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					                                                                                                                       s e c o n d qua rt er 2008



                                               Headliners

                                  Poor Showing                                                     long-term care facilities. the bill passed the
                                                                                                   assembly and was assigned to the senate
                                                         california again ranks as one of
                           Best        Worst                                                       Human services committee.
                                                     the 10 worst legal environments in the
                   1) Delaware     50) West Virginia                                            •	 Assembly	Bill	2359,	which	imposes	new	limits	
                                                     nation, according to Lawsuit Climate
                   2) Nebraska     49) Louisiana                                                   on all arbitration agreements. the bill passed
                                                     2008: Ranking the States, an annual
                   3) Maine        48) Mississippi                                                 the assembly and will be assigned to a senate
                                                     assessment of state liability systems
                                                                                                   committee for a hearing.
                   4) Indiana      47) Alabama       released in april by the u.s. chamber
                                                                                                 In other news:
                   5) Utah         46) Illinois      Institute for Legal reform.
                                                                                                •	 Assembly	Bill	2847,	which	CJAC	opposed,	died	
                   6) Virginia     45) Hawaii            california ranked 44 out of 50
                                                                                                   on the assembly appropriations committee
                   7) Iowa         44) California    states in the assessment by Harris
                                                                                                   suspense File due to its fiscal impact of “over
                                                     Interactive, a nonpartisan market
                                                                                                   $10 million in increased public costs.” the
                                  research firm. the state improved one spot over the
                                                                                                   bill would have shifted the burden of proof
                                  previous year, but Los angeles was again named the
                                                                                                   in any legal action in a medical necessity
                                  “least fair and reasonable litigation environment” in
                                                                                                   determination against a health plan, requiring
                                  the united states.
                                                                                                   the health plan to prove the action is not
                                      a separate survey of california business owners
                                                                                                   medically necessary.
                                  found that nearly one-third want the california
Discussion                                                                                      •	 Senate	Bill	1608,	which	CJAC	supports,	passed	
                                  Legislature to enact new laws to help protect them from
                                                                                                   the senate and is in the assembly. the bill is
Needed                            unfair and frivolous suits.
                                                                                                   a reform measure designed to promote and
“What is needed now
is a sober discussion             Bad Bill Blocked                                                 increase compliance with state and federal
                                                                                                   civil rights laws providing for equal access
about how best to                     In a big win for california consumers, a dangerous           for individuals with disabilities and to reduce
achieve a fairer, more            bill that would have opened a new avenue for personal            the unwarranted, unnecessary litigation that
balanced legal system             injury lawyers to file lawsuits against pharmaceutical           aims to extract monetary settlements from
through comprehensive             companies died May 29 on the assembly floor without              businesses rather than improve access.
tort reform. Such a
                                  a vote.
system would not be
                                      assembly Bill 2690 would have led to increased
                                  liability for makers of prescription medicines while
                                                                                              International Trends
lopsided but would                                                                               In a setback for plaintiff ’s firms with offices
                                  potentially decreasing patient access to appropriate
shield businesses from                                                                        abroad, the european union proposed new rules
                                  medication. the bill would have eliminated a long-
legal blackmail, just as it                                                                   that prevent american-style class action litigation
                                  held legal defense, the “learned intermediary doctrine,”
would protect the rights                                                                      from making europe a “major new port of call
                                  which requires companies to direct their warnings
of legitimate plaintiffs to                                                                   for	 class	 action	 cases,”	 The	 Wall	 Street	 Journal	
                                  to physicians, who act as “learned intermediaries”
win just compensation
                                                                                              reported.
                                  between the drug company and the patients. the rule
                                                                                                 the rules would make it easier for businesses and
from negligent                    recognizes that a physician, not a manufacturer, is best
                                                                                              consumers to sue for price fixing and other types
businesses that caused            suited to evaluate the risks and benefits of a particular
                                                                                              of antitrust abuse, but avoid the most aggressive
them real harm.”                  drug for each individual patient.
                                                                                              aspects of the u.s. system. Groups of plaintiffs can
— The Washington Post                 For more information, go to www.cjac.org and click
                                                                                              sue jointly under the plan, but the european system
in an April editorial about       on “Hot Legislative Issues.”
                                                                                              would be opt-in, unlike u.s. class actions, in which
the guilty pleas by Bill              other dangerous bills:
                                                                                              individuals are assumed to be members of a class
Lerach, Melvyn Weiss, and            •	 Assembly	 Bill	 2947,	 which	 prohibits	 voluntary	
Richard “Dickie” Scruggs                                                                      until they opt-out.
                                         arbitration agreements between elders and their
C i v i l 	 J u S T i C e 	 A S S o C i A T i o n 	 o f 	 C A l i f o r n i A




