Anti-arbitration bills will cost consumers, enrich trial lawyers

Monday, March 19, 2018

Anti-business extremists at the State Capitol would have Coloradans believe that giving up their "right to sue" in exchange for a more efficient, less adversarial process of dispute resolution is somehow playing into the hands of "big corporations." 

In fact, consumers and businesses alike have often found arbitration to be a better way to resolve disputes than long, drawn out lawsuits in which the only real winners are the lawyers who rack up hundreds of billable hours.

House Bills 1261 (sponsored by Rep. Mike Weissman, D-Aurora) and 1262 (Reps. Dominique Jackson, D-Aurora, and Dylan Roberts, D-Eagle) purport to bring "fairness" and "transparency" to arbitration proceedings.

In reality, they would make Colorado's arbitration system just as big a mess as our state's system of civil courts.

 


 

Many business contracts require arbitration as a means to settle disputes, rather that lawsuits. That's a choice that businesses and consumers deserve to make for themselves - without unnecessary meddling by politicians.

Arbitration can be cheaper and faster for both parties in a dispute, reducing costs for the largest driver of litigation costs - attorney fees. Arbitration can also be more flexible, less complex, more private and less hostile than endless litigation.

Instead, HBs 1261 and 1262 will make arbitration more difficult and more expensive by inviting litigation against arbitrators.

These bills are also likely to erode modest gains made by the Legislature last year to make it easier for homeowners and builders to resolve disputes over home construction problems and to reduce litigation costs that drive up home prices.

HB 1261 creates new standards for "impartiality" in an environment in which the Colorado Uniform Arbitration Act, case law, Colorado Rules of Professional Conduct, and private contractual standards already establish ethical requirements on arbitrators. This isn't solving a problem. Instead, it's creating one!

HB 1262 creates disclosure requirements that violate contractual confidentiality provisions that typically benefit both parties in a dispute. The bill also creates a cloud over any contract containing an arbitration clause because, U.S. Supreme Court precedent strongly suggests, it will be preempted by the Federal Arbitration Act.

It is important to note that judges and courts do police arbitrator impartiality by reviewing arbitration awards. A party that believes an arbitrator to be biased can ask a court to vacate the award. Ironically, these protections do not apply for judges who preside over lawsuits.

These bills would harm consumers by making arbitration more expensive, thereby leaving consumers at the mercy of trial lawyers and a costly, over-crowded civil litigation system.


 

Supreme Court upholds limits on wage claims, backing CCJL position

Monday, March 12, 2018

Colorado Supreme Court unanimously ruled that claims for disputed wages must be filed within the statute of limitations (either two or three years) and that the clock starts ticking "on the date that each set of wages first became due and payable—not on the date of separation."

The opinion, written by the court's newest member, Justice Melissa Hart — Yes, we were pleasantly surprised! — largely echoes the salient points submitted by CCJL in a friend of the court brief, authored by Chris Ottele and Sonia Anderson of Husch Blackwell, and which was joined by the Denver Metro Chamber and Building Jobs 4 Colorado.

As summarized by a blog:

The plaintiffs in Hernandez v. Ray Domenico Farms, Inc.had sought to exploit an unusual feature of the Colorado Wage Claim Act (the Wage Act). It allows employees to bring suit for unpaid wages under two separate provisions, depending on whether the employee is currently employed or no longer employed. Plaintiffs in this case had reasoned that the provision that applies to former employees revived claims that were time-barred under the provision that applies to current employees. If true, former employees could bring suit for unpaid wages dating to the beginning of their employment, possibly 20 or 30 years ago. 

[...]

On behalf of the Colorado Civil Justice League and other business interests, Husch Blackwell attorneys filed the only amicus brief in support of the employer. The Supreme Court’s opinion agreed with each of the positions set forth in Husch Blackwell’s amicus brief and disagreed with the briefs of the plaintiffs, their amici and, with respect to at least one issue, even the defendant employer.

Asbestos transparency advances in Senate

Monday, March 05, 2018

There's an unseemly underside to some of those mesothelioma commercials that dominate late-night television. It hasn't come to Colorado yet, and if the Colorado General Assembly passes Senate Bill 123 (sponsored by Sen. Jerry Sonnenberg), it never will. 

