BILL NUMBER: SB 122 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 28, 2003
AMENDED IN ASSEMBLY JULY 16, 2003
AMENDED IN ASSEMBLY JULY 1, 2003
AMENDED IN SENATE MAY 15, 2003
AMENDED IN SENATE MAY 12, 2003
AMENDED IN SENATE MAY 6, 2003
INTRODUCED BY Senator Escutia
(Principal coauthor: Assembly Member Corbett)
FEBRUARY 4, 2003
An act to add Sections 17204.6, 17204.7, 17204.8, and 17204.9 to
the Business and Professions Code, relating to unfair competition.
LEGISLATIVE COUNSEL'S DIGEST
SB 122, as amended, Escutia. Private enforcement actions.
Existing law provides remedies for unfair competition that may be
enforced by a governmental agency, including the district attorney,
or by a private party acting for the interests of itself, its
members, or the general public.
This bill would require, subject to specified exceptions, the
court to review and approve attorney's fees in
a settlement or compromise of an unfair competition action
brought or proposed to be brought by a private party on behalf of
the general public. The bill would also require that the plaintiff
in those actions submit a copy of the complaint to the State Bar of
California. The bill would specify certain equitable remedies
applicable to all unfair competition actions and would set forth
principles for joining these actions. The bill would require a
private party seeking specified remedies to submit a copy of the
proposed judgment terms to the Attorney General and would require
that office to post that information on the Internet. The bill
would make its provisions contingent upon AB 95 being enacted and
becoming effective on or before January 1, 2004.
Vote: majority. Appropriation: no. Fiscal committee:
no yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17204.6 is added to the Business and
Professions Code, to read:
17204.6. (a) (1) At the time of filing a
private cause of action under this chapter on behalf of the general
public, the plaintiff shall notify the State Bar of California and
submit a copy of the complaint to it. An attorney who fails to
comply with this subdivision is subject to disciplinary action by the
State Bar of California.
(b) (1) A court shall review and approve any settlement
or compromise, including any agreement, express or implied,
regarding the payment of attorney's fees proposed to
be paid in connection with a private action or a private
cause of action brought, or proposed to be brought, under this
chapter on behalf of the general public. The request to review and
approve the fees settlement or compromise
shall be made upon noticed motion. The court shall approve
an award of attorney's fees for a plaintiff who prevails in
the action against one or more defendants if an award of attorney's
fees is authorized by a statute or if the award satisfies the
requirements of Section 1021.5 of the Code of Civil Procedure.
(2) (A) When any attorney's fees are proposed to be paid in
compromise or settlement the settlement or compromise
unless based on the evidence, briefing, and information submitted, it
determines that the disposition of the action is unfair or fails to
reasonably protect the interests of the general public under Section
17200. Any attorney's fees or costs awarded by the court shall be
consistent with applicable law.
(2) (A) When any settlement or compromise of a private
action or a private cause of action on behalf of the general
public is proposed to be brought under this chapter on
behalf of the general public that has not but has not
yet been filed with the court, the potential plaintiff shall
file and serve on all parties the following:
(i) A complaint titled entitled
"Complaint re: Settlement of an Action under Section 17200 of the
Business and Professions Code" describing the cause of action
proposed to be brought under this chapter , which shall be filed
with a first paper filing fee pursuant to Section 26820.4 of the
Government Code .
(ii) A special motion for review and approval of the proposed
fees.
(B) A potential defendant who is a party to the compromise or
settlement is not required to file an answer to the complaint but may
file a response to the special motion upon payment of a motion
filing fee pursuant to subdivision (a) of Section 26830 of the
Government Code.
(C) Upon hearing the motion, the court shall approve an
award of attorney's fees to the potential plaintiff against one or
more of the potential defendants if an award of attorney's fees is
authorized by a statute or if the award satisfies the requirements of
Section 1021.5 of the Code of Civil Procedure. the
settlement or compromise unless based on the evidence, briefing, and
information submitted, it determines that the disposition of the
action is unfair or fails to reasonably protect the interests of the
general public under Section 17200.
(3) No attorney's fees settlement moneys
may be paid by a defendant or a potential defendant in
compromise or settlement of an a private
action or proposed action brought on behalf of the general
public under this chapter unless the fees have
settlement or compromise has been reviewed and
approved pursuant to a motion under paragraph (1) or (2). If not
approved by the court, an agreement to pay any attorney's
fees moneys is void and unenforceable.
(4) The court shall review in camera any information submitted by
the plaintiff or the potential plaintiff to support the
award of attorney's fees settlement or compromise
pursuant to this section if the information is protected by the
attorney-client or attorney work product privilege.
(5) An attorney who receives attorney's fees in an action or
proposed action under this chapter without submitting the proposed
attorney's fees for review and approval by the court pursuant to
paragraph (1) or (2) is subject to disciplinary action by the State
Bar of California.
(b) At the time of filing a private cause of action under this
chapter on behalf of the general public, the plaintiff shall notify
and submit a copy of the complaint to the State Bar of California.
Any attorney who fails to comply with this subdivision is subject to
disciplinary action by the State Bar of California.
(5) Any attorney representing a party who enters into a settlement
or compromise or who receives settlement moneys, including attorney'
s fees, in a private action or proposed private action under this
chapter on behalf of the general public without submitting the
proposed settlement or compromise, including attorney's fees, for
review and approval by the court pursuant to paragraph (1) or (2), is
subject to disciplinary action by the State Bar of California.
