HomeMy WebLinkAbout96-66 - Opposing Proposition 211RESOLUTION NO. 96- 66
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH
CALIFORNIA, IN OPPOSITION TO PROPOSITION 211, THE FRIVOLOUS
SECURITIES LITIGATION INITIATIVE
WHEREAS, Congress passed tough consumer protection laws that curbed
• securities lawyers from filing abusive suits in federal court; and
WHEREAS, Proposition 211, the Securities Litigation Initiative, has been
sponsored by an elite group of East Coast lawyers to allow them to file frivolous
class- action suites in California that are now banned in federal court; and
WHEREAS, California would be the only state in the nation to effectively
overturn federal law and would become a haven for frivolous lawsuits clogging
California's already overburdened courts; and
WHEREAS, a handful of securities lawyers spent millions of dollars to
launch the initiative - one East Coast law firm already put in $3.6 million to protects
its ability to file frivolous suits; and
WHEREAS, passage of Proposition 211 would discourage businesses from
locating in California and help drive California's publicly traded companies out of
state; and
WHEREAS, a recent economic study revealed that the initiative would cause
California's economic output to decrease by $106 billion over the next ten (10) years
costing the state nearly 160,000 jobs over the same period; and
WHEREAS, slower economic growth would deprive the state treasury of $3.4
billion to $5 billion in tax revenue over the next 10 years; and
WHEREAS, the measure would cost the taxpayers nearly $100 million in new
court costs over the next 10 years; and
WHEREAS, California is just emerging from a statewide recession largely due
• to the strength of its bio -tech and high -tech industries which are crucial to the state's
economic survival; and
WHEREAS, money wasted on frivolous securities lawsuits takes company
resources away from research and development, including discovering new cures,
treatments and drugs to fight disease; and
Res. 96 -66
WHEREAS, Proposition 211 would create new liability for small businesses,
including business lawyers, CPA's, banks, stockbrokers, public relations firms and
financial planners; and
WHEREAS, new personal liability for directors and corporate officers would
• make it difficult for growing businesses to attract the experience and talent needed to
compete; and
WHEREAS, government officials, such as the Orange County treasurer held
accountable for bad investments resulting in the County's bankruptcy, would be
exempt from liability within the measure's provisions; and
WHEREAS, lawyers' fees would be unlimited, allowing them to pocket the
lion's share of settlements leaving shareholders with pennies per share; and
law.
WHEREAS, investors are already protected under strong federal and state
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL of the
City of Newport Beach opposes Proposition 211, the Securities Litigation Initiative
under which securities lawyers win and California business, seniors and investors
lose, and urges Californians to oppose the Measure on the November 5, 1996 Ballot.
ADOPTED this 26th
ATTEST:
CITY CLERK
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day of August
MAYOR
1996.