THIRD QUARTER 1997
A publication of the Civil Justice Association of California --
dedicated to
restoring fairness and balance to the civil justice system
HEADLINERS
Trial Lawyers Legislative Setback
Sacramento Bee political columnist John Jacobs said it was an imitation of Wily E. Coyote --
"the guy who always holds the bomb with the burning fuse in Roadrunner cartoons and stands
there dumbfounded as it explodes in his face." In reality, it was hard lobbying by Civil Justice Association of California and
a broad coalition of businesses, professions, and associations that stopped bills the trial
lawyers thought they could handily move through the Legislature this summer.
Most significant of the derailed bills were:
- AB 1109 (Escutia) which would open
up the courts to high cost "third
party" lawsuits against insurers, weaken efforts to curb insurance fraud, increase insurance
costs, add to court congestion, and give lawyers a way to evade Proposition 213's new damage
limit for uninsured drivers.
- AB 250 (Kuehl) which would undercut
California's successful Medical
Injury Compensation Reform Act (MICRA) by gutting the non-economic damage limit that has
helped hold down health care costs.
- AB 1324 (Escutia) which would
water down California's already too-weak summary judgment law and make it even more
difficult for judges to weed out frivolous
claims.
The three were made "inactive" by their authors without a vote and can be revived at any
time, though the most likely timing of a renewed effort is early 1998. Trial lawyers are saying
they will step up their efforts, which have already involved an extensive media and lobbying
campaign.
"To the Future" Product Liability Rejected
In an important product liability ruling, the Fourth District Court of Appeal agreed with
Civil Justice Association of California's amicus argument and agreed that "appreciable present harm, not merely the threat of
future harm, is required" to recover in a suit alleging a defective product. In the case (Zamora
v. Shell Oil Co.) 14 homeowners alleged that polybutylene plumbing in their homes was
likely
to fail in the future. Shell was named in the suit because it had supplied resin used in the
product.
Fred Hiestand, Civil Justice Association of California General Counsel, wrote the Civil Justice Association of California brief and participated in oral
argument before the court in April.
AROUND THE STATE
Civil Justice Association of California Radio Spots Pull Back the Curtain
In June Civil Justice Association of California ran two sets of 60-second drive time radio spots around the state to tell voters
that "In the last elections, trial lawyers contributed over $3 million dollars to California
politicians...now they're pushing bills in the Legislature that would make it easier to sue
California businesses..." The commercials urged voters to call their legislator and ask for
votes against all the trial lawyer bills. While the commercials were running, Civil Justice Association of California provided
news media and legislators with an "early report card" criticizing judiciary committee voting
in both the Senate and Assembly but noting (with accuracy, as it turned out) that "there
appears to be a bi-partisan sense of restraint when it comes to floor votes on some of the bad
bills."
IN SACRAMENTO
2000+ Coalition Strengthens Reform Fight
A new coalition of manufacturers, professionals, and service providers is working to stop
self-serving trial lawyer legislation and to build for a future when both the Governor and
Legislature will be much more responsive to enacting legal reforms critical to California's
economy and a fairer legal system.
Called Legal Reform 2000+, the coalition is overseeing research and
communication designed to both stop current trial lawyer bills and, over the longer term,
establish legislative support for tort reform. The project is also designed to improve the
climate for specific reform proposals advocated by Civil Justice Association of California and other organizations sponsoring
separate campaigns designed to improve liability laws that have been causing specific
problems. And 2000+ is preparing the business community to defend against any
ill-conceived ballot measure that the trial lawyers might consider putting forth in the future.
State Bar Challenged for Political Bias
Civil Justice Association of California is opposing State Bar funding legislation because of the Bar Board of Governors' action
in March to take a position on a bill unrelated to the governance of the Bar. The Bar's
newsletter said the board voted to support legislation (AB 250-Kuehl) weakening the
non-economic damage limits in medical malpractice law despite the fact that several board
members "felt strongly that the bar should not take sides on any issue of this nature which
would divide the legal profession."
In Civil Justice Association of California's letter opposing the Bar dues bill (SB 1145-Burton), Civil Justice Association of California President John H.
Sullivan wrote: "Admitting that we have an opposite position on the bill involved, we are
looking at the broader issue of the politicizing of the Bar. If the Board of Governors will not
keep the Bar on task,' who is left to do the job but the Legislature."
Legal reporters credited Civil Justice Association of California's opposition with turning the bill from a two-year to a one-year
measure in the Senate where it barely passed 21-13.
