Oct-Sep 96

CALIFORNIA DRUG BILL THREATENS BUSINESSES AND INDIVIDUALS

Did you know that Senate Bill 1754-which was passed on August 20, 1996 by the California Senate and Assembly (Senate Bills Room [916] 445-2323)-will target both individuals and legitimate national business interests? Under this bill, anyone-if convicted of possessing drugs for sale or giving away even a small amount-can be financially destroyed by hundreds of civil suits from county first parties (drug-users) and third parties (non-drug-users). In fact, under this bill, innocent California individuals, businesses, and corporations do not have to be convicted of drug offenses to be sued by purported drug-injured parties for allegedly giving away or furnishing drugs! Introduced on February 22, 1996, by Senator Calderon, (916) 327-8315, "The Drug Dealer Liability Act," SB 1754- will pass into law if Pete Wilson signs it.

As presently drafted, this law permits businesses and their owners to be sued for economic and non-economic damages resulting from the alleged distribution of illegal drugs from a business location. California neighborhood communities increasingly file class action suits for economic damages and attorney fees against alleged negligent apartment-house owners who allow drug activity to take place at their rental property. Such suits need only "allege" that a business or property owner's negligence allowed drug activity, causing other neighborhood properties to depreciate in value. Subsequently, neighborhoods (for example, tenants and neighbors harassed by local drug dealers and users) can then sue for non-economic damages. Californians may even file suits across state lines by alleging they were economically damaged by interstate illegal drug activity.

For further information regarding the possible latitude of judgment awards for economic and non-economic damages, check with McGeorge Law School in Sacramento, CA, (916) 739-7191.


First and Third Parties

SB 1754 establishes damages for first and third parties. FIRST PARTIES. Under SB 1754, drug-users are first parties to a civil suit for economic damages and may sue severally any county-convicted drug dealer if the dealer distributed the same type of specified drugs that the drug-user used. Drug-users may also sue for economic damages any unconvicted drug dealer or legal entity who allegedly provided drugs to the drug-user.

THIRD PARTIES. Under SB 1754, third parties (non-drug users) can sue severally for economic or non-economic damages any individual or legal entity convicted of causing to distribute or give away an illegal drug in the county. They can sue for having been harmed indirectly if, for example, their child or spouse used the same type of illegal specified controlled substance that was distributed. They can also sue any unconvicted individual or legal entity whom they believe distributed or gave away drugs to a direct drug-user.

Economic damages can include cost of drug treatment, rehabilitation, medical expenses, potential economic or educational loss or injury, and any other pecuniary loss proximately caused by the use of an illegal controlled substance. Non-economic damages can include "physical and emotional pain, suffering, physical impairment, emotional stress, mental anguish, loss of enjoyment, loss of companionship and consortium."

Question: If a California hotel executive or employee gives away or furnishes drugs at a company party, unknown to the principal owners of the hotel, or if a principal hotel owner has a drug problem and possesses illegal drugs at the business location and/or is convicted of selling or giving away less than 1 ounce of cocaine to anyone at the work place, would the entire corporation be sued thousands of times by the county's first parties and third parties, or would only the convicted partner's interest in the hotel be destroyed by a barrage of county civil suits? California communities now sue negligent county polluters for allegedly causing citizens health and other related injuries. Will California county residents use the same legal premise under SB 1754 to sue business locations and owners for economic and noneconomic damages by alleging an owner's negligence caused illegal drugs to be given away, sold, transported to or from a county business location?

Federal and State Governments now civilly seize and forfeit property of landlords who cannot prove they were not negligent in discovering and/or mitigating drug activity at their rental or business property. The civil basis for state and federal forfeiture of landlord rental/business property is that the business location was used to facilitate the distribution of drugs. Unfortunately the Drug Enforcement Agency (DEA) has no definition of what constitutes landlord vigilance to discover drug activity at their business or rental property or what acts by an owner will satisfy DEA standards to mitigate drug activity once discovered.


