60.9 F
San Diego
Wednesday, Oct 4, 2023

Legal Reform: Unfinished Business in New Year

A March primary battle over insurance law, the plaintiffs’ bar legislative attack on protective orders and arbitration, and what to do about California’s bizarre unfair competition law , these rank high as civil justice issues as the Golden State moves into the new millennium.

The campaign has already begun for “no” votes on Propositions 30 and 31. The two referendum measures were placed on the March 7 statewide ballot after a record-setting signature gathering campaign last fall. Voters will have an opportunity to block two personal injury lawyer-sponsored bills , SB-1237 (Escutia) and AB-1309 (Scott) , that would give individuals filing personal injury and property damage suits the ability to bring a second suit against the defendant’s insurer for failing to accept bloated settlement demands.

These “third-party bad faith” suits were permitted in California during much of the 1980s, producing a revenue stream that personal injury lawyers want desperately to restore.

Contrary to what some have been led to believe, Propositions 30 and 31 affect business liability insurance as well as auto liability policies. Any doubt that the two measures would increase the cost of insurance was settled when the state legislative analyst’s independent review found that they would boost premium tax revenue to the state. That doesn’t happen without higher premiums.

- Advertisement -

The state Legislature returning this month will take a second look at a number of proposals. One is the scheme that ended up gaining the most national attention from lawsuit-wary businesses in 1999 , SB-1254 (Schiff) that would virtually kill the confidential protection of documents gathered in lawsuits, but not admitted at trial.

A Danger To Trade Secrets

A Civil Justice Association-led coalition stopped this anti-protective order legislation before its second floor vote with nearly 150 businesses and associations signing opposition letters. The bill would force the release of disparaging, inaccurate information about any company sued over an alleged product defect, environmental hazard or financial fraud , allowing lawyers to use the information to file new lawsuits. Trade secrets and proprietary business plans would be threatened whenever a complaint alleges a public hazard.

Opposition swelled as interests as far ranging as high-tech, the movie industry, financial institutions, and agriculture realized the dangers contained in this unnecessary proposal. With trial lawyers putting this bill among their top priorities for 2000, every company with a stake in stopping this kind of legislation should be on record with a strong “oppose.”

In 2000, the Legislature will get another chance to bring some fairness and common sense to the state’s infamous unfair competition law. This law has evolved into a tool enabling private attorneys to wage huge discovery campaigns and leverage settlements in all manner of cases.

Lawsuits Without Plaintiffs

A private attorney can sue without a plaintiff, without evidence of damages, and can often sustain an action merely by alleging a business’ activity to be “unfair.” The law lets a company be sued repeatedly by different lawyers over the same alleged unfair practice while most of the consumers they supposedly represent are left in the dark. This latter flaw is the subject of two cases the California Supreme Court will likely decide in 2000.

California courts and juries are producing a new surge of record-setting punitive damage verdicts, highlighted by a $4.8 billion punitive damage levy against General Motors in a case where a GM car was slammed by a speeding drunken driver. These, and the continued, almost routine use of punitive damage demands, has increased interest in legislating reasonable restrictions in this area.

Arbitration will again be a major issue. Plaintiffs’ trial lawyers are poised for another attempt to make it illegal for an employer to offer a binding arbitration agreement as part of an employment contract. Their bill in 1999 started as a ban on virtually every kind of arbitration agreement , from real estate listing agreements to retail purchase contracts. Heavy business opposition led by the Civil Justice Association caused the proposal to be narrowed to employment contracts.

Last year ended with personal injury lawyers’ continued failure to win an increase in the limit on non-economic damages under California’s model medical injury reform act. The proponents have vowed to continue their campaign in 2000 , despite the fact that health care costs are on the rise again and a boost in damage lawsuits will only make it harder for employers to offer health care packages.

Summary Judgment Threatened

The “defendant community” will be facing another dangerous trial lawyer proposal soon after legislators resume the session in January. AB-823 (Floyd), which would weaken summary judgment law, is expected to receive an early hearing.

While its subject matter appears complex, its effect would be simple and bad. Enacting this bill would make it harder for a judge to dismiss a meritless lawsuit, giving attorneys bringing such suits more leverage to tie up defendants in court and squeeze out higher settlements.

Businesses would be targeted by a new brand of job-injury lawsuits under an expanded liability proposal , AB-934 (Steinberg) , that personal injury lawyers brought to the Legislature in early 1999. It would allow , regardless of Workers’ Compensation coverage , employees of independent contractors to bring personal injury lawsuits against the company or person hiring the contractor or retaining overall control over the location where work is being performed.

Digging For Deep Pockets

These bills were slowed in 1999 by moderates who hold swing votes in the Assembly.

In 2000, the governor and Legislature will once again be challenged by proposals from a narrow group of attorneys who want to broaden and smooth their path into the deep pockets of producers of goods and services , large and small, public and private. Rather than simply say “no” to the already-too-powerful trial lawyers, lawmakers should begin to reconstruct a civil justice system that will fairly compensate people injured by the negligence of others, but stop rewarding those who use the law primarily as a device to gain ever higher settlements and attorney fees.

Anyone who doubts the need for restraints should recall a recent Los Angeles class-action lawsuit: Shareholder lawyers were set to get $3 million in fees while the people they supposedly represented were to get zero. When one of these shareholders tried to protest the lawyers’ fees, they claimed he had no right to appear in the court because he didn’t have a stake in the settlement!

Sullivan is president of the Civil Justice Association of California, a nonprofit organization formerly known as the Association for California Tort Reform.


Featured Articles


Related Articles