Some Bad Bills Still Moving
As the Legislature prepared for its final month of the first half of the 1997-98 session, bills
attacking mandatory arbitration agreements remained alive (AB 574-Villaraigosa and SB
19-Lockyer), as did bills which would trigger more frivolous lawsuits in the workplace (SB
48-Solis) and against health care service plans (SB 977-Peace).
A rapid, coordinated response stopped two bills sponsored by securities lawyer Bill Lerach's
law firm which would enact the heart of last year's Proposition 211 and open up a new
opportunity for private lawyers to sue life insurance companies. The bills (AB 1486 and AB
1487-Floyd) will be before committees in January 1998.
Close Vote on Unfair Competition Act
The Legislature flunked its first test on eliminating a new brand of absurd lawsuits brought by
fee-seeking attorneys. Both houses' Judiciary committees failed to pass either of two bills (SB
1309-Mountjoy, AB 1295-Caldera) to improve the Unfair Competition Act. This law has
long been used by district attorneys to protect consumers and businesses from dishonest
merchandizing. But a new industry is developing of unscrupulous private attorneys who bring
suits with no real clients and no evidence of harm, then demand attorney fees and
"restitution."
For example: At least 10 software makers have been sued because of claims that their retail
software packages are "too large," and computer monitor makers and retailers are being hit
with private suits over screen size advertising, even though the Attorney General has already
litigated the issue to resolution. Civil Justice Association of California helped mobilize a coalition of companies, many from
Silicon Valley, to press for passage. All involved will continue to pursue this much-needed
legislation in the coming months. Bills can be acted on again in January.
The committees also failed to approve important bills to stop abusive employment and punitive
damage claims.
IN THE COURTS
Risk Defense Followed in Civil Justice Association of California-Briefed Case
In a 5-7 vote the California Supreme Court ruled (Parsons v. Crown Disposal
Company) that a disposal company could not as a matter of law be found negligent when
its routine trash collection frightened a horse which threw and injured its rider.
In an opinion tracing the history of machine-horse conflicts, the majority said in deciding
whether the company had a particular legal duty toward the rider that "chief among the factors
which must be considered is the social value of the interest which the actor is seeking to
advance."
Strengthening the defense of "implied assumption of risk," the court found that "when, as
here, no relationship exists between the plaintiff and the defendant, and there is no policy
reason for imposing a duty upon the defendant to avoid increasing the risk of harm to the
plaintiff over that posed by the activity in which the plaintiff happens to be engaged, the
defendant has no such duty."
Civil Justice Association of California General Counsel Fred Hiestand presented points from Civil Justice Association of California's amicus brief in person
when the court heard the case.
Civil Justice Association of California Weighs In on Research Case
In a case (Artiglio v. Corning Inc.) important to the future of scientific research,
Civil Justice Association of California has filed an amicus brief with the state Supreme Court supporting a lower court ruling
that Dow Chemical could not be found liable for general silicone research that was later used
by Corning, a separate and independent corporation, in developing breast implants.
Dow Chemical's research discussed the use of silicone for general industrial and non-cosmetic
purposes and reported experiments on its low toxicity for humans. Civil Justice Association of California's brief compared
the plaintiff's attempt to establish Dow Chemical's liability with placing before a jury the
argument that Albert Einstein should be found responsible for injuries at Chernoble and Three
Mile Island.
Runaway UCA
Civil Justice Association of California has filed an amicus brief with the California Supreme Court (Stop Youth
Addiction v. Lucky Stores, Inc.) to prevent a private attorney from bootstrapping a Penal
Code provision into a lawsuit under the state Unfair Competition Act (UCA). The case arose
when a corporation Stop Youth Addiction filed suit under the UCA against Lucky Stores, Inc.
for violating the Penal Code section making it a misdemeanor to sell tobacco to persons under
18 years of age. The attorney seeks an injunction and restitution and attorney's fees.
Civil Justice Association of California's brief argues that it was not the intent of the Legislature in enacting the UCA to allow
private attorneys to bring suits over violations of laws for which private rights of action were
not explicitly or implicitly provided. Civil Justice Association of California also argues that the UCA does not confer direct
standing upon individuals to enforce its provisions, regardless of whether they are injured.
Inherently Dangerous Parking
A state appeals court has ruled that owners and operators of commercial parking garages might
be found liable for crimes on those premises even without the usual requirement for evidence
of prior criminal attacks at the location. The case (Sharon P. v. Arman) was
decided 2-1 with the majority finding that the "inherently dangerous nature of commercial
parking structures" means that plaintiffs can proceed with a case based on lack of proper
security without first showing the garage owners knew of similar criminal activity in the
immediate area.
