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Charleston Business

A Fair Share: A new bill would ensure our legal system doesn’t unfairly penalize businesses

By Jason Zacher
Greenville Chamber

If you have a logo, you are a target. That’s the end result of a 2017 South Carolina Supreme Court decision that overturned landmark legislation that ensured a business would be responsible only for its fair share of damages in a lawsuit. If you make a product or if you have cars or trucks on the road, this decision is a major problem for your business. 

It’s time for the General Assembly to fix this and ensure businesses are not one lawsuit away from going out of business. Business groups across the state have sided with more than 50 House co-sponsors to help pass legislation in 2020 that will re-institute key protections from unfair lawsuits.

Prior to 2005, South Carolina was a “pure joint and several liability” state, meaning that if a party was even one percent responsible for an accident or injury, he or she could be stuck paying the entire amount of a judgement. The result is that if there are four parties equally at fault in a lawsuit, but three of them are bankrupt or have no insurance, the fourth could get stuck paying the entire judgment.

In 2005, the General Assembly passed legislation that provided a mechanism for allocating fault among all of the parties responsible for damages—including the plaintiff. If a defendant’s conduct was found to be less than 50 percent of the total fault, he/she would be liable only for the percentage of fault as determined by the judge or jury.

The Smith v. Tiffany case before the state Supreme Court in 2017 overturned that 2005 law and set South Carolina back 15 years. The plaintiff Smith was injured when his vehicle was hit by another vehicle as it pulled out of a gas station. Smith settled with the other driver for the $25,000 minimum insurance coverage. At the time of the accident, there was also a truck legally parked on the side of the road. Smith sued the truck’s driver and the trucking company, saying they were at fault for blocking the other driver’s view. The state Supreme Court’s decision allowed the trucking company to face 100 percent liability even though its percentage of fault was small. This was the finding because the driver that hit Smith was not a party to the case after they settled out of court.

All of this came despite the fact that the Court acknowledged that in cases similar to Smith v. Tiffany, there could be an inequitable result. Justice Costa Pleicones wrote in his dissent, “… in a tort lawsuit, the fact-finder must apportion 100% of the fault among all potentially responsible parties.” (Emphasis mine.)

Despite a reputation for being a pro-business “red” state, South Carolina is only ranked 37th in the nation for our lawsuit climate by the U.S. Chamber of Commerce. We’re only slightly better than California, Illinois and New Jersey and worse than New York and Massachusetts. This is not the company we want to keep in economic development circles, and the Smith v. Tiffany case was a major reason why our ranking fell three spots in 2019. 

There is legislation before the General Assembly—H. 3758—written to ensure that majority fault in a lawsuit is assigned proportionally to the at-fault parties, not simply the company with the deepest pockets. This “Fair Share” legislation will go a long way to evening the playing field and ensuring our legal system doesn’t unfairly penalize businesses. 

The legislation ensures a party with less than 50 percent fault will not have to pay 100 percent of the damages. However, if a party is still found to be more than 50 percent responsible, they still may have to pay more than their fair share of damages. 

What the bill really fixes is the injustice from Smith v. Tiffany; that plaintiffs’ lawyers won’t be able to settle with a defendant without insurance outside of court, leaving the business with the entire bill. It will disallow the “plaintiff chooses” concept and states that “apportionment of percentages of fault among all persons or entities, including plaintiffs, defendants, and nonparties, who proximately caused the damages is to be determined by the jury, or the court if there is no jury.” 

This legislation currently resides in the House Judiciary committee. Once the state legislature gets back into session in January, the passage of this bill should be a priority if our General Assembly wants to ensure a fair, pro-business public policy.