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SACRAMENTO — Opposition from moderate Democrats in the Assembly is threatening to derail a two-bill package backed by the plaintiffs bar that would modify the state’s unfair competition law. Several of the moderates said they are unhappy that the proposal to reform Business & Professions Code � 17200 includes disgorgement, a controversial mechanism for plaintiffs to recover money. “It introduces a new issue into the discussion,” said Assemblyman Joe Canciamilla, D-Pittsburg, who considers himself one of the moderates. Canciamilla said disgorgement shouldn’t be part of the debate. He said the effort to reform 17200 was originally intended to help small businesses that were being hit with unfair competition lawsuits for violating minor regulations. The moderate group is an unofficial caucus that consists of about 15 Assembly Democrats who occasionally refuse to vote down party lines, mostly on business issues. Moderates are not as close to the plaintiffs bar as the rest of the Assembly Democrats. Because there are 48 Democrats and 32 Republicans in the Assembly, supporters of the 17200 proposal will need votes from at least half of the moderate caucus because all Republicans are expected to vote against any measure that includes disgorgement. The 17200 proposal consists of two bills, AB 95 by East Bay Assemblywoman Ellen Corbett and SB 122 by Sen. Martha Escutia, D-Montebello. Although the disgorgement provision is only in Escutia’s bill, the bills are double-joined, which means that both have to pass in order for the changes to become law. For the moderates, disgorgement is the sticking point. “It changes the whole composure of what you’re trying to do,” said Assemblyman George Nakano, D-Torrance. Nakano said he was visited Monday morning by representatives from the Consumer Attorneys of California who tried to persuade him to vote for the bill. Nakano said he was leaning toward not supporting Corbett’s bill but that he was open to continuing to look at it. For her part, Corbett is confident AB 95 will get through. “I haven’t seen any major indication of trouble,” she said. As for disgorgement, Corbett explained that it was necessary in order to make another provision of the reform proposal — review of attorneys fees — work correctly. Together, AB 95 and SB 122 add several checks designed to discourage lawyers from filing frivolous 17200 lawsuits. The bills would require plaintiffs lawyers to inform defendants of their rights under the statute, require judges to review all settlements and prevent plaintiffs from joining defendants together in an action just because they’re in the same business. But disgorgement has been a problem since the package was introduced. The provision gives back to plaintiffs lawyers a tool they lost with two state Supreme Court decisions, Korea Supply Co. v. Lockheed Martin Corp., S100136, which was decided in March, and Kraus v. Trinity Management Services, 23 Cal.4th 116, which was decided in 2000. Tort reformers led by the Civil Justice Association of California have complained that the 17200 proposal does nothing to stop allegedly frivolous suits, yet gives back disgorgement — a sign that trial lawyers and their allies in the Legislature never really wanted to help the small businesses under attack in court. Contrary to tort reformers’ claims, Consumer Attorneys President-elect James Sturdevant, a San Francisco solo, said disgorgement was not a way for trial lawyers to “feather their nests,” but was a necessary part of reform. The package needs to be “comprehensive” in order to make it worthwhile, he said. For the moderates, though, the disgorgement is just a repeat of a bill by Assemblyman Howard Wayne, D-San Diego, that they helped kill last year. Wayne’s bill, AB 2019, was weaker than Corbett’s, reversing the Supreme Court decisions only for public prosecutors. Nearly the entire moderate caucus abstained from voting on Wayne’s measure. Sturdevant said he wasn’t worried about AB 95′s fate. Still, listening to the moderates, including Canciamilla; Nakano; Simon Salinas, D-Salinas; and Lou Correa, D-Santa Ana, Corbett might have reason to worry. Although they’re not exactly united in opposition, several said they wished Correa’s 17200 proposal, AB 69, had made it out of the Assembly Judiciary Committee, which Corbett chairs. Corbett has until Friday to bring her bill to the Assembly floor. Even if she fails this week, the issue could crawl back from the dead — but probably not in a way that Corbett would like. Canciamilla and others said they’ve heard rumors that Republicans, who support substantially changing 17200, could put the topic on the table during upcoming budget negotiations. “Whatever happens with Corbett’s and Escutia’s bills might not [be the] end of the discussion,” Canciamilla said.

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