BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
John L. Burton, Chairman
1997-98 Regular Session
SB 67 S
Senator Kopp B
As Amended February 14, 1997
Hearing Date: April 8, 1997 6
Civil Code 7
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SUBJECT
Products Liability: Repeal of Immunity for Tobacco
Products
DESCRIPTION
This bill would repeal the current immunity conferred upon
manufacturers and sellers of tobacco products, as specified
in Civil Code Section 1714.45, for products liability.
BACKGROUND
In 1987, the Legislature enacted Civil Code Section 1714.45
to provide an immunity to manufacturers and sellers in a
products liability if: (1) the product was oinherently
unsafeo and commonly known to be unsafe; and (2) the
product is a common consumer product intended for personal
consumption, such as sugar, castor oil, alcohol, tobacco
and butter, as identified in comment i to Section 402A of
the Restatement (Second) of Torts.
In American Tobacco Co. v. Superior Court (1989) 208
Cal.App.3d 480, the First District Court of Appeal stated
that Section 1714.45 was opoorly draftedo and construed the
statute to provide an unconditional immunity to tobacco
products.
More recently, in Richards v. Owens Corning, Inc. (1997) 14
Cal.4th 985, the California Supreme Court construed Section
1714.45 to onegate liability to voluntary users....In other
words, under the conditions of Section 1714.45, a tobacco
supplier simply commits no tort against knowing and
voluntary smokers by making cigarettes available for their
use.oo(Id., at p. 1000.) Richards noted that a
determination of the exact substantive scope of Section
1714.45 was not necessary for the case at hand and that it
otakes no position of the correctness of the American
Tobacco decisiono construing section 1714.45 to provide a
onearly complete immunity.o (Id., footnote 8 at p. 1002.)
CHANGES TO EXISTING LAW
Existing law provides an immunity to a manufacturer or
seller in a product liability action if (1) the product is
inherently unsafe and is known to be unsafe by the ordinary
consumer with common community knowledge who consumes the
product, and (2) the product is a common consumer product
intended for personal consumption, such as sugar, castor
oil, alcohol, tobacco, and butter, as identified in comment
i to Section 402A of the Restatement (Second) of Torts.
The term oproduct liability action" is defined to mean oany
action for injury or death caused by a product, except that
the term does not include an action based on a
manufacturing defect or breach of an express warranty.o
This bill would delete tobacco from the list of
illustrative examples and provide that Section 1714.45 does
not exempt tobacco products from product liability actions.
COMMENT
1. Repeal of tobacco immunity: restoration of private cause
of action
According to the authoros office, this bill is intended
to restore products liability law as it relates to
tobacco products prior to the enactment of Civil Code
Section 1714.45. In support of the repeal, he writes:
"Evidence has now become available showing tobacco
companies may have deliberately manipulated the level of
nicotine, a powerfully addictive substance, in tobacco
products so as to create and sustain addiction in
smokers. In addition, evidence shows the tobacco
companies have systematically suppressed and concealed
material information and waged an aggressive campaign of
disinformation about the health consequences of tobacco
use."
In support, the California Medical Association, one of
the main participants in the tort liability reform
package of 1987, writes: oAt the time, it was not
anticipated that the California courts would interpret
this provision [Section 1714.45] so broadly. Over the
last decade, we have also learned much regarding the
addictive nature of tobacco and the industryos
intentional efforts to mislead the public on the health
effects of tobacco. This, coupled with the courtso broad
interpretation of the California statute, has
precipitated the need to change that statute and remove
tobaccoos liability protections.o
The repeal would leave tobacco manufacturers and suppliers
subject to products liability claims by users of the
product. However, common law defenses, such as
assumption of the known risk, will be available to
tobacco manufacturers and suppliers. In addition,
certain claims may be pre-empted by the 1965 Federal
Cigarette Labeling and Advertising Act and the 1969
Public Health Cigarette Smoking Act. (See Cippollone v.
Liggett Group. Inc. (1992) 505 U.S. 504.) Generally,
some ofailure to warno cases are preempted (those based
on a state-law requirement or prohibition with respect to
advertising or promotion), but state law claims for
damages based on breach of express warranty, intentional
fraud and misrepresentation, or conspiracy to
misrepresent or conceal material facts concerning the
health hazards of smoking, are not pre-empted. Id. at
524.
