A March 7 primary election battle over insurance law, the plaintiffs’ bar legislative attack on arbitration and protective orders, and reforming California’s bizarre unfair competition law rank high as civil justice issues affecting the business community as the Golden State moves into the new millennium.
A campaign is well under way to defeat Propositions 30 and 31 , two measures placed on the March 7 statewide ballot after a record-setting signature gathering campaign last fall. A no vote on Propositions 30 and 31 will block a personal injury lawyer-sponsored plan that would drive up insurance premiums by permitting more lawsuits against insurers. Business liability costs would increase, along with coverage costs borne by homeowners and motorists.
Any doubt 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.
For that reason, the Civil Justice Association of California has been joined by the National Federation of Independent Businesses, the California Chamber of Commerce, the California Black Chamber of Commerce, and the Latin Business Association in opposing Propositions 30 and 31.
On the legislative front, lawmakers this year are taking a second look at a number of trial lawyer-proposals introduced in 1999. One scheme gaining national attention from lawsuit-wary (and weary) businesses is state Senate Bill 1254, which would remove much of the confidential protection usually given documents gathered during the early stages of a lawsuit, even if the information would never be admitted at trial.
It’s Back
In 1999, the Civil Justice Association of California led a coalition with nearly 150 businesses and associations, including high-tech, the movie industry, financial institutions and agriculture, in a successful effort to stall this ill-conceived bill.
The bill is back in 2000 , still threatening to force the release of trade secrets and business plans of any company sued over an alleged product defect, environmental hazard or financial fraud , even if the information is found to have no bearing on the case. Trial lawyers could use this information to develop new lawsuits.
With trial lawyers putting this bill among their top priorities for 2000, every company with a stake in stopping this year. This time the issue is back in the form of a new trial lawyer-sponsored bill (AB-1751) that seeks to interfere with the ability of consumers to resolve health plan disputes through the use of cost-effective and efficient arbitration agreements. If not defeated, this bill will lead to a flood of unnecessary and frivolous lawsuits , resulting in a fee windfall for trial lawyers and skyrocketing health care cost for employers, employees and their families.
Burdens Employers
A second anti-arbitration measure (AB-858) seeks to prohibit arbitration agreements between employers and employees. If approved, this bill will burden employers (especially small businesses) and employees with costly and time-consuming court battles to resolve their differences. The Civil Justice Association is working with the broad business community to aggressively oppose these proposals.
Although business and consumers are on the defense against many damaging proposals in 2000, the new millennium will also provide the Legislature and governor a chance to enact some positive reforms to our civil justice system.
Case in point: California’s infamous Unfair Competition Law (UCL). This law has evolved into a tool enabling private attorneys to file frivolous suits and leverage huge settlements in all types of cases.
Under UCL, private attorneys can sue without a plaintiff, without evidence of damages, and can often sustain a suit merely by alleging a business’ activity to be “unfair.”
Increases Business’ Exposure
The law exposes businesses to numerous suits by different lawyers over the same alleged unfair practice. Lawyers make money on these suits, while consumers, who are supposedly being protected by these lawyers, are often left in the dark.
Punitive damages, which continue to grow both in size and unpredictability, will again be before the California Legislature. Will lawmakers follow the example of other states that have attempted to set up fair parameters for this “defective legal product?”
In the coming months, voters, the governor and the legislature will 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.
In addition to saying 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.
Sullivan is president of the Civil Justice Association of California.
