state sovereign immunity - sched · 1 kirk mylander, cis general counsel hector salitrero,...

16
1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN IMMUNITY 2 SHORT HISTORY OF STATE SOVEREIGN IMMUNITY Sovereign Immunity: Applies to States Cf. Governmental Immunity: Applies to municipalities, local government, political subdivisions. Common Law: The King Can Do No Wrong U.S. Constitution, Article III State Sovereign Immunity Abolished Chisolm v. Georgia, 2 U.S. 419 (1793) State Sovereign Immunity Reinstated 11 th Amendment Applied Only to Federal and State Government (Not Local) Federal Tort Claims Act (1946) Waived Immunity With Exceptions State Legislatures Began To Follow Suit Development of Ministerial vs. Discretionary Act Distinction 3

Upload: dokhuong

Post on 08-May-2018

231 views

Category:

Documents


2 download

TRANSCRIPT

Page 1: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

1

Kirk Mylander, CIS General Counsel

Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C.

STATE SOVEREIGN IMMUNITY & TORT CAPS

STATE SOVEREIGN IMMUNITY

2

SHORT HISTORY OF STATE SOVEREIGN IMMUNITY

Sovereign Immunity: Applies to States Cf. Governmental Immunity: Applies to municipalities, local

government, political subdivisions.

Common Law: The King Can Do No Wrong U.S. Constitution, Article III State Sovereign Immunity Abolished

Chisolm v. Georgia, 2 U.S. 419 (1793)

State Sovereign Immunity Reinstated 11th Amendment

Applied Only to Federal and State Government (Not Local) Federal Tort Claims Act (1946)

Waived Immunity With Exceptions

State Legislatures Began To Follow Suit Development of Ministerial vs. Discretionary Act Distinction

3

Page 2: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

2

CATEGORIES OF GOVERNMENT ACTION

Governmental v. Proprietary

Discretionary v. Ministerial

4

DISCRETIONARY IMMUNITY

State Tort Claims Act: Modeled after FTCA (2 Types)

General Waiver of Immunity With Exceptions

Discretionary Function Exception To Liability

Discretionary Immunity

Ministerial (Operational) Function

Execution of Policies and Set Tasks

Establish Immunity With Limited Waivers of Immunity

Most States

State Claims Act: Limit Immunity and Establish Procedure For Claims

Establish Court of Claims, Board, or Commission

Provide Exceptions to Liability and Procedure for Bringing Claims

Connecticut, Illinois, Kentucky, North Carolina, and Ohio

5

PREMISES LIABILITY (RECREATIONAL IMMUNITY)

Many States Establish Low Standard of Care for State Some Create Different Standard of Care Depending On:

Defect: Special Defect (Unusual Danger) Paid To Use Property

Recreational Immunity Statute – Wis. Stat. § 895.52 Provides Property Owners (Including Municipalities) With Immunity

From Suit By Person Engaged In Recreational Activity Owner Gets Minimal Pecuniary Benefit

Broad Immunity – But Not Absolute No Duty To Keep Safe No Duty To Inspect No Duty To Warn Of Unsafe Condition

Exceptions: Injury or Death When Admission Charged Malicious Act/Failure To Warn

“Malicious” = Hatred, Ill Will, or Intentional

What is “recreational activity”?

6

Page 3: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

3

EXCLUSIVE REMEDY IMMUNITY

Public Employers Sued By Employees

Workers’ Compensation Is Exclusive Remedy

Exceptions:

Intentional Act

• Kentucky: Deliberate Intention. K.R.S. § 342.610

Dual Capacity (e.g., Employer and Health Care Provider)

No Intentional Act Exception

• Alabama: An employer remains immune from suit even if it acts intentionally. Ala. Stat. § 25-5-11(a).

7

OVERLAPPING IMMUNITIES

• Fenner v. Municipality of Anchorage, 53 P.3d 573 (Alaska 2002). City employee hurt when snowplow struck protruding manhole. Received workers’ comp and sued city, alleging intentional tort. City argued exclusive remedy of workers’ compensation. Court argued about “substantial certainty.” Court ruled no specific intent to injure employee. City argued “discretionary immunity.” Court ruled that Fenner failed to preserve claim against city.

