with whom the plaintiff has settled (regardless of whether plaintiff sued them); and (4) any third party defendant properly brought into the case. The first two categories are self explanatory.

The third category, "any person with whom the claimant has settled," requires more that merely plaintiff dismissing a defendant from the case. Otherwise, plaintiff could not voluntarily dismiss a named defendant after it became clear that there was no legal liability for fear the jury might assign a percentage of fault to the dismissed defendant. If the remaining defendants refuse to agree that the nonliable defendant shall not appear on the verdict form, the nonliable defendant should file a motion for summary judgment. Because ORS 18.470(2) only permits the comparison of fault of persons "who are liable in tort to the claimant," a summary judgment in favor of one defendant precludes any other party from later contending that the previously dismissed defendant was at fault. If any of the other defendants wants the fault of the party moving for summary judgment to be compared on the verdict form, the nonmoving party must affirmatively respond to and defeat the motion for summary judgment.

The final category allows the jury to consider the fault of any third party defendants properly brought into the case. There are further safeguards for the plaintiff in addition to the requirement that any third party defendant be liable in tort. The third party complaint must be filed within 90 days after the third party plaintiff is served with plaintiff's summons and complaint. "Otherwise, the third party plaintiff must obtain agreement of parties who have appeared and leave of court." ORCP 22C. A defendant who wants to name a third party defendant may have to forego filing Rule 21 motions.

The jury may not assign a percentage of fault to a third party defendant who is immune from liability, not subject to the jurisdiction of the court, or not subject to liability because the statue of limitations or ultimate repose has run. ORS 18.470(2). Because the contribution statute of limitations of ORS 18.450(5) and not the statute governing plaintiff's underlying claim governs third party actions, a defendant will rarely be precluded by the statute of limitations from bringing the third party claim. The two year statute for contribution claims does not begin to run until the third party plaintiff has agreed to a settlement or a judgment against it has become final. ORS 18.450(3) and (4).

Any party may assert the third party defendant's defenses of immunity, lack of jurisdiction and statutes of limitations and repose (i.e., that the third party defendant is not a proper party). ORS 18.470(4). The third party plaintiff bears the burden of proving the third party defendant's liability and causation. ORS 18.470(3). This could be significant in terms of the order of proof and who bears the litigation costs.

Some defendants have attempted to allege as an affirmative defense that "plaintiff's injuries were caused by third parties beyond defendant's control and that no party who caused any injury was an employee of defendants or otherwise under their control." Such a pleading does not allege ultimate facts sufficient to permit the jury to allocate a percentage of fault to an unidentified entity who has not been properly sued as a third party defendant. "Since the 1995 amendments, the factfinder may consider the share of fault of persons who before might have been 'absent tortfeasors' or third-party defendants, but who are now third-party defendants. [Citations omitted.] However, the 1995 amendments still do not allow fault allocation of 'absent tortfeasors who have not settled with a plaintiff." 1 Damages (Oregon CLE 1998)§9.27.

At most, such an allegation might permit defendant to argue that an unidentifiable nonparty was the sole cause of plaintiff's damage. ORS 18.470(5). provides that the 1995 legislation "does not prevent a party from alleging that the party was not at fault in the matter because the injury or death was the sole and exclusive fault of a person who is not a party in the matter." Prudent defense counsel will specifically allege the identity of any such nonparties out of concern that the court will not let the jury consider the conduct of joint tortfeasors whose identity is know or could have been readily ascertained. Careful counsel for plaintiff will move to strike or make more definite and certain the name of the alleged phantom tortfeasor. Plaintiff should move for a directed verdict where defendant concedes it was partially at fault. In all other cases, plaintiff should request that the nonparty "was the sole and exclusive fault" and the cause of plaintiff's damage.

A defendant who has not settled does not have to contend at trial that the settling defendant was at fault, nor does the remaining defendant have to list the settling defendant on the verdict form. Because the remaining defendant would have the burden of proving that the defendant who settled was at fault and a cause of plaintiff's damage, only the remaining defendant can require the inclusion of the settled defendant on the verdict form.

Settlement

Some of the most frequently asked questions deals with the change in treatment of settlements. Previously, a verdict was reduced pro tanto (i.e., dollar for dollar) by the amount of the settlement. ORS 18.455(1) was amended to provide for a reduction in the amount of plaintiff's damages by the settling person's percentage of fault. Under the pro rata approach, the nonsettling defendant pays its percentage share of several liability without regard to the amount of the settlement. For example, plaintiff settles with Acme for $2,000 and goes to trail against Doe. The jury's verdict finds that Acme is 40% at fault, Doe is 60% at fault, and awards plaintiff damages in the sum of $10,000. Under the pre-1995 statutes, the jury could not have assigned a percentage of fault to Acme. The judge would have reduced the $10,000 verdict by the $2,000 settlement and entered judgment against Doe for $8,000. Under the new law, the court enters judgment only for Doe's several share of $6,000 (i.e., 60% of $10,000).

Another question is whether the new law creates a windfall for plaintiffs. As the example demonstrates, whether plaintiff gets more or less than the jury's determination of damages can only be answered after verdict. The pro rata treatment of settlements is consistent with proportionate recoveries limited to several liability. A defendant who goes to verdict pays its several share of the verdict---no more and no less. Such a defendant pays only its several or proportionate share of damages regardless of whether plaintiff settled for too little or too much. Both the risk and reward of a preverdict settlement rest exclusively with plaintiff and the settling defendant. The nonsettling defendant neither benefits nor loses because of someone's settlement.

