Copyright© 1999 by School Services of California, Inc.
Referendums to Overturn Major Liability Bills Gain
Speed
A broad coalition of consumer, business, and education groups, including the Schools Excess Liability Fund, is attempting to qualify two referendums for the March ballot to prevent the implementation of provisions of two trial lawyer-sponsored "third-party lawsuit" bills that opponents say will drive up the cost of insurance in both the private and public sectors.
According to the sponsors of the referendums, Consumers Against Fraud and Higher Insurance Costs, AB 1309 (Chapter 721/1999) and SB 1237 (Chapter 720/1999) will cause an increase in frivolous lawsuits and insurance premium costs in every industry, including school districts and county offices of education, as well as the private companies that school agencies contract with to provide transportation, security, and school cafeteria services. The proponents of the referendums argue that third-party lawsuits will put pressure on insurance providers to settle for more than a case is worth to avoid an even more costly lawsuit and expensive court battle.
The bills essentially invalidate the Supreme Court decision in Moradi-Shalal v. Fireman's Fund which reversed an earlier court case, Royal Globe Insurance Co v. Superior Court, that allowed a consumer to sue a third party insurer for bad faith in the handling or settlement of claims made by a party after obtaining a favorable court judgment or arbitration. According to the spokesperson for the campaign, during the nine years the Royal Globe decision was in effect, the California Judicial Council documented that the number of lawsuits filed increased substantially and a further analysis conducted by former Legislative Analyst Bill Hamm concluded automobile insurance rates increased by more than 14% during that same period.
Referendums are part of the initiative process that allow the public to approve or reject laws or sections of laws previously passed by the Legislature and signed by the Governor. A referendum measure can be placed on the ballot through a signature gathering process equal to 5% of the number of votes cast for Governor at the last election. If the petition garners enough signatures, it is placed on the next succeeding general election occurring at least 31 days after the referendum has qualified. An act that is the subject of a referendum on the ballot is automatically considered inactive until the referendum is decided at the polls.
Per the Secretary of State's office, the proponents of the referendums must gather 419,260 signatures by January 10, 2000, in order for them to qualify on the March 2000 ballot. The referendums would then require a majority vote for passage.
-- Nancy LaCasse