Some leeway seen in plan to share awards with state.

CONSUMER attorneys are typically a unified bunch when it comes to opposing anything that would cut into punitive damage awards. But Gov. Arnold Schwarzenegger appears to be shaking up that unity.

In his May budget revision, the governor said that California could trim $450 million of its budget deficit if it took 75 percent of all punitive damage awards. While most members of the local plaintiffs' bar adamantly oppose the proposal, a vocal minority said there was room for discussion.

"Trial lawyers across the board would likely be supportive of the concept of sharing or taking some portion of the punitive damages for the public good," said Bruce Brusavich, a partner at Agnew & Brusavich and past president of the Consumer Attorneys Association of Los Angeles.

How big a portion is the question.

Schwarzenegger based his $450 million estimate on an analysis of punitive damage awards conducted by J. Clark Kelso, director of the Capital Center for Government Law and Policy at the University of the Pacific's McGeorge School of Law. His report concluded that almost $6.4 billion in punitive damages were awarded from Jan. 1, 1991, to Dec. 31, 2000.

But not all state officials have embraced the findings. Yvette Rincon, fiscal and policy analyst at the California Legislative Analyst's Office, noted that it excludes appeals or settlements that reduce the total punitive damages amount. In one case, a $4.2 billion verdict was later reduced to $1.2 billion. Adjusting for only that verdict, the state's share would be closer to $255 million, she said.

"We (came up with) $255 million but then lowered it to $200 million," Rincon said.

Browne Greene, a partner at Greene Broillet Panish & Wheeler LLP, said he supported a similar proposal in 1987 when he was president of the Consumer Attorneys of California. That called for the state to take one-third of punitive damage awards.

"I'm in favor of something along those lines," Greene said of the theory behind the current proposal. "Twenty-five percent to the victim and 75 percent to the state is a bit steep. But that's negotiable."

Not everyone was willing to negotiate.

"The whole thing is a total fiasco," said Thomas Girardi, a partner at Girardi & Keese. "It harms, to a certain extent, the individual who would have something coming to him who's actually suffered the malice, or the cruel and unusual things that took place."

Girardi doubted that any proposal sharing awards with the state would be approved, especially, he said, since it would mean that the federal government would give up taxes assessed on punitive damages. Further, the plaintiff would be left to collect very little, he said.

Drawing more fire was a second element of Schwarzenegger's plan: Limiting to one the number of punitive damage awards levied against a single defendant. Several attorneys said such limits would be unfair to future plaintiffs, while others said it should be left to juries to decide the appropriateness of a defendant being punished with punitive damages more than once.

One reform that consumer attorneys are united in opposing is the November ballot initiative to amend California's unfair competition law.

The initiative, backed by the California Chamber of Commerce, the Civil Justice Association of California and the California Motor Car Dealers Association, qualified for the ballot this month with more than 600,000 signatures. It would require attorneys bringing suits under section 17200 of the state's Business and Professions Code to represent clients who can show specific injury rather than representing themselves on behalf of the public, as is sometimes the case. Proponents said the change would reduce frivolous lawsuits.

"We have situations where a restaurant might have gotten the highest health rating in L.A. County but had a couple of minor violations and they still get sued," said Allan Zaremberg, president of the California Chamber. "That's extortion by attorneys looking for a settlement out of a business that's doing its best to comply with state regulators."

Last year, three attorneys at Trevor Law Group in Beverly Hills were disbarred after the State Bar of California determined their filings under 17200 were an abuse of the system.

Chad Hummel, a partner with an antitrust practice at Manatt Phelps & Phillips LLP, said the initiative would inspire more injured parties to file suits and limit "lawyer-generated lawsuits."

But consumer attorneys said the initiative primarily would hurt consumer fraud and environmental cases, which seek to prevent harm before any exposure takes place.

Neither side of the 17200 reform issue is expected to muster much of a fight. The same groups are directing their resources to another initiative on the November ballot, a referendum on Senate Bill 2, which requires many California employers to provide health care for their employees or pay into a state-operated fund.

Properly Moves

Greenberg Glusker Fields Claman Machtinger & Kinsella LLP has hired a new environmental and land use partner. Roger Holt, former head of the environmental department at Ervin Cohen & Jessup LLP will join the firm with a former Ervin Cohen associate, Shiraz Tangri. Earlier this month, Greenberg Glusker lost real estate partner Dale Goldsmith, who formed a new boutique firm....

Paul Hastings Janofsky & Walker LLP has hired three attorneys specializing in land use, planning and environmental law. Previously at Nossaman Guthner Knox & Elliott LLP, Robert McMurry joins as a partner and Ann Catherine Norian and Bradly Torgan join of counsel.

Staff reporter Amanda Bronstad can be reached at [phone] ext. 225, or at [e-mail].