2. Opposition
Opponents assert that Civil Code Section 1714.45 provides
manufacturers appropriate protection from lawsuits from
individuals who choose to use an inherently dangerous
product. The California Chamber of Commerce writes: "We
do not believe that individuals should be able to engage
in inherently dangerous activities and then sue someone
for the harm which results from that activity. The
current law requires that individuals accept
responsibility for the known consequences of their
actions which we believe is sound policy."
A representative of the tobacco companies have also
expressed opposition to repeal of the immunity. However,
they have not submitted a formal letter of opposition.
3. Prospective repeal only
Some concern has been expressed that SB 67 would apply
only to causes of action arising on or after January 1,
1998, assuming it is enacted this year. In the absence of
specific language in the legislation specifying
retroactive application, a measure will operate
prospectively only upon its enactment.
4. Impact on state recovery actions unclear
The State Attorney General has steadfastly maintained
that the osweeping immunityo of Section 1714.45 bars him
from filing a state lawsuit to recover state costs of
treating residents for tobacco-related illnesses.
(Statement of Steve Telliano, spokesman for the Attorney
General.)
A prospective repeal of the immunity could be used by the
Attorney General to support his contention. If his
claim is correct, passage of this bill should enable him
to sue for costs incurred after January 1, 1998, but
would not solve the problem of suing to recover treatment
costs spent by the state prior to January 1, 1998.
However, substantial doubt has been voiced about the
Attorney General's legal opinion. Several recent court
decisions have already concluded that Section 1714.45
does not provide a osweeping immunityo against public
entity actions. For example, it does not bar a claim for
unfair trade practice under Business and Professions Code
Section 17200. (See Cardoza v. Liggett Group, Inc. et.
al. (1997) No. 651824, San Diego Superior Court, Order
dated October 30, 1996. See, also, People of the State
of San Francisco, et. al. v. Philip Morris Inc., et. al.
(1996) No. 980864, San Francisco Superior Court, Order
dated January 8, 1997. Conspiracy and deceptive
practices claims are not barred by Section 1714.45.) Nor
does it bar claims based on fraudulent conduct. (See
City and County of San Francisco, et. al., v. Philip
Morris Inc., et. al., No. C-96-2090-DLJ, Order dated
February 26, 1997, pp. 18-19. oCalifornia law recognizes
a distinction between claims based on fraudulent conduct
and claims based on defects in a product.... Based on
this distinction, the Court finds that plaintiffos state
law fraud and special duty claims are not barred by
section 1714.45.o)
Moreover, the Attorney General just recently entered into
Liggett Group class action settlement of a claim to
recover state treatment costs.
WOULD THIS BILL BE USED BY THE ATTORNEY GENERAL TO
SUPPORT HIS POSITION THAT HE CANNOT SUE TO RECOVER STATE
COSTS OF TREATING TOBACCO-RELATED ILLNESSES UNTIL SECTION
1714.45 IS CHANGED?
TO REMOVE ANY DOUBT, SHOULD THE BILL BE AMENDED TO ALSO
PROVIDE THAT THE STATE MAY BRING A DIRECT AGGREGATE
ACTION AGAINST TOBACCO COMPANIES FOR THE RECOVERY OF ITS
COSTS?
6. No impact on other products
The bill would not affect the immunity afforded to the
other consumer products illustrated by way of example in
Section 1714.45, to whatever extent the immunity applies.
7. Other pending legislation
SB 340 (Sher) would state the Legislatureos intent in
enacting Civil Code Section 1714.45 in 1987 and provide
that the provision does not apply to any action against a
tobacco company, its successor-in-interest, or a tobacco
industry research organization brought by: 1) any party
who did not voluntarily consume the product; 2) any party
for fraud, misrepresentation, or conspiracy; or 3) a
party on behalf of a public entity to recover the
entityos costs of treatment provided to individuals
injured by the use of tobacco products. SB 340 is also
scheduled for hearing on April 8.
Support: California Medical Association; American Lung
Association;
American Heart Association; American
Cancer Society; City of Los
Angeles; Retired United Pilots
Association; California Nurses
Association; California Alliance for
Consumer Protection; Americans
for Nonsmokers' Rights (if amended)
Opposition: California Chamber of Commerce; Philip Morris:
R. J. Reynolds
HISTORY
Source: Author
Related Pending Legislation: SB 340 (Sher)
Prior Legislation: None Known
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