After a two-year hiatus, the “Golden State” has once again reclaimed its spot atop the Judicial Hellholes® list. While the state’s demotion was due to the plethora of issues that faced former-Number 1, the Philadelphia Court of Common Pleas and the Supreme Court of Pennsylvania, and not a result of reform; this year it is too hard to ignore the significant lawsuit abuse and liability-expansion occurring in California.
Proposition 65, the originally well-intentioned law enacted in 1986, is one of the plaintiffs’ bar’s favorite tools to exploit. Baseless Prop-65 litigation unjustly burdens companies that do business in California.
The money companies spend on compliance and litigation unnecessarily drives up the cost of goods for California consumers. Prop-65 subjects consumers to ridiculous warnings declaring that most everything causes cancer. It also harms small businesses that do not have the in-house expertise or means to add the necessary warnings or handle litigation.
Under Prop-65, businesses are required to place ominous warning signs on products when tests reveal the presence of even the slightest, non-threatening trace of more than 1,000 listed chemicals that state environmental regulators deem carcinogenic or otherwise toxic. Failure to comply can cost up to $2,500 per day in fines, and settlements can cost $60,000 to $80,000.
A troublesome part of the law allows private citizens, advocacy groups and attorneys to sue on behalf of the state and collect a portion of the monetary penalties and settlements, creating an incentive for the plaintiffs’ bar to pursue these types of lawsuits. Each year, they send thousands of notices to companies threatening Prop-65 litigation and demanding a settlement. Food and beverage companies are among the prime targets. In fact, California saw a shocking rise in Prop 65 pre-litigation notices to the food and beverage industry in 2020, jumping from 534 in 2019 to 1,546 in 2020. As of November 2021, plaintiffs’ lawyers had sent more than 2,600 litigation notices to businesses across the state.
This activity is primarily driven by several new, aggressive bounty hunter plaintiffs who are searching for payouts despite not suffering any injuries. A vast majority of the notices claim that plaintiffs’ lawyers or advocacy groups detected traces of acrylamide, lead, and cadmium in products, accounting for more than 85% of all notices received by food, beverage and supplement companies.
According to the California Attorney General’s office, businesses settled 435 Prop-65 claims in 2020 totaling $9.3 million. About 86% of that amount, more than $8 million, went to plaintiffs’ attorneys. There were also 191 judgments in 2020 totaling $10.7 million, with $7.2 million (67%) going to plaintiffs’ attorneys.
Through October 2021, Prop 65 activity has already exceeded the prior year. As of November 15, 2021, businesses have spent almost $11.5 million to settle 556 Prop 65 claims. As in 2020, 86% of that amount, $9.9 million, has gone to plaintiffs’ attorneys. In addition, there have been 138 Prop-65 judgments in 2021 totaling almost $9.8 million, with $5.9 million of this sum (60%) going to attorneys.
The most infamous Prop-65 case involves Bayer’s Roundup® products. California added the popular weed killer’s active ingredient, glyphosate, to the Prop-65 listing in July 2017. Regulators and scientists worldwide have deemed glyphosate safe, except for the International Agency for Research on Cancer (IARC), whose study was riddled with controversy. The single IARC report stating glyphosate is carcinogenic is in stark contrast to more than 800 studies submitted to the U.S. Environmental Protection Agency (EPA).
In June 2020, a federal judge pushed back against California’s baseless warning requirement and that decision is now on appeal to the Ninth Circuit Court of Appeals. Federal Judge William Shubb ruled that California cannot require Bayer AG to label its glyphosate-based weedkiller Roundup® as “known to the state of California to cause cancer.” Judge Shubb stated “Notwithstanding the IARC’s determination that glyphosate is a ‘probable carcinogen,’ the statement that glyphosate is ‘known to the state of California to cause cancer’ is misleading. Every regulator of which the court is aware, with the sole exception of the IARC, has found that glyphosate does not cause cancer or that there is insufficient evidence to show that it does.”
