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Sep 21

Are DA-Driven Consumer Lawsuits Doomed?

Written on behalf of Brian S. Kabateck
September 22, 2018

District attorneys across our state are stepping up efforts on behalf of consumers in the wake of looming legislation aimed at gutting consumer protections against fraud, dangerous products and corporate wrongdoing. Over the past several years, DAs have filed numerous lawsuits on behalf of consumers against companies accused of deceptive and fraudulent business practices. These attorneys are filling a void caused by the weakening of consumer class actions, but their efforts could be thwarted by the San Diego-based 4th District Court of Appeal.

Earlier this summer, the court ruled on a case from Orange County that found the state constitution allows only the Attorney General to seek penalties and restitution on behalf of all state residents. The decision stems from a 2016 suit filed by Orange County District Attorney Tony Rackauckas who sued several pharmaceutical companies alleging the corporations conspired in a “pay-for-delay” scheme that forced consumers to pay more for a name brand drug by blocking generic equivalents.

According to Associate Justice Terry B. O’Rourke, local prosecutors aren’t authorized to represent all state residents. In a 2-1 split, O’Rourke concluded that district attorneys do not have “authority to unilaterally pursue statewide monetary relief in the name of the state.” Instead, local DAs can only pursue civil penalties and restitution for residents in their own counties. Consumer advocates are vowing to take the case to the state Supreme Court.

Another high-profile example is the San Francisco district attorney who recently filed a lawsuit against Angie’s list for false advertising involving background checks on service providers. The website provides homeowners with household service providers who are ranked by a ratings system. The lawsuit claims that the company engages in deceptive practices regarding its background checks on its service providers. Under the site’s “frequently asked questions” Angie’s list states that it performs background checks on the “principal/owner or relevant manager of all Certified Service Providers.” Yet according to the lawsuit, Angie’s list doesn’t actually run background checks on the worker or subcontractor doing the work inside the consumer’s home. District Attorney George Gascón said the “company made a number of false and misleading representations about background checks” on television, their website and smartphone app.

I told Good Morning America that these legal actions are good for consumers because “this kind of case gives hope that there’s word going out on the street that false advertising on the internet is something that’s not going to be tolerated.”

Consumers are finding it increasingly more difficult to sue financial institutions and corporations for wrongdoing. Class action lawsuits are one of the few courses of action consumers can take against companies, especially when the disputes are over relatively small amounts of money.
A consumer class action is a lawsuit in state or federal court that is brought by one individual, or a few individuals, on behalf of a larger class of people similarly situated.
Typically, it seeks damages on behalf of the named persons bringing the suit as well as the members of the “class.” Class action claims can involve mass disasters, consumer product defects and failure, or even violations of state consumer protection laws.
The purpose for class actions is to combine the smaller-dollar claims of a large number of people in order to pursue the claims cost-effectively and improve the chances for success against large corporations.

When a case is brought as a class action, the court will first decide whether it is a proper class action through a process called class certification. Then, the parties proceed toward trial on the basis of the claims in the case. Due to the nature of the case, the court must approve any settlement and will order notice to be given to any class action members who will be bound by a settlement agreement or a dismissal of the case.

The attorneys at Kabateck LLP have honed specialized skills in handling class action litigation for several decades. Whether the suit is for an inoperative medical device, a deceptively designed printer cartridge, or an improper accounting at the bank, our attorneys have successfully represented thousands of clients in class action or similar representative actions.

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