BILL NUMBER: AB 260 CHAPTERED 07/19/01 CHAPTER 74 FILED WITH SECRETARY OF STATE JULY 19, 2001 APPROVED BY GOVERNOR JULY 18, 2001 PASSED THE SENATE JULY 5, 2001 PASSED THE ASSEMBLY APRIL 16, 2001 INTRODUCED BY Assembly Member Frommer FEBRUARY 14, 2001 An act to amend Section 16760 of the Business and Professions Code, and to amend Sections 11181 and 11187 of the Government Code, relating to state government. LEGISLATIVE COUNSEL'S DIGEST AB 260, Frommer. State departments: investigations and hearings. (1) Existing law requires the Attorney General to distribute monetary relief recovered in civil actions to prohibit acts in restraint of trade and competition pursuant to the discretion of the superior court having jurisdiction over the action, as specified. This bill would, in addition, authorize the superior court to use cy pres or fluid recovery mechanisms as a way of providing value to persons injured as a result of a violation. (2) Existing law authorizes the head of a state department in connection with certain investigations and other actions to issue subpoenas for the attendance of witnesses and the production of papers, books, accounts, documents, and testimony pertinent or material to the investigation or action. This bill would, in addition, authorize the head of any state department to promulgate interrogatories pertinent or material to any inquiry, investigation, hearing, proceeding, or action. (3) Existing law also authorizes the head of a state department to petition the superior court in the county in which a hearing is pending for an order compelling a person to attend and testify or produce the papers required by the subpoena before the officer named in the subpoena. This bill would also authorize the head of a state department to compel answers to interrogatories pursuant to subpoena. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 16760 of the Business and Professions Code is amended to read: 16760. (a) (1) The Attorney General may bring a civil action in the name of the people of the State of California, as parens patriae on behalf of natural persons residing in the state, in the superior court of any county which has jurisdiction of a defendant, to secure monetary relief as provided in this section for injury sustained by those natural persons to their property by reason of any violation of this chapter. The court shall exclude from the amount of monetary relief awarded in the action any amount of monetary relief (A) which duplicates amounts which have been awarded for the same injury, or (B) which is properly allocable to (i) natural persons who have excluded their claims pursuant to paragraph (2) of subdivision (b), and (ii) any business entity. (2) The court shall award the state as monetary relief three times the total damage sustained as described in paragraph (1), the interest on the total damages pursuant to Section 16761, and the costs of suit, including a reasonable attorney's fee. (3) The court may, in its discretion, award a reasonable attorney' s fee to a prevailing defendant upon a finding that the Attorney General or district attorney has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. (b) (1) In any action brought under this section, the Attorney General shall, at any time, in any manner, and with any content as the court may direct, cause notice thereof to be given by publication. If the court finds that notice given solely by publication would deny due process of law to any person or persons, the court may direct further notice to the person or persons according to the circumstances of the case. (2) Any person on whose behalf an action is brought under paragraph (1) of subdivision (a) may elect to exclude from adjudication the portion of the claim for monetary relief attributable to him or her by filing notice of that election with the court within the time as specified in the notice given pursuant to paragraph (1). (3) The final judgment in an action under paragraph (1) of subdivision (a) shall be res judicata as to any claim under this section by any person on behalf of whom the action was brought and who fails to give notice within the period specified in the notice given pursuant to paragraph (1). (c) An action under paragraph (1) of subdivision (a) shall not be dismissed or compromised without the approval of the court, and notice of any proposed dismissal or compromise shall be given in any manner as the court directs. (d) In any action under this chapter, where there has been a determination that a defendant agreed to fix prices, damages may be proved and assessed in the aggregate by statistical or sampling methods, by the pro rata allocation of illegal overcharges or of excess profits, or by any other reasonable system of estimating aggregate damages as the court in its discretion may permit without the necessity of separately proving the individual claim of, or amount of damage to, persons on whose behalf the suit was brought. (e) Monetary relief recovered by the Attorney General under this section shall be distributed as follows: (1) In any manner as the superior court having jurisdiction over the action in its discretion may authorize to insure, to the extent possible, that each person be afforded a reasonable opportunity to secure his or her appropriate portion of the monetary relief. In exercising its discretion, the court may employ cy pres or fluid recovery mechanisms as a way of providing value to persons injured as a result of a violation of this chapter. (2) The Attorney General shall retain that portion of the monetary relief awarded by the court as costs of suit and attorney's fee for deposit in the Attorney General Antitrust Account within the General Fund. (3) To the extent that the monetary relief awarded by the court is not exhausted by distribution under paragraphs (1) and (2), the remaining funds shall be treated under the provisions of Article 3 (commencing with Section 1530) and Article 4 (commencing with Section 1540) of Chapter 7 of Title 10 of Part 3 of the Code of Civil Procedure as if it were unclaimed property, as defined in Section 1300 of the Code of Civil Procedure. (f) The powers granted in this section are in addition to and not in derogation of the powers granted to the Attorney General by common law in respect to bringing actions parens patriae. (g) The district attorney of any county may prosecute any action on behalf of the natural persons residing in the county which the Attorney General is authorized to bring pursuant to subdivision (a), whenever it appears that the activities giving rise to the prosecution or the effects of the activities occur primarily within that county. Prior to bringing the action, a district attorney shall comply with the notice requirements provided in subdivision (g) of Section 16750. In any action brought pursuant to this subdivision, the provisions of subdivisions (a) to (e), inclusive, shall be applicable, except that the portion of monetary relief awarded by the court as attorney's fee and costs shall be retained by the district attorney for deposit in the appropriate account as provided by law. SEC. 2. Section 11181 of the Government Code is amended to read: 11181. In connection with any investigation or action authorized by this article, the department head may do any of the following: (a) Inspect books and records. (b) Hear complaints. (c) Administer oaths. (d) Certify to all official acts. (e) Issue subpoenas for the attendance of witnesses and the production of papers, books, accounts, documents and testimony pertinent or material to any inquiry, investigation, hearing, proceeding, or action conducted in any part of the state. (f) Promulgate interrogatories pertinent or material to any inquiry, investigation, hearing, proceeding, or action. (g) Divulge evidence of unlawful activity discovered from records or testimony not otherwise privileged or confidential, to the Attorney General or to any prosecuting attorney who has a responsibility for investigating the unlawful activity discovered, or to any governmental agency responsible for enforcing laws related to the unlawful activity discovered. SEC. 3. Section 11187 of the Government Code is amended to read: 11187. If any witness refuses to answer any interrogatory or to attend or testify or produce any papers required by subpoena, the head of the department may petition the superior court in the county in which the hearing is pending for an order compelling the person to answer the interrogatories or to attend and testify or produce the papers required by the subpoena before the officer named in the subpoena. The petition shall set forth all of the following: (a) That due notice of the time and place for answering the interrogatories or testifying or the attendance of the person or the production of the papers was given. (b) That the person was subpoenaed in the manner prescribed in this article. (c) That the person failed and refused to answer the interrogatories or to attend or testify or produce the papers required by subpoena before the officer in the cause or proceeding named in the subpoena, or has refused to answer questions propounded to him or her in the course of the investigation or hearing.