LISTEN IN: Assemblyman Gatto discusses AB 227 on KFBK News Radio

Assemblyman Mike Gatto called into KFBK News Radio and discussed AB 227, his legislation to limit unfair Prop. 65 lawsuits and protect local small businesses.  

LA Times: Brown signs law amending state's anti-toxins law, Proposition 65

California Gov. Jerry Brown, center, signed a law giving businesses that are in violation of Proposition 65 two weeks to post the required notices before they are subject to lawsuits or steep fines. (Rich Pedroncelli, Associated Press / January 24, 2013)

By Melanie Mason - October 5, 2013

SACRAMENTO -- Gov. Jerry Brown on Saturday signed into law changes to Proposition 65, the state's landmark anti-toxins law, that aim to reduce lawsuits and fines for businesses.

The initiative, which voters approved in 1986, requires businesses to post notices about the presence of possibly dangerous chemicals, which include alcohol, carcinogens found in parking garages and byproducts of coffee roasting.

Some business owners, particularly owners of bars and coffee shops, complained the law had spawned a wave of frivolous lawsuits and excessive fines over improper signage.

The measure by Assemblyman Mike Gatto (D-Los Angeles) gives businesses that are in violation of the law two weeks to post the required notices before they are subject to lawsuits or steep fines.

Gatto said he was in a "state of disbelief" that his bill, AB 227, had become law, particularly because making changes to the initiative required two-thirds approval in the Legislature.

"Nobody has been able to do this since 1986," he said...

You can read this article and more by visiting the Los Angeles Times 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

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

[VIDEO] CBS2 Investigates: Customers Pay The Price For Prop. 65 Lawsuits Against LA Restaurants

LOS ANGELES (CBSLA.com) — Customers are ultimately paying the price for lawsuits against some Los Angeles-area restaurants, according to CBS2 investigative reporter David Goldstein.

In the past six months, artist Raphael Delgado has had his attorney write letters to 20 restaurants, including California Pizza Kitchen, Maria’s Italian Kitchen and Big Daddy’s Fire Grill, in which he claims he’s documented violations of Proposition 65, which requires businesses to warn residents about possible exposures to chemicals...

...In January, the owner of Big Daddy’s, Dennis Constanzo, said he was threatened with legal action for supposedly not posting warning signs.

“(Delgado) indicated he wanted to settle the matter. And that is what it’s all about,” he said.

Three restaurants have settled with Delgado, paying penalties and legal fees that added up to more than $15,000, according to the California Attorney General’s website. Those costs could end up being passed on to customers in the form of higher food prices...

...When confronted by Goldstein, Delgado claimed he isn’t making any money and quickly called his attorney, Miguel Custodio.

Custodio, who has written 67 threatening letters to restaurants on behalf of just five clients, admitted he’s known Delgado since high school and they even had a business together, but said the Prop. 65 violations are valid.

Asked how Delgado found 20 restaurants in violation of Prop. 65, Custodio said, “You know, he goes to eat out just like, I think, anybody else does and he finds that these establishments don’t have these notices.”

State Assemblyman Mike Gatto, of Burbank, said the lawsuits have led to higher food costs and restaurants are being forced to leave California.

He’s authored a bill that would give restaurants a 14-day grace period to correct any problems.

“If the goal of Prop. 65 was to make sure that warning signs were put up in businesses, then let’s give businesses two weeks or so to put up a warning sign without facing very, very punitive lawsuits,” said Gatto.

Gatto’s proposed legislation is making its way through the state Senate and should be on the governor’s desk in a few weeks.

You can see this investigative report and more at CBS2LA.com by clicking HERE

California Senate committee advances Prop 65 reforms

By Jessica Dye - Thompson Reuters News and Insight - 6/20/2013

(Reuters) - A California Senate committee on Wednesday unanimously approved a bill aimed at curbing litigation brought under Proposition 65, which requires businesses to post signs warning the public about the presence of chemicals that could adversely impact human health.

Enacted by voters in 1986, the Safe Drinking and Toxic Enforcement Act, or Proposition 65, has been gradually expanded over the past 27 years to include a list of approximately 800 chemicals known to cause cancer or reproductive disorders.

Warning signs must be prominently displayed where citizens could be exposed to significant amounts of these chemicals, either in the environment or in products for sale at bars, restaurants and coffee shops, as well as office buildings, airports and other public places.

