LETTERS
Lawsuit Abuse
A few bad apples are abusing an important consumer rights law and the result is that ordinary, honest, hard-working small business owners are being coerced.
Mom-and-pop businesses, such as auto body shops, nail salons, travel agencies, restaurants and video stores, are finding themselves in the crosshairs of renegade attorneys abusing consumer protection laws to squeeze big settlements from small business owners who are least able to defend themselves.
At the center of the storm is a section of the California Business and Professions Code considered a cornerstone of the state’s consumer protection laws. Section 17200 permits prosecutors and private attorneys to claim that a business is acting “unfairly” and then sue.
Used properly, the section is an essential consumer protection law. But that is not what is happening. Unscrupulous attorneys are filing trivial 17200 suits and then offering to drop legal action in exchange for settlements that typically range from a few to several thousand dollars. This looks like nothing more than a shakedown.
Failure to respond to a suit within 30 days can lead to an automatic judgment against any operator, no matter how frivolous the allegations.
Many of the shop owners being hit are new Americans who have limited English-speaking abilities.
On Nov. 26, a Beverly Hills law firm, the Trevor Law Group, filed lawsuits against approximately 1,000 restaurants in the Los Angeles area. Major targets in the suit are operators of family-run Chinese restaurants. Other law firms are also involved.
In August, Trevor filed a similar suit aimed at auto shops. That suit lists 30,000 “Does.” The “Does” are essentially blank spots in the suit that can be filled in later with other businesses. Over 1,400 “Does” in the auto body suit have been named so far, including companies that long ago went out of business. A large number of these suits are aimed at Asians, Latinos and recent immigrants.
The Legislature must ensure that shakedown lawsuits are stopped. I am holding legislative hearings to investigate the problem, and I have introduced Assembly Bill 69 in order to enact solutions. I am cautiously optimistic and encouraged by the fact that diverse and often divergent interest groups appear to recognize the need for real reform.
Lou Correa
(Correa, D-Santa Ana, is chair of the Assembly Business and Professions Committee.)
Tax Cuts
President Bush “gets it.” His economic growth package will provide necessary stimulus to our economy.
Contrary to the class warfare rhetoric of the Democrats, who are attacking the President’s plan, the proposal helps everyone who pays taxes. In addition, the President’s new initiatives will help by encouraging small and large business investment. This will be good for both investors and for employees, as well. The elimination of the double taxation of dividends is great news for investors, and for retirees.
This plan helps every sector of our economy by creating jobs, by growing business and capital investment, and by putting money back in people’s pockets so that consumer spending can be accelerated.
Win! Win! Win!
Thomas E. Tucker
Founding Chair
The New Majority
Newport Beach
