A dozen restaurants in tri-city area face legal action addressed in Gatto bill

A bill introduced this week by Assemblyman Mike Gatto (D-Silver Lake) to protect against what he called “shakedown lawsuits” comes as 12 businesses in his district face similar legal action for not posting simple signage — violations that have spurred thousands of dollars in settlement agreements in the past.

In the last two months Miguel Custodio Law in Pasadena has informed five restaurants each in Burbank and Pasadena and two others in South Pasadena that they are in violation of Proposition 65, a voter approved law that requires establishments to post “clear and reasonable” warnings if the public is at risk of being exposed to chemicals known to cause cancer or birth defects.

That would include restaurants that serve alcohol — businesses that frequently find themselves at the receiving end of predatory legal claims since the law allows the public to sue for up to $2,500 for each day the signage isn’t properly displayed.

Before a suit is filed, plaintiffs are required to file a notice with the state, which then has 60 days to decide whether it wants to sue before any other lawsuit can be filed. If they state officials don’t, businesses often agree to pay a settlement to avoid costly litigation, hence the term “shakedown.”

The 262 current 60-day notices filed with the California Attorney General include complaints about harmful chemicals in items that include everything from furniture and changing pads to sprinklers in businesses.

But all 55 currently active 60-day notices for alcohol were filed by Miguel Custodio and Vineet Dubey of the firm Miguel Custodio Law in Pasadena — 52 of them on behalf of three plaintiffs: Danny Sing, Jesse Garrett and Rafael Delgado Jr.

Gatto’s bill, AB 227, would allow a business owner who receives a 60-day notice to avoid retrospective fines by fixing the violation within 14 days.

In a statement Tuesday, Gatto cited the example of Brett Schoenhals, owner of the Coffee Table in Eagle Rock, who told the assemblyman that the 60-day notice he received in January from Custodio threatened a lawsuit of hundreds of thousands of dollars.

Custodio said he had yet to be contacted by Schoenhals, and had not yet filed a lawsuit against any business for a Proposition 65 violation.

“Mike Gatto’s proposed bill extends from a misconception, from a specific business, of being sued for hundreds of thousands of dollars, but we haven’t sued anybody,” he said.

Custodio came under scrutiny in a Los Angeles Times report for filing 27 American Disabilities Act lawsuits on behalf of one Eric Moran in 2010, and seeking $9,000 out-of-court settlements to avoid lawsuits.

Custodio wouldn’t disclose whether any businesses have settled out of court with his firm, but denied he has been doing anything but representing the claims brought to him by his clients.

“There’s this law in place, but we’re going to give you an extra two weeks to remediate the situation…I don’t see why it should be so hard to post a sign,” he said.

Malbec Restaurants Inc. — which is based in Burbank and runs the Malbec Argentinian restaurants in Pasadena and Toluca Lake — was served a notice by Custodio on Jan. 16.

Co-owner Javier Pardini said after consulting with their lawyer that they decided to spend the $40 to put up the necessary signage in their restaurants, and haven’t heard from Custodio since.

““My [Alcoholic Beverage Control] inspector, he told us…it’s a lot of people creating things on purpose, lawyers creating things,” he said. “We need to play it safe now."

-- Daniel Siegal, Times Community News

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


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