End of Legislative Session Recap: Many Successes, Work Still To Do
By Todd Roberson on 09/12/2011 @ 11:48 PM
The California Legislature wrapped up its 2011 session in the very early hours of Saturday morning. Supporters of civil justice reform will be pleased to know that CJAC had a great deal of success this year.
First off, 35 of the 41 bills that we opposed because they would have made lawsuit abuse worse in California were either killed or amended to our satisfaction. CJAC will be lobbying Governor Brown's administration heavily over the next month and requesting vetoes of the six bills now on his desk that we still oppose (Assembly Bills 267, 325, 559, 1220, 1319, and Senate Bill 931).
Here are a few of the most noteworthy bills that were stopped in the Legislature:
- AB 1062 would have greatly undermined arbitration in California by prohibiting an appeal when a lower court refuses to enforce an arbitration agreement.
- AB 1207 would have exposed businesses to never-ending lawsuits by removing the statute of limitations on claims stemming from exposure to hazardous materials or pollution.
- AB 52 would have created additional regulations on health plans regarding the rates they may charge and would allow lawyers to sue as "interveners" on behalf of the general public whether they have a client who has been harmed or not - a recipe for abusive claims.
- SB 558 would have increased the likelihood of lawsuits against nursing homes by reducing the standard of proof required to win from a higher standard (clear and convincing) proof to a lower "more likely than not" standard (preponderance).
- SB 631 would have substantially expanded the Insurance Commissioner's powers by allowing him to order restitution for economic harm in enforcement actions against insurers.
Furthermore, while it continues to be quite difficult to get proactive legal reform proposals through the Legislature, two bills supported by CJAC have already been signed into law (ABs 141 and 571) and four more are now being considered by Governor Brown. These include:
- AB 1219 (passed by the Legislature, on Brown's desk) would make clarifying changes to the Song Beverly Credit Card Act of 1971 by allowing personal information, such as a zip code, to be requested and retained in reasonable circumstances. These changes are necessary in light of the California Supreme Court's recent decision in the Pineda v. Williams-Sonoma Stores, Inc. case that resulted in dozens of lawsuits.
- AB 1074 (passed by the Legislature, on Brown's desk) would provide immunity for damage or loss caused by supplying 9-1-1 service unless there was gross negligence or intentional misconduct by the provider.
So, we have much to be pleased about so far but the next month is critical. We'll be working hard to help Governor Brown understand that California needs relief from abusive lawsuits. We're hopeful he will see it that way.
For more information on legislation and CJAC's positions, please go to our Legislative Center.
Trial Lawyer-Backed Health Care Regulation Bill Dead For The Year
By Kim Stone on 09/01/2011 @ 11:48 PM
Yesterday Assemblyman Mike Feuer (D-Los Angeles) announced that he would not be moving forward with Assembly Bill 52 this year due to a lack of support in the State Senate. We are extremely pleased that legislators have recognized the major flaws of this proposal.
The bill, sponsored by Insurance Commissioner Dave Jones, would create additional regulations on health plans regarding the rates they may charge and contains several provisions that would encourage unnecessary litigation. The bill would allow any person to intervene in any proceeding to enforce any action of the government agencies charged with rate regulation and enforce provisions of the requirements created by the bill on behalf of him or herself or members of the general public. It would allow a lawyer to sue as an "intervener" on behalf of the general public whether they have a client who has been harmed or not.
These interveners would be able to collect attorney's fees, expert witness fees and costs - a recipe for abusive claims. Not surprisingly, the bill was supported by groups like Consumer Watchdog and the Consumer Attorneys of California. Consumer Watchdog currently takes in hundreds of thousands of dollars per year in intervener fees relating to other types of regulated insurance rates.
Every dollar spent in a dispute with a plaintiff's attorney is one less dollar that can go towards patient care. Creating an intervener process would add major costs to the healthcare system, and patients are the ones who would end up suffering. In recent weeks, the state Department of Finance, CalPERS, and the new California Health Benefit Exchange all expressed concerns over the added costs and complications of AB 52.
Californians are much better off with this bill being shelved for the year. We will continue to be vigilant in fighting proposals that will create a new cottage industry for lawyers at the expense of our healthcare system.
The Foreign Corrupt Practices Act: Time for Reform
By Todd Roberson on 08/31/2011 @ 11:55 PM
In 1977, the Foreign Corrupt Practices Act (FCPA) was approved by Congress and signed into law to prevent companies from bribing foreign officials to receive new or continuing business from those officials' countries- a noble enough goal. However, over time, the vagueness of the law and a broad interpretation by the U.S. Department of Justice, which enforces FCPA and pursues damages from violators, has made American businesses that operate in other countries vulnerable to charges that go beyond the intent of the original FCPA. For instance, a company can be held liable for the actions of a rogue employee or subsidiary. It also unclear who exactly qualifies as a "foreign official."
Not only is this costly for the businesses that have to deal with these charges, it also leaves all multinational businesses in a fearful spot.
