What Does Proposition 64 Mean To You?

On November 2, 2004, California passed Proposition 64, an initiated statute that limited unfair competition in California.  Proposition 64 restricts private lawsuits against a company only to those where an individual is actually injured and suffered a financial loss due to unfair, unlawful or fraudulent business practices.  The legislative intent of Proposition 64 was to limit frivolous lawsuits against companies which resulted in a windfall for lawyers instead of the consumers.

However, the recent court's decision in In re Tobacco II Cases, No. S147345, (May 18, 2009), weakens the limits on frivolous lawsuit.  The Court held that only the named class representative(s) must satisfy the Proposition 64 requirements for being a party to the class action lawsuit.  This will make it much easier for plaintiff's to bring meritless lawsuits because not all of the class members must show they were actually injured and suffered a financial loss.  As a result, businesses will be forced to defend the meritless claims and incur the high costs associated with preparing a defense.

COUNSEL TO MANAGEMENT:

"Unfair, unlawful or fraudulent business practices" are very broad terms and encompass wage and hour claims, harassment claims and discrimination claims, to name a few.  Employers must take proactive measures to ensure that they are complying with State and Federal Laws to limit their exposure to class action litigation, including but limited to the following:

• Maintaining a company handbook with the company's policies and procedures;
• Maintaining accurate records;
• Recording meal and break periods;
• Conducting sexual harassment training and safety training for all employees;
• Conducting separate supervisor trainings; and
• Staying current with the changes in the laws that affect your company.

The goal of this article is to provide employers with current labor and employment law information. The contents should not be interpreted or construed as legal advice or opinion. For individual responses to questions or concerns regarding any given situation, the reader should consult with The Saqui Law Group at (831) 443-7100 in Salinas.