Watchdogs say Correa bill, business-backed initiative would weaken ability to sue.
The Orange County Register (California)
As lawmakers looked at ways to rein in California’s controversial unfair-competition law, consumer groups warned Thursday that a business-backed initiative to change the statute would jeopardize future, groundbreaking consumer protections.
To solve the issue and avoid an expensive initiative campaign, Assemblyman Lou Correa, D-Anaheim, introduced AB2369, a bill he said would guard businesses against frivolous lawsuits and maintain the law’s consumer-protection powers.
“This measure is our best chance at fixing a well-intentioned law that is now so broken it has become a threat to our economy,” Correa said in a statement.
But a coalition of 60 consumer, environmental and civil-rights groups called Election Watchdog said Correa’s bill weakens the law, while a separate initiative sponsored by a Sacramento tort-reform group incapacitates the law — section 17200 of the state Business and Professions Code.
The groups, which include the AARP, CalPIRG, Mexican American Legal Defense and Education Fund, Sierra Club and United Farm Workers, are urging backers of the initiative to withdraw their support.
“This is an assault — not on (consumer) attorneys, as it’s being presented — but on public-interest groups’ ability to stop pollution, deception, predatory lending and discrimination and an assault on keeping society safe,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights and a founder of Election Watchdog.
The effort to restrict consumer attorneys from suing businesses under the law has been gathering steam for several years. Business owners say they are wasting their time and money fighting trivial lawsuits. A spate of shakedown lawsuits in 2002 against thousands of Southern California small businesses fueled anger and gave the effort new momentum.
Though the shakedown suits were universally declared an attack on small businesses, many who favor limiting section 17200 now say they exposed years of frivolous litigation by other lawyers.
The initiative, sponsored by the Civil Justice Association of California and funded by a coalition of large auto dealerships, HMOs and mortgage companies, allows only individuals or groups who have suffered a financial loss to sue under the unfair-competition law. The current law allows individuals or groups to sue regardless of whether they have been injured by the defendant.
“When people are deceived, they haven’t necessarily lost money or property yet,” Court said. “It’s necessary to prevent injury first.”
Court’s group agrees some change is necessary to protect businesses, such as court approval of settlements and notification of lawsuits to the regulators.
Correa, whose first effort to amend the law failed last year, also would require plaintiffs to notify regulatory and law enforcement officials when filing a suit. His bill would prohibit others from suing if a regulatory or government agency already had brought an action.
Correa’s spokesman said the lawmaker has been working with Gov. Schwarzenegger on changes to the law, but the governor has not yet endorsed any 17200-related bill.
CJAC President John Sullivan said that consumer groups are “overreacting to common-sense changes” and that there are sufficient laws for consumers who suffer real injuries from a business.
“They talk now that there are these changes that could be made,” he said. “But these groups have sat back and let the trial lawyers sue.”
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