Trial lawyers suffered a defeat this week when legislation that would allow shareholders to tie up corporate political giving - and sue over alleged violations and drops in stock value that political contributions supposedly caused - was pulled from a committee agenda by its author.
CJAC strongly opposes Assembly Bill 2321 by Assembly Member Pedro Nava (D-Santa Barbara), because it would have encouraged yet more lawsuits at a time when California really needs more jobs and less litigation.
The bill would have required corporations to report all political giving to shareholders and allow them to file objections about the corporation's political giving. It also would have allowed a shareholder to request a return of his or her pro rata share of the funds, and it would have allowed an individual lawsuit by the shareholder against the corporation for any violation or for any contribution that negatively affected the stock price. Furthermore, it would have allowed the one-sided award of attorney's fees to the plaintiff.
Shareholder litigation was the cottage industry pioneered by now-disgraced trial lawyer Bill Lerach, in which plaintiffs sued if a company's stock value dropped or didn't meet expectations, usually regardless of market forces and acts outside a company's control. As usual in these kinds of cases, the supposed victims generally received little if anything, while the lawyers earned multimillion dollar fees.
It appears that Nava pulled the bill from the Assembly Elections Committee agenda because of the mounting opposition and likely lack of support from committee members. However, this is Sacramento and no bill is really dead until the end of the session, so it could come back at any time.