FOR IMMEDIATE RELEASE
May 6, 1997

CONTACT: John H. Sullivan
PHONE: (916) 443-4900

"It is not surprising that the lawsuit industry persists in trying to carve new avenues for litigation, but it is amazing that the California Legislature would even consider such a discredited attack on the very companies that are driving our state's long-awaited economic recovery," said John H. Sullivan, president of the Civil Justice Association of California and a co-chair of the campaign that defeated Proposition 211 by a three to one margin last November.

The current bill (AB 1487 - Floyd) would change what has been California law for more than 100 years and let lawyers use California courts to sue companies over stock information even when a plaintiff hasn't relied on or even read the company statement in dispute. California courts have rejected this so-called "fraud on the market" doctrine.

Sullivan said that the Floyd bill uses the same gimmickry as Proposition 211 -- "a cynical attempt to use senior citizens as a vehicle to drive a scheme to generate more attorney fees." In the case of AB 1487, the existing definition of "senior citizen" is expanded from persons 65 or older to anyone, regardless of age, who has a retirement savings account or investment and claims to have suffered a loss.

"California voters quickly saw through this kind of attempt in 211 to enlarge the client base," Sullivan said. "We hope the many legislators who opposed Proposition 211 will rally to stop this latest brand of deception in its tracks. Protections against fraud are in place and working."

The bill also makes it easier to file frivolous class action lawsuits and includes a one-sided proposal virtually guaranteeing plaintiff attorney fees in every settled consumer remedies case.

Sullivan said the bill is in some ways worse than Proposition 211 because it goes beyond securities and shareholder activity and reaches into marketing products and services. "The Legislature should be working on laws to eliminate frivolous lawsuits, not give lawyers more ways to file them," he said.