   In other news, adam Liptak of the new York times reports                 the survey, by the u.s. chamber of commerce Institute for
on the negative view europeans — and much of the rest of the           legal	reform,	found	that	82%	of	voters	choose	arbitration	over	
world — have toward punitive damages. But the gap between              litigation as a means to settle a serious dispute with a company.
the united states and the rest of the world is narrowing, Liptak       The	 poll	 also	 found	 that	 71%	 of	 likely	 voters	 oppose	 efforts	
writes, “as american courts and legislatures start to limit            by congress to prohibit arbitration agreements in consumer
punitive damages and the rest of the world starts to experiment        contracts.
with them.”
                                                                                     in tHe courts
         a r o u n d t H e s tat e
                                                                       Prop. 64 at work
                                                                           the Fourth district court of appeal confirmed a trial
Class Actions Abound                                                   court’s ruling that a plaintiff did not have standing to sue under
    In just five working days in late april, 46 class action           california’s unfair competition law when he sued time, Inc.,
lawsuits were filed in california state and federal courts in the      alleging the company tricked people into buying books as part
los	Angeles,	San	francisco,	San	Jose,	Sacramento,	San	Diego,	          of a free trial program.
san Mateo, oakland/alameda, and orange county areas, class                 Jeffrey	 Hall’s	 lawyer	 launched	 a	 class	 action	 lawsuit	 after	
action	defense	attorney	Michael	J.	Hassen	reported	on	his	Class	       Hall received a book paired with a bill that encouraged him to
action defense Blog.                                                   pay for it but made clear he was not under any obligation to
    He	found	that	63%	of	the	new	filings	were	labor	law	class	         do so within 21 days. Hall admitted keeping the book and not
actions, which usually top the list of new class actions by a wide     paying for it; eventually he paid and then filed the class action
margin. also filed were class actions involving california unfair      complaint.
business practice claims.                                                  But as the court noted, Hall “did not allege he did not want
    A	2007	CJAC-commissioned	review	of	class	action	lawsuits	          the book, the book was unsatisfactory, or the book was worth
in	California	found	more	than	3,400	new	suits	filed	in	state	          less than what he paid for it.”
courts in a three-year period — nearly five lawsuits every
day the courthouses were open. nearly half of those lawsuits
involved employment laws.
                                                                       ‘Sophisticated User’ Win
                                                                           the california supreme court in april gave a boost to
    Hassen provides weekly, unofficial summaries of the legal
                                                                       manufacturing companies when it unanimously ruled that
categories for the new class action lawsuits filed at http://
                                                                       they do not have to warn experts about products that experts
classactiondefense.jmbm.com/.
                                                                       are trained and hired to work with.
                                                                           the court, affirming a court of appeal’s earlier ruling,
Our Influential Court                                                  adopted the “sophisticated user defense” in the case of a trained
    california supreme court decisions carry more weight               and certified technician who sued chemical manufacturers,
nationwide than any other state’s top court, according to a new        suppliers, and manufacturers of air conditioning equipment
study that counted the number of times the decisions of state          for an alleged failure to warn of potential hazards to exposure
high courts were followed in other states.                             of a refrigerant.
    california won by a landslide compared with other states               You can read the decision in the case, Johnson v. American
and their high court decisions, noted a new York times article         Standard, Inc., by going to www.cjac.org and then clicking on
about the study. In the past 65 years ending in 2005, more             “press releases.”
than 24,000 high court cases have been followed at least once.
california leads with 1,260 decisions, followed by Washington,
with 942, and colorado, with 848.                                                   v e r b at i m
    The	study,	by	Jake	Dear	and	edward	W.	Jessen,	published	
in the uc davis Law review, can be found at http://lawreview.          ‘Parasite Circus’
law.ucdavis.edu/issues/41-2_dear.pdf.                                      “Locking them (Bill Lerach, dickie scruggs, and Melvyn
                                                                       Weiss) up will stop them from further damaging america —
            a r o u n d t H e n at i o n                               at least for a few years. But it’s a small victory for reformers.
                                                                       new members of the parasite circus will just step forward to
                                                                       take their place. and what these aggressive class-action and
Don’t Litigate, Arbitrate                                              securities lawyers do legally is more damaging to america than
    a new poll shows a majority of likely voters say they prefer       the crimes that scruggs, Lerach and Weiss committed. … the
to resolve disputes through arbitration rather than litigation.        game is more about rounding up lots of complainants and
                                                                                        B a L a n c e      s e c o n d      q u a r t e r       2 0 0 8




