BILL ANALYSIS
SB 122
Page 1
Date of Hearing: July 8, 2003
ASSEMBLY COMMITTEE ON JUDICIARY
Ellen M. Corbett, Chair
SB 122 (Escutia) - As Amended: July 1, 2003
SENATE VOTE : 22-15
SUBJECT : UNFAIR COMPETITION
KEY ISSUE : SHOULD THE UNFAIR COMPETITION LAW (UCL) BE AMENDED
TO PROVIDE TARGETED NEW CONSUMER PROTECTIONS CONTAINED IN A
TWO-BILL DUAL HOUSE PACKAGE WHICH INCLUDES MANDATORY COURT
REVIEW AND APPROVAL OF ATTORNEY'S FEES IN PRIVATE UCL CASES AND
NEW CONSUMER NOTICE PROVISIONS?
SYNOPSIS
This bill, part of a two-bill Democratic package which consists
of this bill and AB 95 (Corbett), amends the UCL to provide for
important targeted consumer protections including a requirement
that, in any private UCL action brought on behalf of the general
public, any attorney's fees to be paid in a settlement or other
pre-trial disposition of the action must first be reviewed and
approved by the court, before any payments may be made, except
as specified. Under the bill, an agreement to pay any
attorney's fees in these cases is void and unenforceable if it
is not approved by the court. The bill also provides that any
attorney who receives attorney's fees in a private UCL action
brought on behalf of the general public without submitting the
proposed attorney's fees for review and approval by the court is
subject to disciplinary action by the State Bar. The bill
establishes specified rules with respect to UCL actions proposed
to be brought on behalf of the general public and requires a
private plaintiff, upon filing a UCL action on behalf of the
general public, to notify and submit a copy of the complaint to
the Judicial Council. The analysis contains an author's
amendment which revises this provision to instead require that
the complaint be submitted to the State Bar.
Under the measure, if the court finds that a defendant has
engaged in an unlawful, unfair, or fraudulent business act or
practice in violation of the UCL 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
SB 122
Page 2
the act or practice. The bill requires a court to assure that
any monetary relief in excess of the restitution paid by a
defendant shall be distributed as a fluid recovery or cy pres
award. The bill specifies court oversight of the relief
ordered, as described below and clarifies that defendants cannot
be joined in a UCL action just because they are engaged in the
same or similar types of businesses and are alleged to have
violated the same or similar laws. Finally, the package
requires, under AB 95 (Corbett) to which this bill is joined,
any private person bringing an action for relief on behalf of
the general public to serve on each defendant at the time of
service of a demand letter or a complaint a comprehensive new
notice which notes critical consumer protection rights available
to all defendants sued under the UCL and provides that an
attorney who does not send the notice as required may be subject
to disciplinary action by the State Bar of California. The
analysis contains technical amendments.
Supporters argue that the bill is a measured approach to curbing
abuses of the UCL and believe that mandatory court review and
approval of attorney's fees in these actions will rein in
attorneys who try to intimidate small business owners by
threatening escalating attorneys fees. Proponents also assert
that the measure will address misuse of the UCL where private
plaintiffs - like the Trevor Law Group, as detailed below - file
a single case against multiple defendants simply because they
are all in the same line of business. Opponents, on the other
hand, assert that the bill does not sufficiently address the
flaws in the UCL and argue that the small businesses affected in
the Trevor situation will continue to face a standard of
infinite jeopardy wherein they may be financially assailed
repeatedly for the same technical violation. Opponents further
contend that the UCL is flawed because it permits lawsuits
against businesses for minor violations, despite the fact that
these violations may already have been addressed and resolved.
SUMMARY : Amends California's Unfair Competition Law to provide
for important targeted consumer protections as well as other
consumer protections contained in AB 95 (Corbett).
Specifically, this bill :
1)Requires a court to review and approve attorney's fees
proposed to be paid in connection with a private UCL action
brought, or proposed to be brought, on behalf of the general
public and provides that, if not approved by the court, an
SB 122
Page 3
agreement to pay any attorney's fees is void and
unenforceable.
2)Provides that an attorney who receives attorney's fees in a
private UCL action brought on behalf of the general public
without submitting the proposed attorney's fees for review and
approval by the court is subject to disciplinary action by the
State Bar.
