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SACRAMENTO � An appellate court Friday tossed out six court-approved Proposition 65 settlements involving major hotel chains, ruling that the trial court did not evaluate whether the settlements “served the public interest.” Writing the unanimous decision, Justice Candace Cooper of the Second District Court of Appeal said the case reflected “defects both in the process of negotiating Proposition 65 settlements and the substantive test used by the trial court to decide whether to enter the parties’ settlement as the court’s judgment.” The case, Consumer Advocacy Group Inc. v. Kintetsu Enterprises of America, B169636, stemmed from pacts struck between the hotels and the Consumer Defense Group, an organization with ties to the plaintiffs firm Graham & Martin. Consumer Defense Group, or CDG, has filed numerous claims against companies under Prop 65, California’s Safe Drinking Water and Toxic Enforcement Act. Another plaintiffs firm, Consumer Advocacy Group, or CAG, accused CDG and the hotels of colluding to create a settlement with few serious penalties and a blanket shield from future Prop 65 litigation. CAG had previously tried to file claims against the hotels over secondhand smoke, but became hung up in court challenges over the validity of its notices. According to the appellate court’s decision, CDG then entered the dispute and began negotiating a settlement with the hotels. But those negotiations covered not only secondhand smoke, but also cleaning supplies, construction activities, medical supplies, furniture and a host of other sources of possible contaminants. The global settlement precluded future claims � specifically any brought by CAG � related to chemicals covered in the deal. CDG also negotiated a similar, separate agreement with an industry trade group representing 1,300 lodging businesses. That group, according to Friday’s decision, had sent out a “red alert” asking members to sign on to the deal. “Our objective is to create a court-approved settlement procedure wherein payment of a low negotiated settlement amount and low attorneys’ fees and costs will effectuate a ‘global’ resolution that will benefit every California innkeeper who elects to participate in it,” the alert said. The settlements would have paid CDG attorneys $276,000, according to the attorney general’s office. CAG and the attorney general’s office objected to the pacts. But while a Los Angeles County Superior Court judge expressed concern that the deal with the trade group might be “too cozy,” he ratified the settlements. CAG appealed and the attorney general’s office filed an amicus curiae brief, saying the deals contained no real benefit for the public. The appellate court agreed. “Where the rights of the public are implicated, the additional safeguard of judicial review, though more cumbersome to the settlement process, serves a salutatory purpose,” the court ruled. “It reminds the parties that, in addition to their own interests, the public interest is also relevant.” Anthony Graham, an attorney for CDG, could not be reached for comment late Friday. In a written statement, Attorney General Bill Lockyer hailed the ruling as upholding “meaningful” public health protections. “Today’s court decision will help stop those that abuse California’s consumer laws for private gain,” Lockyer said.

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