using america’s one-sided legal system to terrorize businesses                 shortly after, the firm announced it had changed its name
into settling.” — John Stossel, ABC correspondent and the host              to Milberg and that Weiss had resigned. the firm faces an
of “20-20,” in a Wall Street Journal editorial                              august trial.

No Cries                                                                    Shakedown Lawyer Stopped
    “In the wake of the felony admissions of Weiss and Lerach                   Brea lawyer Harpreet s. Brar, who made headlines by filing
and last week’s bribery plea by dickie scruggs, where are the               shakedown lawsuits against more than 400 nail salon owners
cries in congress to crack down on these wealthy wrongdoers                 in	 southern	 California	 in	 2003,	 may	 be	 disbarred	 following	
who abused their positions of legal trust?” — The Wall Street               a recommendation by the a state Bar court judge. the final
Journal in a March editorial                                                decision rests with the california supreme court.
                                                                                After	the	CJAC-sponsored	Proposition	64	closed	the	door	
‘Litigation Industry’                                                       on unfair competition law shakedowns in 2004, Brar filed three
    “We don’t want a litigation industry.” — Marc Tüngler,                  new lawsuits within nine months accusing liquor stores of not
managing director of Germany’s best-known share holder-                     posting notices of fees charged at atM machines in their stores.
protection group DSW, commenting in The Economist on 800                    He also sent the defendants a threatening letter in which he
lawyers and 16,000 plaintiffs trying to work through a government-          offered	to	settle	the	matter	for	about	$750	and	encouraged	a	
established, temporary class action-type process covering three             quick settlement to avoid additional fees and costs.
million Deutsche Telekonm shareholders who believe they were                    Brar,	36,	was	convicted	of	five	felony	counts	of	tax	evasion	
misled when shares were issued eight years ago                              last	July	and	is	currently	serving	one	year	in	county	jail.	Brar	
                                                                            graduated from Western state university college of Law in
                                                                            Fullerton.
               t r i a l l a w y e r w at c H

