Glendale News-Press: Gatto's Prop 65 reform bill likely to be law

September 23, 2013 | 11:01 a.m.
By Daniel Siegal, daniel.siegal@latimes.com

Assemblyman Mike Gatto’s bill reforming Proposition 65 looks likely to become law, and no one is happier than the business owner whose suggestion spurred the legislation.

AB 227, which passed the Assembly state Senate with unanimous votes, modifies a voter-approved law that requires establishments to post “clear and reasonable” warnings if the public is at risk of being exposed to chemicals known to cause cancer or birth defects.

That includes restaurants that serve alcohol, which frequently find themselves at the receiving end of “shakedown” lawsuits that are filed, proponents of change say, with the intent of extracting settlements to make the litigation go away. The law allows members of the public to sue for up to $2,500 for each day the signage isn’t properly displayed.

Gatto’s bill gives business owners a two-week period to post the correct signage before they can be sued.

Brett Schoenhals, Owner of the Coffee Table
in Eagle Rock.

Brett Schoenhals, who owns the Coffee Table restaurant in Eagle Rock, told Gatto (D-Silver Lake) about these lawsuits — one of which he had been served with — in January, at the inaugural meeting of the assemblyman’s Small Business Advisory Commission.

Nine months later, Schoenhals said he was happy that he was able to raise an issue that affects all businesses in the state.

“It affects everybody, and nobody ever does anything and nothing ever changes,” he said. “My big mouth did something.... I used my big mouth one time for good.”

Gatto said Thursday that giving businesses a chance to post the correct signage before becoming liable for damages was a way to discern the actual concerns that were the intent of the imitative.

“We also look at it as a little bit of bluff-calling,” he said. “These people who sue, these groups that sue, they say ‘We just want the warnings up.’ OK, well guess what? We just gave business-owners a 14-day window to put the warnings up...”

You can read this article and more by visiting the Glendale News Press HERE

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Mike Gatto is the Chairman of the Appropriations Committee in the California State Assembly.  He represents Burbank, Glendale, La Cañada Flintridge, La Crescenta, Montrose, and the Los Angeles neighborhoods of Atwater Village, East Hollywood, Franklin Hills, Hollywood Hills, Los Feliz, and Silver Lake.  www.asm.ca.gov/gatto

Protecting Small Businesses from Meritless Lawsuits

by Mike Gatto

Can you imagine being faced with the prospect of having to pay thousands of dollars to put up a $20 sign?

As crazy as it sounds, that’s exactly what happened to a coffee-shop owner from our area when he was threatened with a several hundred-thousand dollar lawsuit for allegedly failing to post a warning sign that beer can cause cancer. In 2012 and 2013, more than three dozen small businesses in Southern California (including several restaurants and cafés in Pasadena, Glendale, Burbank and Los Angeles) were threatened with similar lawsuits—with some paying thousands of dollars in settlements and attorneys’ fees to avoid spending precious time and money defending themselves in court.

These suits are all a result of California’s Proposition 65. Approved by voters in 1986, the act was intended to prevent and warn the public about possible exposure to carcinogens. Regrettably, there are unscrupulous individuals who have taken advantage of certain provisions in Prop. 65 to ensnare small businesses in lawsuits that were never contemplated by the voters when they passed it.

Brett Schoenhals, Owner of the Coffee Table in Eagle Rock
and a member of my Small-Business Advisory Commission
was threatened with litigation under Prop. 65.

To help these people, and all of us who believe in sensible government, I’ve introduced AB 227, which would allow small businesses to correct technical signage violations of Prop. 65 within fourteen days and pay a small civil fine. It essentially creates a “fix-it ticket” for signage violations for the most common, everyday substances covered under Prop. 65. If the business owners comply, they would be safe from legal action — including the crushing $2,500 per-day retroactive fine — plus legal fees, and the stress of battling meritless litigation.

In May, following the exposure I and my Small Business Advisory Commission brought to this issue, Governor Brown announced his support for my AB 227, and said that he was open to additional reforms. I am proud to have brought together so many other individuals and organizations that are normally on opposite sides. It’s not every day that business groups, environmental-justice coalitions, organized labor, and attorneys’ organizations agree on anything, much less how to reform Prop. 65 — a measure that has been substantively amended just once in nearly 30 years.

Threatening a small business with a lawsuit for serving its customers coffee with their breakfast, a burger with their lunch, or a glass of wine with dinner is absurd. Most business owners work hard to follow the law and protect customers so they return. This is especially true with the majority of our local business owners whose customers are neighbors, friends and relatives.