The proposed legislation, A.B. 227, would tweak Prop 65 with regard to violations of rules regarding warning signs.

Under the bill, private parties could not bring enforcement lawsuits if, within 14 days of receiving notice, an alleged violation was corrected and the alleged violator paid a $500 civil penalty.

The bill is tailored to address alleged violations stemming from exposure to chemicals in alcoholic beverages or food or drink prepared on the premises for immediate consumption, such as acrylamide, a chemical created during coffee roasting. It would also cover exposure to environmental tobacco smoke and engine exhaust fumes in parking lots.

The proposed legislation would not affect the ability of California's attorney general or local district or city attorneys to bring enforcement actions under Prop 65.

The legislation was prompted by an increase in litigation over the past few years to enforce Prop 65.

The wave of new actions has sparked complaints from California's business community that private attorneys are filing large numbers of Prop 65 lawsuits to extract quick settlements.

The majority of Prop 65 lawsuits are brought by private parties, according to statistics from the California attorney general's office. In 2012, a total of 437 settlements were obtained for alleged Prop 65 violations, 397 of which were initiated by private plaintiffs. Prop 65 settlements topped $22.5 million in 2012, compared with $16.2 million in 2011, according to the AG's statistics.

Legislative efforts to reform the law over the last decade have mostly fallen short, due to concerns by public health advocates that loosening the law's warning requirements could undermine its safety goals.

BILL PASSED 9-0

Momentum appears to be gathering behind A.B. 227, which was introduced in February by Assemblyman Mike Gatto, a Democrat representing Los Angeles.

A.B. 227 was passed overwhelmingly by the Assembly on May 24 by a vote of 72-0. On Wednesday, the bill was passed unanimously by the Senate Committee on Environmental Quality 9-0.

Dozens of state and local business and trade associations endorsed the bill, and none were listed as opposing it. The Chanler Group, a plaintiffs' law firm that has filed numerous private Prop 65 actions, put out a statement after the bill passed the Assembly in May in support of its reforms, saying meritless lawsuits needed to be weeded out in order for the statute to properly function.

A.B. 227 will now move to the Senate Judiciary Committee for consideration, before advancing to the full Senate, where it needs a two-thirds majority to pass...

Follow us on Twitter @ReutersLegal

You can read this article and more at Thompson Reuters News and Insight HERE

EDITORIAL: Prop 65 Reform Bills are Overdue

A nonpartisan, nonprofit association, the National Federation of Independent Business (NFIB) represents 350,000 small and independent business owners across the nation.  The editorial below, written by NFIB California Executive Director, John Kabateck, originally appeared in Fox & Hounds Daily and highlights the need to protect small businesses from abusive Proposition 65 litigation, including expressing support for my AB 227.  AB 227 was originally created with the help of my Small Business Advisory Commission and I am proud to have the support small businesses across California, including the NFIB.

Prop 65 Reform Bills are Overdue 

John Kabateck is the
California Executive Director of the
National Federation of Indepedent Business

By John Kabateck
California Executive Director,
National Federation of Independent Business
Fox & Hounds Daily - Monday, June 10th, 2013

When Proposition 65 was approved by voters in 1986, the goal was simple: to protect California’s drinking water from chemicals known to cause cancer or reproductive harm, and to warn members of the public about the presence of those chemicals in their environment to help them avoid exposure.  Since its enactment in 1989, Prop. 65 has helped to protect the public by incentivizing businesses to renovate their facilities, reformulate their products, and update their manufacturing processes to eliminate the use of listed chemicals.  There are currently 774 chemicals on the list, and it keeps growing.

But what determines whether or not a chemical causes cancer or reproductive harm?  That is the question – the answer depends on what standard is used.  Two California Appellate courts have interpreted Prop 65 to require only the listing of “known carcinogens.” However, due to different standards that are used by the National Toxicology Program and the International Agency for Research on Cancer, there can be – and often is – ambiguity.

This is why the National Federation of Independent Business (NFIB) is proud to support and co-sponsor Assembly Bill 1026 (Quirk), which would provide certainty for businesses and ensure that science is the basis for listing chemicals on the Proposition 65 list.  With this bill, businesses can be assured that what is listed is something that they need to notify the public and their employees about because it poses a real safety concern.

