California Chamber of Commerce Initiative Threatens Public Interest

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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