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SACRAMENTO — A group of well-known plaintiffs attorneys are helping write legislation that would dramatically improve their ability to hold corporate officials liable in big-money securities lawsuits. The current draft of the legislation — SB 766 — would make corporate officials liable for securities fraud even if they are not involved with buying stock or if plaintiffs lawyers cannot prove they intentionally made false statements. The bill is being pushed by San Francisco’s Berman DeValerio Pease Tabacco Burt & Pucillo and would undo two recent appellate decisions that went against San Diego’s Milberg Weiss Bershad Hynes & Lerach. State Sen. Dean Florez, a Central Valley Democrat, is carrying the bill. His office said he is scheduled to meet with lawyers from Berman DeValerio soon to work on bill language. Until then, the legislation should be considered a work-in-progress, Florez’s office said. But business interests have already hit the ceiling and are forming a coalition to oppose the measure. “No one is going to want to serve on a corporate board of directors if anyone can be sued for any statement that may mislead an investor,” said Jeff Sievers, vice president of the Civil Justice Association of California, the big business-backed tort reform group. “This appears to be a plaintiffs bar lawyer grab to bring more securities lawsuits in the state of California.” Consumer Attorneys of California, CJAC’s main Sacramento nemesis, said it is still evaluating the bill. Joseph Tabacco Jr., who is taking the lead on the issue for Berman DeValerio, did not return phone calls seeking comment. Milberg Weiss referred calls to partner William Lerach, who also did not return messages seeking comment Thursday. Even though the details might not be hashed out, the bill that has been introduced says it would undo two December 2001 appellate decisions that arose from separate class action securities cases filed by Milberg Weiss. In Kamen v. Lindly, 94 Cal.App.4th 197, a unanimous Sixth District Court of Appeal panel decided that in order to be liable under California Corporations Code � 25400 and 25500, a defendant must have engaged in both buying and selling — or offering to buy and sell — stock and must have made misleading statements. The court found that merely directing the preparation of a public business report did not make a corporate official liable. The other case is from the Second District Court of Appeal. California Amplifier Inc. v. RLI Insurance Co., 94 Cal.App.4th 102, was a dispute between a company that reached a class action settlement with Milberg Weiss and the company’s insurance carrier. The insurer did not want to cover the negotiated claim because state insurance code prohibits coverage of willful misconduct. Milberg Weiss attorneys filed as amicus curiae urging the appellate court to reconsider its ruling, which was in favor of the insurer. They argued that corporate defendants should be liable if they should have known about false statements. The court found otherwise. It’s not the first time securities litigators have gone outside court to try to widen liability. In 1996, Milberg Weiss spent at least $5.3 million trying to pass Prop 211, which would have eliminated a requirement that stock purchasers prove they relied on written misrepresentations and would have made it easier to go after accountants, bankers and law firms. The measure was defeated. Sievers, of the tort reform group, said Florez seemed an unusual choice to carry the bill. “It appears that Sen. Florez is aligning himself more with the plaintiffs bar,” he said. Sen. Florez’s office declined to respond to that assertion. The senator was elected last year after serving four years in the Assembly. Before that, he worked as a consultant to the Senate Budget Committee. He lives in the rural town of Shafter and has offices in Fresno and Bakersfield. Last year, he presided over the Joint Legislative Audit Committee’s investigation into the state’s infamous $95 million Oracle software contract that had created headaches for Gov. Gray Davis. This year, he chairs the Senate Banking, Commerce and International Trade Committee. Many of his other bills have to do with agriculture and air quality issues. Walter Robinson, a partner at Pillsbury Winthrop and co-head of the firm’s Silicon Valley litigation group and nationwide securities team, represented the defense in Kamen. He said it makes no sense to change those codes, which are part of California’s Corporate Securities Law of 1968. “You should not tinker with just this piece,” Robinson said. “This smacks of a plaintiffs firm simply trying to change a law.”

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