One of the requirements of Prop 65 is that businesses with more than ten employees post warnings when they knowingly expose workers or the public to listed chemicals.  These warnings are listed on placards in the business or as part of the labeling on a consumer product.  Consequently, a new industry of attorneys targeting businesses with drive-by lawsuits has now sprung up, resulting in over twice the settlement revenues as Americans With Disabilities Act (ADA) lawsuits.  These lawyers allege that a business does not have adequate signage as required by Prop 65.  They demand money, and business owners rush to settle for thousands of dollars to avoid litigating in court, which is much more expensive.

Many small business owners have just made an honest mistake and didn’t know that signage was required, but they have no chance to remedy the problem without facing legal action.  AB 1026 would ensure that the required warnings are based on adequate science with real evidence, and not just a “gut feeling.”

Additionally, Assembly Bill 227 (Gatto) would help to eliminate the inappropriate use of litigation, while ensuring that the public receives the appropriate Prop 65 warnings.  AB 227 would provide a 14-day window to cure a signage violation and avoid a lawsuit in many situations.  And the reality is that small business owners want to keep their employees and customers safe.  They want people to patronize their business.  It is in the business owner’s best interest to make sure that their location is safe and that customers and employees alike are aware of which chemicals are being used.

The problems concerning Prop 65 are so big that the Governor’s administration is looking into a solution. Meanwhile, both AB 1026 and AB 227 will add a measure of certainty for businesses when complying with Prop 65 requirements.  And certainty is what small businesses in California need right now in order to create jobs and build the economy in our state.

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This editorial originally appeared on Fox & Hounds Daily.  You can read this editorial and more by visiting Fox & Hounds Daily HERE

Legal Newsline: Californians call for Prop. 65 reforms

An very well researched article in Legal Newsline about AB 227 and my efforts to prevent Prop. 65 abuse and "shakedown" lawsuits against small businesses.

By AMANDA ROBERT

SACRAMENTO (Legal Newsline) – As California Assemblyman Mike Gatto, D-Los Angeles, learned more about Proposition 65 and its impact on small businesses, he heard several stories that struck him as clear abuses of the law.

Restaurant and bar owners were being sued for failing to warn customers that beer could cause cancer. Coffee shop owners were forced to put up signs about the health risks associated with coffee beans. Another business owner who did display a warning sign was sued anyway because the sign was an inch too small.

“They had to pay a $5,000 settlement,” Gatto said. “It’s things like that, where people were taking the intent of a really terrific law and trying to stretch it to apply in a way that was just improper.”

In recent years, Prop. 65, the Safe Drinking Water and Toxic Enforcement Act, has become one of many controversial topics that surface during debates over California’s litigious environment. Political and community leaders laud the original purpose of the law, enacted by voters in 1986 to protect residents from chemicals known to cause cancer, birth defects and other reproductive harm.

But like Gatto, many of these leaders also recognize the law could further damage California’s economy. The state identifies nearly 800 chemicals that could be harmful and requires business owners to warn consumers about potential exposure to each one of them. Business owners who fail to comply face fines of $2,500 a day.

Prop. 65 also includes a private right of action, meaning that private plaintiffs and their attorneys – whether or not they have been harmed – can sue business owners who don’t display proper warning signs. In many cases, business owners agree to settle these cases rather than deal with costly litigation.

According to the Office of the Attorney General, there were 338 Prop. 65 settlements in California in 2011. Business owners paid $16.29 million to settle these cases. Nearly $11.94 million went to attorney fees and costs.

These statistics represent a significant increase from the previous year. The Office of the Attorney General shows that there were 187 Prop. 65 settlements in California in 2010. Business owners paid out $13.62 million in settlements, with $7.81 million directed to attorney fees and costs.

Prop. 65 alcohol warning sign in Los Angeles.

In Gatto’s talks with small business owners, he learned that since 2012, nearly two dozen more brick-and-mortar businesses in southern California were threatened with Prop. 65 lawsuits for failing to post warning signs, or signs of the right size, for beer, wine or chemicals that result while cooking food.

Gatto introduced AB 227 in February as a way to eliminate what he calls “shake-down” lawsuits. The new bill gives small business owners who receive notice of a signage violation 14 days to reach compliance. It also requires them to pay a smaller $500 civil penalty.

