Working on limiting lawsuits

Alicia Robinson

More limits to business-related lawsuits are far from a sure thing

for the state, though local lawmakers and business leaders are

working on ways to see restrictions put in place.

Assemblyman John Campbell tried unsuccessfully to repeal

legislation that allows employees to bring lawsuits against employers

for any labor code violation, with or without proof of harm. But he’s

urging state leaders to change the law before the 2004 legislative

session ends.

Also on the horizon is a ballot initiative that would limit

enforcement of so-called unfair business competition laws, which give

people the right to sue over business practices regardless of injury

and without using a class-action suit. Proponents wrote a ballot

initiative after lawmakers voted down a similar legislative proposal

in 2003.

“Both [laws] allow suits to be filed for lots of money for

technical violations of a code somewhere where no one was harmed, so

they both allow attorneys to shake down businesses ... for big

attorneys’ fees when there’s been no harm done to anyone,” Campbell

said.

The two reform efforts apply to different sections of state code.

Campbell’s bill, defeated in committee last month on a party line

vote, would have repealed Senate Bill 796, which was written by

Garden Grove Sen. Joe Dunn and signed by former Gov. Gray Davis late

last year. Dunn’s bill set fines for labor code violations and added

to the list of reasons people can sue.

The ballot proposal to reform sections of the state business code

is awaiting verification that it has the nearly 374,000 signatures

required to appear on the November ballot.

Both laws allow people to sue businesses for state code violations

even without proof that they were harmed by the violations, and

neither give the businesses a right to remedy the violation before a

suit goes to court, Campbell said.

One opponent of the ballot initiative is the California Public

Interest Research Group, or CALPIRG. The proposed changes would

prevent groups like CALPIRG from suing businesses on behalf of

consumers unless the groups have suffered financial or bodily harm,

said CALPIRG legislative director Steve Blackledge.

“[The reforms are] going to prevent consumer groups and others

from bringing some very worthy lawsuits that would protect

consumers,” he said.

Consumer groups fill a gap between existing consumer-protection

laws and government’s ability to enforce them, he added.

Other business and citizens’ groups support reforms of state code

that would limit what they think are frivolous lawsuits.

‘We’re saying that hey, there should at least be a victim, there

should be harm done before there can be any type of lawsuit,” said

Maryann Maloney, executive director of Orange County Citizens Against

Lawsuit Abuse. “If we want to make California a business-friendly

state we have to make it a level playing field with other states that

are taking jobs away from us.”

Existing state code gives employees an incentive to sue employers

over even minor violations because the employees can get a portion of

fines the state collects, said Richard Luehrs, president of the

Newport Beach Chamber of Commerce.

The chamber has been urging the proposed reforms for about two

years, but Luehrs said he’s uncertain how voters will respond to the

ballot initiative if it is approved for the November election.

“It’s going to be a difficult battle for sure because they are

complex matters that require a great deal of understanding and

scrutiny,” he said.

The recent defeat of Campbell’s labor code reform bill didn’t

dampen his hope that legislators will act before the end of the

session. Gov. Arnold Schwarzenegger, who requested that Campbell

write the bill, could still slip the measure in the budget as part of

an economic stimulus package, Campbell said.

Other options include another legislator writing a similar bill

before the session ends in August and the more distant possibility of

persuading Democratic Sen. Dunn to put more significant reforms in a

bill he’s already proposed to reform SB 796.

“There’s still several ways and time left,” Campbell said.

One option he’s not considering is a ballot initiative of his own,

however. Since it’s too late to get something on the November ballot,

Campbell said, “we’d have to be looking at 2006, and it’s way too

early to be thinking about that for this topic now.”