Mesothelioma is a cancer that develops from asbestos fibers that become lodged in the lungs. Because it usually goes undiscovered until it has become advanced, it is almost always fatal.

While it is just to feel sympathy for those suffering from mesothelioma and to want them to receive timely compensation, the way some asbestos plaintiffs lawyers abuse the asbestos claims process is not only unjust - it also endangers the ability of future victims to receive adequate compensation.


Those suffering from mesothelioma can seek relief in two ways: a lawsuit against manufacturers of asbestos products that are still in business or a claim against one or more "asbestos trusts" established during bankruptcy proceedings to pay claims against insolvent companies.

Many injured parties may have legitimate claims against both. However, as more primary companies declared bankruptcy, plaintiffs attorneys began focusing lawsuits against secondary users of asbestos, including those whose products were less dangerous.

One such company, Garlock Sealing Technologies, regularly settled for very small amounts while the primary companies were still solvent. But when the trusts were established, Garlock and other secondary companies suddenly saw claimants argue that they had been exposed only to these secondary products and not to those manufactured by the likes of Owens Corning or Johns Manville.

Garlock's lawyers smelled a rat and, thanks to an inquisitive judge, uncovered a scam in which plaintiffs lawyers first sued solvent companies, claiming exposure only to one or two products, then after reaching a settlement, they applied to the asbestos trusts, now claiming exposure to many other products which were manufactured by now-bankrupt companies.

Bankruptcy Judge George R. Hodges examined 15 such cases and found that in "each and every one" evidence of exposure to other products was withheld by the plaintiffs' attorneys.

"It was a regular practice by many plaintiffs' firms to delay filing Trust claims," Hodges wrote. He found that, on average, plaintiffs against solvent companies disclosed only about two exposures to bankrupt companies' products, but after settling with Garlock, those same plaintiffs subsequently made claims against 19 of the trusts.

Because exposure happened decades ago, "there's no way for defendants to get information on exposure (to asbestos) except from claimants," said Phil Goldberg, who testified for the U.S. Chamber of Commerce in favor of SB 123.

SB 123 requires claimants to first file trust claims before litigating against existing companies in state courts and to provide the same information to each.

"The fastest way to pay plaintiffs is to file trust claims first," Goldberg testified. "The only reason to file civil claims first is to game the system."

While no such abuses are yet known to have occurred in Colorado, we should institute safeguards before these deceptive practices undermine the integrity of our judicial system.

 

Legislators chosen for 'Common Sense' Awards

Tuesday, September 19, 2017

DENVER — Colorado Civil Justice League has announced winners of its Common Sense in the Courtroom Awards, given to state legislators who have demonstrated a commitment to curtailing lawsuit abuse. 

Awards will be presented at CCJL’s Legislative Awards Luncheon on Friday, October 20, at the Denver Four Seasons. Tickets are available at www.CCJL.org.

CCJL is the only organization in Colorado exclusively dedicated to stopping lawsuit abuse while preserving a system of civil justice that fairly compensates legitimate victims.

“Common Sense in the Courtroom requires justice for those who have been wronged, balanced by fairness for those who may be wrongfully accused,” said CCJL executive director Mark Hillman.

A highlight of the 2017 legislative session was the passage of House Bill 1279 which addressed construction litigation by ensuring that homeowners are fully informed of costs and risks of litigation and given a formal voice in determining whether to initiate a lawsuit to resolve alleged defective construction.

“The most encouraging development this year is the growing coalition of legislators who value economic growth for all Coloradans above the narrow interests of personal injury lawyers and a handful of plaintiffs,” Hillman added.

"At CCJL, we are grateful for the bipartisan support of legislators who understand the importance of an efficient and balanced court system to our state's economy," said Jeff Weist, CCJL legislative director.

