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									BALANCE • Second Quarter 2004                                                    CIVIL JUSTICE ASSOCIATION OF CALIFORNIA

                          Second Quarter • 2004

               Headliners                     Arnold’s Surprise                             Association of California.
                                                  The Schwarzenegger Administration’s           Only Louisiana, Alabama, West
Governor Hits Shakedown                       May budget proposal included a plan to        Virginia, and Mississippi placed lower
                                              raise $450 million in state funds by          than California. The survey and summary
17200 Lawsuits
                                              capturing 75% of punitive damage              are available at:
   “We will get rid of the shakedown
                                              awards now going to plaintiffs and their
lawsuits,”      Governor         Arnold
Schwarzenegger told business leaders
                                                  The proposal includes a prohibition
                                                                                                         In Sacramento
from across the state assembled in
                                              of “double jeopardy” — more than one
Sacramento for the annual Host                                                              Bad Days for Bad Bills
                                              punitive damage award against a
Breakfast. The governor’s pledge follows                                                        Some attribute it to the new
                                              defendant for the same act.
his campaign goal of ending private                                                         Governor, others to genuine concern
                                                  At the Administration’s request,
lawyer abuse of the state’s unique Unfair                                                   about California’s business climate, still
                                              CJAC provided fine tuning language,
Competition Law (Business &                                                                 others to an upsurge in common sense.
                                              such as adding a requirement that judges
Professions Code Sec. 17200).                                                               Whatever the causes, CJAC’s arguments
                                              reviewing a punitive damage verdict
On the November Ballot                                                                      on proposed legislation are showing
                                              consider prior punitive damage verdicts
    The Stop Shakedown Lawsuits                                                             results earlier than ever in the Legislative
                                              for the same act that might have occurred
initiative has officially qualified for the                                                 process. For example:
                                              in other states and a prohibition against
November statewide ballot. This mid-                                                            A unnecessary bill (AB 2396 -
                                              telling a jury about the award sharing and
May announcement by the Secretary of                                                        Wiggins) to finance duplicative legal
                                              single award provisions.
State came after counties completed                                                         attacks on businesses was rendered
                                                  The budget proposal takes the state
verification of the 650,000 signatures                                                      harmless; a bill to greatly increase the
                                              share “off the top,” and directs that the
(373,000 valid signatures required)                                                         liability exposure of local governments
                                              attorney’s punitive damage-related fee
submitted in April by the campaign                                                          for police chase accidents (SB 1866 -
                                              shall be a reasonable, court-approved
Californians to Stop Shakedown                                                              Aanestad) was blocked and attention
                                              amount deducted from the client’s 25%
Lawsuits (CSSL).                                                                            focused on non-litigation solutions
                                              punitive share.
    “Now the campaign is in the major                                                       recommended by CJAC; a nursing home
                                                  The plaintiff ’s full actual damages
phase of completing funding for a win                                                       bill (AB 2611 - Simitian) was amended
                                              compensation and pain and suffering
in November,” said John H. Sullivan,                                                        to remove its dilution of long-standing
                                              money will be untouched, as is the
CJAC president and CSSL co-chair.                                                           protections against excessive punitive
                                              lawyer’s ability to claim a contingency fee
    The campaign team headed by Rick                                                        damage claims and its path to end-run
                                              on this full amount.
Claussen of Goddard Claussen Strategic                                                      the Medical Injury Compensation
Advocacy has put together a grass roots
                                              Nearing Bottom                                Reform Act (MICRA).
                                                  California dropped two notches (44th          Work still ahead: Repeal of SB 796,
effort that has generated hundreds of
                                              to 46th) in the U.S. Chamber of               the 2003 bill authored by plaintiffs’
supporters and a media effort that has
                                              Commerce’s Institute for Legal Reform         lawyer and Senator Joe Dunn to give
already produced supporting editorials.
                                              annual ranking of state civil justice         private lawyers endless opportunities to
The campaign team is successfully
                                              systems.                                      make bounty money suing employers;
countering the personal injury lawyers’
                                                  “The Legal Reform Institute survey        stopping a new Dunn bill (SB 1569) that
opposition tactic of using environmental
                                              amounts to a warning label that doing         will increase wasteful litigation against
groups falsely claiming that the initiative
                                              business in California can be hazardous       health plans; stopping a personal injury
would harm environmental protection
                                              to your economic health,” said John H.        lawyer-sponsored bill (SB 494 – Escutia)
in the state.
                                              Sullivan, president of the Civil Justice
BALANCE • Second Quarter 2004                                                      CIVIL JUSTICE ASSOCIATION OF CALIFORNIA

