Propositions must be rejected to maintain vital consumer
rights
By Wesley J. Smith
An important decision faces California voters on March 26:
whether to allow large corporations and insurance companies, in
effect, to buy the California Civil Code. By voting for
Propositions 200-202, voters would give these special interests
their way. On the other hand, voters can stand up for individual
and consumer rights by voting NO.
Californians Against Phony Initiatives is an extraordinary
coalition of consumer and citizens groups that has formed to urge
voters to oppose the power-grab by voting NO. Among its members are
Ralph Nader, Consumers Union, Public Citizen, the California
National Association for the Advancement of Colored People and the
California Nurses Association, among 50 others. The initiative
opposes Propositions 200, 201 and 202 because all three are
astonishingly one-sided and profoundly anti-consumer. For
example:
* Proposition 200, an unprecedented and extreme no-fault auto
insurance measure, strips consumers of their legal right to hold
bad drivers responsible for injuries they cause. These lost legal
rights are replaced with inadequate insurance benefits. For
example, an injured consumer’s wages might be capped as low as
$1,000 per month, with deductions subtracted from this tiny benefit
if the injured victim receives state disability insurance or
workers compensation.
The measure also transfers power from consumers to insurance
companies by mandating arbitration in the event of a dispute over
benefits. This would cost consumers a lot of money because
arbitrations are not paid for by tax dollars (as are the courts),
but by the parties themselves. This means that consumers who are
wrongly denied insurance benefits could be forced to choose between
paying thousands of dollars in arbitrator’s fees or seeking redress
of grievances.
* Proposition 201 seeks to inhibit consumers who believe they
have been cheated in a securities transaction from seeking redress,
through the creation of a "loser-pays" system.
The loser-pays system would benefit wealthy corporations at the
expense of consumers, since corporations would not be deterred from
a frivolous defense – they can easily afford to pay the other
side’s legal fees. On the other hand, consumers would not have the
money to pay the corporations’ million dollar-plus legal fees.
Thus, rather than risk the loss of everything they own, many
cheated consumers would allow the cheater to get away with
fraud.
To add insult to injury, under Proposition 201, wronged
consumers can be forced to post a bond to guarantee the payment of
the corporation’s attorneys’ fees before they can move their case
forward. Proving the one-sided nature of the initiative, this
requirement could only be imposed on consumers, not on companies
who may have engaged in fraud.
* Proposition 202 seeks to make it difficult for consumers to
obtain a lawyer they can afford, by imposing contingency fee
limitations and by creating arcane rules to govern the
attorney-client relationship. It would also punish lawyers who
inadvertently violate the fee scheme by charging them tens of
thousands of dollars in damages.
Of course, there is not a word in the proposition about limiting
the fees of insurance company and corporate lawyers, who generally
charge by the hour and thus have a financial incentive to churn
cases. Nor does the proposition apply to corporations when they
hire lawyers based on a contingency.
Propositions 200-202 are based on the premise that tort cases
are a major problem for the country. This is demonstrably false.
Indeed, several studies show that if any lawsuits are "out of
control," they are cases of businesses suing businesses. Yet, the
initiatives are silent as to this problem. Perhaps that is because
this, like the other ubiquitous "tort reform" campaigns going on
throughout the country, is not about justice, but about sacrificing
individual rights on the altar of corporate profits.
Smith is an attorney and co-author with Ralph Nader of the
upcoming book "NO CONTEST: Corporate Lawyers and the Perversion of
Justice in America." He is also a campaign spokesperson for
Citizens Against Phony Initiatives.Comments to
[email protected]