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After years of defeat in a plaintiffs-friendly state Legislature, a coalition of tort reformers and business interests said Wednesday they will take their fight to revamp California’s unfair competition law directly to voters. The groups released initiative language they will try to qualify for the November 2004 ballot that would limit the ability of plaintiffs attorneys to file suits under Business & Professions Code � 17200. If it qualifies for the ballot, the initiative is likely to set off a nasty and expensive campaign pitting business interests against trial lawyers and their primary lobbying group, the Consumer Attorneys of California. Consumer Attorneys has already said it may try to qualify its own competing initiative in 2004. Each side could try to raise as much as $20 million to sway voters, people close to both camps said. The tort reformers’ measure asks voters to change state law so that private attorneys cannot file unfair competition suits unless there is actual harm to the client they represent. Suits would also have to follow the same guidelines as class actions. The proposal exempts public prosecutors from the new requirements, meaning only they would be able to stop practices when there is the threat of impending harm. Under current law, a private attorney can allege unfair competition on behalf of the general public even if no one has been injured. “I think the initiative is basically a popular initiative. It seeks to do what the public already thinks is the case, that you have no viable action unless you have real injury,” said Steven Merksamer, a partner in the Sacramento office of Nielsen, Merksamer, Parrinello, Mueller & Naylor, a law and lobbying firm that is treasurer and legal counsel for the campaign. James Sturdevant, who will become the Consumer Attorneys’ president in 2004, said the initiative is bad news because it will make it impossible for private attorneys to do anything until someone is already hurt. For years, Republicans have introduced bills to modify the unfair competition law. In this year’s legislative session, some Democrats took up the cause after reports of frivolous 17200 suits against small businesses, mostly in Southern California. But the bills were defeated by the plaintiffs bar’s Democratic allies in the Senate and Assembly. John Sullivan, president of the Civil Justice Association of California, said the time is ripe for an initiative because “this past year was the most frustrating and disappointing of all.” Sullivan made his comments on the west steps of the Capitol, about an hour before Gov.-elect Arnold Schwarzenegger was scheduled to arrive for a day of meetings with legislative leaders. Modifying 17200 was part of Schwarzenegger’s larger campaign platform of improving California’s business climate. Sullivan said he has been in touch with Schwarzenegger’s office; however, it’s not known if he will support the coalition’s effort. “I think if he finds that nothing can be done in the Legislature, then he will [support it],” Sullivan said. The governor-elect’s spokesman did not return a phone call seeking comment. An endorsement from Schwarzenegger could prove very valuable for the business interests that are backing the initiative. Peter Welch, executive vice president of the California Motor Car Dealers Association, said it will cost about $1.5 million to gather enough signatures to qualify for the ballot. Then the campaign costs will depend on how much resistance there is from trial lawyers and other groups. Sullivan said he did not have a cost estimate, only promises from business interests that they would see it through. Merksamer estimated the campaign would cost $10 million to $20 million. The initiative will be pushed by a campaign committee called Californians Against Shakedown Lawsuits. So far, according to the secretary of state, the committee has reported receiving $244,500. Sullivan, of the Civil Justice Association, isn’t worried about the rest of the money, saying “we wouldn’t be here unless we had commitments.” A separate committee run by the Motor Car Dealers has raised another $4.2 million for the campaign. Besides hanging onto Schwarzenegger’s pro-business coattails, the tort reformers hope to ride legislative momentum to change 17200. Previously a Republican issue, 17200 was picked up by moderate Orange County Democrat Lou Correa in 2002 after thousands of businesses in his district were hit with lawsuits under the statute. Lawyers, most notably the now-defunct Trevor Law Group, filed unfair competition suits over minor regulatory violations and then demanded settlements to stay out of court. Correa introduced a measure to modify the law, but his bill was killed in the Assembly Judiciary Committee. Instead, a trial lawyer-backed proposal made it to the Senate and Assembly floors, but it was also defeated. Correa said he planned to introduce another version of his bill in January. In crafting his measure, Correa had enlisted the help of Robert Fellmeth, executive director of the Center for Public Interest Law at the University of San Diego School of Law and an expert on unfair competition. On Wednesday, Fellmeth said the tort reformers’ initiative was “extreme overkill” because it “just destroys” the ability of private attorneys to prevent impending harm to the public by filing suit. “It’s irresponsible, disingenuous reform that is not directed at the problems with the statute,” Fellmeth said.

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