U.S. Chamber Urges Gov. Schwarzenegger to Veto Bill Encouraging More Lawsuits

WASHINGTON, D.C.— The U.S. Chamber of Commerce today asked California Governor Arnold Schwarzenegger to veto legislation that it says would hurt California businesses, investors, and pension plans.

Senate Bill 1489 would allow a judge to award attorneys' fees, expert fees, and court costs to the attorney general when the state prevails in many types of lawsuits, but prevents businesses from collecting the same kinds of fees when the state fails to make its case. The legislature passed the measure late last week, but needs the governor's approval to become law.

"This one-way cost-shifting proposal gives the state attorney general a blank check to pursue unwarranted investigations and lawsuits," said Chamber President and CEO Thomas J. Donohue. "The proposal would create a 'bounty hunter' mentality among private lawyers hired by the state."

In a letter to Governor Schwarzenegger, Donohue wrote that "over-reaching by state attorneys general is an issue of great importance to the national business community." He said adoption of the legislation would give the attorney general unfair leverage to force settlement of cases—even when the defendant is innocent—and "further dampen the enthusiasm of publicly traded companies toward the state's legal climate."

California ranked 44th in the latest survey of legal fairness conducted by the U.S. Chamber's Institute for Legal Reform and Harris Interactive. The 2006 State Liability Systems Ranking Study polled more than 1,400 senior attorneys to explore how reasonable and fair the tort liability system is perceived to be by U.S. businesses.

The U.S. Chamber of Commerce is the world's largest business federation, representing more than 3 million businesses and organizations of every size, sector, and region.

www.uschamber.com

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