Doug Sherwin, May 21, 2008

SAN DIEGO - Forcing plaintiffs to pay attorney's fees if they lose would help curb costly and frivolous litigation, according to a panel discussion hosted by San Diego Citizens Against Lawsuit Abuse (CALA) Tuesday.  

Representatives of the þuilding, hospitality and biocom industry bemoaned the proliferation of classaction lawsuits and disòussed possible solutions.

"With an ADA (Americans with Disability Act) lawsuit, it's a stacked deck," said Sam Hardage, chief executive officer of Woodfin Suites Hotels. "We would be happy to defend this, but if we defend this and lose, we have to pay our attorney's fees and his attorney's'fees. If he loses, he doesn't have to pay our ättorney's fees. That's not a fair deal.

"If this was a loser-pays system, I guarantee You those lawsuits would disappear very quickly because everybody would defend against them."

The biggest problem in the building industry is construction defect litigation, according to Matt Adams, vice president of government affairs for the Building Industry Association.

At one time, he said, 81 percent of all condo projects built in San Diego construction ended up in litigation. According to Adams, most never went to trial because plaintiffs were just seeking a financial settlement.

The lawsuits caused the local construction industry to go from averaging 123 condo projects a year at its peak from 7976-85 to just 22 projects a year from 1997-2000.

"If you don't have condo construction, you don't have smart growth," Adams said, "and our future in this town is more smart growth buildings. It's very important to stick to these issues and try to get a resolution." He also thinks a loser's pay system would help level the playing field.

The restaurant industry has been hit with the ADA related and wage-and-hour class-action lawsuits, according to Katie Hansen, director of local government affairs for the California Restaurant Association.

She said there are a pair of bills before the state legislature that would help ease the burden for business in both ty¡les of lawsuits.

"I say keep up the banter and keep presenting bills because you never know when one is going to catch fire and pass," Hardage said.

Hardage said another big problem is the use of the California Environmental Quality Act for political purposes to delay projects.

He said litigation has delayed development of the $4.25 million Lane Field project downtown, preventing the city benefiting from a development that would add 2,ooo permanent jobs, 5OO construction jobs and $22 million in annual tax income.

"This is a very, very dangerous movement that's afoot here in California," he said. "And I think it will have a significant affect in terms of reducing development, reducing tax revenue and reducing investment in California."

The biotech industry isnot immune to frivolous lawsuits, said Joe Panetta, president and CEO of Biocom. Because of the uncertain nature of the industry - an average of one in 20 drugs successfully make it to market - and the long regulatory process, biotech companies' stocks can fluctuate greatly.

"(And when) stock prices dip, we're a target for a class-action Panetta said. lawsuit,"

There have also been attempts at legislation that would open up biotech companies' confidential information to the discovery process in lawsuits.

The BIAs Adams said one way to find a solution and get legislation protecting businesses passed is to humanize the issue.

"You want to show them the families that are affected." he said. "You want to show them the jobs that have been lost. You want to demonstrate to them the economic opportunities that are being shipped overseas and costing our citizens, our friends, our neighbors job opportunities."

Finding a solution is important, Woodfin Suites Hotels' Hardage emphasized.

"This is really a profound issue," he said. "It goes to the heart and soul of the future of our state and the nation. What kind of California are we going to leave for our children? Are we going to be competitive with the rest of the world and are we going to be able to provide the jobs and the economic opportunity and the kind of lifestyle that we've enjoyed?"