BILL ANALYSIS                                                                                                                                                                                                    






                           SENATE JUDICIARY COMMITTEE
                        Senator Ellen M. Corbett, Chair
                           2007-2008 Regular Session


          SB 376                                                 S
          Senator Migden                                         B
          As Amended April 9, 2007
          Hearing Date: April 17, 2007                           3
          Business & Professions Code                            7
          KB:rm                                                  6
                                                                 

                                     SUBJECT
                                         
                 Unfair Competition: actions by city attorneys

                                   DESCRIPTION  

          This bill would revise the statute authorizing the city and  
          county of San Francisco to bring unfair competition  
          actions, and to allow recovery of a civil penalty  
          regardless of the size of its population. 

           (This analysis reflects author's amendments to be offered  
                                 in committee.)

                                    BACKGROUND
                                        
          Unfair business practices encompass fraud,  
          misrepresentation, and oppressive or unconscionable acts or  
          practices by businesses, often against consumers.  In  
          California, specified governmental agencies are authorized  
          to bring an action for unfair competition and to recover a  
          civil penalty from the defendant in those actions.  

          Among the agencies authorized to bring such actions, is the  
          city attorney of a city and county with a population in  
          excess of 750,000.  A consolidated city-county is a city  
          and county that have been merged into one jurisdiction.  As  
          such, it is simultaneously a city, which is a municipal  
          corporation, and a county, which is an administrative  
          division of a state.  Currently, the City and County of San  
          Francisco is the only consolidated city-county in  
          California, a status it has held since 1856.  Thus, in  
                                                                 
          (more)



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          practice, San Francisco is the only public entity that is  
          affected by the statutory provisions granting authority to  
          a city attorney of a city and county to bring unfair  
          competition actions.

          A federal census has recently put San Francisco's  
          population at under 750,000.  This has prompted defendants  
          in unfair competition actions to argue, albeit  
          unsuccessfully, that San Francisco no longer has standing  
          to bring these actions.  The San Francisco City Attorney's  
          office is concerned that it will continuously need to  
          defend attacks on its standing, which will consume scare  
          public resources unless the issue is clarified in the  
          statute.

          This bill would remove the population requirement  
          pertaining to a city and county, and instead authorize the  
          city attorney of any city and county to bring an action for  
          unfair competition and recover a civil penalty from the  
          defendant in those actions. 
          
                             CHANGES TO EXISTING LAW
           
           Existing law  authorizes, among other specified governmental  
          agencies, the city attorney of a city and county having a  
          population in excess of 750,000 to bring an action for  
          unfair competition and to recover a civil penalty from the  
          defendant in those actions.  [Business & Professions Code  
           17204 & 17206.]

           This bill  would authorize the city attorney of any city and  
          county, regardless of its population, to bring an action  
          for unfair competition and recover a civil penalty from the  
          defendant in those actions. 
          
                                     COMMENT
          
              1.   Stated need for the bill
           
            According to the sponsor, the San Francisco City  
            Attorney's office has a long and distinguished history of  
            bringing actions under the unfair competion law.   
            However, a recent federal census estimates that San  
            Francisco's population has decreased to below 750,000.   
            This has prompted defendants in unfair compeition actions  
                                                                       




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            to argue that the San Francisco City Attorney no longer  
            has standing to bring these actions.  While these  
            arguments have ultimately been unsuccessful, there is a  
            concern that defendants will continue to attack San  
            Francisco's standing to bring unfair competition actions  
            unless the issue is clarified by statute.  

           2.Author's amendments will clarify that this bill will not  
            affect the standing of other parties currently authorized  
            to bring unfair competition actions, or unnecessarily  
            broaden the statute
           
            The California District Attorneys Association and the  
            League of Cities have expressed concern that the current  
            version of the bill is not narrowly drafted, and could be  
            interpreted as both removing the authority currently  
            granted to certain entities, and granting authority to  
            others who currently do not possess it.  They are not  
            opposed to San Francisco retaining its standing, but wish  
            to avoid unnecessary and overbroad changes to the current  
            law.  Because this is the primary tool utilized by  
            district and city attorneys in protecting consumers from  
            unfair business practices, public policy would be best  
            served by minimizing change to the current statutes so as  
            not to create additional disputes as to standing of  
            various entities to bring these actions.  

            To address these concerns, the author has offered  
            amendments, which would simply delete the population  
            requirement pertaining to a city and county, and leave  
            the remainder of the statutes intact.  This would enable  
            San Francisco to maintain its authority to bring unfair  
            competition actions without affecting the standing of any  
            other entity.  Thus, in practice, if this bill is  
            enacted, the agencies currently entitled to bring unfair  
            competitions would not change.  

            The amendments shall be as follows:

            On page 2, strike lines 5-22, inclusive and insert,

             "Actions for any relief pursuant to this chapter shall  
            be prosecuted exclusively in a court of competent  
            jurisdiction by the Attorney General or any district  
            attorney or by any county counsel authorized by agreement  
                                                                       




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            with the district attorney in actions involving violation  
            of a county ordinance, or any city attorney of a city  
            having a population in excess of 750,000, or by a city  
            attorney in any city and county and, with the consent of  
            the district attorney, by a city prosecutor in any city  
            having a full-time city prosecutor in the name of the  
            people of the State of California upon their own  
            complaint or upon the complaint of any board, officer,  
            person, corporation or association or by any person who  
            has suffered injury in fact and has lost money or  
            property as a result of such unfair competition."

            On page 2, strike lines 26-32, inclusive and insert, 

            "(a) Any person who engages, has engaged, or proposes to  
            engage in
            unfair competition shall be liable for a civil penalty  
            not to exceed two thousand five hundred dollars ($2,500)  
            for each violation, which shall be assessed and recovered  
            in a civil action brought in the name of the people of  
            the State of California by the Attorney General, by any  
            district attorney, by any county counsel authorized by  
            agreement with the district attorney in actions involving  
            violation of a county ordinance, by any city attorney of  
            a city having a population in excess of 750,000, by any  
            city attorney of any city and county, and, with the  
            consent of the district attorney, by a city prosecutor in  
            any city having a full-time city prosecutor, in any court  
            of competent jurisdiction."

            These amendments would resolve the concerns expressed by  
            both the California District Attorneys Association and  
            the League of Cities.


          Support: None Known

          Opposition: None as Amended

                                     HISTORY
           
          Source: Office of San Francisco City Attorney Dennis  
          Herrera 

          Related Pending Legislation: None Known
                                                                       




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           Prior Legislation:  AB 759 (Leiber) would have deleted the  
                        limitations on unfair competition actions  
                        brought by a county counsel, allowing the  
                        county counsel to proceed without an  
                        agreement with the district attorney.  This  
                        bill was later amended to pertain to an  
                        unrelated matter.

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