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With details on the governor’s plan to commandeer 75 percent of all punitive damage awards still sketchy, some California lawyers are having trouble staking out a position. But plaintiffs attorneys say at least one part of last week’s budget proposal will never fly. “First of all, you have to take off the tables the elimination of one award per defendant,” said James Sturdevant, president of the California Consumer Attorneys Association. Assembly budget Chairman Darrell Steinberg, D-Sacramento, is also on record as likely to oppose the one-award-per-defendant limit on punitive damages. In brief language buried deep in his May budget revision, Gov. Arnold Schwarzenegger proposed last week to raise $450 million by diverting punitive damages. But the governor didn’t spell out whether the state would get its cut before or after the lawyers, nor whether the state would attempt to take a portion of settlement proceeds. It’s also not clear what, if anything, juries might be told about the diversion of a possible verdict. Joseph Cotchett, a possible candidate for state attorney general who has also won some of the largest punitive damages awarded in a civil case — $2.5 billion just for the Lincoln Savings and Loan case — theorized that the one-time limit on punitives was meant as a negotiating chip. “He threw that out as a tradable,” said Cotchett, who supports the idea of turning punitive damages over to the state. Sen. Richard Ackerman, R-Irvine, the new Senate Republican leader, agreed the governor might try to use that part of his plan to coax the state’s trial lawyers into agreeing to the diversion of some punitive awards. “They will probably want to get something back for it,” said Ackerman. He called the proposals a good idea, but said similar proposals died in committee. A representative from the insurance industry said his group is waiting to see whether juries would be informed that a large chunk of punitive damages could go to a public entity. “The argument has been made that a law like this would encourage punitive damages,” said Bill Gausewitz, assistant vice president of the American Insurance Association, which represents more than 400 companies. “My personal view is that’s a stretch.” But the real horse trading isn’t expected to start until details of the plan are laid out in an actual bill. Sturdevant said the plaintiffs bar will be looking at “the lowest allocation” of punitive damages possible going to the state. While the governor’s proposal was originally mum on whether plaintiffs attorneys would take their cut before or after the state gets its 75 percent, a report from legislative analyst Elizabeth Hill states “the 25 percent would go to plaintiffs, as well as cover attorneys fees.” Hill also said $200 million would be a more “realistic estimate” of the revenue the state is likely to see. “When we really get down to brass tacks, how many dollars are really talking about coming into the state coffers?” Sturdevant asked. “That’s still a hefty chunk of change,” countered John Sullivan of the Civil Justice Association of California, which is supporting the governor’s proposal.

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