California’s civil justice system has always been a major deterrent against increased job growth and economic development. This state’s liberal tort liability laws have contributed to the anti-business climate in California and the inability of businesses to reach their full potential.
To make matters worse, the plaintiff’s bar in California continues to push a legislative agenda that will benefit plaintiffs’ lawyers to the detriment of the rest of the state’s citizens. Their proposals will ensure that costs of insurance for everyone, as well as the costs of doing business in this state, will increase substantially.
There are tremendous costs associated with our state’s civil justice system. Minor reforms have to be made in order to trim the costs of the tort system and encourage economic development. The following proposals would serve to bring balance and common sense to the civil justice system in California:
Product Liability
Legislators should consider the following product liability reforms:
- In defective design cases, require the plaintiff to have the burden of proving that a feasible and practical alternative design was available at the time of manufacture, the particular design danger was known or reasonably knowable to the defendant at the time of manufacture, and the danger outweighed the safety benefits of the design.
California is one of the few states that requires defendants to prove that no alternative design existed. If a plaintiff contends that his or her injury was caused by a defective product design, the plaintiff, rather than the defendant, should have the burden of proving an alternative design existed which would have prevented or reduced injury without rendering the product undesirable.
- In defective warning cases, require the plaintiff to have the burden of proving that the danger was known or reasonably knowable at the time of manufacture and that an alternative warning existed which would have averted the injury and would not have reduced the effectiveness of warnings made against other dangers related to the product.
Once again, California is one of the few states that requires defendants to prove that no alternative warning existed that would have reduced or eliminated the injury. This burden is more appropriately placed on the plaintiff to prove no alternative warning existed.
- Restore the rule of evidence that subsequent or remedial repairs or measures, or recalls, taken by the defendant may not be admitted to prove a defendant’s liability in design or warning defect cases.
Public policy should obviously encourage manufacturers to make their products safer and to take immediate, corrective action to improve a product’s safety or to repair a defect.
- Enact a drug and alcohol defense in cases where a claimant, due to his or her alcohol or illegal drug intoxication, is determined to be more than 50% responsible for the accident or event that caused his or her injury.
A greater degree of personal responsibility should be imposed on the injured party whose improper conduct was the predominant cause of his or her own injury. This will ensure that persons are responsible for the results of their own improper conduct, rather than looking toward a third party to compensate them.
Punitive Damages
Only two nations in the world (U.S. and Great Britain) permit punitive damages to be awarded. Moreover, the United States is the only country that allows punitive damages to be awarded by juries (Great Britain does not use a jury system). Legislators should consider the following punitive damages reform proposals:
- Disallow punitive damages when a defendant has lawfully complied with applicable regulatory standards established by the federal or state governments (but not industry customs). No defense would be allowed if a defendant withheld or misrepresented information submitted to the government.
Punitive damages should only be awarded in cases where the defendant acted with malice. No such conduct can occur if a manufacturer produced a product consistent with applicable standards set forth by the government.
- Impose a statutory limit on multiple punitive damage awards against the same defendant for the same course of conduct.
This proposal is similar in nature to the criminal “double jeopardy” standard. Once a defendant has been punished for its egregious wrongdoing (i.e., the original purpose of punitive damages), no further punishment should be allowed.
- Allocate 50% of punitive damages awards to the State’s General Fund and earmark the money for education or crime victims’ restitution. The jury would not be informed of this allocation so that improper motives would not influence a jury.
Punitive damages are intended to punish a wrongdoer and to make an example of the wrongdoer so that others do not engage in that type of wrongful conduct. Punitive damages are not meant to compensate an injured party and their attorney.
Front-Pay Damage Awards
California law does not currently place any limits on “front-pay” (or prospective pay) damage awards. In fact, California courts have awarded lifetime front pay to prevailing plaintiffs in numerous cases. In wrongful termination lawsuits, front pay can be awarded to a former employee as compensation for future lost earnings.
