Florida Tort Reform Law Passes

Passage of tort reform was the top priority of the business community in Governor Jeb Bush's first legislative session since being sworn into office as Florida's 43rd Governor. Historically, this legislative session was significant because it was the first time in this century that the State of Florida was led by a Republican Governor, and Republican-controlled majorities in the House and Senate.

This tort reform was approved by the House and Senate on votes of 84-33 and 26-14, respectively. Governor Bush has signed the legislation into law. The Florida Academy of Trial Lawyers has vowed to challenge the law in court.

The law makes wide-ranging and substantial modifications to procedural and substantive components of the civil litigation system in Florida. Highlights of the bill that are of interest to product manufacturers follow.

Frivolous Lawsuits

The bill revises current law relating to an award of attorney's fees in frivolous lawsuits with a new standard based upon whether the losing party or attorney knew or should have known that the claim or defense, at the time it was initially presented, or at any time before trial, was not supported by material facts or by the application of then-existing law to the material facts.

The bill expands the court's authority to impose sanctions for protracted litigation if the party moving for sanctions proves by a preponderance of the evidence that any litigation activities were taken for the primary purpose of unreasonable delay. Sanctions maybe initiated by a party or upon the court's own initiative. Courts are also authorized to impose additional sanctions as are just and warranted for either unsupported claims or defenses, or protracted litigation. Such sanctions include: issuance of contempt citations, taxing costs, striking claims or dismissing pleadings.

Statute of Repose

The bill establishes varying statutes of repose applicable to different types of product liability actions. The bill provides a 12-year statute of repose for products with a useful life of 10 years or less, unless the manufacturer expressly warrants a product for longer than 10 years. The bill provides a 20-year statute of repose for airplanes or vessels in commercial use unless a longer period is specifically warranted by the manufacturer. Improvements to real property, including elevators and escalators, are not subject to the statute of repose.

The repose periods do not apply if the claimant used or was exposed to the product within the repose period but the injury caused by such use or exposure did not manifest itself until after the repose period. Also, the repose periods are tolled for any period during which the manufacturer had actual knowledge the product was defective and took affirmative steps to conceal the defect.

The act contains a grandfather clause to allow product liability actions that would not have otherwise been barred, but for the new statute of repose provisions, to be brought before July 1, 2003, or otherwise be subject to the new repose periods.

Government Rules Presumption

The government rules presumption allows manufacturers and sellers to assert a rebuttable presumption that products are not defective or unreasonably dangerous if the product complies with applicable state or federal regulations. The bill also provides for a reverse presumption that the product is defective or unreasonably dangerous if it did not comply with applicable regulations.

Punitive Damages

In order to be entitled to punitive damages, a plaintiff must prove by clear and convincing evidence that the defendant was guilty of intentional misconduct or gross negligence.

Caps for punitive damages are established on a three-tiered basis:

• The first tier provides that punitive damages may not exceed the greater of three times the amount of compensatory damages or the sum of $500,000.
• The second tier applies to cases where the fact finder determines that the wrongful conduct was motivated solely by financial gain and that the unreasonably dangerous nature of the conduct, together with the high likelihood of injury resulting from the conduct, were actually known by the defendant's managing agent, officer, director or other policy making person. In this scenario, the amount of punitive damages may not exceed the greater of four times the amount of compensatory damages or the sum of $2,000,000.
• The third tier provides that there are no caps on punitive damages when the fact finder determines the defendant had a specific intent to harm the claimant and the defendant's conduct did in fact harm the claimant.

This bill also adds a limitation to multiple awards of punitive damages against the same defendant in any civil action if that defendant can establish, before trial, that punitive damages have previously been awarded against that defendant in any state or federal court based upon the same act or course of conduct. However, a subsequent award may be made if the court determines, by clear and convincing evidence, and makes specific findings of fact that, the amount of prior awards was insufficient to punish the defendant's behavior. The punitive damages caps do not apply to certain abuse actions or actions relating to nursing homes and other health-related facilities.

Joint and Several Liability

The bill establishes a multi-tiered limitation on joint and several liability and provides for the consideration of guilty non-parties on jury verdict forms. The tiered system of finding joint and several liability is based upon whether the plaintiff bears some fault for any injury.

When a plaintiff is found to be at fault, the following governs joint and several liability:

• any defendant found 10 percent or less at fault shall not be subject to joint and several liability
• for any defendant found more than 10 percent but less than 25 percent at fault, joint and several liability shall not apply to that portion of economic damages in excess of $200,000
• for any defendant found at least 25 percent at fault but not more than 50 percent at fault, joint and several liability shall not apply to that portion of economic damages in excess of $500,000
• for any defendant found more than 50 percent at fault, joint and several liability shall not apply to that portion of economic damages in excess of $1,000,000

Where a plaintiff is found to be without fault, the following shall apply:

• any defendant found less than 10 percent at fault shall not be subject to joint and several liability
• for any defendant found at least 10 percent but less than 25 percent at fault, joint and several liability shall not apply to that portion of economic damages in excess of $500,000
• for any defendant found at least 25 percent at fault but not more than 50 percent at fault, joint and several liability shall not apply to that portion of economic damages in excess of $1,000,000
• for any defendant found more than 50 percent at fault, joint and several liability shall not apply to that portion of economic damages in excess of $2,000,000

The effective date of the bill is October 1, 1999, except as otherwise provided.