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Suit Initiative Goes Too Far

August 17, 2004

With the exception of some trial lawyers and dishonest litigants, just about everybody would like to do away with frivolous lawsuits. The trouble is, most of the proposed "solutions" would strip away protections intended to keep predatory businesses from abusing consumers. Proposition 64, a November initiative that would gut the state's tough Unfair Business Competition Law, falls in that category.

There's no denying that the 70-year-old law, intended to protect consumers from unfair or fraudulent business practices and deceptive ads, has flaws. It allows unscrupulous lawyers to conduct what amounts to legalized extortion by filing nuisance lawsuits intended to produce out-of-court settlements. Business leaders in California, frustrated by Sacramento's long-standing failure to stop the shakedowns, already have stockpiled more than $7 million to lobby for passage of Prop. 64 on Nov. 2. But the all-or-nothing initiative risks throwing out the good with the bad. Gov. Arnold Schwarzenegger, who has yet to take a public stand on the measure, should quickly move to broker a legislative deal that would spare voters from what could become one of November's most heavily contested propositions.

The governor should start by getting the real story behind the Unfair Business Competition Law from state Environmental Protection Agency Secretary Terry Tamminen. During the mid-1990s, Tamminen (then working with the environmental group Santa Monica BayKeeper) used the law to force Southern California ports to reduce toxic emissions at tanker facilities. Other groups have used it to rid apartment buildings of lead paint and to protect consumers from a supermarket chain that was relabeling days-old meat.

Business leaders argue that district attorneys will adequately protect consumers against fraudulent business practices if Prop. 64 succeeds. Not so, according to state Senior Assistant Atty. Gen. Herschel Elkins, who says Prop. 64 "goes unbelievably far.... Throwing out the baby with the bathwater is not the best thing."

Fortunately, there is a solution that both sides should be able to agree upon. A 1995 California Law Revision Commission report issued by a bipartisan panel that included business leaders and consumer advocates shows how to keep the good parts of the law and plug the loopholes. Schwarzenegger should follow that blueprint in crafting a legislative solution. Then he can urge voters to turn down Proposition 64 -- his opinion will hold weight among voters. He should use his influence now to avoid what will otherwise be a costly and divisive ballot fight.

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