Assaults on Proposition 64 & Confidential Settlements Stalled

By CMTA Staff

Capitol Update, June 3, 2005 Share this on FacebookTweet thisEmail this to a friend

A flurry of activity took place this week to get all bills (other than tax levies) out of their house of origin to meet today’s deadline of June 3rd.

CMTA is pleased to announce that two of the worst civil justice bills of the last decade have been derailed due to lack of support.

AB 528 (Dario Frommer, D-Los Angeles) would have gutted an essential protection for businesses that was overwhelmingly approved by voters last November in the form of Proposition 64.  Prop. 64 tightened up the state’s Unfair Competition Law (UCL) by requiring that three simple tests be met in order for a suit to be brought:

1) An actual individual must be involved;
2) There must be harm; and
3) Such cases must have finality.

AB 528, on the other hand, would have allowed "any person with a beneficial interest" to bring a lawsuit to enforce a voluminous list of code sections, including regulations, permits and orders.  Additionally, the bill would have allowed a suit with no harm alleged and would have allowed private lawyers to extract civil fines, "restoration of the environment", and attorney’s fees. 

The day after a full page ad in the Sacramento Bee attacked the bill, the Orange County Register reported that "one of the most radical anti-growth, anti-housing, anti-road, anti-everything proposals possible is now winding its way through the California Assembly, being pushed ahead by environmental activists looking for the silver bullet to stop any project they don't like." 

Viewed as one of the worst civil justice bills of the decade and faced with enormous opposition, the author chose not to put the bill up for a floor vote and moved it to the "inactive file" where it will likely become a two-year bill.  (Two-year bills stop moving for the current year, then are brought up at the start of the second year of the session.  They are given strict deadlines for passage early in the second year.)

Also suffering from a lack of support was AB 1700 (Fran Pavley, D-Agoura Hills).  It would have prohibited confidential settlements and protective orders in litigation.  The bill failed passage Thursday night, June 2nd with only 31 affirmative votes (10 shy of winning approval).

The bill would have dramatically changed current law to state that evidence of a "public danger" obtained during a legal process is presumed to be public information even if it was not used in a court proceeding. 

This bill was different in some ways than previous versions.  It included "substances" and "psychological harm" in the definition of "public danger." By bringing substances into that definition, the law could have applied to an employee being exposed to various substances in the workplace. The new definition allowed proponents to characterize the bill as environmentally friendly and necessary.

AB 1700 allowed some level of protection for trade secrets.  Proprietary information, however, may not have risen to the level of a trade secret and may have become public information under this bill. Companies with intellectual property, valuable proprietary processes and/or product designs would have been harmed by the new language.

The defeat of AB 528 and AB 1700 are two great victories for the manufacturing community.  CMTA greatly appreciates the support in opposition to these measures from a significant block of democrats and the republicans in the Assembly.

Read more Regulatory / Legal articles

Capitol updates archive 989898989