Superior Court Holds Bankrupt Entities Are Not Joint Tortfeasors

| Jul 19, 2013 | Firm News

The Superior Court has held in an asbestos case that bankrupt entities are not joint tortfeasors so that non-settling defendants cannot place the entities’ names on the jury verdict form for an apportionment of responsibility.  The Court also said that defendants cannot discover the claims forms that plaintiffs submit to the bankrupt entities’ trusts to obtain compensation.

There is one remaining defendant in the case.  It filed a motion in limine to obtain a ruling that it could have the names of settling defendants placed on the jury verdict form for an apportionment of responsibility.  It also sought a ruling that the names of bankrupt entities could be placed on the verdict form.  Finally, it filed a motion to compel the production of claims forms that plaintiff had submitted to the trusts created in the entities’ bankruptcies to provide compensation to persons harmed by the entities’ products.

The Superior Court first reviewed Rhode Island’s Contribution Among Joint Tortfeasors Act (“the Act”).  When a defendant settles with the plaintiff and obtains a joint tortfeasor release, any contribution claims against the settling defendant are extinguished.  In return, a non-settling defendant may have the settling defendant’s name placed on the jury verdict form for an apportionment of responsibility for plaintiff’s injury.  The non-settling defendant receives a “credit” for the greater of either the amount the settling defendant paid or the proportion of responsibility attributed to the settling defendant by the finder of fact.  Accordingly, the Court held that the jury verdict form would include the name of each settling defendant that received a joint tortfeasor release conforming to the Act’s requirements.   Moreover, the non-settling defendant can introduce evidence of the responsibility of the settling defendants.

However, the Court held that bankrupt entities and their compensation trusts are not joint tortfeasors under the Act and their names will not go on the verdict form for an apportionment.  The Court parsed the language of the Act to determine that the entities did not meet the definition of a joint tortfeasor.  The entities are not “liable in tort” to the plaintiff because of their bankruptcies.

Moreover, public policy disfavors extending the Act to include bankrupt entities.  The bankruptcy provision creating the trusts does not require claimants to prove the entities were negligent.  Accordingly, it is akin to a workers compensation system under which employers are immune from direct suit by injured workers.

Finally, the Court said defendant could not discover the claims forms plaintiff had submitted to the bankrupt entities’ trusts to obtain compensation.  The defendant argued that information plaintiff put in the claims forms about exposure to the entities’ products was relevant to which products caused plaintiff’s injury because the forms generally require the claimant to set forth the extent of exposure to the bankrupt entities’ products.  The Court said the information was not relevant because the issue for trial was whether defendant’s products caused plaintiff’s injury and information respecting exposure to other defendants’ products is not relevant to causation.  The Court states in a footnote that if the information is relevant, it is available through other discovery and this discovery would be cumulative.

Unfortunately, this last part of the decision appears to be where the decision goes awry.  First, it is inconsistent with the the first part of the Court’s analysis that defendant can introduce evidence of settling defendants’ responsibility under the Act.   The information could bear on causation.   Hypothetically, the claims form might state that the plaintiff worked with a bankrupt entity’s products on a daily basis for decades.  By comparison, the plaintiff’s exposure to the non-settling defendant’s products may be relatively insignificant even though in isolation it may seem significant.   The claims form may be the best source of information on the extent to which the plaintiff was exposed to the bankrupt entities’ products.

Although the Court did not address this point, presumably, the non-settling defendant would get a credit for the compensation received from the bankrupt entities’ trusts.

Sweredoski v. Alfa Laval, Inc., P.C. 2011-1544, slip op., (R.I. Super. July 15, 2013).

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