Who Goes on the Verdict Form: Arkansas’ Evolving Apportionment Rules

April 2018
Edward M. Slaughter, Quincy A. M. Jones, Celina Walker
Arkansas

 

Arkansas law provides for allocation of fault among defendants, settled parties, and some identifiable nonparties. Fault cannot be assigned to unidentified “phantom parties,” and the law is unsettled regarding whether bankrupt and otherwise immune parties such as employers can share an allocation of fault. Pursuant to the 2014 amendments to the Arkansas Rules of Civil Procedure, Rule 9 now provides the process for asserting a defendant’s right to nonparty fault allocation. See Ark. R. Civ. P. 9(h)(2); Ark. R. Civ. P. 49(c); Ark. R. Civ. P. 52(a)(2). Timeliness is key. A defendant must identify nonparties in its initial responsive pleading or in an amended pleading after the party discovers the nonparty’s information required by Rule 9. Debate continues regarding the definition of “nonparty” and how nonparty fault allocation affects Arkansas’s comparative fault scheme. This article provides guidance on these issues, but one should keep a watchful eye for new developments.

A. The Civil Justice Reform Act of 2003

Arkansas is a comparative fault state. Plaintiff may recover damages from any and every responsible defendant only if plaintiff is less than 50% at fault. Ark. Code Ann. § 16-55-216. In a multi-defendant case, plaintiff may recover the percentage of fault assigned any defendant, even where the fault of the plaintiff is greater than the individual defendant.1 See Walton v. Tull, 234 Ark. 882, 356 S.W.2d 20 (1962); Riddell v. Little, 253 Ark. 686, 488 S.W.2d 34 (1972). 

Prior to 2003, defendants could be held jointly and severally liable for the amount of damages in a judgment, meaning all or any one of such defendants is liable to the plaintiff for the entire judgment. Corn v. Farmers Ins. Co., 430 S.W.3d 655, 659 (Ark. 2013). However, the Arkansas legislature passed the Civil Justice Reform Act of 2003 (“CJRA”) which abolished joint and several liability in most negligence cases. See Ark. Code Ann. §§16-55-201 to 16-55-220. The statute provides that “the liability of each defendant for compensatory or punitive damages shall be several only and shall not be joint” and that “each defendant shall be liable only for the amount of damages allocated to that defendant in direct proportion to that defendant’s percentage of fault.” Ark. Code Ann. §16-55-201 (a), (b)(1). 

A plaintiff can only collect from a defendant the proportionate share of the damages for which it is severally liable, unless plaintiff can prove by a preponderance of the evidence that the defendant’s shares are not reasonably collectible. Ark. Code Ann. §16-55-203 (a)(1-2). “Reasonably collectible” is not defined in the statute or case law, and plaintiff only has ten days after a several judgment is entered against multiple-party defendants to request a collectability determination from the court. Ark. Code Ann. §16-55-203 (a)(1). If defendant’s shares are not reasonably collectible, the court shall increase the percentage of the several shares of each of the remaining defendants.2 Stated differently, “. . . an uncollectible judgment against one defendant may serve to increase the amount collectible on a judgment against another defendant.” Davis v. CNH Am. LLC, No. 08-3015, 2008 U.S. Dist. LEXIS 25774, at *7 (W.D. Ark. 2008) (citing A.R.C. § 16-55-203). 

The CJRA also dictated the procedure for allocating fault in civil actions by instructing the fact finder to “consider the fault of all persons or entities who contributed to the alleged injury or death or damage to property, tangible or intangible, regardless of whether the person or entity was or could have been named as a party to the suit.” Ark. Code Ann. §16-55-202(a). Negligence or fault of a nonparty could be considered if the plaintiff entered into a settlement agreement with the nonparty or the defending party provided notice that a nonparty was at fault no later than one hundred and twenty (120) days before trial. Ark. Code Ann. §16-55-202(b)(1).  