3)Provides that the court shall approve an attorney's fee award
for a prevailing plaintiff if an award of attorney's fees is
authorized by a statute or if the award satisfies the
requirements of Code of Civil Procedure section 1021.5.
4)Provides for the following rules with respect to UCL actions
proposed to be brought on behalf of the general public:
a) Requires the private plaintiff who proposes to bring the
action to file and serve on all parties a complaint
describing the cause of action proposed to be brought and a
special motion for review and approval of the proposed
fees.
b) Provides that 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, as specified.
c) Provides that, 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 Code of Civil
Procedure section 1021.5.
5)Provides that a court is not required to review an award of
attorney's fees if the fees are agreed upon by the parties as
part of the compromise or settlement of a UCL action or
proposed action brought by labor organizations or their
representatives, joint labor-management committees, or
employment or civil rights organizations in existence for at
least five years that have as one of their purposes the
vindication of labor, civil, constitutional or human rights.
6)Requires a private plaintiff, at the time of filing a UCL
SB 122
Page 4
action on behalf of the general public, to notify and submit a
copy of the complaint to the Judicial Council.
7)Provides that in addition to the relief authorized under the
UCL, 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. The bill also requires a court to assure
that any monetary relief in excess of the restitution paid by
a defendant shall be distributed as a fluid recovery or cy
pres award.
8)Provides that prior to the entry of any judgment or order for
relief pursuant to the bill, 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 bill also requires the court to set a date when
the parties must report to the court the total amount actually
paid in restitution to members of the public and, after the
report is received, the court shall amend the judgment to
direct the defendant to pay the sum of the unpaid residue to
nonprofit organizations or foundations to support projects
consistent with the objectives and purposes of the underlying
action or to promote justice for all. The bill requires the
court to ensure that this distribution provides substantial
benefit to California consumers.
9)Provides for specified joinder provisions in the UCL and
clarifies that the fact that individual defendants are engaged
in the same or similar types of businesses, and are alleged to
have violated the same or similar laws or regulations, is not,
in itself, a basis for joinder under the UCL.
10)Provides that a court may, in the interests of justice, order
consolidation or coordination of UCL actions.
11)Requires, under AB 95 to which this bill is joined, any
private person bringing an action for relief on behalf of the
general public to serve on each defendant at the time of
service of a demand letter or a complaint a comprehensive new
notice in 14-point boldface type which notes critical consumer
protection rights available to all defendants sued under the
UCL and provides that an attorney who does not send the notice
SB 122
Page 5
as required may be subject to disciplinary action by the State
Bar of California.
12)Provides that this bill becomes operative only if AB 95
(Corbett) is enacted.
EXISTING LAW :
1)Defines "unfair competition" as any unlawful, unfair or
fraudulent business act or practice, as any unfair, deceptive,
untrue or misleading advertising, and as any act prohibited by
the false advertising statutes. (Business and Professions
Code section 17200. All further statutory references are to
this code.)
2)Provides that actions for relief may be brought by the
Attorney General (AG), or any district attorney or, under
specified circumstances, a city attorney or city prosecutor
and by any person acting for his or her own interest or the
interests of the general public. (Sections 17204 and 17535.)
3)Provides that civil penalties for unfair competition
violations are not available to consumers. (Sections 17206
and 17536.)
4)Provides that, in such an action, the court may make any
orders or judgments as may be necessary to prevent the use or
employment by any entity of any practice which constitutes
unfair competition or which violates the false advertising
laws, including issuing an injunction or appointing a
receiver. Existing law also provides that the court may order
restitution of any money or property which may have been
acquired by means of the unfair competition or false
advertising. (Sections 17203 and 17535.)
5)Provides that a consumer bringing an unfair competition action
on behalf of the public or of persons similarly situated is
not required to meet the requirements applicable to class
action lawsuits. ( Stop Youth Addiction v. Lucky Stores
(1998) 17 Cal. 4th 553.)
6)Provides that a court may order restitution for violations of
Section 17500 without individualized proof of deception,
reliance, and injury if it "determines that such a remedy is
necessary to prevent the use or employment of the unfair
SB 122
Page 6
practice ?" ( Committee on Children's TV, Inc. v. General
Foods Corp. (1983) 35 Cal. 3d 197 (citations omitted).)