In 1993 the state Supreme Court ruled (Ann M. v. Pacific Plaza Shopping Center)
that evidence of prior criminal assaults was necessary to establishing the foreseeability of harm
necessary to create duty to provide security guards in a private parking area.
AROUND THE NATION
Congress Acts on Medical Liability Reform
Medical malpractice liability amendments modeled on California's two-decades-old reforms
are part of the Medicare budget package before Congress. The amendments, including a
$250,000 limit on non-economic damages, are part of a House bill which the Congressional
Budget Office says will save $200 million over the next five years.
Drop in Frivolous Prisoner Lawsuits
The number of prisoner civil rights suits has dropped 25% in California and 20% nationwide
since the April 1996 enactment of the federal Prison Litigation Reform Act designed to
eliminate frivolous lawsuits filed by prisoners. State Attorney General Dan Lungren, who was
a leader in the reform effort, had documented the high taxpayer costs of suits over such issues
as prison food. The law established a $120 lawsuit filing fee.
Fast Action on Volunteer Bill
Following overwhelming Congressional approval, President Clinton in May signed legislation
limiting the liability of individual volunteers working for non-profit organizations and
government entities. Individuals will be immune from liability for simple negligence.
Savings from Illinois Reforms
Illinois' comprehensive 1995 tort reform legislation has reduced civil lawsuit filings by 30% at
a savings of at least $150 million in taxpayer and defendant costs. The findings are based on a
comparison of suits filed in 1994 and 1996. The Illinois Civil Justice League discounted
1995's numbers because of the large number of suits filed by trial lawyers rushing to beat the
new law's effective date.
Nine States Enact Reforms
The American Tort Reform Association reports that nine states have succeeded in enacting
reform legislation this year:
- Alaska: Punitive damage limit of lesser of three times compensatory
damages or $500,000 (with exceptions for employment law cases or cases where defendant is
"motivated by financial gain;" non-economic damage limit of the greater of $400,000 or the
injured person's life expectancy multiplied by $80,000 (with higher limits in cases of severe
physical impairment); pre-qualification of expert witnesses; comparative fault; requires a party
rejecting an offer to pay a portion of other party's attorney fees and court costs if final
judgment or settlement is five percent less favorable than offer.
- Arkansas: Immunity for volunteer physicians providing services in low-cost
medical clinics.
- Iowa: Comparative fault for non-economic damages for defendant 50% or
more at fault (defendants less than 50% at fault have no liability in Iowa); 15-year statute of
repose in product liability actions; 6-year statute of limitations for medical malpractice.
- Maryland: Immunity for professional engineers who volunteer at the
request of state officials to respond to emergency or disaster.
- Minnesota: Certificate of merit required for claims against licensed
professionals.
- Montana: Unanimous jury required to find punitive damage liability and
to set damage amount; permits court to levy jury costs on a party whose case is frivolous or
intended to harass.
- North Dakota: Requires preponderance of evidence of fraud, oppression
or malice before party can allege fraud; plaintiff must obtain a favorable "admissible expert
opinion" before proceeding with a medical malpractice suit; plaintiff in medical malpractice
suit waives medical confidentiality privilege pertaining to records and other information from
physicians.
- South Dakota: Creates a new cause of action against fomenting litigation
("barratry") and requires court to impose court costs and attorney fees on a party whose action
is determined frivolous or malicious.
- Texas: Restores forum non conveniens doctrine allowing courts to refuse
jurisdiction over out-of-state injury and wrongful death claims.
- Utah: Establishes an 180-day time limit for pre-litigation medical
malpractice hearings.
The Next Big Tort?
Betting has begun on whether "latex allergy" will be the next lawsuit bonanza for the trial
lawyer industry. Business Week reported in June that medical glove manufacturers
are facing an explosion of suits over reactions allegedly caused by healthcare personnel using
the product. A Philadelphia attorney is leading an 18-member legal steering committee
overseeing the recent consolidation of 45 federal cases -- about a quarter of those filed so far.
With law firms advertising via seminars, nursing and medical publications, and the Internet,
competition for clients is heating up.
VERBATIM
Why?
As a matter of public policy, why would a Democratic Legislature choose to reduce the
amount of care available to the working poor so that trial lawyers, already among the state's
wealthiest residents, can have a larger payday? -- Sacramento Bee, in a
May 30, 1997, editorial opposing the trial lawyer bill (AB 250) attacking the Medical Injury
Compensation Reform Act (MICRA).
Welcome to the Club
The mere threat of tort actions could discourage some news organizations from
aggressive reporting that is within the bounds of ethical conduct. Organizations with deep
pockets may be able to fight the suits. But smaller media, often the most visible consumer
watchdogs in their communities, can ill afford potential exposure to punitive damages. They
may find they can no longer risk crossing the line in reporting truthful information without
being taken to court. -- Editorial Notebook, New York Times, February 17,
1997.
