BILL ANALYSIS Ó
SB 1130
Page 1
SENATE THIRD READING
SB
1130 (Wieckowski)
As Introduced February 17, 2016
Majority vote
SENATE VOTE: 24-11
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Judiciary |7-2 |Mark Stone, Burke, |Wagner, Gallagher |
| | |Chau, Chiu, Cristina | |
| | |Garcia, Holden, Ting | |
| | | | |
| | | | |
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SUMMARY: Authorizes a county counsel to request official
evidence of the facts on which advertising claims are based and
take other actions, as specified. Specifically, this bill:
1)Authorizes a county counsel to request any person or business,
on whose behalf advertising claims are made to consumers, to
request evidence of the facts upon which the advertising
claims are made.
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2)Authorizes a county counsel, upon failure of the advertiser to
adequately respond to request within a reasonable period of
time, or if the county counsel has reason to believe that the
advertising claim is false or misleading, to do either or both
of the following:
a) Seek an immediate termination or modification of the
claim by the person, as specified.
b) Disseminate information, taking due care to protect
legitimate trade secrets, concerning the veracity of the
claims or why the claims are misleading to the consumers in
this state.
EXISTING LAW:
1)Makes it unlawful for a person doing business and advertising
in this state from making any false or misleading advertising
claim. (Business and Professions Code Section 17508 (a); all
further statutory references are to this code, unless
otherwise indicated.)
2)Provides that, upon written request by the Director of
Consumer Affairs, the Attorney General, any city attorney, or
any district attorney, any person doing business and
advertising in California shall provide to the official making
the request, evidence of the facts upon which the challenged
advertising claims are based. Specifies that the request
shall be made within one year of the last day on which the
advertising claim is made. If the advertiser to whom the
request is made fails to adequately respond to the request for
information, or if the official making the request has reasons
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to believe that the advertising claim is false or misleading,
the official making the request may do either or both of the
following:
a) Seek an injunction, ordering an immediate termination or
modification of the false or misleading advertisement.
b) Disseminate information, taking due care to protect
legitimate trade secrets, concerning the veracity of the
claims or why the claims are misleading to consumers of
this state. (Section 17508(b) and (c).)
3)Specifies that the above provisions shall not be construed to
hold any newspaper publisher or radio or television
broadcaster liable for publishing or broadcasting any
advertising claims, unless the publisher or broadcaster is the
person making the claims. (Section 17508(e).)
4)Authorizes the following entities to seek an injunction
ordering an immediate termination or modification of the false
or misleading advertising claim: the Attorney General, any
district attorney, county counsel, city attorney, or city
prosecutor in this state. Specifies that the injunction shall
be sought in the name of the people of the State of
California, or upon the complaint of any board, officer,
person, corporation or association, by any person who has
suffered injury in fact and has lost money or property as a
result of the false or misleading advertising claim. (Section
17535.)
5)Provides that any person who violates the False Advertising
Law shall be liable for a civil penalty not to exceed $2,500
for each violation, which shall be assessed and recovered in a
civil action brought in the name of the people of the State of
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California by the Attorney General or by any district
attorney, county counsel, or city attorney in any court of
competent jurisdiction. (Section 17536.)
FISCAL EFFECT: None.
COMMENTS: This bill seeks to remedy what is arguably an
oversight in California's False Advertising Law (Business and
Professions Code Sections 17500 to 17606). California's False
Advertising Law makes it unlawful for any person doing business
in California to make false or misleading advertising claims to
California consumers. In addition to potential civil liability
to a person who is harmed by false or misleading advertising
claim, a person or business that engages in false or misleading
advertising can also be subject to civil actions brought by
various government officials for injunctive relief or civil
penalties. The public officials who may bring an action under
the False Advertising Law include the California Attorney
General, any district attorney, county counsel, or city
attorney. Prior to bringing an action based upon false or
misleading advertising, a public official may request that a
person or business suspected of engaging in false or misleading
advertising provide evidence to support the veracity of specific
advertising claims. If the person or business to whom the
request is made fails to respond or provide satisfactory
evidence in support of the claim, the public official may do
either or both of the following: 1) seek an injunction ordering
the person or business to terminate or modify the false or
misleading claim; 2) disseminate information to consumers about
the nature of the false or misleading claim.
Discrepancy in Existing Law: While the purpose of the False
Advertising Law and the methods for enforcing seem clear enough,
there is nonetheless a curious discrepancy in existing law that
this bill attempts to address. While existing law allows the
Attorney General, any district attorney, county counsel, or city
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attorney to seek injunctive relief or civil penalties to enforce
the False Advertising Law, existing law only allows the Attorney
General, any district attorney or city attorney to request
evidence upon which an advertising claim is based. In other
words, while a county counsel is one of the public attorneys who
may bring an action alleging false or misleading advertising,
the county counsel alone is not authorized to request that a
person or business provide evidence of the facts upon which an
advertising claim is made. According to the county
organizations that support this bill, making this preliminary
request is essential in order to determine whether or not there
is enough evidence of wrongdoing to bring an action and to give
the person or business an opportunity to explain the veracity of
the claim.
It is unclear why a county counsel was omitted from the list of
officials who may request evidence, but the discrepancy has
existed since 1972. Yet, whatever the reason for the omission
of county counsel and however they may have dealt with this
omission in the past, it certainly makes sense that if the
county counsel, like other public attorneys, have the authority
to bring an action for injunctive relief and civil penalties,
they should have the ability, like other public attorneys, to
request a business or advertiser to produce evidence that
supports an advertising claim.
Potential Impact on Litigation Seems Limited: Supporters and
opponents of this bill offer quite different assessments as to
whether this bill will increase or decrease the number of
lawsuits alleging false advertising. Supporters suggest that
this bill could decrease litigation by allowing county counsel
to request substantiation of an advertising claim before filing
a lawsuit. It will give a business the opportunity to defend an
advertising claim before being subject to a lawsuit and
potential civil penalties. Opponents, on the other hand,
contend that this bill "is intended to facilitate additional
litigation." Opponents apparently believe that county counsel
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will use this authority to gather information in support of a
lawsuit that they otherwise would not have brought. However,
there is no evidence that the author and supporters "intend"
this bill to lead to more litigation; indeed, it seems more
likely that this bill will allow county counsel to resolve false
advertising claims without having to initiate litigation.
Before the county counsel files a lawsuit, the business or
advertiser will be given an opportunity to show evidence in
support of their claims. If the county counsel is not satisfied
by that evidence, the county counsel may seek an injunction
requiring the business or advertiser to terminate or "modify"
that claim so that it is not false or misleading. In addition,
since 1974 city attorneys have had the power - like the Attorney
General and district attorneys - to request substantiating
evidence prior to bringing an action, yet the Committee is not
aware of (and opponents have not offered) any evidence showing
that city attorneys have abused that power by making unwarranted
requests or bringing unnecessary lawsuits.
Analysis Prepared by:
Thomas Clark / JUD. / (916) 319-2334 FN:
0003417