The Arkansas Supreme Court subsequently found the CJRA “nonparty fault allocation” provision to be unconstitutional under the separation of powers section of the Arkansas Constitution. Johnson v. Rockwell Automation, Inc., 308 S.W.3d 135 (Ark. 2009). In Johnson, the court ruled that the instructions prescribing how to allocate fault were within the realm of the judiciary to create, and not the legislature. Id. While the Arkansas Constitution allows the legislature to make substantive changes to the law, the Arkansas Supreme Court “shall prescribe the rules of pleading, practice and procedure for all courts.” Id. at 141-142 (quoting amendment 80, § 3 to the Arkansas Constitution). The court determined that the section of the CJRA modifying joint and several liability was clearly substantive and could stand, but the section outlining procedural requirements by which the fault of a nonparty shall be litigated was void. Id.  

B. The Uniform Contribution Among Tortfeasors Act and Arkansas Rules of Civil Procedure 

In 2013, the legislature passed Act 1116 which modified Arkansas’s Uniform Contribution Among Tortfeasors Act (“UCATA”) by adding the definition of several liability and a new section stating that “the right to contribution is not limited to money damages but also includes the right to allocation of fault as among all joint tortfeasors and the rights provided for in § 16-61-204.” See Ark. Code Ann. § 16-61-202. But, it did not include a procedural mechanism. Ark. Code Ann.  §§ 16-61-201 (2); 16-61-202 (c).  

Originally only specifying fault for the sole purpose of indemnity and money damages, Act 1116 “created a new, substantive right to allocation of fault separate from the right to recover money damages.” English v. Robbins, 452 S.W.3d 566, 572 (Ark. 2014).3 This arguably left the task of developing a nonparty fault allocation procedure to the courts. Instead, the Arkansas Supreme Court appointed a Special Task Force on Practice and Procedure in Civil Cases to consider the unconstitutional provisions of the CJRA in conjunction with court rules. In re Spec. Task Force on Prac., Proc. in Civ. Cases, 2013 Ark. 303, 2 (2013); see also In re Special Task Force on Practice & Procedure in Civil Cases — Ark. R. Civil P. 9, 49, 52, & Ark. R. App. P.-Civ. 8, 2014 Ark. 340 (2014).

The Task Force recommended amendments for Rules 9(h), 49(c), and 52(a)(2) of the Arkansas Rules of Civil Procedure, all of which involve the allocation of nonparty fault. The amendments were adopted by the Arkansas Supreme Court and ARCP 9(h) now provides the sole procedural process for asserting the right to an allocation of nonparty fault. Ark. R. Civ. P. 9, Addition to Reporter’s Notes (2014 Amendment). Under the rule, in an action for personal injury, medical injury, wrongful death, or property damage, a defending party seeking to allocate fault to a nonparty must provide notice by identifying the nonparty and stating why the nonparty is at fault for the injury. Ark. R. Civ. P. 9(h)(2). The information must be stated in the initial responsive pleading if known at the time or in an amended pleading after the party discovers the information. Ark. R. Civ. P. 9. The notice requirement does not apply to a nonparty who has entered into a settlement agreement with the claimant. Ark. R. Civ. P. 9. For the settling parties or a nonparty to appear on the verdict form, the party seeking fault allocation must establish a prima facie case of the nonparty’s fault. Ark. R. Civ. P. 49(c); Ark. R. Civ. P. 52(a)(2). Defendants now have the procedure to allocate fault to nonparties, however the tensions between the CJRA, UCATA and the Amendments leave open to some debate about exactly what qualifies as a “nonparty.”