7)Held the Legislature has not yet expressly authorized a court
to order disgorgement into a fluid recovery fund in a UCL
action that is brought by a private party on behalf of absent
persons and that is not certified as a class action. ( Kraus
v. Trinity Management Services, Inc. (2000) 23 Cal. 4th 116.)
In reviewing the Kraus case, the California Supreme Court
recently held in Korea Supply Co. v. Lockheed Martin Corp.
(2003) 29 Cal. 4th 1134, that disgorgement of profits is not
yet an authorized remedy in an individual action under the UCL
where the profits are "neither money taken from a plaintiff
nor funds in which the plaintiff has an ownership interest."
FISCAL EFFECT : The bill as currently in print is keyed
non-fiscal.
COMMENTS : This bill is part of a two-bill Democratic package
which consists of this bill and AB 95 (Corbett). Together these
two bills amend the UCL to provide for important targeted
consumer protections. In support of this measure, the author
states:
SB 122 responds to a recent rash of UCL lawsuits
brought by a few law firms against thousands of small
businesses (auto repair shops, restaurants, and nail
salons) in Southern California. These lawsuits
typically have consisted of boilerplate complaints
filed against hundreds of defendants at a time, based
solely on public notices of minor or technical
violations already addressed by the responsible
regulatory agencies. The lawsuits usually have been
followed by immediate demands for financial settlements
for nuisance value from the defendants, many of whom
are recent immigrants unfamiliar with the American
legal system and particularly vulnerable to such
pressures, or who simply cannot afford the time or
expense of litigating on the merits. This bill would
respond to reform suggestions made in the joint Senate
and Assembly Judiciary Committee hearing on this issue
by providing that, in any private action brought in the
public interest to enforce the UCL, a court shall
review and approve the attorney's fees to be paid in a
settlement or other pre-trial disposition of the
SB 122
Page 7
action.
Recent Amendments to the Bill. In explanation of recent
amendments made to the bill on July 1, 2003, the author
writes:
Recent amendments have fleshed out the procedure for
court review and approval of attorney's fees in cases
already filed with the court, and have added a process
for review and approval of fees in settlements reached
prior to the filing of a private action. Another
recent amendment would provide that a plaintiff filing
a private UCL action shall notify, and submit a copy of
the complaint to, the Judicial Council. The author
will offer an amendment in Committee to substitute the
State Bar for the Judicial Council, since the State Bar
is a disciplinary authority that already has taken
action to stop UCL abuses, and has the experience and
authority to monitor private filings for abuses and to
take action when necessary. SB 122 would clarify that
defendants cannot be joined in a UCL action just
because they are engaged in the same or similar
businesses and are alleged to have violated the same or
similar laws. Attorneys defending the small business
owners in these recent cases have indicated that this
is the first reform they would seek to defend against
future cases.
Additional amendments to the bill have rewritten the
previous disgorgement provision and allow a court, upon
a finding that a business has engaged in an unlawful,
unfair or fraudulent business act or practice, and has
derived profits from that act or practice, to order
"any appropriate equitable relief" to remedy the
violation. Equitable remedies may include injunctions,
restitution, disgorgement of profits, or other forms of
relief tailored to the specific violation. The new
amendments also adopt existing statutory language to
assure proper court oversight of any grant of relief.
Finally, to address concerns expressed by some
businesses that have been sued by more than one
plaintiff for a particular violation, the bill would
provide that a court may order consolidation or
coordination of private UCL actions where appropriate.
SB 122
Page 8
Background: The State's Preeminent Consumer Protection Statute.
California's landmark Unfair Competition Law has been a vital
tool used over the years to protect consumers, children, the
elderly, minorities and many others. This crucial consumer
protection statute has been employed by public interest
organizations, legal services offices, public prosecutors and
consumers as a critical tool to protect the public from
unlawful, unfair and fraudulent business practices. For
example, in Consumers Union v. Alta-Dena Certified Dairy (1992)
4 Cal. App. 4th 963, Consumers Union brought a UCL action
against a dairy for its misleading advertising regarding the
health benefits of raw milk. Despite the claims of the dairy in
its advertising campaign, the evidence at trial overwhelmingly
established that raw certified milk can contain particularly
dangerous organisms and, as a result of Consumer Union's suit,
the court required the defendant to disclose on its containers
the potential danger to consumers.
