Publications

The Los Angeles and San Francisco Daily Journal

Publication Date: June 04, 1997

More than a decade after California voters decided to introduce an element of fairness into "deep pocket" litigation, the courts of this state seem determined to limit the effect of Proposition 51. The latest evidence came last month in Moreno v. S.H. Kress & Co., 97 Daily Journal D.A.R. 5459 (April 29, 1997), when the Court of Appeal in Sacramento said a store held strictly liable for selling a defective product could be required to pay all of the plaintiffs' pain and suffering and other non-economic damages -- even though Prop. 51 (Civil Code section 1431 et seq) says defendants should be liable only for their fair share of such damages based on their share of the fault.

In Moreno, the court decided to ignore the intent of Prop. 51 and instead to focus on its words, declaring that the statute simply does not apply unless the defendant's liability is based on fault. Thus, the Moreno court took the paradoxical position that, because the store was not "at fault" at all, it could be held liable for all of the plaintiffs' non-economic damages.

The paradox stems from the two different meanings of the word "fault." First, there is fault in the sense of wrongdoing -- for example, the breach of a duty of care that gives rise to negligence. Because a strict liability plaintiff is not required to prove that breach, courts say liability is imposed "regardless of fault." But then there is the other use of the word "fault," meaning "share of the blame." This is the sense of the word at issue in Prop. 51 and in the many California cases holding that comparative fault principles can be applied to apportion liability among defendants who are negligent and defendants who are strictly liable. What's more, the cases the Moreno court relied on, which say Prop. 51's limitations don't apply to vicarious liability, are very different from a case based on strict liability.

The facts of the Moreno case are as straightforward as they are tragic. Three-year-old Nicholas Moreno was severely burned when loose caps for a toy cap gun exploded in his pocket. After finding that the caps were defective due to inadequate warnings and packaging, the trial court ruled that the distributor who had imported and packaged the caps was 100 percent responsible for that defect. Although the distributor was bankrupt and could not pay the judgment, the S.H. Kress store where Nicholas's father had bought the caps was also liable -- under the principles of strict liability -- since it had sold a defective product that caused injury.

Kress never disputed its liability for the Moreno family's economic damages, such as medical expenses and income lost as a result of Nicholas's injuries. Even after Prop. 51, such liability is joint -- that is, any defendant found liable can be required to pay all the economic damages. Indeed, the facts of Moreno are a good example of why the voters approved joint liability for economic damages: That way, if one of the defendants goes bankrupt, as the toy distributor did, the cost of the injury is borne by other responsible parties, not by the innocent plaintiff.

But Kress argued that Prop. 51 requires that liability for non-economic damages be several -- that is, apportioned according to fault -- because that is what the statute says. The first sentence of Civil Code Section 1431.2, declares that, in an action "based upon principles of comparative fault," each defendant's liability "for non-economic damages" is several, not joint. The second sentence then explains quite clearly what that means:
Each defendant shall be liable only for the amount of non-economic damages allocated to that defendant in direct proportion to that defendant's percentage of fault.

Seizing on the first sentence's reference to an action "based on comparative fault," rather than the second sentence's explanation of what Prop. 51 was all about, both the trial court and the Court of Appeal in Moreno held that the limitation on damages in section 1431.2 does not apply to a defendant held strictly liable, because such liability is predicated not on comparative fault, but on public policy considerations.

Writing for a unanimous court, Associate Justice Vance W. Raye analogized strict liability to vicarious liability, which is also based on public policy considerations, and noted that other California appellate courts have held that Prop. 51 does not apply to a defendant held vicariously liable for another's wrongful conduct. For example, an employer held liable under the doctrine of respondeat superior for a housekeeper's negligent driving was held jointly liable for the non-economic damages of someone injured in a car accident. (Miller v. Stouffer, 9 Cal. App. 4th 70 (1992). Similarly, an automobile rental company held vicariously liable for a renter's accident under permissive user statutes was not protected by section 1431.2, even though the company was not "at fault." Rashtian v. BRAC-BH, 9 Cal. App. 4th 1847 (1992). And in Srithong v. Total Investment Co., 23 Cal. App .4th 72 (1994), a landowner liable for an independent contractor's negligent repairs was held jointly liable for non-economic damages because his liability was based on public policy, not fault.

