Tort Reform

HB 4, adds to and amends the Civil Practice and Remedies Code and other statutes effective September 1, 2003 (certain amendments effective June 11, 2003).

Class Actions

• Gives jurisdiction to the Texas Supreme Court to hear an appeal from a trial court order certifying or refusing to certify a class
• Stays all proceedings in the trial court pending that appeal
• Requires the Texas Supreme Court to promulgate rules to be used by trial courts in calculating the fees to be awarded to class counsel, including rules requiring that:
• the fee be calculated using the lodestar method, which requires a reasonable fee based on the hours actually worked by class counsel
• if part of the recovery by the class is non-cash, the fee paid to class counsel must be in cash and non-cash in the same percentage as the recovery by the class
• Requires that before a class is certified, the trial court must rule on any plea to the jurisdiction in which it is asserted that the plaintiff’s claims are within the jurisdiction of a state agency

Offer of Settlement

• Provides incentives for parties to make and accept reasonable settlement offers early in lawsuits by shifting litigation-related costs when a party refuses a pre-trial settlement offer that turns out to be as good as or better than what that party ultimately wins
• This cost-shifting mechanism is available in most civil cases, and comes into play only upon the defendant filing an election to have the mechanism in play in that case
• The defendant’s litigation costs are shifted to the plaintiff if the plaintiff’s judgment is less than 80% of the defendant’s settlement offer
• The plaintiff’s litigation costs are shifted to the defendant if the plaintiff’s judgment is more than 120% of the plaintiff’s settlement offer
• Even if costs are shifted against the plaintiff, the plaintiff still recovers at least 50% of his or her economic damages plus the amount of any statutory liens against the plaintiff’s recovery

Multidistrict Litigation

• Creates the five-member Judicial Panel on Multidistrict Litigation, appointed by the Chief Justice of the Texas Supreme Court, that is empowered to transfer factually related cases pending in multiple counties to a single court for consolidated or coordinated pretrial proceedings
• The cases must be returned to the county in which the case was filed for trial
• This procedure, which is modeled on federal law, provides for more consistent outcomes and reduces the overall cost of large-scale litigation by creating a procedure for consolidating cases with common fact questions

Venue

• Fixes an anomaly in the current law by allowing an immediate appeal of a trial court’s decision that a plaintiff in a multi-plaintiff case has independently established venue in the county of suit

Forum Non Conveniens

• Creates a single standard--based on federal law--for determining whether a case should be dismissed so that it may be pursued in a more appropriate state or country
• The court will be able to dismiss a case that has no connection to Texas and should have been brought in another state or country if dismissal is in the interest of justice and for the convenience of the parties

Proportionate Responsibility

• Ensures that named defendants will be responsible only for the portion of fault attributable to them by allowing the jury or factfinder to consider the conduct of all potentially responsible persons when allocating fault for a plaintiff’s injury
• The jury may allocate fault to any responsible person, including a bankrupt, criminal, person beyond the court’s jurisdiction, or employer with workman’s compensation immunity
• Does not impose additional liability or cost on businesses that carry workers’ compensation insurance or others who are not parties to the case or are immune from liability
• Provides that the credit for the pre-trial settlement by another defendant in cases other than healthcare liability claims is based on the percentage of responsibility allocated to the settling defendant rather than being based on the amount of the settlement
• Provides that the credit for the pre-trial settlement by another defendant with respect to healthcare liability claims is based on the total dollar amount of the settlements unless all nonsettling defendants agree to a credit based on the percentage of responsibility allocated to the settling defendant
• Corrects a problem with the definition of "claimant" that was identified by the Texas Supreme Court

Products Liability Reform

• Establishes a 15-year statute of repose for product liability claims, except in "latent disease" cases, in which the disease does not manifest for many years after use of the product
• Creates an "innocent retailer defense" under which a retailer cannot be held liable for a product defect unless the retailer has some actual responsibility for the defect
• Numerous exceptions to the defense are provided, including an exception that prevents use of the defense if the responsible manufacturer is outside the court’s jurisdiction or insolvent
• Provides protection from liability, through the use of a rebuttable presumption, to manufacturers, distributors, or prescribers of pharmaceutical products in cases in which it is alleged that the defendant failed to provide an adequate warning about the product’s risk
• Defense is available if the defendant provided government approved warnings with the product
• Several exceptions are provided, including one making the defense inapplicable if the manufacturer misrepresented or withheld required information from the government
• Provides additional protection from liability, through the use of a rebuttable presumption, for manufacturers who comply with federal standards or regulatory requirements applicable to a product
• Protection is available only if the standard was (1) mandatory, (2) applicable to the aspect of the product that allegedly caused harm, and (3) adequate to protect the public from the risk
• Requires the Texas Supreme Court to revise the Texas Rules of Evidence to conform them to the Federal Rules of Evidence in regard to the admissibility of "subsequent remedial measures" in a products liability action

Judgment Interest

• Prohibits the assessment of pre-judgment interest on an award of future damages
• Establishes a post-judgment interest rate that is based on the prime rate and, therefore, more closely reflects market conditions
• Adjusts the current floor and ceiling for the post-judgment interest rate from 10%-20% to 5%-15%

Appeal Bonds

• Modifies the rules relating to appeal bonds so that the cost of the bond alone will not make the appeal of a trial court judgment prohibitive
• Limits the bond requirement to compensatory damages awarded to the plaintiff and places reasonable limits on the total amount of a bond

Evidence Regarding the Use of Seat Belts

• Allows the jury or fact-finder to know whether a plaintiff was wearing a seat belt at the time of an accident for the purpose of allocating fault and determining the cause of damages.

Damages

• Requires jury awards of punitive damage to based on a unanimous jury verdict
• Limits recovery of health care expenses to expenses actually incurred by the plaintiff
• Allows the jury to consider a plaintiff’s income taxes when awarding lost future income

Migration of Particles in the Air

• Allows trespass action for migration or transport of an air contaminant only on a showing of actual and substantial damage to the plaintiff.

Indemnification

• Chapter not to be construed as affecting any rights of indemnity granted by any statute, by contract, or by common law.