2016 Legislative Review: Balance, no backsliding, but bulls-eye on business again

Tuesday, May 17, 2016

While the 2016 session of the Colorado General Assembly produced little news on the civil justice front, the partisan balance of a Democratic-controlled House and a Republican-controlled Senate provided two obvious benefits:

For legislation to survive both chambers, its sponsors were able to navigate and negotiate. Sponsors from both chambers sought the input of Colorado’s business community both to develop good public policy and to build political support.

Legislation that ignored business concerns – or, worse yet, put a bulls-eye on business as a target for speculative or unmerited litigation – usually met stiff resistance . . . and not only in the Republican-controlled Senate.

Colorado Civil Justice League, the state’s only associated devoted primarily to tort reform and curbing lawsuit abuse, opposed eight bills introduced in this year’s session. Of those, six died in the Senate, one died in the House, and one passed after sponsors agreed to eleventh-hour amendments that alleviated concerns about expanding liability.

CCJL appreciates legislators who opposed such extreme legislation as:

  • Enshrining a right for homeless people to sue for privacy (House Bill 1191),
  • Arbitrarily assigning liability for earthquakes to oil and gas operations (HB 1310),
  • Creating a corporate shaming regime funded by “fees” on business (HB 1435), and
  • Bills that ignore the legitimate business practices of conducting criminal background checks on prospective hires (HB 1388) and discussing a potential employee’s salary history and expectations (HB 1166).

Importantly, the bipartisan balanced stopped further erosion of Colorado’s business liability climate. Colorado currently ranks 16th on the U.S. Chamber of Commerce State Lawsuit Climate survey, up from 23rd in the previous study but well below the Top 10 status that made Colorado a magnet for growth in the 1990s and early 2000s.

The past four legislative sessions have yielded an onslaught of 38 bills that arbitrarily attack Colorado employers by making employment law a harvest field for plaintiffs lawyers. Such persistent threats raise enormous red flags to businesses that might consider expanding or relocating in Colorado.

CCJL backed two pro-active measures this year, as well. Senate President Bill Cadman (R-Colorado Springs) and Majority Leader Mark Scheffel (R-Parker) teamed up with Rep. Yeulin Willet (R-Grand Junction) to sponsor Senate Bill 184 which would update a 40-year-old statute that set the interest rate for litigation claims at 9 percent. SB 184 would have calibrated the rate to float at 2 percent above the Kansas City Federal Reserve discount rate. That bill passed the Senate 20-15, but died in a House committee.

Rep. Cole Wist (R-Centennial) and Sen. Cheri Jahn (D-Wheat Ridge) sponsored HB 1299, an overdue correction to the attorney fee recovery provision of the Colorado anti-discrimination act. Under this bill, successful employers could recover attorney fees from meritless claims “when no reasonable person” would believe the claim was likely to succeed. The House Judiciary Committee defeated this bill on a party-line vote.

Two bills demonstrated the ability of legislators of both parties to develop practical solutions to emerging issues. HB 1432, sponsored by Rep. Faith Winter (D-Westminster) and Sen. Andy Kerr (D-Lakewood), provided employees with the opportunity to view the employer’s personnel file without creating a litigation trap for employers. HB 1438, sponsored by Rep. Winter and Sen. Beth Martinez Humenik (R-Adams County) largely applies federal law regarding employers’ responsibility to accommodate pregnant employees.


Senate passes litigation interest rate reform

Thursday, May 05, 2016

Colorado State Senate took a long overdue step to update a 40-year-old statute to reflect today's economic reality when it passed Senate Bill 184 today.

Sponsored by Senate President Bill Cadman and Majority Leader Mark Scheffel, the bill would set interest rates on litigation judgments at 2% above the rate set by the Kansas City Federal Reserve Bank.

State law requires interest be paid on judgments to compensate the plaintiff for the time value of money that was lost. Colorado Supreme Court has repeatedly ruled that judgment interest is not intended to further punish the person who was at fault but to fairly compensate the person who was wronged.

The law goes back to the 1970s when inflation jumped from 3.6% in 1973 to 12.2% in 1974, fell below 9% for about three years and then leaped back into double digits from 1979 to 1981, peaking at 14.8%.

However, for the last 20 years, the Consumer Price Index (which measures inflation) has remained at less than 6%. In fact, CPI has been 3% or less for 181 of those 240 months. Yet Colorado's statutory interest rate remains the same.

This is fair to both plaintiffs and defendants in civil lawsuits.

 Under the existing 9% rate, plaintiffs and their attorneys (who typically get one-third to 40% of the judgment) have an incentive to drag out proceedings when they have a legitimate claim and when real-world interest rates are low. When real-world rates are above 9%, as was the case regularly in the 1970s and early-1980s, defendants can make more interest by keeping their in the bank than they will be required to pay when judgment day finally arrives.

As the bill moves to the House, it is sponsored by Rep. Yeulin Willett and is scheduled for a hearing on Monday at 1:30 p.m. in the State, Veterans and Military Affairs Committee.