SECOND QUARTER 1998
A publication of the Civil Justice Association of California -- dedicated to restoring fairness and balance to the civil justice system
A publication of the Civil Justice Association of California -- dedicated to restoring fairness and balance to the civil justice system
Headliners
Trial lawyers could not generate enough support to risk floor votes on the major bills they introduced with high hopes in 1997. Commending legislators for resisting strong pressure, Civil Justice Association of California observed that "trial lawyers lobbied the Legislature hard for many months to get their bills passed. Their plan was to build opportunities for more and bigger lawsuits in a number of areas. Every legislator who hung tough and put consumers and taxpayers first deserves commendation."
The bills would have boosted the cost of health care, made it harder for judges to dismiss frivolous lawsuits, and devastated Proposition 213, which the voters passed in 1996 to attack the problem of uninsured motorists.
The prominent bills which died included:
AB 250 (Kuehl) which was designed to eliminate the $250,000 pain and suffering damage limit in the Medical Injury Compensation Reform Act (MICRA), a two- decade old law that has become a national model for holding down health care costs;
AB 1109 (Escutia) which would have restored a discredited 1970s court ruling and driven up insurance litigation and costs and provided personal injury lawyers with a way around Proposition 213's restrictions on damage recoveries by uninsured drivers;
AB 1324 (Escutia) which would have tilted summary judgment procedures toward plaintiffs' lawyers and given meritless lawsuits a new lease on life;
AB 1486 and AB 1487(Floyd), introduced last year at the behest of Proposition 211-sponsor Bill Lerach's law firm, these would have given lawyers bigger fees in lawsuits brought under the Consumer Legal Remedies Act and unfairly targeted life insurers by permitting fraud actions without showing that anyone had been mislead.
The legislation, authored by Assembly members Brooks Firestone and Jim Cunneen, would limit legal damages resulting from a year 2000 computer date failure to costs related to bodily injury and reprogramming and testing software and hardware date systems. The bill would not affect existing or future contracts in which the parties agreed to limit or expand liability or damages for year 2000-related problems.
Assemblyman Brooks Firestone said that "AB 1710 is designed to discourage predator lawsuits and to provide the predictability companies need to plan for the 'Y2K' conversion."
Barbara Wheeler, Civil Justice Association of California legislative advocate, said the association believes that money and attention that can be used to head off the problem should not be diverted to lawyers filing class action negligence and fraud lawsuits in the hopes of hitting punitive damage jackpots and contingency fee bonanzas.
Entitled "Health Care Business. Consumer and Provider Services Initiative Statute," the proposal would establish expansive medical malpractice liability for what it terms "health care businesses" -- defined so broadly as to include many employers, virtually every kind of insurance company, and state and local governments.
Early review by the Legislative Analyst and Department of Finance shows from "tens of millions to hundreds of millions of dollars" in increased taxpayer costs.
It is unclear whether the relatively unknown list of official proponents have trial lawyer or other backers with sufficient financial ability for the expensive signature gathering activity necessary to qualify the initiative for this year's November ballot.
Civil Justice Association of California, which filed an amicus brief in support of Lucky Stores, said the majority's ruling was disappointing, but praised Justice Janice Brown's dissent which "describes the kind of legal mischief going on in these Unfair Competition Act cases where the law lets suits be filed over 'general disgruntlement' instead of real injuries." Civil Justice Association of California General Counsel Fred Hiestand also noted that Justice Marvin Baxter described, in his concurring opinion, the due process problems in letting a private lawyer file and settle suits for other people who have not even been told what is going on."
"The majority's ruling nevertheless highlights misuse of the Unfair Competition Act and the need for the Legislature to step in with some reforms," Hiestand said.
The theme embodied in the physicians' Hippocratic Oath was echoed in Governor Pete Wilson's January 28 statement to the Legislature on managed health care reform in which he cautioned that reform done wrong can "compromise the quality of care, lead to exorbitant costs that make coverage unaffordable, and allow trial lawyers to prey upon innocent consumers and decent providers."
Earlier the Governor's Managed Health Care Improvement Task Force released recommendations after resisting proposals to throw open the door to non-productive health care litigation. Congratulating the task force for its position, Civil Justice Association of California president John H. Sullivan noted that "health care delivered through managed care plans would not be improved by diverting millions of dollars to the trial lawyer industry."