The U.S. Chamber of Commerce, California Farm Bureau Federation and others are urging the Ninth Circuit to uphold the lower court’s decision. The groups argue that ordering companies to carry “subjective and stigmatizing speech” violates First Amendment rights. The California Farm Bureau Federation observed that the availability of glyphosate is critical to the agricultural industry, not only allowing farmers to improve crop yields, but also to protect the environment. The U.S. Chamber pointed to the “highly misleading” and “heavily debated” nature of California’s mandated warnings.
The EPA also has explicitly challenged California’s designation of glyphosate as a carcinogen. The federal agency told all glyphosate registrants to remove Prop-65 warnings because the language (stating that glyphosate is carcinogenic) constitutes a false and misleading statement that violates the Federal Insecticide, Fungicide, and Rodenticide Act’s prohibition against misbranded substances.
Glyphosate Personal Injury Cases
Unfortunately, California courts rely more on plaintiffs’ attorneys than scientific experts when making these important determinations. In May 2021, a Ninth Circuit judge affirmed a $25 million verdict involving glyphosate warnings on Roundup®. The judge rejected Monsanto’s argument that federal law preempts the state law claim because the EPA had approved Roundup’s label. While many states recognize a defense based on compliance with federal standards, California does not. The court held that the EPA’s standards and instructions do not preempt state law because the EPA’s approval of the Roundup® labels do not carry the force of law, a requirement for federal preemption.
This case is on appeal to the U.S. Supreme Court. Bayer claims that the Ninth Circuit’s errors will allow companies to be severely punished for not including cancer warnings on products, even when near- universal scientific and regulatory consensus is that the product does not cause cancer. The responsible federal agency, the EPA, has forbidden such warnings for Roundup’s active ingredient, glyphosate. The Ninth Circuit’s decision would allow a company to be punished under state law for not including a label that is disallowed by federal regulators.
In August 2021, a California appellate court affirmed a trial court’s $87 million award for a couple’s claim that exposure to glyphosate gave them non-Hodgkin’s lymphoma. The lawsuit consisted of design defect and failure to warn claims under California state law, with the court again rejecting Bayer’s argument that the claims are preempted by federal law. In November 2021, the California Supreme Court denied Bayer’s request to hear the case leaving the massive verdict intact.
While California has hosted multi-million glyphosate verdicts, juries are not always willing to overlook science and pin the blame on a business for the tragedy of a person’s cancer diagnosis. In October 2021, for example, a Los Angeles jury found that the plaintiff’s family’s use of Roundup® in their yard and his school’s use of the product in its fields was not the cause of his lymphoma.
Settlement Discussions
On May 26, 2021, U.S. District Judge Vince Chhabria refused to approve a $2 billion class action settlement to cover future claims that Roundup® caused cancer because it would do little to help class members.
The $2 billion settlement would have provided up to $200,000 for each class member who was exposed to Roundup® and later was diagnosed with non-Hodgkin’s lymphoma. It would have allocated $50 million to a fund for “extraordinary” cases allowing individuals to be compensated more than $200,000.
The proposed settlement of future claims followed a separate $9.6 billion settlement by Bayer in 2020 for current Roundup® claims.
California businesses are fighting back against another Prop-65 labeling requirement for products that contain Acrylamide. Acrylamide is a chemical that can form in some foods during high-temperature cooking processes, such as frying, roasting, and baking. The chemical was added to the Prop-65 list in 1990 as a carcinogen and in 2011 as “causing reproductive and developmental effects.”
In March 2021, a California federal court granted a motion for preliminary injunction barring the Attorney General and anyone else from filing new lawsuits against businesses for not displaying Acrylamide warnings. In California Chamber of Commerce v. Becerra, U.S. District Judge Kimberly Mueller ruled that the State failed to show that the required cancer warnings are purely factual and uncontroversial. It also failed to show that Prop-65 imposes no undue burden on businesses that would have to provide the warnings. The judge said that the acrylamide warning requirement “is controversial because it elevates one side of an unresolved scientific debate” about whether consuming foods and drinks with acrylamide causes cancer. This decision is on appeal to the Ninth Circuit.
