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Prop 64

During the successful campaign for Proposition 64 in California, reformers cited as an example of the sort of the “shakedown lawsuit” they hoped to eliminate a suit in which Bill Lerach’s class action firm demanded money from lock maker Kwikset because its product was marked “Made in U.S.A.” but included screws made in Taiwan. Nonetheless, the California Supreme Court has now ruled 5-2 that the proposition does not ban such suits after all, because consumers can claim to be injured by the arguable mislabeling, even though nothing was defective about the lock. Dissenting Justice Ming Chin, joined by Carol Corrigan, pointed out that to get around the Proposition 64 limit all that consumers “now have to allege is that they would not have bought the mislabeled product,” and that this “cannot be what the electorate intended” in voting for the measure. [L.A. Times, CJAC, earlier here, here, etc.]

Relatedly or otherwise: Glenn Reynolds interviews University of Tennessee law professor Ben Barton about his new book The Lawyer-Judge Bias in the American Legal System (“Virtually all American judges are former lawyers. This book argues that these lawyer-judges instinctively favor the legal profession in their decisions and that this bias has far-reaching and deleterious effects on American law.”)

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In 2004 Californians voted to curtail s. 17200, the state’s distinctively liberal “unfair competition” law which had brought into existence an entrepreneurial sector of lawyers to sue businesses even in the absence of an injured consumer as client. The Federalist Society’s State Court Docket Watch has just published a symposium on the lessons and aftermath of Prop 64, with participants including William Stern of Morrison & Foerster, Scott Leviant of Spiro Moss, Jeremy Rosen of Horvitz & Levy, and Shaun Martin of the University of San Diego School of Law

April 2 roundup

by Walter Olson on April 2, 2008

  • Judge expresses surprise at how many law firms want in on fees in Visa/MasterCard issuer settlement [NYSun]
  • Mississippi bill would require a lawyer’s presence at real estate escrow closings; so rude to cite the profession’s self-interest as a factor [Clarion-Ledger]
  • Following Coughlin Stoia’s lead, Mark Lanier announces he’s expanding into intellectual property litigation [The Recorder]
  • Maryland legislation would require state-aided colleges and universities to report on what they’re doing to advance “cultural diversity” [Examiner via Bader/Open Market]
  • New era at UK pubs? Under new directive, “employers will risk being sued if a bar worker or waitress complains of being called ‘love’ or ‘darling’, or if staff overhear customers telling sexist jokes.” [Daily Mail]
  • ACLU just sued city of San Diego and snagged $900K in legal fees, but that’s no impediment to the city’s council’s enacting a special day of tribute to the group [House of Eratosthenes]
  • George Wallace, who’s guestblogged here, hosts twin editions of Blawg Review #153 at his blogs Declarations & Exclusions and A Fool in the Forest, on piratical and Punchinello themes;
  • Obama won’t support lowering drinking age [Newsweek]
  • Such a shame for entrepreneurial plaintiffs, post-Proposition 64 if you want to sue a California business you might actually need to have been injured [CalBizLit]
  • Time mag appeals $100 million Suharto libel ruling [IHT]
  • Hey, no fair enforcing that fine print disclaiming liability for sweepstakes misprints [three years ago on Overlawyered]

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More about the Magna Carta for California bounty-hunters known as the Unfair Competition Law or s. 17200, which Golden State voters have a chance to rein in tomorrow by approving the much-needed Proposition 64:

* Attorney Harpreet Brar, whose law firm of Brar & Gamulin was among those to arouse public outrage in the shakedown-lawsuit scandal of 2002-03, has been ordered to pay nearly $1.8 million for filing shoddy lawsuits against small businesses and seeking to settle them quickly for cash (see Aug. 20, 2002) (various news sources, via Legal Reader, Oct. 20);

* Justice David Sills’s spirited dissent in the “Six Screws” case in June (mentioned in my Friday WSJ piece) can be found, along with the majority opinion, here. An excerpt from Sills’s opinion to illustrate the flavor:

What is the difference between the $3 million attorney fees award here and the petty shakedowns which made the Trevor Law Group infamous in Southern California? Nothing but the size of the law firm and its target. As this court noted in People ex rel. Lockyer v. Brar (2004) 115 Cal.App.4th 1315, 1316-1317: “The abuse is a kind of legal shakedown scheme: Attorneys form a front ‘watchdog’ or ‘consumer’ organization. They scour public records on the internet for what are often ridiculously minor violations of some regulation or law by a small business, and sue that business in the name of the front organization.”

Thus, if the Trevor Law Group sues an auto body shop over not having its license up to date, that is an abuse of the unfair competition law. But if a more established law firm sues a big corporation over an equally trivial putative violation — it is rewarded with $3 million in fees. The net result is to bless the same kind of abuse in which the Trevor Law Group engaged — looking for a hypertechnical violation of some law by a California business and then going after that business under section 17200 as a profit-making venture — with appellate holy water.

* Rutan & Tucker attorney Layne H. Melzer has published a succinct guide to the headaches s. 17200 can inflict on an unwary California businessperson (“A Step Toward Disarming California’s ‘Business Practice Bandits'”, undated, at Rutan site (PDF))

* On the other hand, as we mentioned Jul. 7, there’s a whole blog about s. 17200, written by a class action lawyer who has filed many cases using the law. She has published on the blog a description and defense of the law and a post in opposition to Prop 64. (Fixed 11/1 to correct description of blog’s author and to add last-mentioned link.)

* Tim Sandefur (Oct. 28) examines allegations that Prop 64 would impair the enforcement of environmental laws.

* According to the latest Field Poll (Oct. 30, PDF), proponents of Prop 64 have been gaining momentum as the word gets out about the measure. In late September the proposition was behind by twelve points, 26 to 38 percent. Now the deficit has been shaved to five points, 37 percent No and 32 percent Yes, with a gigantic 31 percent of likely voters still undecided. And Gov. Schwarzenegger has started storming the state at rallies to promote his “road trip to reform” which includes a Yes vote on 64, further improving the measure’s chances if its supporters can be made to turn out at the polls.

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