BILL NUMBER: SB 185 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 26, 2004
AMENDED IN ASSEMBLY AUGUST 23, 2004
AMENDED IN ASSEMBLY SEPTEMBER 4, 2003
AMENDED IN ASSEMBLY JULY 6, 2003
AMENDED IN ASSEMBLY JUNE 19, 2003
AMENDED IN SENATE APRIL 22, 2003
AMENDED IN SENATE MARCH 25, 2003
INTRODUCED BY Senators Sher and Escutia
FEBRUARY 12, 2003
An act to add Section 17203.7 to the An
act to add Sections 17203.6, 17203.7, 17203.74, and 17204.3 to the
Business and Professions Code, relating to unfair competition.
LEGISLATIVE COUNSEL'S DIGEST
SB 185, as amended, Sher. Representative actions.
Existing law defines unfair competition as including any unlawful,
unfair, or fraudulent business act or practice, any unfair,
deceptive, untrue, or misleading advertising, and other specified
conduct relating to representations made to the public. Under
existing law, an action for relief from an act of unfair competition
may be brought by the Attorney General, a district attorney, county
counsel, or a city attorney, or by a person acting for the interests
of itself, its members, or the general public. Existing law provides
various remedies for violations of the unfair competition laws.
This bill would require a private person bringing an unfair
competition action on behalf of the interests of the general public
to submit a copy of the complaint to the Attorney General.
This bill would require a proposed settlement in an unfair
competition action brought or planned to be brought by a private
person on behalf of the general public to be approved by a court, and
would establish certain procedures in this regard. The bill would
authorize any representative of a public agency, any party, any
proposed party, or any other person directly affected by the alleged
unfair competition practice to file an objection to the proposed
settlement. The bill would also require the private person bringing
the action to provide a specified notice to each defendant or
proposed defendant. The bill would exempt actions brought or
sponsored by specified labor organizations or by a nonprofit
organization funded by designated legal entities from these
requirements. The bill would require a private person filing an
unfair competition action on behalf of the general public to show
injury-in-fact to obtain restitution, unless the plaintiff is a
tax-exempt nonprofit corporation or the action is brought or
sponsored by specified labor organizations or by a nonprofit
organization funded by designated legal entities. The bill would
require unfair competition actions brought by a private person on
behalf of the general public to submit a copy of the complaint and
proposed settlement filings to the Attorney General.
This bill would specify that its provisions are not operative if
the voters approve Proposition 64 at the general election on November
2, 2004.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17203.7 is added to the Business and
SECTION 1. Section 17203.6 is added to the Business and
Professions Code, to read:
17203.6. (a) An unfair competition action brought or planned to
be brought on behalf of the interests of the general public by a
private person or persons pursuant to this chapter may not be settled
or compromised in connection with the payment of any money,
including, but not limited to, restitution, attorney's fees, or
costs, unless the proposed settlement is reviewed and approved by a
court after making specified findings pursuant to this section. As
used in this section, "settlement" includes any stipulations or
agreements associated with a settlement, and "settlement" also
includes a dismissal of an unfair competition action brought on
behalf of the interests of the general public where that dismissal is
accompanied by or conditioned upon any payment of money or the
payment of attorney's fees or costs.
(1) If the action has been filed, court review shall be conducted
upon noticed motion of any party, or a joint application of the
parties, or if no motion is filed, upon the court's own motion.
(2) If the proposed action has not been filed, the party or
parties seeking to settle the proposed action shall file an
"Application for approval of settlement, Business and Professions
Code Section 17200" with the superior court. The application shall
be accompanied by a declaration of an attorney attaching a proposed
complaint setting forth the cause of action proposed to be brought.
The application shall be accompanied by a first paper filing fee
pursuant to Section 26820.4 of the Government Code and shall be
served on all persons proposed to be named as parties.
(b) The parties seeking approval of the settlement shall file one
or more declarations setting forth the material facts of the claims
and the facts and circumstances that justify the settlement and a
memorandum setting forth the legal issues that justify the
settlement.
(c) Any representative of a public agency, any party, any proposed
party, or any other person directly affected by the alleged unfair
competition practice may file an objection to the proposed
settlement, including an objection to the payment of attorney's fees
and costs. Any other person may seek to intervene in the settlement
approval proceedings pursuant to Section 387 of the Code of Civil
Procedure. Any person participating in the settlement approval
proceedings shall pay a motion filing fee with the first filing.
(d) The court shall consider the evidence and legal memoranda
submitted by the parties to the proposed settlement approval
proceeding. In proceedings where there are parties who are not
participating in the settlement and against whom claims are or may
become pending, the court shall review, in camera, information
submitted by the plaintiff or the potential plaintiff to support the
settlement pursuant to this section if the information is protected
by the attorney-client or attorney work product privilege.
(e) A court shall approve a proposed settlement if both of the
following apply:
(1) With respect to any monetary aspect of the settlement other
than a payment of attorney's fees or costs covered by paragraph (2),
if the court finds that it is fair and reasonable and adequately
protects the interests of the general public.
(2) With respect to the payment of attorney's fees and costs, if
the court finds that the proposed payment of attorney's fees or
costs, or both, is fair and reasonable. If Section 1021.5 of the
Code of Civil Procedure is applicable, the approval of a settlement
of attorney's fees shall be governed by that section.
(f) Any agreement to settle a claim in violation of this section
is contrary to public policy and shall be unenforceable.
(g) Nothing in this section prevents a court from ordering
preliminary injunctive relief prior to the proceedings described in
this section.