Crime Still Pays                                                                           studies of note
    the defendants who pleaded guilty in the Milberg Weiss
case	 have	 collectively	 agreed	 to	 pay	 more	 than	 $32	 million	        Asbestos Litigation Dominates
in monetary recoveries — a far cry from the $251 million in                      the fifth comprehensive report from the Manhattan
attorney’s fees that federal prosecutors allege the firm and its            institute’s	 Center	 for	 legal	 Policy	 analyzes	 how	 asbestos	
lawyers received by paying kickbacks to lead plaintiffs, reporter           litigation, which originally sought redress for the truly injured,
Amanda	Bronstad	wrote	in	The	national	law	Journal.                          has morphed into big business for plaintiff ’s lawyers.
    over the past few months, Bill Lerach was sentenced to                       according to Trial Lawyers, Inc.: Asbestos, A Report on
two	 years	 in	 prison	 and	 ordered	 to	 forfeit	 $7.75	 million	 for	     the Asbestos Litigation Industry 2008, asbestos litigation has
concealing illegal payments to plaintiffs in class-action lawsuits.         cost	more	than	$70	billion	in	direct	losses	for	businesses	and	
then, Melvyn Weiss of Lerach’s former firm, Milberg Weiss,                  insurers — $40 billion of which went to lawyers — bankrupted
pleaded guilty to participating in a criminal conspiracy to pay             80 companies, and distorted the economy while endangering
a share of legal fees to plaintiffs in shareholder suits brought            relief for those who need it most.to read more, go to www.
by the firm, which remains a defendant in the case.                         triallawyersinc.com.

                                                      cJac in the courts
  Decisions Rendered…
  n Court of Appeal, 6th District: The court on April 8 reinstated          n California Supreme Court: The court on April 24 held that, absent a
  the contingency-fee arrangements that a coalition of cities and coun-     fiduciary relationship, punitive damages cannot be awarded for breaching
  ties had negotiated with a number of plaintiff’s lawyer firms. The case   a contract. The Court set aside a jury’s award of punitive damage award
  asked whether government can contract on a contingency fee basis with     to City of Hope in a business dispute with Genentech. The case involved
  private counsel to prosecute a public nuisance action by 10 counties      $200 million in punitive damages — on top of a compensatory award in
  and cities against numerous companies involved in the manufacture         excess of $300 million — for failure to pay royalties in a research/patent
  and distribution of lead-based paint. CJAC filed an amicus brief which    assignment contract. The CJAC amicus brief in support of Genentech
  defended the 22-year-old case law rule against such contingency fee       argued that punitive damages are not appropriate in this contract dispute.
  agreements between government prosecutors and private attorneys.          (City of Hope National Medical Center v. Genentech, Inc.)
  (County of Santa Clara V. Superior Court)
C i v i l 	 J u S T i C e 	 A S S o C i A T i o n 	 o f 	 C A l i f o r n i A