The Clinton Administration and some members of Congress are supporting amendments that include opening the tort liability door on decisions made by health care plans.
A Los Angeles Times editorial described a new Texas law promoting lawsuits against HMOs as a "backlash" which in California "would hardly be the kind of cost- effective approach to managed health care reform the governor is seeking." And the Times later editorialized that a federal law to open health care to malpractice suits "would be bad medicine for both employees and employers, driving up health care premiums."
Civil Justice Association of California has been opposing legislative proposals that would spawn wasteful litigation by defining health care plan coverage decisions as the practice of medicine.
Barbara Wheeler, Civil Justice Association of California legislative advocate, said one important issue is a private attorney's current ability to bring a suit despite the fact that a district attorney has already prosecuted the matter. Other problems result because a private attorney can bring suit for restitution and attorney fees on behalf of an individual without any showing that the person was harmed or misled or had even used the product or service involved. And UCA suits are being brought as pseudo class actions, but with none of the protections for consumer plaintiffs or defendants that are in place in actual class action suits.
"The challenge is to make sure the Unfair Competition Act is maintained as a consumer and business protection tool, but not available for private lawyers who are learning to use it primarily for their own economic gain," she said. She noted that the California District Attorneys Association is also interested in UCA reform and is working with Civil Justice Association of California on proposals.
Around the State
The report noted that California is one of only three states with a "clearance rate" of under 80%, meaning that a pending case backlog has been rapidly building. This is resulting, the report surmises, from the state's rapid growth of civil filings and its new experience with the "three strikes" criminal sentencing law.
In all states, civil filings between 1984 and 1996 (not including domestic cases) increased 37% in limited jurisdiction courts and 25% in general jurisdiction courts -- a period when U.S. population increased by 12.4%
Last year 2000+ radio spots, letters, newspaper ads, and an 800 information line were used -- ultimately successfully -- to assist other efforts to stop legislation detrimental to jobs and the economy in the state.
When the "terrible tort" bills died in January after failing to get needed votes before a legislative deadline, Civil Justice Association of California used ads, news releases, and mailings to thank legislators who refused to vote for the trial lawyers' bills.
In Sacramento
The bill (AB 2086-Keeley) is an alternative to trial lawyer-supported proposals to, in effect, eliminate arbitration as a cost-effective means of alternative dispute resolution. Two bills (SB 19-Lockyer and AB 574-Villaraigosa) remain alive as attempts to virtually eliminate the finality of arbitral awards by subjecting them to a relaxed standard of appeal and completely prohibiting binding arbitration clauses in employment contracts.
Mark Krausse, Civil Justice Association of California vice president-legislation, said that "allowing an arbitrator to reconsider his own award once it has been issued is the appropriate, incremental step to improve the arbitration process. Under current law, although an arbitrator might wish to correct his award, in most instances he has no authority to do so."
The measure, a successor to SB 232 (Brulte) of last year, is modeled after successful provisions of the federal Securities Litigation Reform Act of 1995, which limited financial damages in a multiple-defendant securities suit to portions equal to each defendant's percentage share of fault.
In 1986 California voters approved Proposition 51, which established the proportional liability rule in personal injury and property damage cases.
The broad-based CFLL coalition is operating an education program which is developing support for the proposal all across the state.
Bills Expand Age Discrimination Liability
Two bills have been introduced to reverse the appellate decision (Marks v. Loral) which held that an employer may make employment decisions based on salary level even though the result may be that younger employees are hired or retained over older, higher compensated workers. The State Supreme Court refused to review the decision late last year.
Senate Bill 1098 (Kopp) would make any employment decision based solely on salary level actionable as age discrimination if it disadvantaged employees or potential employees over the age of 40. Assembly Bill 1643 (Escutia) specifically rejects the Marks holdings and makes an employment decision actionable if it disproportionately affects over-40 workers as a group.
Civil Justice Association of California has communicated its opposition to both measures to the Legislature.
Around the Nation
Now, according to a Wall Street Journal review, courts are beginning to take a close look at contingency fees in all kinds of cases. For example, in Colorado, an appeals court upheld a jury that found that a lawyer charged excessive fees when he took a standard one-third of a $100,000 settlement he quickly negotiated with an insurer in a case where his client was injured by a drunk driver.
