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2006 LEGISLATIVE SESSION, continued and Education Board established by a joint powers agreement between the City of Crookston and the Crookston School District. The School District made arrangements for the boiler maintenance and under the joint powers agreement, the School District bore the cost of the boiler checks. After protracted litigation, a federal district court jury awarded over $12 million dollars in damages to Mr. Reimer and his wife. The damages, however, were awarded only against the School District. The jury found that because the School District owned and operated the boiler that caused the injury, it alone was responsible for the damages award. Although-theimJ-awarded millions of dollars in damages, due to the statutory cap on tort liability for government entities, Mr. Reimer could only collect $300,000 from the School District. Minnesota Statute ~466.04, subdivision 4 limits a municipality's liability for damages in a single tort claim to $300,000 (a tort is an act, other than a breach of contract, that injures someone in some way, and for which the injured person may sue the wrongdoer for damages). Mr. Reimer appealed. In the appeal, he did not argue that the Ciry of Crookston was negligent or that the City was in any manner responsible for Mr. Reimer's injuries. Instead, he argued that the City and the School District, as collaborators in a joint enterptise (the Joint Recreation and Education Board), were jointly liable for damages arising out of the joint enterprise. In essence, Mr. Reimer sought to collect the statutory cap amount of $300,000 from the City, along with the statutory cap amount of $300,000 from the School District. Contrary to many expectations, the Eighth Circuit Court of Appeals agreed with the plaintiffs, Mr. Reimer and his wife. The GoULt of Appeals foumlthat eaclL.p.ar.ty_tQ a joint enterprise or venture remains jointly liable for the acts of their co-parties. The Court found that the City was liable by virtue of its participation in the joint enterprise with the School District. The Court found that although the School District was the actual operator of the boiler, the City and the School District both had the legal right to control the boiler. The Court held that it was the right of control, rather than the exercise of control that determined liability. Additionally, the Court found that Minnesota law was unsettled regarding the characterization of a joint powers board for the purpose of assigning liability to its members. The City had argued that the Joint Recreation and Education Board was a separate municipal entity and subject to only one statutory cap of $300,000. Upon review, the Court reasoned that if the member entities of a joint powers board could be held jointly responsible for their liabilities, then the joint powers board was not a separate, limited liability entity. As such, the Court held that the plaintiffs could collect from both the City and the School District, thus allowing plaintiffs to stack liability caps and receive $600,000. The Eighth Circuit's decision caused significant concern among municipalities. Due to the increased liability exposure, the case created a disincentive for governmental units to work together on joint projects. Legislation supported by the Association of Minnesota Counties, the League of Minnesota Cities, the Minnesota School Boards Association and others was enacted as a reaction to the Reimer decision. Statutory Changes to Joint Powers Liability Beginning May 25,2006, new legislation effectively overrides the Eighth Circuit's opinion in Reimer. The statute returned the present law to what previously had been presumed to be the law-prior to the Reimer decision. The Minnesota Legislature added a new subdivision to Minnesota Statute Section 471.59 to define the extent of liability for a government entity participating in a joint venture or joint enterprise, including participation in a joint powers agreement. Pursuant to the new law, a municipality participating in a joint venture or joint enterprise, including a joint powers agreement, may not be held liable for the acts or omissions of another participating government entity. Liability will only attach where the municipality has agreed in writing to be responsible for the actions or inactions of another participating governmental entity. The new law also resolves the issue of stacking liability caps. Minnesota Statute Section 471.59, subdivision 1 a, specifically provides that for purposes of determining totalJiabilitJr- fQLdamages. ~ovefRrn~ntal entities participating in a joint venture or enterprise like a joint powers board are to be considered a single unit. Accordingly, the total liability for the participating governmental units and the joint board as a whole may not exceed the liability cap for a single governmental unit (unless waived or extended by the joint board or all participating government entities). I Under current liability caps, this limits a single plaintiff's recovery to $300,000, no matter how many governmental units are participating in a joint enterprise. Municipalities should be particularly aware of one aspect of the new law. If a government unit procures insurance for participation in the joint venture which is in excess of the tort liability caps, the procurement of lit must be noted, however. that this limited liability docs not protect an individual govcrnmemaJ entity from liability for its own independent acts or omissions that are not directly related (Q the joint activity. continued on page 3 2