Common Sense in the Courtroom Award recipients include:


  • Representatives Jeni Arndt (Fort Collins), Jon Becker (Fort Morgan), Susan Beckman (Littleton), Perry Buck (Greeley), Terri Carver (Colorado Springs), Marc Catlin (Montrose), Phil Covarrubias (Brighton), Justin Everett (Littleton), Matt Gray (Broomfield), Leslie Herod (Denver), Edie Hooton (Boulder), Steve Humphrey (Eaton), Tracy Kraft-Tharp (Arvada), Lois Landgraf (Fountain), Polly Lawrence (Douglas County), Tim Leonard (Evergreen), Kimmi Lewis (Kim), Larry Liston (Colorado Springs), Paul Lundeen (Monument), Hugh McKean (Loveland), Clarice Navarro-Ratzlaff (Pueblo West), Patrick Neville (Franktown), Dan Nordberg (Colorado Springs), Bob Rankin (Carbondale), Kim Ransom (Douglas County), Lori Saine (Firestone), Lang Sias (Arvada), Dan Thurlow (Grand Junction), Don Valdez (La Jara), Kevin Van Winkle (Highlands Ranch), Yeulin Willett (Grand Junction), David Williams (Colorado Springs), Jim Wilson (Salida) and Cole Wist (Centennial).
  • Senators Randy Baumgardner (Hot Sulphur Springs), John Cooke (Greeley), Don Coram (Montrose), Larry Crowder (Alamosa), Bob Gardner (Colorado Springs), Kevin Grantham (Canon City), Owen Hill (Colorado Springs), Chris Holbert (Parker), Beth Martinez Humenik (Thornton), Cheri Jahn (Wheat Ridge), Kent Lambert (Colorado Springs), Dominic Moreno (Commerce City), Kevin Priola (Brighton), Ray Scott (Grand Junction), Jim Smallwood (Castle Rock), Jerry Sonnenberg (Sterling), Jack Tate (Centennial), Nancy Todd (Aurora), Angela Williams (Denver), Rachel Zenzinger (Arvada).
  •  

    Tickets on sale now for Legislative Awards Luncheon

    Thursday, September 07, 2017

    DENVER - Tickets are now available for CCJL's Legislative Awards Luncheon on Friday, Oct. 20, at the Denver Four Seasons, where Colorado's business community will recognize state lawmakers for their commitment to "Common Sense in the Courtroom." 

    Featured speaker at this year's event is Malini Moorthy, head of global litigation for Bayer Corporation, who will speak about "The Mass Tort Machine." Moorthy is a nationally recognized expert in civil justice reform and complex litigation in the life sciences industry. Last year, she was named a Visionary Leader in Litigation by Inside Counsel magazine. She was also recognized by the National Center for Law and Economic Justice for her extraordinary service to the legal profession and nonprofit community.

    Prior to joining Bayer, Malini headed the Civil Litigation Group at Pfizer where she and her team were awarded in-house Counsel Litigation Team of the Year by Benchmark Litigation. Earlier, she worked as a litigation associate at law firms in the U.S. and Canada, including the New York office of Salans, now known a Dentons.

    Tickets can be purchased HERE.

     

    General Assembly gets 'B' grade for 2017

    Monday, May 22, 2017

    With one notable exception, the Colorado General Assembly's 2017 session preserved the status quo - which isn't the worst outcome, given the potential of certain bills to wreak havoc upon Colorado's litigation climate.

    So, Colorado Civil Justice League rates the Legislature's performance as a "B," with it's passage of House Bill 1279, addressing construction litigation, as the notable achievement.

    Sponsored by Rep. Alec Garnett (D-Denver), Rep. Lori Saine (R-Firestone), Sen. Jack Tate (R-Centennial) and Sen. Lucia Guzman (D-Denver), HB 1279 was the product of many hours of work including a much larger coalition of lawmakers from both parties, as well as advocates representing homeowners and homebuilders.

    While not as ambitious as we might have hoped, the bill nonetheless moves the ball forward by ensuring that homeowners are fully informed of costs and risks and given a formal voice in determining whether to initiate litigation to resolve alleged defective construction.

    Anything that makes it more difficult for a cadre of plaintiffs attorneys to steamroll HOA members down the path toward litigation is an improvement over the status quo, which has construction of multi-family owner-occupied projects crawling at a snail's pace.

    The bill didn't specifically address affordability of contractor's liability insurance or the rampant litigation that ensues between developers and subcontractors when a construction lawsuit is filed. One school of thought says that HB 1279 will help with insurance affordability by making claims more predictable for underwriters. A more skeptical outlook is that the cost of litigation will continue to drive up insurance costs until those issues are specifically addressed. Only time will tell which viewpoint is more accurate.