C. Defining the term “Nonparty”

Employers and Other Entities That are Immune from Suit

Before the CJRA abolished joint and several liability, the Arkansas Supreme Court ruled that employers are immune from liability for contribution because the exclusive-remedy section of the Arkansas Workers’ Compensation Act prevails over the UCATA. W.M. Bashlin Co. v. Smith, 643 S.W.2d 526, 534 (Ark. 1982); see also Hendrix v. Alcoa, 506 S.W.3d 230 (Ark. 2016) (concluding that the Workers’ Compensation Act exclusive-remedy provision still applies in a latent disease tort case, even if the latent disease cannot be discovered until well past the applicable statute of limitations). However, the new language in Rule 9(h)(1) provides for fault allocation to parties under Ark. Code Ann. § 16-61-202(c) of the UCATA, which incorporates fault-allocation as part of the right of contribution. Ark. R. Civ. P. 9(h)(1). Further, in Rule 49(c), the Reporter’s Notes state that the rule is based in part on the unconstitutional section of the CJRA (A.C.A. 16-55-202), which originally reflected the choice by the legislature to allocate fault to parties who could not be held liable, such as employers. Ark. R. Civ. P. 49, Addition to Reporter’s Notes (2014 Amendment) (“The jury shall allocate the fault, on a percentage basis, among those persons or entities, including those not made parties, found to have contributed to the injury, death, or property damage.”); see also Ark. Code Ann. § 16-55-202 (“In assessing percentages of fault, the fact finder shall consider the fault of all persons or entities who contributed to the alleged injury or death or damage to property, tangible or intangible, regardless of whether the person or entity was or could have been named as a party to the suit.”) 

However, while the rule tracks the statutory definition of joint tortfeasor in the UCATA, the rule is neutral on questions as to its scope. Ark. R. Civ. P. 49, Addition to Reporter’s Notes (2014 Amendment). Specifically, it does not attempt to answer “whether the phrase ‘may have joint liability or several liability’ [as it is used in ARCP 49] includes persons who are immune from suit or are beyond the court’s jurisdiction.” Ark. R. Civ. P. 49, Addition to Reporter’s Notes (2014 Amendment). Thus, it is likely up to the trial courts to determine whether the rules allow fault-allocation to previously immune parties. Based on the legislature’s intent as demonstrated in prior enactments and the Arkansas General Assembly’s harmonization of the CJRA and UCATA, parties who are immune from suit, such as employers and bankrupt entities, should be apportioned fault on the verdict form. See generally, Act 1116, “An Act to Clarify the Meaning of the Uniform Contribution Among Tortfeasors Act; and for other purposes” (protecting the right of a defendant for “allocation of fault” and explicitly providing that a person is only liability for the amount of damages allocated to that defendant in direct proportion to that defendant’s percentage of fault); see also Ark. Code Ann. § 16-55-202; Ark. R. Civ. P. 49; Reed v. Malone’s Mech., Inc., 854 F. Supp. 2d 636, 643 (W.D. Ark. 2012) (recognizing that if statutes/acts relate to the same general subject matter, each statute/act should be read in a manner harmonious with the other and must be construed together.).

Similarly, Rule 49(c)’s instruction to apportion fault to parties and nonparties who “may have joint liability or several liability” could open the verdict form door to foreign entities not subject to in personam jurisdiction. Ark. R. Civ. P. 49. It’s unclear whether this phrase requires that plaintiff only have a cause of action against the entity or whether the entity must also be amenable to suit.  

Settling Persons

Settling parties may be included on the verdict form so that the fact finder may allocate fault to them as well as named defendants. Ark. R. Civ. P. 49(c); Ark. R. Civ. P. 52(a)(2). Further, the notice requirement does not apply for settling parties because of Ark. Code Ann. § 16-61-204(d), which provides that “the remaining defendants are entitled to a determination by the finder of fact of the released joint tortfeasor's pro rata share of responsibility for the injured person's damages.” Ark. R. Civ. P. 9, Addition to Reporter’s Notes (2014 Amendment). 

Phantom Persons

The rule requires nonparties to be identified in sufficient detail and to comply with the specifications of Ark. R. Civ. P. 8(a) (outlining the fact pleading necessary in a complaint) and to permit service of process. See Ark. R. Civ. P. 9, Addition to Reporter’s Notes (2014 Amendment). This requirement was purposely enacted to limit the naming of so-called phantom tortfeasors—a tortfeaser who is unknown or inaccessible, i.e. a tortious John Doe. Ark. R. Civ. P. 9.