Following this decision, the Council for Education and Research on Toxins (CERT) appealed the preliminary injunction order and moved for an emergency stay, which the court granted to the extent that it bars any private enforcer from bringing new Prop-65 acrylamide actions.
In an interesting turn of events, Judge Mueller recused herself in September from the lawsuit at the urging of two advocacy groups that intervened in the case. The documents in the motion remain sealed but seem to argue that Judge Mueller has an interest in the outcome of the case based on her husband’s business interests. While stating that there is nothing requiring her recusal and she has no bias or prejudice, Judge Mueller indicated that she felt pressured by the “uncommonly aggressive, scorched earth efforts” of the advocacy groups, which included extensive personal details about the judge and her husband in their motion that have little relevance to the case. Judge Mueller indicated that she believes the recusal motion was not motivated by a fear of bias, but likely was spurred by the belief that the organizations would have a better chance of success before another judge.
“Notwithstanding the IARC’s determination that glyphosate is a ‘probable carcinogen,’ the statement that glyphosate is ‘known to the state of California to cause cancer’ is misleading. Every regulator of which the court is aware, with the sole exception of the IARC, has found that glyphosate does not cause cancer or that there is insufficient evidence to show that it does.”
Enacted in 2004, California’s Private Attorneys General Act (PAGA) has become known as the “Sue Your Boss” law. While its initial purpose was to protect workers, it has done little to help them. The plaintiffs’ bar has been the true beneficiary. “PAGA lawsuits have made it more difficult for family-owned businesses like mine to be flexible with employees,” says Ken Monroe, chairman of the Family Business Association of California and president of Holt of California.
PAGA authorizes “aggrieved” employees to file lawsuits seeking civil penalties on behalf of themselves, other employees, and the State of California for labor code violations. Many PAGA lawsuits revolve around technical nitpicks, such as an employer’s failure to print its address on employees’ pay stubs, even though the address was printed on the paychecks themselves.
Three quarters of the penalties paid by non-compliant employers go to the state’s Labor and Workforce Development Agency while only 25 percent go to the “aggrieved employees” and their lawyers who take a third or so of that. In some cases, the plaintiffs’ lawyers receive even more.
In February 2021, an intermediate court held that venue in PAGA cases is not limited to the individual employee’s location because he or she is suing on behalf of all employees at all locations. In Crestwood Behavioral Health, Inc. v. Superior Court, the plaintiff filed a PAGA claim against her former employer in Alameda County. The plaintiff worked in Solano County and the defendant’s principal place of business was Sacramento County. The court allowed the case to proceed because the defendant owned two additional facilities in Alameda County. Plaintiffs’ lawyers will abuse this venue provision to bring PAGA claims in courts viewed as most favorable to plaintiffs.
California courts also have allowed plaintiffs to circumvent arbitration clauses by refusing to enforce them in PAGA claims. In July 2021, the California Supreme Court denied Uber’s petition to review whether companies can require workers to arbitrate PAGA claims. The Court did not give any reason for denying review, leaving the issue to lower courts. Courts across the state have ruled that because employees act as agents of the state when filing PAGA cases, pre-dispute arbitration provisions in employment contracts are invalid. The state is not a party to the employment contract, and therefore, PAGA litigation is not bound by the contract provisions.
Uber has argued that the Federal Arbitration Act (FAA) and U.S. Supreme Court decisions interpreting that law do not permit state courts to disregard agreements to arbitrate disputes, including claims brought under PAGA.
Good News
In May 2021, the Ninth Circuit held in Magadia v. Wal-Mart Associates, Inc. that plaintiffs must have experienced an actual injury from the alleged violation of the labor code to pursue a PAGA action in federal court. Previously, plaintiffs would bring PAGA claims and argue they had standing to sue because they were standing “in the shoes of the State” as they do in what is known as a qui tam action. Following this decision, a PAGA plaintiff must show actual Article III standing to bring a claim, and a plaintiff’s standing to maintain another claim does not establish standing to maintain a separate PAGA action.
