BILL ANALYSIS                                                                                                                                                                                                    

                    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

    Products Liability:  Repeal of Immunity for Tobacco  


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.


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  

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.

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  


  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  

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  

  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.  

  1714.45 IS CHANGED? 

  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  
                  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

Source:  Author

Related Pending Legislation:  SB 340 (Sher) 

Prior Legislation:  None Known