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) SB 376 (Migden) Page 2 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 SB 376 (Migden) Page 3 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 SB 376 (Migden) Page 4 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 SB 376 (Migden) Page 5 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. **************