Much ado, but little done to reduce lawsuits in 2018

Wednesday, May 16, 2018

The 2018 legislative session produced much political posturing but resulted in comparatively no meaningful policy accomplishments toward reducing litigation in Colorado.

Most significant legislation to pass was re-authorization of the Colorado Civil Rights Division which was due for the periodic "sunset review" to which all regulatory agencies are subject. Because CCRD is the first stop for all employment-related litigation, it is an important mechanism to filter out frivolous claims against businesses. Ordinarily, sunset bills are fairly mundane and characterized by discussions between the regulators and "the regulated" seeking to accomplish the agencies' mission without undue burden on either party.

Instead, the CCRD reauthorization measure (House Bill 1256, sponsored by Speaker Crisanta Duran, D-Denver, and Sen. Bob Gardner, R-Colorado Springs) became a vehicle for scoring political points. At the center of this gamesmanship was the Civil Rights Commission's (CRC) handling of the Masterpiece Cakeshop case which is now before the United States Supreme Court.

Democrats, viewing the Commission as a bulwark against unfair discrimination toward racial and sexual minorities, chided Republicans for, at one point, blocking funding of CCRD. Republicans, conversely, seized upon statements made by individual CRC commissioners in the Masterpiece deliberations which have been described by Justice Anthony Kennedy as "neither tolerant nor respectful." Republicans were also annoyed that Gov. Hickenlooper, in 2017, had appointed a commissioner to fill one of the seats reserved for representatives of the business community who, in their view, had no business credentials and then reappointed that person, albeit in a different position, after her confirmation was rejected by the Senate.


Ultimately, another compromise was finally adopted only a few hours before mandatory adjournment at midnight on the final legislative day. That change mandates partisan (3D-3R-1UA) balance on the commission, adds a third seat for business representatives, and bars a governor from re-appointing someone who fails Senate confirmation.

Other bills that passed with bipartisan consensus increased the limit on claims brought in county courts (Senate Bill 56) from $15,000 to $25,000 and resolved inconsistencies between case law and statutory provisions that address damages (Senate Bill 98).

LATE BILLS THREATEN LITIGATION TORRENT

As the legislative session entered its final six weeks, a torrent of "message bills" were introduced in the House - all purporting to address perceived greed and inequity practiced by business. The irony, however, is that in each of these bills, the proposed remedy to "corporate greed" was to create new incentives for personal-injury lawyers to file lawsuits against suspect businesses. Seriously, is the best policy remedy to unleash a hoard of profiteering trial lawyers?

Two bills were aimed at discouraging arbitration - a tool for dispute resolution that often saves time and expense for both consumers and businesses. House Bills 1261 and 1262 proposed to make arbitration essentially meaningless and to burden arbitrators with so much regulation as to drive them out of business. These misguided bills would have taken away the choice of consumers and business to opt for arbitration. The alternative to arbitration? Hiring a lawyer and filing a lawsuit, of course.

Fortunately, through the efforts of Colorado Civil Justice League and our allies in the business community, these bills were shown to be impractical and an intrusion into private rights of contract. Both were defeated but are likely candidates for re-introduction in 2019.

Another bill, HB 1378, would have removed the authority of the Department of Labor and Employment to penalize employers that pay women less than men for performing the same job and instead turned enforcement over to lawsuits filed by trial lawyers. It's companion, HB 1377, sought to make it illegal to merely ask a prospective hire about his or her salary at previous jobs. The bill would have defined this typical step in salary negotiations to be an "unfair labor practice," tantamount to refusing to hire someone because of their race or gender. HB 1377 also insisted that every business in Colorado follow a new state-mandated procedure to advertise all pending workplace promotions.

At a time when Colorado's lawsuit climate has fallen into the bottom one-third in the United States and when Denver ranks 8th nationally for the number of trial lawyer commercials on television, it's hard to imagine that creating even more litigation is the best remedy to any public policy problem.

Exceptionally misguided: HBs 1377, 1378

Monday, April 23, 2018

Two bills introduced late in this legislative session purport to protect employees – specifically female employees – from wage discrimination.  Instead, House Bills 1377 and 1378 paint a target on the Colorado businesses and invite trial lawyers to unleash a new wave of litigation against them.