But vicarious liability is different from strict liability, and the difference is important to understanding why section 1431.2 ought to apply to a defendant like Kress. On one hand, a vicariously liable defendant "stands in the shoes" of the person who is at fault. Because of her status as employer, for example, the defendant in Miller v. Stouffer was liable for her housekeeper's negligence and was therefore liable for the housekeeper's share of non-economic damages even though the employer was not at fault. As Justice Raye explains in Moreno, the doctrine of vicarious liability is concerned with "shifting" responsibility; that is why the principles of comparative fault, which are concerned with "sharing" responsibility, do not apply to vicarious liability.

On the other hand, a defendant who is strictly liable is not being held accountable for another's wrongdoing. Rather, a manufacturer or retailer is held accountable for its own conduct -- putting a defective product into the stream of commerce -- and not for its status in relation to the wrongdoer.

Because strict liability is based on conduct, not status, recent cases even recognize that strict product liability raises many of the same fault issues as a negligence claim does, particularly when the alleged defect is a failure to warn as it was in Moreno. See, Carlin v. Superior Court, 13 Cal. 4th 1104 (1996) ("In the failure-to-warn context, strict liability is to some extent a hybrid of traditional strict liability and negligence."); Anderson v. Owens-Corning Fiberglas Corp., 53 Cal. 3d 987 (1993) ("The strict liability doctrine has incorporated some well-settled rules from the law of negligence and has survived judicial challenges asserting that such incorporation violates the fundamental principles of the doctrine.")

Thus, the doctrine of strict liability is a "sharing" doctrine, not a "shifting" one, and applying principles of comparative fault to a strictly liable defendant is entirely appropriate. Indeed, that is exactly what the California Supreme Court said almost 20 years ago in Safeway Stores, Inc. v. Nest-Kart, 21 Cal.3d 322 (1978): "Nothing in the rationale of strict product liability conflicts with a rule which apportions liability between a strictly liable defendant and other responsible tortfeasors."

Justice Raye distinguishes Safeway by saying it "has nothing to do with section 1431.2 or with vicarious liability," but those distinctions do not support his holding. Safeway could hardly be expected to have addressed a statute that was then only a twinkle in some tort reformer's eye. And the footnote from Safeway that Justice Raye quotes -- in which the Supreme Court says, '[W]e have no occasion in this case to determine whether the comparative indemnity doctrine should be applied in a situation in which a party's liability is entirely derivative or vicarious in nature" -- suggests that the Supreme Court recognized that vicarious liability and strict liability might merit different treatment.

Justice Raye does not, however, quote other parts of the Safeway opinion, such as the Supreme Court's comment that, if liability could not be apportioned whenever strict liability was alleged, "bizarre, and indeed irrational, consequences" would follow. For instance, "a manufacturer who was actually negligent in producing a product would frequently be placed in a better position than a manufacturer who was free from negligence but who happened to produce a defective product."

Precisely the same language applies to Prop. 51. In Moreno, for example, Kress apparently would have been better off being a little bit negligent. Had the retailer been put on notice that the warning on the caps was inadequate, for example, perhaps it would have shared the blame with the manufacturer and been allocated only that share of the non-economic damages. Indeed, even if it had been 95 percent at fault, its liability would have been limited by Prop. 51.

Thus, the Moreno decision is inconsistent with the intent of section 1431.2, which was to introduce fairness into the doctrine of joint and several liability by ensuring two things: first, that an injured plaintiff will be fully compensated for economic losses as long as some responsible party is able to pay; but second, that a defendant responsible for only a fraction of the fault does not become a deep pocket target for multimillion-dollar judgments for non-economic damages. Even where a defendant is not negligent but is strictly liable, a jury can and should determine its share of the blame so that the important public policies of section 1431.2 can be advanced.

Early reports are that S.H. Kress is not going to appeal this decision, for financial reasons. If the state Supreme Court depublishes Moreno pursuant to Rule 979 of the California Rules of Court, it will at least no longer be precedent that other courts can rely on. But the ultimate resolution may lie with the Legislature, which could amend the statute to clarify that it applies to cases involving strict liability.