California Proposition 201, "Loser Pays" Rules for Shareholder Lawsuits (1996)

California Proposition 201, also known as the Attorney Fees, Shareholder Actions, and Class Actions Initiative, was on the March 26, 1996 primary election ballot in California as an initiated state statute, where it was defeated.

Proposition 201 would have changed who is responsible for paying the legal expenses of persons involved in shareholder lawsuits, allowing the winner of a shareholder lawsuit to require the losing party to pay the legal fees of the winning side.

Election results

Proposition 201
Result		Votes	Percentage
d No		3,384,580	59.32%
Yes		2,320,747	40.68%

Text of measure

Summary

The official ballot summary that appeared on the ballot said:

• Requires losing party to pay winning party's reasonable attorneys' fees and expenses in shareholder actions against corporations and in class actions based on securities law violations.
• Payment by member of losing party not required if position was substantially justified and payment would be unjust. Court may require losing party's attorney to pay.
• After hearing, court may require plaintiff to furnish bond for defendant's estimated fees and expenses, unless plaintiff owns or traded at least 5% of shares. Plaintiff's attorney may agree to furnish bond and pay defendant's fees and expenses for plaintiff.

Estimated fiscal impact

The California Legislative Analyst's Office provided an estimate of net state and local government fiscal impact for Proposition 201. That estimate was:

• Adoption of this measure would have unknown, but probably not significant, fiscal impact on state and local governments.

Campaign donations

Supporters and opponents of Proposition 201 also supported or opposed Prop 200 and Prop 202. As a result, several campaign committees in 1996 raised and spent money for campaigns relating to all three ballot measures and, in the case of one or two campaign committees, several additional ballot propositions.

Single committees

According to the campaign finance reporting system sponsored by the California Secretary of State, no campaign committees raised or spent money exclusively to support or oppose Proposition 201.

Supporters

According to the campaign finance reporting system sponsored by the California Secretary of State:

• The "Alliance to Revitalize California" spent $15.7 million cumulatively in a campaign to support Prop 200, Prop 201 and Prop 202.

• A group called "Voter Revolt to Cut Insurance Rates" spent $247,561 cumulatively in a campaign to support Prop 200, Prop 201 and Prop 202.

• A group called "Taxpayers Against Frivolous Lawsuits" spent $38.2 million cumulatively in a campaign to support Prop 192, Prop 200, Prop 201, Prop 202, Prop 203 and Prop 204.

• The group called "California Business PAC" spent about $1.8 million cumulatively in a campaign to support Prop 192, Prop 200, Prop 201, Prop 202, Prop 203 and Prop 204. From the same pool of money ($1.8 million) this group also opposed propositions 207, 208, 210, 211, 212, 214, 216 and 217.

Opponents

According to the campaign finance reporting system sponsored by the California Secretary of State:

• A group called "Citizens Against Phony Initiatives" spent $113,045 cumulatively in a campaign to oppose Prop 200, Prop 201 and Prop 202.

• A group called "Citizens for Retirement Protection and Security" spent $12.3 million cumulatively in a campaign to oppose Prop 200, Prop 201 and Prop 202 and to support Prop 211.

• A group called "Frivolous Lawsuit Reform" spent $7.9 million cumulatively in a campaign to oppose Prop 200, Prop 201 and Prop 202 and to support Prop 207.

• A group called "Consumer Attorneys Issues PAC" spent about $3.7 million cumulatively to oppose Prop 200, Prop 201, Prop 202, Prop 209 and Prop 213. With its $3.7 million, the same group also supported Prop 207, Prop 210 and Prop 211.

See also

• California 1996 ballot propositions

External links

• Official Voter Guide to Proposition 201
• Full text of Proposition 201
• March 26, 1996 California elections results
• PDF of the March 26 voter guide