01 Jan California’s Judiciary Under Attack
Last month an advocacy group calling itself the American Tort Reform Association published its annual list of what it calls “Judicial Hellholes,” and California earned the dubious distinction of coming in toward the top of the list (having been narrowly defeated for first place by the court system in Philadelphia, Pennsylvania).
Citing California’s penchant for “wacky consumer class actions” which led to a “not coincidentally high unemployment rate,” the report lambasted both the California Supreme Court and two state Courts of Appeal for “particularly unsound decisions.” The Supreme Court decision in question modified a rule that had been in effect since 1985, prohibiting municipal governments from hiring outside law firms on a contingency-fee basis to pursue civil lawsuits. Specifically, the Supreme Court allowed municipal lawsuits filed against manufacturers of lead-based paints to go forward using contingency-fee lawyers, as long as the government lawyers retained the power to supervise and control the litigation. In the two Court of Appeal decisions, injured plaintiffs were permitted to recover the full “sticker price” of their medical care from the defendants who caused their injuries, even though most health care providers negotiate for and are paid much lower amounts by health insurance carriers.
Other gripes included large jury verdicts and punitive damages awards in Los Angeles and Humboldt counties, and an “unjust” California statute requiring judgment debtors to post a surety bond equaling 150% of the judgment amount, in order to stay judgment enforcement on appeal.
The public interest group representing California trial lawyers was quick to fire back. “This is a predictable list of venues where juries of twelve ordinary citizens have held corporate wrongdoers accountable,” said the president of the Consumer Attorneys of California, who noted that the “Judicial Hellhole” report was funded by “corporate giants such as Philip Morris, Dow Chemical, Exxon, General Electric, Aetna” and others — a ” ‘who’s who’ of corporations with the most to gain by shutting the courthouse door on consumers.”
Many small to mid-size businesses have explored leaving California (and some have actually left) due to California’s perceived anti-business climate and high taxes. While it is true that California has its fair share of “plaintiff-friendly” laws — including “bounty hunter” statutes such as Proposition 65, and employment laws that encourage lawyers to bring low dollar-value cases against employers — the moniker “Judicial Hellhole” is too severe, if not entirely undeserved. The judiciary’s function is to follow laws that have been enacted by the state Senate and Assembly. The NMGM law firm takes no active position on political issues such as tort reform, but to the extent California’s entrepreneurial community desires legal reform, a more effective campaign would focus on elected legislators as opposed to the heavily-vetted, appointed members of an independent judiciary.