We'd encourage you to take a look at two recent articles that highlight the problem. The first, Congress, Get Out Your Pencils: FCPA Rules Are Ripe for Revision, was written by attorney D. Michael Crites for the National Law Review and offers four fixes to FCPA. The second is a Reuters article that explains how this year companies are fighting back against FCPA charges and going to trial, rather than settling which had been the trend. And as Reuters reports, of the two FCPA trials there have been so far this year, "neither has cast the government in a flattering light."
Congress has been receiving quite a bit of feedback of late from businesses hoping for a legislative fix in the final months of this year's session. Let's hope it happens.
Survey on Lawsuit Abuse Shows Voters Want Reform
By Kim Stone on 08/24/2011 @ 11:48 PM
Our friends with the California Citizens Against Lawsuit Abuse released a survey yesterday showing that California voters believe lawsuits are hurting our struggling economy, and that voters are more likely to vote for candidates that support legal reform. Some of the highlights of the survey are:
- 2/3 of California voters believe that the number of lawsuits filed against businesses or public entities in California has hurt the state's economy.
- More than 40% of voters have seen services in their community reduced and public places closed or restricted due to lawsuits or the threat of lawsuits.
- 42% of voters believe personal injury lawyers benefit most from lawsuits, while only 4% believe injured people benefit most.
- 74% of voters believe that enacting lawsuit reform is an important part of improving California's business environment and attracting and keeping jobs.
- 2/3 of voters are likely to support a candidate who supports lawsuit reform as a way to create a better business environment in California.
The message is clear: voters are recognizing the impact of lawsuit abuse, particularly in an ailing economy, and they want elected officials to do something about it.
Op-Ed from CJAC President on Court Budget Cuts
By Todd Roberson on 08/18/2011 @ 11:48 PM
The op-ed below, "How to deal with unprecedented court budget cuts", by CJAC President Kim Stone appeared in Capitol Weekly today.
How to deal with unprecedented court budget cuts
By Kim Stone
August 18, 2011
Over the past couple weeks there has been some dire news on the major delays Californians can expect to see in our courts as a result of the most recent budget cuts. The 2011-12 budget cuts $350 million from the court system, the largest in state court history. An equally devastating cut is projected for next year, and plans for new courthouses are on hold as well, as lawmakers also shifted $310 million from a courthouse construction fund to help cover this year's shortfall. The San Francisco County Superior Court announced that its civil division will basically be shut down.
Funding for the courts has now been reduced by 30 percent over the last three years. The Civil Justice Association of California (CJAC) has consistently opposed these cuts. There are plenty of legitimate civil disputes that need to be resolved in court and Californians deserve a court system that can settle these disputes in a timely fashion.
But the budget decision has been made, and now we have to figure out the best way to deal with it. Here are three suggestions.
First, don't make things worse! We cannot pass legislation that will throw more cases into a court system that can't handle the current caseload. This means the Legislature needs to reject proposals like this year's AB 1062, which would eliminate the long-standing right of immediate appeal when a lower court dismisses an arbitration agreement. Under this bill, when one party that voluntarily agreed to arbitrate any dispute changes their mind and wants to go to court instead, it will be easier for them to do so. The immediate right of appeal has been around for 50 years and without it, there will be more cases in court that should have been resolved through arbitration.
The leads us right into the second suggestion: look to existing alternatives. Arbitration is one of course, and is a fast, fair, and effective way to relieve pressure on the courts. The National Workrights Institute found that employees were almost 20 percent more likely to win employment cases in arbitration than in court, and consumer cases administered by the American Arbitration Association last only four to six months compared to 25 months in court, which also means lower attorney's fees.
Another alternative is greater use of expedited jury trials, created last year in AB 2284, which was authored by now-Senator Noreen Evans and received broad support from across the spectrum. In fact, the proposal to create expedited jury trials was supported by both CJAC and the Consumer Attorneys of California. With these one-day, binding trials, the costs and time of a trial - and therefore court costs -- are substantially reduced.
Third, we need to pass some reform measures that will keep frivolous cases out of the courts so there's more time to focus on the legitimate cases. One good example is this year's SB 603, authored by Tom Berryhill, which would have given judges greater ability to designate plaintiffs "vexatious litigants." A vexatious litigant is one who abuses the court system by filing meritless or harassing claims. Once labeled as such, that plaintiff must seek special approval before suing again. Current law only allows a vexatious litigant designation when there is no attorney present. Unfortunately, having an attorney does not stop malicious or baseless claims. This bill would have removed such an illogical limitation.
One area in particular where we see repeated filings is Americans with Disabilities Act (ADA) claims. In these "drive-by lawsuits", some plaintiff's lawyers seek only settlement money - rather than access improvements. In 2008, the Legislature established a process for pre-litigation conferences between two parties in ADA disputes, but unfortunately the settlement demands from unscrupulous lawyers continue. The Legislature needs to give greater consideration to proposals like this year's SB 783, authored by Senator Bob Dutton, which would have kept more ADA disputes outside of the courtroom by giving business owners a brief opportunity to make fixes before they could be sued.
These suggestions will not only help with the current crisis, they are also in the best long-term fiscal interest of the courts. Now is the time to reassess how our courts prioritize their time. We can help them weather the current storm and makes things easier on them in the future by making California less litigious.