Lobbyists, Lawyers Cut Deal on Injury Liability

Several long-feuding groups hammered out a last-minute deal Friday on legislation to provide new protections for private industry and individuals against personal injury lawsuits, including a provision exempting manufacturers of alcoholic beverages and cigarettes from liability for injuries or deaths caused by their products.

Both houses of the Legislature ratified the agreement and sent it to Gov. George Deukmejian Friday night, shortly before adjourning for the year. The Assembly passed the bill 60 to 10 after a bitter debate, and the Senate later endorsed it 24 to 1.

The compromise, reached in a series of private meetings and outlined at one point on a white linen napkin from a local restaurant, would, among other things, make it more difficult for victims to collect punitive damages from companies or individuals who injure them.

The agreement, immediately criticized by consumer groups as “a back-room raid on victims’ rights,” was negotiated privately by a coalition of insurance companies, major business groups and doctors on one side and the California Trial Lawyers Assn. on the other.

The elements of the deal were amended into a bill on the Assembly floor after a quickly called joint “informational hearing” of the Senate and Assembly Judiciary committees. Under normal legislative procedure, such a complex bill would require extensive public hearings after a 30-day public notice.

A key part of the deal that was not included in the legislation was a unique “nonaggression pact” in which each side agreed not to pursue costly ballot initiatives or legislation that would harm the other’s interests. The pact reportedly will be in effect for five years.

Senate President Pro Tem David A. Roberti (D-Los Angeles) said the legislation, if enacted, would be the “hallmark of the session,” although he admitted that he was not comfortable with all of its provisions.

“It would bring to a conclusion warfare between the professional groups that has been going on in the Legislature almost interminably,” Roberti said. “It’s a real solution to a real problem.”

Assembly Speaker Willie Brown (D-San Francisco), who carried the bill on the Assembly floor, termed it a “significant and historical piece of legislation.”

During Friday night’s legislative debates, proponents said the measure was needed to improve the “efficiency and fairness” of the civil justice system without jeopardizing the rights of consumers, though they conceded that it would do little if anything to reduce insurance premiums.

“This will truly help our people,” said Assembly Republican Leader Pat Nolan of Glendale. “This will speed up the trial process. This will make sure the results are fairer. This will make sure justice is indeed blind and not just stupid.”

But opponents said the bill was poorly drafted and too broad and argued that its product-liability provisions might limit the rights of people injured by “second-hand” cigarette smoke as well as infants who were born with defects caused by their mothers’ use of alcohol during pregnancy.

“We cannot rely on what we’re told by the people who reached this 11th-hour agreement,” said Assemblyman Byron D. Sher (D-Palo Alto). “It’s too late in the session. We ought to take our time if we’re going to put the Legislature’s stamp of approval” on the bill.

Although Democrat and Republican leaders in the Senate and Assembly kept tabs on the progress of the talks late Thursday and Friday, the negotiations were handled primarily by a handful of lawyers and lobbyists representing several interest groups. They included former Assemblyman Robert Naylor, now chairman of the state Republican Party, and Steven Merksamer, Deukmejian’s former chief of staff, both of whom were working on behalf of the California Manufacturers Assn.

Something for Each Group

The deal, as described by several legislative sources and participants in the negotiations, includes something for each of the interested parties.

For manufacturers, the measure would exempt from liability the producers or sellers of “inherently unsafe products,” including tobacco and alcohol, which are known to be hazardous by the ordinary consumer. The bill also listed sugar, butter and castor oil as examples.

For doctors, the agreement preserves the medical profession’s hard-fought protections from malpractice lawsuits, and it prohibits the introduction of evidence at trial about a defendant’s financial worth until after the plaintiff proves that the defendant is liable.

Doctors, manufacturers and others could also benefit from changes the bill would make in the procedures governing punitive damage awards. The bill would change the definition of “malice” to include “despicable conduct” and increase the standard of proof that must be met by the plaintiff from a “preponderance of evidence” to the tougher-to-reach “clear and convincing evidence.”

For the insurance companies, which would benefit generally from any agreement that helps their clients avoid large judgments, the bill included provisions expected to cut down markedly on the number of cases in which insurance companies must provide independent legal counsel for their clients.

In exchange, the trial lawyers would receive the right to collect higher fees in malpractice cases, which would increase to 15% from 10% for damage awards greater than $600,000. In addition, through the innovative “peace pact,” lawyers would be assured that none of the other groups would seek legislation or an initiative to further limit attorney fees.

The apparent agreement follows closely behind the trial lawyers’ recent settlement with cities and counties, which included a package of bills aimed at protecting governments and public officials from liability lawsuits.

Hit by Consumer Groups

Both deals were criticized by consumer groups, although the private, hastily drafted agreement reached Friday was the subject of harsher rhetoric.

“Insurance companies, manufacturers, doctors and trial lawyers have met to decide the rights of victims injured by some dangerous products,” said Harry Snyder, regional director for Consumers Union. “Unfortunately, the victims who will be harmed weren’t in the room when the deal was cut.”

But Sen. Bill Lockyer (D-Hayward), a key participant in the negotiations, said the consumer activists were too single-minded in their approach.

“They care about one thing and I’m glad they do: the ability of an injured party to get maximum compensation,” Lockyer said. “Our job is to try to balance that against the escalating insurance costs and clogged court calendars.”

Lockyer said the deal was reached behind closed doors because the negotiations required “very delicate compromise.”

“To do that in public means all the lobbyists or spokesmen for each point of view have to be extreme and posture and argue ferociously for their point of view,” he said. “That’s not conducive to a negotiated settlement.”