Californians will have the right to sue the monopolies

from Ryan SabalowCalMatters

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A controversial bill lawmakers are debating this year asks them: Should Californians have the right to sue if a company uses unfair tactics to stifle its competition?

Assembly Bill 1776 would expand California antitrust law to allow people and companies who claim they have been harmed by a company’s attempts to stifle competition to sue in state court.

Under long-standing California law, these types of lawsuits can generally only be brought when two or more parties are suspected of colluding to stifle competition. Federal law allows for unilateral enforcement, but defenders of California’s COMPETE law say federal courts have weakened antitrust law to the point that the state must define its own legal framework.

The dispute pits some of the state’s biggest political drivers — labor unions and trial lawyers — against the powerful lobby of California’s business and technology industries. Collectively, groups fighting the bill have donated at least $106 million to lawmakers’ campaigns since 2000, according to CalMatters Digital Democracy Database.

Supporters of the measure say it would give consumers a way to fight to keep independent grocery stores and pharmacies open, prevent single companies from controlling farm and restaurant supply chains and give patients more choices about their health care.

Author of the measure, leader of the democratic majority in the assembly Cecilia Aguilar-Curry testified to the Senate Judiciary Committee late last month that more than 75 percent of American industries have gone through a process of consolidation since the late 1990s.

“When companies get so much power and abuse it, it translates into higher prices, fewer opportunities, fewer opportunities for entrepreneurs to start small businesses, and lower wages for working families.” said Aguiar-Curry, who represents the Davis district.

Business groups say that if the measure is approved, it will open a new avenue for unscrupulous law firms to extort companies. Business owners have complained for years about California laws that allow activists and a growing group of lawyers to harass them with demands for money and lawsuits over issues such as access for people with disabilities , product warning labels , labor complaints Mr user privacy.

The California Chamber of Commerce was so alarmed by this latest attempt to increase the companies’ legal risks that its lobbyists put up billboards near the Capitol earlier this year. In them, they pointed directly at Aguiar-Curry.

“Cecilia, the prices are already pretty high,” said one billboard. “Don’t make life more expensive for California consumers.” Chamber of Commerce spokesman John Myers declined to comment on the billboards.

Moderate Democrats remain cautious.

If the group’s goal was to pressure lawmakers to withdraw the measure, it may have backfired.

The rare public attack on a popular senior Democrat appears to have bolstered support for the bill, despite concerns among several moderate Democrats that the legislation could make it harder to do business in California.
At least one competition law expert says those concerns are well-founded.

Babette Boliek, a Pepperdine University law professor and former chief economist at the Federal Communications Commission, argued that the bill is so vague that it would “invite judges to pick winners and losers based on subjective likes rather than quantifiable damages.”

He compared it to “a speed limit that no one knows exists.”

Aguiar-Curry’s team is receptive to some concerns. After initial resistance, he added an exemption aimed at protecting California’s independent small businesses as long as they have no more than 100 employees and have earned an average of $10 million or more in annual gross receipts over the previous three years.

Ben Golombek, executive vice president of the Cal Chamber, said thousands of California companies will remain vulnerable to costly litigation, including from their competitors.

“This unprecedented and massive legal liability for businesses of all sizes – small, medium and large – that this bill creates is why we are so opposed to it,” he said.

Mark Ramos, president of the Western States Council of the United Food and Commercial Workers, said the legislation would ensure that consolidation would not lower wages or increase product prices for workers. He added that as supermarket chains merge, their members are also finding it harder to negotiate the wages that previously allowed workers like him to afford housing.

“With this consolidation came the biggest challenge of not being able to negotiate a contract that allows our members to prosper in their local economy because these traders no longer have to compete with each other,” he said.

Some Democrats, especially Sen. Tom Umberg Democratic chairman of the Judiciary Committee, are cautious. Historically, Umberg has voted with Ramos’ union and its affiliates 93 percent of the time, according to Digital Democracy.

A key point for Umberg is whether citizens and private companies can file lawsuits under the so-called “private right of action.” Umberg told the committee that for now, he wants only local prosecutors and the California attorney general to have those powers.

“We want to make sure we’re not stifling competition by threatening lawsuits,” Umberg announced to the committee.

Aguiar-Curry said she would implement most of the changes requested by Umberg, but did not commit to limiting the law’s application to prosecutors. He indicated that he would continue to work to make frivolous lawsuits more difficult to file in the next version of the bill.

Will this measure act as a deterrent?

The bill passed committee with the only Republican vote against, but Umberg did not vote when it was his turn, the equivalent of a no vote.

Abstention is a common tactic among California legislators to voice their displeasure with a bill, thereby avoiding an outright “no” vote that might anger powerful interest groups or their colleagues. Umberg had the support of 15 other Democrats who did not vote when the bill narrowly passed the Assembly.

The COMPETE Act will be considered again by the Senate Appropriations Committee when lawmakers return from their summer recess in early August.

Supporters hope the final version won’t prevent Californians from suing a company for anticompetitive practices.

Lee Hepner, Senior Legal Counsel at American Economic Freedom Project antitrust activist group, said it’s imperative that ordinary Californians have the right to take legal action.

Otherwise, he said, big corporations will use their economic power and political influence to pressure politicians and regulators to give them leeway.

“The right of private action is an essential counterweight to the politicization of antitrust enforcement, which threatens the entire project of policing markets to ensure fairness,” he said.

This article was originally published on CalMatters and was republished under license Creative Commons Attribution/Attribution-Noncommercial.