In another example of how this law protects consumers, in Warren
v. Safeway Stores (Alameda County Superior Court No. 663420-3,
filed 1990) a plaintiff sued the defendant under the UCL to stop
the supermarket's practice of altering the package date on
expired unsold meat and selling it as "fresh" meat. The
settlement agreement resulted in the cessation of the practice
and in an agreement by the defendant to distribute food to the
homeless in the San Francisco Bay area. Finally, in Ramos v.
Martinez (Los Angeles Superior Court No. BC158060, filed Sept.
27, 1996), a plaintiff used the UCL to stop a non-lawyer
immigration consultant who falsely represented to consumers that
she worked for the INS and could obtain residency status for
them through immigration programs for which they did not
qualify.
Historical Backdrop. California law has contained a statute
prohibiting "unfair" practices in competition since the first
Civil Code was enacted in 1872. Since 1933, the UCL has
authorized any private entity acting for the interests of
itself, its members, or the general public, to bring a civil
action seeking an injunction against acts of unfair competition
or false advertising. In 1963, the statute was expanded to
protect consumers from fraud and unfair business dealings by
prohibiting "unlawful" practices in addition to unfair
practices. California courts have interpreted this amendment to
mean that plaintiffs may "borrow ... violations of other laws
and treat [them] ... as unlawful practices independently
SB 122
Page 9
actionable" under the UCL. ( Farmers Insurance Exchange v.
Superior Court (1992) 2 Cal. 4th 377, 383.) Thus, a statute
which declares a certain type of practice unlawful, but does not
expressly provide for an action by a consumer to enforce its
provisions, can be enforced by a consumer under the UCL.
In 1977, California's preeminent consumer protection statute was
revised to permit courts to order restitutionary remedies
requiring "disgorgement of money or property obtained by means
of such [unfair or unlawful] practices." ( State Farm Fire &
Casualty Co. v. Superior Court (1996) 45 Cal. App. 4th 1093,
1110.) For example, if a court finds that a business has been
unlawfully over-charging customers for a good or service, the
court may order the business to pay the difference between the
actual price it received and the price which it could have
lawfully charged.
Potential Remedies Available. Unlike public prosecutors, who
may seek civil penalties for UCL violations, the remedies
available to consumers are much more limited under the UCL; they
cannot seek penalties or damages to compensate for injuries
caused by the violation. Significantly, neither public
prosecutors nor consumers may seek punitive damages under the
UCL, even for the most egregious practices.
Instead, consumers may seek an injunction to halt the unfair,
unlawful or fraudulent practice, and restitution of any
ill-gotten gains obtained as a result of the violation. As
injunctions and restitution are equitable remedies that do not
require submission to a jury, there is no right to a jury trial,
and so private UCL actions are instead tried before a judge who
has sole discretion to determine if the alleged wrongful act is
an unfair, fraudulent, or unlawful business practice, and to
determine the appropriate equitable remedy. A court may order
restitution in a UCL action without individualized proof of
injury if it determines that such a remedy is necessary to
prevent the unfair practice.
Background on Recent Controversy Regarding Abuse of the Unfair
Competition Act. As reported in press accounts and further
illuminated at this Committee's joint hearing with the Senate
Judiciary Committee on January 14, 2003, a Beverly Hills law
firm called the Trevor Law Group ("Trevor") filed lawsuits under
the UCL naming approximately 2,207 automobile repair shops for
violations ranging from not having valid business licenses to
SB 122
Page 10
failing to give customers proper paperwork. During the joint
hearing, Trevor attorneys acknowledged that many of the charges
against the defendants merely stemmed from complaints made to
the state Bureau of Automotive Repair (BAR) and listed on the
BAR's Web site. Similar suits by Trevor, plus others by the
Long Beach law firm of Brar & Gamulin, have been filed against
hundreds of other small, mostly immigrant-owned businesses,
including nail salons (for allegedly simply using the same
bottle of nail polish for more than one customer), restaurants
(for alleged health code violations), and grocery stores (for
allegedly selling pirated videotapes).
