Lockyer seeks scrutiny of extortionist legal schemes

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, Dec. 20, 2002 Share this on FacebookTweet thisEmail this to a friend

At the center of this storm is a section of the California Business and Professions code once considered a cornerstone to the state's consumer protection laws. Section 17200 permits prosecutors and private attorneys to claim that a business is acting “unfairly” and then sue. Increasingly, lawyers have been filing frivolous 17200 suits against small businesses (many owned by minorities) and offering to drop legal action in exchange for significant monetary settlements.

Attorney General Bill Lockyer (D-Hayward) has called on the California State Bar to investigate two Beverly Hills attorneys who have sued thousands of auto repair shops, restaurants and other small businesses, likening the attorneys’ tactics to extortion. The AG is “concerned about the way these guys operate in terms of how they pursue these lawsuits,” said Tom Dresslar, a Lockyer spokesman. “Some of their tactics appear to be extortionist.”

Far too many of these lawsuits are nothing more than private attorneys targeting small businesses by filing suits, accusing them of unfair business practices, and then offering to settle for inflated cash settlements. To add insult to injury, many of these cases are not on behalf of any specific individual, involve no actual harm, and can be brought against a business repeatedly, as there is no finality. While some suggest the AG’s request for the State Bar to investigate is nothing more than a symbolic gesture, CMTA believes it to be a good starting point and is encouraged by the amount of discussion and focus on this issue.
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