8

OVERLAPPING IMMUNITIES

• Jeter v. New Jersey Transit, 2009 WL 1118727 (N.J. Super. 2009).

Bus driver in head-on crash and suffered spinal injuries on August 1, 1999.

Driver disciplined for driving and condition of his buses after shifts.

Driver believed he was being singled out.

Driver sued Transit Authority for intentional infliction/hostile work environment.

Claim dismissed for failure to give timely notice (90 days).

On appeal, court held intentional tort exception NOT subject to notice requirement.

Loss occurred prior to Velez v. City of Jersey City, 850 A.2d 1238 (N.J. 2004). Notice provisions of Tort Claims Act apply to intentional and negligent conduct.

9

Page 4: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

4

OVERLAPPING IMMUNITIES

• Schmitz v. Xenia Bd. of Education, 2003 WL 139970 (Ohio App. 2003). School custodian died after fall from ladder. Wife sued Board of Education claiming intentional tort. In NJ, if intentional tort, parties no longer in

employer/employee relationship. Skirts Exclusive Remedy Immunity

Plaintiff also claimed the exception to municipal immunity. “Any matter that arises out of the employment

relationship” creating dangerous condition.

Court ruled that plaintiff could NOT claim “employment” exception because it was intentional It was no longer an employer/employee relationship.

10

OVERLAPPING IMMUNITIES

• Harbel v. Wintermute, 883 P.2d 359 (Wyo. 1994). County employee injured while operating county-

owned front-end loader. Employee sued co-employee supervising loader

operation. Alleged loader unsafe and employer took no action to

make it safe. Under Comp Act, employee can sue co-employee. Court held that Governmental Claims Act did NOT

waive immunity against supervising co-employees. If co-employee had been operating motor vehicle,

immunity would have been waived.

11

TORT CAPS & IMMUNITIES

• Just a Rumor of Losing Caps or Immunities

– Plaintiff Attorneys Flocking

– Actuaries Scrambling

– Reinsurers Calling

…The playing field is forever changed.

12

Page 5: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

5

THE TREND OF TORT CAP CHALLENGES

• Oregon: Line of Cases Challenging Caps

• North Dakota: Facing Tort Cap Challenge

• Utah: Prospective Challenge to Caps

• Oklahoma: Tulsa World Newspaper Did a Story on Caps

– Plaintiffs’ firm asking, “Is it time to raise the tort claim caps?”

• Maryland: Raised Caps in 2015

13

THE TREND OF TORT CAP CHALLENGES

• States With Government Liability Caps: 36

• State With No Caps: 15

States With Tort Caps

Caps No Caps

14

THE DEBATE WAS ABOUT:

How caps and immunities allow government to act in the public interest.

…Instead of forcing government to worry about losing program funds to large, uncapped claims.

PUBLIC

INTEREST

PROJECTS

15

Page 6: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

6

THE DEBATE BECOMES ABOUT:

How do we make every injured person whole?

vs.

Who pays?

16

TORT CAPS: CASE #1

17

CASE #1: SYMPATHETIC PLAINTIFF: CLARKE V. OHSU

• Baby 3-months-old suffers brain injury during heart surgery.

Parents seek $17 million for lifetime care.

OHSU only proper defendant – not government employees.

Recovery at trial court is capped $200,000 from OHSU.

18

Page 7: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

7

TORT CAPS

• Result of Case 1:

– Plaintiff can sue individuals without cap applying if capped recovery would not amount to “an adequate recovery.”

– Government entity still indemnifies uncapped individual defendants.

– Effectively an end-run around the caps.