Employers

Under sb 1754's establishment of economic and non-economic damages, employers who had knowledge of drug activity at the work place may be subject to being sued by all their employees (first and third parties) who allege to have been harmed directly or indirectly by drugs. Furthermore, any corporate owner/organization officer having an alleged association with drug-users could erroneously be convicted of conspiracy to distribute or give away small amounts of drugs. The conspiracy conviction is enough to cause the assets of an individual, corporation or organization to be devastated by unlimited civil law suits (see SB 1754 Level 1, 2, 3, 4, Offenses).

SB 1754 may present huge scam opportunities for drug-users or others where plaintiffs don't need a conviction to sue. Under 11713, page 11, lines 14 (c)- line 18, for example, drug-users could be both husband and spouse, employed by separate employers. Each spouse could be a third party plaintiff suing the other's employer or suing as both first and third party plaintiffs if both spouses work at the same place. Like racketeering laws, there may be no end to civil liability.

It appears that the civil penalty provisions of SB 1754 are so severe that a corrupt employee or associate partner could separately or jointly blackmail a corporation whose employees or owners have drug problems. SB 1754 extends special breaks to drug-users for testifying in civil suits (against former or present employers, employees, or anyone else), allowing them to share in the defendant's assets after a defendant loses in court. Because of these financial incentives, SB 1754 could well create a whole new information industry.

Furthermore, evidence provided by drug-user employees and others in civil suits may be sufficient for the federal government to allege owner negligence and civilly forfeit a business location, and/or for first party and third party plaintiffs to sue business owners and corporations for negligence in allowing or not mitigating illegal drugs in the work place.

Anyone convicted of giving away, even less than 1 ounce of cocaine, would be presumed 25% guilty from the onset in any civil trial in which a defendant was sued severally by first and third parties alleging to have been injured indirectly by the same type of drugs or directly by the actual batch of drugs caused to be distributed by a convicted distributor.

Drug Prevention?
Corporations and businesses under SB 1754 have little incentive to mitigate or help police stop drug activity at the work place. If a corporate principle or executive, for example, is convicted of giving away a tiny amount of cocaine at the workplace, where a reasonable fine and/or probation would have been required, corporate executives, owners, and employees could lose everything they own under SB 1754, including retirement and pensions, to civil suits from first and third party employees. Corporate owners and high level executives with drug abuse problems could easily be blackmailed by corrupt employees or others-potentially forcing open the door for corporate thefts and/or corruption in a business. SB 1754's civil provisions are so severe that corporate drug-abusers or anyone with assets may be afraid to expose themselves by even seeking group or individual rehabilitation. SB 1754 is not retroactive, but in the future, first- and third-party plaintiffs could be located through legal advertising and distribution of information flyers to people attending substance abuse meetings.



Inter- & Intra-state Civil Liabilities

Successive liability of new business owners and investors would be of tantamount concern. Potential owner-liability may open the door for legitimate corporations to be financially ruined by having to pay unlimited defense costs and potential economic/non-economic damages to employees and others, thereby clouding title to corporate real estate and encumbering their business contracts when plaintiffs are granted exparte prejudgments (see SB 1754, p. 11, 11713, lines 19-25). Corporations or individuals faced with criminal or civil drug liabilities may find it difficult to sell any part of their corporation or business, as SB 1754 is written like RICO (Racketeering Laws) where the civil illegal drug liability never ends.


Is Justice Served?

A substance-abuser convicted of "giving away" any amount less than one ounce of a specified illegal controlled substance may escape jail, but even a wealthy defendant might be financially ruined by first party civil suits from drug-users and third party suits from non-drug-users alleging to have been harmed by the same type of drugs in the county where the defendant was convicted of distributing drugs.

Receipt of a small amount of drugs may constitute possession for sale. SB 1754, p. 6, 11704-B, permits law enforcement to "market, sell/give away drugs" and the bill removes the proof requirement that a defendant actually distributed the drug which the plaintiff alleges caused him or her harm. Should any government agent allege to have found a small amount of illegal controlled substance in a person's home or automobile, resulting in a conviction for possession for sale, all of a defendant's assets not involved at the location of arrest, could be lost to county civil suits from persons claiming to have been directly or indirectly harmed by the same type of drug(s).

After enactment of SB 1754 , will attorneys be rushing to county courthouses on behalf of alleged drug-injured parties-to sue for damages and attorney fees any person with assets who has been charged with distributing small amounts of drugs?

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