to increase lawyer contingency fees by       explained, “Currently, it is legal for a          burdens the court system just as much
inflating non-economic loss damages in       personal injury attorney to charge an             as initiating an action known to be
causes where medical costs are               exorbitant fee, on a contingent-fee basis,        baseless from the outset,” Justice Janice
reimbursed by Medi-Cal; removal of           measured against the amount of time               Rogers Brown wrote in a unanimous
over-broad litigation provisions in a bill   they spend trying or settling the case.”          California Supreme Court decision
(SB 1436 – Murray) to stop harmful                                                             (Zamos v. Stroud) that makes a lawyer
“spyware” programs from infiltrating                        Around the                         liable for malicious prosecution if he
computers.                                                  Nation                             continues to push a case after learning it
                                             Good News from Other States                       can’t be supported by probable cause.
Par for the Course
    No one was surprised by the judiciary        In Mississippi, Governor Haley                                Verbatim
committees’ killing of two bills which       Barbour, a strong proponent of civil
would have helped consumers of legal         justice reform, has signed a sweeping tort        An Admission
services but potentially disadvantaged       reform bill (HB 13) passed in a special               “Look, I’ve known him for forty years,
some personal injury lawyers.                legislative session convened to consider          and I think he’s a terrific judge, but the
    In the Senate, the majority of           civil justice reform.                             law is an industry now, not a ‘learned
committee members refused to support             The measure includes venue reform,            profession.’ When you start asserting
a CJAC-sponsored bill (SB 1811 –             a cap on non-economic damages in most             that lawyers aren’t entitled to their
Morrow) to end unequal treatment of          civil actions, product liability reform,          contractual rights, you’re saying you want
children in superior courts around the       sliding caps on punitive damages,                 to put a cap on lawyers’ earnings.” –
state by establishing a uniform rule for     premises liability reform, joint and several      Plaintiffs’ lawyer Robert Popeo, quoted
determining attorney contingency fees.       liability reform, and the creation of a           in Alex Beam’s Atlantic Monthly article
State law already requires that judges       medical review panel to review medical            “Greed on Trial,” reporting on the
approve fees charged minors, but each        malpractice claims prior to trial.                Massachusetts lawsuit brought by lawyers
county sets its own percentages and              In Colorado, Governor Bill Owens              seeking an additional $1.3 billion in
guidelines. The bill also would have         has signed a bill (SB 115) prohibiting            attorney fees in anti- tobacco litigation.
extended the court fee-approval              non-economic damages in breach of
protection to senior citizens. Despite       contract claims unless specifically               The Most Frivolous Case
Senator Bill Morrow’s excellent              authorized in the contract that is the               “This is the most frivolous case with
presentation supporting the bill and a       subject of the claim. He also signed a            which I ever had to deal...While the vast
lack of credible opposition arguments,       bill to block obesity litigation.                 majority of actions taken by lawyers
“aye” votes were not there at roll call.                                                       contribute to the public good, counsel
    The Civil Justice Association of                       In the Courts                       here are providing nothing even
California had surveyed counties and                                                           approaching rectification of a legitimate
found large variations in the rules                                                            wrong. I cannot see breathing life into
                                             New Help for Lawsuit Victims
protecting children from excessive                                                             this farce. We should be occupying
                                                “Continuing an action one discovers
attorney fees. The study “Unequal                                                              ourselves with resolving legitimate
                                             to be baseless harms the defendant and
Protection: Children and Attorney Fees” is                                                     disputes instead of laughable cases
available at:
research/minorfeestudy0403.pdf                                             CJAC in the News
    The second bill (AB 2371 – Bates), a
“Legal Consumers’ Protection Act,”              I Reporting the 25th Anniversary Reception: “If the party was any indication, CJAC
would have assisted legal consumers by          members have reason to feel good now. Although Schwarzenegger couldn’t attend —
requiring contingency fee attorneys to          he was still busy on the East Coast — he sent a letter and several staff members and
disclose information that would enable          advisers, who chowed on finger food and free drinks alongside Republican and Demo-
                                                crat lawmakers. ‘We look forward to working with CJAC,’ said Richard Costigan, the
consumers to determine whether a
                                                governor’s legislative affairs secretary. ‘This year we look forward to working on 17200
proposed fee agreement is fair. As              reform.’” — Jeff Chorney, writing in The Recorder.
Assemblymember Patricia C. Bates
BALANCE • Second Quarter 2004                                                           CIVIL JUSTICE ASSOCIATION OF CALIFORNIA