According to the AG's complaint against Trevor, described in
more detail below, Trevor filed 22 lawsuits in which they named
2,207 auto repair shops, more than 1,000 restaurants and
markets, and 210,000 "Does," or unnamed defendants. The suits
understandably provoked confusion, fear, and anger among the
business owners sued, who claimed the UCL violations alleged
against them were frivolous and unfounded. Further, the
defendants also claimed they were pressured to agree to quick
out-of-court settlements of $1,000 or more apiece, which many
paid either because they felt they could not afford to mount a
defense, or because the plaintiffs' attorneys allegedly
threatened sharp escalation of their demands if the cases were
not settled immediately.
Unprecedented Investigation and Intervention by the State Bar.
In response to these reports, the State Bar of California stated
that it initiated its largest-ever investigation of alleged
attorney misconduct, involving 40 staff who devoted over 8,000
hours to the investigation. After the completion of the
investigation, Bar officials announced in March that they would
ask a court to bar Trevor's attorneys from practicing law until
a full disciplinary hearing was held. The Bar's petition was
based on the concern that the attorneys' conduct posed a
substantial threat of harm to the public. During a two-day
hearing on the Bar's petition to move the three Trevor attorneys
to "inactive status" held on April 17 and 18, 2003, State Bar
counsel argued that Trevor had filed hundreds of lawsuits under
the UCL not on behalf of the public interest, but out of greed.
The Bar's charges against the attorneys include malicious
prosecution, conspiracy to defraud, abuse of process, and moral
turpitude.
On May 24, 2003, the State Bar Court judge granted the Bar's
SB 122
Page 11
petition to suspend the attorneys' practice, placing them on
involuntary inactive status. And, on June 4, 2003, the State
Bar officially filed disciplinary charges against the three
Trevor attorneys, seeking their disbarment. The Bar's 88-page
complaint charges the three with 36 violations of professional
conduct, and one of them is also charged with practicing law
without a license and committing perjury on an employment
history update filed with the Committee of Bar Examiners before
his bar admission.
Forceful Response by the Attorney General. In addition to the
Bar's prosecutions, in February, Attorney General Bill Lockyer
filed suit under the UCL against Trevor, alleging that it had
violated the very statute under which it had brought its own
suits. The AG's suit, which asks for $1 million in civil fines,
alleges that the firm operated a "shakedown" scheme, filing UCL
actions solely to obtain nuisance settlements and attorneys'
fees. The AG's complaint also alleges that there is no
connection among the businesses nor is there a relationship
between the businesses and their alleged misconduct. The suit
also asks that UCL suits brought by Trevor be dismissed and
requests a permanent restraining order to enjoin the firm from
filing new 17200 actions. Press reports also indicate the AG is
continuing to investigate four other law firms and their
associated consumer groups on whose behalf the firms have filed
UCL suits.
Action by the Courts and Other Prosecutors. On March 28, 2003,
Los Angeles Superior Court Judge West dismissed Trevor's nine
UCL cases filed in Los Angeles County against approximately
2,000 automotive repair shops and 30,000 potential "Doe"
defendants. The court also awarded sanctions to the defendants
in the cases. In addition, a San Francisco judge stayed
Trevor's UCL lawsuits against about 100 car dealers pending the
outcome of the actions taken against the firm by the State Bar
and Attorney General. After the dismissal of the auto repair
cases in Los Angeles, Trevor voluntarily dismissed its cases
against more than 1,000 restaurant owners in Southern
California. Finally, recent press reports indicate that a
federal grand jury is investigating Trevor, raising the
possibility of criminal action against the attorneys. Press
reports quoted one of the attorneys, Shane Han, as saying that
there were "some indications" that the law firm is currently the
subject of a federal criminal investigation.
