Wilson Vetoes Bill to Lift Secrecy on Liability Lawsuits

SACRAMENTO — Gov. Pete Wilson on Friday vetoed as bad for business a bill aimed at removing the confidentiality protections routinely imposed in the settlement of product liability and other high economic impact lawsuits.

“Rather than promoting public safety, this bill would add to California’s litigation nightmare and increase the cost of doing business in this state,” Wilson said in a message.

The governor’s rejection of the controversial bill, carried by Sen. Bill Lockyer (D-Hayward), had been anticipated even as it bumped its way over business and Republican objections in the Legislature.

The legislation was bitterly opposed by influential business and trade organizations on grounds that in the name of protecting the public, the proposal would unfairly expose manufacturers to the loss of important secrets to competitors and would drain off resources to intensified litigation.

But Consumers Union, which joined the California Trial Lawyers Assn. in supporting the bill, contended that secret settlements of lawsuits blocks the right of consumers to learn about products that may be hazardous to their health and safety.

The organization cited as examples the safety of silicon breast implants, an artificial heart valve, exploding cigarette lighters and certain automobiles.

Consumers Union deplored the governor’s veto as part of an “all-out attack on the legal system that protects consumers.”

“If businesses and Pete Wilson have their way, we not only won’t be able to sue manufacturers who sell dangerous products, we won’t know what products are dangerous in the first place,” said Harry Snyder, lobbyist for Consumers Union.

The veto drew praise from the Assn. for California Tort Reform, an organization of major insurers, manufacturers, hospitals and others who often do legislative battle with trial lawyers.

Fred J. Hiestand, general counsel to the association, said Wilson’s veto “reflects his understanding of the need to boost California’s competitiveness rather than stifle it.”

In his first wave of vetoes of bills sent to him in the last few weeks of the recently concluded legislative session, Wilson has based his action on protecting California business during tough times. He sounded the same theme a year ago.

In vetoing the bill that would limit the imposition of confidentiality restrictions on settlements, Wilson asserted that requiring public disclosure of the agreements would “encourage and prolong litigation, without any demonstrated improvement in public disclosure or safety.”

Further, Wilson charged that the bill would give tort specialists, whom he described as “contingency fee” lawyers, another tool to “generate lawsuits and extort large settlements from businesses, by threatening to disclose confidential information.”