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November 07, 2006

California Watch: Prop 89

By James R. Copland

John Sullivan, president of the Civil Justice Association of California, alerts us to the dangers looming if Golden Staters approve Proposition 89:

Californians are today voting on a list of statewide initiatives that includes Proposition 89, a proposal that if passed would do grave harm to legal reform in the Golden State. Pitched as "campaign finance reform," this initiative comes at a time when we are making great strides in reforming California’s civil justice system–-a system that has for far too long been rife with frivolous lawsuits and abuse. If 89 passes, business and civil justice reform advocates will effectively be precluded from participating in the political process in California.

The Civil Justice Association of California board voted months back to oppose Proposition 89.

Proposition 89, would prohibit a corporation from directly or indirectly contributing to an independent expenditure election campaign, which is the only constitutional way a company has to make its views on candidates known to voters.

Equally devastating would be the $10,000 corporate contribution limit on supporting or opposing initiatives.

Personal injury lawyers and other plaintiffs' lawyers are largely unaffected by these limits. (The big trial lawyer players are Limited Liability Partnerships.) This mismatch would set plaintiffs' lawyers up to elect their picks to the Legislature. It would set them up for ballot campaigns to undo voter-passed laws like Proposition 64 of 2004 and win ballot campaigns to further their agenda.

Proposition 89 would, in the legal reform arena, mean unilateral disarmament for us in the very political areas where we've been able to make gains and restore balance. At the same time, the scales would be hugely tilted in favor of those who want to more aggressively use the civil justice system as a revenue raising and social tool against businesses and government entities. If the provisions of Proposition 89 had been in place, none of the following would have been possible:

Passage of Proposition 64 (2004). Businesses of all sizes banded together to pass Proposition 64, which stopped personal injury lawyers who had been using state unfair competition law to extort settlements.

The defeat of Propositions 30 and 31 (2000). These trial lawyer-sponsored schemes would have allowed two lawsuits for every insurance claim, costing the insurance industry and eventually all insureds millions of dollars.

The defeat of Proposition 211 (1996). This was securities class action lawyer Bill Lerach's unsuccessful scheme to end-run federal securities litigation reform and open California courts to his brand of "strike" suits based on stock price changes.

The election of moderate Democrats in recent election cycles, sending to Sacramento more lawmakers who understand the need for a fair civil justice system and are not beholden to the plaintiffs' bar.

Thanks John. We'll be watching the fate of Prop 89, with our fingers crossed.

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Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.