The Ninth Circuit found that PAGA differs from the traditional qui tam theory because PAGA actions implicate the interests of third parties other than the State. It reached this decision in a case in which a plaintiff brought a class action against Walmart alleging four separate causes of action: unpaid meal break premiums, inaccurate itemized wage statements, unfair and unlawful business practices, and PAGA violations. The district court awarded over $101 million in damages and civil penalties for the alleged wage statement violations, from which Magadia had suffered. The district court also awarded $70,000 in PAGA civil penalties based on meal period premium violations, which Magadia did not experience but still brought on behalf of other employees.
The Ninth Circuit reversed the judgment and award for both the wage statement violations and the meal period premium judgement. The Court held that Magadia lacked standing to bring the PAGA claim because he himself experienced no such violation. Instead of grouping the meal period premium claim with the wage statement claim, the Court treated the two actions as separate.
In 2020, California again led the country with the most federal lawsuits claiming that businesses violated standards under the Americans with Disabilities Act (ADA) that are intended to ensure that public places are accessible to everyone but have been abused by serial plaintiffs and certain attorneys. That year, lawyers filed 5,869 of these ADA cases in California’s federal courts. New York, the next highest state, had less than half this amount, 2,238. California’s 2020 ADA filings broke the state’s record number of lawsuits by 22%, a figure that is especially shocking in a year where there was a national decrease in ADA lawsuits – likely due to the pandemic. Through June 30, 2021, California led all states in ADA lawsuit filings with 3,340, more than half of the 6,304 filed nationally.
California also is seeing a jump in website accessibility lawsuits, going from 10 in 2018 to 120 in 2019 to 223 in 2020. Serial plaintiffs are specifically targeting California hotels, alleging that the accessibility information provided on reserva- tion websites is not sufficiently detailed for the plaintiffs to decide whether the hotel meets their accessibility needs. Among the details that the lawsuits claim should be included are the dimensions of space under accessible desks and sinks. Seven plaintiffs, all represented by the same law firm, have filed over 450 lawsuits.
In California, penalties for ADA violations are much higher due to the state’s Unruh Civil Rights Act, which provides for a fine of $4,000 per violation, a fine other states do not have, plus attorneys’ fees. Often these so-called “violations” are as minor as a mirror that is an inch too high or a sidewalk or parking lot that is angled one degree too much.
Small business’ efforts to fight back against the abuse suffered a disappointing setback when the California Supreme Court refused to review a case brought by the Riverside District Attorney that was dismissed by lower courts.
In that instance, Riverside County District Attorney Mike Hestrin sued multiple attorneys in April 2019, alleging they engaged in ADA “shakedowns” of small businesses. The complaint claimed that the attorneys violated the California Unfair Competition Law (UCL) and false advertising laws. The lawyers sought to abuse the system by seeking out minor ADA violations to make easy money at the expense of small businesses. The Riverside Superior Court dismissed the case, holding that litigation privilege precluded this suit.
The Civil Justice Association of California (CJAC) filed an amicus brief in support of the District Attorney. In it, CJAC argued that district attorneys have exclusive authority to bring UCL claims against those who file “shakedown” lawsuits. The complaints were “boilerplate,” and individuals on whose behalf the claims were filed often did not use any of the architectural accommodations such as ramps, automatic doors, or handicapped parking spots. In most instances, plaintiffs did not even visit the business at issue in a suit.
Unfortunately, in December 2020, the Court of Appeals affirmed the dismissal. The court agreed with the lower court’s finding that California’s litigation privilege applied to the District Attorney’s UCL claim and made no material findings on the allegations themselves. In April 2021, the California Supreme Court denied a petition for review.
In November 2020, California voters delivered a huge victory for Rideshare services like Uber and Lyft and those who rely on these services for affordable transportation. Proposition 22 passed, which granted ride- hail and delivery companies an exemption from treating its drivers as employees, as required by A.B. 5.
