Schwarzenegger faces 'uphill battle' getting tort reforms

Chris Rizo Jan. 10, 2010, 4:35pm

Arnold Schwarzenegger (R)

SACRAMENTO, Calif. (Legal Newsline)-California Gov. Arnold Schwarzenegger has made tort reform part of his five-point economic agenda for his final year in office, but it's unlikely the Republican governor will get the changes he seeks to the state's civil code, political and legal observers said Sunday.

You see, they told Legal Newsline that the state Legislature will essentially be too bogged down this legislative session with the Golden State's fiscal woes to even begin to consider Schwarzenegger's proposals to, among other things, limit damage awards for economic loss and pain and suffering and protect sellers of defective products so long as they were unaware the products they sold were defective.

And even without tackling lawsuit abuse, the governor has a full legislative plate, said Barbara O'Connor, director of the Institute for the Study of Politics and Media at California State University Sacramento.

Already, she noted, the governor is pushing for educational reform, an $11.1 billion water bond on the November ballot and suggesting a measure to privatize the state's prisons.

O'Connor said unless tort reform is part of a larger state budget package Schwarzenegger's calls for civil justice reforms will likely just go unheard during what is expected to be a very, very busy political year in Sacramento.

"This (tort reform) will not make it to the top of the list for Dems.," O'Connor said.

Tom Scott, executive director of California Citizens Against Lawsuit Abuse, said he hopes the governor's proposals for legal reforms are seen by lawmakers as an integral part of a wider effort to boost economic development in the struggling state.

"The legislative branch needs to see legal reform as part of the package; not a throwaway," Scott said. "Legal reform is critical if economic reform is to occur. If that happens jobs will be created and saved."

As for Schwarzenegger's chances of getting meaningful legal reforms enacted in a state that ranked 44th in an annual survey of in-house corporate counsel around the nation, Scott said: "I think it is an uphill battle. I am hopeful, but cautious."

Bill Wong, a Democratic campaign consultant and former longtime legislative aide, said he doubts the governor's efforts to limit corporate liability would gain much support among California voters.

"I think consumers are angry and they would be opposed to any effort to take away their ability to punish what they would perceive as big unscrupulous corporations that might be intent on cheating them by producing shoddy products or cutting corners on safety," he said.

As for the governor's claim that tort reform will help bring jobs to the state, Wong said he is not so sure that argument will work either.

"The jobs argument won't fly in the shadow of the bank debacle and corporate bailouts," he said.

In addition to California's estimated $20 billion revenue shortfall through the next fiscal year beginning in July, there is a political dynamic at work that could keep tort reform off lawmakers' agenda.

Schwarzenegger's efforts to overhaul the state's litigation landscape could be stymied because the state Legislature is controlled by Democrats, many of whom get large amounts of campaign cash from the state's trial bar, which is typically opposed to limiting damage awards and civil liability.

"I don't see any enthusiasm in the Democratic-controlled Legislature to rein in the abuses of the plaintiffs' bar," said Ted Frank, founder and president of the Center for Class Action Fairness, based in the District of Columbia.

Schwarzenegger outlined his economic and jobs-creation plan Wednesday in his final State of the State address before a joint session of the state Legislature. It was then that he announced the California Jobs Initiative, a $500 million program aimed at kickstarting the Golden State's beleaguered economy by creating or retaining 100,000 jobs in the state where unemployment topped 12 percent in November.

"Creating jobs and getting our economy back on track, protecting education, reforming our tax and pension systems and putting an end to our boom and bust budget cycle must all be priorities," Schwarzenegger said last week. "I know that if we can recreate the teamwork we built last year and focus together on these priorities, California, already seeing clear signs of recovery, will emerge from these difficult times stronger and more vibrant that ever."

In a position paper outlining his legislative agenda released Wednesday, Schwarzenegger said he plans to ask the state Legislature to address the spate of frivolous lawsuits filed each year and said he plans to seek a series of changes to the rules governing class-action and product liability lawsuits. He also wants a cap on punitive damage awards.

"California's current litigation laws lead to large settlements with little value to consumers but become worth millions to lawyers at the expense of California businesses," the statement said. "Current statutes also impede growth by holding businesspersons liable for defective products -- even if the seller had no knowledge or control over the defect -- and allowing for punitive damage awards that are wildly unpredictable among similar cases."

The governor also wants to "improve California's litigation climate" by allowing defendants to appeal class action certifications and by requiring plaintiffs rather than defendants to pay for notification to other potential class members.

Both of the governor's proposed changes to how class actions are handled in the state would enact "sound practices," said Frank of the Center for Class Action Fairness.

"The appellate review is especially important and would bring California into line with federal and most state courts," said Frank, one of the nation's leading tort reform advocates.

From Legal Newsline: Reach staff reporter Chris Rizo at

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