- California should limit awards of front-pay damages in wrongful termination and employment discrimination litigation.
The Legislature should adopt the federal standard of placing a limitation on front pay awards. While California courts have not placed limits on front pay awards, federal courts view prospective pay as temporary. “Front” (or future) pay basically constitutes funds for the wrongfully discharged person to live on while looking for new employment. Federal courts do not view front pay as a form of lifetime financial support.
Labor Code Private Attorneys General Act (PAGA) Suits
The Private Attorneys General Act (PAGA) allows an employee or group of employees to sue over nearly any violation of the Labor Code. PAGA was enacted to provide enforcement of the Labor Code without adequately staffing or funding state labor law enforcement agencies. PAGA penalties are supposed to be divided between the employee and the state Labor and Workforce Development Agency.
Unfortunately, turning enforcement over to private attorneys has led to abusive lawsuits alleging, for example, that accrued vacation is displayed incorrectly on pay stubs even though no employee lost any vacation time. Because the lawsuits can be filed on behalf of current and former employees and the penalties can be stacked, the demands for damages and attorneys’ fees often are in the millions of dollars.
Employers see no option except to settle, and the workers and the state are often shortchanged in the settlement. The legislature should reign in the practice of filing multi-million dollar lawsuits alleging non-harmful Labor Code violations. The right to notice and an opportunity to cure minor, technical violations currently in Labor Code § 2699.3 should be expanded to include claims such as an inaccurate wage statements for an employee not otherwise harmed.
Americans with Disabilities Act (ADA) Suits
The problem with abusive lawsuits alleging violations of the ADA is widely recognized. In 2016, the Legislature acted to provide notice and opportunity to cure for a few of the most minor and technical of these violations, but the number of ADA lawsuits continues to grow. All too often these suits are filed with only a settlement in mind and, once settled, no actual improvement to access occurs. Notice and opportunity to cure should be the rule for any ADA claim because that would cut down on abusive lawsuits and lead to improved accessibility in our public spaces.
Government and Private Attorneys
Public lawyers—the Attorney General’s office, district attorneys, city attorneys—often use private law firms to sue businesses. The government gets to pursue the case without using its own staff or resources, and the law firm gets to go after a high-profile defendant under the imprimatur of the government. The agreements between these private law firms and the agencies hiring them are secret, so the public does not know how or why the law firm was selected, what the law firm stands to gain from any settlement, or who is making the decisions about how the case is handled. Nor does the public have any way to be sure the law firm is acting in the best interests of the public agency rather than its own. California should enact some reasonable restrictions on the use of private law firms by government agencies.
Asbestos Trust Transparency Litigation
Lawsuits alleging injuries from asbestos have developed into a two-track system where plaintiffs sue solvent companies and, for the same injury, file claims against trusts set up by federal bankruptcy courts alleging completely different facts. Some claimants have misrepresented facts and deliberately delayed filing trust claims to protect their state court claims against other defendants. This “double-dipping” hurts current and future claimants. California should act to require that asbestos plaintiffs in state court disclose their bankruptcy trust claims or explain why they have not made claims to identified trusts.
Stop Making It Worse
In addition to these positive steps, the Legislature could improve the litigation climate by not acting to limit arbitration. Every year bills are introduced attacking arbitration as a means to settle civil claims. Arbitration provides a quicker, less expensive alternative to our state’s court system that is plagued by excessive litigation, long wait times, and shortages of courtrooms, judges, and jurors.
Consumers and employees achieve results in arbitration that are as good as or better than they would have gotten in court. Arbitration does not generate attorneys’ fees at anything near the rate of a civil court case, but that is not a good reason for the Legislature to limit the use of arbitration to settle disputes.
While these reforms represent an important first step, they do not include many of the comprehensive reforms to the civil justice system that some in the business community have advocated. These reforms, nonetheless, will help alleviate the crushing financial burden now placed on businesses by California’s existing legal system.