California Governor’s Job Creation Proposals Could Work in the Garden State

As he enters his final year in office, California Governor Arnold Schwarzenegger has outlined an innovative strategy to spark the job creation his state’s economy so desperately needs.  And it starts with tort reform. 

“California’s current litigation laws lead to large settlements with little value to consumers, but become worth millions to lawyers at the expense of California businesses,” said Governor Schwarzenegger in a statement following his state-of-the-state address. 

In order to help California recover from its double-digit unemployment and declining business community- a situation eerily familiar in New Jersey-  the Governor announced his intention to push for a series of legislative and statutory changes.  They will include a cap on punitive damage awards- which he notes are “wildly unpredictable” among similar cases in California, changes to the rules governing class-action and product liability lawsuits, and requiring plaintiffs rather than defendants to subsidize notification to potential class members.  The last would be particularly important because current statutes hold businesspersons liable for defective products, even if the seller had no knowledge or control over the defect. 

Schwarzenegger’s model for these proposals is his state’s Medical Injury Compensation Reform Act, which was enacted in 1975.  Noneconomic damages are capped at $250,000.  It has been widely credited with keeping malpractice insurance premiums in check and keeping primary and specialty doctors in California. 

“I know that if we can recreate the teamwork we built last year and focus together on these priorities… California will emerge from these difficult times stronger and more vibrant than ever,” he said. 

Schwarzenegger is a Republican Governor who must work with a Democratic-controlled Legislature in order to advance any proposals – just like incoming Governor Chris Christie. 

Democratic and Republican leaders pledged their willingness to cooperate in order to help New Jersey rebound from its economic crisis.  Perhaps this will be a golden opportunity for Governor Christie to introduce tort reform in New Jersey.