“One of the goals with Prop. 65 was certainly to make sure warnings were put up,” Gatto said. “You could look at my bill as somewhat as a ‘fix-it’ ticket … We want to encourage compliance. We want to make sure that the public is fully informed. This is just an opportunity for businesses to get into compliance without facing very, very expensive lawsuits.”

The Assembly Judiciary Committee passed AB 227 by a bipartisan, 10-vote in late April. The Appropriations Committee, currently chaired by Gatto, will now consider the bill.

Legal reform advocacy groups like Citizens Against Lawsuit Abuse and the Civil Justice Association of California agree that lawyers who file lawsuits for the primary purpose of extracting settlements from small businesses are abusing Prop. 65. They support Gatto’s bill, contending that the state should refocus on its primary goal of protecting the public.

Tom Scott, executive director of CALA, a nonpartisan grassroots organization based in Sacramento, compares Prop. 65 lawsuits to Americans with Disabilities Act lawsuits, which have also plagued California.

“It took a long time for ADA lawsuits to really become an issue,” Scott said. “I think part of it was because businesses didn’t want to come forward and talk about it. They settled the lawsuit, and then, ‘I’m done. I just want to get on with it.’ Prop. 65 is sort of where ADA was eight years ago.”

From Scott’s perspective, AB 227 will be successful since Republicans and Democrats can both appreciate its ability to improve their state’s economy.

“There’s no reason why legal reform can’t be bipartisan,” he said. “The fact that a Democrat from Los Angeles is carrying this bill is great. To amend an initiative, you need a two-thirds vote, so the Democrats have to be players in this legal reform fight.”

The Center for Environmental Health, despite initial opposition, also plans to support AB 227. CEH helped initiate hundreds of Prop. 65 legal agreements with dozens of major companies, including Target, Macy’s and Disney, that forced them to eliminate harmful chemicals from their products.

But now, Charles Margulis, CEH’s communications director, points out that the organization recognizes the importance of protecting both consumers and small business owners.

“We worked together with the Assemblyman to narrow down the concerns, which we share, around protecting small businesses that shouldn’t be burdened by lawsuits that are really intended for major companies that put millions of people at risk,” he said. 

Last week, California Gov. Jerry Brown also answered the call to address problems with Prop. 65. He announced that the California Environmental Protection Agency, legislature and other stakeholders will consider measures that could strengthen and reform the law. These measures will build on current legislative efforts, including Gatto’s proposed AB 227.

“Proposition 65 is a good law that’s helped many people, but it’s being abused by unscrupulous lawyers,” Brown said in his announcement. “This is an effort to improve the law so it can do what it was intended to do – protect Californians from harmful chemicals.”

According to the Office of the Governor, nearly 2,000 complaints were filed in the past six years by “citizen enforcers” who wanted to push businesses into settlements that provided little or no public health or environmental benefits.

Brown has proposed a package of potential Prop. 65 reforms, including capping or limiting attorney fees in Prop. 65 cases, allowing the state to adjust warning levels for certain chemicals and requiring more useful exposure information for consumers.

You can read this article and more at Legal Newsline by clicking the link below http://legalnewsline.com/issues/tort-reform/241570-californians-call-for-prop-65-reforms

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 

Brown, Cal EPA back reforms to cut 'shakedown' lawsuits filed under Prop. 65

Article from KPCC - California Public Radio on some new allies in the movement to reform Prop 65 and protect small businesses from frivilous litigation.

Molly Peterson | May 7th, 2013, 1:08pm

A sign posted at a Sacramento apartment complex warns of harmful chemicals on the premises, as required by Prop. 65.

Gov. Jerry Brown has directed the state’s Environmental Protection Agency to work towards reforming Proposition 65, a law passed a quarter-century ago that aims to protect Californians from harmful chemicals.

California EPA Secretary Matt Rodriquez says the reforms will combat “shakedown” lawsuits. Proposition 65 enables private lawyers to bring claims against businesses that knowingly expose the public to toxic chemicals identified under state law.  Lawyers have filed such claims more than 2000 times since 2008; critics say in some cases the suits are motivated by a desire to make a quick buck, rather than address a public health threat. 

According to Rodriquez, the governor might want to impose a cap on lawyer’s fees in such cases. The governor’s office says state officials, lawmakers, and business interests also will discuss requiring more proof from plaintiffs before lawsuits can go forward, as well as limits on how much money businesses found liable would pay into a settlement fund in lieu of penalties.

