Ex-Allies Now Split Over Anti-Lawyer Measures

For the past decade, Harvey Rosenfield has been a leading consumer activist in California. But lately, he has found himself in a nasty fight with some former allies who claim he has misrepresented his allegiances.

Ordinarily, this would attract little attention outside the small world of consumer activists. However, because of three anti-lawyer initiatives on the March 26 ballot, the stakes and the level of nastiness loom large.

At issue is whether Rosenfield, a West Los Angeles lawyer who is taking a leading role in opposing the initiatives, is a tool of trial lawyers. One of the most powerful lobbies in the state, trial lawyers say the initiatives will greatly restrict their ability to sue, and they are funding the opposition campaign.

The ammunition against Rosenfield is that he took at least $279,000 from trial lawyers in 1993 and 1994 to finance his nonprofit corporation, donations that became public only because of an apparent filing blunder at a state office in Sacramento.

The fight plays a role in the campaigns of Propositions 200, 201 and 202 because both sides are casting themselves as guardians of consumers. It is an image--given the complexity of the proposals and an expected heavy TV campaign--that consultants in both camps believe is critical to victory at the polls.

“Harvey is a shill for the trial lawyers,” charged campaign consultant Bill Zimmerman, a former friend who is managing the campaign for the propositions.

“I’m not on the trial lawyers’ side. They’re on my side,” Rosenfield responded. “If I could raise a couple million from these guys, I would.”

Rosenfield has accused Zimmerman, who spent 30 years working for liberal causes and candidates, of being a traitor to the cause of consumer protection. The initiatives are supported by Gov. Pete Wilson, the state Chamber of Commerce and conservative taxpayers groups. Corporations, especially high-tech Silicon Valley firms, are funding the campaign.

Voter Revolt, a campaign organization founded by Rosenfield, also backs the measures, but Rosenfield says the group is largely controlled by Zimmerman.

To hear them now, one would never know that just eight years ago Rosenfield and Zimmerman were California’s dynamic duo of consumer reform activism.

In 1988, Rosenfield, allied with Zimmerman, catapulted into statewide prominence when he and his Voter Revolt campaign organization took on lawyers and insurance companies in an $80-million war over five insurance- and tort-related initiatives on the ballot that year.

On election day, the industry Goliaths lost. The only ballot measure that passed was Proposition 103, authored by Rosenfield, which promised but never delivered a 20% decrease in car insurance rates. Zimmerman managed the Proposition 103 campaign.

In the years since, Rosenfield has struggled to implement Proposition 103’s complex regulatory scheme. Allied more often than not with trial lawyers, he has battled the insurance industry in the courts, the Legislature and before the insurance commissioner.

Along the way, Rosenfield and Zimmerman’s relationship soured, and in June 1993 Rosenfield left Voter Revolt. He said that if he had known that the remnants of Voter Revolt would be used today to trumpet Propositions 200, 201 and 202, he would not have gone without a fight.

“Every time I see the name I’m sick,” Rosenfield said.

Zimmerman and Voter Revolt, working for Silicon Valley entrepreneurs and financial writer Andrew Tobias, gathered more than 2 million signatures last year to place the three initiatives on this month’s ballot.

As Zimmerman gathered ammunition for his campaign, Michael Johnson, another Voter Revolt veteran who sides with Zimmerman, visited the state attorney general’s division of charitable trust, where nonprofit groups are required by law to file their annual tax returns.

There, Johnson found the tax return for Rosenfield’s nonprofit Network Project. Included in the otherwise public documents were forms stamped “Not Subject to Public Inspection.” On the forms were names of Rosenfield’s individual donors who gave more than $5,000.

Every donor named was a trial lawyer. In all, Rosenfield’s Network Project received at least $279,700 from trial attorneys in 1993 and 1994.

Zimmerman says he’s not so angry that Rosenfield took the money. What bothers him, he says, is that Rosenfield stated at various times that he received only minimal funding from trial lawyers.

Rosenfield says he never hid his relationship with trial attorneys. Indeed, in news accounts, he often was described as being close to trial lawyers. Still, in news stories that appeared last year, Rosenfield said he received no more than 10% of his money from lawyers.

“We don’t need to destroy the credibility of most of the [opponents],” Zimmerman said. “Harvey is a different story. Harvey has said he gets insignificant funding from the trial lawyers. Harvey is a liar.”

In 1993, the year Rosenfield left Voter Revolt, 73% of his $299,000 budget, or $219,00, came from lawyers, the tax records show. Rosenfield said he took the money from lawyers in 1993 because he had not yet gotten his fund-raising underway.

In 1994, the tax returns show, attorneys giving more than $5,000 accounted for 15% of Rosenfield’s funding. There is no breakdown of donors who gave less than $5,000.

Rosenfield, counterpunching at Zimmerman, points out that not long ago, when he and Zimmerman were allies, Zimmerman was soliciting business from lawyers. In 1991, for example, Zimmerman sent the trial lawyers a proposal asking to be hired as their consultant to oppose a potential initiative to create a no-fault auto insurance system--a version of which Zimmerman now supports as embodied in Proposition 200.

Today, the campaign committee against the initiatives is named Consumers and Their Attorneys Against 200, 201 and 202--though lawyers gave virtually all the $2.8 million it raised through Dec. 31. Rosenfield has set up a separate campaign committee, which has reported no donations from lawyers.

In coming advertising blitzes, supporters and backers of the initiatives are certain to cite their consumer credentials.

Both sides invoke the name of Ralph Nader, the nation’s most recognized consumer advocate.

“That’s short-cut communication,” Nader said. “People are busy. They’ve got a lot of things on their minds. So they think, between Seagate Technology’s CEO [who supports the initiatives] and Harvey Rosenfield, who do we chose?”

Nader defends Rosenfield, a protege: “If he thinks [lawyers] are wrong, he fights them. I’d prefer Harvey to get funds from the Angel Gabriel. As a last resort, if you have to take it, you take it.”

Nader is not so charitable toward Zimmerman. “I know what motivates Zimmerman--money.”

Nader, Consumers Union and other consumer groups oppose the three initiatives. On the other side, the main consumer credentials belong to Voter Revolt and Tobias, who has written extensively about the insurance industry.

Tobias’ focus is Proposition 200, which would create an extreme no-fault auto insurance system, precluding people from suing over car crashes in almost all cases.

Corporate backers, though, are most interested in the other two. Proposition 201 would limit shareholder suits against publicly traded corporations. Proposition 202 would cap contingency fees charged by plaintiffs’ attorneys in other types of suits.

As he campaigns against the initiatives, Rosenfield is using a variation of the accusation that Zimmerman has lodged against him.

Backers of Proposition 200, the no-fault auto insurance initiative, cite studies by the Rand Corp.’s Institute for Civil Justice showing no-fault insurance would cut premiums by eliminating most lawsuits over car accidents.

Rosenfield, however, discounts the studies, noting that the Institute for Civil Justice gets a third of its money from the insurance industry.

“It might sound like the same argument, but I’m right,” Rosenfield said. “Look at the record: I have fought the lawyers bitterly when I disagree with them. When they’re on the right side, they can work with me.”

Rand spokesman Jess Cook acknowledged that Rand takes money from insurers, but also from lawyers and consumer groups. “We’re nonpolitical,” he said. “We’re scrupulously nonpartisan.”