Last-Minute Push for a Bill to Undercut Prop. 64

With less than a week left in the legislative session, environmentalists are dickering with the Schwarzenegger administration in hopes of cutting a deal that could undermine a business-backed initiative to curtail so-called shake-down lawsuits.

The initiative, Proposition 64 on the November ballot, is aimed at weakening California’s 70-year-old Unfair Competition Law. The law lets private citizens sue companies to stop allegedly deceptive or harmful business practices, even when people filing the complaints have not been personally injured.

Proposition 64 would limit an individual’s right to sue to those situations in which the person has suffered actual injury or financial loss because of an allegedly unfair practice. The proposition would also allow only the state attorney general or local public officials to sue on behalf of the public at large to enforce laws governing business competition.

If an agreement is reached with environmental group leaders, the governor will presumably stay neutral on the ballot measure -- or even campaign against it.

Arnold Schwarzenegger met with environmental community representatives 10 days ago. During the session, he indicated that he preferred “a legislative solution” over a costly initiative battle in the fall.

The business lobby, led by the California Chamber of Commerce, is worried that Schwarzenegger could throw his support behind a bill this week that fine-tunes but doesn’t junk the Unfair Competition Law, reducing the chances that Proposition 64 would pass.

The chamber and allied groups bought a full-page advertisement that ran in a Sacramento newspaper Monday denouncing the possible legislation as a smokescreen.

“The chamber is spooked,” said Bill Magavern, a lobbyist for the Sierra Club.

For years, business groups have complained that the Unfair Competition Law has led to a deluge of frivolous lawsuits ginned up by unethical plaintiffs’ attorneys seeking easy settlements.

But Robert Fellmeth, director of the Center for Public Interest Law at the University of San Diego, said much abuse could be eliminated by adopting ideas spelled out nine years ago by the California Law Revision Commission. It is those recommendations that are being considered for inclusion in a bill being crafted by Sen. Byron Sher (D-Stanford) with input from the Sierra Club and the California League of Conservation Voters.

Among other things, the bill could prohibit plaintiffs who represent the general public from having financial or legal conflicts of interest.

Other parts of the measure could require that the state attorney general be notified of all lawsuits, and ensure that proposed settlements be aired in public hearings.

The bill could mandate that judges have final say on settlements, judgments and legal fee awards.

The governor’s office has yet to sign off on these concepts. Though time is running short, some think a deal could still be struck. “This is not that difficult of a problem,” said Fellmeth, who served as a staffer on the law revision commission.

Unlike the legislation being considered, he added, “the initiative throws the baby out with the bathwater” and would make it almost impossible to use the Unfair Competition Law to fight environmental degradation.

The business community, which has already raised more than $9 million to fight Proposition 64, is striving to make a case to the governor, the Legislature and the public that nothing short of the initiative will stop frivolous lawsuits.

The legislation being contemplated “regulates instead of eliminates the problems,” said Chamber of Commerce President Allan Zaremberg.

Zaremberg and others maintain that environmentalists don’t need the Unfair Competition Law because they have plenty of other state and federal laws to go after polluters.

“The environmental community is leading folks to believe that Prop. 64 will let corporate polluters off the hook,” Rusty Hammer, the president of the Los Angeles Chamber of Commerce, wrote in a commentary issued Monday. “That’s a lot of baloney.”

Zaremberg said businesses remain skeptical that lawmakers have the political will to change the Unfair Competition Law. “Our experience with the Legislature forces us to proceed full speed ahead” with the initiative, he said.

Recent polls, however, suggest that business faces a tough road. A Field Poll this month showed opposition running 2 to 1 against Proposition 64.