The governor’s announcement was welcomed by tort reform groups, including the nonpartisan Citizens Against Lawsuit Abuse.

Voters approved Prop. 65 in 1986. Any changes would require the support of two-thirds of the state’s Legislature, and would need to align with the intent of the original proposition to pass legal muster.

Rodriquez says state officials will seek support from likeminded lawmakers, such as state Assemblyman Mike Gatto. Gatto, who represents Burbank, Glendale, La Crescenta, parts of the San Fernando Valley, and Los Feliz, has sponsored a Prop 65 reform bill that would limit a business’s exposure to fines if it corrects problems promptly. Gatto says his interest in the issue was spurred by a constituent, a small business owner troubled by the way the law works now. 

Neither Rodriquez nor the governor has identified lawmakers who support this newly-announced package of reforms. State Senator Ted Lieu tweeted a commendation to the governor for proposing to reform “a great law that has been terribly abused."

This article originally appeared on SCPR.org, the website of Southern California Public Radio.  You can read this article and more at Southern California Public Radio by clicking HERE

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 

Press Enterprise Editorial: End the legal shakedowns over chemical warnings

Legislators should back a bill that would curb abusive lawsuits over warnings about harmful chemicals. Businesses would have the chance to correct violations promptly, and avoid lawsuits and fines.  Photo: The Press Enterprise

THE PRESS-ENTERPRISE - March 14, 2013; 05:47 PM

California should not confuse bounty hunting with consumer protection. Predatory legal shakedowns under Prop. 65 burden businesses while doing nothing to safeguard the public. Legislators should back a bill that would curb abuses while ensuring compliance with the law.

Assemblyman Mike Gatto, D-Los Angeles, has a sensible proposal that would protect the goals of Prop. 65 while combating abusive lawsuits. His AB 227 would give businesses that receive notice of a Prop. 65 violation 14 days to correct the issue — and thus avoid costly lawsuits and fines of up to $2,500 per day.

Prop. 65, approved by voters in 1986, requires businesses to notify customers about harmful chemicals in the products they purchase. The state maintains a list of more than 800 chemicals that compel the warning notices, ranging from well-known health threats such as lead and asbestos to obscure chemicals such as dibromoacetonitrile, a byproduct of drinking water disinfection. Many prescription drugs are on the list, which also includes such commonplace items as diesel exhaust, tobacco smoke and unleaded gasoline.

But the measure allows enforcement through private lawsuits, leading to a thriving practice of threatening unsuspecting businesses with fines and litigation unless they agree to a settlement. Businesses can easily run afoul of Prop. 65, given the broad range of chemicals involved. Some are common ingredients in manufactured products, while others — such as diesel exhaust — are nearly inescapable in populated areas.

The legal threats do little besides earning money for lawyers and adding to the already high cost of doing business in California. The violations usually consist of failure to post proper warnings about hazardous chemicals, rather than any immediate hazard to public health. And Prop. 65 notices are so ubiquitous that most people pay little attention, anyway.

The lack of a proper posted warning, however, can cost big money. The state attorney general’s office reports than in 2011, Prop. 65 lawsuits led to settlements totaling $16.3 million. Nearly three-quarters of that amount, almost $12 million, went to attorneys’ fees — and not fines or corrective actions.

But voters did not approve Prop. 65 with the idea of making attorneys wealthy. Allowing businesses to correct violations instead of saddling them with huge payouts advances the goal of the measure — without also harming the state’s economy.

The Legislature has a ready precedent for this approach: Last year, legislators approved a bill that protected businesses from abusive lawsuits under the Americans with Disabilities Act, by cutting any potential damages if businesses correct violations promptly.

Likewise, AB 227 would refocus Prop. 65 enforcement on compliance, rather than on exploiting trivial violations for monetary gain. That approach serves the public’s interest in both environmental safety and economic progress. Californians’ desire to know about the presence of hazardous chemicals does not justify the bane of excessive, greedy litigation.

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This editorial can be read in its entirety at the Press Enterprise, by clicking HERE

Mike Gatto is the chairman of the Appropriations Committee of the California State Assembly. He represents Burbank, Glendale, La Cañada-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

Fox and Hounds: Some Hopeful Signs for Business Under the Capitol Dome

By Joel Fox

Editor of Fox & Hounds and President of the Small Business Action Committee

Thursday, March 14th, 2013

California’s notoriously bad reputation for business seems to be making an impact with the leaders of the state’s government...

