Local Government Liability PDF Print E-mail

 The Mandate: Local governments are favored targets of lawsuits because they are perceived as having deep pockets and, in many instances, they may be the only viable defendant, even if they are only minimally related to the incident giving rise to the cause of action. Compounding this problem is a myriad of New York State laws that (1) amplify the financial exposure local governments face from such lawsuits and (2) increase the incentive to commence frivolous lawsuits against municipalities.

Jury Trials
One major source of cost to local governments and property taxpayers is the jury trial system for civil actions against municipalities. Numerous studies have shown that juries render larger damage awards than judges. The United States Bureau of Justice Statistics found that jury awards were larger than awards handed down by a judge.1 In addition to excessive damage awards, jury trials are more expensive for local governments to litigate. Studies indicate that litigation costs, for both the municipal defendants and the state which administers the judicial system, are greater in jury trials than bench trials because jury trials are longer and more involved. For example, jury selection accounts for nine to seventeen percent of total trial time.2 Moreover, the prospect of large jury awards serves as an incentive to sue local governments, even if the perceived likelihood of success on the merits of the case is small

Excessive Damage Awards
Additionally, the compensation which local governments must pay frequently exceeds defendants' actual damages, pain, and suffering. Juries also "appear to be more receptive to ‘redistribute the wealth' arguments than judges."3 Finally, in many instances local governments are sued because they may be the only potential source of money, even if the local government is only nominally related to the case or partially responsible for the damages.

The Cost: New York's laws regarding local government liability result in higher insurance premiums for local governments. In addition, local governments incur substantial costs defending meritless lawsuits. While it is difficult to quantify the costs to local governments of New York's plaintiff friendly laws, the failure to reform New York's tort laws is costing municipalities across New York State millions of dollars. For example, New York City alone estimates that the failure to reform New York's collateral source law will cost it nearly $164 million in pending cases. And cities from Albany to Buffalo, as well as hundreds of villages and towns across the State, are forced to pay out hundreds of thousands, even millions of dollars, each year - all because the Legislature has not yet fixed this obvious mistake. This means not only higher taxes, but also fewer services, firefighters or police officers for our communities.

The Solution:
Court of Claims Jurisdiction
Unlike cases brought against New York's cities and villages, cases brought against the State of New York are adjudicated by the State's Court of Claims, which does not adjudicate cases via a jury. Consequently, the State of New York is subject to neither excessive jury awards nor the expense of litigating jury trials. New York's local governments should be afforded this same cost-saving opportunity. Requiring cases against local governments to be adjudicated by the Court of Claims would lower the costs local government and local property taxpayers incur in defending jury trials.

Cap Non-Economic Damage Awards
As previously mentioned, juries are susceptible to "redistribute the wealth" arguments. They often view local governments as having limitless resources and thus force them to pay large monetary awards. Consequently, New York's existing tort system should be amended to compensate plaintiffs more accurately for the actual damages they incur. Specifically, state law should be amended to reduce the municipal costs for tort liability by imposing a medical expense threshold and a $250,000 cap on non-economic damages in actions against public entities. Thirty-eight states cap both economic and non-economic loss damages against local governments.

Endnotes
1."The Decline In Jury Trials: What Would Wal-Mart Do?," South Texas Law Review, Winter 2005, Justice Scott Brister, citing Bureau of Justice Statistics, U.S. Dep't of Justice, NCJ Bull. 202803, Civil Trial Cases and Verdicts in Large Counties, 2001 3 tbl.2 (2004), http://www.ojp.usdoj.gov/bjs/pub/pdf/ctcvlc01.pdf; see also Eric Helland and Alexander Tabarrok, "Runaway Judges? Selection Effects And The Jury," Journal of Law, Economics and Organization, October, 2000.
2."The Decline In Jury Trials: What Would Wal-Mart Do?," South Texas Law Review, Winter 2005, Justice Scott Brister, citing Dale Anne Sipes et al., Nat'l Ctr. for State Courts, On Trial: The Length of Civil and Criminal Trials 14, 40 (1988).
3.Eric Helland and Alexander Tabarrok, "Runaway Judges? Selection Effects And The Jury," Journal of Law, Economics and Organization, October, 2000.