Jan. 19, 2017
SB 1130: False advertising lawsuits
Gives county counsel the same power as other public prosecutors to request substantiation of advertising claims and pursue remedial measures before suing businesses under California's False Advertising Law. By Steve Atlee and Holly Farless
Steven D. Atlee
Park & Velayos LLPlitigation, IP law
801 S Figueroa St Ste 450
Los Angeles , CA 90017-5501
Phone: (213) 570-8013
Fax: (213) 570-8010
Email: satlee@parkvelayos.com
USC Law School
Holly Farless
Stroock & Stroock & Lavan LLP
2029 Century Park E #1800
Los Angeles , CA 90067
Phone: (310) 556-5811
Email: hfarless@stroock.com
USC Law School
As of Jan. 1, 2017, county counsel in California now have the same power as other California public prosecutors to request substantiation of advertising claims and pursue remedial measures before suing businesses under California's False Advertising Law.
Business and Professions Code Section 17508 makes it unlawful for California businesses to make false or misleading claims in advertising to consumers. Previous law gave various public prosecutors such as the director of consumer affairs, the attorney general, and city or district attorneys - but not county counsel - the authority to demand that a business substantiate its advertising claims. If the business failed to respond to the request or provide adequate support for the claims, these attorneys could then seek termination or modification of the claim by injunction under Section 17535 or disseminate information to the public about the nature of a misleading claim without filing a lawsuit.
While previous law gave county counsel the same powers as other public prosecutors to seek an injunction terminating or modifying claims or bring a civil action to recover statutory penalties, county counsel lacked authority to demand substantiation of ad claims. As a result, county counsel were less able to determine whether there was sufficient evidence to bring a lawsuit and allow a business the opportunity to justify the veracity of its advertising claims, short of filing a lawsuit. Senate Bill 1130 amended Section 17508 to include county counsel among the public lawyers with authorization to request substantiating information before bringing civil action against businesses for false advertising. This corrected what bill author State Sen. Bob Wieckowski, D-Fremont, called an "oversight" in the previous law by giving county counsel the same authority as other law enforcement attorneys to evaluate false advertising claims and seek redress before initiating litigation.
Predictions on the effects of this amendment are mixed. Proponents of SB 1130, including the Consumer Federation of California, the California State Association of Counties, and the Urban Counties of California, have argued that SB 1130 will reduce the number of false advertising lawsuits because county counsel will be able to seek substantiation of advertising claims and correct violations outside of the courtroom rather than filing unnecessary litigation. Opponents such as the Civil Justice Association of California (CJAC), on the other hand, argue that the amendment will facilitate more litigation, not less.
Overall, this amendment may give county counsel and California businesses a valuable opportunity to avoid litigation for violations that may be corrected outside of the courtroom. Business groups, including CJAC, have previously argued for rules giving them notice and opportunity to cure infractions without the expense of an unnecessary lawsuit. SB 1130 expands these opportunities for earlier resolution by giving county counsel the ability to conduct an investigation into false advertising claims and negotiate remedial measures without litigation.
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