California Enacts Prejudgment Interest

A Case Study of Legislative Action

by Albert J. Lipson

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Abstract

This Note presents a case study of one of the most controversial actions of the 1981-1982 California legislative sessions: passage of mandatory prejudgment interest on personal injury awards (SB 203). This law entitles successful plaintiffs to interest,which accrues prior to judgment from the date of the first offer to compromise which is exceeded by judgment, to the date of the satisfaction of the judgment. The study sheds some light on the politics of tort reform in California. Section II reviews the major contested issues and how they were received in the legislature. Section III analyzes the political dynamics that help to explain passage of this bill, considers the role of analysis in the debate, and finally draws some conclusions and generalizations from the exercise.

This report is part of the RAND Corporation note series. The note was a product of the RAND Corporation from 1979 to 1993 that reported other outputs of sponsored research for general distribution.

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