FIRST QUARTER 1997
A publication of the Civil Justice Association of California - dedicated to
restoring fairness and balance to the civil justice system
HEADLINERS
Liability Laws Still Top Problem
For the fourth year in a row California's business leaders and voters ranked liability laws and
civil suits as "having the most negative effect on the California economy." Eighty-five percent
of the business leaders questioned and 59% of the voters put liability law problems in this high
category. Ninety-one percent of the business leaders and 55% of the voters said legal reform is
important to the state's future economic growth.
The findings were included in the seventh annual Business Climate Survey released in December
by the California Business Roundtable. In a statement to reporters, Civil Justice Association of California noted that 30 states
have enacted legal reforms over the past two years, making California's failure to enact reform
even more glaring.
Trial Lawyers Out To Kill Auto Initiative
Undeterred by the fact that it received a 77% approval rate (the largest margin on the November
5 ballot), California trial lawyers are waging an all-out attack on Proposition 213, which cuts
damage awards for uninsured motorists. Trial lawyers have filed suit to overturn the initiative in
San Francisco Superior Court, and in December a consortium of state trial lawyer groups held 10
seminars around the state instructing their members how to challenge the new law.
The measure's major provision prohibits uninsured drivers from recovering non-economic
damages, such as pain and suffering awards, if they are involved in an auto accident. This
provision will reduce frivolous auto accident litigation and could cost the trial lawyer industry
$100 million a year in contingency fees.
Sabers Rattle After Crushing Ballot Losses
Trial lawyers are beating even louder on their "pro-consumer" drum, despite the drubbing
consumers gave them on three initiatives in the November election. Voters rejected the trial
lawyers on the three measures by the largest margins on the crowded ballot: Proposition 211 (the
securities lawyers' scheme to circumvent federal reforms) was beaten 74% to 26%; Proposition
207 (the mainline trial lawyers' fee protection measure) was trounced 66% to 34%; and
Proposition 213 (Insurance Commissioner Chuck Quackenbush's proposal to increase
responsibility and lower costs in the auto liability area) passed by an overwhelming 77% to 23%
margin.
Commenting on the election in the Daily Journal legal newspaper, Civil Justice Association of California president John
H.
Sullivan said that trial lawyers "should think twice in the future about launching obviously
self-protecting measures that end up further hurting the reputation of everyone in the legal
profession....trial lawyers laid out their agenda for the public to see, and they were just plain
crushed."
In media statements, trial lawyers said later they plan to work in the Legislature to "take back
legal rights."
California Tops in Phony Auto Claims
A detailed study by the Insurance Research Council of fraudulent and excessively inflated auto
injury claims in several states puts California at the top of the list in both categories. An
astounding 22% of bodily injury claims appeared to involve fraud and 42% had suspicious levels
of claiming for injuries, treatment, wage loss, or other losses.
California was only one of two states studied where staged accidents were a statistically
significant source of fraud (2%, versus 1% in New York). Data published by the Rand Institute
of Civil Justice in 1995 and 1996 showed that excessive personal injury claiming is costing
California motorists billions of dollars annually.
AROUND THE NATION
Blow to Silicone Junk Science
As judges become ever more vigilant in weeding out "junk science," an Oregon federal judge has
ruled that scientific evidence contending that silicone breast implants cause disease is so weak
that it should not be presented to a jury. U.S. District Judge Robert E. Jones said plaintiffs'
disease arguments were at best a hypothesis and their experts' work had not been subjected to
peer review.
Punitive Cap List Growing
The list of states limiting punitive damages reached 15 last year, with the recent passage of an
extensive reform package in Ohio. Add to these the seven states which either do not provide for
punitive damages or allow them only in a few circumstances and the picture develops of a nation
gradually coming to grips with a major source of civil justice abuse.
Court Attacks on Reforms Continue
Court attacks on Illinois' sweeping 1995 Civil Justice Reform Amendments are continuing, with
a consolidated case on major portions of the reforms headed toward an expedited review by the
state's Supreme Court this spring. Elimination of joint and several liability for non-economic
damages and caps on punitive and non-economic damages are the major provisions targeted by
plaintiffs' lawyers pushing the attacks through lower courts.
Ohio's broad reforms enacted in October are also in court. The provisions included in that state's
"House Bill 350" range from non-economic and punitive damage caps to elimination of joint and
several liability for non-economic damages and for all damages when the plaintiff is more than
50% at fault.
