California initiative is US bellwether on liability-law reform

A multimillion-dollar battle is shaping up over a California ballot initiative that could greatly affect the way states deal with the growing problem of liability insurance. At issue is a measure on the June ballot that would limit corporate and government liability for pain and suffering in personal injury cases.

Advocates contend that Proposition 51, commonly known as the ``deep pockets'' initiative, will help resolve the dilemmas facing cities, bus companies, doctors, day-care centers, and other institutions and individuals in securing insurance against liability lawsuits.

But critics argue that the measure would deprive innocent victims of their right to compensation for damages. They also say it would reduce the pressure liability verdicts can put on government officials and manufacturers to safeguard public health and safety.

The battle pits trial lawyers, consumer groups, and some labor organizations against a broad coalition of government, business, and professional groups. It centers on torts -- civil suits for damages not involving breaches of contracts.

While many other states are weighing, or have already made, similar changes in their civil justice systems, the California initiative is the first such tort reform to be put directly to the voters.

``Everyone is looking at California, because it will set the tone for tort reform for the whole country,'' says John McCann of the Insurance Information Institute, a trade group supporting the measure.

``It is the biggest thing since Proposition 13,'' agrees critic Harry Snyder of Consumers Union, referring California's 1978 tax-slashing measure that spawned a wave of similar initiatives across the country.

Proposition 51 would overhaul a centuries-old legal doctrine embraced in California -- and many other states -- that allows an accident victim to collect all pain and suffering damages from the defendant most able to pay, even though the defendant may have been only incidentally at fault.

Here is a hypothetical example of what could happen under current law: An uninsured driver with no assets injures a pedestrian on a city street. The town is found to be partly to blame because a missing stop sign had not been replaced. The town, with its relatively ``deep pockets'' -- not the driver -- could be forced to pay 100 percent of the injury award.

Under the initiative's provisions, the town in the hypothetical case might still have to pay all ``actual'' damages, such as medical expenses and lost wages. But its share of noneconomic damages -- such as ``pain and suffering'' -- would be limited to its degree of fault.

Advocates of Proposition 51 -- including cities, insurance companies, manufacturers, and professional groups -- argue that a change in the deep-pockets doctrine would help curb huge verdicts. They also think it would make insurers more willing to issue policies at more affordable rates.

But opponents of the initiative don't see it doing anything to alleviate the liability insurance crunch. They argue that the insurance industry's current financial woes stem from competitive pressures and low interest on their investments, not a plethora of damage suits or problems with the courts. Changing the civil justice system, they contend, will only erode two time-honored goals of the legal process: compensating victims and deterring wrongdoers.

Proposition 51 ``is not reform. It is a rollback of rights,'' says Mr. Snyder.

The debate in California is being echoed, in varying forms and degrees of fervor, in almost every state in the land. As the insurance crisis has deepened -- affecting the ability of every one from firefighters to amusement-park operators to obtain or afford coverage -- state lawmakers have been searching for solutions. Rightly or wrongly, much of the attention has focused on changing laws governing liability suits.

At last count, more than 1,000 ``tort reform'' bills had been introduced in state legislatures, most of which would make it more difficult for accident victims to recover large sums in personal-injury cases. Several states have already adopted protection for deep-pocket defendants, similar to that Proposition 51 would provide. Others are considering far broader tort changes.

The California initiative, though, is considered symbolically important, because it would be the first voter-approved law of its kind.

In the California Legislature, some 50 bills have been put forth to modify tort laws. Their fate may hinge on what the voters say on Prop. 51.

``Its passage could very well be construed by legislators as support for reforms that cut back on frivolous lawsuits,'' says Gene Livingston, chairman of the Association for California Tort Reform.

Voter awareness of the issue is low at this point. Only 28 percent of those surveyed in a recent California Poll had even heard of the measure.