SECOND QUARTER 1995
A publication of the Civil Justice Association of California - dedicated to restoring fairness and balance to the civil justice system
HEADLINERS
House Action Fires Hopes; Senate Next
The U.S. House of Representatives' passage of three major civil justice reform measures has spurred reform hopes in California and other states around the nation. The three packages -- dealing with product liability, securities litigation, and general civil justice reforms -- moved into the Senate.
At the same time, Senate bills were introduced, with some bipartisan support, containing similar provisions aimed at containing the abusive, anti-jobs use of litigation by contingency fee attorneys.
Civil Justice Association of California launched a campaign to convince Senator Diane Feinstein, a key vote, to support S.565 and important amendments to expand its reforms beyond product liability law.
U.S. Supreme Court Gets Civil Justice Association of California Brief
Civil Justice Association of California and the American Tort Reform Association have joined in filing a friend of the court brief with the U.S. Supreme court in an important punitive damage case. The case, BMW v. Gore, raises key questions whether a punitive damage award upheld in Alabama is unconstitutional because it is excessive and permits multiple punishment.
"Contingency fee lawyers who have used our civil justice system to launch a new litigation industry have robbed punitive damages of their historic credibility. This case gives our top court the opportunity to use the fundamental requirement of due process to bring an unfair, runaway situation under control," commented Civil Justice Association of California President John H. Sullivan. The brief urges the court to rule that punitive awards must be proportional to the offense and to set out standards for preventing excessive awards.
Key Bills Move To May Hearings
Lawsuit reforms introduced early this year began moving toward their first committee hearings in the 1995-96 Session. Mike Carpenter, Civil Justice Association of California Vice President, said that when the measures are presented in committees in May "the California Legislature will have its first opportunity to signal whether it is ready to craft some common sense legislation to help consumers and business or whether it's business as usual."
Among them are Civil Justice Association of California-sponsored measures to:
- eliminate joint liability for economic damages in cases that do not involve bodily injury, wrongful death, or property damage (AB 1516 - Morrow), and;
- prevent felons from suing their victims and others when they get hurt committing a crime (AB 1423 - Brulte and Setenich and SB 31 - Leslie).
Other bill's Civil Justice Association of California helped develop and supports in the current session are proposals to:
- shift responsibility for setting the amount of punitive damages from juries to judges and make these damages proportionate to actual damages to make their imposition fair and more predictable (AB 1862 - Morrow and Goldsmith);
- require a plaintiff alleging a design defect to prove that a superior design was available at the time of manufacturer (AB 1601 - Poochigian and SB 930 - Leonard);
- make it mandatory for a judge to impose a monetary penalty against a party or attorney responsible for a frivolous action or lawsuit (AB 1600 - Poochigian);
- discourage speculative shareholder suits by requiring a plaintiff to make a demand on members of boards of directors before initiating a suit (AB 920 - Cunneen);
- limit future pay damages to one year and require an employee to give an employer a chance to cure an alleged work place problem before suing on the basis of "constructive discharge" (SB 1312 - Peace);
- permit defendants to pursue mediation before being required to formally respond to a lawsuit (AB 1040 - Russell);
- raise mandatory judicial arbitration threshold from $50,000 to $150,000 (AB 1927 - Cunneen);
- compensate for less-than-serious auto accidents on a no-fault basis (SB 1229 - Killea);
- protect partners from unfair litigation by enabling the establishment of limited liability partnerships (SB 513 - Calderon).
Shocking Data from RAND
RAND Corporation's scathing data on auto liability cost excesses struck a heavy blow to contingency fee lawyers' efforts to preserve a flawed auto injury liability system in California. The respected, Santa Monica-based research group in April released a study showing that excessive injury claims encouraged by the state's liability system are adding between $2.5 and $3.5 billion a year to insurance premiums. This figure amounts to $200 to $250 a year for each policy holder.
The RAND study found that 60-66% of the medical costs submitted to insurers in California seem to stem from excessive claims, compared with 35-42% nationally. Excessive claiming is stimulating $4 billion a year nationally in excess health care consumption, according to RAND.
AROUND THE NATION
Illinois Enacts Major Reforms
Trial lawyers swarmed Illinois courthouses in March to beat Governor Jim Edgar's signing of probably the most comprehensive tort reform package ever enacted by a state. The measure, which became law upon his signature, limits punitive damages to the lesser of an amount equal to actual damages or $500,000, and provides "state of the art" and "government standards" defenses in product liability actions.
Follow the Bouncing Lawsuit
A federal court in Denver has upheld a $477,000 jury award to a woman whose attorney successfully argued that an exercise trampoline company should have warned her that repetitive use of its product could cause foot injury. There was no evidence that the trampoline was defectively built or failed in its intended use of enabling the purchaser to bounce up and down, over and over and over... It now appears that building a product that stands up under constant, intended use is a new path to liability!
Aircraft Reform Produces Jobs
Cessna Aircraft Co. announced a new plant and 1,500 new jobs in the wake of federal enactment of legislation limiting lawsuits involving propeller airplanes more than 18 years old.
