Battle Lines Drawn on 17200 Ballot Measure
By CHRIS CZIBORR
Let the battle over 17200 reform begin.
Opposing groups are drawing up their campaign plans for a likely November ballot initiative aimed at reforming the 17200 section of California’s Business and Professions Code.
The code has spawned scores of lawsuits and threatened litigation mainly targeting small businesses such as auto repair shops and nail salons in recent years.
On one side are backers of the initiative,business groups,while trial lawyers and consumer groups who want only modest reform or none at all line up on the other.
“It looks like everybody is gearing up,no question about that,” said Ed Sybesma, an attorney with Costa Mesa-based Rutan & Tucker LLP’s 17200 practice. “One side will be advertising 17200 abuses experienced by people. The other side will talk about how 17200 has or could be used to help consumers prevent themselves from getting cheated.”
Sybesma has defended businesses charged with violating the 17200 code.
The ballot measure, called the CJAC initiative after a key backer, the Sacramento-based Civil Justice Association of California, is awaiting certification of signatures gathered to qualify for the ballot. Certification is expected in the next month or so.
If successful in November, the initiative would eliminate from the 17200 code the ability of private lawyers to sue a company without having a plaintiff that can show actual harm. It would continue allowing a public official, such as an attorney general or district attorney, to sue a company without having a plaintiff show harm. The measure also would eliminate lawsuits filed in order to prevent an injury or harm from happening.
The existing code attracted intense criticism after law firms such as the notorious Trevor Law Group LLP sent letters threatening 17200-based lawsuits to thousands of small businesses demanding payment to avoid litigation. Many of the companies paid money, even though there was no person harmed by what usually amounted to a minor infraction.
A key element of the debate to watch: How involved will Gov. Arnold Schwarzenegger get? Schwarzenegger has given support for 17200 reform in the past, though Jeff Randle, a political advisor to the governor, said Schwarzenegger has made no decision yet.
“We’re still waiting for ballot certification,” Randle said.
Californians to Stop Shakedown Lawsuits,a coalition of groups supporting 17200 reform,already has started with its plan to get voters on its side.
The coalition is co-chaired by heads of groups such as the Civil Justice Association and California Motor Car Dealers Association, whose members have been hit hard by 17200 suits over violations like improper font sizes in advertisements. Californians to Stop Shake-down Lawsuits is made up of more than 400 members in the state, including scores of businesses.
The group has enlisted the help of Sacramento-based consultant Goddard Claussen Strategic Advocacy for help in promoting the ballot initiative.
“We’re going to be reminding folks that what our ballot measure does is end the frivolous shakedown lawsuits while protecting the right of individuals to file suits,” said partner Rick Claussen.
“We’ll do broadcast advertising, direct mail and print ads, as well as a cyber campaign,” said Claussen, whose company will handle advertising and other promotional activities.
Claussen and partner Ben Goddard are political veterans. In the early 1990s, their firm created the Harry and Louise ad campaign in opposition to the Clinton administration’s healthcare reform proposal.
Also throwing support behind the initiative is Assemblyman John Campbell (R-Irvine). Campbell said he would use his Web site to ask constituents to vote for the CJAC measure. He also said he might speak at pro-initiative events.
Meanwhile, groups opposing 17200 reform had tried to get an initiative of their own,the California Privacy Protection Act,on the November ballot. But they failed to get enough signatures. Groups backing that initiative included the Consumer Federation of California, the California Research Group and Oakland attorney James Wheaton. While the measure largely would’ve dealt with privacy issues, it would’ve made it easier to sue under 17200 by making the code more vague.
With that initiative a no-go, groups opposing 17200 reforms now have no choice but to try and convince people to vote “no” on the CJAC initiative.
Jim Sturdevant, president of the Consumer Attorneys of California, said the group would fight the measure, though he declined to give details, saying only, “We have a play in place to defeat the CJAC initiative.”
Along with the consumer attorneys, environmental groups such as the Sierra Club are planning to oppose the initiative.
“17200 has proven to be one of the most important laws we have to protect the environment and public health in California,” said Bill Magavern, the Sierra Club’s senior legislative representative.
Magavern said private attorneys should be able to sue companies that violate environmental regulations, because public attorneys can’t handle that work by themselves.
“The record shows that even if we have a good, proactive attorney-general like we do now, his office will not have the resources to take all the actions that need to be taken,” he said.
Magavern said the Sierra Club will try to raise awareness about the issue, though he said it won’t fund ads.
“We don’t have any budget for advertising. But we’ll try to get the news out to radio stations and newspapers and alert community groups,” Magavern said.
Election Watchdog, part of the Santa Monica-based advocacy group Foundation for Taxpayer Rights, also is opposing the CJAC initiative.
The group’s Web site includes a list of companies supporting the initiative and how much they are contributing. Auto dealers are contributing the biggest share of funds, as expected. But the list also includes heavyweights such as Microsoft Corp., Nike Inc. and Oracle Corp.
Jamie Court, president of the Foundation for Taxpayer Rights, said he supported Assembly Bill 2369, sponsored by Assemblyman Lou Correa (D-Santa Ana).
Correa’s reform would alter the code to prevent multiple lawsuits based on a single alleged infraction. It also would make it tougher to get settlements unless a consumer actually was harmed, though Court said he believed Correa was showing flexibility on this point.
But with the CJAC initiative likely for November, Correa could end up putting his legislation on hold. If the initiative fails to garner enough votes in November, then Correa could rekindle his efforts to forge a legislative solution to 17200 reform.
Earlier this year talks between auto dealers and trial lawyers over a legislative compromise on 17200 fell apart, paving the way for the ballot initiative.
As for the November initiative, Correa is mum. A spokesman said he hasn’t studied the CJAC initiative yet.
For his part, Court said that, like the Sierra Club, his organization lacks the funds to run any anti-CJAC initiative ads.
“Our plans include protests at the sites of companies who are donating money to the initiative,” Court said.
Goddard Claussen is confident about attracting voter support for the CJAC initiative.
“We’ve done three comprehensive public opinion surveys on the initiative and are getting over 60% in favor,” Claussen said.