By giving businesses the opportunity to post a sign and fix a simple mistake, AB 227 strikes a balance by helping businesses avoid senseless litigation while preserving the public’s ability to obtain proper warnings about dangerous chemicals. It shouldn’t cost California’s small businesses thousands of dollars because of issues with a $20 sign.

This opinion editorial originally appeared in the Pasadena Star News.  You can read this Op-Ed and more by visiting  http://www.pasadenastarnews.com/20130822/protecting-small-business-from-meritless-lawsuits-mike-gatto

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Mike Gatto chairs the Appropriations Committee in the California Assembly. He represents Burbank, Glendale, La Cañada Flintridge, La Crescenta, Montrose, and the Los Angeles neighborhoods of Atwater Village, East Hollywood, Franklin Hills, Hollywood Hills, Los Feliz, and Silver Lake.

LA Times Business Beat: Limiting Lawsuits

A restaurant owner was threatened with a lawsuit for not posting enough of these warning signs. (Stephen Osman / Los Angeles Times / December 12, 2005)

Limiting lawsuits

Brett Schoenhals thought he was following the law by putting one of California's all-too-familiar warnings in the bar of his Coffee Table restaurant in Eagle Rock.

Soon after he posted the sign, "This facility contains chemicals known to the state of California to cause cancer and birth defects or other reproductive harm," he got a letter from a lawyer saying he was representing an irate patron who wanted to see more warnings.

Invoking the Safe Drinking Water and Toxic Enforcement Act of 1986, or Proposition 65, the lawyer threatened a lawsuit. The restaurant owner was told he faced fines of $2,500 a day for violations.

Infuriated, the Coffee Table owner decided to fight. "I plastered my whole place with signs everywhere," he said.

Afterward, he confronted the lawyer, who dropped his complaint. But Schoenhals did not stop there. Convinced he and other business owners were too often being extorted, he took his frustrations to Assemblyman Mike Gatto (D-Los Angeles). The lawmaker introduced a bill to help businesses avoid fines for minor violations, if they promptly fix problems, and it is set to get its first legislative committee vote Tuesday.

"The voters passed Proposition 65 to be protected from chemicals that could hurt them," Gatto said. "They did not intend to create a situation where shakedowns of California's small business owners would cause them to want to close their doors."

marc.lifsher@latimes.com

You can read this article and more at the Los Angeles Times HERE

Mike Gatto is the Chairman of the Appropriations Committee of the California State Assembly.  He represents the cities of Burbank, Glendale, La Cañada-Flintridge, the Los Angeles neighborhoods of Los Feliz, Silver Lake, Atwater Village, and portions of the Hollywood Hills and East Hollywood.  www.asm.ca.gov/gatto 

Learning to Fight Shakedown Lawsuits

By Mary O’KEEFE

Shakedown lawsuits have been a problem for business owners for years. States, including California, have passed laws to help protect the business owner from these lawsuits while continuing to support and protect the rights of the public. But the lawsuits have continued despite the efforts of legislators.

In response to a discussion with his Small Business Advisory Commission, Assemblymember Mike Gatto has taken action to help prevent these types of frivolous lawsuits.

On Feb. 4, Gatto introduced legislation that allows a business owner who receives notice of a Proposition 65 violation to remedy that violation and achieve compliance within 14 days without facing exorbitant retroactive fines.

In 1986, California voters approved Prop. 65, the Safe Drinking Water and Toxic Enforcement Act, which required the state to publish a list of chemicals known to cause cancer or birth defects. It required business owners to notify customers about these chemicals via a “clear and reasonable” warning as in posting signs in their establishments. In 2004, Prop. 64 was passed which, at the time, was heralded as a solution to stop frivolous lawsuits but, as is with most legislation, there were loopholes.

Gatto’s legislation was inspired by an Eagle Rock restaurant owner who had been sued for thousands of dollars for failing to notify his customers that beer could cause cancer.

Brett Schoenhals owner of The Coffee Table in Eagle Rock

During the commission meeting, the business owner said the lawsuits are difficult to fight because the owner doesn’t know when the person who is suing visited the business and if in fact the sign was not visible at the time. All it takes for a lawsuit, the restaurant owner said, is to be accused.

The law allows for fines of $2,500 per day for each day of the violation. Most larger companies settle out of court; however, small businesses can be driven out of business.