designed not to gain anything for the
plaintiffs but rather to generate fees for                                      CJAC in the Courts
the only true beneficiaries of this disgrace,
the attorneys.” – Justice Reuben A. Ortega         Decisions Rendered…
of the 5th District Court of Appeal,               I California Supreme Court: The Court unanimously concluded, contrary to CJAC’s argu-
dissenting in a case allowing a Business &         ments, that insurance rate determination information required to be filed with the State De-
Professions Code Sec. 17200 claim to               partment of Insurance is not protected from public disclosure as a trade secret.(State Farm v.
                                                   Harry Low)
stand against Sony Pictures.
                                                   I California Supreme Court: The Court unanimously ruled that the safeguards against ex-
Classless Action, Cont’d                           cessive punitive damage claims which have been in medical malpractice law for nearly three
    “Nobody should expect to get rich off          decades do not apply to punitive damage claims brought under the new “Elder Abuse Act.”
                                                   (Covenant Care, Inc. v. Superior Court)
this case. If there is any recovery, the great
bulk of the recovery should go to those who        I California Supreme Court: The Court denied a request from CJAC and others to grant
                                                   review of a case to determine whether due process permits damages owed employees for
were injured, not to their lawyers,
                                                   overtime claimed to be awarded against the employer in the aggregate based on a “statistical
particularly in light of the fact that so much     sampling” of what is claimed without an evidentiary hearing as to the hours and responsibili-
of the underlying investigative work has           ties actually worked by individual employees comprising the class. (Bell v. Farmers Insur-
already been done by public authorities.”          ance)
– District Judge J. Frederick Motz, quoted         I California Supreme Court: The Court chose not to grant review of a case in which CJAC
in Wall Street Journal article on class action     filed a letter brief urging the Court to determine whether an appellate opinion conflicts with
lawyers fighting among themselves for the          Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. in finding purposeful
                                                   intent to “target” minors is satisfied, as a matter of law, by inference from general knowledge
lucrative “lead counsel” position in
                                                   that minors are certain to be exposed to cigarette advertisements in national consumer maga-
accounting and mutual fund lawsuits.               zines marketed to adult readers; and whether the injunction is unconstitutionally vague. (People
If They Don’t                                      ex rel. Bill Lockyer v. R.J. Reynolds Tobacco Co.)
    Most small-business owners don’t have          Briefs Filed…
the time or resources to wage costly legal         I California Supreme Court: Following on a win in the Court of Appeal (in which the court
battles, so they are forced to settle with         quoted CJAC’s argument) the Association has filed a second brief supporting the California
the attorneys. We can’t continue to let trial      Dental Association’s request for protection against an unfair competition lawsuit attacking its
                                                   statements that dental amalgam is safe.(California Dental Association v. Kids Against
attorneys decimate small businesses, clog
our courts with frivolous lawsuits, or cost
                                                   I California Supreme Court: As part of its work to protect the right to agree to arbitrate
taxpayers money. The Legislature must
                                                   disputes, CJAC has filed a brief contesting a Court of Appeal holding that an insurance con-
enact reasonable, solid legislative                tract is unconscionable and therefore invalid because it includes a provision requiring the
protections. If they don’t, we will.” —            insured to pay half the costs of a future arbitration. (Boghos v.Lloyds of London)
Diann H. Rogers, Executive Director,               I Court of Appeal, 2nd District: Responding to a request from the Court of Appeal, CJAC
Central California Citizens Against                filed a letter brief answering the Court’s questions on the application of the 10-year statute of
Lawsuit, in a letter to the Sacramento Bee.        limitations in construction defect litigation. (Acosta v. Glenfed Development Corp.)

               New CJAC                             In Washington, prior to joining                  Engineering from the University of Notre
               Board Members                     Chevron, he was the D.C. Manager for                Dame, where he was a National Science
                John J. (Jack) Coffey,           Western States Petroleum Association’s              Foundation Fellow.
                Director of California           predecessor organization and the U.S.                                Ken Gibson, Vice
                Government Affairs for           Chamber of Commerce’s Manager of                                     President in the
                C h e v r o n Te x a c o         Natural Resources and Environment. He                                American Insurance
                Corporation, has been            has served as Chairman of the California                             Association’s Western
                elected to the CJAC              State Fair and Exposition Board and                                  Regional Office, has
Board of Directors. He joined Chevron            Commissioner of the California Horse                                 been elected to the
Corporation in 1979 in Washington,               Racing Board.                                       CJAC Board of Directors.
D.C., and moved to California in 1988.              Coffey holds a B.S. Degree in Civil                  He manages AIA’s state government
                                                 Engineering and an M.S. in Environmental            affairs operations in a 10-state region.
BALANCE • Second Quarter 2004                                                       CIVIL JUSTICE ASSOCIATION OF CALIFORNIA

