Damage cap under the Political Subdivision Tort Claims Act is constitutional and does not violate the equal protection rights of injured parties.

The plaintiff sustained severe and permanent injuries, including a crushed pelvis and the amputation of her left leg above the knee, when a school bus, owned and operated by an employee of the appellee School District, accelerated out of control onto a sidewalk and struck 20 students. The defendant did not contest liability. While there was $11 million available to the school district in primary and excess liability insurance coverage, the defendant asserted that it was only liable up to the statutory damages cap set forth within Pennsylvania’s Political Subdivision Tort Claim Act. 42 Pa.C.S. §§ 8553(b) establishes a “statutory cap” or “damages cap,” which provides “damages arising from the same cause of action or transaction or occurrence or series of causes of action or transactions or occurrences shall not exceed $500,000 in the aggregate.” Id. § 8553(b). The sole issue presented was whether the $500,000 cap on damages was constitutional. The trial of the underlying matter had resulted in a jury verdict in favor of the injured student in the amount of $14,036,263.39. A post-trial motion to mold the verdict to $500,000 in conformity with the damages cap was granted, albeit reluctantly, with the trial court’s opinion characterizing the result as unfair and unjust. After the Commonwealth Court affirmed the lower court’s decision, an appeal to the Supreme Court challenging the constitutionality of the cap followed. The plaintiff/appellant argued that the statutory damages cap violated equal protection principles under both the Pennsylvania and U.S. Constitutions because the cap discriminated against tort victims based on whether the tortfeasor was a public or a private entity. Amicus briefs were filed by the Pennsylvania and American Associations for Justice arguing in favor of abrogating governmental immunity and the damages cap. There were 10 amicus briefs filed by local governmental entities, which argued against lifting the damages cap based on the significant negative financial implications that unlimited liability would impose. After a lengthy analysis of the parties’ positions and historical background of governmental immunity in Pennsylvania, the Supreme Court rejected the plaintiff’s arguments. The court concluded that the damage cap had a close relationship to important and legitimate governmental goals, particularly the “bedrock concern with the continued financial viability of local agencies like public school districts.” In rejecting the plaintiff’s argument that the availability of insurance to the local agency undercut such concerns, the court held that the availability of insurance to local agencies was irrelevant and that the costs involved in procuring such insurance would certainly increase in the event that a damages cap no longer existed.

Case Law Alerts, 1st Quarter, January 2015