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California Legislature Called Upon to Protect Consumers from Fraud




by:
Kristen Law Sagafi
Lieff, Cabraser, Heimann & Bernstein, LLP - San Francisco Office

 
May 23, 2014

Previously published on May 8, 2014

On May 6, 2014, I testified before the California Senate Judiciary Committee in support of Senate Bill 1188, which would restore an important protection for consumers. Sponsored by state Senator Hannah-Beth Jackson, the bill ensures that consumers can hold manufacturers accountable for producing and selling defective products. At the hearing, I was joined by Richard Holober, Executive Director of the Consumer Federation of California. After our testimony, and testimony from Senator Jackson, the Judiciary Committee approved and advanced the bill for a vote on the Senate floor.

Under the Consumer Legal Remedies Act ("CLRA"), consumers can bring suit against manufacturers for making fraudulent claims about their goods or services, or for failing to inform consumers of a known product defect. Signed into law in 1970, the CLRA is California's strongest consumer protection statute. For decades the CLRA has safeguarded consumers from unfair business practices, including the sale of "junk" products that are advertised as quality goods.

In recent years, however, courts have misinterpreted the CLRA to require that the health or safety of the consumer be at risk before a lawsuit could proceed. As a result, courts have dismissed class action lawsuits charging that manufacturers knowingly sold faulty TVs, computers, washing machines, and other products simply because the defect did not place the consumer's health and safety in jeopardy. But the CLRA does not include a safety requirement. And it never did.

Senate Bill 1188 provides a legislative fix to recent court decisions holding that a safety hazard is required for CLRA claims. The bill will restore the intent and purpose of the CLRA by clarifying that a company commits fraud by failing to disclose a known defect, whether or not the defect presents a safety hazard.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Author
 
Kristen Law Sagafi
Lieff, Cabraser, Heimann & Bernstein, LLP
 
San Francisco Office
Practice Area
 
Business Law
 
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