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The significant deterioration of the Georgia civil justice system that took place in 2021 has propelled the “Peach State” to its highest-ever ranking on the Judicial Hellholes® list. The Georgia Supreme Court has developed a propensity to expand liability whenever given a chance and other courts around the state are following its lead.

In 2021, the high court eliminated apportionment of fault in certain cases and expanded bad faith liability for insurers. The state continues to have a reputation for nuclear verdicts and third-party litigation financing is playing an increasing role in litigation.

   

HIGH COURT ELIMINATES APPORTIONMENT OF FAULT IN CERTAIN CASES

In August 2021, the Georgia Supreme Court delivered the plaintiffs’ bar its most significant victory in the Judicial Hellholes® report’s 20-year history. In Alston Bird LLC v. Hatcher Management Holdings, the high court ruled that Georgia law does not allow a jury to apportion fault to all those who share responsibility in single defendant cases. In other words, an individual or business can be required to pay a plaintiff’s entire damage award if it is the only one sued, even if others were at fault. This result is contrary to the legislature’s adoption of a law that was intended to ensure that a defendant’s liability is proportionate to its level of fault. The Georgia General Assembly can clarify the statute to address the Court’s ruling and the absurd result that the ability of a jury to allocate fault among responsible parties depends on how many defendants a plaintiff names in a complaint.

OTHER LIABILITY-EXPANDING DECISIONS

Bad Faith

In April 2021, the Georgia Supreme Court lowered the bar for plaintiffs bringing bad faith claims against their insurers. In Geico Indemnity Co. v. Whiteside, the high court held that a defendant’s lack of notice of a lawsuit against a policyholder is no excuse for failing to settle a claim.

In this case, an individual was driving another person’s car, which was insured by GEICO, when she collided with a bicyclist. The bicyclist’s lawyer demanded the full $30,000 policy limit from GEICO and GEICO offered $12,409. The bicyclist’s attorney ignored this counteroffer and sued the driver. The driver failed to notify GEICO of the lawsuit, discarded the summons and complaint, and failed to appear in court. As a result, the bicyclist obtained a default judgment of $2,916,204 and forced the driver into involuntary bankruptcy. The bankruptcy trustee sued GEICO in federal court for negligently or in bad faith failing to settle the claim.

The jury determined that GEICO acted in bad faith when it failed to settle the bicyclist claim for $30,000 and that it was 70% liable (totaling more than $2.7 million with interest) for the default judgment.

GEICO appealed and the Eleventh Circuit certified questions to the Georgia Supreme Court including whether Georgia’s law relieves an insurer of liability in a bad faith suit when it had no notice of the underlying lawsuit against its insured.

The Georgia Supreme Court held that although the policyholder was required to provide notice to GEICO as a condition of receiving insurance coverage, GEICO “should have foreseen” that an unreliable, unsophisticated, and unstable driver would fail to do so.

While the court did acknowledge that this decision may be limited to the facts at hand, it opens the door for similar decisions in the future.

Employment Liability

Last year’s Judicial Hellholes® report highlighted Frett v. State Farm Employee Workers’ Compensation, in which the Georgia Supreme Court held that routine work breaks are incidental to work and, therefore, injuries suffered during that time are eligible for coverage. The ruling overturned the Court’s own 85-year- old precedent, which found that employee injuries suffered while off the clock are non-compensable.

Relying on last year’s Frett decision, the Georgia Court of Appeals found that a worker who suffered an injury during her lunch break is eligible for benefits under Georgia’s workers’ compensation law. The plaintiff was walking to her car during her lunch break when she tripped on a sidewalk in a company- owned lot. This ruling provides a glimpse into the future of workers’ compensation laws in the state, where employees can now seek coverage for non-work-related injuries suffered during scheduled breaks.

Registering To Do Business In Georgia Means Registering To Get Sued In Georgia Courts

In September 2021, the Georgia Supreme Court ruled that simply registering to do business in Georgia subjects an out-of-state business to lawsuits in Georgia’s state courts for all matters, regardless of the suit’s connection to Georgia. The state high court reached this result by adhering to its own three-decade-old decision that it acknowledged was “in tension” with a series of recent U.S. Supreme Court cases. Those

U.S. Supreme Court cases have generally found that due process does not permit state courts to assert jurisdiction over a business that is not located or headquartered in a state unless there is a sufficient connection between the business’s actions in that state and the lawsuit. Contrary to Georgia, several state and federal appellate courts have rejected a “consent by registration” approach to jurisdiction. The outcome in this case, Cooper Tire & Rubber Co. v. McCall, may discourage corporations from registering to do business in Georgia.

High Court Weighs In On Meaning Of “Sufficient Notice”

In Roberts v. Unison Behavioral Health, the Georgia Supreme Court lowered the bar for plaintiffs for pro- viding the State with sufficient notice of a claim, which is intended to facilitate settlement before a plaintiff files a lawsuit.

