Napkin Deal

The Napkin Deal was an agreement between tobacco industry lobbyists and political influentials that altered the basics of tort law in California for almost ten years.

On September 10, 1987, California Assembly Speaker Willie Brown (a Democrat from San Francisco), who had by the end of the 1988 election cycle received $125,900 in campaign contributions from the tobacco industry, hosted a dinner meeting at Frank Fat's, a Sacramento restaurant popular with influential figures from the state Capitol. Brown invited trial lawyers, representatives of the California Medical Association and insurance companies to work out a tort reform agreement that would accommodate the interests of all involved and avoid an expensive ballot initiative battle. They were joined by lobbyists from the tobacco industry. Public health and consumer groups were excluded from the dinner.

The parties worked out an agreement in which everyone got something. Insurance companies got protection from lawsuits and avoided regulation of their industry, doctors kept their existing liability protections and got a higher standard of proof that a victim had to meet to receive damages, and trial lawyers got larger contingency fees to compensate them for the fact that the cases would be harder to win. The tobacco industry, as well as producers of products like castor oil, butter, sugar, and alcohol, got virtual immunity from lawsuits based on consumer use of its “inherently” unsafe product.

The deal was written on a napkin, thus the name the “Napkin Deal.” The agreement emerged as a legendary political deal in the state capitol. The legislation that resulted from the agreement was introduced by Senator Bill Lockyer (D-Hayward). It had a a perfunctory one-hour committee hearing, went to the floor (where it was blocked from amendment by the leadership), and passed by a wide margin.

The agreement became California Civil Code Section 1714.45, which barred claims against tobacco or other products whose risks were allegedly well-known. Tobacco lawsuits pending in California courts at the time the law went into effect were dismissed. In 1997 the California Legislature repealed the Napkin Deal statute.