State Accuses Law Firm of Extortion

State Atty. Gen. Bill Lockyer filed a lawsuit against a Beverly Hills law firm Wednesday alleging that the lawyers used the state’s Unfair Competition Law to extort cash settlements from thousands of small businesses under the guise of consumer protection.

Lockyer, who described the action as a “delicious irony,” filed the suit under the same law that the Trevor Law Group used when suing more than 2,000 auto repair shops and about 1,000 restaurants. Trevor Law group lawyers Damian Trevor and Allan Hendrickson also are being investigated by the State Bar of California.

“Trevor Law Group operates a shakedown operation designed to extract attorneys’ fees from law-abiding small businesses,” Lockyer said. “They’ve abused one of the state’s most important consumer protection statutes and dishonored attorneys who practice law in the public interest. There’s some delicious irony in turning the weapon around and using it on them.”

The Unfair Competition Law, also known as Business and Professions Code 17200, allows private individuals or nonprofit groups to sue businesses that engage in unfair practices, such as price fixing and false advertising.

The attorney general’s suit, filed in Los Angeles County Superior Court, accuses the Trevor Law Group and the Consumer Enforcement Watch Corp. of Santa Ana, owned by Ron Jamal Kort, of using the consumer protection law to collect cash settlements while fraudulently claiming to protect the public. The suit seeks repayment of all money collected by the groups and $1 million in penalties.

Among other allegations, the suit says that the defendants formed Consumer Enforcement Watch for the sole purpose of pursing such litigation, that they have engaged in a massive number of frivolous lawsuits and that they have failed to conduct adequate investigations into the merits of their cases.

The suit also alleges that the defendants have tried to obtain money by threatening unlawful injury in the form of financial harm. The suit alleges that businesses are coerced into paying the group anywhere between $6,000 and $26,000 or face even more expensive court costs.

Lawyers at the Trevor Law Group did not return telephone calls Wednesday, but have insisted that their lawsuits are legitimate.

The attorney general’s lawsuit comes at a time when small-business groups and tort reform organizations are demanding a change in the law. Lockyer, who is viewed by tort reform activists as closely allied with consumer attorneys, said he was not trying to head off a change in the law by suing the Trevor group.

“I didn’t have any such motives,” Lockyer said. “Business groups have been trying for 30 years to change this law, and I think the odds are against them.”

Lockyer said his office was also investigating other law firms and consumer groups that have been accused of abusing the consumer law.