(August 1, 2011) Two California Chamber of Commerce-opposed “job killer” bills that will inflate legal costs if approved await action by the Senate when legislators return from summer recess in August.

AB 559 (Swanson; D-Oakland) undermines judicial discretion while AB 1062 (Dickinson; D-Sacramento) undermines efficient dispute resolution.

AB 559 unreasonably increases business litigation costs by limiting judicial discretion to reduce or deny exorbitant attorneys fees in fair employment and housing claims that should have been raised in a limited civil proceeding.

AB 1062 dramatically increases litigation costs for employers by eliminating the right to appeal a court order denying or dismissing a petition to compel arbitration, driving more cases into the courts.

AB 559

In opposing AB 559, the CalChamber is arguing that the bill:

• Is unnecessary. According to the Chavez decision, which AB 559 seeks to overturn, a trial court may limit or deny an attorneys fee request only if it “is firmly persuaded that the plaintiff’s attorney had no reasonable basis to anticipate a FEHA [Fair Employment and Housing Act] damages award in excess of the amount recoverable in a limited liability case, and also that the action could have been fairly and effectively litigated as a limited civil case....” (emphasis added). 
• Increases the burden on courts—eliminates all incentive for plaintiffs to file FEHA claims properly, wasting precious judicial resources, and encouraging the practice of including an FEHA claim to avoid having to file a case as a limited civil case. 
• Undermines judicial discretion. A reading of the Chavez decision shows the trial court properly considered the policy behind both statutes granting it discretion over the attorneys fee award, and appropriately penalized the attorney for serious overreaching and a failure to offer any evidence of harm to the plaintiff. 
•  Worsens California’s legal climate. AB 559 uses bad facts to justify a sweeping change to the legal system, which is a poor way to make policy, worsens California’s legal climate, and sends the wrong message to employers thinking of locating or expanding here.

AB 1062

In opposing AB 1062, the CalChamber argues that the bill:

• Will cost the state jobs. It dramatically increases litigation costs for employers, leaving fewer resources to hire and retain employees, and discouraging them from expanding in the state. 
• Hurts plaintiffs. The bill drives more non-meritorious claims into the courts, increasing the length of civil trials and delaying compensation to plaintiffs with legitimate grievances. 
• Will clog the courts. AB 1062 undermines enforcement of valid arbitration agreements, which means more cases will go to trial, taking four times longer than arbitration, on average. 
• Is a job boon for the plaintiff’s bar. The only people who benefit from sending cases to trial rather than to arbitration are plaintiff’s attorneys, the sponsors of AB 1062. Employers, plaintiffs and taxpayers all benefit from use of arbitration, as it saves money and provides faster relief while still protecting consumer and employee rights.

Action Needed

Contact your senators and urge them to oppose AB 559 and AB 1062.

Sample letters are available at www.calchambervotes.com.

Staff Contact: Mira Guertin