Alabama Update
Alabama's notorious court system edged toward balance with the election of a pro-reform justice
to the state's supreme court. Harold See, a law professor at the University of Alabama, defeated
trial lawyer-backed incumbent Kenneth Ingram in a multi-million dollar campaign. November's
election is viewed as a warm-up for 1998 when three more of the state's nine justice seats will be
up for election.
HALT Goes After Fee Abuse
An "Injured Consumers Legal Bill of Rights" is being advanced by "HALT," a non-profit
national organization of 70,000 individual members. Its list of proposals includes requirements
that judges review all contingency fees, written fee agreements that include a projection of hours
of legal work, and an "opt in" rather than "opt out" procedure for class action cases. HALT
argues that "the nature of the plaintiff's risk built into the contingency fee system has changed
significantly over the past 30 years, but that change has not been reflected in marketplace
pricing."
More Medical Liability Reforms
Pennsylvania has joined the list of states enacting medical liability reforms with a
unanimously-approved measure that includes caps on punitive damages, periodic damage
payments, and increased sanctions for frivolous lawsuits. A month earlier Ohio enacted reforms
including a limit on non-economic damages in health care liability suits.
AROUND THE STATE
Lawyers: Fix the System
Half the lawyers responding to a California Lawyer magazine poll said the litigation
system needs fixing and that "frivolous and unfounded suits are ruining the economy." Forty
percent said a cap should be imposed on punitive damages and 39% agreed that all contingency
fees should be capped. Two-thirds of the lawyers answering the fax poll published in the
November 1996 issue said they were opposed to losing parties being always required to pay
opponents' legal costs.
On the frivolous litigation issue, 65% said they had defended a frivolous lawsuit while 5%
admitted to filing one. Seventy-four percent said they believe sanctions against frivolous
lawsuits should be strengthened. The attorneys were split on "no-fault" auto insurance, with 45%
favoring some form of no-fault and 55% opposing it.
Loony Lawsuits
The Los Angeles area "Citizens Against Lawsuit Abuse" organization is attracting state-wide
attention with its new "Loony Suit" awards. Winners to date are a woman who sued for injuries
from a falling blender after she pulled out the bottom box of a stack of K-Mart blenders and a
lawyer who sued for emotional distress after his partner set up a poster tombstone referring to the
death of Grateful Dead musician Jerry Garcia.
Legal Consumers' Guide
The San Diego County "Citizens Against Lawsuit Abuse" group has published an
already-popular Legal Consumer's Guide to hiring an attorney. The brochure includes a number
for reporting attorneys suspected of illegally soliciting business. Last year Consumer Reports
published a poll on attorney services and noted a high level of dissatisfaction: "Of all the
services we've surveyed over the years, only diet programs have received a worse score." Copies
of the Legal Consumer Guide may be requested at 619-295-6059.
IN SACRAMENTO
The Unfairness Act
Unfairness in the state Unfair Competition Act (UCA) will be on the Legislature's agenda this
spring. The UCA was designed to protect consumers and businesses. However it has been
increasingly misused by attorneys who file suits and seek attorneys' fees even though they have
no plaintiff who has been harmed and the matter has already been resolved by a local district
attorney.
Civil Justice Association of California has been tracking lawsuits under the Act and has filed one amicus brief with another in
progress. It is clear that a growing number of trial lawyers see the UCA as a significant new area
for speculative litigation against high tech companies, retailers, consumer product manufacturers,
insurers, and financial institutions.
The California Law Revision Commission has recommended a modest set of amendments for
legislative consideration. Civil Justice Association of California last year wrote the Commission urging stronger revisions.
Among the law firms arguing for the status quo is Milberg Weiss Bershad Hynes & Lerach.
Threat to Health Care Legal Reform
California trial lawyers have unveiled preliminary plans for new legislation to let them bring
more lawsuits against health providers, employers, and insurers. The group's new president told
reporters that trial lawyers were specifically targeting the medical malpractice damage award cap
which has succeeded in restraining health care costs. A plan to attack the Medical Injury
Compensation Reform Act (MICRA) was also described in a legal newspaper opinion article by
the president of the Los Angeles trial lawyers.
Trial lawyers are also looking at legislation to reinstate so-called third party "bad faith" lawsuits
against insurers. These suits were routinely advanced to leverage unwarranted or excessive
settlements until the state Supreme Court outlawed them in the mid-1980s.
