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VICA: New Bills Protect Businesses from Frivolous Lawsuits

Posted: May 28, 2014 4:17 p.m.
Updated: May 28, 2014 4:18 p.m.

At any given time in California, there are numerous bills in circulation dealing with - or dealing out - meritless lawsuits. In fact, scheming trial lawyers have become a seemingly unshakable facet of our state’s identity. With more than 50 closed state courthouses, 205 closed courtrooms, reduced operating hours at 30 courthouses and more than 50 vacant judgeships due to state budget cuts, California’s court system is beyond critical mass.

Luckily, there are a few organizations and public servants out there trying to improve our hapless legal system through proposals in the 2014 Legislature, even if new bad bills are inevitably drafted up before the ink is dry on the good ones.

The Valley Industry & Commerce Association is advocating for Assembly Bill 2494 (Ken Cooley, D-Rancho Cordova), which would deter plaintiffs from pursuing meritless actions or actions intended to cause unnecessary delay by requiring the losing party to pay for attorney’s fees. Because our court system is so backlogged, we can’t afford the waste of time and resources required to determine whether or not a case has been made in bad faith.

AB 2494 provides a much needed financial deterrent for parties looking to file non-meritorious lawsuits. It is necessary to employers and employees alike – because it discourages either party from testing the legal waters, both are less likely to be subjected to costly litigation. It also lets California businesses and businesses interested in moving to California know that the state is making an effort to protect them from bad-faith actions.

California business owners are also no doubt familiar with the endless debate surrounding Proposition 65, which requires businesses to tell consumers if the products they sell or have on their premises contain chemicals known to cause cancer or reproductive harm, like Tylenol. Like many laws, Proposition 65’s intention was admirable.

However, Proposition 65 is essentially enforced by private lawyers who collect huge profits off of violations – settlements in the tens of thousands. Since Proposition 65’s enactment in 1986, countless businesses have been subjected to “shakedown” lawsuits, in which a lawyer suspects a business may be in violation and asks for $2,500 a day in fines until it is corrected.

The list of chemicals that require Proposition 65 warnings grows every year, making it nearly impossible for businesses to keep up. At the time of AB 227’s (Mike Gatto, D-Los Angeles) passage last year – which gave businesses a 14-day window to correct Prop 65 signage violations – the count was at 774.

As current law stands, businesses that employ less than 10 people are exempt from private enforcement actions. AB 2361 (Brian Jones, R-Santee) expands this protection to cover businesses with 25 employees or less – a small but mighty step in the right direction. Small businesses simply don’t have the time or resources to adhere to a law that changes so frequently.

With so many benefits to living and working in the state of California, why are we sending more and more businesses out of state every year? Business owners should contact their representatives in support of these policies. Every step chips away at our reputation for rewarding unscrupulous trial lawyers and hurting businesses.

The Valley Industry and Commerce Association (VICA) is a business advocacy organization based in Sherman Oaks that represents employers throughout the Los Angeles County region at the local, state and federal levels of government.


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