In that instance, a person involved in an accident with a van owned by a Georgia community service board sent the state a notice of the claim that lacked details describing her injury. Instead, the notice vaguely described the “nature of loss suffered” as “bodily injury; past, present and future mental and physical pain and suffering; infliction of emotional distress; past, present, and future medical expenses; past, present, and future lost earning; diminished earning capacity.” The notice stated that the amount of loss claimed for the unspecified injuries was $1 million.

The driver then filed a negligence action in state court. Although a Georgia trial court allowed the case to proceed, the Court of Appeals granted an interlocutory appeal and reversed, holding that the “description of the nature of her loss does not fulfill the requirement that she state the required information ‘to the extent of [her] knowledge and belief and as may be practicable under the circumstances.’” The Georgia Supreme Court, however, revived the lawsuit, finding that a plaintiff fulfills the notice requirement even if he or she simply parrots the statutory definition of loss without explaining the injuries involved.

As a result of the ruling, more Georgia taxpayer money is likely to go toward paying litigation expenses and judgments that could have been avoided through early, reasonable settlements.

NUCLEAR VERDICTS BOG DOWN BUSINESS

Nuclear verdicts are multi-million-dollar awards, usually for a person’s subjective and immeasurable pain and suffering, at a level that far exceeds an amount that reasonably compensates a person for an injury. These awards typically result from a plaintiffs’ lawyer’s urging the jury to return a specific, extraordinary amount and misleading them to think that level is the norm. It also can result from plaintiffs’ lawyers inflaming the jury to improperly punish a defendant for conduct that would not qualify for punitive damages. The Judicial Hellholes® report has chronicled how the trucking industry has been one of the hardest hit by nuclear verdicts in Georgia. The American Transportation Research Institute (ATRI) indicates that while there were only four cases in 2006 where the awards exceeded $1 million, there were over 70 in 2013. From 2010 to 2018, the average verdict for truck crashes jumped from $2.3 million to $22.3 million, a nearly 1,000% increase. As a result, commercial insurance rates are skyrocketing. In the past two years, rates increased an average of 20% – 25% annually, which is suffocating smaller companies (“One respondent specified that “low risk” motor carriers are experiencing 8% to 10% increases in insurance costs, while new ventures and average-to-marginal carriers are experiencing a 35% to 40% annual increase – a trend that has occurred for three consecutive years”). Another carrier cited an increase of more than 100% in one year, $340,000 per year to $700,000 per year, which forced the company to close and more than 50 employees to lose their jobs.

John McGlynn, director of transportation at Burns & Wilcox explained: “It is really the smaller and mid- sized operations that feel the brunt of this. They have less financial flexibility. I think, ultimately, the ones that will not be able to afford the premiums will be the smaller, family-owned, 10-unit-and-less drivers. We will lose that history, that free spirit and independence which was the foundation of the trucking industry.”

Umbrella or excess liability rates have increased more than 75%, forcing most companies to scale back on their coverage. Mike Card, president of Combined Transport, explained “If someone wins $20 million from the jury, my insurance companies only pay the first $5 [million]. I would have to pay the next $15 million. We couldn’t afford that. We’d have to shut our doors.”

A recent study finds that: (1) corporate mistrust, (2) growth in third-party litigation financing, and (3) social pessimism and jury sentiment favoring plaintiffs, are the driving forces behind nuclear verdicts, which leads insurers to raise rates. According to the study, almost 50% of participants in the 2019 Edelman Trust Barometer believed that the “system” was failing them.

“This sentiment leads to a loss of faith and a desire for change, the report suggests, which may be spurring people to shift their trust to things they can exert control over – like verdicts. This attitude, legal and liability insurance experts believe, can lead juries to be biased toward the rights of plaintiffs – thinking businesses should bear a greater share of responsibility than individuals. The end result? When it exists, this prejudice can place any corporate defendant at a disadvantage.”

The number of nuclear verdicts in Georgia decreased in 2021, in large part due to court shutdowns during the pandemic. Despite the slowdown, a Rabun County jury delivered the county’s largest ever verdict. According to the family’s lawyers at Clark Fountain La Vista Prather & Littky-Rubin, the verdict also is the largest single verdict for noneconomic damages in a wrongful death case in Georgia history. The jury awarded an astounding $200 million, including $80 million in pain and suffering plus $120 million in punitive damages, to the parents of a boy who died in a boating accident. The jury found that Malibu Boats, the boat manufacturer, had negligently failed to warn of the boat’s susceptibility to swamping. It found the company 25% responsible and placed the other 75% of responsibility with the operator of the boat, the boy’s great uncle.

THIRD-PARTY LITIGATION FUNDING

Georgia’s third-party litigation funding (TPLF) industry is thriving. Funders are a quick Google search away, and a federal judge, in January 2020, ruled that litigation funding agreements are not subject to Georgia’s statutory interest rate caps. The court found that TPLF does not qualify as lending, and therefore, funders can charge any usurious rate they want. Instead of applying state lending laws, the court asked the legislature to regulate the industry. Because the Georgia Supreme Court declined to restrict the industry, TPLF will likely continue to grow in the state.