Weirdness in the Workplace
It is hard to spend much time among the documents that employment law leaves behind --
the case reports, hearings, and press summaries of actual lawsuits -- without being struck by
the volume of spectacular injustice and irrationality the law has produced. More than one
reader of early drafts of this book suggested I include frequent disclaimers that I really wasn't
making it up. -- Walter K. Olson of the Manhattan Institute in the forward of his new
book "The Excuse Factory: How Employment Law Is Paralyzing the American Workplace."
TRIAL LAWYER WATCH
www.2000.$$$
Lloyd's of London has been told to expect $1 trillion in litigation in the U.S. alone over the
failure of some computer programs to deal with the change from the year 1999 to 2000. An
attorney with a San Francisco law firm's "Year 2000 legal team," told a San Francisco
Examiner reporter that liability and legal issues could exceed the cost of fixing
systems.
"One hopes this is all wishful thinking," commented Civil Justice Association of California President John H. Sullivan. "But
with the trial lawyers' relentless press to turn contract disputes into tort actions, you know
they'll be working to start the next century with a big contingency fee bang."
Water Rescue
The San Francisco Daily Journal reported that "Less than 24 hours after the
horrifying collapse of a Concord water slide that killed a high school senior and injured nearly
three dozen others, a San Francisco law firm was putting its spin on the tragedy just in case
anyone -- like, say, potential clients -- might be interested." The news release from Brown
Fabbro & Scarlett in San Francisco contained a heading "defective slide."
After checking with the State Bar, Journal reporters concluded that the release
"apparently doesn't run afoul of any ethical or legal standards," and noted a Bar legal deputy
saying that after the accident the Bar activated its "disaster response plan." The plan calls for
dispatching investigators to nearby hospitals and areas downwind of the scene to look for
attorney business card fallout.
STUDIES OF NOTE
Punitives Grow in Financial Suits
A RAND Institute for Civil Justice study finds that average punitive damage awards in
financial loss lawsuits rose from $3.3 million to $7.6 million during a five-year period in a
five-state study region. Based on the study, RAND estimates that half of all punitive damage
jury awards in state courts occur in financial litigation rather than personal injury lawsuits.
The study found that punitive damages are awarded in one of seven financial cases that go to a
jury verdict and that punitive damages account for more than half of the total damages of any
kind awarded in financial litigation. California juries awarded punitive damages in 21% of the
financial suits examined, compared with 14% in Illinois, and 4% in New York.
NEW Civil Justice Association of California BOARD MEMBERS
Ingrid K. Calle, Michael L. Carpenter, and Melanie L. Wiegner were elected to the Civil Justice Association of California
Board of Directors in May.
Calle is a senior attorney in Atlantic Richfield Company's Major Litigation Department in Los
Angeles, where she heads the toxic tort litigation unit. She began her career, which has
focused on complex product and premises liability litigation, with the firm of Haight, Dickson,
Brown and Bonesteel in Santa Monica in 1986 and later left to help establish the firm of
Dickson, Carlson and Campillo. She joined ARCO in 1991.
Calle received a B.S. in finance from the University of Southern California and graduated
from Hastings College of Law.
Carpenter is Regional Director of Governmental Affairs for Philip Morris, Inc. From 1994
until accepting his new appointment in May, he was Vice President-Legislation at Civil Justice Association of California
where he guided Civil Justice Association of California's legislative and political action programs to new successes. Prior to
joining Civil Justice Association of California, he was for five years a litigation attorney with Gordon & Rees in San
Francisco, representing plaintiffs and defendants in product liability, professional malpractice,
construction, and securities actions.
A graduate of the University of California at Berkeley, he holds a law degree from the
University of San Francisco.
Wiegner is Regional Manager for California Governmental Affairs for Ford Motor Company.
She previously was a legislative advocate for Rose & Kindel in Sacramento. From 1991
through 1993 she was Director and Counsel, Labor and Employment Law at the California
Chamber of Commerce. She has served in the public sector as Legal Counsel on the
California Public Employment Relations Board and earlier as a clerk in the Office of the U.S.
Attorney in Sacramento.
From 1985 to 1987 she was an associate with the firm of Hubbert, Shanley and Lee in
Sacramento. She is a graduate of the University of Kentucky where she also received a law
degree.
Items in Balance may be reprinted without permission but credit should be given to the
Civil Justice Association of California
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©1997 California Association for Tort Reform