...Governor Jerry Brown and Senate president pro tem, Darrell Steinberg, have voiced support for modifying features of the California Environmental Quality Act that is often used as a roadblock to business development...

...Another sign that Sacramento recognizes government imposed burdens on business is Assemblyman Mike Gatto’s AB 227, which would give businesses 14 days to fix any problems related to a violation of Proposition 65’s warning requirements. Businesses would have time to make adjustments and avoid lawsuits.  Note that all the legislators mentioned above attempting to improve the business concerns are Democrats...

You can read this entire article, and more at Fox and Hounds Daily  HERE

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

Gatto introduces bill to protect businesses from 'shakedown' lawsuits

Assembly Bill 227 would give businesses 14 days to fix Proposition 65 violations, protecting them from so-called "shakedown" lawsuits, proponents say. Above, Le Comptoir in Glendale. (Tim Berger/Staff photographer / February 6, 2013)

Assemblyman Mike Gatto (D-Silver Lake) introduced a bill Monday to protect businesses from “shakedown” lawsuits that are filed with the intent of extracting settlements to make the litigation go away.

Business owners told Gatto at his Small Business Advisory Commission’s meeting last month that Proposition 65 – which allows the public to sue businesses for up to $2,500 for each day signs aren’t posted about the dangers of chemicals known to cause cancer or birth defects -- is easily abused by lawyers who file claims with the sole purpose of extracting settlements...

...Gatto’s bill, AB 227, would allow a business owner who receives notice of a Prop. 65 violation to avoid retrospective fines by fixing the violation within 14 days, according to a statement released on Tuesday.

“The voters passed Prop. 65 to be protected from chemicals that would hurt them,” Gatto said in his statement. “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.”

-- 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

PRESS RELEASE: Small Business Advisory Commission Generates Legislation to Help Small Businesses Avoid Shakedown Lawsuits

FOR IMMEDIATE RELEASE                                      Contact: Justin Hager: (818) 558-3043

February 5, 2013                                                                                 Cell: (415) 889-9762

Assemblyman Gatto’s Business Advisory Commission

Generates Legislation to Help Small Businesses Avoid Shakedown Lawsuits

SACRAMENTO – On Saturday, February 2, members of Assemblyman Mike Gatto's (D-Los Angeles) Small Business Advisory Commission voted to ask him to introduce legislation to address a new breed of shakedown lawsuits plaguing small businesses in Southern California.  On Monday, February 4, Assemblyman Gatto did what the Commission asked, introducing legislation that allows a business owner who receives notice of a Proposition 65 violation to remedy a violation, and achieve compliance within 14 days, without facing exorbitant retrospective fines.  

Prop. 65, the Safe Drinking Water and Toxic Enforcement Act, was passed by voters in 1986 and provides that a business in California may not expose individuals to chemicals known to cause cancer and/or reproductive toxicity without first giving clear and reasonable warning.  The State of California publishes a list of more than 800 chemicals known to cause cancer, reproductive harm, or birth defects.  Originally intended for serious exposures or failures to warn, Prop. 65 lawsuits have recently been abused by unethical attorneys.  A coffee shop owner in Gatto's district was sued for hundreds of thousands of dollars for failing to notify his customers that beer could cause cancer.

Such suits exist because the law allows for fines of $2,500 per day, enforced by any plaintiff.  Most people suing businesses expect that a small business, wary of litigation costs, will opt for a quick settlement to make the lawsuit go away. 

As introduced, AB 227 would further the original intent of Prop. 65, which was obtaining compliance with warnings for chemicals present on a site.  It would therefore allow a business that receives a notice of a private action to correct the violation, i.e., post the Prop. 65 warning, within fourteen days without being subject to the retroactive $2,500 per day fine. 

“The voters passed Prop. 65 to be protected from chemicals that would hurt them.  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,” said Gatto.   

Assemblyman Gatto formed the Small Business Advisory Commission this year to advise him on challenges facing local small-business owners.  The eight member commission discussed a variety of concerns impacting small businesses and voted unanimously for Gatto to introduce the bill to reform Prop. 65 so that the law’s intent is not undermined.

 

“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,” said 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.”

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

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