The background, as the Economist magazine described it: "In the late 1970s, before product litigation became big business for trial lawyers, Cessna, Beechcraft, Gulfstream, Learjet, and other small manufacturers made over 17,000 aircraft a year. By 1993, America's general aviation industry was building fewer than 900 aircraft." The magazine said the law change might also benefit a Long Beach firm, Advanced Aerodynamics and Structure, Inc., which is developing a new generation of business airplanes based on a radical design and carbon-fiber construction.
NEW Civil Justice Association of California BOARD MEMBERS
Carolyn Covault of Harrison, N.Y., and James A. O'Malley of Sacramento have been elected to serve on Civil Justice Association of California's Board of Directors.
Covault, a litigation attorney with Texaco, Inc., received law and undergraduate degrees at the University of Southern California and began her career in Los Angeles with Texaco. She is a member of the California Bar, the American Corporate Counsel Association and the Los Angeles County Bar Association.
O'Malley, a senior associate with the law firm of Flanigan & Flanigan, has served as a legislative consultant to the Subcommittee on Interstate Banking in the California Assembly and as a legislative staff attorney for the U.S. House of Representative's Public Works and Transportation Committee. He has worked with the lobbying firm of Vern Clark and Associates in Washington, D.C. He received law and undergraduate degrees from the University of San Diego and is a member of the Pennsylvania Bar.
IN SACRAMENTO
Design a Better Certificate
California engineers, architects, and land surveyors are looking for improvements in the certificate of merit statute intended to protect them against unjustified lawsuits. Under current law a lawyer wanting to allege professional negligence must file a certificate declaring that he or she has consulted with a relevant professional who believes there is a meritorious cause for filing the action. The amendments sought in Senate Bill 934, authored by Senator Tom Campbell of Palo Alto, would require the attorney to get a written report from the professional consultant following that consultant's review of the critical documents in the case.
A Fuzzy Front
The unsettled ballot initiative front became even fuzzier after a judge invalidated the Attorney General's title and summary on a no fault auto insurance initiative already being circulated by Voter Revolt. Trial lawyers persuaded a Los Angeles Superior Court judge to rule that the title did not properly describe the initiative and that the 170,000 signatures collected so far were invalid.
Sponsors said they would immediately resume their qualification effort after the Attorney General's office processes a rewrite and would conduct signature gathering simultaneously for the auto initiative and for two others (trial lawyer contingency fee and shareholder suit limits) whose petition circulation has not begun.
The delay raised the question whether any of the initiatives, which are not supported by Civil Justice Association of California, insurers, or the general business community, would receive the necessary 385,000 valid signatures in time for the March 1996 primary election.
Meanwhile, trial lawyers filed a contingency fee limit prohibition initiative to use defensively to counter those put into play by their former Voter Revolt allies.
Construction Litigation Proposal
California's builders are seeking legislation to give them a fair chance to fix construction problems before lawsuits are filed. The growing tendency to sue first when construction defects are identified is raising construction costs overall and delaying repairs. "We believe home owners and builders should have an expedited process to settle repair issues before the lawyers move in," says Bob Rivinius, chief executive officer of the California Building Industry Association. The measure to achieve this is Senate Bill 1029 authored by Senator Charles Calderon of Whittier.
TRIAL LAWYER WATCH
AKA Trial Lawyers
"It was an inauspicious beginning," wrote Sacramento Bee political columnist Dan Walters of the California Trial Lawyers Association name change unveiling. "All of that legal brainpower finally came up with 'Consumer Attorneys of California.' And the name was no sooner unveiled...than a reporter quipped that its acronym could be 'CACA,' slang for the odoriferous biological waste that lawyers are often accused of spreading in copious amounts."
"The name change itself constitutes consumer fraud," was Civil Justice Association of California President John H. Sullivan's observation.
One of the first questions a reporter asked of trial lawyer president Wayne McClean was whether the new "consumer organization" was sponsoring any consumer legislation in the session just beginning. The answer: "No..."
The trial lawyers soon began a widely-publicized search for a public relations firm that could improve their image in all quarters, including "how we can best use the Internet."
New Big Numbers Nationally
A new national study has revealed that trial lawyers have contributed more than $30 million to federal candidates over the past five years. About 2,000 of the nation's contingency fee lawyers personally contributed $18 million to federal candidates between January 1989 and December 1994, according to a study by the American Tort Reform Association.
Where the $ Are
The Wall Street Journal reports that the major storefront law firm Jacoby & Meyers' revenue has been rising because the firm is now concentrating on personal injury cases to make up for lower profit in other areas.
IN THE COURTS
Civil Justice Association of California Backs Early Resolution
In an amicus brief filed with the Second District Court of Appeal in Los Angeles, Civil Justice Association of California has urged that plaintiffs seeking punitive damages be required under a 1993 summary judgment law to make an initial showing that they will be able to meet the state's "clear and convincing" evidence test. The higher, "clear and convincing" proof test for punitive damages was established by SB 241 of 1987, legislation based on the so-called "Napkin Agreement." Civil Justice Association of California General Counsel Fred J. Hiestand said the case is important in presenting "a unique opportunity to combine two statutes, enacted six years apart, intended to get rid of groundless punitive damage claims."