(c) Subdivision (a) (b) shall not
require a court to review and approve an award of attorney's
fees when the fees are agreed upon by the parties as part of the
compromise or settlement of an apply if the action or
cause of action or proposed action is brought by a
labor organization or by a representative of a labor organization or
by a joint labor management committee established pursuant to the
federal Labor Management Corporation Act of 1978 (29 U.S.C. Sec.
175a) or by an established employment or civil rights organization on
behalf of employees or the general public. For purposes of this
section, an employment or civil rights organization shall be in
existence for a minimum of five years in order to qualify for an
exemption and have as one of its purposes the vindication of labor,
civil, constitutional or human rights.
SEC. 2. Section 17204.7 is added to the Business and Professions
Code, to read:
17204.7. (a) In addition to the relief authorized by Section
17203, if
17204.7. (a) If the court finds that a defendant has
engaged in an unlawful, unfair, or fraudulent business act or
practice in violation of this chapter and that the defendant has
derived profits or ill gotten gains from that act
or practice, the court may order any appropriate equitable relief to
remedy the act or practice. A In addition, a
court shall assure that any monetary relief in excess of the
restitution paid by a defendant amounts paid
to the plaintiffs or to affected members of the general public by a
defendant, if any, shall be distributed as a fluid
recovery or cy pres award or fluid recovery
pursuant to this section to provide substantial benefit, pursuant
to paragraph (2) of subdivision (b), to Californians .
(b) (1) Prior to the entry of any judgment or order for
relief pursuant to this section, the court shall determine the total
amount of monetary relief payable as the result of the defendant's
unlawful, unfair, or fraudulent business act or practice. The court
shall set a date when the parties shall report to the court the total
amount actually paid in restitution to to
those members of the public . After
identified and located as being affected by the act or practice, if
any.
(2) After the report is received, the court shall amend the
judgment to direct the defendant to pay the sum
remaining balance of the unpaid residue to
nonprofit organizations or foundations ill gotten
gains to a nonprofit organization or foundation to support
projects consistent with the objectives and purposes of the
underlying action or to promote justice for all. The court
shall ensure that this distribution provides substantial benefit to
California consumers. justice for all; or to a
court-approved fund appropriate to the circumstances of the
particular action; or, if neither of those options is available, to
the State of California.
(3) For purposes of this section only, and in connection with a
private action or private cause of action brought on behalf of the
general public under this chapter, a court shall not order any
monetary relief in excess of monetary restitution against a small
business. For this purpose, a "small business" is a business that
has fewer than 10 employees or independent contractors and average
annual gross receipts of less than five hundred thousand dollars
($500,000). Nothing in this paragraph is intended to limit the
ability of the court, in the exercise of its equitable powers, to
issue injunctive relief or order restitution against a small
business. This paragraph does not apply to any cause of action that
alleges a violation of any law or regulation affecting civil rights,
wages, or working hours or conditions.
(c) (1) A private plaintiff who is seeking cy pres or fluid
recovery shall at least 30 days before the date of the final report
and judgment by the court, as described in paragraph (2) of
subdivision (b), submit to the Attorney General a copy, including a
copy in electronic form, of the proposed terms of the judgment,
including all stipulations and associated agreements between the
parties, together with the notice of the time and place set for
hearing on the entry of the judgment. If the proposed judgment is
materially amended before entry of judgment, the private plaintiff
shall promptly provide the Attorney General with an amended copy.
(2) The Attorney General shall make the proposed terms of the
judgment publicly available on the Internet for a period not to
exceed 45 days from the date of its receipt of the judgment. The
posting of information required of the Attorney General pursuant to
this subdivision is administrative in nature, and imposes no other
duty on that office.
(3) The receipt of information pursuant to paragraph (1) does not
constitute notice affecting the right of the Attorney General to take
any other action within its authority at any time.
(d) Notwithstanding any other provision of law, Section 17208
applies to this section.
SEC. 3. Section 17204.8 is added to the Business and Professions
Code, to read:
17204.8. (a) All persons may be joined in one action as
defendants if there is asserted against them:
(1) Any right to relief jointly, severally, or in the alternative,
in respect of or arising out of the same transaction, occurrence, or
series of transactions or occurrences and if any question of law or
fact common to all these persons will arise in the action; or
(2) A claim, right, or interest adverse to them in the property or
controversy which is the subject of the action.
(b) It is not necessary that each defendant be interested as to
every cause of action or as to all relief prayed for. Judgment may
be given against one or more defendants according to their respective
liabilities.
(c) Where the plaintiff is in doubt as to the person from whom he
or she is entitled to redress, he or she may join two or more
defendants, with the intent that the question as to which, if any, of
the defendants is liable, and to what extent, may be determined
between the parties.
(d) The fact that individual defendants who are not associates or
affiliates of each other are engaged in the same or similar types of
businesses and are alleged to have violated the same or similar laws
or regulations shall not, in itself, constitute a basis for joinder
under this chapter.
SEC. 4. Section 17204.9 is added to the Business and Professions
Code, to read:
17204.9. (a) A court in reviewing an action brought
pursuant to this chapter may, in the interests of justice, order
consolidation or coordination of actions.
(b) In order to prevent double recovery, a court may, in the
exercise of its equitable powers, allow any party to present
information about a prior action against the same defendant and allow
a set off against claims in a later action against that defendant,
if the later action is based on the same facts, occurring at the same
time, and raises the same issues as the prior action.
SEC. 5. The provisions of subdivision (d) of Section 17204.8 of
the Business and Professions Code added by this act do not constitute
a change in, but are declaratory of, existing law.
SEC. 6. This act shall become operative only if Assembly Bill 95
of the 2003-04 Regular Session is enacted and becomes effective on or
before January 1, 2004.