Time-Barred Persons

Based on previous case law, time-barred parties will still be included in nonparty fault allocation.  In a contribution case applying Arkansas law, the court treated the expiration of statute of limitations period as the same as a voluntary release by the plaintiff in regard to the defendant’s contribution claim.  Schott v. Colonial Baking Co., 111 F. Supp. 13, 22-24 (W.D. Ark. 1953). The court concluded that the plaintiff’s choices should not affect a third party plaintiff’s right to contribution and that the plaintiff’s inaction in allowing the statute of limitations to run against the third party defendant does not prevent the third party plaintiff from exercising its right to contribution. Id. A court applying Arkansas law in this manner may take a similar approach to allocation of fault. Further, in Reed, the court ruled that a third-party defendant on whom the statute of limitations had expired could be considered by the jury in fault allocation, just not the initial comparative fault determination for the fifty-percent-bar. Reed v. Malone’s Mech., Inc., 854 F. Supp. 2d 636, 643 (W.D. Ark. 2012).  

D. The Interplay with Comparative Fault 

In Arkansas, if the party claiming damages has a lesser degree of fault than the fault chargeable to the party or parties from whom the claiming party seeks to recover damages, then the claiming party is entitled to recover the amount of his or her damages after they have been diminished in proportion to the degree of his or her own fault. Ark. Code Ann. § 16-64-122(b). If the party claiming damages fault is equal or greater to the party from whom they are seeking damages, they are not entitled to recover. Ark. Code Ann. § 16-64-122(b). But whether plaintiff’s fault should be compared to both named defendants and nonparties for purposes of the plaintiff comparative fault bar is open to some debate. Two cases that pre-date the abolition of joint and several liability excluded nonparty fault from the comparative-fault determination. See NationsBank v. Murray Guard, Inc., 36 S.W.3d 291 (Ark. 2001) (plurality); Hiatt v. Mazda Motor Corp., 75 F.3d 1252 (8th Cir. 1996). Both courts cited the provision of the Arkansas Comparative Fault Act which allows fault chargeable to parties “from whom the claiming party seeks to recover damages.” NationsBank, 36 S.W.3d at 296; Hiatt, 75 F.3d at 1255; (emphasis in original). The two courts reasoned that a plaintiff is not “seeking to recover damages” from a nonparty and therefore the named defendant is not entitled to a comparison of fault among all those responsible for the harm. Id. 

In Nationsbank, the court read the comparative fault statute to bar recovery if the plaintiff's fault equaled or exceeded the aggregate fault assessed to the parties from whom the plaintiff sought to recover damages. A landlord and tenant brought negligence claims against a security guard firm and cross claims against each other. The landlord and tenant entered into a settlement agreement but each continued to pursue claims against the security firm. The landlord and tenant (now a settled party with the landlord)4 were respectively 47% and 21% at fault and the defendant was 32% at fault. Only the tenant who was 21% at fault was allowed to recover from the defendant; the landlord could not recover because its fault was greater than the named defendant’s fault. The landlord contended that the defendant and the tenant’s (settled party’s) fault should be combined in the comparison. The court rejected this argument, and ruled that statute did not provide for a comparison of fault among all those responsible for harm. The tenant-settled party was no longer someone from whom the landlord was seeking damages; thus, the landlord’s fault would only be compared to the named defendant’s fault. Nationsbank, 36 S.W.3d at 296. 

In Hiatt, plaintiff appealed a jury verdict in favor of two manufacturers. The manufacturers filed a third party claim seeking contribution from another party. For comparative fault purposes, defendant manufacturer contended that under Arkansas law plaintiff’s fault should be compared with only defendant manufacturer’s fault and plaintiff could recover only if his comparative fault was less. Plaintiff argued that, once the other party was added as a third-party defendant, plaintiff was entitled to recover if his fault was less than the combined fault of defendant and third-party defendant. The court stated that the plaintiff chose not to assert a claim for damages against an impleaded third-party defendant to maintain diversity. Therefore, it affirmed the district court’s decision not to instruct the jury to combine the third-party defendant’s fault with the named defendants’ fault in the comparative fault determination. Hiatt, 75 F.3d at 1260.