A.B. 5, enacted in September 2019, codified the California Supreme Court’s adoption of what is known as the “ABC Test,” a more stringent standard for determining whether a person is an employee or independent contractor. The bill amended the law by presuming workers are employees unless the business can prove three elements. The law specifically targeted the gig economy like Uber, Lyft and DoorDash that use digital platforms to connect workers with customers.
The Prop 22 victory was short-lived, however. In August 2021, Alameda County Superior Court Judge Frank Roesch ruled that Prop 22 is unconstitutional and unenforceable. Although Prop 22 passed with 59% of the vote of California citizens in November, Judge Roesch said that the measure only serves to protect the economic interests of the companies rather than California citizens and workers.
Lawsuit abuse under California’s Song-Beverly Consumer Warranty Act, otherwise known as the California lemon law, has reached a fever pitch and judges are calling for the Legislature to step in.
While automobiles have become more reliable and the frequency of problems with them have generally decreased over the past decade, lawsuits under California’s Song-Beverly Consumer Warranty Act have actually increased.
The Song-Beverly Consumer Warranty Act clearly defines the obligations of consumer goods manufacturers. Under the law, a manufacturer guarantees that a product is in order when sold. Should a product fail in utility or performance, the manufacturer must repair or replace the product or make restitution to the buyer in the form of a purchase refund. The Act also limits punitive damages to no more than twice the amount of actual damages.
The intent of the law was to ensure manufacturers would repair, replace, or repurchase a consumer’s defective vehicle as quickly as possible. However, plaintiffs’ lawyers have learned to exploit loopholes in the law and create windfalls for themselves at the expense of a fair resolution for consumers. The law provides an incentive for attorneys to pursue litigation even when companies make a reasonable offer and consumers may be inclined to settle. This draws out the process for consumers and delays the time it takes to reach a fair resolution. The costly litigation also drives up the price of vehicles in the state. The true winners of the prolonged litigation are the plaintiffs’ lawyers. By dragging out a case, they run up hefty legal fees on top of the statutory lemon law fee entitlement.
In May 2021, an intermediate court held that “it is an error of law for the trial court to reduce or deny an award of attorney’s fees in a civil rights or public interest case based on a plaintiff’s rejection of a [settlement] offer when the ultimate recovery has exceeded the rejected offer.” In Reck v. FCA, a couple sued the automaker under California’s lemon law for a defective Chrysler. FCA offered to settle at $81,000, including reasonable attorney’s fees, which amounted to $15,000. Reck’s counsel advised him to reject the offer, and the case went to trial. On the second day of trial, the parties settled at $89,500, only an $8,500 increase from the initial offer, but the attorneys’ fees requested skyrocketed from $15,000 to $187,247 – a $172,247 increase. Despite the straightforward nature of the case, plaintiff’s counsel added a second law firm before trial bringing the total number of lawyers involved in the case to 13.
The trial court found the fees and additional lawyers to be excessive and did not require the additional fees to be paid. It limited attorneys’ fees to those incurred up through the initial rejection along with certain fees included after the settlement, totaling $30,237. The plaintiffs appealed.
The appellate court remanded the decision, ordering the trial court to determine a reasonable attorneys’ fee for actual hours expended. While the court did not approve the initially requested $187,247, it said the trial court erred by categorically denying all attorneys’ fees incurred after the initial offer so long as the final settlement beats the rejected offer, no matter how small the difference may be.
This decision will incentivize plaintiff’s attorneys to advise their clients to reject reasonable settlement offers and go to trial. Attorneys can rack up fees and over-litigate simple cases, understanding that so long as the resulting settlement increases by any amount, they will likely receive higher fees.
In Spitzfaden v. FCA US LLC, plaintiffs’ lawyers sought $148,826 in fees, plus costs of almost $35,000. The accepted settlement was $110,000 and the car at issue cost $32,000 (brand new). Judge Timothy Taylor, the judge overseeing the case, repeatedly stated that California’s lemon law system is abusive and caters to plaintiffs’ attorneys. He found the fees to be “clearly out of proportion to the results obtained” but argued that other courts have made it clear that trial courts lack the authority to rein in the system. He called on the legislature to amend the law to ensure the reasonableness and legitimacy of attorney’s fees and costs.
