A Halloween Trick? Sovereign Immunity at Risk.

By: Andrew McRoberts, Editor. This was posted Tuesday, October 27th, 2009

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Boyd Graves Conference says put localities under Tort Claims Act. More litigation and cost to the taxpayers likely if it passes.

Is this an early Halloween trick? I don’t know, but I am scared already.

According to the Virginia Lawyers’ Weekly Blog, the Boyd Graves Conference voted on October 23 to recommend that the General Assembly extend the Virginia Tort Claims Act to all Virginia local governments. The Tort Claims Act currently is limited to the Commonwealth of Virginia, and allows recovery for tort claims up to a maximum of $100,000. Virginia Code § 8.10-195, et seq.

Again according to the Virginia Lawyers’ Weekly Blog, the subcommittee considering the matter split on a 5-5 vote. A copy of the materials presented by the subcommittee, including a report favoring the measure and a report opposing the measure, can be found here. The entire Conference, which has members who are retired judges and academics but is populated largely with plaintiffs’ lawyers and defense lawyers, approved the measure on a 71-20 vote.

According to the Virginia Lawyers’ Weekly Blog, the proponents felt the measure was important to bring fairness and predictability to the process. The opponents cited the likely financial burden, the lacking any real way to predict the full financial fallout of the measure.

Fairness? While conceding that sovereign immunity may not seem fair to the specific plaintiff involved, there is a matter of societal fairness to the taxpayers at large and to the local government employees involved. This public policy has been specifically upheld time and time again by the Virginia Supreme Court, most recently in the City of Chesapeake v. Cunningham case. Moreover, there is a serious question regarding whether the Boyd Graves Conference should even have been considering a matter like sovereign immunity which disproportionately affects local governments and their taxpayers, when their representatives to the Conference are so few in number. This proposal would open a new world of substantive liability for localities where none now exists. With only a few local government representatives in the room, was that fair?

Although impossible to quantify, the financial impact will be large. Currently, localities have far lower insurance costs because of the existence of sovereign immunity. Elimination or lowering of the bar of sovereign immunity will certainly increase claims and thus the cost of insurance. Moreover, it is common sense that sovereign immunity prevents many lawsuits, or ends lawsuits at an early stage like demurrer. Under this proposal, these lawsuits will go on and likely result in trial or more likely a settlement of some kind. The settlement and defense costs of localities alone would be a huge impact from this proposal. And it is the taxpayers who will foot the bill.

A big unseen impact of this proposal would be harm to the delivery of governmental services. As the Virginia Supreme Court has said, the public policy justifications for sovereign immunity go beyond protecting the public’s pocketbook. Sovereign immunity also gives public servants protection from being haled into court. Under this proposal, every tort could end up in litigation, with the loss of employee time spent in court, in depositions, in responding to discovery. There is also the fear factor: How many good people will refuse service in government under the new order rather than face increased risk of litigation?

Predictability is a smokescreen argument. The current system for Counties is completely predictable. Counties are immune from suit for torts. Period. Any support for this measure for predictability reasons as to counties (at least) is nonsense. Cities and towns do have a more complex rule for application of sovereign immunity to the locality, depending upon whether the suit arose in a governmental or proprietary context. But extending the Tort Claims Act to towns and cities makes this no more predictable or understandable, it merely eliminates sovereign immunity for governmental activities up to the $100,000 threshold and creates more litigation. The governmental-proprietary issue will still need to be argued above the Tort Claims Act threshold. If the interest to be served is predictability or ease of application, the Counties’ complete sovereign immunity from torts should be extended to cities and towns. The waiver of sovereign immunity up to a certain dollar threshold does not make anything simpler or more predictable; it is a transfer of taxpayer dollars to plaintiffs and the lawyers on both sides.

And that is where the rubber meets the road. A wise man said one must follow the money to figure out the motivation. So let’s be frank. This Boyd-Graves proposal would be costly to local governments and thus their taxpayers. It does nothing to help the Commonwealth, except cause further taxation to the citizens. So who gets the benefit here, at the cost of the taxpayers? Plaintiffs? Undoubtedly. But also plaintiffs’ lawyers who file the lawsuits and, yes, defense lawyers who get paid to defend these lawsuits. In other words, the very same group that largely fills the Boyd-Graves Conference and voted on the proposal itself! The conflict in the Conference vote should be apparent to anyone with open eyes. Though members of the Boyd Graves are supposed to set aside their self-interest, they are human, and the appearance of conflict here does nothing to help the reputation of my chosen profession.

Localities and local taxpayers should be aware that this will likely result in a bill before the General Assembly in 2010, and should be watched carefully. This is a back-door tax increase aimed at local taxpayers, with the dollars going to plaintiffs, plaintiffs lawyers and defense lawyers.

Watch your pocketbooks, ladies and gentlemen. Another unfunded mandate which would result in higher local taxes will soon be under consideration by the General Assembly. But don’t wait for the Assembly to convene. Don’t even wait for Halloween. Be afraid. Be very afraid.

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