BILL NUMBER: SB 143 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 2, 1997
INTRODUCED BY Senator Kopp
JANUARY 13, 1997
An act to add Chapter 6 (commencing with Section 17300) to Part 2
of Division 7 of the Business and Professions Code, relating to
unfair competition litigation.
LEGISLATIVE COUNSEL'S DIGEST
SB 143, as amended, Kopp. Unfair competition litigation:
representative actions.
Existing law prohibits unlawful, unfair, or fraudulent business
acts or practices and unfair, deceptive, untrue, or misleading
advertising. Existing law provides that relief for violations of
these provisions may be obtained by the Attorney General, district
attorneys, county counsels, city attorneys, and city prosecutors, as
specified, or by certain other parties, including a person acting for
the person's interests or on behalf of the general public.
Available remedies under these laws are cumulative, and generally
include injunctive relief, civil penalties, and restitution.
This bill would require unfair business practice actions brought
by private parties on behalf of the interests of the
general public ("representative actions") to comply with certain
requirements. The bill would require a private plaintiff to
be an adequate representative of the interests of the general public
and would provide that the private plaintiff may not have
a conflict of interest with the interests of the general public. The
bill would also require the plaintiff's attorney to be an adequate
representative of the interests of the general public. These matters
would be determined by the court, and the representative cause of
action would be stricken from the complaint if these requirements are
not satisfied, as specified.
The bill would also require the private plaintiff to provide
notice of the representative action to the Attorney General and to
the district attorney of the county where the action is pending. The
defendant would be required to notify the plaintiff and the court of
any other related actions pending in this state against the
defendant.
The bill would also require the plaintiff to notify specified
persons prior to entry of judgment or modification of judgment with
respect to a final determination of the action, and would require a
court hearing to determine if various requirements have been
satisfied. A judgment approved by the court under these
provisions would bar any further actions on representative causes of
actions brought by private plaintiffs against the defendant based on
substantially similar facts and theories of liability.
The bill would also provide that if a prosecutor has commenced an
enforcement action against the same defendant based on substantially
similar facts and theories of liability, a court may stay the
representative action, make an order for consolidation or
coordination of the actions, or make any other order, in the interest
of justice.
The bill would provide that its provisions apply to actions
commenced after December 31, 1997.
The bill includes other related provisions.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 6 (commencing with Section 17300) is added to
Part 2 of Division 7 of the Business and Professions Code, to read:
CHAPTER 6. REPRESENTATIVE ACTIONS ON BEHALF OF PUBLIC
17300. As used in this chapter:
(a) "Enforcement action" means an action by a prosecutor under
Chapter 5 (commencing with Section 17200) or Part 3 (commencing with
Section 17500).
(b) "Prosecutor" means the Attorney General or appropriate
district attorney, county counsel, city attorney, or city prosecutor.
(c) "Representative cause of action" means a cause of action
asserted by a private plaintiff on behalf of the general public under
Section 17204 or 17535.
17301. (a) A private plaintiff may plead a representative cause
of action on behalf of the interests of the general public
under Section 17204 or 17535 only if the requirements of this
chapter are satisfied.
(b) The private plaintiff shall separately state the
representative cause of action in the pleadings, and shall designate
it as being brought "on behalf of the interests of the
general public" under Section 17204 or 17535, as applicable.
17302. (a) A private plaintiff in a representative action
must be an adequate representative of the interests of the
general public pled and may not have a conflict of interest
that reasonably could compromise the good faith representation of
the interests of the general public pled. The private
plaintiff is not required to have sustained any injury by the
defendant.
(b) The attorney for a private plaintiff in a representative
action must be an adequate legal representative of the interests of
the general public pled.
(c) On noticed motion of a party or on the court's own motion, the
court shall determine by order whether the requirements of
subdivisions (a) and (b) are satisfied. The determination may be
based on the pleadings. The court may inquire into the matters in
its discretion or may permit discovery. In making its determination,
the court shall consider standards applied in class actions. If the
court determines that the requirements of subdivisions (a) and (b)
are not satisfied, the representative cause of action shall be
stricken from the complaint.
(d) An order under this subdivision may be conditional, and may be
modified before judgment in the action.
(e) This section does not preclude the court from granting
appropriate preliminary relief before a determination is made under
subdivision (c).
17303. Within 10 days after commencement of a representative
action, the private plaintiff shall give notice of the action and of
any application for preliminary relief, together with a copy of the
complaint, to the Attorney General and to the district attorney of
the county where the action is pending. Notice of any application
for preliminary relief shall be given in the same manner as notice is
given to the defendant.
