BILL ANALYSIS                                                                                                                                                                                                    





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular  Session


          SB 1161 (Allen)
          Version: March 29, 2016
          Hearing Date: May 3, 2016
          Fiscal: No
          Urgency: No
          TH   


                                        SUBJECT
                                           
            Statutes of Limitation: California Climate Science Truth and  
                             Accountability Act of 2016

                                      DESCRIPTION  

          This bill would retroactively extend the statute of limitation  
          to 30 years for claims brought under the Unfair Competition Law  
          alleging unfair competition with respect to scientific evidence  
          regarding the existence, extent, or current or future impacts of  
          anthropogenic induced climate change.  The retroactive statute  
          of limitation created by this bill would apply only to claims  
          brought by specified public prosecutors.

          (This analysis reflects author's amendments to be offered in  
          Committee.)

                                      BACKGROUND  

          Recent news articles from the Los Angeles Times and the Energy  
          and Environmental Reporting Project at Columbia University's  
          Graduate School of Journalism have revealed a striking  
          disconnect between the public positions taken by oil companies  
          over the past few decades, and the internal planning and  
          research conducted by those same companies, regarding  
          human-induced climate change.  According to the Times:

            Before most Americans were even aware of global warming, Exxon  
            was investing in high-quality research on the subject.   
            According to reports . . . the oil company's scientists  
            concluded in the 1970s, '80s and '90s that climate change was  








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            real, would transform the Earth's landscape and was driven by  
            human activity - especially the burning of fossil fuels.

            As the debate over climate change began in earnest, however,  
            Exxon didn't use its wealth of scientific findings to issue an  
            alarm to the world, or even to add a supportive,  
            attention-grabbing voice to those of the climatologists who  
            were trying to convince policymakers and the public.  Instead,  
            company officials publicly cast doubt on the very existence of  
            global warming, arguing that the science was just too murky to  
            draw a conclusion.  (Editorial Board, Exxon's Damaging Denial  
            on Climate Change, Los Angeles Times, Oct. 15, 2015  
             [as  
            of Apr. 27, 2016].) 

          Exxon was not the only oil company seemingly experiencing this  
          disconnect.  According to another Times article:

            A few weeks before seminal climate change talks in Kyoto back  
            in 1997, Mobil Oil took out a bluntly worded advertisement in  
            the New York Times and Washington Post.  "Let's face it: The  
            science of climate change is too uncertain to mandate a plan  
            of action that could plunge economies into turmoil," the ad  
            said.  "Scientists cannot predict with certainty if  
            temperatures will increase, by how much and where changes will  
            occur."

            One year earlier, though, engineers at Mobil Oil were  
            concerned enough about climate change to design and build a  
            collection of exploration and production facilities along the  
            Nova Scotia coast that made structural allowances for rising  
            temperatures and sea levels.  (Amy Lieberman and Susanne Rust,  
            Big Oil Braced for Global Warming While it Fought Regulations,  
            Los Angeles Times, Dec. 31, 2015  
             [as of Apr. 27,  
            2016].)

          Through an examination of "oil industry records and interviews  
          with current and former executives," the Times and the Energy  
          and Environmental Reporting Project discovered that this  
          "two-pronged strategy was widespread within the industry during  
          the 1990s and early 2000s," finding that "[a]s many of the  
          world's major oil companies - including Exxon, Mobil and Shell -  
          joined a multimillion-dollar industry effort to stave off new  







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          regulations to address climate change, they were quietly  
          safeguarding billion-dollar infrastructure projects from rising  
          sea levels, warming temperatures and increasing storm severity."  
           (Id.)

          This bill would allow specified public prosecutors to bring  
          claims against oil companies that engaged in this practice under  
          California's Unfair Competition Law by retroactively extending  
          the statute of limitation to 30 years for claims alleging unfair  
          competition with respect to scientific evidence regarding the  
          existence, extent, or current or future impacts of anthropogenic  
          induced climate change.