Another common maneuver aimed at maximizing legal fees involves the practice of adding multiple layers of lawyers and law firms into a lemon law case. Given the simple, fact-centric nature of the litigation, this layering serves only to drive up attorney fees.
In 2019, plaintiffs-side consumer law firms filed two suits in Los Angeles County against their high-profile former co-counsel, Knight Law Group. The lawsuits — Hackler Daghighian Martino & Novak PC v. Knight Law Group, and Law Offices of Michael H. Rosenstein LC v. Knight Law Group LLP — spotlight client-sharing arrangements and fee-splitting practices employed in the world of high-volume lemon law cases. The cases are scheduled to go to trial in February and April 2022.
Knight Law Group describes itself as one of the “leading law firms in California practicing in the area [of] consumer litigation.” Docket data certainly supports their claim: Knight has filed more than 4,560 lemon law cases in the last five years, though it often associates with others to take them to trial.
The image painted by the other law firms in their suits is deeply troubling. They describe a fee-generating arrangement applied to hundreds of cases, in which Knight “focused on marketing and operations” while tapping other firms to perform most case development and trial tasks. Disturbingly, this alleged system promotes inefficiency, encourages misleading timekeeping practices and makes pursuit of fees the centerpiece of this “consumer” litigation.
Although the Los Angeles lawsuits describe using two firms, court filings show Knight lemon law cases commonly involve three or even four law firms entering appearances for a plaintiff. The U.S. District Court for the Central District of California recognized the obvious wastefulness of this practice in Luna v. FCA US LLC in 2020: “[A]s a result of having twelve attorneys from two firms billing on this matter, the billing records are riddled with duplicative inter-office communications and entries reviewing prior filings and case materials.”
“The lemon law plaintiff’s bar has been emboldened to over-litigate cases the manufacturers regularly seek to settle, with no benefit to the injured consumer. Indeed, the over-litigation for purposes of padding the fee application can actually injure the consumer by delaying resolution of the case and the buy-back of the vehicle.”
California once again challenged New York for the most “no-injury” consumer class actions targeting the food and beverage industry. These lawsuits often claim that some aspect of a product’s packaging or marketing misleads consumers, even though it is likely to have made no difference in anyone’s decision to buy a product.
In 2020, California came in second with 58 new food and beverage class action filings. New York had 107 and the next closest state, Missouri, only had 13. California had the most class actions targeting dietary supplements with 25. Overall, California hosts about 25% of the nation’s food litigation.
In June 2021, U.S. District Judge William Orrick approved a $15 million settlement ending a class action against Post Foods LLC. The lawsuit, filed in 2016, alleged that Post cereal labels led consumers to believe that the cereals were healthier than they really were. By indicating truthfully that the products contained “no high fructose corn syrup” and were “Made with Natural Wildflower Honey,” the suit claimed, consumers would over- look that cereals such as Honey Bunches of Oats, Honeycomb, and Waffle Crisp, contain added sugar.
The details of the settlement expose the lucrative nature of these lawsuits for the plaintiffs’ bar. The plaintiffs’ attorneys received $5.5 million in fees, more than a third of the total award, plus nearly $1 mil- lion as reimbursement for litigation expenses. Meanwhile, the lead plaintiffs were awarded $5,000 each, and consumers each received a few dollars if they completed a claim form before the deadline.
There are limits, however, for how much money courts will entertain awarding lawyers in these creative but often ridiculous lawsuits. For example, in June 2021, the Ninth Circuit rejected a proposed settlement of a class action alleging Wesson Oil did not qualify as “100% natural” because it allegedly contained ingredients made from GMOs. In that instance, the lawyers would have received seven times more money in fees and costs than the class members they purportedly represented. The appellate court ruled that a settlement that awards $5.85 million to attorneys in fees and nearly $1 million in costs, but sets aside just $1 million to be divvied up among 15 million consumers is not fair, reasonable, or adequate. In fact, the settlement was premised on the lawyers, “virtually worthless” achievement of getting a food maker to agree to stop using labeling on a product it no longer owned. The Ninth Circuit summed up the case, Briseño v. Henderson, as “How to Lose a Class Action Settlement in 10 Ways.”
