Gino DiCaro

Business defendants to fund Attorney General?

By Gino DiCaro, VP, Communications

Capitol Update, June 9, 2006 Share this on FacebookTweet thisEmail this to a friend

A bill by Denise Moreno Ducheny (D-San Diego), SB 1489, would force companies that are sued by the Attorney General to pay all costs of investigations, expert witnesses and attorney's fees whenever the AG "prevails". It would apply retroactively to any pending lawsuits as far back as 2003 or 2004.

Additionally, the bill does not provide a definition for the term "prevails" and would force a judge to automatically award all investigation and prosecution costs to the AG. By not defining the term "prevails" in the bill, the AG is granted an enormous settlement advantage because the term has been loosely defined by the courts to include settlements, any change in operation by a defendant or even a miniscule monetary award.

While this concept is a repeat of the vetoed AB 153 (Assembly Committee on Budget, Chaired by John Laird, D-Santa Cruz) from 2005, SB 1489 goes even further by applying to a laundry list of code sections including Unruh Civil Rights Act violations, many water pollution, disability, Corporate Securities Law, California Commodities law, vehicular and non-vehicular pollution sections and many tobacco related sections.

This bill would create a very dangerous precedent that could be followed by other regulatory agencies. Also, if defendants are the source of funds for the AG's office, tension will exist between choosing worthy cases that would protect the public and advance business integrity and choosing cases that only have the potential to augment the AG's budget.

SB 1489 also provides opportunity for private counsel retained by the AG to be fully compensated for the suits they bring, with only weak protection for expansive and abusive use of this opportunity. For example, the AG could retain private counsel if he can show that the "services are not available" or "cannot be performed satisfactorily" within its own ranks. These requirements are an extremely low threshold and open the door to a plethora of actions promoted and staffed by private firms.

The bill is currently set for hearing on June 13th in the Assembly Judiciary Committee.
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