Bill to Update State’s Unfair Competition Law Fails

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A consumer group says big business, not small, is behind an initiative aimed at making similar changes.

Los Angeles Daily Journal

SACRAMENTO – Another attempt to reform the state’s unfair competition laws failed Tuesday in the Legislature and a consumer group said millions of dollars supporting a reform initiative shows big corporations, not mom-and-pop businesses, are behind it.

It was no surprise to anyone that the Democrat-controlled Assembly Judiciary Committee voted 9-4 to defeat, for a second time, AB102 by Assemblyman Robert Pacheco, R-Walnut. The reconsideration vote was taken without discussion because the committee had already voted to defeat the measure last year, by a 7-4 vote.

Pacheco himself had left the meeting room shortly before the vote to present a measure to another legislative committee.

AB102 was similar to an initiative being circulated for signature gathering to qualify for the November ballot. The bill would have required a plaintiff to have suffered a “distinct and palpable injury” before suing under Section 17200 of the Business and Professions Code. Currently, a plaintiff need not suffer any injury in order to sue under Section 17200.

Under Pacheco’s proposal, a plaintiff also would have had to give a defendant a 90-day notice of his intent to sue, and if a public prosecutor or consumer had already filed an action against the same defendant, another could not be filed.

Proponents said the bill would have helped prevent lawyers from abusing the law by filing multiple suits against small business owners and extorting thousands of dollars from them in settlements to avoid litigation.

Opponents, some of whom are consumer groups, complained the measure would have gutted the law and prevented them from using it to protect consumers who could be harmed by defective products.

Pacheco said his bill’s defeat was no surprise.

“Clearly they don’t want any major changes in the law so I think it will take the initiative route,” he said. “I think I may bring up another bill this year and take a shot at it, but the initiative has in it the things I think the public is willing to accept.”

Anticipating further defeats in the Legislature, reformers formed Californians Against Shakedown Lawsuits to ask voters to change the unfair competition laws.

The group’s measure would require private entities to seek class certification before filing a suit under the statutes. The California Chamber of Commerce and the Civil Justice Association of California support it.

Leaders of the chamber and the tort reform group have complained that lawmakers have refused to listen to the small business community’s complaints about extortionist lawsuits filed under Section 17200.

The Foundation for Taxpayer and Consumer Rights insist the push to change the law is coming from big corporations seeking to “buy immunity” for themselves.

The group released a list of large donors and their contributions in support of the initiative, including $250,000 from Blue Cross and $100,000 checks from such businesses as Bank of America, Microsoft Corp., Southern California Edison and Oracle Corp. Many of those corporations have been targets of unfair business practice actions, said Jamie Court, the foundation president.

Pacheco said small businesses may not be the major contributors to the effort, but public opinion favors the changes.

“I think the initial seed money to get the initiative going has been put out by major corporations,” Pacheco said, adding that small businesses lack the funds to launch an initiative. “Once the initiative gets going they are going to be behind it.”

Trial lawyers have responded by backing several proposed privacy initiatives that would expand the definition of unfair competition to include any act that violates the right to privacy. They would extend the statute of limitations for unfair competition laws to 10 years from four and include a disgorgement feature requiring those found violating the laws to surrender financial gains.

To make the proposals more attractive to voters, they include bans on telemarketing during evening and early morning hours.

Consumer Watchdog
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