Should municipal liability caps be higher?

Plaintiffs’ attorneys contend that current statutory limits are too low to adequately compensate victims killed or seriously injured as a result of negligence on the part of city employees.

Last December’s tragedy at the Holidazzle parade in Minneapolis was only the latest in a series of accidents that have given some in the plaintiffs’ bar reason to wonder whether the state cap for governmental tort liability should be raised.

Plaintiffs’ attorneys point out that cities have protections other than the cap, including immunity in some instances and reluctance on the part of juror-taxpayers to award damages.

City officials and defense attorneys, however, defend the liability caps as a public policy necessity. They maintain that current limits strike a balance between compensating injured parties while protecting taxpayers who ultimately have to foot the bill for city expenditures.

Though common today, tort claims against cities are actually a relatively recent development. Minnesota cities enjoyed sovereign immunity up until 1962 when the state Supreme Court decided that cities should pay some level of damages for their torts. A year later, the Legislature enacted the Minnesota Tort Liability Act which limited municipal liability to $25,000 per single claimant and $50,000 per incident. The limits have been raised periodically since then with the latest change coming in 1997.

Currently, the liability caps are set at $300,000 per individual and $750,000 per incident (see Minn. Stat. sec. 466.04). The per incident limit will increase to $1 million on January 1, 2000.

Despite the recent increase, some plaintiffs’ attorneys believe the limits are still too low.

Minneapolis practitioner John Mariani thinks the limits should, at least, be doubled. Mariani represented the family of Jeffrey Carlson who was killed last November, along with Steven Winkel, after a Minneapolis police cruiser slammed into Winkel’s pickup truck while following a burglary suspect. Mariani characterized the $300,000 settlement received by Carlson’s family as “totally inadequate.”

Similar sentiments have been expressed by Jim Schwebel who represents several of the Holidazzle claimants. Schwebel said that Minneapolis’ offer of $750,000 to compensate all of the victims was “unconscionable.”

Two people were killed during the Holidazzle parade and 11 injured after a police van accelerated out of control.

Minneapolis attorney Marshall Tanick told Minnesota Lawyer: “When you’ve got a serious accident with several deaths and multiple injuries, $750,000 doesn’t do much and even $1 million will be way too low.”

Tanick was one of several plaintiffs’ attorneys involved in litigation following a 1993 gas explosion in St. Paul. The explosion occurred after city workers ruptured a gas line while doing routine sewer work. Three people were killed by the blast, 11 injured, and at least 40 were left homeless.

Tanick was able to avoid having the municipal liability cap work a hardship on his clients by bringing in the gas company as a third-party defendant.

Lawyers with cases against a municipality should always consider whether they can bring in a third-party defendant in order to recover beyond the municipality’s liability limit, experts in the field advised.

Bill Foster, who was also involved in the St. Paul litigation, said he finds the liability caps “inherently unfair.” He explained that a person with less severe injuries can be fully compensated under the $300,000 cap, but that those with more severe injuries are left unprotected.

“As things are now,” Foster observed, “people who are the worst victims of governmental negligence are the ones who are not compensated.”

Equally troublesome, said Foster, is the fact that the liability caps do not apply to all tort claims. Claims brought under federal civil rights law are not subject to the limitations, nor are workers’ compensation or breach of contract claims.

“So, [as a mediator] I sometimes see police brutality cases come in under civil rights law where the injuries are miniscule except for the outrage factor, which drives up the value of the case … then I see people who are very seriously injured and they don’t have the opportunity to get full compensation [because of the liability caps],” said Foster.

Defending the caps

Pete Tritz of the League of Minnesota Cities said, given the recent series of accidents involving city employees, he is not surprised some plaintiffs’ attorneys are complaining about the liability caps.

“This is a perennial issue for the plainitffs’ bar,” he said. “Regardless of what the [liability limit] is, whenever there is an individual circumstance where the limit comes into play, someone is going to raise the issue.”

Tritz explained that municipal liability limits are necessary because cities are not like private companies. Private companies can choose to leave a particular business if they conclude that the risks are too great. Cities do not have that option. They have no choice but to assume the risks.

“A city cannot just decide it doesn’t want to be in the road business anymore, or the police or fire business,” remarked Tritz.

Don McNeil, a Minneapolis attorney whose practice includes municipal defense, said legislators cannot simply keep raising the liability limit because those added costs are passed on to taxpayers.

“It comes down to a policy decision,” observed McNeil. “It’s just like the $30,000 minimum liability limit for car insurance. The Legislature weighs the need to compensate injured people against the needs of the taxpayer.”

Legal challenges

Legal challenges to the state’s liability caps have thus far been unsuccessful. The Minnesota Supreme Court upheld the statute in 1988 and again in 1989. The plaintiffs in the St. Paul gas explosion challenged the liability limits in 1994, but were rebuffed at the trial court level.

“I don’t see the [Minnesota Supreme Court] going out of its way to rule the liability caps unconstitutional,” said McNeil.

Tanick agreed, adding that “challengers have thrown everything and the kitchen sink” at the liability caps, but with little success.

McNeil also said that he doubts whether the Legislature will revisit the issue soon. He observed that the caps were raised in 1997, and the per incident cap is scheduled to be raised again in 2000.

“I think it’s safe to assume the cap will stay where it is,” McNeil said. “Whatever interest there is in the issue now is because of the publicity surrounding the recent series of tragic accidents.”

Nearly 800 of the state’s 853 cities purchase liability insurance through the League of Minnesota Cities Insurance Trust, which is a joint self-insurance organization that functions much like a nonprofit insurance company. The state’s three largest cities — Minneapolis, St. Paul and Duluth — are self-insured. The remaining cities purchase insurance from private providers.