(September 16, 2008) Two California Chamber of Commerce-opposed “job killer” bills that will inflate liability costs for employers, have been sent to enrollment, the phase of the legislative process when bills are proofed and prepared for delivery to the Governor.

• AB 437 (Jones; D-Sacramento) could result in significant new liability exposure for employers by stating that the Legislature rejects, for purposes of any California statutes of limitation, a recent U.S. Supreme Court decision that provided clear limits on statutes of limitation for lawsuits relating to employer decisions.
  
• SB 1113 (Migden; D-San Francisco) expands reward to plaintiffs for costs of litigation stemming from private attorney general actions while providing no cost recovery for those who must defend themselves against such actions, even if those actions are found to be baseless.

New Employer Liability

AB 437 could result in significant new employer liability and damages exposure lawsuits challenging workplace decisions.

The bill seeks to codify in the California Code of Civil Procedure a sweeping statement that the recent ruling by the U.S. Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co. (2007) 127 S. Ct. 2162 should be rejected for purposes of any statutes of limitation under existing California law, including but not limited to the Fair Employment and Housing Act (FEHA). By doing so, AB 437 does far more than merely “construe and clarify” existing law. It effectively instructs courts to adopt the alternative, a statute of limitations rule that is broad and limitless, potentially allowing for decades-old lawsuits and indefinite damages amounts.

The Ledbetter case set forth a clear and objective rule that statutes of limitation, for purposes of workplace decisions, begin to run at the time of the employer’s decision and rejected the notion that they are renewed each time the employee’s pay are subsequently affected by that decision. This is consistent with current California statutory and case law, in which there is no blanket rule across all statutes that the repeated issuance of affected paychecks keeps lawsuits alive or that compensation merely being “affected” keeps a statute of limitations running.

A vague and indefinite statute of limitations scheme is unworkable and undermines important public policies behind statutes of limitation. This includes prompt surfacing and resolution of potential claims through dialogue between employers and employees. Clear time limits also balance competing interests by providing plaintiffs a sufficient time to file charges while preventing courts and employers from facing stale claims in which evidence is lost, memories have faded, or witnesses are no longer available.

CalChamber is concerned about the bill’s potential retroactive application to pending cases. There is nothing limiting it to prospective claims. As a result, it appears AB 437 could also breathe life into stale claims not yet filed. Finally, AB 437 invites abuse of California’s employment laws and frivolous claims when unwarranted litigation is already an issue under so many California laws.

Incentive to Sue

SB 1113 significantly expands the cost recovery for prevailing parties under the private attorney general statute, to include expert witness fees, which can be very costly.

The current private attorney general statute already provides courts authority to award plaintiffs their attorneys’ fees in actions to enforce rights deemed important in the public interest, in order to encourage private individuals to bring such litigation by acting as private attorneys general.

The current statute has unfortunately provided incentive for some plaintiffs to use the statute to pursue meritless and harassing litigation brought to extract monetary settlements rather than to advance any public interest, such as many of the lawsuits filed under Proposition 65. Those who must defend themselves against such lawsuits must bear the cost of their own attorneys’ fees, even when the lawsuit is ultimately found baseless.

SB 1113’s addition of expert witness fees and non-statutory costs to what may be recovered will provide further unfair settlement leverage for plaintiffs in meritless lawsuits, compelling defendant companies to settle due to the overwhelming cost of litigating even defensible claims to conclusion. Moreover, SB 1113’s expansion of cost recovery is extremely broad. Expert witness fees can easily approach or exceed $100,000 in a single case.

Action Needed

Both AB 437 and SB 1113 will go to the Governor soon for consideration. Contact the Governor and urge him to veto AB 437 and SB 1113.

For a sample letter, visit www.calchambervotes.com.

Staff Contact: Kyla Christoffersen