‘Deep Pocket’ Liability Rule Survives Modification Effort

Local governments and businesses lost their fourth bid in seven years Monday to modify the “deep pocket” liability rule that can result in multimillion-dollar court judgments against them even when they are only partly at fault.

A subcommittee of the Assembly Judiciary Committee shelved until next year two rival measures that would have limited the deep pocket rule, which is designed to ensure that victims of negligence receive full compensation for their injuries and damages.

Sen. John F. Foran (D-San Francisco), author of one measure, warned that with the defeat of his bill, his supporters will move forward with an initiative for the 1986 ballot to modify the liability rule.

Under the deep pocket provision, local governments and businesses that are found partly at fault in a case of negligence can be required to pay the victim the entire court judgment if their co-defendants have no money.

Some small cities and businesses have protested that such a rule threatens to bankrupt them and have said it prevents them from buying insurance to protect themselves.

Foran’s bill would have limited the financial responsibility of governments and businesses to the degree of their fault in causing pain and suffering and other non-economic losses. They would have continued, however, to be liable for all medical bills, loss of wages and other direct losses incurred by the victim, Foran said.

Assembly Speaker Willie Brown (D-San Francsico), in an effort to keep changes in the rule to a minimum, offered last-minute legislation that would have reduced the liability of public agencies in traffic accident cases.

Neither bill won support from the powerful California Trial Lawyers’ Assn., whose lobbying efforts over the years have been instrumental in preventing a change in the deep pocket rule, known formally as joint and several liability.

Brown’s measure also drew opposition from representatives of the cities, counties and business organizations.

“It pleases nobody except me,” Brown told the subcommittee.

In their campaign to reduce their liability, city and county officials have cited horror stories in which a drunken driver, who is largely at fault in an accident, is able to pin a small part of the blame on a public agency and win a large settlement at the taxpayers’ expense.

“My basic attitude is that the system as it presently exists is unfair to all,” Foran said.

Since 1979, at least three other bills seeking to modify the deep pocket rule have died in the Assembly Judiciary Committee.

Backers of the measures blame lobbying by the trial lawyers, whose legal fees would be limited by the measure.

Peter Hinton, a spokesman for the trial lawyers, argued that local governments and business are attempting to save themselves by reducing court awards to innocent victims.

The trial lawyers, who are among the top political campaign contributors in California, entered into negotiations with the cities and counties in Brown’s unsuccessful attempt to forge a compromise.

“By even entering into these discussions, we have gone farther than we have ever gone,” Hinton said.