Loophole Aiding Shiley Is Likely to Stay on Books : Litigation: The Orange County firm, sued over heart valve failures, has lobbied to retain a sentence in a civil procedure allowing judges to dismiss suits by out-of-state plaintiffs.
After a fierce lobbying war, a legal loophole--which could help an Orange County manufacturer of heart valves resist hundreds of product-liability claims--will probably remain on the books.
Over the last few weeks, Irvine-based Shiley Inc., its parent, Pfizer Inc., and the California Manufacturers Assn. have mobilized a team of lobbyists and dozens of top company officials to block a bill that would delete an arcane sentence in civil procedure that allows California judges to dismiss lawsuits by out-of-state plaintiffs for convenience.
Now the bill’s sponsor, Sen. Quentin Kopp (I-San Francisco), says the intense lobbying campaign has him seriously thinking about dropping the bill. “It generated opposition from members, which in turn has an effect on the future of the bill,” Kopp said Wednesday.
At stake in the legislative battle is the potential for large court judgments against Shiley, which is facing an onslaught of lawsuits over defects in some of its Bjork-Shiley heart valves.
Records show that 395 of the 60-degree and 70-degree Convexo-Concave heart valves have failed, leading to an estimated 261 deaths. The company sold 86,000 of the valves between 1979 and 1983, about half to foreign patients.
Shiley has been accused in several liability lawsuits--which ultimately represent hundreds of millions of dollars in potential damages--of suppressing evidence that tiny wire struts in the device were prone to break and cause fatal hemorrhaging. The company denies the charges.
The high-stakes issue spilled over into the Legislature in late March when Kopp amended one of his bills to delete an obscure, 24-word sentence that allows judges to dismiss lawsuits involving foreigners if an overseas trial is deemed more convenient. Kopp has argued that the provision was a “fluke” that should be stricken by the Legislature, even though the loophole is already scheduled to expire by 1992.
But Shiley took strong exception because it has used the sentence to fend off lawsuits filed by foreign customers. So far, it has gained one dismissal in December of an Orange County lawsuit.
“We freely acknowledge Shiley’s interests in containing legal costs,” company spokesman Robert J. Fauteux said of the firm’s fight against Kopp. “But that is not the same thing as suggesting we are trying to avoid or evade legal responsibility.”
Joined by the powerful 900-member manufacturers’ group, Shiley and New York-based Pfizer have argued that the obscure sentence creates a “level playing field” in product-liability cases while holding down legal costs.
“Here in California, the costs of litigation are generally conceded to be higher than anywhere else in the world,” Fauteux said. “And that’s when you are the winner. In the case of losing, the product-liability awards in California are not capped.”
Without the sentence, the lobbyists add, California attorneys would continue to file lawsuits and courts in the state would remain clogged.
“To have the court clogged with a lot of foreign plaintiffs who are here primarily because they think they can get a bigger award is just not doing a service to California citizens,” said Anne Kelley, lobbyist for the CMA.
Yet those who supported Kopp’s bill claim that Shiley and other corporations actually want to shirk their responsibility by staying out of California courtrooms, where there is no limit on product liability awards.
“What Shiley has done is appear in the Orange County Superior Court in the foreign cases and said, ‘This is an inconvenient place for us to litigate these cases,’ ” said Joseph Dunn, a Newport Beach attorney who is handling 280 suits against Shiley. “They say that despite the fact that their headquarters is a mere five miles from the courthouse.”
Added Harry M. Snyder, director of the Consumers Union’s West Coast office: “Unless we send a clear message, we will continue to see exploding Ford Pintos, exploding heart valves and dangerous contraceptive devices all being kept on the market.”
In addition to the Consumers Union, the California Trial Laywers Assn.--one of the state’s top interest groups--has been lobbying on behalf of the Kopp bill.
The CMA, another strong interest group, has spent money twisting arms on the Kopp measure and also has called on its corporate membership to inundate lawmakers with letters advocating retention of the loophole. Kopp said the effort, which resulted in 75 to 80 letters to his office alone, was “remarkable.”
Pfizer itself is no stranger to state politics. Campaign reports show the pharmaceutical giant has contributed at least $74,800 to legislators over the last three years, as well as thousands of dollars in gifts and trips.
One beneficiary, records show, was former Sen. William Campbell (R-Hacienda Heights), who accepted tickets to a Broadway play, expensive meals and an overseas trip during the last two years from Pfizer. Campbell quit the Senate in December to become president of the CMA.
Pfizer also has pitched in by hiring two outside lobbyists to help kill the Kopp bill. One is Dennis Carpenter, former Orange County senator and now contract lobbyist for Orange County; the other is Jerome M. Haleva, who formerly served portions of Orange County as the top aide to Campbell.
In the face of the lobbying effort, Kopp said Wednesday that it was his “predilection” to drop the bill, but that he wouldn’t make a final decision until Friday. Even if he backs off, Kopp said, the loophole will expire at the end of 1991 and the Legislature will fight any attempt by Shiley to carry it over.
“Let them try to extend it, because they’ll fail,” Kopp said. “Their purpose will be transparent and . . . I . . . doubt that, with a new governor, their artifice will be successful.”
