California Chamber of Commerce Initiative Threatens Public Interest
By Tom Elias
Published by The Daily Breeze (Torrance, CA) April 5, 2004
Rarely has a ballot initiative so imperiled California consumers
as one sponsored this spring by the California Chamber of Commerce, which
bills it as part of its long-running campaign against "frivolous lawsuits."
Bearing the ponderous title Limitations on Enforcement of Unfair Business Competition
Laws, this measure would make it impossible for consumer groups of all types
to sue corporations and businesses to prevent fraud, false advertising and
other deceptions before they take place. The initiative allows lawsuits only
by individuals who have actually suffered damages.
On the surface, of course, the chamber appears to have a solid reason for promoting
this measure. Only last year, several Southern California lawyers were disbarred
for taking millions of dollars in unjustified settlements from scores of businesses
that had done no harm to anyone. These unscrupulous attorneys threatened small
businesses with expensive lawsuits for violations they had not committed, a
shakedown scheme where they usually extorted extravagant settlements even before
filing suit.
No one questions this practice must be stopped. But the chamber wants to throw
the baby out with the bath water. Its measure would prevent anyone but the
state attorney general or county district attorneys from suing on behalf of
the public under unfair business practice laws. That's just uncalled for.
Had this proposal been law in the 1980s and '90s, it would have prevented community
groups from filing a lawsuit that forced oil companies to pay for polluting
drinking water supplies and cleaning the water before anyone got hurt. It would
not have allowed cases that prevented misleading advertising of breakfast cereal
to children, fraudulent marketing of drugs, deceptive HMO practices and likely
elder abuse in some nursing homes.
What's more, a credible alternative is making its way through the state Legislature
right now. This is AB 2369, sponsored by Democratic Assemblyman Lou Correa
of Santa Ana, who is bidding to become an Orange County supervisor after he's
termed out of Sacramento next fall.
Correa's bill would ban lawyers from negotiating settlements until after lawsuits
actually are filed, thus requiring judicial approval of settlements. This would
let judges throw out settlements they find unfair or reached by unscrupulous
tactics.
Not enough, says the chamber. "That bill does not alleviate all the concerns
of our coalition," said Dominic Dimare, a chamber vice president and lobbyist.
But he said another Assembly bill now in the hopper, by Republican Rob Pacheco
of Walnut, would be just fine. Why? Because Pacheco's bill includes everything
in the chamber's own proposal. But Pacheco's bill has little chance of passage.
A quick look at some donors to the chamber's initiative campaign helps explain
why business interests like the chamber want consumer watchdogs defanged.
Nike Inc., for example, contributed $50,000 to the initiative campaign. This
athletic gear maker in 2003 settled
a false advertising suit (Kasky v. Nike)
that charged a Nike public relations campaign lied in responding to charges
of substandard working conditions and extreme low pay in its Asian factories.
Without that action, the firm might still be using foreign child labor to make
expensive shoes.
Microsoft is in for $100,000, one year after it was sued for allegedly failing
to alert consumers or provide them software to fix programs that allowed hackers
to break into individuals' computers.
These realities spurred more than 40 consumer and public interest groups to
sign a letter claiming the chamber's initiative would "make society less safe." Said
the letter, "If we weaken our most important consumer protection law, someone
is bound to get hurt. It could be a member of your family."
All of which makes the chamber's initiative one of the most potentially pernicious
to come along in many years.
Tom Elias is author of The Burzynski Breakthrough: The Most Promising Cancer
Treatment and the Government's Campaign to Squelch It.
© 2004 Tom Elias
Related features:
Nation's Toughest Consumer Protection Law Under Attack (our first take upon hearing of this initiative.
Corporations Seizing the (Ballot) Initiative
Lawsuit Reform Initiative By California Corporations Overreaches
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