Trial lawyers in December renewed their attack on binding arbitration in the form of Senate Bill
19, introduced in the new session by Senator Bill Lockyer.
Civil Justice Association of California's Lead Role in 207's Defeat
Civil Justice Association of California led the fight in building the 66% no vote against the trial lawyers' Proposition 207 on the
November ballot. The Association formed the campaign committee to oppose the measure and
prepared the ballot arguments. The Association's staff worked on fund raising, analysis, and
news releases. Civil Justice Association of California President John H. Sullivan met with editorial writers at nine newspapers
and radio stations and participated in a dozen radio and television debates with trial lawyers.
Civil Justice Association of California General Counsel Fred J. Hiestand testified at the legislative hearing on the initiative.
The campaign firm of Goddard*Claussen/First Tuesday helped on the campaign, especially with
advertising in the final two weeks, and Edelman Public Relations worked with news media. All
of Civil Justice Association of California's staff helped respond to the many calls generated by Civil Justice Association of California's phone and web page
listing in the official Ballot Pamphlet.
Civil Justice Association of California's president thanked all those who helped with the low-budget campaign: "We were
surprised by our large margin of victory, but in hindsight maybe we shouldn't have been; anyone
who took more than a couple of minutes to study 207 could see what a transparent gimmick it
was. Our job was to make sure voters took that extra look at the proposal and knew who was
behind it."
IN THE COURTS
Heading off a "New" Tort
Civil Justice Association of California has filed two briefs with the California Supreme Court to challenge an attempt by trial
lawyers to create a new tort involving lost evidence. In Cedars-Sinai Medical Center v. Los
Angeles Superior Court the plaintiff seeks punitive damages for "spoliation of evidence"
allegedly occurring because fetal monitoring slips were missing from the hospital's records. In
Temple Community Hospital v. Los Angeles Superior Court the evidence allegedly
destroyed was an oxygen tank and cauterizing equipment used to remove a mole from the
plaintiff's face.
Civil Justice Association of California briefs argue that existing remedies for deliberate or negligent destruction of evidence are
adequate and preferable to creating a new tort remedy, and that "spoliation of evidence" should
only be allowed as a tort where one party detrimentally relied upon another's assurances that it
will preserve evidence.
A Reach
Civil Justice Association of California has filed a brief in Nafsu v. Red Lion where a hotel is accused of negligence for
not protecting a guest from a third party criminal assault. The plaintiff was shot and wounded by
another guest who had been invited to attend a loud party in one of the rooms by the occupant
guests of that room. The assailant had earlier been observed wearing a gun by a bell clerk, whom
the guest told he had a permit to carry a firearm and displayed an official-looking paper.
Challenge to Bootstrapping
Civil Justice Association of California will ask the California Supreme Court to prevent private actions under the Unfair
Competition Act (UCA) to enforce state criminal statutes. The case, Stop Youth Addiction,
Inc. v. Lucky Stores, Inc., involves "bootstrapping" the Penal Code, which prohibits cigarette
sales to minors and provides that public prosecutors shall enforce its criminal penalties. An
appellate court has held that anyone may bring an action for restitution and injunctive relief
under the UCA to enforce any statute making any conduct unlawful.
The Supreme Court earlier refused to review State Farm Fire & Casualty Co. v. Superior
Court of Los Angeles , where persons not insured by the defendant company nevertheless
brought suit under the UCA alleging wrongful pricing, coverage and claims practices. Civil Justice Association of California
filed a letter brief with the Court urging that it grant review because the appellate opinion
transforms the UCA into a virtual "omnibus act," conferring legal standing upon any bystander
who feels aggrieved about some practice that is arguably unfair, fraudulent or unlawful. Civil Justice Association of California
contends that the unrestricted ability to sue and obtain attorney fees is contrary to legislative
intent.
No Duty to Help a Robber
The California Supreme Court has ruled that Kentucky Fried Chicken is not liable to a customer
who claimed emotional distress after being held at gunpoint by a robber in the company's
Redondo Beach restaurant. Civil Justice Association of California General Counsel Fred J. Hiestand filed a brief for Civil Justice Association of California
supporting KFC and participated in the oral arguments before the Supreme Court when it heard
the case in Los Angeles on October 9.
The customer and her attorney are claiming the restaurant is at fault because its employee did not
respond quickly enough when she was ordered to open the cash register. In its four-to-three
opinion the court said, "The public as a whole is much better served if would-be robbers are
deterred by knowledge that their victims have no legal duty to comply with the robber's
demands..."
