(The Center Square) — A South Carolina policy group says the state’s civil liability system costs the state jobs and hinders its economic growth.
In a new report, the South Carolina Policy Council says small and medium-sized companies could be required to pay entire legal verdicts even if they were only partially at fault, a concept known as “joint and several” liability. The group wants state lawmakers to move toward a several-liability model where a defendant is financially liable based upon their percentage of fault.
The group’s report points to several cases, including one where a South Carolina business had to pay $250,000 through its insurance provider after serving one beer to a customer involved in a car wreck more than 12 hours later — and after visiting “other bars or restaurants.”
“We’re seeing more cases like these, we’re also hearing from people, local businesses that are saying that their insurance premiums are going up, it’s increasing the cost of doing business, they’re having to pass on those costs to consumers,” Bryce Fiedler, senior policy analyst at SCPC, told The Center Square. “Some businesses are simply unable to get insurance policies just because they’re unavailable or not being offered — or they’re prohibitively expensive. So this is all really coming together in the last few years, reaching a breaking point for the state, the state’s economy and businesses.”
According to the SCPC report, South Carolina has followed a “modified version of joint and several liability” since 2005. Under state law, a defendant at least 50% at fault “can be forced to pay an entire verdict.”
Critics like C.L. Mike Schmidt, a trial lawyer at Schmidt & Clark, said such a system could financially ruin a business, even if not primarily responsible for the plaintiff’s injuries.
Schmidt said passing liability reform would make South Carolina’s civil liability system fairer to businesses by adopting a proportionate liability system or capping punitive damages awarded.
“Now, what does this mean for South Carolina taxpayers? First, it would help to create jobs and boost economic growth,” Schmidt said. “When businesses feel more secure from frivolous lawsuits, they are more likely to invest and expand in South Carolina.
“Second, liability reform would reduce the cost of goods and services for consumers. Businesses often pass the cost of liability insurance on to consumers in the form of higher prices,” Schmidt added. “Third, liability reform would reduce the burden on the state court system. Frivolous lawsuits clog up the courts and make it more difficult for people to get their cases heard in a timely manner.”
One legal expert said most states have several liability standards.
“Several liability is the standard most states are going by, and I honestly didn’t even realize South Carolina didn’t have this in place,” Derek Jacques, an attorney at The Mitten Law Firm, told The Center Square via email.
“It is both bad for business and legally unfair for a business to be held liable for more than their part in any civil damage,” Jacques added. “If you look at examples like Michigan, where one party is found to have injured another, the court even looks at the part played by the injured party, which is how law should be written and executed.”
Fiedler said the state’s current system “incentivizes defendant targeting.”
“The system allows them to go after defendants who were not necessarily fully responsible for an incident and still get a large payout,” Fiedler said. “You wouldn’t want to venue target or judge shop. So we should be against the same principle, against defendant shopping and really move toward a system where if you are 25% at fault for an incident, you pay 25% of the damages.”
