Tort reform urged for California economic recovery

Legal News Line Dec. 24, 2008, 1:00am

John Sullivan

SACRAMENTO, Calif. (Legal Newsline)-A California organization that advocates for fairness in civil courts, has urged Republican Gov. Arnold Schwarzenegger to include tort reform in efforts to help attract new businesses to the state.

California is mired in a financial free-fall that has seen the deficit swell by the billions and threatened the state's cash reserves. Schwarzenegger announced early this week that all state employees would soon have to take mandatory two-day unpaid furloughs for the state to continue to meet its payroll obligations.

On Monday, state Controller John Chiang gave the Legislature a possible scenario of the state resorting to risky emergency loans if a revised budget accord is not reached soon.

Amid that ominous climate, the Civil Justice Association of California asked the governor to make economic recovery a high priority in on-going budget negotiations with the state Legislature.

"State government ... can send a powerful national message that we welcome private investment in California employees and production of goods and services more than in the past," CJAC President John Sullivan wrote Monday.

Sullivan cited forecasts of higher unemployment and weak job growth for the next two years as evidence the state needed to do more to attract private businesses, particularly, by offering tort reform legislation.

"Tangible legislation that will make California a more attractive place to do business is bound to result in more jobs sooner," Sullivan wrote.

In his letter to Schwarzenegger, Sullivan gave the governor a list of recent civil justice legislation that would not cost the taxpayers anything to enact and could have an immediate impact on the business climate throughout the state.

"They do not reduce public heath or safety," Sullivan wrote. "They will, however, be recognized nationally by business decision-makers. These are the people who, in preparing for economic recovery, will decide how much personnel and facilities to add or retain in California, if any, and how much to develop in a different state."

Among the changes proposed by Sullivan is a law that would allow defendants equal legal ability to appeal a judge's decision to certify a class action. Once a class action is certified, defendants face a costly legal battle regardless of the case's merit, Sullivan wrote.

"Federal law and the law of most states give both sides equal rights to appeal certification," Sullivan wrote. "The imbalance is well known nationally. It is one of the reasons that business lawyers rank California among the worst states in class action lawsuit fairness."

Sullivan also asked for support for laws that encourage case settlement, fair post-judgment interest rate laws and employee meal and rest break rule modification.

California is often cited in an annual report by the American Tort Reform Association as a "judicial hellhole" or a place where "judges systematically apply lows and court procedures in an inequitable manner, general against defendants in civil lawsuits."

Los Angeles County made the list of the seven worst places for businesses, according to the ATRA, for allowing "shakedown lawsuits brought primarily against small businesses under the Americans with Disabilities Act."

Recent lawsuits by California Attorney General Jerry Brown related to climate change, according to ATRA Spokesman Darren McKinney, show the state "continues to tilt at windmills, which only adds to the Golden State's reputation as a horrible place to do business."

McKinney told Legal Newsline that California's legal system has helped pushed many companies into neighboring Nevada and Arizona, which has eroded the states' employment and revenue.

Earlier this month Brown sent his own letter to high-ranking members of Congress asking that any bailout for the automaker industry be tied to a demand that the automakers stop resisting California's emission laws, designed to reduce overall emissions to the level of 1990.

The effort, while touted by some Democrats, was considered a "poison pill" by the Bush administration and dropped from the negotiations.

McKinney cited Brown's lawsuits against automakers as just another example of the state's hostility toward businesses.

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