19

LOCAL GOVERNMENT LOBBIED TO RAISE CAPS

• Provide “Adequate” But Not “Unfettered”

– Two Separate Sets of Caps

– State of Oregon / OHSU

– Local Government

• New Caps Include Escalator Clauses

– Ratcheted Up For Five Years

– Now Increase Every Year Based On CPI

20

LOCAL GOVERNMENT LOBBIED TO RAISE CAPS

• Previous Caps:

– Property Damage: $50,000

– Economic Damages: $100,000

– Non-Economic Damages: $100,000

• New Caps (Adjusted Annually For 2017-18):

– State & Local Property Damage: $116k / $579k

– Local Personal Injury/ Death: $706k / $1.41 Mil

– State / OHSU Personal Injury/ Death: $2.12 Mil / $4.24 Mil

21

Page 8: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

8

TORT CAPS: CASE #2

22

CASE #2: SYMPATHETIC PLAINTIFF: HORTON V. OHSU

• 9-Month-Old Boy With Liver Cancer

• Cut Blood Supply To Liver, Needed Transplant

• 7 Surgeries In 3 Weeks / Flown To Stanford / $5 Million Med Bills

• Verdict of $12,071,190 In Damages

• Tort Cap At $3 Million

23

TORT CAPS

OHSU Paid $3 Million For Its Capped Liability

Jury Verdict Against Employed Doctor For $12 Million (Uncapped)

– Initial $3 Mil Counts Toward $12 Million

– $9 Million In Dispute

24

Page 9: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

9

TORT CAPS

Court Entered Judgment For The Full $12 Million

Did Not Limit Judgment To $3 Million Cap

OHSU Appealed Arguing That Cap Should Apply

Setting Caps is a Legitimate Exercise of Legislative Authority

Horton argued Legislature cannot interfere with a jury verdict and/or plaintiff’s right to a unfettered remedy.

25

Reestablish hard cap for all circumstances.

Maintain the flexible cap.

Strike down all the caps.

(but find it does, or does not, apply in this case)

Possible Outcomes:

26

LOCAL GOVERNMENT ALLIES

• Who are allies of local government on Tort Cap and Immunities cases?

1. OHSU – State of Oregon

2. CIS – Pool of Cities and Counties*

3. SDIS - Pool of Special Districts*

4. PACE - Pool of School Districts*

5. Public Universities*

6. Self-Insured Cities and Counties

* Joined Municipal Risk Pool Amicus

27

Page 10: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

10

What would happen in an uncapped environment?

28

AN UNCAPPED ENVIRONMENT?

We wanted the court to understand the legislature weighed the cost of providing unfettered remedies to plaintiffs against the cost of providing stable government services to public.

The legislature reset the caps, the court should not legislate another reset.

29

TORT CAPS… OR NOT

County Population Retro/Agg or Per Occ

Deductible Premium

Coos (OR) 62,890 $97,608 $137,920

Walla Walla (WA) 59,100 $50,000 $369,104

Polk (OR) 76,625 $80,162 $111,225

Chelan (WA) 73,200 $100,000 $505,012

30

Page 11: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

11

TORT CAPS… OR NOT

Cities Population Liability Premium

Fairview (OR) 9,153 $43,127

Snohomish (WA) 9,098 $168,291

Junction City (OR) 5,552 $47,795

Ocean Shores (WA) 5,569 $110,851

31

TORT CAPS

Based on premium differences between capped and uncapped states…

…if we lose our tort caps, impact on public budgets will be an amount equal to…

227 to 487 teaching positions.

32

TORT CAPS & IMMUNITIES

…If we lose our tort caps, impact on public budgets will be an amount equal to…

…1,330 to 2,852 full-time city or county workers.

33

Page 12: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

12

TORT CAPS & IMMUNITIES

…If we lose our tort caps, impact on public budgets will be an amount equal to…

…141 to 274 full-time special district employees.

34

TORT CAPS & IMMUNITIES

830-1,778 full-time university students’ tuition and fees.

35

“The Amicus Brief… projects future insurance premium increases for local public bodies. This information would be suitable for such a legislative forum. Amicus presumably attempts to show that affirming plaintiff’s constitutional rights in this case will lead inevitably to financially devastating outcomes for local public bodies. This is by no means clear. It is certainly beyond the scope of a court to test the validity of data, weigh options, or preempt policy choices the legislature may make in the future.”

Exactly! And the Legislature’s past choices, too!

36

Page 13: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

13

Reestablish hard cap for all circumstances.

Maintain the flexible cap.

Strike down all the caps.

(but find it does, or does not, apply in this case)

Horton v. OHSU: What Happened?

37

HORTON V. OHSU: WHAT HAPPENED?

• VICTORY!

