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By Justin Scheck
November 5, 2004
Working around Prop 64's clampdown on § 17200 claims will be as easy -- and as hard -- as finding a plaintiff, attorneys say.
In some cases, that won't be difficult. Often, attorneys tacked on unfair competition claims to augment suits brought under other statutes anyway.
But the new law is expected to have a chilling effect on cases in which it is difficult to identify individual plaintiffs or to form a certifiable class. Hardest hit will be environmental torts, certain employment claims and mass torts whose circumstances make class certification difficult.
"The greatest impact is going to be on the ability of public interest groups to litigate cases," said Timothy Blood, a partner with Lerach Coughlin Stoia Geller Rudman & Robbins who specializes in consumer litigation.
Blood and fellow Lerach partner Reed Kathrein said that for them, Business & Professions Code § 17200 was an effective statute in cases in which a group of injured plaintiffs did not make up a traditional class. For instance, Kathrein pointed to a case he is litigating against Internet browsers for allegedly illegal advertising of gambling sites; he said that it would be virtually impossible to identify class members or figure out a way to reimburse them since they cannot legally be paid back for gambling debts. In the future, the only way to bring similar cases would be to make new -- and likely difficult -- arguments for class certification.
Kathrein hopes that an unintended consequence of Prop 64 may be to ease the certification process. "The courts may be more likely to certify them … if the alternative is not granting any relief," he said.
In cases where harm is inevitable but has not yet occurred, he said, the new law could make it nearly impossible to file for injunctive relief.
Attorneys for environmental groups say that some suits -- particularly those with clear individual injuries or violations of state law -- will take only minor adjustments to bring.
"In the future, we'll use the advocacy groups to find victims," said Clifford Chanler, an environmental attorney based in Connecticut with offices in California. Chanler said he has brought "several hundred" 17200 claims over the past 15 years, generally in connection with suits under Prop 65, the state law that requires employers and manufacturers to provide public notification of exposure to harmful chemicals.
But Chanler said the 17200s were generally used only to augment other claims, and in recent years he has moved away from 17200.
"You had to be legally blind and politically deaf to not know that 17200 was going to be reined in," he said.
Attorneys' tendency to tack 17200 claims to other litigation was one of the reasons for Prop 64, said William Kissinger, a partner at Bingham McCutchen and a former state environmental regulator. "Everyone likes to throw in a 17200. It's one more cause of action," he said.
For attorneys whose clients have not been demonstrably harmed or are afraid to be named, the issue is more difficult.
"If someone dumps chemicals in the middle of the night somewhere … it's going to be hard to prove you've lost property," said Eric Somers, a partner at the Lexington Law Group who files 17200s in consumer and environment cases.
Labor attorneys are also worried that the statute will affect their ability to influence employment practices.
"We file many, many lawsuits to recover unpaid wages. It's safe to say we recover hundreds of thousands, if not millions of dollars," said William Sokol, a partner at the Oakland labor firm Weinberg Roger & Rosenfeld. Most of these cases, he said, are 17200s with unnamed plaintiffs, often on behalf of undocumented or underemployed workers who are afraid to name themselves as plaintiffs.
"They say, 'When will I get my job back?' We say, 'Maybe never.' How can that person be a named plaintiff?" Sokol said. "Now, we'll see if we can find named plaintiffs who'll put their lives on the line for their fellow workers."
In the immediate future, the most pitched battle over 17200 has defendants in current litigation arguing that it should apply retroactively.
On Wednesday, in a case in San Joaquin County Superior Court, lawyers for Dameron Hospital argued that the passage of Prop 64 should void a claim against Dameron Hospital Association's billing practices. The judge denied the motion but left the issue open for post-trial claims.
Frank Pitre, of Cotchett, Pitre, Simon & McCarthy who filed the claim against Dameron, along with several defense attorneys, said they do not expect the law to apply retroactively. But, Pitre added, lawyers may argue the case in order to prolong trials and postpone settlements.
While Pitre said he's confident that Prop 64 changes a substantive legal right, and may therefore not be applied retroactively, some defense attorneys argue otherwise. "We plan to argue that Prop 64 changes a procedural right," said Jeffrey Margulies, a partner with Fulbright & Jaworski in Los Angeles who specializes in defending Prop 64 cases. He said that his firm plans to argue retroactivity in several ongoing cases.
In the meantime, many attorneys are increasing their focus on finding individuals emblematic of their complaints.
"It shouldn't be difficult, if a lawyer thinks an action should be brought, to have a victim step forward," said Eugene Crew, a partner at Townsend and Townsend and Crew who successfully sued Microsoft under 17200.
"It isn't that difficult if you have a legitimate case," added Kissinger.