If your business sells products in the U.S., Joint and Several Liability is the best example of how state laws can impact your business.
In “Why Naming Multiple Defendants in a Lawsuit is Common Practice” I share why plaintiff attorneys name so many defendants in a Product Liability lawsuits. Even if you have only marginal ties to the product responsible for the lawsuit, you’re potentially responsible for paying the lion’s share of the damages – or even all of it.
Joint & Several Liability serves to make sure the injured party or plaintiff is able to be made whole. This is so even if one or more of the defendants are unable pay their share of the monetary damages. Critics of Joint and Several Liability refer to this approach as the “deep pocket rule.” This is because of the potential of a Product Liability lawsuit becoming a search for the deepest pockets.
Over time, tort reform efforts have led to many states limiting the applicability of pure joint and several liability. States currently use one of the following three approaches when distributing the financial liability among defendants:
Pure Joint/Several Liability: Each defendant in a Product Liability lawsuit is responsible for the entire amount of the damages. This is so regardless of how much responsibility or liability each defendant had. Currently, 16% of states use Pure Joint and Several Liability, including my fine home state, South Carolina.
Pure Several Liability: Each defendant is only liable for a portion of the damages, based on their percentage of responsibility or liability. For example, the manufacturer and designer of a faulty product would have a higher percentage of responsibility or liability than the retail distributor. Currently, 28% of states use use this approach.
Modified Joint/Several Liability: This is the midpoint between Pure Joint/Several Liability and Pure Several Liability. It can vary greatly from state to state. Currently, 56% of the states use this approach.
Obviously, life is not fair. The portion of damages a business distributing products in all or most of the 50 states must pay depends on the state where the Product Liability case takes place.
If you want to know which states use Pure Joint & Several Liability, Pure Several Liability or the Modified Joint & Several Liability, simply check this chart.
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