17304. (a) Promptly after summons is served on the defendant in
an enforcement action or representative action, the defendant shall
notify the plaintiff and the court of any other enforcement actions,
representative actions, or class actions pending in this state
against the defendant that are based on substantially similar facts
and theories of liability and that are known to the defendant.
(b) Promptly after summons is served on the defendant in an
enforcement action, representative action, or class action in this
state, the defendant shall give notice of the filing to the plaintiff
and the court in all pending enforcement actions and representative
actions in this state against the defendant that are based on
substantially similar facts and theories of liability and that are
known to the defendant.
17305. (a) With respect to a representative cause of action, at
least 45 days before entry of a judgment, or any modification of a
judgment, which is a final determination of the representative cause
of action, the private plaintiff shall give notice of the proposed
terms of the judgment or modification, including all stipulations and
associated agreements between the parties, together with notice of
the time and place set for a hearing on entry of the judgment or
modification, to all of the following:
(1) The Attorney General.
(2) The district attorney of the county where the action is
pending.
(3) Other parties with cases pending against the defendant based
on substantially similar facts and theories of liability known to the
plaintiff.
(4) Each person who has filed with the court a request for notice
of the terms of judgment.
(5) Other persons as ordered by the court.
(b) A person given notice under subdivision (a) or any other
interested person may apply to the court for leave to intervene in
the hearing provided by Section 17306. Nothing in this subdivision
limits any other right a person may have to intervene in the action.
(c) On motion of a party or on the court's own motion, the court
for good cause may shorten or lengthen the time for giving notice
under subdivision (a).
17306. (a) With respect to a representative cause of action,
before entry of a judgment, or any modification of a judgment, which
is a final determination of the representative cause of action, a
hearing shall be held to determine whether the requirements of this
chapter have been satisfied.
(b) At the hearing the court shall consider the showing made by
the parties and any other persons permitted to appear and shall order
entry of judgment only if the court finds that all of the following
requirements have been satisfied:
(1) The proposed judgment and any stipulations and associated
agreements are fair, reasonable, and adequate to protect the
interests of the general public pled.
(2) Any award of attorney's fees included in the judgment or in
any stipulation or associated agreement complies with applicable law.
(3) The private plaintiff satisfies the requirements of
subdivision (a) of Section 17302.
(4) The attorney for the private plaintiff satisfies the
requirements of subdivision (b) of Section 17302.
(5) All other requirements of this chapter have been satisfied.
17307. A representative cause of action may not be dismissed,
settled, or compromised without the approval of the court and a
determination that the disposition of the representative cause of
action is fair, reasonable, and adequate to protect the interests of
the general public pled. The court, in its discretion, may set the
matter for hearing on notice to persons who would receive notice
under Section 17306.
17308. The determination of a representative cause of action
brought by a private plaintiff in a judgment approved by the court
pursuant to Section 17306 is conclusive and bars any further actions
on representative causes of action brought by private plaintiffs
against the same defendant based on substantially similar facts and
theories of liability.
17309. (a) If a private plaintiff has commenced an action that
includes a representative cause of action and a prosecutor has
commenced an enforcement action against the same defendant based on
substantially similar facts and theories of liability, the court in
which either action is pending, on motion of a party or on the court'
s own motion, may stay the private plaintiff's representative cause
of action until completion of the prosecutor's enforcement action,
may make an order for consolidation or coordination of the actions,
or may make any other order, in the interest of justice.
(b) The determination under subdivision (a) may be made at any
time during the proceedings and regardless of the order in which the
actions were commenced.
(c) Nothing in this section affects any right the plaintiff may
have to costs and attorney's fees pursuant to Section 1021.5 of the
Code of Civil Procedure or other applicable law.
17310. Notice provided to the Attorney General or a district
attorney under Section 17303 or 17305 does not impose any duty on the
Attorney General or district attorney. The Attorney General or
district attorney is not precluded from taking any future action as a
consequence of not taking action in response to notice or any
determination made under Section 17306.
17311. (a) Except as provided in subdivision (b), this
chapter does not apply to actions pending on its operative date.
(b) If the parties to a representative action commenced before the
operative date of this chapter substantially comply with the
provisions of this chapter, the substantive rules provided in this
chapter apply in the action unless the court determines that
application of a particular provision of this chapter would
substantially interfere with the effective conduct of the action or
the rights of the parties or other interested persons. For the
purpose of this subdivision, Sections 17301 and 17302 are not
applicable and the duty to give notice under Section 17303 is
satisfied if the notice is given promptly after the operative date of
this chapter. This chapter applies to actions
commenced after December 31, 1997.