                                CHANGES TO EXISTING LAW
           
           Existing law  , the Unfair Competition Law, protects consumers and  
          competitors against unlawful, unfair or fraudulent business acts  
          or practices and unfair, deceptive, untrue, or misleading  
          advertising.  (Bus. & Prof. Code Sec. 17200 et seq.)

           Existing law  states that any person who engages, has engaged, or  
          proposes to engage in unfair competition may be enjoined in any  
          court of competent jurisdiction.  (Bus. & Prof. Code Sec.  
          17203.)  

          Existing law  states that, in addition to other remedies, any  
          person who engages, has engaged, or proposes to engage in unfair  
          competition 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 California by specified public prosecutors.  (Bus. & Prof.  
          Code Sec. 17206(a).)

           Existing law  states that any action to enforce a cause of action  
          pursuant to the Unfair Competition Law shall be commenced within  
          four years after the cause of action accrued.  (Bus. & Prof.  
          Code Sec. 17208.)

           This bill  states that, notwithstanding the above provision, an  
          action may be brought pursuant to the Unfair Competition Law  
          against a corporation, firm, partnership, joint stock company,  
          association, or other organization of persons that has directly  
          or indirectly engaged in unfair competition with respect to  
          scientific evidence regarding the existence, extent, or current  
          or future impacts of anthropogenic induced climate change if the  







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          action is commenced within 30 years of an act giving rise to the  
          cause of action.

           This bill  specifies that actions alleging claims described in  
          the provision above that are otherwise barred as of January 1,  
          2017, solely because the statute of limitation specified in the  
          Unfair Competition Law has or had expired are revived to the  
          extent that the actions are commenced within 30 years of an act  
          giving rise to the cause of action.

           This bill  specifies that the above provision does not apply to  
          actions for which a final and nonappealable judgment has been  
          rendered.

           This bill  specifies that its provisions shall only apply to  
          actions brought by the Attorney General, or a district attorney.
          
                                        COMMENT
           
           1.Stated need for the bill  

          According to the author:

            Recent research has shown that nearly two-thirds of all  
            industrial carbon dioxide and methane released into the  
            atmosphere since the dawn of the industrial revolution can be  
            traced to just 90 entities.  The top five investor-owned  
            companies on the list- Chevron, ExxonMobil, British Petroleum,  
            Shell, and ConocoPhillips-are responsible for one-eighth of  
            all emissions.
            New discoveries by Inside Climate News, the Los Angeles Times,  
            and a Union of Concerned Scientists' report, The Climate  
            Deception Dossiers, show that by the 1980s the fossil fuel  
            industry was well aware of the emerging scientific consensus  
            that emissions from the burning of fossil fuels was increasing  
            global temperature.  In fact, many companies engaged in their  
            own climate change research and shared some of this research  
            with others in the industry.  Exxon's own climate scientists,  
            for example, conducted cutting-edge climate change research in  
            the late 1970s and early 1980s.  There is also evidence that  
            companies began factoring projected climate change into their  
            own business decisions and operations.

            State law provides a broad right of action to challenge  
            "unfair" business practices. Generally, the law establishes a  







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            statute of limitations of four years, though case law  
            indicates that if the legislature finds sufficient cause, it  
            has the ability to retroactively extend the statute of  
            limitations.  Given the environmental, health, and economic  
            impacts that Californians are already paying for as a result  
            of the fossil fuel industry's many years of public deception,  
            it is important to hold the industry responsible. Keeping the  
            statute limited to only four years may undermine the state's  
            ability to hold fossil fuel companies responsible for their  
            practices that extend back well beyond four years, as well as  
            the damages and risks that Californians and everyone else must  
            face for centuries to come.  By extending the statute of  
            limitations, California has the opportunity to hold these  
            companies fully accountable for their actions.

            SB 1161 seeks to extend the statute of limitations under the  
            state's Unfair Competition Law from 4 years to 30 years for  
            deceptive behavior relating to scientific evidence of climate  
            change.

