FIRST QUARTER 1995
A publication of the Civil Justice Association of California - dedicated to restoring fairness and balance to the civil justice system
Civil Justice Association of California has been working on punitive damage reform concepts with the staff of Governor Pete Wilson, who is calling for action on punitive damages and other civil justice trouble spots. Civil Justice Association of California has also been working with Senate and Assembly legislators and their staffs on other reform proposals of mutual interest.
Those expected to be in bill form early this session include:
Calling auto insurance "Exhibit A" of the legal system's needless cost hikes for California families, he said, "It's time to stand up to the special interests...to get the lawyers out of the fender-benders and to crack down on fraud."
The Governor's Office said he would sponsor a series of bills to:
"John's knowledge of state government and the law, combined with his excellent reputation and communication skills, will produce results, letting us build on our efforts to provide relief for consumers, taxpayers, businesses, and professionals who bear the heavy burden of the hidden 'litigation tax,'" said Roger B. Tompkins, Chairman of Civil Justice Association of California's Board of Directors.
From 1986 to 1991, Sullivan was undersecretary of the state Business, Transportation, and Housing Agency. He is a graduate of the University of California at Berkeley and worked in the newspaper and public relations fields before earning a law degree at the University of Pacific's McGeorge School of Law. Sullivan served on the post-election transition teams of both Governor Pete Wilson and former Governor George Deukmejian.
Carpenter is a graduate of the University of California at Berkeley and the University of San Francisco School of Law. He was a tort litigation attorney for four years with the San Francisco law firm of Gordon and Rees, representing defendants and plaintiffs in product liability, professional malpractice, construction and securities actions.
I see three reasons for believing that liability law reforms in California are attainable soon:
1. The evidence of need is piling up. Governor Wilson's Council on Competitiveness, Rand, the Center for Economic Policy Research at Stanford, and a growing number of national studies have documented the grinding effect of a runaway liability system on jobs, the economy, and taxpayer and consumer costs.
And there are unexpected new voices. For example: Former presidential candidate George McGovern writes that a war threatens to undercut the civil basis of our society and the weapons are "abusive lawsuits brought by an army of trial lawyers subverting our system of civil justice while enriching themselves."
And the Securities and Exchange Commission will re-examine the liability standards for companies issuing earnings projections. Commission member J. Carter Beese Jr., observes that "for far too long, gun-slinging plaintiff's lawyers have forestalled meaningful discussion, much less meaningful reform, of the crisis affecting the securities litigation system in America..."
Meanwhile, studies of existing reforms like California's Medical Injury Compensation Reform Act shows that reasonable changes in liability law work for everyone. And with President Clinton's signing of the General Aviation Recovery Act, limiting product liability claims against small plane manufacturers, Cessna says it will begin building the popular models that had been abandoned in 1986 because of litigation costs.
2. The workers' compensation reform example. Claims have dropped. The base rate for employers has been cut, and cut again. The state has received national recognition for taking real steps to improve its business climate.
3. The elections. This past November's elections cap a year in which many citizens signaled they are sick and tired of lawsuit abuse.
In a Stockton market, a woman slipped and fell on a piece of cheese. Six witnesses came forward -- but against her, not for her, for faking the fall! In nearby legislative districts voters learned some of their candidates were heavily financed by contingency fee lawyers and they came forward -- but to defeat the candidates, not to support them.
In the background, studies are documenting the staggering campaign contribution investment in the status quo being made by the California Trial Lawyers Association and the American Trial Lawyers Association. Polls are showing the voters are not liking what they see. At Civil Justice Association of California, we are seeing the concern via a solid growth in our diverse membership base. This growth is essential to carrying forward the fight. And it is a fight. Contingency fee lawyers have been driven to increase the spin on their three big myths: 1) that they are weak Davids hurting only corporate Goliaths who deserve it; 2) that they are consumer advocates; and 3) that we are out to "eliminate juries and bring down the legal system."
We can and will rebut this silliness at the same time we move ahead with changes that are beneficial to responsible citizens -- to employers, taxpayers, and consumers.
Change is never so simple as "an idea whose time has come." Change must be legitimately earned, based on documented need, encouraged--if not insisted on--by the people.
With new muscle in our legislative, research, educational, and legal advocacy programs, we will be doing our part to earn that change. --John H. Sullivan
Kieffer, an attorney for major accounting firms, serves on a number of civic boards and commissions in the Los Angeles area. He is vice-chair of the board of the Los Angeles Urban League and serves on the board of the Constitutional Rights Foundation. He is former board chairman of the Center for the Study of Democratic Institutions.
Singer is executive vice president and state secretary of the California Association of Realtors. He has held the statewide association's top position since 1989. He joined the Association in 1978 and later served as its chief economist and head of public affairs.
A recent survey of voters in 14 Northern California counties found that 96% believe that civil lawsuits have caused higher insurance premiums; 86% believe they slow down compensation to legitimate victims; and 78% believe they have caused job losses in California.
Similar findings came from the Institute's survey in eight Central Valley counties.
In both polls, two-thirds of those responding said they would be more likely to vote against a candidate who accepted campaign contributions or endorsements from contingency fee lawyers.
This sentiment contributed to the surprise November losses by two Central Valley legislators, long-time Senator Dan McCorquodale and Assemblywoman Margaret Snyder, whose support from contingency-fee lawyers was publicized during the campaigns.
On the average each lawsuit consumed:
A quarter of California's CEOs report that they will not serve on the Board of a start up company for fear of being named personally in a lawsuit.
The Civil Justice Association of California brief challenges contingency fee lawyers' efforts to extend the rule to hotel owners.
Judge Mackey wrote in a 33-page opinion that there was no clear and convincing evidence of malice to support $40 million in punitive damages for each of the two employee plaintiffs. He said the award was "clearly motivated by passion and prejudice."
Mackey also said the plaintiffs "conspired to subvert the internal system that Hughes had to protect against discrimination...[and] kept quiet, deciding to place their already-planned lawsuit in the best light."
ATRA's study revealed that between January 1990 and June 1994, in California, Texas and Alabama alone -- contingency fee lawyers gave $17.3 million to candidates for state office.
Trial lawyer contributions in these three states dwarfed contributions made by the Republican and Democratic national committees in all 50 states -- $10.8 million and $12.4 million, respectively.
In the three states during this period, the contributions of Exxon, Mobil, Shell, and Texaco amounted to $1.75 million, while contributions from Ford, General Motors, and Chrysler to state candidates in the three states totalled only $3,600.
"Because of these obscuring tactics, the media is often forced to report only the contributions reported by the state trial lawyer PAC, which is overwhelmingly dominated by personal injury and plaintiff's lawyers." But researchers found that PAC expenditures usually constitute only a small portion of total trial lawyer contributions to state candidates. For example, while the California Trial Lawyers' PAC reported $1.2 million in contributions to state candidates between 1990 and 1994, the contingency fee attorney total jumped to $3.4 million once carefully bundled contributions from individual trial lawyers were tabulated.
Researchers found "patterns of aggressive coordination by big givers who remain largely anonymous to the voting public. Tabulating the money, we have seen how sophisticated contribution schemes--some almost impossible to trace--get money into the pockets of plaintiff's lawyer-backed candidates."
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