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Moderate Democrats who want to modify the state unfair competition law are encouraged that Gov. Arnold Schwarzenegger seems inclined to make a deal with them instead of getting involved in a costly initiative fight. The governor met with members of the business-friendly Moderate Democratic Caucus last week and discussed ideas they believe would stop frivolous unfair competition lawsuits without gutting consumer protection. Assemblyman Lou Correa, the Santa Ana Democrat who led last year’s legislative fight to modify the law, left the 2 1/2-hour meeting optimistic. “He wants to sit down and make a deal,” Correa said, adding that he hopes to begin working with the governor’s staff soon. Others who were at the meeting shared Correa’s outlook. Modifying the law, Business and Professions Code � 17200, was part of Schwarzenegger’s pro-business campaign platform. But he didn’t describe how he would like to see that happen. His press office did not return a phone call seeking comment Thursday. Republicans have introduced legislation for the past several years to change the law, which they say is regularly abused by trial lawyers to the detriment of California businesses. Plaintiffs lawyers counter that the law is essential for consumer protection and have had their Democratic allies block legislation they believe goes too far. The partisan debate changed tenor last session, though, after several plaintiffs firms targeted Southern California small businesses in suits that Attorney General Bill Lockyer said amounted to “extortion.” Correa introduced a measure that was killed in the Assembly Judiciary Committee, which is chaired by trial lawyer ally Ellen Corbett, a Democrat from San Leandro. Frustrated with the Legislature, the business community then floated an initiative for the November ballot that goes beyond Correa’s changes. Interest groups battling over 17200 say the governor’s influence will be key in this year’s debate, whether it remains confined to the Legislature or ends up in voters’ hands. Schwarzenegger, of course, is not the only one with juice in the Legislature. Correa admitted that one of his biggest problems, even if he gets the governor on board, will be overcoming trial lawyers. “I think what we’re going to do is wait until Mr. Correa actually submits his bill,” said Consumer Attorneys of California President James Sturdevant of San Francisco’s Sturdevant Law Firm. “Then we’ll take a look at it.” Asked if he was worried about Schwarzenegger working with the moderates, Sturdevant said the situation was “too amorphous to put some kind of blush on it.” In contrast, John Sullivan, president of the tort reform Civil Justice Association of California, welcomed the governor’s involvement. “If the governor and Legislature come up with something that’s as good or better than our initiative then � that’s great,” Sullivan said. Upon hearing a brief description of Correa’s new measure, which would likely be the blueprint of any deal, Sullivan said it didn’t sound quite as good as the initiative. Signature gatherers are already collecting for the tort-reform initiative, which would require actual harm before a private attorney could file a 17200 action. Tort reformers and their allies hope to win Schwarzenegger’s support for the measure. The backing of the popular celebrity governor would mean they’d have to spend less money to convince voters of their position. Some believe Schwarzenegger’s support could also build legislative momentum. “If he decides to make this a priority, I think that it will help,” said Brian Maas, lobbyist for the California Motor Car Dealers Association, which represents the initiative’s biggest financial backers so far. Schwarzenegger met with moderate Democrats at Sacramento’s Supper Club on Jan. 21. About a dozen of the 17 caucus members attended, and the Democrats took turns presenting to the governor several topics, including worker’s compensation and transportation. Correa addressed 17200. The assemblyman plans to introduce a new bill to modify the statute some time soon. It will be similar to his bill last year, which included a ban on prefiling settlements, notice to the attorney general and district attorneys, disclosure of defendants’ rights, judicial review of settlements, and would have forbidden attorney conflicts of interest. The new bill adds explicit sanctions for attorneys who file frivolous actions, court-assisted creation of a defendant class, and rules to stop lawyers from filing suits based on infractions that are already dealt with by regulatory agencies. If anything is to happen in the Legislature this year, it’s going to have to be fast. Initiative backers say they’ll submit signatures in mid-April to put the measure on the ballot if they don’t like any legislative fix. An initiative would supercede legislation. Assemblyman Joseph Canciamilla , D-Pittsburg, who chairs the moderate group, said Schwarzenegger will decide how fast things move. “It will depend in part on how much effort he and his office put into [it],” he said.

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