Anti-Litigation Initiative Drive Moves Forward : Election: Signatures to put three measures on ballot are turned in. Package includes ‘no-fault’ car insurance, plans to discourage suits against corporations and limit attorneys’ fees.


Funded by several high-tech firms, political consultants turned in 2.3 million signatures to election officials Monday, signaling the start of a new initiative war over attorneys fees, lawsuits and car insurance.

The package of initiatives is headed for an already fat March primary ballot and includes a “no-fault” auto insurance plan, one to discourage lawsuits against corporations by shareholders and a third to sharply limit fees charged by plaintiffs’ attorneys.

A group calling itself the Alliance to Revitalize California is pushing the initiatives and has raised $2 million in loans and donations, mostly from Silicon Valley entrepreneurs and investors. Most of the $2 million was spent gathering voter signatures to qualify the measures for the ballot.


Santa Monica campaign consultant Bill Zimmerman, who is handling the three measures, said he intends to promote all three as a package aimed at limiting litigation, thereby helping the state’s economy.

“There is too much litigation, and it takes too much out of the economy, depriving business of profits and workers of jobs,” Zimmerman said.

County registrars of voters must count signatures of registered voters and submit them to Secretary of State Bill Jones for final certification. Each requires 435,000 signatures of registered voters.

The package of initiatives amounts to a direct attack on the aggressive and well-funded California trial lawyers association, now called Consumer Lawyers of California.

Bill Carrick, the Los Angeles political consultant representing the lawyers, characterized the proponents of the three initiatives as “a special interest that is trying to masquerade as protectors of consumers.”

To battle the measures, Carrick is pushing a counter-initiative for the March ballot that would undermine the measure to limit attorney fees. He also may push another counter-initiative for the November, 1996, ballot.


So far, major lobbying groups in Sacramento that support no-fault auto insurance and a general overhaul of the civil law system are staying out of the new initiative battle.

“As long as we keep seeing progress in the Legislature, we see no reason to take the initiative route,” said John Sullivan of the Assn. for California Tort Reform.

Zimmerman said he has tried to tap insurance companies for campaign money. But while insurance company executives support no-fault auto insurance, they recall the 1988 campaign when the industry spent $80 million on an initiative war. The result was the passage of Proposition 103, the 1988 measure that has been a bane to insurance companies.

In a bit of irony, the Alliance to Revitalize California includes the remnants of Voter Revolt, the organization that pushed Proposition 103. Among the leaders of the opposition of the new initiatives is the founder and former head of Voter Revolt, Harvey Rosenfield.

Rosenfield, who believes consumers would be giving up too many rights by supporting the measures, charges that the initiatives’ backers are “cloaking themselves in the garb of consumer advocates, particularly through their previous limited association with ourselves on projects we initiated, such as Proposition 103.”

No-fault insurance is the most far-reaching of the three initiatives being proposed. The proposal would require that people have minimum insurance policies to register their cars. It also would require that insurance companies pay claims within a month, or pay 2% per month interest.


In most cases, motorists would lose the right to sue over accidents--a major cause of high insurance rates. Motorists could, however, sue if an insurance company refused to pay benefits, if the other driver was under the influence of drugs or alcohol, or if the crash was caused by defects in the car or road hazards.

The standard policy would cover up to $1 million in medical and other damages. Drivers could sign waivers to buy smaller policies, and insurance companies would have to offer policies providing coverage of up to $5 million.

Nothing in the measure would force auto insurance companies to cut premiums. But its backers say that under terms of Proposition 103, as insurance costs decline, the price of insurance premiums also must fall.

The no-fault car insurance plan is largely the brainchild of Florida and New York writer Andrew Tobias, who two years ago came to California to push his idea of pay-at-the-pump, no-fault auto insurance.

Tobias dropped his pay-at-the-pump initiative after oil companies and attorneys came out against it. But since then, he has formed an alliance with Silicon Valley entrepreneur Tom Proulx, founder of a software company and chairman of the Alliance to Revitalize California.

“If money has to come from someplace, what a marvelous place for it to come from,” Tobias said. “I’m not one of these people who wishes there were fewer Intels and more lawyers.”


Proulx has given $100,000 to the campaign, as has the chairman of Intel. Proulx and other Silicon Valley business leaders have taken the lead in drafting the measure that would limit the right of shareholders to sue publicly traded corporations.

This initiative would limit lawsuits against publicly traded companies by shareholders by requiring plaintiffs to pay for defense costs if they lose. Proponents of the measure say shareholder suits often amount to extortion against the corporations.

“This is a huge problem for the high-tech industry, which is targeted by these lawsuits,” said Michael Johnson of Voter Revolt.

The final measure, the one to cut attorneys’ fees, is aimed at reducing the number of lawsuits by cutting fees charged by plaintiffs’ lawyers. As it is, lawyers generally collect 33% of a settlement or a judgment in contingency fee cases.

The initiative would limit the amount to 15% of a settlement, but only if the defendant makes an acceptable offer within 60 days of receiving a letter demanding payment from the plaintiff’s lawyer. Backers say such a system would add to pressure on defendants to settle legitimate cases quickly and not go to trial.

If the plaintiffs refuse the initial offer, the plaintiffs’ lawyer could collect a larger fee when a final judgment or settlement is reached, assuming it is more than the original settlement offer.


Johnson said the initial drafts of the attorneys’ fees initiative came from yet another group, the Manhattan Institute, a conservative think tank in New York.

“It troubles me greatly that windfall fees are so endemic and lawyers control the system,” said Michael Horowitz, a lawyer who helped develop the attorneys’ fees idea while at the Manhattan Institute. “The excesses of the tort system spill over to ill feeling for the legal system as a whole.”

If the three proposals qualify, the number of initiatives on the March ballot will be five, plus the presidential primary, state legislative races and various local races.

The other initiatives would limit rent control in mobile home parks and create open primaries in which voters would be able to cast ballots for the candidate of their choice regardless of party affiliation.