CJAC Letter - New Reasons to Oppose Senate Bill 11 (Escutia)
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New Reasons to Oppose Senate Bill 11 (Escutia)

August 27, 2001


1. Congress has already enacted a solution to the tire/rollover problem.

In the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act signed by President Clinton last November, Congress mandated increased requirements for reporting to the National Highway Traffic Safety Administration (NHTSA) and bigger penalties for failures to report incidents and complaints related to autos, auto parts, and tires. As Congressman Billy Tauzin described the law: "We gave NHTSA all kinds of new authority. We mandated the sharing of information by insurance companies, and claims agents, and tire companies, and automobile companies. And we also gave NHTSA the money and the authority to put in better data systems to track those trends. We also instructed them to do a lot more testing."

Even though regulations implementing the act are not final, NHTSA has added 20 more defect investigators and more are on the way. Its testing and research budget has been boosted by $9 million and another $16 million could be added next year. The Act's early data reporting requirements are being universally welcomed. Joan Claybrook, head of Public Citizens and a former NHTSA administrators says, "It will be a massive change because if the agency gets data early it will be able to make calls about safety and not just wait until the manufacturer decides it is time."

2. The very lawyers who want SB 11 to give them the power over disclosing lawsuit information were revealed by the New York Times to have kept information about a pattern of tire failures from federal regulators for four years rather than risk an investigation that might have weakened their cases.

In late June the New York Times quoted a trial lawyer consultant who said he identified 30 cases of tire failures in 1996 but that he and his trial lawyer clients decided not to tell the National Highway Traffic Safety Administration about the problem. They did not want an investigation that might jeopardize their individual cases in state courts. Plaintiffs lawyers in California have been highlighting Firestone tire failures in their campaign for AB 36 and SB 11. So the Times' documentation of a number of these lawyers intentionally withholding public safety information understandably has raised questions. Why should the California legislature enact a process designed by the personal injury lawyer lobby, whose members benefit greatly by increased control over when lawsuit confidentiality does and does not apply?

The Times reported that Dr. Ricardo Martinez, a trauma physician who was the administrator of the National Highway Traffic Safety Administration from 1994 to 1999, said "he was appalled to learn that information had been kept from his staff for years." He said: "It's outrageous -- I can't say that enough. If I saw something was killing my patients and I didn't say anything because that would reduce the demand for my services, I would be putting my benefit over the benefit of my patients and the public, and that would clearly be unethical."

3. Health care researchers have shown how their work to develop new life-saving products would be seriously damaged by SB 11.

Legislators at an Assembly Judiciary Committee hearing in May learned how San Diego's Alliance Pharmaceutical Corp. spent $2 million to defeat a lawsuit and then had to go back to court to prevent the law firm that sued it from using the company's proprietary information in a seminar for other plaintiffs' lawyers. The litigation cost Alliance valuable time and money which could have otherwise been used to fund its research to develop a blood substitute for emergency room use and a liquid breathing product for critically ill patients.

As Dr. David L. Gollaher, President and CEO of the California Healthcare Institute (CHI) wrote: "With its potential to expose biomedical companies to substantial economic risk without improving public health and safety, [SB 11] would be a large step backward for the industry that promises most for the future health of our state".

4. Despite being introduced in 16 other states, bills like SB 11 have been rejected or shelved by every state legislature considering them.

With trial lawyers nationally launching a coast-to-coast self-proclaimed "drive for documents," it's not surprising that California is only one of many states where the plaintiffs' bar began the year by sponsoring anti-protective order legislation. The scorecard: bills introduced in 16 states, dead in 7, enacted in none. State-by-state, law makers are concluding what the non-partisan Federal Judicial Conference told Congress in 1998 after an objective study: "There is no evidence that protective orders in fact create any significant problem in concealing information about public hazards or in impeding efficient sharing of discovery information."

5. Policy makers are recalling that California already has the toughest penalties in the nation for withholding information about dangerous products.

For more than a decade California has had its own Corporate Criminal Liability Act that makes companies and managers criminally liable if they don't report a product's serious concealed defects. Much attention is being given the new TREAD Act's strong provision imposing criminal penalties for auto and tire makers who mislead federal agencies about product defects. And recall that the separate federal Consumer Product Safety Act enacted earlier in 2000 requires fines and prison time for anyone who makes or imports, distributes, or sells any product that does not meet safety standards or intentionally withholds information about a product's defects.

6. Support is growing for a separate bill (AB 881 - Simitian) that would expedite delivery of potentially important public safety information to regulators without jeopardizing business confidentiality or providing personal injury lawyers with unfair leverage over innocent defendants.

Hearings and research in the Ford/Firestone episode show that more data should have been collected faster, giving safety experts the facts they needed to zero in on causal information which could lead to warnings and recalls. A new bill (AB 881 - Simitian) responds to this need by enabling rapid delivery to public agencies of important hazard information developed in the course of a civil lawsuit.

It would allow a litigant who discovers documents relating to a possible defective product or environmental danger to get the court's permission to deliver this information to the appropriate state or federal regulatory and enforcement agency - even when the information is covered by a protective order designed to protect privacy. The bill also voids any portion of a settlement agreement limiting a party's ability to provide information to regulators.

The bill is attractive because it beefs up early public safety reporting without the AB 36/SB 11 downside of unfairly harming reputations or disclosing the private or businesses information of innocent individuals and businesses named in a lawsuit.

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