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November 02, 2004

s. 17200 (and Proposition 64) roundup [reprint]

This appeared on Overlawyered Nov. 1:

More about the Magna Carta for California bounty-hunters known as the Unfair Competition Law or s. 17200, which Golden State voters have a chance to rein in tomorrow by approving the much-needed Proposition 64:

* Attorney Harpreet Brar, whose law firm of Brar & Gamulin was among those to arouse public outrage in the shakedown-lawsuit scandal of 2002-03, has been ordered to pay nearly $1.8 million for filing shoddy lawsuits against small businesses and seeking to settle them quickly for cash (see Aug. 20, 2002) (various news sources, via Legal Reader, Oct. 20);

* Justice David Sills's spirited dissent in the "Six Screws" case in June (mentioned in my Friday WSJ piece) can be found, along with the majority opinion, here. An excerpt from Sills's opinion to illustrate the flavor:

What is the difference between the $3 million attorney fees award here and the petty shakedowns which made the Trevor Law Group infamous in Southern California? Nothing but the size of the law firm and its target. As this court noted in People ex rel. Lockyer v. Brar (2004) 115 Cal.App.4th 1315, 1316-1317: "The abuse is a kind of legal shakedown scheme: Attorneys form a front 'watchdog' or 'consumer' organization. They scour public records on the internet for what are often ridiculously minor violations of some regulation or law by a small business, and sue that business in the name of the front organization."

Thus, if the Trevor Law Group sues an auto body shop over not having its license up to date, that is an abuse of the unfair competition law. But if a more established law firm sues a big corporation over an equally trivial putative violation -- it is rewarded with $3 million in fees. The net result is to bless the same kind of abuse in which the Trevor Law Group engaged -- looking for a hypertechnical violation of some law by a California business and then going after that business under section 17200 as a profit-making venture -- with appellate holy water.

* Rutan & Tucker attorney Layne H. Melzer has published a succinct guide to the headaches s. 17200 can inflict on an unwary California businessperson ("A Step Toward Disarming California's 'Business Practice Bandits'", undated, at Rutan site (PDF))

* On the other hand, as we mentioned Jul. 7, there's a whole blog about s. 17200, written by a class action lawyer who has filed many cases using the law. She has published on the blog a description and defense of the law and a post in opposition to Prop 64. (Fixed 11/1 to correct description of blog's author and to add last-mentioned link.)

* Tim Sandefur (Oct. 28) examines allegations that Prop 64 would impair the enforcement of environmental laws.

* According to the latest Field Poll (Oct. 30, PDF), proponents of Prop 64 have been gaining momentum as the word gets out about the measure. In late September the proposition was behind by twelve points, 26 to 38 percent. Now the deficit has been shaved to five points, 37 percent No and 32 percent Yes, with a gigantic 31 percent of likely voters still undecided. And Gov. Schwarzenegger has started storming the state at rallies to promote his "road trip to reform" which includes a Yes vote on 64, further improving the measure's chances if its supporters can be made to turn out at the polls.

Posted by Walter Olson at 06:37 PM | TrackBack (0)




Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.