Thursday, 30 September 2004 17:00

Governor Schwarzenegger voices support to end shakedown lawsuits

Governor Arnold Schwarzenegger announced his support for Proposition 64, a November ballot measure whose supporters claim would stop "shakedown lawsuits." 

Over a thousand small businesses, including several hundred California mechanical and body shops were sued in the summer of 2002 under the provisions of California's Unfair Competition Law, commonly referred to as 17200 (The law's section number in the state's Business and Professions Code).

The repair shops were sued in 2002 after their names appeared on a list of shops that were issued Notices of Violation (NOV's) by the California BAR.

The suits were filed by the Trevor Law Group of Beverly Hills, which then offered to settle the suits for amounts ranging from several hundred to several thousand dollars. While early settlements ranging from $1,000 to $5,000 were reported, the cases were later thrown out by the Courts. The partners in that firm have since resigned from the California Bar and were under investigation by the State Attorney General's office.

Governor Schwarzenegger comments

"California is turning the economy around with an aggressive reform agenda, the kind of reform the voters have demanded," said Schwarzenegger. "Proposition 64 will stop the legal practice of shakedown lawsuits, in which private lawyers file suits without any client or any evidence of harm. This turns lawyers into bounty hunters, stalking innocent small businesses that create jobs and opportunity in California."

Thowing out baby with bath water

Those against the ballot measure point out that The Unfair Business Competition Law is a powerful weapon for consumers, and that gutting it would be like throwing out the baby with the bath water. They say that the law allows individuals, public interest groups, companies and prosecutors to sue companies that cheat their competitors or defraud consumers. While acknowledging that the law has been misused by some unscrupulous attorneys, they say the law has properly been used to punish polluters, stop misleading advertising, prevent religious discrimination and end fraudulent financing schemes.

A spokesman for the Consumer Attorneys Association of Los Angeles said "Proposition 64 would eliminate the ability of consumer, environmental, senior and civil rights groups to bring suit under the law in the public interest." He pointed out that Section 17200 was instrumental in taking old meat off supermarket shelves, stopping fraudulent HMO marketing in non- English speaking communities and forcing bottled-water companies to remove illegal levels of arsenic and bacteria."


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