Schwarzenegger vetoes California’s last-minute punitive damages bill

California Gov. Arnold Schwarzenegger has vetoed SB 832 by Sen. Don Perata, D-Oakland, that would have required by law that 75 percent of all punitive damage awards go to the state treasury rather than to the victim.

In his statement attached to the veto, the Governor wrote: “As written, SB 832 seeked to extend the sunset on Section 3294.5, which was added to the Civil Code relating to punitive damages. While I have been supportive of the policy in the past and signed SB 1102 that contained the original provision which sunset on July 1, 2006, this bill was amended late in the legislative session and did not provide an opportunity for sufficient hearings to determine whether this policy has been effective or not. I encourage the author to reintroduce the bill next year and allow a full debate on the effectiveness of the policy.”

The American Insurance Association and the Civil Justice Association of California commended the governor for his veto. The CJAC noted that if it had passed, the bill would have made the state a partner with personal injury lawyers in extracting punitive damage awards from California companies.

The groups noted that SB832 was slipped into an existing bill only days before the end of the legislative session and went to the Governor with no review other than a “token” hearing held off the Assembly floor without notice to the public.

“The Governor’s message was that the bill didn’t have time to be fully vetted but that it’s quite possible he would have looked at it if it were not jammed through,” said Nicole Mahrt, public affairs director of the western region of the AIA. “We agree with him in his veto message about the last-minute process not being a good idea because there was not time for input. The bill would have increased jury awards and made products more expensive for consumers.”

Under SB 832, the client’s share of punitive damages would have dropped to a third of that currently received, CJAC said.