Governor vetoes corporate counsel bill

By CMTA Staff

Capitol Update, Oct. 14, 2005 Share this on FacebookTweet thisEmail this to a friend

The Governor vetoed AB 153 (Committee on Budget) which would have required a court to award the Attorney General and the Commissioner of Corporations the costs of investigation, expert witness fees, and attorney fees when the plaintiff prevails in an action alleging a Corporate Securities Act violation.

One of the reasons CMTA requested the Governor to veto this bill was because the term "prevails" was not defined in the bill and the prevailing party would have almost always been the Attorney General. We believe this would have been the case as the term "prevail" lacked any parameters and has been loosely defined by the courts to include settlements, changes in operation by a defendant, or even a miniscule monetary award to the plaintiff. The clear lack of guidelines would have given an unwarranted windfall and advantage to the Attorney General.

The Governor stated in his veto message that "similar provisions were included in the 2004 budget trailer bills, without a hearing.  Those provisions were invalidated by a superior court ruling. Under the provisions of the bill, it may be possible to allow the Attorney General to hire private law firms to bring the lawsuit. The courts action provides us a second chance to decide the impact of these provisions on California's business climate."

Furthermore, if defendants are forced to fund the Attorney General's office, then a very clear tension will exist between choosing cases that protect the public and/or advance business integrity and cases that have the potential for augmenting the Attorney General's budget.
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