Trial Judge: "No" to Junk Science
Santa Clara Superior Court Judge David Leahy's refusal to permit use of unsubstantiated
scientific evidence brought an early end to a suit by a San Jose chiropractor who claimed his
partial paralysis was caused by mercury vapor from fillings in his teeth. The ruling is viewed as
a growing trend among judges to prevent introduction of "junk science" that is developed for
courtroom use and that has no independent acceptance in the scientific community.
The suit had named as defendants the plaintiff's dentist, a local dental supply firm, manufacturers
of the material, and the American Dental Association.
VERBATIM
View from USA Today
In the Us v. Them world of litigation, courts need to act on behalf of people, especially when
their lawyers do not. -- USA Today, editorial, December 10, 1996.
Class Action Skepticism
If the total fee ($ 22,000,000), fees already received plus the 10% under the district court's
order, is considered at an hourly rate of $300 (a very high rate), it would require 70,000 hours of
work to produce. An attorney would have to live as long as Methuselah to bill so many
hours. -- Judge Robert F. Chapman, Senior Circuit Judge: Fourth Circuit United States Court
of Appeals, Appellants v. Dalkon Shield Claimants Trust, June 20, 1996.
The Power of the State
Lawyers are sui generis. They use the power of the state to earn a living, and along
with the privilege they enjoy as officers of the court--e.g., a monopoly on the provision of legal
services--come certain responsibilities. -- Max Boot, writing in the Wall Street
Journal, December 18, 1996.
Chaotic Redistribution
Civil litigation is a form of chaotic wealth redistribution with no coherent rationale. --
anonymous lawyer responding to California Lawyer magazine poll on tort reform,
November 1996.
I Will Sign
Let me say first of all I signed a tort reform bill that dealt with civilian aviation a couple of
years ago. I proved that I will sign reasonable tort reform. -- President Bill Clinton in first
Presidential Debate, October 7, 1996.
Ralph's Latest
The analysis in No Contest is a variant of standard conspiracy theory. Start with an
unshakable pre-formed judgment that power lawyers pervert justice, and no evidence can
possibly be adduced that would disprove the theory. -- New York University law professor
Geoffrey P. Miller reviewing Ralph Nader's latest book in the Washington Post.
TRIAL LAWYER WATCH
Big Spending Continues
Preliminary research revealed that trial lawyers pumped an amazing $1.3 million into 14 of the
most-contested legislative races in the November election. An analysis of reports filed with the
Secretary of State showed that trial lawyer money totaled at least $888,000 in five Senate races
and $435,000 in nine Assembly races between July 1 and November 5. Complete numbers were
not available until early in 1997.
In providing the numbers to the news media, Civil Justice Association of California commented that: "While the total amount
contributed by their political action committees is awesome by itself, you don't get the full story
of their influence until you add money from individual lawyers and the money both individuals
and lawyer PACs send to candidates indirectly."
STUDIES OF NOTE
Junk Law on Trial
Marcia Angell, M.D., executive editor of the New England Journal of Medicine, said in a
Manhattan Institute speech that "perhaps the most important aspect of the breast implant story is
its reflection of what appears to be a widespread distrust and misunderstanding of science -- and
a corresponding embrace of pseudoscience. In the long run, I believe, this growing alienation
from science will cause more damage than any other aspect of the controversy. Several jurors
involved in breast implant cases, as well as the head of a powerful advocacy group, publicly
stated that the result of scientific studies didn't matter to them. In their view, medical research
was not critical in settling the matter."
Dr. Angell is author of "Science on Trial: The Clash of Medical Evidence and the Law in the
Breast Implant Case," published last year by W.W. Norton & Co.
NEW Civil Justice Association of California BOARD MEMBER
Stephen J. Feely, Farmers Group, Inc., Vice President and Executive Director - State of
California, has been elected to the Civil Justice Association of California Board of Directors. He joined Farmers in Oregon in
1974 and held underwriting and management assignments there and in Ohio. He then moved into
legislative affairs and was named Vice President - Public Affairs in 1987.
Feely is vice chairman of the Personal Insurance Federation of California and chairs the Business
Insurance Steering Group. He serves on the Advisory Board of the Santa Clara Institute of
Insurance Law and Regulation and is past chair of the California Assigned Risk Advisory Board
and the Western Association of Assigned Risk Plans.
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©1997 California Association for Tort Reform
