SACRAMENTO - At the end of this month, California Supreme Court Justice Kathryn Werdegar is scheduled to retire, giving Gov. Jerry Brown the opportunity to appoint his fourth justice to the highest court in the nation’s most populous state, ending a Republican majority and sealing his influence over the court for decades.

That could be bad news for business, as California has long been a laboratory for costly legal innovations including strict liability and so-called “bystander injury” damages for people who observe a family member getting hurt. California’s steady expansion of tort liability after World War II spread across the rest of the country, driving up the cost of everything from manufactured products to insurance.

The good news is Brown is anything but predictable. Generally regarded as liberal – critics dubbed him “Governor Moonbeam” during his first term in office in the 1970s – Brown also signed a groundbreaking law limiting pain-and-suffering awards in medical malpractice cases in 1975. His support for that law demonstrated a pragmatic streak that may steer him away from nominating a purely pro-plaintiff or pro-labor justice – especially since in California new appointees are subject to voter approval at the next gubernatorial election as well as at the end of their 12-year terms.

Brown learned the hazards of getting out of step with the voters in his first stint as governor. Three of his seven nominees were voted off the bench in 1986 after businesses helped organize a recall campaign that was also animated by opposition to all three judges’ anti-death penalty stance.

This time around, the dominant thread linking Brown’s three appointees -- Goodwin Liu, Mariano-Florentino Cuellar and Leondra R. Kruger – is Yale Law School, also Brown’s alma mater. While predictably liberal on criminal justice matters, Liu and Cuellar both dissented from the majority’s decision in Vergara v. California to dismiss a constitutional challenge by minority students to California’s public school teacher-tenure rules.

The high court’s decisions have mostly been unanimous in recent years, however. Even Werdegar, a moderate appointed by Republican Gov. Pete Wilson in 1994, has penned pro-plaintiff decisions including reversing a lower court’s rejection of a class action lawsuit over the labeling of “organic” produce.

“Judging by past performance, the best bet is he’ll appoint a Yale Law graduate,” said Fred Hiestand, general counsel of the Civil Justice Association of California, which supports civil liability reform. Appeals court Associate Justice Jeffrey Johnson, a Duke and Yale Law grad and former federal prosecutor, has been mentioned as a potential nominee in the past.

One potential nominee who didn’t attend Yale is First Appellate Court Judge Jim Humes, a University of Denver grad and former Brown deputy who would be the first openly gay justice on the California Supreme Court.

While Brown’s ideal may be the judges who served on the liberal Traynor court of the 1960s – where Brown served as a clerk thanks to the help of his father, who was the governor of California at the time – Hiestand said the governor “likes bright justices above all.”

Brown also values “common sense,” Hiestand continued. That pragmatism is best exemplified by Brown’s promotion of MICRA, which capped pain and suffering at $250,000 to relieve a medical malpractice insurance crisis. The law survived constitutional challenges in California and at the U.S. Supreme Court and became a model for similar laws around the country.

The newest member of the court will have a number of important business cases to consider, often pitting the interests of the plaintiffs’ bar in expanding liability against the concerns of corporations and the insurance industry:

Jarman  v. HCR Manorcare: Does California’s Health & Safety Code 1430(b) – the “patient bill of rights” – provide for statutory damages of $500 per incident, or $500 per lawsuit? Since nursing-home patients frequently can cite hundreds of minor violations over the course of a year, the financial difference can be huge.

Kim v. Toyota Motor Corp.: Can corporate defendants present evidence of industry practice in a products liability case? Appeal of lower court ruling refusing to strip evidence that it was not industry practice to include electronic stability control systems as standard equipment. If the plaintiffs win, manufacturers will have a harder time defending against claims their products were unreasonably dangerous.

King v. CompPartners: Can plaintiffs sue the physicians who review their Workers’ Compensation files for malpractice? If the California Supreme Court upholds an appeals court ruling in favor of an employee who blamed review physicians for cutting off his pain medication, employers say Workers’ Compensation costs will skyrocket as lawyers tap a new venue for bringing suit outside of the Workers’ Compensation system.

Lopez v. Sony Electronics: Are claims of childhood chemical exposure governed by a six-year statute of limitations or is that limit effectively extended to 20 years by tolling it during the plaintiff’s minority? Extending the time limit for such cases would dramatically extend potential liability while making it harder for companies to defend claims based on old and possibly incomplete evidence.

State of California v. Atlantic Richfield: However a California appeals court rules, this nuisance lawsuit by local governments against lead paint and pigment manufacturers is likely to wind up at the California Supreme Court. The question will be whether a judge can order an entire industry to pay to remove lead paint from privately owned structures as a “public nuisance” even though the product was legal and in fact mandated for use in government structures until the 1950s.

Given Brown’s unpredictability and penchant for appointing smart justices, business defendants may need to prepare for challenges ahead. Smart justices can write decisions that expand the boundaries of the law without generating successful appeals to the U.S. Supreme Court, said Kim Stone, a lobbyist and former president of the Civil Justice Association of California.

"If you end up with super-smart people on the California Supreme Court, they will be more likely to have success at threading that needle, avoiding the ire of the U.S. Supreme Court while still being intellectually honest to get the results they wanted," Stone said. "It might turn out to be his biggest legacy, if the California Supreme Court becomes even more of a dominant intellectual force in the country."

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