(h) An attorney who evades or attempts to evade the requirements
of this section or of Section 17203.7 or 17203.74 is subject to
disciplinary action by the State Bar of California.
(i) This section shall not apply if the action or cause of action
or proposed action meets either of the following conditions:
(1) It is brought or sponsored by a labor organization or by a
representative of a labor organization or by a joint labor management
committee established pursuant to the federal Labor Management
Corporation Act of 1978 (29 U.S.C. Sec. 175a).
(2) It is brought by a plaintiff represented by a nonprofit legal
services organization. For purposes of this section, a "nonprofit
legal services organization" is any nonprofit organization that
receives funds from either the federal Legal Services Corporation or
the State Bar of California.
SEC. 2. Section 17203.7 is added to the Business and Professions
Code, to read:
17203.7. (a) A private person bringing an unfair competition
action on behalf of the interests of the general public shall, within
10 business days after commencement of the action, submit a copy of
the complaint to the Attorney General.
(b) The Attorney General shall be served with a copy of any motion
or application for approval of a settlement pursuant to Section
17203.6 at the same time as that motion or application is filed with
the court.
(c) The receipt of information pursuant to subdivision (a) or (b)
does not affect the right of the Attorney General to take any action
within his or her authority at any time.
SEC. 3. Section 17203.74 is added to the Business and Professions
Code, to read:
17203.74. (a) A private person asserting a claim of unfair
competition on behalf of the general public shall provide to each
defendant or proposed defendant, at the time of service of an initial
demand letter or a complaint, a notice containing the following
statement in boldface type:
"IMPORTANT LEGAL RIGHTS INFORMATION: California law requires that
you receive this notice about your legal rights. You are receiving
this notice because one or more of the claims against you allege that
you have committed an unlawful, unfair, or fraudulent business act
or practice. YOU HAVE IMPORTANT LEGAL RIGHTS, AND YOU SHOULD KNOW
THAT YOU ARE NOT REQUIRED TO PAY ANY MONEY TO SETTLE ANY CLAIM,
INCLUDING CLAIMS OF ATTORNEY'S FEES AND COURT COSTS, AT THIS TIME.
YOUR RECEIPT OF A DEMAND LETTER OR COMPLAINT DOES NOT NECESSARILY
MEAN THAT YOU WILL BE HELD LIABLE FOR ANYTHING. You may wish to
consult an attorney to get legal advice regarding the complaint. In
addition, the local bar association in your county may also be able
to provide legal information about this type of lawsuit. If you
choose not to use an attorney, you may obtain additional information
about how to represent yourself on the California Courts Web site,
www.courtinfo.ca.gov.
YOU SHOULD ALSO KNOW THAT, TO PROTECT DEFENDANTS OR PROSPECTIVE
DEFENDANTS FROM THE IMPROPER USE OF THE UNFAIR COMPETITION LAW,
CALIFORNIA LAW REQUIRES A COURT TO REVIEW IF ANY PAYMENT OF MONEY OR
ATTORNEY'S FEES BY YOU TO THE PLAINTIFF OR HIS OR HER ATTORNEY FOR
SETTLEMENT OF AN UNFAIR COMPETITION CLAIM IS FAIR AND REASONABLE
UNDER THE FACTS AND THE LAW. Thus, any agreement you made to pay
another party's attorney's fees or costs or to pay moneys in
settlement shall be enforceable against you only upon court review
and approval of the settlement and attorney's fees and costs claim."
(b) The notice described in subdivision (a) shall be in at least
14-point boldface type and shall not contain any other statements
except those required in subdivision (a).
(c) An attorney who fails to comply with this section is subject
to disciplinary action by the State Bar of California.
(d) This section shall not apply if the action or cause of action
or proposed action meets either of the following conditions:
(1) It is brought or sponsored by a labor organization or by a
representative of a labor organization or by a joint labor management
committee established pursuant to the federal Labor Management
Corporation Act of 1978 (29 U.S.C. Sec. 175a).
(2) It is brought by a plaintiff represented by a nonprofit legal
services organization. For purposes of this section, a "nonprofit
legal services organization" is any nonprofit organization that
receives funds from either the federal Legal Services Corporation or
the State Bar of California.
SEC. 4. Section 17204.3 is added to the Business and Professions
Code, to read:
17204.3. (a) A private person who files an unfair competition
claim under Section 17204 on behalf of the general public shall show
injury in fact in order to have standing to secure an order for
restitution, unless the plaintiff is a nonprofit corporation
recognized by the Internal Revenue Service as tax exempt under
Section 501(c) of the Internal Revenue Code.
(b) This section shall not apply if the action or cause of action
or proposed action meets either of the following conditions:
(1) It is brought or sponsored by a labor organization or by a
representative of a labor organization or by a joint labor management
committee established pursuant to the federal Labor Management
Corporation Act of 1978 (29 U.S.C. Sec. 175a).
(2) It is brought by a plaintiff represented by a nonprofit legal
services organization. For purposes of this section, a "nonprofit
legal services organization" is any nonprofit organization that
receives funds from either the federal Legal Services Corporation or
the State Bar of California.
SEC. 5. Sections 1, 2, 3, and 4 of this act shall not become
operative if the voters approve Proposition 64 at the general
election held on November 2, 2004. Professions Code,
to read:
17203.7. (a) A private person bringing an unfair competition
action on behalf of the interests of the general public shall, within
10 business days after commencement of the action, submit a copy of
the complaint to the Attorney General.
(b) The receipt of information pursuant to subdivision (a) does
not affect the right of the Attorney General to take any action
within his or her authority at any time.