Weekly Legislative Update
February 13, 2009

The Top Five Report
A look at the worst liability bills of the session

With five weeks into the legislative session, it’s a fitting time for the Top Five Report, a compilation of the worst liability issues the legislature is considering. In no particular order, the winners [losers] are:

• SB 5531 / HB 1683 – these measures increase the damages available under the Consumer Protection Act by a staggering 750% (from $10,000 to $75,000 per violation) and they make it significantly easier for a private plaintiff to bring a lawsuit for a single instance rather than a pattern of violations.  Status: both bills heard in committee Feb. 5 and Feb. 9, respectively. 
• SB 5144 – the so-called false claims bill allows private citizens to dig through public records and file a lawsuit against a state contractor for improper billing.  The Office of Financial Management says this bill will cost taxpayers $7.5 million per biennium and the state attorney general says “the bill will not achieve the recoveries anticipated and will cost the State more money than it will receive pursuant to the proposed Act.”  The AG’s full comments are attached.  Status: heard today in the Senate Judiciary Committee. 
• HB 1393 – with a crumbling housing market it seems odd, at the very least, that lawmakers would consider legislation that would make it even more costly and more prohibitive for those in the home construction business.  But HB 1393 is a measure that provides more construction liability, hence increasing the cost of building more homes.  Status: heard in House Judiciary Committee Feb. 4.
• SB 5886 – this measure regulates legal proceedings involving public hazards and lowers the threshold for the causation of bringing such cases.  The real intent of this bill is to limit confidentiality agreements in legal matters, therefore providing trial lawyers all the information they need to bring more lawsuits.    Status: schedule to be heard in the Senate Judiciary Committee Feb. 17. 
• HB 2054 / SB 5964 –these bills are an end-run around two Supreme Court decisions which held that makers of nonhazardous component parts, such as pipes or valves, have no duty to warn ultimate users about asbestos products made by others and attached to the components post-sale.  Many people see these bills as an effort on the part of trial lawyers to go after new defendants in asbestos cases because most manufacturers who used asbestos products have already filed for bankruptcy.  Status: both bills are introduced but have not yet been scheduled for a hearing.  

The first major cut-off is March 2, when all bills need to be out of their policy committee.  For a complete list of all liability bills, see the LRC’s bill tracker. 

What’s good for the goose is good for the gander
Class action lawyer gets paid in gift cards

The Metropolitan News Enterprise, a Los Angeles daily newspaper, reports that a judge awarded a class action trial lawyer $125,000 in fees but stipulated that the lawyer be paid in gift cards from the store he sued.  Here’s the complete story:

Yorba Linda attorney Neil B. Fineman will soon have enough womens’ apparel to be able to open a dress store.

It seems that Fineman, 40, brought a class action by which he forced Windsor Fashions to stop committing routine violations of the Song-Beverly Credit Card Act. The class was comprised of all customers who, between Nov. 29, 2006—one year before the action was filed—and Nov. 18, 2008 (when the class was preliminarily certified) “purchased merchandise from Defendant’s stores in the State of California, used a credit card to make the purchase(s), and whose address, E mail address or telephone number was requested and recorded by a Windsor Fashions employee.”

Collecting “personal identification information” from credit card customers is proscribed by Civil Code §1747.08(a)(2).

Under a settlement, arrived at with the assistance of a mediator, it was agreed that Fineman was entitled to a $125,000 fee for his legal services. However, customers who were subjected to the proscribed practice won’t receive any cash under the accord...only a $10 gift card. In an order signed Friday, Los Angeles Superior Court Judge Brett Klein likewise provided that Fineman will be paid off in the form of such cards: “12,500 ten-dollar Windsor Fashions gift cards.”

The lawyer is to get 3,500 of those cards by next Monday and 750 of them on the third day of each month through January of next year. Too, the named plaintiff, Jacqueline Cohen, will garner 250 of the gift cards as an “incentive reward” for leading the charge.

Ascertained members of the class have already been mailed or e-mailed $10 certificates, and others may assert class membership at any during a short period of time.

Does the outcome penalize Windsor Fashions for its erstwhile violation of the statute? Not much. It does afford Fineman the power to deplete the stock of any of its stores. However, the certificates going to consumers merely constitute inducements to come to a Windsor Fashions store and spend money, any expenditures being bound to exceed $10. In essence, they’re discount coupons. What Fineman has done is to promote purchases at the defendants’ stores.

Fineman could not be reached for comment.