Massive Payoffs                                                                                                    new board members
    With	more	than	$3.8	billion	in	recoveries,	Milberg	tops	the	
list of plaintiff ’s law firms ranked by the largest total dollar                               Steven D. Burns, Manager of california
amount	of	final	securities	class	action	settlements	in	2007	in	                             Government affairs for chevron corporation,
which the firms served as lead or co-lead counsel.                                          is responsible for the company’s interests in
    coughlin stoia, based in san diego, settled 49 shareholder                              state politics and supervises a team of legislative
class	 actions	 in	 2007,	 more	 than	 double	 any	 other	 plaintiffs’	                     and regulatory advocates in sacramento. He
firm. the firm’s settlement total was $1.85 billion.                                        also advises the company’s senior leadership on
    “There	were	more	settlements	in	2007	than	at	any	other	time	                            compliance options for the california Global
in history,” said adam savett of riskMetrics, which released                                Warming	Solutions	Act	of	2006	(AB	32).	
the securities class action services annual list of the top 50                                  Burns has also served as chevron’s manager of global
plaintiffs’ firms. there’s no slowdown in sight in 2008; the                                community engagement, lead policy coordinator, assistant
number of cases filed will continue to rise, savett said, because                           to the chairman and chief executive officer, and manager of
of the ongoing expansion of the subprime fallout.                                           corporate responsibility.
    a link to the press release and the study is at http://slw.                                 For two years, Burns served on the staff of the chairman
riskmetrics.com/2008/03/the_scas_50_for_2007.html.                                          of the Ways and Means committee in the u.s. House of
                                                                                            representatives.
Big Spenders                                                                                    Burns has a master’s degree in public policy from George
    Personal	injury	lawyers,	their	firms,	and	their	independent	                            Washington university, and an undergraduate degree from the
expenditure committees have so far spent $2.2 million in the                                college of William and Mary. He and his wife live in sacramento
2007–08	election	cycle.	Most	of	the	money	went	to	hotly	contested	                          with their four children.
Senate	and	Assembly	races	in	the	June	3	Primary	election.                                       Michael A. Paiva, regional director of
    data compiled from the california secretary of state’s records                          Government relations for Blue cross of
shows that candidates have received more than $1.2 million in                               california, is the company’s lead lobbyist in
direct contributions from personal injury and other trial lawyers                           california.
and their law firms.                                                                            Prior	to	joining	Blue	Cross,	Paiva	was	a	senior	
    In addition, seven trial lawyer-controlled political action                             legislative	 advocate	 for	 the	 Personal	 insurance	
committees	 have	 raised	 more	 than	 $1.7	 million	 and	 spent	 $1	                        Federation of california. He also served as the principal
million	 so	 far	 in	 the	 2007–08	 election	 cycle.	 Several	 of	 these	                   consultant to the senate Insurance committee from 2002 to
committees have deceptive names. the “committee for corporate                               2004.	from	1997	to	2000	he	was	legislative	assistant	to	Assembly	
Accountability	and	Consumer	Protection,	a	coalition	of	workers,	                            Member	fred	Keeley.	Prior	to	that,	Paiva	worked	for	nine	yeas	
seniors, and taxpayers” has received more than $1 million in                                as a sales representative in the steel industry.
contributions.	More	than	$792,000	–	or	75	percent	–	came	from	                                  Paiva	graduated	from	the	university	of	California,	Berkeley,	
trial lawyers and their firms.                                                              and	the	university	of	the	Pacific	McGeorge	School	of	law.	He	
    To	see	CJAC’s	compilation	of	historical	data	of	trial	lawyer	                           lives in sacramento with his wife and two children.
contributions, including individual candidate recipients, go to
www.cjac.org and click on the “research” link.


                     The	Civil	Justice	Association	of	California	works	to	reduce	the	excessive	and	unwarranted	litigation	that	increases	business	and	government	
                     expenses, discourages innovation, and drives up the cost of goods and services for all californians. We are a non-profit, membership-
                     supported coalition of citizens, taxpayers, businesses, local governments, professionals, manufacturers, financial institutions, insurers, and
                     medical	organizations.	founded	in	1979,	CJAC	is	the	only	statewide	association	working	in	both	the	legislature	and	the	courts	to	improve	
                     california’s civil justice system.

                     Balance	is	published	by	the	Civil	Justice	Association	of	California
                     1201 K street, suite 1850, sacramento, california 95814
                     Telephone	(916)	443-4900	•	facsimile	(916)	443-4306	•	e-mail	cjac@cjac.org	•	internet	www.cjac.org
                     Staff
                     John	H.	Sullivan,	President                              Jenni	Jurgens,	executive	Assistant	–	Communications	&	Public	Affairs
                     Kim	Stone,	vice	President	–	legislation                  Jenn	Butler,	Assistant	office	Manager
                     rick	rivas,	Director	of	Public	Affairs
                                                                              Fred Hiestand, General counsel
                     cynthia neff, director of communications & research
                                                                              david cooper, assistant to the General counsel
                     debbie edgar, Finance & operations Manager
                     Gina	Stamper,	executive	Assistant	to	the	President       for	information	on	CJAC	membership	please	call	(916)	443-4900
                     Linda Hoover, Website/systems coordinator
                                                                              Items in Balance may be reprinted without permission but credit should be given to the
                     Julia	ruano,	executive	Assistant	–	legislation           Civil	Justice	Association	of	California
                     Petra	Bilson,	Accounting	Coordinator

				
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