U.S. Supreme Court gives business a ‘tort wars’ win

“Tort wars” is the term Capitol insiders apply to the perennial political conflict over the rules governing personal injury lawsuits.

Lawyers who file such suits seek to expand opportunities for litigation, often in concert with other interests, such as unions and environmental activists.

Business and employer groups and their insurers resist such expansion and occasionally propose ways to reduce exposure.

The conflict plays out in the Legislature, in the courts and in ballot measures with countless billions of dollars at stake in outcomes. Earlier this year, a 44-year-long dispute over medical malpractice compensation was resolved in a compromise that averted a ballot measure battle.

However, there are many other fronts in tort wars, including one that resulted in a U.S. Supreme Court ruling last week.

In 2003, just four days after California voters decided to remove him from office, then-Gov. Gray Davis handed personal injury lawyers and unions a major victory by signing legislation called the Private Attorneys General Act (PAGA). It enabled workers who had disputes with their employers to file class action lawsuits even if they had signed pre-employment agreements to submit such disputes to arbitration.

Advocates said it was needed to protect workers’ rights and make up for the state labor department’s inability to keep up with disputes over wages and other working conditions. Business and employer groups said it gave greedy lawyers a license to demand big settlements of cases and earn big contingency fees.

Ultimately, business interests spent millions of dollars to qualify a ballot measure that would gut PAGA. The initiative petitions have been submitted for signature-counting, but probably too late for the 2022 ballot. Most likely it will go to voters in 2024.

Meanwhile, a case challenging PAGA’s provisions has been winding through state and federal courts and the U.S. Supreme Court last week declared that some important features are void because they conflict with the Federal Arbitration Act, which encourages civil disputes to be arbitrated rather than litigated.

The case involved Viking River Cruises and one of its employees, former sales representative Angie Moriana. Essentially, the Supreme Court declared that California’s Supreme Court had erred in a previous PAGA case and state courts had applied that erroneous decision, involving the division of individual and class action complaints, to Moriana’s case.

The decision was not unexpected, given the tenor of oral arguments, but surprisingly did not reflect the court’s much-discussed 6-3 ideological split. The vote was 8-1 with only the court’s most conservative member, Clarence Thomas, fully dissenting, saying state issues should be left to state legislatures and courts.

Predictably, even a Supreme Court decision does not end the battle over PAGA because it was decided on technical legal points rather than the broader issue.

Unions, lawyers and their political allies immediately pledged to write new legislation to get around the Supreme Court decree. Sen. Dave Cortese, a San Jose Democrat who chairs the state Senate’s labor committee, said the ruling “has provided a roadmap as to how we can create for employees a new pathway to legal standing as well as safeguard the protections that state law puts in place for our workers.”

Because the Supreme Court did not strike down all of PAGA, the business coalition backing the ballot measure, dubbed the California Fair Pay and Employer Accountability Act, pledged to continue its campaign. “Even with the SCOTUS ruling on Viking River Cruises, PAGA will still be an avenue for shakedown claims against businesses where trial attorneys take a huge portion of the recovery, leaving employees with a reduced amount,” it said.