    Building on the success of HB 1279, the most encouraging development from this session is the growing coalition of legislators who value economic growth for all Coloradans above the narrow interests of personal injury lawyers and a handful of plaintiffs.

    Bipartisan votes were instrumental in advancing worthwhile bills or defeating others that invited further lawsuit abuse.

    The Senate passed - with bipartisan support - a package of bills to help consumers control the rising cost of automobile insurance, only to see those bills fail in the House. However, key Representatives stood up to vote against, and sometimes defeat, destructive legislation that would have eroded Colorado's safeguards against runaway jury awards for "pain and suffering" or other non-economic damages and subjected schools, nonprofits, businesses and local governments to increased litigation for various claims.

    A complete list of bills related to Colorado's civil justice system appears below, followed by a link to each bill's summary and legislative history.

     

    Ban-the-box still bad policy, despite improvements

    Monday, April 24, 2017

    Significant changes to this year's version of "Ban the Box" (House Bill 1305) have reduced the specter of litigation by potential employees, and for that sponsors Rep. Mike Foote (D-Lafayette) and Rep. Jovan Melton (D-Denver) deserve credit.

    However, businesses use questions about criminal history for a variety of reasons - not simply because they don't want ex-cons in the workplace.

    Employers ask for criminal history to protect employees and customers and to avoid litigation. Employers often owe a duty of reasonable care to both employees and customers to avoid personal harm to either. Courts often hold employers liable for criminal or intentional harm caused by an employee when, in they eyes of a jury with 20/20 hindsight, it was "reasonably foreseeable" that some type of harm or injury could result from hiring or retaining an employee with a criminal history.

    That's why employers use questions about criminal history to fulfill their duty of care to other employees and to customers. And that's why Colorado Civil Justice League remains OPPOSED to HB 1305.

     

    House advances construction lawsuit reform, nixes homeless right to sue

    Saturday, April 22, 2017

    House State, Veterans and Military Affairs Committee rubber-stamped a bipartisan agreement to make it more difficult for trial lawyers to bullrush homeowner associations into construction defects lawsuits, passing House Bill 1279 (SUPPORT) on a unanimous vote after adopting several amendments.

    The bill would require a majority of homeowners in an association to give written consent before a construction lawsuit could proceed. Homeowners would also be fully apprised of the potential costs and risks of litigation. Provisions mandating mediation or arbitration were deleted from the bill.
     
     
    As a result, Colorado law will continue to allow plaintiffs and their attorneys to collect "phantom damages" on medical bills that do not reflect the true cost of treatment and to receive 8% or 9% interest per year on those claims.
     
    Ironically, one of the witnesses arguing against SB 181 acknowledged that his medical finance business would cease to exist if clients could no longer sue for phantom damages.
     
    Simultaneously, House Local Government Committee endured a 10-hour hearing on a single bill, Rep. Joe Salazar's (D-Thornton) perennial "Right to Rest Act" - aka, the Homeless Right to Sue.
     
    Citing the potential for expansive litigation against local governments, Reps. Paul Rosenthal (D-Denver) and Matt Gray (D-Broomfield) courageously voted against the bill, joined by the committee's six Republicans.
    Representatives of cities testified that the bill would strike down bans on "urban camping," thereby depriving the public of safe use of city parks and denying customers access to businesses.
     
    Unpersuaded by concerns of people who want to enjoy clean parks funded by taxpayers and to shop safely, Rep. Salazar took to social media to condemn his own colleagues for not marching in lockstep with his prescription.

     

    House hearings hold key to lawsuit reforms

    Wednesday, April 19, 2017

    It’s a pivotal week in House committees for several bills - some that would make common-sense reforms to lawsuits in Colorado, others that would create new causes of litigation. 

    On Wednesday, House State, Veterans and Military Affairs considers several bills aimed at curtailing Colorado’s lawsuit tax:

    Senate Bill 181 (sponsored by Rep. Yeulin Willett, R-Grand Junction) would allow juries to hear evidence that reimbursement costs for medical expenses were actually less than the amount printed on bills from medical providers. The difference between the larger billed amount and the lesser paid amount are “phantom damages” which no one actually owed and no one ever paid. Juries are smart enough to sort this out, if only courts are required to give them all of the facts.

