Holidazzle verdict in, but the battle is not yet finished

A $4 million verdict awarded to one family and the subsequent settlement of claims by eight other victims has brought most, but not all, of the legal dispute surrounding the 1998 Holidazzle parade tragedy to an end.

The claims arose when a police van surged into the crowd at the parade, killing two persons and injuring the others. The case that went to verdict involved claims brought by the family of

Erin Lanz, now 10 years old, whose arm was amputated above the elbow after fiveoperations. Her brother also suffered less serious injuries.

The accident victims sued the city of Minneapolis and Federal Signal Corporation. Federal Signal brought in Ford Motor Company as a third-party defendant.

The plaintiffs argued that a light flasher manufactured by Federal Signal had disabled the brake shift interlock on a Ford Econoline van operated by a Minneapolis police officer. (The brake shift interlock is a safety component designed to prevent sudden acceleration incidents by preventing a driver of an automatic transmission vehicle from shifting out of park unless his or her foot is depressing the brake pedal.) The flasher was installed on the vehicle by the city.

Ford settled out of the case for a confidential sum — and the jury later determined it to have no liability.

The Lanz case was bifurcated into liability and damages portions. An 11-member jury found the city of Minneapolis 87.5 percent liable for the incident and Federal Signal liable for the remaining 12.5 percent.

After the damages portion of the case was heard, the jury awarded $3.815 million to Erin Lanz. With the additional monies awarded the girl’s father (for medical bills for the children) and brother, the award exceeded $4 million. It remains to be seen how damages will be apportioned — and whether the defense will appeal.

Minneapolis attorney Richard Gill, who represented the Lanz family, observed: “We’re gratified we were able to achieve a result for Erin that will give her the best medical care money can buy.”

Gill also represented two other Holidazzle victims — Cary Gerlicher, who suffered a broken pelvis, and her daughter, Hannah Gerlicher, who broke her leg. The Gerlichers’ case against Federal Signal was settled for $93,000.

According to Gill, five-eighths of the settlement money in the Gerlicher case will be distributed to Cary and, pending court approval, three-eighths to Hannah, who was 4 years old at the time of the injury. Both of these plaintiffs will also receive funds from the city and from Ford, Gill observed.

Minneapolis attorney James R. Schwebel, who represented the other remaining plaintiffs, told Minnesota Lawyer that his clients did not want to disclose the sums of their settlements.

Do the math

Under the municipal liability cap in effect at the time of the accident, the liability of the city of Minneapolis for the tragedy was limited to $750,000. (Subsequent to the accident the cap was raised to $1 million per occurrence.) The city has paid this amount into a court fund to be divided among the accident victims.

With the city’s liability capped, the big question is the extent of Federal Signal’s liability. Lawyers disagree as to what this amount should be.

Under Minnesota’s joint and several liability law, a defendant who is found to be 15 percent or less responsible for an accident is limited to damages that are four times its percentage of fault. That calculation would make Federal Signal liable for half the $4 million verdict.

However, Jack Fribley, the Minneapolis attorney representing Federal Signal, told Minnesota Lawyer that he will argue that the joint and several liability statute doesn’t apply to a case in which one of the defendants is a city with capped liability.

Federal Signal is not jointly liable with the city for any amount over $750,000 because the city is capped, Fribley said.

Hennepin County District Court Judge Gary Larson will decide whether Federal Signal should pay the 12.5 percent that the jury determined to be its portion of fault or the 50 percent called for by the joint and several liability statute.

Fribley also said that an argument has been raised that there were two “occurrences” in the Holidazzle tragedy, making the city liable for up to $1.5 million (i.e. $750,000 x 2). If that argument prevails, Federal Signal would be jointly liable up to $1.5 million, he said.

Schwebel said that there’s a “dangerous flip side” to the defense’s argument that there is no joint liability with the city beyond $750,000.
“If there’s no joint and several liability over $750,000 and [Federal Signal] were found responsible, they’d have to pay it all,” he said.

Gill agreed. The statute provides for several or separate liability, not merely joint liability, he explained.

“If the statute has no application at all, then Federal pays it all, ‘severally,’” he said.

Gill’s position is that joint and several liability applies to the extent of the cap — and Federal pays the balance of the $4 million.

In support of the plaintiffs’ position, Schwebel cited the 1996 case of Decker v. Brunkow in which the Court of Appeals found that the formula of the joint and several liability statute did not apply where the third party defendant (in that case the plaintiff’s employer) was immune from suit. The Court of Appeals in that case upheld the trial court judge’s decision to allocate the entire liability to the defendant and the third-party plaintiff.

“There’s a good argument that Erin will get her [entire] $3.8 million,” said Schwebel.

But defense attorney Eric Jorstad, Fribley’s partner, rejected this argument.

“That’s not several liability any more,” he said. “The only way Federal has to pay part of the city’s share is if it’s jointly liable. Under several liability, it has to pay 12.5 percent.”

William Mitchell College of Law torts professor Michael Steenson told Minnesota Lawyer that the distribution will work one of two ways. If there is found to be joint liability, Federal Signal’s share will be multiplied by four with Federal Signal being liable for 50 percent of the verdict. If there is no joint liability, then it appears that the plaintiffs are right, and the city is a nonparty as far as Federal Signal is concerned, he said. Existing caselaw, including Decker, if upheld, stands for the proposition that the statute would not apply. Therefore, Federal Signal would not be entitled to limit its liability to the 12.5 percent figure in the statute because the statute would be irrelevant, he explained.

Settlement discussions on the Lanz verdict will likely continue pending a motion to determine joint and several liability. And defense lawyers are not ruling out an appeal.
Fribley said that his clients disagree with some of the arguments made by plaintiff’s counsel during the liability phase of the trial, and also have some concerns about the treatment of Ford during the trial. Ford settled after the opening statements, but the jury was told there was a settlement when it was asked to determine Ford’s share of liability, he stated.

Additionally, “all three plaintiffs’ lawyers stressed to the jury that they hadn’t sued Ford, that there was an investigation of Ford’s liability and they saw no reason to sue Ford. There was no fair opportunity to have Ford considered,” Fribley said.

Cap criticized

The injured persons and the families of the decedents are frustrated that the city’s liability is so limited, said Schwebel.

“The families are very pleased to have this behind them. This was a sensible jury,” he stated. “[However,] the injured and bereaved have not been fully compensated, and the real at-fault party doesn’t have to pay. They are outraged by that.”

The results of the liability phase demonstrate that “it’s damn hard to predict juries,” said Schwebel. He had anticipated that Federal Signal would be found at least 25 percent liable.

The attorneys for Federal Signal and Ford believe that, in the absence of the tort liability cap, they wouldn’t be in court at all, and the plaintiffs don’t disagree.

“The practical necessity for the litigation is the cap,” said Schwebel. “It created the necessity for an extremely comprehensive investigation which implicated Federal Signal. [Federal Signal] argued that the [use of the flasher] was not an intended use. We argued that the question was whether it was a misuse that could have been anticipated. That was the whole trial.”

Gill agreed. “This whole trial was over the flasher,” he said. “We proved it was a time bomb that could disable the shift lock and did so at the worse possible time. An essential safety device was taken away from the driver and he didn’t know it.”

Noting that the jury attributed most of the responsibility for the accident to the city, Wayne Struble, attorney for Ford, said that the end result of the cap is that the party responsible isn’t paying.

“I think it’s unfair that Ford and Federal were placed in a situation of defending lawsuits that would not have been brought if it weren’t for the cap,” he said. “It’s a policy argument. It puts the loss where it doesn’t belong. The people responsible should pay, and that didn’t happen here.”