Plug Pulled on Junk Suit
A state appeals court has thrown out a lawsuit seeking damages for property value losses allegedly caused by electromagnetic fields surrounding nearby transmission lines. Civil Justice Association of California President John H. Sullivan commented that the case was but another attempt to turn courtrooms into laboratories for junk science: "It is the consumers -- in this case utility ratepayers and property owners -- who pay for the legal overhead and unfounded fears generated by personal injury lawyers styling themselves as consumer friends while playing the lawsuit lottery."
VERBATIM
Consumer's Union on "Consumer" Attorneys
"This is a solvable problem, but 5,000 trial lawyers are forcing every insured driver in California to pay an extra $200 to $250 to subsidize their life style, and that's outrageous." -- Harry Snyder of the Consumer's Union, quoted in an Oakland Tribune report of RAND Corporation's study on excessive auto injury claims.
Denigration
"I think a lot of lawyers are concerned about the denigration of the profession by certain people who are just abusing the law and abusing the trust in them as lawyers." -- Senator Orrin G. Hatch, Chairman of the Senate Judiciary Committee, ABA Journal, April 1995.
Manipulators
"We don't believe it is right for a small group of lawyers to manipulate a flawed system for personal gain at the expense of entrepreneurial growth." -- William Archey, President and CEO, American Electronic Association, San Francisco Examiner, March 12, 1995.
Powell on Punitives
"It is long past time to bring the law of punitive damages into conformity with our notions of just punishment, and with the tradition of other nations that also protect their citizens against arbitrary deprivations." -- Former U.S. Supreme Court Justice Lewis Powell, from draft opinion found in the papers of Justice Thurgood Marshall in the Library of Congress.
STUDIES OF NOTE
We'd Rather Not be First
California is first in the nation in the percentage of injury claims for every 100 property damage claims, according to "Trends in Auto Injury Claims" released in February by the National Insurance Research Council. The state's 61 out of 100 figure is set in large part by data from the Los Angeles area where there are an astonishing 99 injury claims for every 100 property damage claims. In California 29% of all bodily injury claims result in litigation -- another nation-leading statistic.
Nation Supports Tort Reform
Nearly three out of four Americans polled say they want their representatives in Congress to vote in favor of major legal reform proposals being debated in Washington. A very strong majority -- 83% -- said they believe "the present liability system has problems and should be improved." The desire for reform is bi-partisan, with support coming from 63% of Democrats, 75% of Independents, and 83% of Republicans. The poll findings came from a national survey completed March 2 for the American Tort Reform Association by Public Opinion Strategies.
Jury Award Trend Shift
A steady five-year downward trend in plaintiff recovery rates for product liability and medical malpractice cases reversed in 1994, according to Jury Verdict Research. In product liability cases, the percentage of verdicts favoring plaintiffs rose from 38% to 42%; in medical malpractice cases the increase was from 31% to 37%. Slight increases occurred in premises liability and business negligence cases.
Record Corporate Settlements
Corporate directors and officers -- and their insurers -- paid record amounts in 1994 to settle lawsuits for alleged mismanagement. A national survey by the Wyatt Company, a San Francisco consulting firm, found that the average settlement was $4.6 million -- up from $3.2 million the year before. Forty percent of the claims against directors and officers were filed by shareholders. These cost an average of $7.7 million to settle, according to the study.
AROUND THE STATE
Judge Kozinski at Civil Justice Association of California May Meeting
Federal Appellate Judge Alex Kozinski will speak at Civil Justice Association of California's annual meeting luncheon on May 31 in Sacramento. Kozinski, a persistent advocate of common sense in the civil justice system, authored a widely-acclaimed Wall Street Journal column early this year on the problems with punitive damage law. Tickets for the luncheon can be obtained by calling 916-443-4900 on or before May 17.
High Tech High
California's high tech community was on an emotional high over the overwhelming bi-partisan vote in the House of Representatives for California Congressman Christopher Cox's bill to curb lawyers who have been suing high technology firms to extort settlements. Cox's Securities Litigation Reform Bill surged out of the House on a 325-99 vote, with nearly half the House's Democrats voting for the measure. The bill protects companies making good-faith, forward looking statements, requires suits alleging fraud to specify their factual basis, and requires that damage awards be linked to the actual damage a plaintiff has incurred.
A survey of the 150 largest technology companies in the Silicon Valley found that more than 50% have been hit with a securities suit.
San Diego Taxpayers' Toilet Tab
San Diegans are paying to defend a $5.4 million suit filed by a man who says he suffered emotional trauma when women used a men's restroom at an Elton John concert in Jack Murphy Stadium. It is the city's fault, he says, because there are not enough women's restrooms.
Little League's Big League Liability
Little League's top administrator reports that liability insurance has gone from $75 to $750 per league over the past five years.
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©1996 California Association for Tort Reform