AB 227, the legislation introduced by Gatto, would further the intent of Prop. 65, which is to obtain compliance by displaying warnings of chemicals present on a site. It would allow a business that receives notice of a private action to correct the violation, i.e., post the Prop. 65 warning, within 14 days without being subject to the retroactive $2,500 per day fine, stated Gatto.

Gatto said the intent of the law was to warn the public, not drive out business.

“I had the opportunity to listen to concerns of local business owners on the Small Business Advisory Commission. The severe negative impact of shakedown lawsuits under Prop. 65 was immediately apparent,” stated Gatto.  “Most business owners work hard to protect customers so that the customers return. This is especially true with small business owners whose customers are neighbors, friends and relatives. This common-sense bill will help small businesses avoid costly litigation while ensuring that the public has the proper warnings about potentially dangerous chemicals.”

In addition to the Prop. 65 violations, there are also a growing number of ADA [Americans With Disabilities Act] lawsuits. The so-called drive-by lawsuits or shakedown lawsuits are also financially crushing small businesses...

You can read the rest of this article, and more, at the Crescenta Valley Weekly HERE

Mike Gatto is the Chairman of the Appropriations Committee of the California State Assembly.  He represents Burbank, Glendale, La Canada-Flintridge, La Crescenta, Montrose, and the Los Angeles neighborhoods of Los Feliz, Silver Lake, Atwater Village, and portions of the Hollywood Hills and East Hollywood.   www.asm.ca.gov/gatto

Glendale News-Press: A dozen restaurants in tri-city area face legal action addressed in Gatto bill

Gatto's bill would give restaurants a reprieve from predatory legal filings over signage. Above, a pizzeria in Pasadena. (Times Community News / February 8, 2013)

A bill introduced this week by Assemblyman Mike Gatto (D-Silver Lake) to protect against what he called “shakedown lawsuits” comes as 12 businesses in his district face similar legal action for not posting simple signage — violations that have spurred thousands of dollars in settlement agreements in the past.

In the last two months Miguel Custodio Law in Pasadena has informed five restaurants each in Burbank and Pasadena and two others in South Pasadena that they are in violation of Proposition 65, a voter approved law that requires establishments to post “clear and reasonable” warnings if the public is at risk of being exposed to chemicals known to cause cancer or birth defects.

That would include restaurants that serve alcohol — businesses that frequently find themselves at the receiving end of predatory legal claims since the law allows the public to sue for up to $2,500 for each day the signage isn’t properly displayed.

Before a suit is filed, plaintiffs are required to file a notice with the state, which then has 60 days to decide whether it wants to sue before any other lawsuit can be filed. If they state officials don’t, businesses often agree to pay a settlement to avoid costly litigation, hence the term “shakedown...”

...all 55 currently active 60-day notices for alcohol were filed by Miguel Custodio and Vineet Dubey of the firm Miguel Custodio Law in Pasadena — 52 of them on behalf of three plaintiffs: Danny Sing, Jesse Garrett and Rafael Delgado Jr.

Gatto’s bill, AB 227, would allow a business owner who receives a 60-day notice to avoid retrospective fines by fixing the violation within 14 days.

In a statement Tuesday, Gatto cited the example of Brett Schoenhals, owner of the Coffee Table in Eagle Rock, who told the assemblyman that the 60-day notice he received in January from Custodio threatened a lawsuit of hundreds of thousands of dollars.

Custodio said he had yet to be contacted by Schoenhals, and had not yet filed a lawsuit against any business for a Proposition 65 violation...

...Custodio came under scrutiny in a Los Angeles Times report for filing 27 American Disabilities Act lawsuits on behalf of one Eric Moran in 2010, and seeking $9,000 out-of-court settlements to avoid lawsuits...

...Malbec Restaurants Inc. — which is based in Burbank and runs the Malbec Argentinian restaurants in Pasadena and Toluca Lake — was served a notice by Custodio on Jan. 16...

-- Daniel Siegal, Times Community News

Follow Daniel Siegal on Google+ and on Twitter: @Daniel_Siegal

You can read this entire article and more at the Glendale News Press HERE

Mike Gatto is the Chairman of the Appropriations Committee of the California State Assembly.  He represents the cities of Burbank, Glendale, La Canada-Flintridge, La Crescenta, Montrose, the Los Angeles neighborhoods of Los Feliz, Silver Lake, Atwater Village, and portions of the Hollywood Hills and East Hollywood.   www.asm.ca.gov/gatto