Despite Tense Talk, 17200 Bill Clears Hurdle

A measure to reform the state unfair competition law squeaked out of the Assembly Judiciary Committee on Thursday. AB 95, by the committee chairwoman, Assemblywoman Ellen Corbett, D-San Leandro, made it out with nine "aye" votes, one more than was needed. Corbett's bill, which is backed by the plaintiffs bar, is linked to a measure by Sen. Martha Escutia, D-Montebello, and one bill cannot become law without the other. Together, they would reform the statute, Business and Professions Code § 17200.

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SACRAMENTO — A measure to reform the state unfair competition law squeaked out of the Assembly Judiciary Committee on Thursday after last-minute amendments and amid complaints that there wasn’t enough time to properly weigh the proposal. AB 95, by the committee chairwoman, Assemblywoman Ellen Corbett, D-San Leandro, made it out with nine “aye” votes, one more than was needed. The mood in the hearing room was tense as bill language changed and witnesses argued over how much the statute should be changed because of allegations that some plaintiffs used the unfair competition law to unethically leverage settlements from small businesses. Corbett’s bill, which is backed by the plaintiffs bar, is linked to a measure by Sen. Martha Escutia, D-Montebello, and one bill cannot become law without the other. Together, they would reform the statute, Business and Professions Code � 17200. Escutia’s piece of the package, SB 122, will be heard in committee Tuesday. The proposals would do three things: require judicial review of attorneys fees in 17200 cases; force plaintiffs to notify defendants of their rights in a lawsuit; and revive plaintiffs’ ability to seek disgorgement of profits through fluid recovery. Corbett tightened the package even further Thursday by adding an anti-severability clause that means if any part of the new law is held invalid, the whole reform package goes out the window. Because her bill is linked to Escutia’s, that clause would likely apply to the whole package, according to Escutia’s staff. Some at the hearing complained that, because Corbett and Escutia only released their bill language Wednesday, there hasn’t been enough time to evaluate their proposal. “I’m very displeased with the process for hearing this matter. This type of hearing does not give justice to what needs to develop,” said Assemblyman Robert Pacheco, R-Walnut. Corbett said she wanted to hold the hearing next week. She pointed out that even as Republicans complained, they still refused to grant her another exemption to get around deadlines negotiated by Republican and Democratic Assembly leaders. But Assemblyman Todd Spitzer, R-Orange, said Corbett had plenty of time to come up with her proposal. Republicans shouldn’t be blamed for trying to keep bills moving “expeditiously” through the Legislature, he said. Although Spitzer said the hearing appeared to be pro forma, with the Democrats having decided how they were going to vote ahead of time, he was happy to get one concession. During the hearing, Consumer Attorneys of California Vice President Raymond Boucher, of Beverly Hills’ Kiesel Boucher & Larson, agreed to clarify language in the proposal that would require that judges review attorneys fees in 17200 cases, even if those cases aren’t filed in court. The proposal had already included a provision on court approval of attorneys fees, but language in the package of bills wasn’t clear whether that included settlements that occurred before a case was filed, Spitzer said. CAOC President-elect James Sturdevant, of San Francisco’s Sturdevant Law Firm, said he doesn’t view it as a concession because that was already the intent of the bill. Corbett also removed a section on disgorgement, the most significant of the proposed reforms. But because Escutia’s bill still contains the disgorgement provision, and the bills are linked, Corbett’s move will have no effect if the bill passes. Plaintiffs attorneys lauded the disgorgement provision because it gives back to them a way to recover money that they lost in two recent state Supreme Court decisions, Kraus v. Trinity Management Services, 23 Cal.4th 116, and Korea Supply Co. v. Lockheed Martin Corp., S100136. Republicans were able to jeopardize the measure with a last-minute parliamentary trick. Because the hearing was held on a Thursday, several of the Democratic members cast their votes and then left, leaving a majority of Republicans in the room. As Corbett presented her bill, Pacheco moved to throw out the Democrats’ early votes. Had his move succeeded, the committee would have had trouble finishing the vote. Corbett called a recess and got the clerk of the Assembly to come to the chamber and explain that Pacheco’s move was out of order. The committee also killed Pacheco’s bill, AB 102, as well as another Republican proposal. The other Democrat with a bill, Lou Correa of Santa Ana, also saw his measure defeated. Correa led this year’s push to reform 17200 after thousands of small businesses in his district were hit with lawsuits based on the statute. Of 14 Judiciary Committee members, only four Republicans and one Democrat voted for his bill. Plaintiffs attorneys said Correa’s bill, AB 69, went too far. Correa has asked that his bill be reconsidered. Unless Republicans grant more deadline waivers, the earliest it could be heard would be January.

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