EXPANSION OF PREMISE LIABILITY CONTINUES

The Georgia Supreme Court set the stage for courts across the state to expand premises liability for land- owners with its landmark decision in Martin v. Six Flags Over Georgia. Here, the plaintiff was attacked by assailants at a bus stop outside of a Six Flags Over Georgia amusement park. A Georgia jury reached a $35 million dollar verdict, imposing 92% of the damages on Six Flags and just 2% to each of the four named attackers. The state high court unanimously ruled that businesses are subject to liability for harm to a customer even when it is a result of crime that occurred off of its property if criminal activity is allegedly “foreseeable.”

This decision opened the floodgates to outrageous lawsuits and nuclear verdicts in premises liability cases. In Georgia CVS Pharmacy, LLC v. Carmichael (November 2021), the Court of Appeals of Georgia upheld a $42,750,000 verdict against the pharmacy for a shooting that occurred in the parking lot. The plaintiff had arranged to meet an acquaintance, Gray, in the CVS parking lot to purchase an iPad. After the transaction, an unknown assailant entered the plaintiff’s car, threatened to kill him, and ordered him to hand over his money. The plaintiff tried and failed to shoot the assailant with his own pistol, at which point the assailant shot the plaintiff several times and fled. The plaintiff survived but sustained severe injuries.

Astonishingly, the jury found that CVS was 95% at fault, the plaintiff 5% at fault, and Gray and the assailant both 0% at fault. On appeal, CVS argued that the trial court erred in denying its motion for a directed verdict or a new trial because the plaintiff failed to provide sufficient evidence of proximate cause, superior knowledge of the danger on the part of CVS, and the efficacy of additional lighting or security guard presence in deterring the attack. The Court of Appeals concluded that the plaintiff demonstrated sufficient evidence in all three instances and affirmed the verdict.

CASES TO WATCH

Apex Doctrine

In October 2021, the Georgia Supreme Court agreed to decide whether Georgia will adopt the apex doctrine, a framework implemented by courts across the country to avoid the propensity of some plaintiffs’ lawyers to needlessly require high-ranking corporate officials to sit for depositions when they have no first- hand knowledge of the issue involved. In General Motors v. Buchanan, the trial court allowed Mary Barra, CEO of General Motors, to be deposed in a case involving a fatal car accident allegedly caused by a defect in a Chevy Trailblazer. The plaintiff sought to depose her based on general statements she made in April and July of 2014 regarding her Speak Up program, which promotes intra-company innovation to identify and remedy product safety issues. The Georgia Court of Appeals upheld the decision and refused to adopt the apex doctrine.

ATRA filed an amicus brief in the Georgia Supreme Court arguing that that the deposition of a high- level executive is reserved for when it is truly needed for the pursuit of justice, rather than an unjust attempt to gain an unwarranted litigation advantage irrespective of the facts. The Georgia Court of Appeals’ decision will incentivize abusive discovery, erode confidence in judicial discovery process, and undermine fundamental fairness and justice for manufacturers and other corporate litigants. It is critically important that executives are free to advance a beneficial corporate culture without fear of being subjected to deposition simply because of their job title when they have no direct involvement in, or superior knowledge of a given lawsuit. These leaders should not be subject to depositions based on general statements about safety, the implementation of safety programs, or the advancement of corporate safety cultures, for example.

Consumers, employees, and other members of the public benefit significantly when leaders, like Barra, take a personal stake in advancing a better corporate culture.

Product Liability

The Georgia Supreme Court granted certiorari to determine whether the Georgia Court of Appeals erred in dismissing a husband and wife’s personal injury suit against Snapchat regarding its “speed filter” which allegedly distracted the driver who hit them. Consistent with basic principles of tort law, the appellate court affirmed the trial court’s determination that Snapchat does not have a general duty to prevent actors from misusing their product. Will the Georgia Supreme Court find otherwise?

COVID-19 LIABILITY

Many states have enacted robust liability protections for businesses and health care providers from COVID-19 related lawsuits, and Georgia took a step in the right direction in addressing these concerns.

The legislation, originally enacted in August 2020, raises the standard for a plaintiff to recover for a claim alleging that he or she was exposed to COVID-19 on any premise, a claim of injury from receiving medical care effected by the pandemic, or a claim that personal protective equipment made, sold, or donated in response to the pandemic is defective. The law also provides an assumption that a person assumed the risk of exposure to COVID-19 at a public gathering or premises if a warning is conveyed on a sign, receipt, ticket, or event wristband. A plaintiff can overcome these liability protections by claiming that a defendant was grossly negligent, reckless, or engaged in willful misconduct. In 2021, Governor Brian Kemp (R) signed H.B. 112, the COVID-19 Recovery Act, which extends the liability protections for another year until July 2022.

The law does not cover COVID-19 liability for acts or transmission prior to the bill’s implementation, however, leaving businesses exposed when the disease was least understood and most unpredictable.

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