Cries of Extortion-by-Lawsuit Prompt Santa Ana Hearing on Consumer Law

With pressure mounting to change one of California’s stiffest consumer protection laws, legislators will take testimony on the statute in a special hearing in Santa Ana on Friday.

Responding to charges that the Unfair Competition Act effectively allows attorneys to extort money from businesses through frivolous lawsuits, Assemblyman Lou Correa (D-Anaheim) will hold the hearing at Rancho Santiago Community College.

The hearing follows the filing of more than 5,000 consumer lawsuits by a group of Beverly Hills attorneys against auto repair shops, nail salons, restaurants, markets and other small businesses throughout Southern California.

“The number of people served papers or sued continues to go up,” said Chris Leo, Correa’s chief of staff and a hearing organizer. “We want to see what can be done to tighten up an otherwise good consumer protection law.”

The statute was designed to help consumers fight unfair business practices such as price fixing and false advertising. It allows plaintiffs to sue even if they have not been directly harmed.

Business groups complain that the law is being abused. They say some lawyers file the suits and demand quick settlements of roughly $2,000, on the premise that business owners would rather pay that than mount a more costly court fight.

The hearing will run from 11 a.m. to 5 p.m. Friday in the college Administration Building, 2323 N. Broadway, Santa Ana.

There will be testimony by business owners who have been sued under the law, consumer attorneys, legislators, representatives of the state attorney general’s office, the California District Attorneys Assn. and the Civil Justice Assn. of California.