• Court held that the tort caps did not violate:

– Right to Jury Trial – It’s Procedural, Not Substantive

– Right to a Remedy – Legislature can limit government liability as a partial waiver of sovereign immunity.

Cap actually ensures solvent defendant will be available to pay.

– Two Underlying Cases Overruled; Caps Now Stable

38

WARNING SIGNS

• Tort caps have not been revised since the 80’s.

• No conversations of any kind about tort caps in your state.

• A high damage case injuring a highly sympathetic person.

• Similar states are facing tort cap challenges.

39

Page 14: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

14

THREE “SLIDE” CASE STUDIES:

Thomas Fire & Mudslide Litigation (California)

Oso Landslide (Washington)

Anaheim California Reservoir Leak (California)

40

THOMAS FIRE & MUDSLIDE

• Key and potentially inflammatory allegation in the compliant: The quasi-governmental agency spent money supposedly earmarked for safety on other costs.

• May defend on basis of immunity as in City of Austin v. Liberty Mutual, 431 S.W.3d 817 (Tex. App. 2017), where the court found:

City’s fiscal decision to curtail inspections “had to be almost certain to result” in fire damage.

City had to know at the time that its decision would result in a chain of events “substantially certain” to result in fire damage.

Must determine without hindsight.

Fire was not substantially certain to occur or “necessarily an incident to” the cost savings.

41

OSO LANDSLIDE (WASHINGTON)

3/22/14 historic landslide; mud and debris covering about one square mile in less than one minute; inundated state highways; killed 43 people and destroyed 40 homes and structures.

Presidential “Major Disaster” Declaration

42

Page 15: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

15

OSO LANDSLIDE (WASHINGTON) (CONT.)

Governor – Joint Commission Report:

Lesson Learned: Public awareness of the potential negative impacts to property caused by the existence of geologic hazards is important in ensuring the protection of the general public.

Recommendation 17: Advance Public Awareness of Geologic Hazards:

Commission recommends local governments develop public awareness initiatives to inform property owners (e.g., through property tax assessment notices) and the general public of designated geologic hazard areas, once these hazards are identified from local, regional, or statewide mapping programs.

Commission encourages Washington State Real Estate Commission to include natural hazards awareness – and, landslides, - in its ‘core’ curriculum that informs licensees on current trends and issues of importance.

Commission supports development of educational programs specific to local community issues, to raise awareness of natural hazards and risks from landslides, debris flows, flooding, volcanic eruptions, and earthquakes.

Result: Oct. 2016 settlement between survivors and State of Washington and timber company, Grandy Lake Forrest Associates: $50 Million and $10 Million, respectively.

43

ANAHEIM, CALIFORNIA RESERVOIR LEAK

Suryanto v. 396 Investment Co. 2005 WL 1155725 (4th Dt. Ct. App. Cal. 2005):

Significant damage to numerous residential properties.

Dozens of Lawsuits

Leaking reservoir owned by City of Anaheim.

Court found that the reservoir seeped 34,164,000 gallons of water per year (that exceeded 50% of its capacity).

• Result: “Notably, it argues that even though the plaintiffs established a 34,164,000-gallon annual seepage rate, they did not establish causation. This argument does not hold water. We also reject City’s defense of design immunity.”

44

CONCLUSION:

1. Keep your caps updated.

Minimize the highly sympathetic plaintiff / bad facts make bad law.

2. Share group data: strength in numbers.

3. Demonstrate losing caps and immunities will result in unstable tax rates or unstable service levels – or both.

And, at least on solvent defendant.

4. Legislature’s role to weigh plaintiffs’ needs for meaningful recovery vs. government’s ability to provide necessary services at predicable rates.

45

Page 16: STATE SOVEREIGN IMMUNITY - Sched · 1 Kirk Mylander, CIS General Counsel Hector Salitrero, Matthiesen, Wickert & Lehrer, S.C. STATE SOVEREIGN IMMUNITY & TORT CAPS STATE SOVEREIGN

16

46

CONTACT INFORMATION:

Kirk Mylander, CIS General Counsel [email protected]

Hector Salitrero Matthiesen, Wickert & Lehrer, S.C. [email protected]