Group Would Overhaul Liability Laws

Having failed to persuade the Legislature to overhaul the state’s liability laws, an influential coalition of businesses and physicians announced Thursday that it is gearing up for a ballot initiative that would dramatically alter the way damage lawsuits are decided in California.

Supporters of the proposed ballot measure--several of whom were major backers of last year’s successful “deep-pockets” insurance initiative--are proposing to limit lawyers’ fees, protect officers of nonprofit organizations from lawsuits and make it far more difficult to collect punitive damages from manufacturers of faulty products.

The proposal also would make it extremely difficult for the Legislature to do away with a system of special liability laws enacted 10 years ago to protect physicians from some types of large damage awards.

Contending that there has been “an explosion” in civil suits, Frank Schubert, spokesman for the coalition, named Californians for Fair Liability Laws, said his group intends to begin gathering the 372,178 signatures of registered voters needed to place the measure on the June, 1988, ballot.

“We are convinced that as a consequence of this initiative, insurance rates will decline and the state’s economic climate will improve,” Schubert said.

Consumer organizations and trial lawyers, however, immediately announced plans to sponsor an opposing measure that would more closely regulate the insurance industry and make it easier for injury victims to collect big damage awards.

“Our reforms would limit the number of lawsuits by punishing wrongdoers so severely that they would be less likely to hurt others,” said Harvey Rosenfield, founder of Access to Justice and a leading opponent of last year’s “deep-pockets” initiative.

Contending that big insurers stand to make millions under the coalition’s proposed liability initiative, Browne Greene, president of the California Trial Lawyers Assn., said the business-supported measure “is so anti-consumer and anti-victim and pro-big business as to be patently unfair and one-sided.”

The business-backed initiative would put attorney contingency fees on a sliding scale, allowing lawyers to charge up to one-third of settlements of $100,000 or less and a maximum of 10% for settlements of more than $200,000.

Injury awards would be reduced by the amount of insurance paid to victims. Volunteer directors and officers of nonprofit organizations would be protected from lawsuits for mistakes made “in good faith.”

The measure also would require a stricter, “beyond a reasonable doubt” standard of proof before punitive damages could be awarded. Under current law, a less stringent “preponderance of evidence” standard of proof is applied in most civil matters. In the case of faulty products, the initiative would protect manufacturers if the defect that causes injury is “an inherent characteristic” of the product.

Two-Thirds Vote

For doctors, the proposal would require a two-thirds vote on any proposal in the Legislature to modify the 10-year-old Medical Injury Compensation Reform Act, which limits the size of some awards in medical malpractice cases.

All of these measures go much further than the Proposition 51 “deep-pockets” initiative, which was overwhelmingly approved by voters in June, 1986. It restricted “pain and suffering” awards by requiring that defendants in injury suits be assessed according to their degree of fault. Previously, wealthier defendants who were minimally at fault could have been forced to pay a major share of the award.

Supporters of the “deep-pockets” measure had hoped that the Legislature would follow with other bills to overhaul the liability system. But nearly all of those proposals have been rejected.

However, advocates of insurance regulation also have been frustrated by their inability to move major bills through the Assembly and Senate.