           2.Protecting consumers from unfair business practices  

          California's Unfair Competition Law (UCL), has protected  
          California consumers from "unlawful, unfair or fraudulent  
          business act[s] or practice[s]" for over 70 years.  (Bus. &  
          Prof. Code Sec. 17200.)  It renders an individual liable for any  
          unlawful, unfair, or fraudulent business act or practice and any  
          unfair, deceptive, untrue, or misleading advertising.  In  
          describing the Unfair Competition Law's broad scope, the  
          California Supreme Court explained: "it does not proscribe  
          specific practices.  Rather . . . it defines unfair competition  
          to include any unlawful, unfair or fraudulent business act or  
          practice.  Its coverage is sweeping, embracing anything that can  
          properly be called a business practice and that at the same time  
          is forbidden by law."  (Cel-Tech Communications, Inc. v. Los  
          Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180  
          (internal quotation marks and citations omitted).)

          This bill would explicitly authorize district attorneys and the  
          Attorney General to pursue UCL claims alleging that a business  
          or organization has directly or indirectly engaged in unfair  
          competition with respect to scientific evidence regarding the  
          existence, extent, or current or future impacts of anthropogenic  
          induced climate change, provided the action is commenced within  
          30 years of the act giving rise to the cause of action.  In  







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          effect, the bill would allow these public prosecutors to reach  
          back and hold firms accountable for allegedly misleading  
          consumers about the harmful effects of human-induced climate  
          change despite knowing that these harms were likely to  
          materialize.  This sort of claim - an action for redress based  
          on the misleading or fraudulent business practices of another -  
          falls squarely within the mandate of the UCL, which is to  
          "provid[e] an equitable means through which both public  
          prosecutors and private individuals can bring suit to prevent  
          unfair business practices and restore money or property to  
          victims of these practices."  (Korea Supply Co. v. Lockheed  
          Martin Corp. (2003) 29 Cal.4th 1134, 1150.)

           3.Tolling for delayed discovery  

          The Unfair Competition Law (UCL) generally requires litigants to  
          file their claims within 4 years of the date upon which their  
          claim accrued.  (See Bus. & Prof. Code Sec. 17208.)  However,  
          the common law recognizes "a handful of equitable exceptions to  
          and modifications of the usual rules governing limitations  
          periods," and these exceptions and modifications operate to  
          "alter the rules governing either the initial accrual of a  
          claim, the subsequent running of the limitations period, or  
          both."  (Aryeh v. Canon Business Solutions, Inc. (2013) 55  
          Cal.4th 1185, 1192.)  Among the exceptions to the normal rules  
          governing limitations periods is the "discovery rule," which  
          "postpones accrual of a cause of action until the plaintiff  
          discovers, or has reason to discover, the cause of action."   
          (Id.)

          According to a recent California Supreme Court case, "the UCL is  
          governed by common law accrual rules," including the discovery  
          rule, "to the same extent as any other statute."  (Id. at 1196.)  
           Consequently, it is possible that public prosecutors, and any  
          other aggrieved party with standing, could bring a claim against  
          a company that allegedly misled consumers about the harmful  
          effects of human-induced climate change under existing law,  
          given that the revelations of this conduct were made public only  
          recently.  Recognizing this possibility, the author nonetheless  
          states:

            while the delayed discovery rule tolls the statute after the  
            cause of action has accrued (the act, causation, and harms),  
            it is unclear how courts will [rule on this] issue.  There is  
            the possibility that a court could find that a plaintiff could  







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            have discovered their claims more than 4 years ago.  SB 1161  
            avoids stepping into the common law debate by clarifying to  
            courts that they don't need to delve into a legal battle about  
            whether plaintiff had discovered or had reason to discover  
            this very specific cause of action.  Thus, SB 1161 avoids the  
            current uncertainty about whether plaintiff's claims are  
            barred and legislates the extension by focusing on when the  
            act occurred rather than letting one judge decide the  
            discovery analysis and thus about whether these claims should  
            be allowed to proceed.

