California Proposed Trial Damages Change Threatens Businesses

Jun 10, 2021 | Litigation Management

S.B. 447, which has been sponsored by the Consumer Attorneys of California (an organization of 3,000 plaintiffs’ lawyers), seeks to overturn longstanding legislation to allow for pain and suffering damages to be compensated in a survival action. Under California law, when an individual dies from an injury caused by a tortfeasor, the decedent’s successors/heirs can file a survival lawsuit to recover damages that the decedent would have been entitled to up until the point of death. These damages include lost wages, medical bills, as well as any punitive damages. Noneconomic damages, specifically pain and suffering, are not recoverable under California survival actions, as those damages are only permitted to be recovered directly by the party to whom the pain and suffering would apply – namely, the decedent.

The current bill as proposed seeks to amend California Code of Civil Procedure Section 377.34 as follows:

(a) In an action or proceeding by a decedent’s personal representative or successor in interest on the decedent’s cause of action, the damages recoverable are limited to the loss or damage that the decedent sustained or incurred before death, including any penalties or punitive or exemplary damages that the decedent would have been entitled to recover had the decedent lived, and do not include damages for pain, suffering, or disfigurement.

(b) Notwithstanding subdivision (a), in an action or proceeding by a decedent’s personal representative or successor in interest on the decedent’s cause of action, the damages recoverable may include damages for pain, suffering, or disfigurement if the cause of action accrued before January 1, 2026. [italics constitute proposed changes]

Should this bill pass into law, it could not only lead to significantly larger verdicts in California due to the significant increase in non-economic damages, but also potentially larger punitive damages verdicts. Punitive damages are typically calculated as a ratio to the underlying damages verdict. Undoubtedly, plaintiffs’ attorneys are pushing for this law to be enacted in order to significantly raise valuations and settlement demands. Noneconomic damages are within the province of the jury and thus can result in exceedingly large verdicts.

While the proponents of the bill will argue that this is for the greater good, there will of course be knock on effects as a result. It is no secret that many California businesses have grown weary of the regulations imposed on it that have resulted in many business leaving. Tesla, one of the largest companies by market cap in the United States, has recently opted to move from California to Texas as a result of regulations. Thus, further legal changes that may be viewed as unwelcoming to businesses may result in further exodus, which results in job loss, loss of tax revenue, as well as an overall loss of revenue to the local economy.  Given the pandemic and likelihood that numerous businesses will fail as a result, enacting more legislation that will ultimately be viewed as unwelcoming to businesses may ultimately backfire for the plaintiffs’ attorneys seeking to push this through.

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