Earlier today I blogged about a proposed bill that would change California punitive damages law. Here’s a proposed bill that doesn’t directly address punitive damages, but would also have a significant effect on punitive damages litigation in California.

Senator Mimi Walters (R-Laguna Niguel) has introduced a bill to change the rate of postjudgment interest in California. Currently, the postjudgment interest rate in California is fixed at 10 percent. Unlike in federal court, the rate is not tied to any market rate. As a result, judgment creditors have been able to earn a greater return than they could get by investing their money almost anywhere else. SB 1117 would change that, reducing the rate to the federal short-term rate plus 2%.

The accrual of postjudgment interest can play a huge rule in punitive damages litigation. In City of Hope v. Genentech, for example, a lengthy appeal culiminated with the California Supreme Court eliminating a $200 million punitive damages award, but the $300 million compensatory damages award accrued roughly $180 million in postjudgment interest during the appellate process, nearly offsetting the benefit of appealing the punitive damages.

As noted by CJAC, which is sponsoring the bill, a similar bill introduced last year was not adopted.