South Carolina's Tort Reform Statute Became Effective January 1, 2012

This post is about 40 days late, and I meant to post it earlier.  However, between discussing food liability over the holidays and getting busy, it went by the wayside.

South Carolina's tort reform statute became effective on January 1, 2012. From reviewing my Google Analytics daily report, there is a great deal of interest in what the statute means to South Carolina litigation in the future.  There have been quite a few keyword searches about tort reform that brought readers to my blog.

So without further delay, let do a quick summary of what the South Carolina Fairness in Civil Justice Act means.  I have done extensive previous blogging about the legislative process that brought about the Act, and you can find those posts here, here, here, here, here, and here.  The final version of the Act can be found here. 

In a nutshell, here is what the Act changes about South Carolina litigation:

• A claim for punitive damages has to be specifically prayed for in the Complaint.  It does not have to be a specific amount, but the plaintiff has to plead them as part of the relief being sought.  S.C. Code § 15-32-510.

• If requested by a defendant, all actions involving punitive damages must be conducted in a bifurcated trial before the same jury.  The first stage of the trial is limited to assessment of liability, and punitive damages evidence is not admissible at this stage.  Punitive damages can be considered if nominal or compensatory damages are awarded in the first stage.  In the second stage, punitive damages may be awarded only if the plaintiff proves willful, wanton, or reckless conduct by the defendant by clear and convincing evidence.  There is a long list of factors that the jury can consider in determining the amount of punitive damages.  If punitive damages are awarded, the trial court reviews the award to ensure it is not excessive.  In a case with multiple defendants, a punitive damages award must be specific to each defendant, and the defendant is only liable for that amount.  See generally S.C. Code § 15-32-520, and see subsection (E) for the list of factors considered (e.g., degree of culpability, severity of harm, etc.).

• S.C. Code § 15-32-530 sets forth the caps on punitive damages.  Generally, punitive damages may not exceed the greater of three times the amount of compensatory damages awarded to each claimant, or $500,000.  This limit cannot be disclosed to the jury.  If the amount returned is greater than the cap, then the trial court has to assess whether the wrongful conduct was motivated primarily by unreasonable financial gain and was known by a policy decision-maker or whether the defendant's actions could subject the defendant to conviction of a felony and the conduct and was the proximate cause of plaintiff's damages.  If so, then the "cap" becomes four times the compensatory damages or $2 million, whichever is greater.  If not, then the amount is reduced to the initial cap (three times compensatory damages or $500,000).  However, as Billy Mays once said, "But wait, there's more!"  That's not the end of the loopholes in the "cap."  If the trial court determines (1) there was an intent to harm by the defendant, and harm in fact, (2) the defendant pled guilty to or has been convicted of a felony concerning the same act or course of conduct that proximately caused plaintiff's injury, or (3) the defendant's actions were while under the influence of some sort of drug or alcohol....then "POOF"...the cap goes away.  The State Budget and Control Board can adjust these limits each year to factor in changes to the Consumer Price Index.  Finally, remedies under the South Carolina Tort Claims Act are exempt from this article.  If you really want to understand how all of this works, read S.C. Code § 15-32-530 in its entirety.

• A circuit solicitor can now employ outside counsel without the approval of the Attorney General for civil forfeiture proceedings arising from criminal activity or from estreatment of bail bonds.  Other matters require written approval by the Attorney General.  S.C. Code § 1-7-750.

• There are some new provisions about automobile insurers providing coverage information upon request from a claimant.  My colleague Jack Griffeth blogged about this portion of the law at the South Carolina Insurance Law Blog, and you can find his post here.  The statute can be found at S.C. Code § 38-77-250.

• I do not do construction law, but if you do, you need to check out S.C. Code § 15-3-670.  In it, you will find there are some limitations on actions based on unsafe or defective improvements to real property, evidence of fraud, negligence, gross negligence, or recklessness.  The statute also takes away the eight year statute of limitations in cases of personal injury or death.

• Finally, S.C. Code § 18-9-130(A)(1) is amended to include some new limitations on appeal bonds.  In short, the execution of a judgment is not stayed pending appeal unless the presiding judge grants a stay of execution.  Furthermore, if a stay is granted and a bond is required, the bond should not exceed the amount of judgment or (a) $25 million, whichever is less, for a business with greater than 50 employees and $5 million in gross revenue for the previous tax year, or (b) $1 million, whichever is less, for all other entities or individuals.

Those are all of the statutes implicated by the Act.  It will be interesting to see how they affect the administration of trials in South Carolina. 

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