SB 122
Page 12
Joinder Provisions: Legislative Intent. This bill provides that
the fact that individual defendants are engaged in the same or
similar businesses, and are alleged to have violated the same or
similar law(s) or regulation(s), shall not, in itself,
constitute a basis for joinder under the UCL. It is important
to note that this provision is not intended to limit the court's
discretion to allow or disallow joinder as currently provided
pursuant to Section 379 of the Code of Civil Procedure. The
language is added here to clarify that the factual basis to
support joinder is inadequate where a plaintiff pleads only that
defendants operate the same type of business (e.g., nail salons
or restaurants) and allegedly violated the same or similar laws
or regulations. Some additional factual or legal basis for
joinder must exist for there to be joinder of defendants. This
need for additional factual or legal justification for joinder
is particularly important when a plaintiff is joining hundreds
of defendants in a single action, as was the case with Trevor's
use of the UCL.
Author's Amendment. The author would like to amend the bill to
modify its provision requiring a private plaintiff to notify and
submit a copy of the complaint to the Judicial Council at the
time of filing a UCL action. The author would like to instead
require that the plaintiff notify the State Bar because, unlike
the Judicial Council, the State Bar is a disciplinary authority,
and therefore is a more appropriate body to collect information
on UCL filings to determine if abuses are occurring. The
amendment also provides that violation of the bill's provision
to provide the required notice subjects the plaintiff to
disciplinary action by the State Bar. The author also notes
that, as described above, the State Bar has already acted to
sanction attorneys who are abusing the UCL, and therefore is
both familiar with and prepared for oversight responsibility.
As a result, the author would like to amend the bill as follows:
? On page 3, line 23, delete "Judicial Council" and insert
"State Bar".
? On page 3, line 24, after "California." insert "An
attorney who fails to comply with this subdivision is
subject to disciplinary action by the State Bar of
California."
Author's Technical Amendments. The following technical
SB 122
Page 13
amendments are needed:
? On page 2, line 9, after "review" add "and approve".
? On page 3, line 26, change "if" to "when".
ARGUMENTS IN SUPPORT : Many letters were received in support of
this measure. Reflective of the arguments in support of the
bill is the letter from the Consumer Attorneys of California
which states in part:
The changes to the fee review section of SB 122 make it
clear that any fees paid in connection with a private
action brought, or proposed to be brought, are subject
to this new requirement. Further, we have worked with
the Judicial Council to make sure that the statute
contains a specific process for such review. This
section has also been amended, per the request of the
courts, to apply a standard, consistent with the
applicable fee statutes, to give the court guidance
when it approves or disapproves fees in both the pre
and post complaint scenario. ? The "disgorgement"
section has been rewritten to clarify the court is
authorized, only after it clearly finds the defendant
has engaged in an unlawful, unfair or fraudulent act
AND that the defendant has derived profits or ill
gotten gains from the act, to order any equitable
relief to remedy that act. ? The [bill] also adds
important protections for the defendant which require
the court to determine the total amount payable and to
receive an "accounting" showing amounts paid in
restitution before he or she can order such equitable
relief. ? Last, the [bill] also clearly states that
"the court shall ensure that this distribution provide
substantial benefit to California consumers." This
provision enables the court to have an active role in
the distribution process.
In another letter, Consumers for Auto Reliability and Safety
(CARS) writes that SB 122, along with AB 95, represents "a
measured approach to curbing abuses of California's Unfair
Competition Law, embodied in Business and Professions Code
Section 17200." The group further writes:
SB 122 and AB 95 will provide for mandatory court
SB 122
Page 14
approval of attorney's fees in private actions brought
on behalf of consumers and the general public. This
provision will rein in attorneys who seek to intimidate
small business owners by threatening escalating
attorneys fees, by requiring court review early in the
process. ? SB 122 and AB 95 will address misuse of the
statute involving filing a single case against multiple
defendants simply because they are all in the same line
of business. They would also specifically authorize
courts to consolidate cases or coordinate actions. The
bills will also require prominent, conspicuous notice
to defendants or potential defendants explaining their
rights and obligations in plain and easy language, to
assist them in avoiding being threatened by unethical
lawyers. We believe that these provisions will improve
the fairness of the law and its application, and
address legitimate concerns about attorneys who misused
the statute primarily or solely for their personal
gain, rather than for the public benefit.
