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Assuaging legislators’ concerns over disgorgement is the next step in the fight to win passage of a legislative package revising the state’s unfair competition law. Democrats in the California Assembly cobbled together a bare majority late Thursday to pass their half of the package. AB 95 by Assemblywoman Ellen Corbett, D-San Leandro, squeaked by on a 41-35 vote — an hour after an initial roll call failed to come up with enough votes to pass the plan. But some who voted for the measure are opposed to disgorgement, which is included in the companion Senate bill, SB 122. Approved by the Senate on Wednesday by a vote of 22-15, SB 122 is double-joined to Corbett’s bill, which means that both have to pass in order for the changes to become law. “I think we will have to tinker with it, but I think it will get to the governor’s desk,” said Bruce Brusavich, president of the Consumer Attorneys of California, which has lobbied for the legislative package. “I have a lot of votes committed to AB 95 with the legislators saying they want changes,” he said. “Disgorgement is getting all the attention in Sacramento.” Together, AB 95 and SB 122 are intended to reform Business & Professions Code � 17200 by adding checks designed to discourage lawyers from filing frivolous 17200 suits. They would require plaintiffs bringing such suits to send a notice to every defendant informing them 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. The Senate bill would allow plaintiffs to seek disgorgement through fluid recovery and cy pres awards — practices banned by the California Supreme Court. Republicans and some moderate Democrats blasted the proposal Thursday, saying it didn’t go far enough to reform 17200. Opponents said it would not prevent unwarranted lawsuits and pointed out that many businesses that have been victims of unfair competition suits are opposed to it. Assemblywoman Carol Liu, D-Pasadena, agreed to support AB 95 despite her opposition to disgorgement. “I think [disgorgement] could hurt small businesses,” Liu said. “I will not be able to support disgorgement.” Liu threw her support behind AB 95 after Corbett agreed to consider amending the bill to require that the attorney general’s office and district attorney’s office be notified when a 17200 suit is filed. Brusavich said his group is not opposed to the notification but he said the attorney general has said he doesn’t have the funds or staffing to handle the notices. Opponents of the bill will be doubling their efforts to defeat it. “For us, the momentum is going in the wrong direction,” said John Sullivan, president of the Civil Justice Association of America. “But it’s never over ’til it’s over.” Sullivan said the bill has incomplete provisions to stop the shake-down of businesses, and the notice that plaintiffs are to send to defendants is “just about as scary as the notice the Trevor Law Group sent out” to defendants it threatened to sue. Members of the Assembly echoed his concerns during debate over the bill. “This bill does absolutely nothing,” said Assemblyman Robert Pacheco, R-Walnut. There needs to be a “threshold requirement that prevents filing of a lawsuit. There has to be some harm incurred by plaintiffs.” Assemblyman Lou Correa, D-Santa Ana, said he decided to vote against the measure based on who was supporting it and who was opposing it. “My constituents — small auto shops, nail salons, restaurants — most victims [of 17200 lawsuits] are opposed to the bill,” Correa said. But Assemblywoman Hannah-Beth Jackson, D-Santa Barbara, said the bill would prevent abuse of 17200 and weed out bad lawyers. “There have been abuses by a few firms,” she said. “By virtue of this measure they will be thrown out of practice. The bill also gives disincentive for bad actors to come in — they will be disgorged of their profits.” Corbett rejected arguments that the bill does not help small businesses, saying it was “one of the most ironic and despicable parts of the discussion.” “Some say we should sit on our hands and do nothing because it doesn’t go far enough,” she said. “It goes a long way. Don’t listen to those who are behind wiping out a landmark consumer protection act.” Corbett’s bill will now move to the Senate Judiciary Committee, while SB 122, being carried by Sen. Martha Escutia, D-Montebello, will be taken up by the Assembly Judiciary Committee.

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