    Senate Bill 191 (by Rep. Willett and Rep. Cole Wist, R-Centennial) changes the interest rate on judgments from 8% or 9% to a floating rate of 2% above the Kansas City federal reserve rate. Today, the best investment in Colorado is a lawsuit because interest rates on successful lawsuits pay more than CDs, bonds - even more than PERA. Interest rates should reflect today’s economy - not the economy of the 1970s.

    Senate Bill 156 (by Rep. Lori Saine, R-Firestone, and Rep. Wist) requires that, before an HOA can engage in a lawsuit based on construction defects, homeowners must be given information about the costs and risks of litigation; requires mediation before litigation; and requires written consent of at least a majority of HOA members.

    Meanwhile, two other House committees consider bills that will lead to more lawsuits.

    House Bill 1307 (by Rep. Faith Winter, D-Westminster) creates mandatory family and medical leave insurance. The bill creates several potential “litigation traps” for employers by prohibiting “adverse employment action” against an employee who attempts to take leave. So, an employee who is being discharged or demoted files for leave and then claims discrimination by the employer, forcing the employer to prove that discharge or demotion was due to performance, not related to the attempt to take leave.

    While House Finance considers that bill, House Local Government will ponder House Bill 1314 (by Rep. Joe Salazar, D-Thorton) this year’s iteration of the Colorado Right to Rest Act - aka “the Homeless Right to Sue” Bill.

    While HB 1314 has been dialed back from previous versions, it continues to create statutory “rights,” like a right for homeless people right to enjoy privacy in public places comparable to that in a private residence. This bill creates a cause of action (and litigation) for anyone who believes that these “rights” are being violated, either by government or private property owners.

     

    Senate bills needlessly use litigation as enforcement weapon

    Tuesday, April 11, 2017

    At Colorado Civil Justice League, we try to keep a consistent focus on unnecessary litigation. That's why you usually won't see us weigh in on bills unless there's a litigation angle.

    After all, litigation should be a last resort!

    However, two bills in the Colorado Senate needlessly turn to private, personal injury litigation as an enforcement mechanism to advance other policy objectives. The only time private litigation is the proper enforcement tool is when fundamental freedoms are at stake and other avenues of redress are insufficient or unavailable - as when First Amendment rights to freedom of speech or freedom of religion or freedom of association are being abridged by government.

    Even then, the answer usually isn't to sue for monetary damages; it's to sue to compel government to honor your constitutional freedoms.

    Senate Bill 281 (by Sen. Vicki Marble, R-Fort Collins, and Sen. Tim Neville, R-Littleton) aims to punish local governments that fail to enforce federal immigration law - aka "sanctuary cities."

    Senate Bill 284 (by Sen. Kevin Lundberg, R-Berthoud, and Sen. Marble) would require that health care providers present women who are considering an abortion with certain information about their pregnancies and health care options.


    Both of those issues are squarely outside CCJL's policy purview - unless the bills use private lawsuits as an enforcement mechanism. That's why CCJL opposes both bills, so long as the personal injury lawsuit provisions remain.

    Under SB 281, if a crime is committed by someone determined to be an illegal alien, crime victims would be allowed to sue the local jurisdiction for damages. Ironically, crime victims cannot sue state or local governments for criminal acts committed by legal residents. That is, you cannot sue the police department for failure to prevent a crime.

    It's doubtful that a crime victim could prove all of the elements necessary to successfully bring such a lawsuit against a "sanctuary jurisdiction." So, the lawsuit provisions may be an empty threat.

    SB 284 includes a "kitchen sink" provision that allows someone who suffers a "loss or injury" due to an abortion provider's failure to provide required information to sue for "damages, punitive damages, treble damages, and such equitable remedies as the court may deem appropriate." Translation: sue for everything your lawyer can dream up!

    Government's job is to see that laws are followed, so lawmakers should enforce the law through state agencies, not by unleashing an army of personal injury lawyers to do their bidding.
     
    For more background, read CCJL's issue papers on the perils of enforcement through private litigation or about the rational basis for limits on governmental liability.