ARGUMENTS IN OPPOSITION : Many letters were received in
opposition to this measure. Reflective of the arguments in
opposition to the bill is the letter from the Civil Justice
Association of California which states in part:
Private attorneys acting as "representatives" can under
the UCL file what amounts to class action lawsuits
without court-supervised class certification
safeguards, without any showing that the attorney is a
suitable representative of the people allegedly
represented (and without any notice to those people
that a suit is being brought), and without any
protection to defendants that once a case is concluded
they won't be sued all over again on the same issues!
Current abuse of the UCL stems primarily from its
recently exploding use by plaintiffs attorneys claiming
to be acting on behalf of the general public or
representing individuals who have not been harmed or
misled and who may not even have had any personal
involvement with the product or service. The law
permits any private attorney to become a
quasi-prosecutor, selecting deep pocket targets and
shallow pockets alike! In fact, plaintiffs lawyers
hold seminars on how to use the UCL to drive up
SB 122
Page 15
settlement values and develop a new practice.
The law grants a private attorney the power to decide
almost carte blanche what is "unfair." This allows
private attorneys to use the UCL as a weapon in
conjunction with other causes of action, for example,
demanding broad discovery of all information relevant
to "unfairness." None of these problems are even
marginally addressed by SB 122. They are only
aggravated.
Several regional chapters of the group Citizens Against Lawsuit
Abuse wrote in opposition to the measure, stating that the bill
"does nothing to address the flaws in the state's current unfair
competition law ? We feel, and recent history has demonstrated,
that the state's current unfair competition law is flawed
because it gives unscrupulous lawyers free reign to file
extortionate lawsuits against businesses for minor violations,
despite the fact these violations may already have been
addressed and resolved."
The Automotive Repair Coalition (ARC) also opposes the measure,
writing:
Unfortunately, while some modest reforms are proposed
and enhanced by the recent amendments, SB 122 still
does not materially change or alter B&P 17200 in a
manner that ensures these businesses will not again
have to endure this type of hardship. Despite
amendments, this bill continues to allow a significant
deficiency in the 17200 law. In fact, under SB 122,
these small businesses will continue to face a standard
of "infinite jeopardy" wherein they may be financially
assailed repeatedly by profiteering attorneys for the
same technical violation. ARC believes this central
issue must be addressed in order to achieve any real
reform of the 17200 statute. ARC appreciates the
author's removal of the section that provided
"disgorgement" as an available remedy under 17203. ?
However, the replacement provisions in the new Section
2 of the bill now provide essentially the same threat
to businesses. It appears to us that despite the term
"disgorgement" being removed there is no other
substantive difference.
SB 122
Page 16
REGISTERED SUPPORT / OPPOSITION :
Support
Attorney General
California Labor Federation, AFL-CIO
California League for Environmental Enforcement Now (CLEEN)
California Rural Legal Assistance Foundation (CRLA)
California State Association of Electrical Workers and Western
States Sheet Metal Workers
California State Pipe Trades Council
City and County of San Francisco
Congress of California Seniors
Consumer Attorneys of California (CAOC)
Consumers for Auto Reliability and Safety (CARS)
Consumers Union
Sierra Club California
One individual
Opposition
American Insurance Association
American International Group
Automotive Aftermarket Services, Inc.
Automotive Repair Coalition (ARC)
Automotive Trade Organizations of California
California Association of Health Facilities
California Association of REALTORS
California Chamber of Commerce
California Dental Association
California Manufacturers & Technology Association
California Motor Car Dealers Association
California Service Station and Automotive Repair Association
Citizens Against Lawsuit Abuse - Central California
Citizens Against Lawsuit Abuse - Los Angeles
Citizens Against Lawsuit Abuse - Northern California
Citizens Against Lawsuit Abuse - Orange County
Citizens Against Lawsuit Abuse - San Diego County
Citizens Against Lawsuit Abuse - Silicon Valley
Civil Justice Association of California (CJAC)
Clorox Company
Motion Picture Association of America
National Federation of Independent Businesses (NFIB)
Option One Mortgage Corporation
Personal Insurance Federation of California
SB 122
Page 17
Pleasanton Chamber of Commerce
SBC California
SeaStack Enterprises, LLC
One individual
Analysis Prepared by : Saskia Kim / JUD. / (916) 319-2334