Deluge of Liability ‘Reforms’ Seen : Passage of Prop. 51 Could Set Stage for Wider Battle

Passage of Proposition 51, the June 3 ballot initiative that seeks to limit the cost of liability lawsuits to businesses and public agencies, could set the stage for a much wider battle over California’s complex and sometimes burdensome liability system.

Supporters of the measure acknowledge that it is unlikely, in itself, to resolve an “insurance crisis” that has forced some businesses to go under and many cities to operate without liability coverage.

But they believe that its passage would send a strong signal to the Legislature and break the trial lawyers’ grasp on a key Assembly committee considered the graveyard of any attempt to “reform” the liability system. The outcome, both sides acknowledge, could be a deluge of measures designed to further limit how much an injured party can collect.

“It’s fair to say that this is really an important first step,” said Larry Naake, director of the County Supervisors Assn. of California, which is a principal sponsor of the ballot measure. “What it will do is send a signal from the citizens that they are tired of these outrageous suits that are really obscene.”

Fearful of what may follow, however, consumer groups and other critics have come to view the initiative as a kind of “Trojan horse” that would lead to sweeping new laws granting legal immunity to government and industries while leaving injured victims with little hope of redress.

“You can now get justice if you are injured by a very dangerous product or sloppily maintained roads,” said Harry Snyder, West Coast director of Consumer’s Union, one of Proposition 51’s chief opponents. “But those that are now held accountable don’t like it and want to reverse the system and put it back to a time when we didn’t always take care of these things. (Proposition 51) is just the tip of the iceberg for what they want.”

The ballot initiative, which is backed by a broad coalition of insurance companies, local governments, business groups and physicians, would not directly limit the amount of damages awarded to an injury victim.

However, in cases where more than one defendant is sued, it would require that each be assessed according to his degree of fault for such non-economic damages as “pain and suffering.” Existing law requires defendants to pay according to their means even if they are only minimally at fault.

Existing Law’s Effect

For example, an uninsured driver hits a pedestrian on a dark city street. Both the city and the motorist are sued. The city later is found to be only 5% at fault but the driver has no money. Under existing law, the city must pay 100% of the damages because it has “deep pockets” of wealth. If Proposition 51 passes, the city still would have to pay 100% of the injured pedestrian’s medical bills, but only 5% of any damages assessed as non-economic damages, such as “pain and suffering.”

Measures similar to the initiative, as well as bills seeking a more drastic overhaul of the liability system--such as limits on the size of damage awards and attorney fees--have been repeatedly rejected by the Legislature in recent years. Nearly all have died in the Assembly Judiciary Committee, a lawyer-dominated panel whose members are appointed by Assembly Speaker Willie Brown (D-San Francisco), a trial lawyer who vehemently opposes major changes in the liability laws.

“Those bills were killed because they are devoid of any merit,” Brown said in an interview. He said he would support a limit on lawsuits and attorneys’ fees as soon as insurance companies agree to have their premiums regulated.

The ultimate aim of those bills and Proposition 51, Brown added, is to “limit what people can receive” while offering little relief to the cities and businesses that have been hit hard by skyrocketing liability premiums and policy cancellations.

Overhaul Seen Needed

Even the initiative’s supporters concede that its passage would not assure the immediate availability of liability coverage at a reasonable price. They contend that only an overhaul of the liability system will encourage insurers to once again cover high-risk clients such as government agencies and big business.

“We don’t want an overall redoing of the whole tort (liability) system,” said Michael J. Breining, lobbyist for the California Manufacturers’ Assn. “We think it is generally a good system but we do want some moderate reforms that will protect manufacturers from unwarranted litigation and at the same time protect consumers so they may receive just compensation.”

Critics, however, contend that Proposition 51 is actually a “trial balloon” for more radical proposals like those that have come before the Legislature in recent years.

This year alone, state lawmakers introduced more than 300 bills that seek to alter California’s liability system. Among those are proposals to grant immunity from suits to private toxic cleanup firms, religious organizations, associations of psychologists and social workers, manufacturers of whooping cough vaccine and ski lift operators.

Other legislative proposals would make it more difficult to collect punitive damages from manufacturers of faulty and dangerous products, require that court judges rather than juries set the size of damage awards and limit the liability of school districts that fail to comply with state regulations on the removal of hazardous asbestos.

‘The Opening Wedge’

“Their (motives) have been quite plain all the way along,” James Wheaton, a civil rights attorney and chairman of a “No on 51” campaign, said of the initiative’s sponsors. “This is really the opening wedge so that they can continue to stampede the public for bigger reforms.”

Of all the proposals to come before the Legislature, the one most consistently cited as a model for future changes in the liability system is the 1975 landmark overhaul of medical malpractice laws.

The Medical Injury Reform Act, as it is formally called, was pushed through the Legislature amid a major crisis in the availability of malpractice insurance, not unlike the current situation for businesses and government agencies.

With doctors threatening to withhold medical services, lawmakers, who had resisted such efforts in the past, agreed to place a maximum award of $250,000 for “pain and suffering,” to limit the size of lawyer fees and to allow large settlements to be paid out over a number of years rather than in a lump sum.

It took 10 years to resolve constitutional challenges to the law, but officials of the California Medical Assn. have credited it with keeping a lid on rising malpractice insurance rates.

‘It’s Pretty Close’

“It may not be the epitome of everything we wanted, but it’s pretty close,” said Tom Kennedy, a medical association spokesman.

Several lawmakers, arguing that what is good for doctors is good for society at large, recently introduced bills that would extend the malpractice limits across the board. The Assn. for California Tort Reform, one of Proposition 51’s major backers, has given that effort top priority.

Speaker Brown, who opposed the malpractice liability limits in 1975, said that enacting the restrictions “absolutely was a mistake” that opened the door for other groups to demand that they be treated no differently from physicians.

Other critics maintain that with strict limits on damages, wealthy industries would have less of an incentive to make sure that their products are safe and cities would not be as vigilant in preventing the kind of accidents that lead to lawsuits.

“What they want is immunity, they don’t want to be responsible for their negligent acts,” said James Frayne, chief lobbyist for the California Trial Lawyers Assn.

Deterrent Value

Fred Hiestand, legal counsel for a statewide coalition of businesses backing liability overhaul, acknowledged that the threat of a suit has some value in deterring negligent behavior, but added, “I think it’s very minimal.”

“There are a lot of other things that deter manufacturers from putting out defective products,” he said. “There is competition and regulatory bodies that look out for safety and once you put a bad product out there, it gets publicized.”

Sen. John F. Foran (D-San Francisco), whose unsuccessful efforts to alter the liability laws sparked the initiative, said there is no way that public agencies or businesses can operate if they are constantly subjected to lawsuits for injuries that often are unavoidable.

“The courts are demanding a perfect society free from any injury or negligence,” he said. “I don’t think any society can survive in that situation.”

For now at least, supporters of the initiative are banking on a resounding victory at the polls as leverage to persuade lawmakers that the public wants further changes in the liability system.

‘Willie, Not Jerry, Brown

Speaker Brown, for one, said he will not be moved. “My name is Willie, not Jerry, Brown,” he quipped, referring to the former governor’s sudden embrace of tax-slashing Proposition 13 after it was overwhelmingly approved by voters in 1978.

Others disagree. “If it’s a close vote it will not be seen as a mandate to totally dismantle 1,000 years of Anglo-Saxon jurisprudence,” said Sen. Bill Lockyer (D-Hayward),chairman of the Senate Judiciary Committee. “But if it’s a landslide, it will demonstrate the public’s attitude and that would be viewed as a direction to policy makers.”