Gatto introduces bill to protect businesses from ‘shakedown’ lawsuits

Assemblyman Mike Gatto (D-Silver Lake) introduced a bill Monday to protect businesses from “shakedown” lawsuits that are filed with the intent of extracting settlements to make the litigation go away.

Business owners told Gatto at his Small Business Advisory Commission’s meeting last month that Proposition 65 – which allows the public to sue businesses for up to $2,500 for each day signs aren’t posted about the dangers of chemicals known to cause cancer or birth defects -- is easily abused by lawyers who file claims with the sole purpose of extracting settlements.

Restaurateurs who serve alcohol complain that they often find themselves on the receiving end of the predatory litigation.

Gatto’s bill, AB 227, would allow a business owner who receives notice of a Prop. 65 violation to avoid retrospective fines by fixing the violation within 14 days, according to a statement released on Tuesday.

“The voters passed Prop. 65 to be protected from chemicals that would hurt them,” Gatto said in his statement. “They did not intend to create a situation where shakedowns of California’s small-business owners would cause them to want to close their doors.”

-- Daniel Siegal, Times Community News

Follow Daniel Siegal on Google+ and on Twitter: @Daniel_Siegal