The 1995 amendments were modeled in large part upon the 1977 Uniform Comparative Fault Act. The official commentary states that the pro rata approach "is fairly based on the proportionate-fault principle." John W. Wade (along with two Oregon lawyers) was a member of the eight person committee that wrote the Uniform Act and commentary. Dean Wade wrote that the "effect of this plan is that p[lanitff] sells, for the amount established in the settlement, his claim against A[cme] for A[cme]'s equitably apportioned responsibility, no matter whether it is more or less than the settlement amount. The only persons affected by the settlement are P[laintiff] and A[cme], who voluntarily entered into it and each of them consciously takes the risk that the settlement will not work out in his favor. The drawback to it is that it may not strongly encourage a plaintiff to settle. On the whole I find this solution to be the most desirable of the three and I recommend it." John W. Wade, "Multiple Tortfeasor Liability in Products Liability Suits." 55 Mississippi Law Journal 683, 703 (1985).

The United States Supreme Court adopted the proportionate share treatment of settlements for cases governed by the common law admiralty. McDermott, Inc. v. AmClyde, 511 US 202, 128L Ed 2d 148, 114 S Ct 146 (1994). The court found that the pro rata was the alternative most consistent with the concepts of comparative fault and contribution, most likely to promote settlements, and best served the interests of judicial economy.

More than one commentator has opined that the 1995 amendments discourage settlements. This argument was made to and rejected by the legislature. The proponents argued that the legislation would not reduce the number of global settlements, but would likely reduce the number of settlements with less than all defendants. There are no know statistics that answer the question. Plaintiff should be very reluctant to settle with fewer than all defendants. Plaintiff not only bears the burden of settling for too little, she assumes the settled person's share of fault on reallocation. ORS 18.484(3). Unless a defendant's offer is disproportionately higher than its likely percentage share of fault, plaintiff should only settle when agreement can be reached with all tortfeasors.

A defendant who has not settled does not have to contend at trial that the settling defendant was at fault, nor does the remaining defendant have to list the settling defendant on the verdict form. Because the remaining defendant would have the burden of proving that the defendant who settled was at fault and a cause of plaintiff's damage, only the inclusion of the settled defendant on the verdict form. If plaintiff wants the jury to assign a percentage of fault to the settled defendant, plaintiff must not settle with that party. If the remaining defendant does not want to bear the burden of proof, then it is not entitled to have the settled defendant's name included on the verdict form.

Another question that has arisen is whether a party may introduce evidence of a settled party's fault where defendant does not contend that the dismissed party was not at fault. The answer is extremely fact dependent. The relevance depends upon the issues of the case unrelated to the fact of the settlement. Such evidence might be exculpatory of a remaining party's fault or help explain why plaintiff did not discover a remaining defendant's fault until after the two year statute of limitations had run.

It is not expected that the 1995 amendments will change the way depositions and out-of-court statements of settled parties may be used at trial. For example, the prior out-of-court statements of a settled party would not be admissions of a party-opponent under OEC 801(4)(b). The settling defendant might be thought of as gone, not forgotten, appearing on the verdict form, but no longer a "party opponent."

How does the court explain to the jury why it is considering the fault of someone who settled before trial? There is an express prohibition against telling the jury about a settlement. ORS 18.480(3). However, the pre-existing language of ORS 18.480(2) requiring that the jury be informed of the legal effect of its answers remains on the books. The solution is found in ORS 18.470(3) which allows a defendant who assumes the burden of proof to require the jury to assign a percentage of fault to a settled party. The court should instruct the jury that defendant Doe alleges that Mr. Acme is at fault and that his fault is a cause of plaintiff's damage; you are to answer the questions on the verdict form.

Reallocation

While the 1995 amendments provide for the initial entry of a judgment for several liability only, a defendant whose percentage of fault is both more than 25% and greater than plaintiff's percentage of fault is subject to a reallocation of any uncollectible portion of the judgment. ORS 18.485. "Uncollectible" means more than exhausting the available liability insurance. The motion to reallocate must be filed within one year from when the judgment becomes final by failure to appeal or exhaustion of appeals. Some have mistakenly spoken of the one year period as a waiting period before the motion to reallocate can be filed. The one year period is the deadline for filing the motion.

The complexity of the reallocation provisions does not allow a fulldiscussion here. Nor are there any known cases of a motion being made to reallocate. With 97% of all cases filed settling before trial, with most cases involving only one defendant, with 65% of all cases being resolved for $50,000 or less, and with many catastrophic damage cases involving defendants who are all adequately insured, joint and several liability is an issue in only a few cases.

Conclusion

The 1995 amendments have been criticized for being too complex. The two simplest alternatives are a return to common law joint and several liability and the abolishment of what remains of the doctrine. While both alternatives would be simple to apply, neither is likely to occur politically.

The bench and bar's best hope is to carefully study the statutes and to keep in mind the age old lesson that nothing in life is free. If defendant wants to compare the fault of someone who plaintiff did not sue, defendant has to sue them and bear the burden of proof. If defendant wants to try to reduce its percentage of fault by suing a third party defendant, it risks suppressing plaintiff's percentage of fault and increasing the amount of plaintiff's damages. If plaintiff wants a tortfeasor's fault to be compared, plaintiff has to sue them and not settle with them. If plaintiff wants to settle with less than all parties, she runs the risk of recovering less than her full damages. Be careful what you wish for. It just might come true.

"Reprinted by permission of the Oregon State Bar Litigation Journal. This article was originally published in THE LITIGATION JOURNAL, March, 1999."