Because Nationsbank and Hiatt were decided before the CJRA’s partial abolition of joint and several liability and the provisions for allocation of fault to nonparties adopted under Act 1116 of 2013 and the 2014 amendments to the Arkansas Rules of Civil Procedure, they do not address the question of whether a nonparty’s fault is to be excluded for the fifty-percent bar, even though it is included to reduce plaintiff’s recovery. 

The only case to discuss this issue since the enactment of the CJRA, but pre-Act 1116 of the UCATA and the Amendments to the procedural rules, also concluded that nonparty fault should not be considered for purposes of the comparative fault bar. Reed v. Malone’s Mech., Inc., 854 F. Supp.2d 636, 645 (W.D. Ark. 2012). 

In Reed, the court considered a motion to dismiss the defendant’s third party complaint against a third party defendant. The court ruled that even though the plaintiff was barred by the statute of limitations from asserting a claim against the third party defendant, the original defendant was still entitled to contribution from the third party defendant under the UCATA. The court also decided that under the CJRA, parties were now entitled to an apportionment of fault. However, it followed Hiatt’s reasoning in determining that under Arkansas's comparative fault statute, where a plaintiff does not assert a claim against a third party defendant, the jury should be instructed to compare the fault of the plaintiff and defendant only. The court reconciled the comparative fault statute and the CJRA by creating a two-step process for the jury—(1) plaintiff’s fault is first compared to named parties to determine the bar and if the plaintiff is less than 50% at fault, the plaintiff’s suit may proceed; and (2) if the suit may proceed, then the fact-finder can allocate fault among all named parties and nonparties.5 Reed, 854 F. Supp.2d at 645. However, Reed also cites the CJRA savings clause, which references the Comparative Fault Act but does not contain the same limitation that liability shall only be attributed to the party or parties from whom the claiming party is seeking damages. Id (emphasis added). Thus, it is possible that courts will interpret this language to allow nonparties to be considered when deciding the comparative fault bar. 

In sum, these three cases do not allow a non-party’s fault to be considered when analyzing whether the plaintiff is barred from recovery altogether. Notably, all three of the previously cited cases involved nonparty tortfeasors who the plaintiff could have joined in the action but chose not to. This raises the question of whether these cases indicate that courts will not consider nonparty fault for the plaintiff bar at all, or whether they only limit it to nonparties the plaintiff had the ability to join.6 Under Rule 49(c), parties may apportion fault to nonparties “who may have joint and several liability.” A defendant could argue that Rule 49(c)’s Reporter Note, stating that the amendment’s language tracks the unconstitutional provision of the CRJA and reflects the legislature’s original choice to allocate fault to parties that could not be held liable by a claimant. A court may be inclined to adopt this view based on the existing framework and legislative agenda to provide fault allocation.

Existing case law does not provide a clear answer of plaintiff’s recovery because there was no established law or procedure for allocating fault to nonparties when the three cases were decided. A court could take the same route as the previous cases and rule that the now-enacted CJRA savings clause does not change these three cases’ previous interpretations of the Comparative Fault Act, and only allows distribution to parties from whom the claimant is seeking damages for purposes of the bar. However, the Comment to the Arkansas Model Jury Instruction 307A suggests that a court taking this route will first have to resolve this precise legal question surrounding comparative fault and enter judgment accordingly before the providing the factfinder with a jury form similar to this. Ark. Model Jury Instr., Civil AMI 307A. The court could also instead choose to use the two-step process employed in Reed. Reed, 854 F. Supp.2d at 645.