    Prior to joining AIA, Gibson was a          and lobbying company and later served         elected to the CJAC Board of Directors.
Director of the Insurance Regulatory and        as Director of Government Affairs for         He is responsible for legislative and
Compliance Solutions Group for                  California at Farmers Insurance. S h e        regulatory advocacy on behalf of the
PricewaterhouseCoopers LLP. Earlier he          has a B.S. degree in Business                 Altria family of companies — including
led the West Coast insurance practice for       Administration and Health Care from the       Kraft Foods and Philip Morris USA —
Navigant Consulting. He served as chief         California State University, Fresno.          in California, Hawaii, and Alaska.
deputy commissioner of the California                             Stephen L. Schirle,             Prior to his Sacramento appointment
Department of Insurance from 1995–97,                             Section Head for Tort       in January 2004, he served as Manager,
and from 1987-90 he was director of the                           and      Employment         Media Relations in Altria Corporate
California Department of Commerce                                 Litigation at Pacific Gas   Services’s External Communications
under Governor George Deukmejian.                                 and Electric Company,       Department. David joined Altria
He earlier was a senior vice president with                       has been elected to the     Corporate Services in 1997, and worked
Kaiser Steel Corporation.                       CJAC Board of Directors. Schirle joined       in the Internal Communications
                   David Ligh, Govern-          PG&E in 1998 after serving for five years     department until 1999. In 2000, he
                   mental Relations Manager     as Assistant United States Attorney in the    joined the External Communications
                   for ExxonMobil in the        Northern District of California’s             department and became Manager,
                   company’s U.S. Western       Criminal Division. He joined the U.S.         External Communications in 2002.
                   Regional Office, has been    Attorney’s Office in 1984 after working           He graduated from the University of
                   elected to the CJAC Board    as an attorney at Heller, Eherman, White      Delaware with a Bachelor of Arts degree
of Directors. He has spent more than a          & McAuliffe.                                  in 1996.
decade working on public policy issues for          He has held governing positions in
the oil industry. The first five years of his   the Federal Bar Association and from
                                                                                                   Civil Justice Association
career were as an environmental engineering     2000 to 2003 was Lawyer Representative
consultant.                                     to the Ninth Circuit Court of Appeals.
                                                                                                         of California
                                                                                                The Civil Justice Association is a non-profit,
    He holds a B.S. Degree in Biological        He holds a degree in political science and      membership supported coalition of citizens,
Sciences and a B.A. in Applied Ecology          economics from the University of                taxpayers, businesses, local governments,
                                                                                                professionals, manufacturers, financial
from the University of California at            California at Berkeley and a law degree         institutions, insurers and medical organizations.
                                                                                                Founded in 1979, CJAC is the only statewide
Irvine and an M.S. in Environmental             from the University of California at Los        association dedicated soley to improving
Engineering from the University of              Angeles School of Law.                          California's civil liability system. It is active in
                                                                                                both the Legislature and the courts, working to
Southern California.                                              Bob Sutis, General &          reduce the excessive and unwarranted litigation
                   Tracyle (Tracy) Sandin,                        Anti-Trust Litigation         that increases business and government expenses,
                                                                                                discourages innovation, and drives up the costs
                   Assistant Vice President                       Manager at Hewlett-           of goods and services for all consumers.
                   for Government Affairs                         Packard, has been
                   at     21 st     Century                       elected to the CJAC
                   Insurance, has been                            Board of Directors.
                                                                                                               Balance is published by the
                   elected to the CJAC              Sutis has held various positions in                  Civil Justice Association of California
Board of Directors.                             H-P’s Legal Department since November                          1201 K Street, Suite 1960,
                                                                                                            Sacramento, California 95814
    She began her Sacramento career in          1980.                                                         Telephone (916) 443-4900
1980, and after working in the Assembly             He received a B.A. Degree from the                         Facsimile (916) 443-4306
was appointed in 1989 by Governor               University of Illinois in 1970 and a law                         Internet
George Deukmejian to the California             degree from from Hastings College of the                       John H. Sullivan, President
Department of Food and Agriculture              Law in 1974.                                            Jeff Sievers, Vice President, Legislation
                                                                                                     Laura Borden Riddell, Legislative Advocate
where she served as the legislative                               David Tovar, District         Ronnie Corrick, Administration/Membership Coordinator
                                                                                                          Fred J. Hiestand, General Counsel
coordinator and executive director of the                         Director,           State
Board of Food and Agriculture. She later                          Government Affairs,                   For information on CJAC membership
                                                                                                              please call (916) 443-4900
worked in government relations for                                Altria      Corporate         Items in Balance may be reprinted without permission
ARCO. In 1993 she founded a consulting                            Services, Inc. has been      but credit should be given to the Civil Justice Association
                                                                                                                      of California

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