Calif. tort reform bills face certain death, observers say

By Chris Rizo | Feb 23, 2010

Kassy Perry

Kim Stone

Tom Del Beccaro

SACRAMENTO, Calif. (Legal Newsline)-Republicans in the California Legislature are aiming to level the state's legal landscape through a handful of bills they say will also help jumpstart the state's sputtering economy.

Backed by the state's tort reform group, the bills face an uncertain future -- at best -- given that both houses of the Legislature are controlled by Democrats, often sympathetic to trial lawyers who distribute huge amounts of campaign cash each election cycle.

But there is an even larger political dynamic at play: a $20 billion budget hole lawmakers are grappling to fill, said veteran Sacramento public affairs consultant Kassy Perry.

She said efforts this year by the Civil Justice Association of California to limit damage awards in civil cases, to overhaul the state's class action law and to lower pre- and post-judgment interest rates in the state face uphill battles.

"While tort reform is likely the only way to rein in health care costs, it's unlikely the Democrats will see it as anything other than a 'get rich quick scheme' for corporations," Perry said. "The only bright spot for tort reform is the fact that bills with significant general fund costs are DOA. With tort reform, lawmakers can pass something modest and the governor can sign it, claiming they did something good for California without out increasing the budget deficit."

Tort reform proponents say California's plaintiff-friendly legal climate makes many companies leery of locating -- or remaining -- in a state because of exorbitant punitive damage awards that have become commonplace.

Kim Stone, CJAC's chief lobbyist, said the group's three-legged legislative package would help promote economic growth in the Golden State, where unemployment has topped 12 percent and courts have a reputation of siding with plaintiffs.

"If we did improve our legal climate that would send a message to national business leaders," Stone said. "And just because we might fail doesn't mean we shouldn't try."

Perhaps the bill with the bleakest future is one by state Assemblyman Roger Niello, R-Sacramento. He has introduced legislation -- Assembly Bill 8X 40 -- that would limit punitive damages to three times the amount of compensatory damages awarded in a case, while awards for noneconomic damages would be capped at $250,000.

Already, California has its landmark Medical Injury Compensation Reform Act, the 34-year-old law that limits noneconomic damages in medical malpractice cases at $250,000.

Critics of MICRA often say that the law signed by then-Gov. Jerry Brown, a Democrat, robs patients harmed by physicians of an equitable remedy.

Then there is Senate Bill 1117, authored by Republican state Sen. Mimi Walters of Laguna Niguel, which would jettison the statute that has set pre- and post-judgment interest rates in California at 10 percent per year since 1982. Under her proposal, the rate would change to the federal short-term rate, rounded to the nearest whole number percent, plus 2 points.

The move would put California in line with other states, including Alaska, Florida, Illinois, Michigan, New Jersey, Ohio, Texas and Washington.

The third CJAC proposal would retool California's complex class action law, written about five decades ago.

The bill by state Assemblywoman Audra Strickland, R-Thousand Oaks, marks the latest effort to overhaul California's class action law, outlined in Section 382 of the California Code of Civil Procedure.

The proposal -- Assembly Bill 8X 38 -- would provide state judges with statutory rules for handling class action cases.

Among other things, the law would set prerequisites for a class action and provide processes for defining or certifying a class, notification of class members, withdrawal by a member of a class and orders for the conduct of class actions.

The bill is very similar to a CJAC-sponsored proposal floated by a Democrat -- then-Assemblywoman Nicole Parra of Bakersfield-- a couple years ago that did not even get a committee vote.

Stone said none of CJAC's bills this year will likely reach the governor's desk -- let alone get out of committee given that Democrats on the Senate and Assembly judiciary committees are "quite friendly" to trial lawyers.

"Unfortunately, I fear that these bills will meet the same fate that other tort reform bills that we have sponsored ... even though the economy is so terrible and they are championed by the governor," Stone said.

A special legislative session might be in order to tackle liability and legal reform issues, including non-profit groups "abusing the legal system to create their own personal gravy train," said Perry, president of Sacramento-based Perry Communications Group Inc.

"Tort reform legislation would take a special session in this state, similar to energy deregulation and workers' comp. reform, in order to create the focus needed to get something done," she said.

Asked what he thought CJAC's bills' fates would be, state Republican Party Vice Chairman Tom Del Beccaro said that is simple: "Democrats will not let them out of committee."

Del Beccaro, a named partner in the Walnut Creek, Calif., business law firm Del Beccaro, Hornsby & Blake, said Democrats in the Legislature are "pretty much' beholden to protecting the economic interests of the plaintiffs' bar.

So why press ahead?

"Social change is a long process, and it's important to bring up solutions to problems even if they are not going to be embraced at this point," Stone said. "It is valuable to bring attention to the problem."

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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