           4.Extended statutes of limitation  

          Statutes of limitation are a fundamental element of California  
          law.  By limiting the time period within which a party can bring  
          a cause of action against another, statutes of limitation  
          provide finality to disputes that otherwise might never end.   
          Without statutes of limitation, ancient wrongs committed while  
          someone was young might become the subject of litigation years  
          later in their old age.  Statutes of limitation "are designed to  
          promote justice by preventing surprises through the revival of  
          claims that have been allowed to slumber until evidence has been  
          lost, memories have faded, and witnesses have disappeared.  The  
          theory is that even if one has a just claim it is unjust not to  
          put the adversary on notice to defend within the period of  
          limitation and that the right to be free of stale claims in time  
          comes to prevail over the right to prosecute them."  (Order of  
          R. Telegraphers v. Railway Express Agency, Inc. (1944), 321 U.S.  
          342, 348-349.)

          This bill would create a new 30-year statute of limitation under  
          the UCL for claims against defendants that allegedly misled  
          consumers about the harmful effects of human-induced climate  
          change.  A coalition of business organizations, in opposition,  
          state:

            Current law allows unfair competition actions under Business  
            and Professions Code 17200 to be brought within four years.   
            Companies therefore keep their papers and records for a set  
            period of time before discarding them.  No businesses could  
            have anticipated 30 years ago that it would have to defend its  
            routine business activities in the context of climate change  
            litigation.  If you were accused now of doing something on  
            today's date 29 years ago, and had to provide documentation  
            and proof to defend yourself, could you do so?  The  







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            administrative and transactional costs to keeping items for 30  
            years would be prohibitive, and until now, there would have  
            been no reason to do so.
            . . .
            This bill is changing the rules on companies late in the game.  
             An extension of over 26 years, retroactively, is at odds with  
            our notions of fair jurisprudence.
            . . .
            California already places tremendous burdens upon the  
            companies it depends upon for its tax base.  Our civil justice  
            system is already perceived as the least fair in the country,  
            as evidenced by our ranking, yet again, as the nation's number  
            one "judicial hellhole."  This bill will require companies to  
            operate in a constant state of "litigation preparedness,"  
            spending time and resources on preserving, organizing and  
            maintaining information in the event that they are eventually  
            sued.

          Writing in support of an extended statute of limitation, the  
          Union of Concerned Scientists, the sponsor of SB 1161, writes:

            We believe that extending the statute of limitations to 30  
            years from an act giving rise to the cause of action is  
            appropriate given the scale and duration of the allegations.   
            The alleged deceit rivals the tobacco industry's disavowal of  
            the link between tobacco and cancer, but the impact of fossil  
            fuels is even greater on people, the environment, and the  
            economy.  Damage of climate change is already occurring and  
            will become more severe as time passes.  Moreover, more than  
            half of all industrial carbon dioxide emissions have been  
            emitted since 1988-a time when the industry knew of the damage  
            caused by their product.  Thus, the gravity of potential  
            misconduct is huge and deserving of a fair hearing on the  
            merits. . . . [W]hether these companies have actually broken  
            the law is something for the courts to decide-SB 1161 is not  
            making that judgment.  The bill only gives law enforcement the  
            opportunity to make sure justice is served for the full weight  
            of any violations that could be proven in court.

          Recognizing the concerns surrounding the creation of a 30-year  
          statute of limitation as proposed in this bill, the Committee  
          might wish to consider alternative pathways that would permit  
          these claims to be brought under the UCL, such as enacting a  
          one-time revival period for otherwise time-lapsed claims, or  
          bolstering applicability of the delayed discovery rule.







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           5.Retroactivity  

          In addition to providing an expanded prospective statute of  
          limitation for bringing specified claims regarding the harmful  
          effects of human-induced climate change, this bill would also  
          have retroactive effect to revive claims that, absent such  
          revival, would be barred as untimely under the UCL's existing  
          4-year statute of limitation.  "Generally, statutes operate  
          prospectively only."  (McClung v. Employment Dev. Dept. (2004)  
          34 Cal.4th 467, 475.)
           
