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The State

Initiative Seeks Curbs on Consumer Lawsuits

July 06, 2004|Evan Halper and Marc Lifsher | Times Staff Writers

"What we are saying is, have a legitimate reason to sue," said Michael Chee, spokesman for Blue Cross of California, which has donated $250,000 to fund the measure. The company has been sued under the consumer protection law at least four times in recent years. The charges have included deceptively increasing members' premiums and underpaying doctors and hospitals.

Alan Zaremberg, president of the California Chamber of Commerce, said passage of the initiative wouldn't keep cases with merit from going forward under other laws.

"If there is a problem, you can call the district attorney," he said. "If they are selling meat that is out of date, he can go stop it."

But several current and former prosecutors scoff at Zaremberg's statement.

"The attorney general's office and the district attorney do not have enough staff -- and never will -- to solve all the problems of deceptions in business practices," Elkins said.

For The Record
Los Angeles Times Wednesday July 07, 2004 Home Edition Main News Part A Page 2 National Desk 2 inches; 81 words Type of Material: Correction
Consumer lawsuits -- A photo caption in Tuesday's Section A accompanying an article on California's Unfair Competition Law said Kathy Olsen won a malpractice lawsuit against Kaiser Permanente. She was the lead plaintiff in a false advertising lawsuit against Kaiser that resulted in a settlement requiring the HMO to disclose a system of bonuses given to medical groups for controlling costs. Also, an accompanying chart said the Foundation for Taxpayer and Consumer Rights was in Sacramento; it is in Santa Monica.

Public interest groups say the changes proposed by the initiative would be a disaster.

Environmentalists cite several cases in which they have used the law to stop polluters before they could cause harm. People should not have to wait until they are hurt to take action, they say.

The Environmental Law Foundation, an Oakland-based advocacy group, says there have been hundreds of pollution and natural-resource cases that could not have been filed under the initiative.

Among them is a lawsuit an environmental health activist group filed that resulted in the removal of tobacco billboard ads from within 1,000 feet of schools. Another case forced bottled-water companies to install filtration systems to remove illegal levels of arsenic.

And a case against major oil companies spurred the cleanup of leaking underground gas station tanks that were polluting groundwater.

So far, the oil giant BP has contributed $50,000 to the initiative.

Other advocacy groups have used the law to stop companies from marketing sugary children's cereals as healthful. They have sued large insurance companies for reducing earthquake coverage without providing adequate notice to policyholders. And they say the law has shed light on car dealers and finance companies that scammed minority customers into paying excessive rates and illegally repossessed cars.

"Unless you have a law like this, those nightmares continue for thousands of people unabated," said Andrew Ogilvie, a consumer attorney in San Francisco.

Los Angeles Mayor James K. Hahn, a former prosecutor, has warned that the initiative would lead to "the erosion of critical public safety and civil rights protections" and cost taxpayers more money because prosecutors would need to take on cases now being handled by private groups.

Hahn, in a recent letter to the California League of Cities, noted that if the measure had been in effect, lawsuits such as the one charging R.J. Reynolds with using its Joe Camel advertising campaign to attract children to smoking would not have been filed. Settlements from such cases resulted in a multibillion-dollar payout for cities and counties, he said.

Some legal experts say there is an easier way to end abuses of the law without keeping legitimate cases out of court. They say all it takes is a little more discipline from the courts, state officials and the bar association.

Indeed, three lawyers accused by Atty. Gen. Bill Lockyer of filing thousands of bogus cases against restaurants and auto repair shops gave up their law licenses.

Robert Fellmeth of the Center for Public Interest Law at the University of San Diego has been pushing lawmakers to pass a bill that would provide prosecutors with resources to more aggressively police use of the law and to crack down on abuses. His solution also would involve judges reviewing settlements to ensure that they are just.

"The problem is not that difficult to solve," Fellmeth said.

But a negotiated solution has yet to gain traction in the Legislature. Analysts say neither side has been willing to give. Many business groups want nothing short of the initiative, and some groups that file suits under the law won't accept any changes.

With the election season looming, both sides hope that Gov. Arnold Schwarzenegger will step in on their side.

The Republican governor, who ran in a recall election on a jobs and pro-business agenda, recently signaled sympathy for the initiative by telling a chamber of commerce audience that he opposes "shakedown lawsuits." His office, however, stresses that the governor has not yet officially declared his position on the measure.

Schwarzenegger's own Environmental Protection Agency secretary used the law in the mid-1990s to file a suit against an El Segundo oil refinery. Environmentalists hope Terry Tamminen will persuade his boss to broker a legislative agreement that will take the steam out of the initiative.

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