Cardozo Law School professor Lester Brickman told the Journal that the case was "the first time that an appeals court has ruled that charging a standard contingent fee in a personal injury case devoid of any risk is unethical and illegal. It is going to make its way into the lawyers' case books."
Congress' Joint Economic Committee has estimated the plan would cut premiums an average of 32% across the country, saving $45 billion a year. In California the estimate is an annual savings of up to $5.4 billion (if all drivers opted for the lower cost plan), an average of $323 per policy.
Part of the savings would come from reducing excessive and fraudulent claims, which the Rand Institute for Civil Justice has determined is costing Californians from $250 million to $350 million a year.
Californian's enacted, in a sense, their own choice plan in 1996 through an initiative that provides no pain and suffering damage recovery for drivers who opt not to buy mandated liability coverage at all.
Tamer Ads in Florida?
The Florida legislature has been reviewing a proposal to limit lawyers' printed ads to simple "tombstone" ads which list only basic practice areas and qualifications. Earlier the state enacted tough rules against lawyer solicitation that were challenged but ultimately upheld by the U.S. Supreme Court.
Further information on the proposals can be received via fax by calling the document retrieval number of the American Tort Reform Association, 800-996-0056.
In the Courts
Civil Justice Association of California filed a brief in the case last year as part of its ongoing work to protect MICRA and block unjustified expansions of tort law. The case (Cedars-Sinai Medical Center v. Superior Court) involved alleged loss of heart monitoring records in a childbirth case.
The decision (Erlich v. Menezes) was recognized as a distinct departure from established law by dissenting Justice Kenneth R. Yegan who wrote that "No reported California case has upheld an award of emotional distress damages based upon a simple breach of the contract to build a residence and simple negligence in the building of the residence."
The jury awarded $406,700 for the cost of repairing the custom-built home and $165,000 in lost wages, emotional distress, and pain and suffering. The plaintiff claimed his new house literally made him sick and that he had to be transported by ambulance after he learned the house was structurally unsound.
Civil Justice Association of California's Appellate Committee is determining whether to file an amicus brief should the defendant seek to appeal.
The court ruled that loss of enjoyment of life is already a component of the concept of "pain and suffering" and that to allow separate evidence from Smith was prejudicial because it could lead the jury to award double damages for the same injury. The opinion said that the superior court judge should also have excluded Smith's testimony because mathematical formulas for computing general pain and suffering damages are not permitted and that methods for computing "hedonic" damages are not a matter for which expert testimony is admissible under the Evidence Code.
As an "expert," Smith presented the jury with various studies and formulas giving an average person's life expectancy at the plaintiff's age a baseline "enjoyment" figure of $2.3 million. The jury awarded $890,000 in the case.
Verbatim
Trial Lawyer Watch
The group wrote Wayne to express its "deep concern" over his having "voluntarily agreed to accept an award as Legislator of the Year from the San Diego chapter of the very group that seeks to continually expand California's liability laws."
In a press statement, the group noted that Wayne seemed reluctant to publicize his award and cited Civil Justice Association of California research which showed the assemblyman in 1995-96 receiving directly and indirectly at least $50,400 in campaign contributions from trial lawyers.
The Los Angeles Times and Daily Journal statewide legal newspaper have been investigating whether and how much individual judges paid for the trip. A Journal writer said the voyage "raised a mayday for the regulation of the private judging industry."
The 90-member group on the cruise arranged by plaintiff's attorney Thomas Girardi included active and retired judges -- some of the latter involved in private arbitration and judging. Girardi told the Journal he chartered the ship for an education and fund-raising voyage for his organization the Foundation for Enrichment of the Law at a cost of $350,000.
The Journal earlier reported that 450 lawyers crowded into a Philadelphia conference on diet pill lawsuits put on by a legal newsletter publisher.
Studies of Note
Design professionals are turning down work at an increasing rate because of liability fears, according to the American Consulting Engineers Council 1997-98 Professional Liability Report. The survey of member engineer firms revealed that almost 90% refused work during 1997 because they "detected the possibility of lawsuits" -- up from 75% the previous year.
However, the report found that tort reform successes are adding up -- as a percentage of gross income, consulting engineers' insurance rates are the lowest in 10 years.
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