Harmful corporate counsel bills squashed

By CMTA Staff

Capitol Update, Oct. 6, 2006 Share this on FacebookTweet thisEmail this to a friend

Governor Schwarzenegger vetoed SB 1489 (Denise Moreno Ducheny, D-San Diego) which could have unfairly forced companies that are sued by the Attorney General (AG) to pay all costs of investigations, expert witnesses and attorney's fees whenever the AG "prevails".

With the term "prevails" undefined in the bill and with it loosely defined in the courts to include a change in business operation or a settlement, this bill would have given the AG tremendous leverage over business defendants. The bill was an end-run around the normal budget process for departments and was being pursued as a way to bolster the AG's budget. If enacted, the bill would have set up a system where the AG had a clear incentive to target a manufacturer regardless of the validity of an allegation in hopes of augmenting the Department's budget.

Additionally, Governor Schwarzenegger vetoed SB 832 (Don Perata, D-Oakland) which would have given the State of California 75 percent of all punitive damages awarded in cases for the next five years and would have applied to any case filed after August 2004. The remaining 25 percent would have been received by plaintiffs in these cases.

This proposal marked a dramatic California public policy shift that would have greatly undermined future efforts with regard to punitive damage reform. Additionally, while this new funding mechanism may have benefited other worthy state policy goals, those very goals would have been dependent on this exceptionally volatile funding source as the size and scope of punitive damage awards varies from year to year.

The Governor's veto message was focused on the last minute nature of this proposal as it was a "gut and amend" during the final days of the legislative session, strategically avoiding any public hearing of the matter.

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