Traditionally, a viable claim for public nuisance involved instances in which a property owner’s activities unreasonably interfered in a right that is common to the public, usually affecting land use. Typical cases include blocking a public road or waterway or permitting illicit drug dealing or prostitution on one’s property. The usual remedy in a public nuisance claim is to require the party engaged in the improper activity to “abate” or stop the nuisance. California is looking to expand public nuisance law through the courts, however, to harm associated with public health crises and climate change.
In June 2021, the United States Supreme Court refused to intervene in the legal battle waging between California municipalities and the energy sector over climate change, leaving intact a Ninth Circuit decision that the litigation belonged in state court.
The cities of Oakland and San Francisco filed a public nuisance lawsuit against BP for its role in causing climate change. The local governments are trying to make energy companies pay for climate- change-related infrastructure projects. The case had been transferred to federal court where U.S. District Judge William Alsup dismissed the suit in June 2018. “[O]ur industrial revolution and the development of our modern world has literally been fueled by oil and coal,” he observed. “Having reaped the benefit of that historic progress, would it really be fair to now ignore our own responsibility in the use of fossil fuels and place the blame for global warming on those who supplied what we demanded?”
Judge Alsup correctly recognized that the limited role of the judiciary is to solve disputes between par- ties before the court, not to develop national policy. It is the responsibility of the legislative and executive branches to create comprehensive public policy solutions for our nation’s most pressing issues.
On appeal, the Ninth Circuit missed an opportunity to push back on activist attorneys’ attempts to improperly expand public nuisance law. Unfortunately, the Court remanded the case to state court, reasoning that the cities’ claims arose under state law, and therefore, federal courts did not have jurisdiction.
This summer a landmark trial took place in Orange County Superior Court before Judge Peter Wilson. The City of Oakland, Los Angeles County, Orange County and Santa Clara County sued four drug makers under public nuisance law, alleging that pharmaceutical marketing caused widespread opioid abuse. The municipalities sought $50 billion from the drug makers, including Johnson & Johnson and Endo Pharmaceuticals.
Motley Rice represented the cities and counties, as private contingency fee lawyers from similar litigation brought across the country.
On November 1, Judge Wilson tentatively rejected the allegations finding the plaintiffs failed to prove the pharmaceutical companies created an actionable public nuisance for which the defendants are legally liable.
Judge Wilson said that “there is no evidence to show that the rise in prescriptions was not the result of medically appropriate provision of pain medications to patients in need.” Without such evidence, the government plaintiffs would have to show that the drug makers’ contributions to the opioid crisis were more than “negligible or theoretical,” which they failed to show.
Judge Wilson said his legal findings “are in no manner intended to ignore or minimize the existence and extent of the ongoing opioid crisis,” while noting that the drug makers do not dispute the existence of the crisis. J&J echoed Judge Wilson in its statement following the ruling, saying it “recognize[s] the opioid crisis is a tremendously complex public health issue, and we have deep sympathy for everyone affected.”
The plaintiffs’ attorneys said the plaintiffs plan to appeal the judgement.
Americans are rightly concerned about the opioid crisis. The reality is that this complicated problem requires a comprehensive solution. Our civil justice system exists to resolve disputes—not to perform the functions of legislators and regulators. Broader public policy challenges should be addressed by those entrusted with such responsibilities. In the case of opioids, that includes Congress, state legislators and federal and state public health officials and regulators. They are obliged to serve and protect the public, and they are accountable to us all. By contrast, lawyers operating on a contingency fee basis are driven by a profit motive.
“Having reaped the benefit of that historic progress, would it really be fair to now ignore our own responsibility in the use of fossil fuels and place the blame for global warming on those who supplied what we demanded?”
In 2020, the California Supreme Court refused to review Bolger v. Amazon LLC, a “first-of-its-kind” decision that allowed Amazon.com to be held strictly liable for products sold on its site.
