Legal Reform - California Chamber of Commerce

Legal Reform

Overview

Recent economic data confirms that states with fair and balanced legal systems thrive fiscally.

On the one hand, this doesn’t bode well for California, whose current legal system registers near the bottom in the nation for fairness and reasonableness — 45th out of the worst 50 states, according to the U.S. Chamber’s Lawsuit Climate 2007. On the other hand, the direct correlation between legal climate and economic health provides California with a clear signpost to the path toward a better economy: improve the state’s legal climate.

Related Business Issue: ADA Reform

Goal

Seek comprehensive tort reform that will prevent lawsuit abuse, halt runaway liability risk and promote greater fairness, efficiency and economy in the civil justice system.

Major Victories

Limiting inflation for liability awards. Won veto of 2007 proposal that would have artificially inflated medical damage awards in third party liability cases by not allowing judges to consider the actual cost of medical expenses as evidence, ultimately increasing, not only legal costs, but also rates for auto and general liability insurance (SB 93)
Halted attacks on employers' right to arbitrate. In 2006, stopped potential increases in litigation costs for employers by defeating legislation that would have eliminated an employer’s ability to mandate the use of the less expensive and faster process of arbitration, rather than court, to resolve discrimination claims by employees under the California Fair Employment and Housing Act (AB 2371, failed passage in Assembly 5/31/06).
Maintained Attorney General accountability. Ensured the Attorney General did not receive unchecked power and unfair settlement leverage against companies in "fishing expeditions" and lawsuits alleging violations of the Unruh Civil Rights Act, corporate securities laws, environmental laws, and numerous other statutes, by winning a veto of legislation that would have required defendant companies to pay all the investigation and lawsuit costs, including attorney’s fees, if the Attorney General "prevailed." "Prevailed" was not defined and could have included a slight change in behavior by the company or miniscule settlements. (SB 1489, vetoed by Governor). In 2005, overcame a similar attempt (AB 153, Vetoed by Governor, 2005).
Held the line on punitive damages reform. Achieved a veto by the Governor, halting end-of-session 2006 legislation that would have hampered much-needed reforms to California’s out-of-control punitive damage system by establishing that 50 percent of all punitive damages awards go to an undefined state "public benefit" fund, potentially controlled by the attorney general, while 25 percent would still go to the plaintiffs' lawyer and the remaining 25% to the plaintiff (SB 832, vetoed by Governor).
Supported reforms of lawsuit abuse under Unfair Competition laws. Helped advocate and achieve passage of Proposition 64, which curbed predatory lawsuits by requiring attorneys who file section 17200 lawsuits to have an actual plaintiff who has been harmed or suffered by financial injury.
Protected confidentiality of proprietary information. In 2005, defeated legislation that aimed to impede a business’ ability to maintain the confidentiality of its proprietary information, thus exacerbating an already-hostile legal environment (AB 1700, Assembly Inactive File, 6/2/05)
Kept the lid on excessive litigation. In 2005, won a veto of legislation establishing new “sue your boss” lawsuits, which would have increased employer liability by providing new incentives for plaintiffs and their attorneys to file lawsuits by establishing new types of “sue your boss” lawsuits (SB 174 — vetoed by Governor). Also blocked new reasons to sue certain private sector employers by setting in statue a very detailed notice process that an employer must follow exactly in order to able to utilize any severance agreement (AB 1310, vetoed by Governor).

Issue Summaries

Counterfeiting and Piracy
Position: The California Chamber of Commerce supports:

upholding existing laws and international agreements that protect intellectual property rights and strengthening them to the extent necessary to achieve or maintain effective, appropriate and current intellectual property rights protections, using clear standards and applying free market and free trade principles and sound economic policies; and
promoting a culture of respect for intellectual property rights in private and public sectors.

Counterfeiting and Piracy Summary

Wanted: Better Access, Fewer Lawsuits
Position: The CalChamber supports comprehensive reforms to state disability laws that achieve the following goals:

encourage and facilitate greater compliance by businesses with disability access laws;
encourage resolution of access violations without use of litigation; and
seek to reduce abusive and unwarranted demands for money and lawsuits under the disability laws that seek to extract monetary settlements rather than improve access.

Reducing Class Action Lawsuits
Position: The CalChamber supports reforms to California’s class action system in order to curb frivolous class action lawsuits and make the state less inviting to forum shoppers.

Protecting Right to Use Arbitration
Position: The CalChamber supports the freedom of businesses to utilize arbitration and mediation as a means of resolving disputes. The CalChamber will oppose any legislation that attempts to prevent businesses from using legitimate alternatives to court that are more timely and cost-efficient, such as arbitration and mediation. The CalChamber supports legislation that requires arbitration to be fair and to provide procedural protections to the parties involved.

Punitive Damages
Position: The CalChamber will continue to promote reforms that bring balance and stability to California's out-of-control punitive damages system. The CalChamber will oppose efforts that will exacerbate problems with the current system.

See a related report from the U.S. Department of Commerce:
The U.S. Litigation Environment and Foreign Direct Investment - Supporting U.S. Competitiveness by Reducing Legal Costs and Uncertainty