            [T]he presumption against retroactive legislation is deeply  
            rooted in our jurisprudence, and embodies a legal doctrine  
            centuries older than our Republic.  Elementary considerations  
            of fairness dictate that individuals should have an  
            opportunity to know what the law is and to conform their  
            conduct accordingly; settled expectations should not be  
            lightly disrupted.  For that reason, the principle that the  
            legal effect of conduct should ordinarily be assessed under  
            the law that existed when the conduct took place has timeless  
            and universal appeal.  (Landgraf v. USI Film Products (1994)  
            511 U.S. 244, 265 (internal citations omitted).)

          "A statute does not operate [retroactively] merely because it is  
          applied in a case arising from conduct antedating the statute's  
          enactment, or upsets expectations based in prior law.  Rather,  
          the court must ask whether the new provision attaches new legal  
          consequences to events completed before its enactment."   
          (Landgraf, 511 U.S. at 269-70 (internal citations omitted).)   
          "This is not to say," however, "that a statute may never apply  
          retroactively."  (McClung, 34 Cal.4th at 475.)  In California,  
          "[a] statute's retroactivity is, in the first instance, a policy  
          determination for the Legislature and one to which courts defer  
          absent some constitutional objection to retroactivity."  (Id.,  
          at 475.)  Under California law, "a statute may be applied  
          retroactively only if it contains express language of  
          retroactivity or if other sources provide a clear and  
          unavoidable implication that the Legislature intended  
          retroactive application."  (Myers v. Philip Morris Companies,  
          Inc. (2002) 28 Cal.4th 828, 844.)

          The language in this bill makes clear that it would operate  
          retroactively to revive claims brought by public prosecutors  
          against specified entities that directly or indirectly engaged  







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          in unfair competition with respect to scientific evidence  
          regarding the existence, extent, or current or future impacts of  
          anthropogenic induced climate change.  In so doing, it would  
          allow public prosecutors to bring claims under the UCL against  
          corporations that allegedly misled the public about the harmful  
          effects of climate change in the 1980s and 1990s.  Importantly,  
          the retroactive reach of this bill would not extend to claims  
          accruing outside the 30-year statute of limitation, and would  
          not operate to revive claims for which a final and nonappealable  
          judgment has already been rendered.

           6.Author's amendments  

          The author offers the following amendments to clarify the scope  
          of this bill's retroactivity and revival provisions, and to  
          strike specified city attorneys from the list of public  
          prosecutors authorized to bring claims under the extended  
          statute of limitation.

             Amendments  :

            On page 2, line 38, following "Actions" insert "alleging  
            claims described in paragraph (1)"

            On page 3, strike lines 3 through 7, and insert "(3) Paragraph  
            (2) does not apply to actions alleging claims described in  
            paragraph (1) for which a final and nonappealable judgment has  
            been rendered."

            On page 3, lines 9 and 10, strike "or a city attorney of a  
            city having a population in excess of 750,000."


           Support  :  Amazon Watch; As You Sow; Asian Pacific Environmental  
          Network; Azul; California Coastal Protection Network; California  
          League of Conservation Voters; Center for Biological Diversity;  
          Center for Environmental Health; Center for International  
          Environmental Law; Climate Hawks Vote; Climate Resolve;  
          Coalition for Clean Air; Consumer Attorneys of California;  
          Environment California; Fossil Free California; Global Exchange;  
                                                               Interfaith Power & Light; Media Alliance; Natural Resources  
          Defense Council; Rainforest Action Network; Sierra Club  
          California; Stand; Zevin Asset Management, LLC

           Opposition  :  American Chemistry Council; American Insurance  







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          Association; Association of California Insurance Companies;  
          California Business Roundtable; California Business Properties  
          Association; California Building Industry Association;  
          California Chamber of Commerce; California Independent Oil  
          Marketers Association; California Independent Petroleum  
          Association; California Manufacturers and Technology  
          Association; California Retailers Association; Civil Justice  
          Association of California; National Federation of Independent  
          Business; Valley Industry and Commerce Association

                                        HISTORY
           
           Source  :  Union of Concerned Scientists

           Related Pending Legislation  :  None Known

           Prior Legislation  :  None Known

           Prior Vote  :  Senate Environmental Quality Committee (Ayes 5,  
          Noes 2)

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