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Corporations Use Prop 64 to Attack Pending Consumer Protection Suits

Santa Monica, CA — Big corporations charged with violating patients’ medical privacy, marketing alcohol to minors and overcharging wireless phone customers are among the defendants trying to apply Prop 64 retroactively to avoid accountability under lawsuits filed before the law was approved in November. This attempt contradicts representations made by Prop 64 proponents to voters that the law would not be retroactive and would not apply to pending lawsuits.

Prop 64 proponents also told the electorate the initiative was aimed at stopping baseless suits against small businesses, not legitimate consumer protection cases against big business. It is, however, large corporate donors to the initiative that are aggressively seeking to dismiss unfair business competition lawsuits filed against them prior to the election, according to consumer advocates.

The Foundation for Taxpayer and Consumer Rights (FTCR) today released a list of pending cases under attack, including suits against 15 corporations that gave $2.2 million to the Prop 64 campaign. At least 55 consumer and public health protection cases are under assault by defendants who claim Prop 64 is retroactive. Among the pending cases that big business donors to Prop 64 are seeking to have dismissed using the initiative:

  • Albertsons and the nation’s largest pharmaceutical companies, which together gave $352,000 to the Prop 64 campaign, are charged with illegally sharing pharmacy patients’ private medical information as part of drug marketing efforts;
  • Anheuser-Busch and Miller Brewing Co. are challenged with targeting new alcoholic products at, and marketing to, minors in a suit brought by parents whose 20-year-old daughter was killed by an 18-year-old drunk driver. The brewers gave $125,000 to the initiative;
  • Cingular Wireless, owned by SBC Communications ($35,000 to Prop 64), faces suit to stop it from charging cell phone customers international rates for domestic calls that the company routes through cell towers in Mexico.

“The big businesses behind Prop 64 are not trying to help small businesses as they claimed, but to throw out important suits to protect medical privacy, stop wireless overcharges and end alcohol marketing to underage kids,” said Carmen Balber, consumer advocate with FTCR.

During the election, Proposition 64 backers claimed that the measure’s only purpose was to protect “small businesses” from “shakedown lawsuits” and that “Proposition 64 will do nothing to dampen the enforcement of these important [consumer protection] laws.”

Prop 64 proponents explicitly told voters that Prop 64 would not stop public health and consumer protection cases and would not be retroactive, but now the very same companies funding the campaign are attacking already filed lawsuits to protect the public health and the consumer, ” said FTCR President Jamie Court. “Two months after its passage, Prop 64 is already proving to be the greatest threat to consumer, public health and environmental protections in decades.”

California law holds that initiatives cannot be applied retroactively unless the measure’s language explicitly states it is retroactive. Proposition 64 does not, but defense attorneys have seized upon a procedural argument that process changes can be applied retroactively — an argument which appears to be holding sway with some judges.

Corporate Donors Attack Consumer Protection Suits With Prop 64

Some of the pending cases that Prop 64 donors are trying stop by invoking the initiative (and the amounts the defendant gave to Prop 64) include:

  • Privacy Rights Clearinghouse v Albertsons, et al ($352,000*) — Supermarket pharmacy illegally shared patients’ private medical information with drug companies.
  • Consumer Advocates v DaimlerChrysler ($1,500,000**) — Automaker broke California Lemon Law 15 different ways.
  • Krumme v Mercury ($50,000) — Mercury‘s insurance “brokers” claimed to work independently for their customers but actually worked for the insurance company.
  • Diaz v Fresno Dodge ($9,800) — Car dealer hid bank and financing fees from buyers.
  • California Consumer Health Care Council v Aetna ($25,000) — Health insurer falsely told medical negligence victims they had waived their right to trial by jury.
  • Utility Consumers’ Action Network v SBC; UCAN v Cingular Wireless; Woods v Cingular Wireless ($35,000) — Deceptive advertising of international calling rates; overcharging wireless customers international rates for domestic calls; unilaterally changing wireless contract terms.
  • Jones v Citigroup ($100,000) — Bank failed to disclose charges to credit card customers.
  • Goodwin v Anheuser-Busch and Miller Brewing Co. ($125,000) — Targeting new products at, and marketing to, minors.

Donors are not the only corporations attack consumer protection suits under using Prop 64. Some others include:

  • Foundation Aiding the Elderly v Covenant Care — Nursing home fails to meet minimum nurse staffing requirements.
  • Benson v Kwikset — Company claimed locks made in Mexico were all-American made.
  • Wilson v Brawn — Company added fraudulent “insurance” charge to all mail order purchases.
  • Turner v UnumProvident Corp — Unfair disability insurance claims process and fraudulent marketing.
  • Poulson v Daily News — Newspaper threatens “collection measures” to obtain payment for continued service that was not ordered.
  • Pacific Shore Funding v Kairouz; Pacific Shore Funding v Miller — Failure to make required loan disclosures.
  • Wilens v JP Morgan — Bank failed to disclose charges to credit card customers.
  • Litalien v General Electric Capital Corp — Unlawful overcharges by lender on commercial leases.
  • Kim v Bayer — False advertising by supplement producer.

* Including California Grocers Association, and pharmaceutical company plaintiffs that participated in the marketing scheme: AstraZeneca, Pfizer, Aventis, Wyeth and GlaxoSmithKline.
** DaimlerChrysler is a founding member of the Alliance of Automobile Manufacturers, a $1.5 million donor.

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Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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