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Auto Dealers, Lawyers Break Off Talks on 17200 Law

Auto Dealers, Lawyers Break Off Talks on 17200 Law


It looks like cats and dogs really can’t get along.

The latest attempt by California trial lawyers and automotive dealers to hammer out proposed legislation to fix the state’s consumer protection law broke down last week.

The two groups were trying to craft a proposal to stave off a likely November ballot initiative designed to reform California’s notorious Business and Professions Code 17200, which has spawned scores of lawsuits and threatened litigation in recent years.

The talks brought together two key but opposing groups with vested stakes in 17200 reform.

On one side: lawyers leery of watering down the code, which allows anyone to act as an attorney general and sue businesses on behalf of the public.

On the other side: auto dealers, many of whom have been sued under 17200 for violations as small as having the wrong type size in an advertisement.

“The gap between what they would be willing to do and what would be acceptable to the business community in general would be too great to cross,” said Peter Welsh, Sacramento-based director of government and legal affairs for the Playa del Rey-based California Motor Car Dealers Association.

The breakdown sets the stage for the two groups to face off in November over what’s being dubbed the “CJAC initiative,” after the Sacramento-based Civil Justice Association of California, a tort reform group that’s backing the measure.

Along with auto dealers, health maintenance organizations and mortgage companies also are among the backers of the initiative. The Sacramento-based California Chamber of Commerce has expressed support for it.

Gov. Arnold Schwarzenegger has said he backs 17200 reform but would like to see a legislative fix instead before resorting to another costly ballot-box battle.

The CJAC measure would, among other things, require suing lawyers to prove that there is an actual plaintiff who was harmed in an alleged 17200 violation. In the past, lawyers have sued on behalf of dubious consumer groups or other plaintiffs.

Placing Blame

James Sturdevant, president of the Sacramento-based Consumer Attorneys of California, said he blamed the breakdown in talks on the auto dealers.

“It became clear to us that the people the car dealers sent to negotiate with us didn’t have the authority to negotiate by themselves,” Sturdevant said. “I’m very disappointed. I’ve worked personally with leaders of the Legislature and other leaders in my organization to try and craft a legislative solution to prevent abuse of 17200 by a handful of small lawyers and firms.”

The two sides have been in 17200 talks on and off since 2002. Trial lawyers in the past have called for minimal 17200 reform. The group last year backed a pair of bills in the Legislature that actually would’ve made it easier to sue under 17200. But the legislation died in the Assembly.

Backers of the 17200 initiative say they’ve collected enough signatures to place it on the November ballot. They say they plan to turn them in to the secretary of state this week.

Full-Court Press

Sturdevant said his group plans to pull out all the stops to try and defeat the measure.

“We long since hired people to deal with that initiative , we’ve defeated similar initiatives in the past and we’ll defeat this one,” he said.

The dealers association’s Welch said he would’ve preferred a legislative fix to a ballot measure.

“That’s what the Legislature is for,” he said. “It’s very expensive to go to an initiative and it involves an uncertain outcome.”

John Sullivan, president of the Civil Justice Association, said he wasn’t surprised the latest round of talks between trial lawyers and auto dealers failed.

“The personal injury lawyers have never provided any meaningful or realistic suggestions,” he said. “We’ve been working on 17200 reform for eight years, and for eight years the personal injury lawyers have been stiff-arming the Legislature and stiff-arming the public. It is the only group in the known world that believes this law is fine in its current form.”

Trial lawyers are a big source of funding for state Democrats. As a result, 17200 has spawned a rift in the Legislature between Democrats who support 17200 and Republicans and moderate Democrats who advocate 17200 reform.

Assemblyman Lou Correa and other moderate Democrats have been trying to reform 17200. Correa, who represents Santa Ana and Anaheim, backs Assembly Bill 2369, a 17200 reform proposal.

With an initiative likely, Correa could end up putting his legislation on hold. If the initiative fails to garner enough votes in November, then Correa could rekindle his efforts to forge a legislative solution to 17200 reform.

Chris Cziborr writes for the Orange County Business Journal.

It’s Tit for Tat On Used Cars

Trial lawyers have upped the ante in the fight over 17200 by backing a bill that targets used car dealers.

The bill , AB 1839 , would require a three-day cooling-off period for used car buys and make it illegal for dealers to profit from providing loans to buyers.

The legislation also would create a new standard for what dealers may call a “certified” used car, banning the use of salvaged parts among other things.

Assemblywoman Cindy Monta & #324;ez, a San Fernando Democrat, introduced the bill. The Playa del Rey-based California Motor Car Dealers Association as well as the Sacramento-based Civil Justice Association of California , both strong 17200 reform advocates , oppose it.

The bill is part of a war being waged by trial lawyers against 17200 reform, officials from the two groups contend.

“It’s part of the personal injury lawyers’ style of harassing and threatening people who attempt to restrict any law that permits them to make tons of money,” said John Sullivan, president of the Civil Justice Association. “Used car dealers are contributing a lot of money to our November ballot initiative on 17200 reform. So it’s not surprising the personal injury lawyers would go after them.”

Peter Welsh, Sacramento-based director of government and legal affairs for the California Motor Car Dealers Association, said there is “a lot of speculation” around the capital that the trial lawyers pushed the bill to go after opponents of 17200.

“The two are completely unrelated in terms of subject matter,” countered Jim Sturdevant, president of the Sacramento-based Consumer Attorneys of California. “The bill is about providing consumers with additional protection.”

If the bill finds its way into law, consumers could use 17200 to sue used car dealers that violate any provisions, Sturdevant said.

, Chris Cziborr


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