BILL NUMBER: SB 122 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY SEPTEMBER 5, 2003
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. An act to add Sections 17204.6 and 17204.9
to, and to repeal and add Section 17204.7 of, the Business and
Professions Code, and to repeal Section 4 of Chapter ____ of the
Statutes of 2003, relating to unfair competition.
LEGISLATIVE COUNSEL'S DIGEST
SB 122, as amended, Escutia. Private enforcement actions
Unfair competition .
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 authorize ,
subject to specified exceptions, the court to review and
approve a party to request court review and approval
of 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 serve a specified notice on each
defendant in the action and 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
specify set off requirements applicable to unfair
competition actions . The bill would make its provisions
contingent upon AB 95 being enacted and becoming effective on or
before January 1, 2004 and would repeal specified provisions of
that bill .
Vote: majority. Appropriation: no. Fiscal committee:
yes no . 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) 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 At the option of any party to a
private action brought on behalf of the general public under this
chapter, a court shall review and approve any settlement or
compromise, including any agreement, express or implied, regarding
the payment of attorney's fees proposed 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 settlement or compromise shall be
made upon noticed motion. The court shall approve 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 but has not yet been filed with the
court, any party may seek court review and approval of the
settlement or compromise. At the request of any party for court
review and approval, the potential plaintiff shall file and
serve on all parties the following:
(i) A complaint 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 settlement or compromise .
(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) The motion for court review and approval of the
settlement or compromise shall be treated as a special proceeding of
a civil nature pursuant to Part 3 (commencing with Section 1063) of
the Code of Civil Procedure. Upon hearing the motion, the
court shall approve 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 If a party has opted for court
review of a settlement or compromise under this section, no
settlement moneys may be paid by a defendant or a potential defendant
in compromise or settlement of a private action or proposed action
brought on behalf of the general public under this chapter unless the
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 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 settlement or
compromise pursuant to this section if the information is protected
by the attorney-client or attorney work product privilege.
(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 ,
if a party has opted for court review of a settlement or compromise
under this section .
(c) Subdivision (b) shall not 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) 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 ill
gotten gains from that act or practice, the court may order any
appropriate equitable relief to remedy the act or practice. In
addition, a court shall assure that any monetary relief in excess of
the amounts paid to the plaintiffs or to affected members of the
general public by a defendant, if any, shall be distributed as a 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 to those members of the public 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 remaining balance of the
unpaid 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; 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. 2. Section 17204.7 of the Business and Professions Code, as
added by Section 1 of Chapter __ of the Statutes of 2003 (Assembly
Bill 95), is repealed.
17204.7. (a) A person bringing a private action for relief on
behalf of the general public pursuant to Section 17204 shall serve on
each defendant at the time of service of a demand letter or a
complaint, a notice containing the following statement in boldface
type:
"IMPORTANT CONSUMER INFORMATION: You are receiving this notice
because at least one of the claims against you alleges an unlawful,
unfair, or fraudulent business act or practice under the California
Business and Professions Code. YOU HAVE IMPORTANT LEGAL RIGHTS, and
you may wish to consult an attorney promptly to get helpful legal
advice in responding to this notice.
In addition, you may wish to contact your local District Attorney'
s Office, the Attorney General's Office, or the local bar association
in your county, or all of these offices, for legal information about
this type of lawsuit.
It also is important that you know that you are not required to
pay any money at this time. Moreover, RECEIPT OF THIS NOTICE DOES
NOT NECESSARILY MEAN YOU WILL BE FOUND LIABLE FOR ANYTHING. Your
best protection is to seek out legal advice before agreeing to
anything.
Once you have an attorney representing you, the attorney for the
plaintiff in this case is prohibited from contacting you unless your
attorney is present or your attorney has given the plaintiff's
attorney permission to contact you. If the plaintiff's attorney does
try to contact you personally, you should immediately report the
contact to your attorney. Attorneys are not allowed to threaten to
report you to a law enforcement or regulatory agency if you refuse to
settle a claim. If the plaintiff's attorney does so, you should
notify your attorney or the State Bar of California immediately.
If you choose not to hire an attorney, you may obtain additional
information about how to represent yourself on the California Courts
Web site, www.courtinfo.ca.gov.
If you agree to pay any attorney's fees to the plaintiff in this
case, a court must review these fees, pursuant to subdivision (a) of
Section 17204.6 of the California Business and Professions Code."
(b) The notice in subdivision (a) shall be in at least 14-point
boldface type and shall not contain any other statements except for
those required in subdivision (a).
(c) An attorney who fails to comply with this section may be
subject to disciplinary action by the State Bar of California.
SEC. 3. Section 17204.7 is added to the Business and Professions
Code, to read:
17204.7. (a) A person bringing a private action for relief on
behalf of the general public pursuant to Section 17204 shall serve on
each defendant at the time of service of a demand letter or a
complaint, a notice containing the following statement in boldface
type:
"IMPORTANT CONSUMER INFORMATION: You are receiving this notice
because at least one of the claims against you alleges an unlawful,
unfair, or fraudulent business act or practice under the California
Business and Professions Code. YOU HAVE IMPORTANT LEGAL RIGHTS, and
you may wish to consult an attorney promptly to get helpful legal
advice in responding to this notice. In addition, you may wish to
contact the local bar association in your county for legal
information about this type of lawsuit.
It also is important that you know that you are not required to
pay any money at this time. Moreover, RECEIPT OF THIS NOTICE DOES
NOT NECESSARILY MEAN YOU WILL BE FOUND LIABLE FOR ANYTHING. Your
best protection is to seek out legal advice before agreeing to
anything.
Once you have an attorney representing you, the attorney for the
plaintiff in this case is prohibited from contacting you unless your
attorney is present or your attorney has given the plaintiff's
attorney permission to contact you. If the plaintiff's attorney does
try to contact you personally, you should immediately report the
contact to your attorney. Attorneys are not allowed to threaten to
report you to a law enforcement or regulatory agency if you refuse to
settle a claim. If the plaintiff's attorney does so, you should
notify your attorney or the State Bar of California immediately.
If you choose not to hire an attorney, you may obtain additional
information about how to represent yourself on the California Courts
Web site, www.courtinfo.ca.gov.
If you agree to enter into a settlement or pay any attorney's fees
to the plaintiff in this case, you have the right to have a court
review and approve the settlement or the fees before you pay them,
except in certain limited circumstances, pursuant to Section 17204.6
of the California Business and Professions Code."
(b) The notice described in subdivision (a) shall be in at least
14-point boldface type and shall not contain any other statements
except those required in subdivision (a).
(c) An attorney who fails to comply with this section may be
subject to disciplinary action by the State Bar of California.
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.
(c) A judgment in a private action brought on behalf of the
general public does not affect a judgment in an action brought by a
public prosecutor, except to the extent both judgments order payment
to members of the public to redress the same violations of law based
on the same facts, occurring at the same time. Under those
circumstances, payments actually made to members of the public under
one judgment may be offset against payments owed under the other
judgment in order to prevent double recovery.
SEC. 5. Section 4 of Chapter __ of the Statutes of 2003 (Assembly
Bill 95) is repealed.
Sec. 4. The provisions of this act are not severable. If any
provision of this act or its application is held invalid, all of the
other provisions of this act and all of their applications shall be
invalid.
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.