HB 1377 (sponsored by Reps. James Coleman, D-Denver, and Brittany Petterson, D-Lakewood) would prohibit “seeking” information about a potential employee’s salary history.  But what makes this bill so exceptionally misguided is that it makes asking for that information a violation akin to illegal racial or gender discrimination.

That’s right – the sponsors of this bill believe that merely seeking information about a potential employee’s salary history is tantamount to refusing to hire someone because of their race or gender.

By defining salary history as a discriminatory practice, the bill creates an incentive for trial lawyers to sue employers, seeking a wide range of monetary damages, including punitive damages, and automatically forces employers to pay attorney fees and costs to any prevailing plaintiff.

Prevailing employers aren’t automatically entitled to recover their attorney fees and costs.  Even if a business has done nothing wrong, defending against a baseless lawsuit is costly!

If there was any doubt that these bills are far more about enriching trial lawyers than eliminating any pay disparity, HB 1378 should dispel them.  Sponsored by Rep. Jessie Danielson, D-Wheat Ridge, and Sens. Kerry Donovan, D-Vail, and Rhonda Fields, D-Aurora, this bill removes the authority of the Department of Labor to penalize employers that pay women less than men for performing the same job and instead uses private litigation for enforcement.


And just as with HB 1377, it gets worse!  Next, the bill mandates that every business in Colorado must follow a specific legal procedure before promoting any of its employees.  No matter how many employees and no matter what the job, the proponents of this bill believe the State must micromanage day-to-day operations of private businesses – the economic engine of our state.

If this bill becomes law, an employer couldn’t simply give a promotion to a deserving employee – including a female employee – without first advertising the opportunity for promotion to all existing employees.

In the past year, Colorado has fallen to its worst alltime ranking (36th) by the U.S. Chamber of Commerce Lawsuit Climate Index. Legislation like this shows that it could get worse!

 

 

 

Anti-arbitration bills will cost consumers, enrich trial lawyers

Monday, March 19, 2018

Anti-business extremists at the State Capitol would have Coloradans believe that giving up their "right to sue" in exchange for a more efficient, less adversarial process of dispute resolution is somehow playing into the hands of "big corporations." 

In fact, consumers and businesses alike have often found arbitration to be a better way to resolve disputes than long, drawn out lawsuits in which the only real winners are the lawyers who rack up hundreds of billable hours.

House Bills 1261 (sponsored by Rep. Mike Weissman, D-Aurora) and 1262 (Reps. Dominique Jackson, D-Aurora, and Dylan Roberts, D-Eagle) purport to bring "fairness" and "transparency" to arbitration proceedings.

In reality, they would make Colorado's arbitration system just as big a mess as our state's system of civil courts.

 


 

Many business contracts require arbitration as a means to settle disputes, rather that lawsuits. That's a choice that businesses and consumers deserve to make for themselves - without unnecessary meddling by politicians.

Arbitration can be cheaper and faster for both parties in a dispute, reducing costs for the largest driver of litigation costs - attorney fees. Arbitration can also be more flexible, less complex, more private and less hostile than endless litigation.

Instead, HBs 1261 and 1262 will make arbitration more difficult and more expensive by inviting litigation against arbitrators.

These bills are also likely to erode modest gains made by the Legislature last year to make it easier for homeowners and builders to resolve disputes over home construction problems and to reduce litigation costs that drive up home prices.

HB 1261 creates new standards for "impartiality" in an environment in which the Colorado Uniform Arbitration Act, case law, Colorado Rules of Professional Conduct, and private contractual standards already establish ethical requirements on arbitrators. This isn't solving a problem. Instead, it's creating one!

HB 1262 creates disclosure requirements that violate contractual confidentiality provisions that typically benefit both parties in a dispute. The bill also creates a cloud over any contract containing an arbitration clause because, U.S. Supreme Court precedent strongly suggests, it will be preempted by the Federal Arbitration Act.

It is important to note that judges and courts do police arbitrator impartiality by reviewing arbitration awards. A party that believes an arbitrator to be biased can ask a court to vacate the award. Ironically, these protections do not apply for judges who preside over lawsuits.

These bills would harm consumers by making arbitration more expensive, thereby leaving consumers at the mercy of trial lawyers and a costly, over-crowded civil litigation system.