Further, a defendant could argue that a court should interpret the CJRA savings clause as referring to and leaving in place only the fifty-percent bar determination, and does not include the portion of the comparative fault statute that limits comparison only to those whom a plaintiff seeks recovery. A defendant should advocate that this interpretation of the clause and CJRA’s overall proportional-fault policy are consistent with Arkansas comparative fault law. Under this argument, a court may allow nonparties to be considered for the fifty-percent bar. If a court rejects this argument, then the plaintiff’s fault would only be compared to the named parties in determining whether plaintiff’s recovery is barred, but nonparties may still be included on the verdict form to reduce plaintiff’s recovery.

E. Conclusion

Arkansas law allows an allocation of fault among various nonparties, including settled former parties and entities that were never in the suit. Bankrupt and otherwise immune parties such as employers should be included on the verdict form based on the General Assembly’s overall policy objective in implementing a fair-share liability scheme, including the express intent for the courts to harmonize the CJRA and UCATA. As the debate continues concerning the definition of a “nonparty” and how nonparty fault allocation affects Arkansas’s overall comparative fault scheme, including all nonparties will ensure both a fair allocation of fault and a complete record should the appellate courts address this issue further.

About the Authors
For similar guidance in other states, please refer to the following Who Goes on the Verdict Form publications: 


1 For example, Plaintiff is assigned 45% fault, Defendant A is assigned 50% fault, and Defendant B is assigned 5% fault. Plaintiff may recover 50% of her damages from Defendant A and 5% of her damages from Defendant B. However, if the Plaintiff is assigned 50% fault or greater, the Plaintiff may not recover from any Defendant regardless of the Defendant’s assigned percentage of fault.

2 In Arkansas, “[i]f the court determines, based upon a preponderance of the evidence, that any defendant's several share or multiple defendants' several shares will not be reasonably collectible, the court shall increase the percentage points of the several shares of each of the remaining defendants, subject to the limitations in subdivisions (a)(3) and (4) of this section.” Ark. Code Ann. § 16-55-203 (a)(2). Further, “[a]ny defendant whose several share has been increased pursuant to this section, and who has discharged his or her obligation to pay the increased several share, has a right of contribution from the defendants whose several shares were determined by the court to be not reasonably collectible.” Ark. Code Ann. § 16-55-203 (a)(5). However, these provisions do not apply to any punitive damages awards. Ark. Code Ann. § 16-55-203 (b).

3 The court in English also stated that “substantive right to allocation of fault ... cannot be constitutionally applied retroactively” regarding the appellants attempt to apply the newly passed statute to the instant case, which had been filed before the Act. Id. at 571. Two federal cases have ruled that the substantive right cannot be applied retroactively where the injury pre-dated the enactment of the statute. Lancaster v. Pace, 6:13-CV-06034, 2015 WL 12914428, at *3 (W.D. Ark. July 6, 2015); Bell v. Mine Safety Appliances, 1:13-CV-01075, 2015 WL 12914430, at *2 (W.D. Ark. Nov. 17, 2015). The Arkansas Supreme Court has not addressed the issue.

4 The abolition of joint liability and allocation of fault in Arkansas had not been established when this case was decided. The procedure for including settled parties on the verdict form is now dictated by Arkansas Rule of Civil Procedure 9(h). 

5 The express language of the comparative fault statute states that if a plaintiff’s fault is “equal to or greater in degree” than any fault chargeable to the party or parties from whom the plaintiff seeks to recover damages, plaintiff is barred from recovery. The Arkansas Supreme Court has barred a plaintiff’s recovery even when that plaintiff’s degree of fault is less than 50%. See NationsBank v. Murray Guard, Inc., 36 S.W.3d 291 (Ark. 2001). However, this determination has also been referred to as the fifty-percent bar. See Reed v. Malone’s Mech., Inc., 854 F. Supp.2d 636, 645 (W.D. Ark. 2012).

6 These cases were all decided before the legislature had reiterated its intention that joint tortfeasors are entitled to allocation of fault and the procedural rules were amended to include nonparties in the process.

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