Manufacturers set legal reform as key '94 issue.

The California Manufacturers Association plans to make legal/tort reform in 1994 what workers' compensation reform was this year -- top item on the business community's agenda for legislative action.

The CMA will be pushing for a comprehensive package of legal reform legislation in Sacramento in the upcoming session, because the CMA views liability litigation, and its related damage awards, as one of the few remaining obstacles to economic recovery in California, said CMA General Counsel Chris Micheli.

"This time we're going to set the agenda," proclaimed Micheli. "We've going to organize our member companies on a grassroots level."

The CMA represents more than 800 manufacturers doing business in California. It is nonprofit, statewide trade association.

Micheli explained that, according to a Southern California Edison Corp. survey, companies have left Southern California for four main reasons: workers' comp costs, taxes, government regulations and liability laws.

Now that the state Legislature has addressed reform of the worker's comp system and state business taxes, it's time to tackle problems with the legal system and with government regulations, said Micheli.

Micheli explained that "California is known as quite liberal in many of its liability laws."

Naturally, the California Trial Lawyers Association disagrees and will likely be fighting the CMA every step of the way.

"We think the (existing) liability laws go too far against the consumer and in favor of business in California," said Nancy Drabble, legislative counsel for the CTLA. "There is absolutely no evidence that people are leaving California because of liability laws."

Drabble said the California Supreme Court in recent years has "rolled back consumer rights" when interpreting California liability laws.

Micheli said the CMA is currently speaking with several legislators about sponsoring a tort reform package.

At a November meeting, the CMA board of directors approved the organization's legislative agenda, including a list of CMA "principles in the legal reform area," goals and a four-point action plan.

The top principle on the list is that California's laws and legal system "should permit California employers and citizens to effectively compete with other jurisdictions."

For example, many states limit the amount of punitive damages that can be awarded in civil suits to a percentage of actual damages, but California does not, Micheli noted.

But Drabble said that a 1987 California law made it more difficult for plaintiffs to collect any punitive damages, by requiring proof that the defendant company acted in a "despicable" manner.

Also, California is one of only three states that prohibits a defendant company in a product liability case from introducing evidence that its product in question complied with industry customs and standards, Micheli said.

In most states, a plaintiff must prove that a product's risks outweigh its benefits, but in California, the defendants must prove that the benefits outweigh the risks, Micheli continued.

The CMA also is calling for more use of arbitration, as an alternative to costly litigation, and for penalties imposed on attorney who file frivolous cases.

Drabble said the CTLA also favors using arbitration options and cutting down on frivolous cases, but she said she would have to see specific litigation on the subject to form an opinion on it.

Last September, Gov. Pete Wilson signed legislation regulating lawyer advertising and encouraging the use of arbitration options. He also signed a bill continuing a test program in Riverside County imposing sanctions on people filing frivolous actions. The test program will continue until 1998.

But Micheli said the 1993 bills will do little to affect that huge number of civil liability cases clogging California courts.

"We had 750,000 to 800,000 civil filings in California last year. Maybe there will be a few hundred less," said Micheli. "What's that?"