In that case, a customer purchased a laptop battery from a third-party seller that exploded, causing severe injuries. The plaintiff sued both the third-party seller and Amazon. Amazon argued that it only pro- vides services and is not a seller, manufacturer, or previous owner. In many cases, Amazon never handles the product at all and should not be found liable for alleged defects in such products. Following traditional product liability principles, the trial court held that Amazon could not be strictly liable because it was not the product’s seller. A state appellate court later reversed the trial court and found that Amazon put itself in the stream of distribution, and therefore, should be treated the same as a brick-and-mortar retailer.
In May 2021, the California Court of Appeal used the Bolger case as precedent, holding Amazon liable for injuries caused by an allegedly defective hoverboard sold by a third-party seller.
These decisions abandon the principle that strict liability applies only to those who design, make, or sell a product. Aside from courts in California and a federal appellate court interpreting Pennsylvania law, most courts have not expanded strict liability law to third-party sellers. Recent examples include in the Supreme Courts of Ohio in 2020 and Texas in 2021.
California remains one of a few states not to address COVID-19 liability concerns for businesses and individuals on the frontlines during the pandemic. Two thirds of states have enacted liability protections to date, and while a bill was introduced in California in 2021, legislators refused to grant it a hearing. California small businesses continue to be exposed to potential liability for COVID-related injuries and illnesses, even if the businesses follow health and safety protocols.
In place of passing much-needed reform, the legislature focused intently on expanding liability in a variety of ways.
Under California’s longstanding law governing survival actions, a personal representative of an estate can recover economic damages on behalf of a person who dies because of someone else’s negligent or wrongful act. These economic damages are limited to actual expenses incurred by the decedent up until their death, including loss of wages and medical bills, as well as punitive damages meant to punish the wrongdoer. The current statute explicitly states that these recoverable damages “do not include damages for pain, suffering, or disfigurement,” because those damages are personal to the decedent.
But after California’s passing of S.B. 447, an estate can now recover for pain and suffering, loss of consortium, emotional distress, and disfigurement on behalf of the decedent. In a state with tort damages already out of control, this bill’s enactment will lead to awards in survival actions skyrocketing.
Opponents argued that the bill will essentially allow plaintiffs’ attorneys to double dip into damages because the statute already allows punitive damage awards, with some suggesting plaintiffs’ attorneys pushed the bill just so they could raise case valuations and settlement demands.
The new law will seriously impact California residents as well, with insurance premiums likely taking a steep rise once the effects of the bill set in. California insurance policies do not cover punitive damages, and the increased risk that insurers must cover pain and suffering awards in survival actions will lead to premiums that dig even deeper into their policyholders’ pockets.
In August 2021, the California Supreme Court denied review in Phipps v. Copeland Corp., a lawsuit in which an HVAC technician claimed that his exposure to asbestos while working in the company’s compressors caused his mesothelioma. The jury found Copeland, the only defendant remaining by the end of the trial, 60% responsible for the plaintiffs’ $25 million in noneconomic damages. Copeland appealed, arguing substantial evidence did not support the jury’s allocation of fault in light of the plaintiff’s exposure to asbestos from many other compressor manufacturers and others, and that the award was excessive. An appellate court affirmed the judgment.
The Civil Justice Association of California (CJAC) urged the state supreme court to review the case, particularly on the issues of comparative fault and jury discretion in increasing a defendant’s share of damages. The appellate court held that the company did not introduce enough evidence of the fault attributable to other parties to overturn the jury’s apportionment. The court also held that a jury may increase a defendant’s share of damages above its causal contribution to the injury based on its “more culpable” state of mind.
The appellate court’s opinion conflicts with precedent over who bears the burden in apportioning fault. By raising the defendant’s burden of proof, the court’s opinion puts defendants at risk of having to pay more than their fair share of noneconomic damages. The decision will likely have repercussions beyond asbestos cases, potentially affecting environmental, products liability, and construction defect litigation by neutralizing effective apportionment.
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