Home > 5500.5, asbestos, Tactics and Strategy, Uncategorized > 5500.5 and spreading the wealth of sovereign immunity (Part 2)

5500.5 and spreading the wealth of sovereign immunity (Part 2)

In the last post, we set the stage for the breakdown in co-defendant cooperation in cases where the bulk of the liability should (but, of course, doesn’t) fall on the liability-immune Federal government.  The California Workers’ Compensation system and California case-law offers us a silver lining to this scenario.

In the case of Cloristeen Collins v. Plant Insulation Company (185 Cal. App. 4th 260 (2010)), the Court of Appeals found that when our dear monarch proudly declared that the King can do no wrong, his loyal subjects had, all along, correctly noted that the King had no clothes!

Essentially, the Court held that fault for personal injury should be apportioned amongst the parties, regardless of the sovereign immunity defense, and that each party must only pay for their percentage of fault.  So if the Federal government is 50% at fault, although it is immune to actual liability, the plaintiff can expect to receive only 50% of his or her recovery, and the defendants need dread only paying the same.

So how does this help Joe Business or Jane, Inc.?  Well, let’s say an asbestos applicant wins an award of $1,000,000.00 in a civil claim against a group of defendants, including the Federal Government.  If the jury assigns 40% of the fault to the federal government, and only 10% of the fault to Joe Business, that means that Joe Business gets a credit against Workers Compensation liability.

Why not 100% of the award credit?  Under Labor Code § 3861 a defendant employee’s credit is related to its relative fault.  So, what does that mean in the Workers’ Compensation case?

Well, Joe Business first must pay out 10% of applicant’s civil trial recovery – that’s after applicant (at that point a plaintiff) pays his or her attorney, after the costs, and after the reduction due to the Federal government’s sovereign immunity.  Assuming an attorney fee of 33%, and pretending that there are no costs to be paid out as well, Joe recovered $198,000.00 ($1,000,000.00 [base award] x 50% [federal immunity] x 66% [recovery after attorney fee]).

Joe Business will first have to pay up to $19,800.00 in the Workers’ Compensation arena. (See Rodgers v. Workers’ Comp. Appeals Bd. (1984) 36 Cal.3d 330, 336.)  But after that, Joe gets a credit for $178,200.00.  Pretty nifty, right?  More on practical application at a later date.  For now, let’s re-form the phalanx and stop playing the whipping boy for Uncle Sam tort-happy history.

Just a caveat: I’m not aware of any case where this theory has been put to the test.  So, just like the first back-yard distillery, there’s no way of knowing if it will be the cause of a huge mess or a huge celebration.  In either case, good hunting!

  1. JJ
    June 14, 2011 at 7:47 am

    Talk about CIGA next!!

    • June 14, 2011 at 7:59 am

      Soon, very soon, it’s on my list of topics to do.

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