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CC - Item 4B - Authorize Letter os Support Commending Attorney General Swift Action in filing Lawsuit - Box 070/,)zq I i I TO: HONORABLE MAYOR AND MEMBERS ROSEMEAD CITY COUNCIL FROM: BILL CROWE,Y MANAGER DATE: MARCH 25, 2003' RE: AUTHORIZE LETTER OF SUPPORT COMMENDING ATTORNEY GENERAL'S SWIFT ACTION IN FILING LAWSUIT TO CURTAIL ABUSE OF UNFAIR COMPETITION LAW At your January 28`h meeting, the City Council authorized support of reform of state consumer protection laws in order to curtail frivolous and extortionist lawsuits. As you will recall, a large number of Rosemead businesses were targeted in one such lawsuit brought by the Trevor Law Group of Beverly Hills. The Attorney General's Office recently filed a lawsuit against the Trevor Law Group, which had abused state consumer protection laws to sue over 3,200 restaurants and auto shops. In addition to the Attorney General's actions, the State Bar Association has initiated action to disbar the attorneys in this law group. RECOMMENDATION: Send a letter to the Attorney General expressing support and appreciation for his swift action in filing a lawsuit against the Trevor Law Group for violation and abuse of state consumer protection laws. COUNCIL AGENDA MAR 2 5 2003 ITEM No. v M March 25, 2003 Mr. Bill Lockyer, Attorney General State of California Department of Justice P. O. Box 944255 Sacramento, Ca 94244-2550 Re: City of Rosemead Support for Legal Actions Against Abusive Lawyers Dear Attorney General Lockyer: The Rosemead City Council has been monitoring the outrageous actions of the Trevor Law Group in naming over 60 city businesses in lawsuits designed to extort rather than cure consumer problems. The Council has also been monitoring the response of our elected officials on this matter. This is to express the wholehearted support of the Rosemead City Council for your recent filing of suit against the Trevor Law Group to stop this abuse of our legal system. Your prompt response to the immediate problem is very much appreciated. Please keep us informed of your efforts on legislative reform so that our businesses will not again be victimized. Again, thank you for being responsive to the urgent plea for help from the City of Rosemead. Sincerely, MAYOR MAYOR PRO TEM COUNCILMEMBER COUNCILMEMBER COUNCILMEMBER COUNCIL MEMORANDUM FROM: CITY MANAGER DATE: FEBRUARY 26, 2003 RE: FRIVOLOUS LAWSUITS - UPDATE The Attorney General's Office has just announced it filed a lawsuit against the Trevor Law Group. Ironically, the AG is using the same consumer protection law (Unfair Competition Law aka B&P Code 17200) to sue the Trevor Law Group, which used B&P 17200 to sue over 3,200 restaurants and auto shops. Attached are copies the Attorney General's Office press release and the AG's lawsuit. Attorney General Lockyer Files `17200' Consumer Protection Lawsuit Against Beverly Hil.. Page I of 2 REGISTERING WITH US CAREER OPPORTUNITIES rr ' ' r4 x~ I A R t'r t3W$ .Z .uf > CONTACT PUBLICATIONS US LINKS TO STATE SITES Attorney General Lockyer Files '17200' Consumer Protection Lawsuit Against Beverly Hills Law Firm Trevor Law Group Filed Abusive Actions Against Thousands of Small Businesses February 26, 2003 03-021 FOR IMMEDIATE RELEASE (916) 324-5500 (LOS ANGELES) - Attorney General Bill Lockyer today filed a consumer protection action against the Trevor Law Group of Beverly Hills, alleging the firm committed unfair business practices in slapping thousands of small businesses with abusive lawsuits filed solely to obtain nuisance settlements and attorneys fees. The Attorney General filed his complaint under the Unfair Competition Act (UCA) - Business and Professions Code Section 17200 - the same statute the Trevor Law Group used to sue auto repair shops, restaurants and markets in the Los Angeles area. "The Trevor Law Group operates a shakedown operation designed to extract attorneys fees from law-abiding small business owners," said Lockyer. "With its unlawful practices, the Trevor Law Group has abused one of the state's most important consumer protection statutes and dishonored attorneys who practice law in the public interest." The complaint, filed in Los Angeles County Superior Court on behalf of the people of California, seeks full restitution of money acquired by the defendants as a result of their violations of Section 17200. The lawsuit also asks the court to impose civil penalties of not less than $1 million. Additionally, the complaint requests the court to order the defendants to drop all lawsuits that they have brought under the UCA and false advertising law. Finally, the Attorney General's complaint seeks a permanent injunction barring the defendants from fling new lawsuits under the UCA and false advertising statute without court approval. The action also names as defendants: the Consumer Enforcement Watch Corporation (CEWC), the organization used by the Trevor Law Group as the plaintiff in their cases, Damian Trevor, Shane C. Han and Allan Hendrickson, lawyers with the firm; and CEWC owner Ron Jamal Kort. The complaint alleges the Trevor Law Group and CEWC have "abused the process of law" and unlawfully exploited a UCA provision that permits private plaintiffs to represent the public in bringing actions for unfair or unlawful business practices. The defendants have filed 22 lawsuits in which they have named as defendants 2,207 auto repair shops, more than 1,000 restaurants and markets, and 210;000 "Does," or unnamed plaintiffs, according to the complaint. In the lawsuits that name multiple defendants, the complaint alleges there is no connection among the businesses, nor is there a relationship between the businesses and their alleged misconduct. That lack of connection violates Code of Civil Procedure Section 379. "Defendants represent they are in the business of enforcing consumer laws through litigation," the complaint states. "Defendants are actually in the business of extracting money from small businesses under the guise of purporting to enforce consumer protection laws Defendants' real n...-- is to nhtain --fa- navmcnf fnr }hcm mhmc fn ...hirh thcv arc nn} .n+M.H " SEARC http://ag.ca.gov/newsalerts/2003/03-021.htm 2/26/2003 OFFICE OF THE PROGRAMS & NEWS & AG SERVICES ALERTS Attorney General Lockyer Files `17200' Consumer Protection Lawsuit Against Beverly Hil.. Page 2 of 2 r,.~r..~.. y r.r.y„w,„ 1- a According to the complaint, the defendants formed the CEWC in April 2002 to serve as named plaintiff in their Section 17200 lawsuits. They then filed the actions based solely on notices of regulatory violations they found on government agencies' Websites - violations the regulators deemed insufficient to warrant disciplinary action. Shortly after filing the suit, the complaint alleges, the Trevor Law Group and CEWC used form letters to contact the businesses to try to obtain quick settlements. They told auto repair shop owners the cases typically settled for $6,000 to $26,000. The settlement range they provided restaurant and market owners was $7,000 to $13,000. If all the named businesses settled at the low end of the ranges, the complaint notes, the Trevor Law Group and CEWC still would realize a $20.2 million windfall. The form letters also falsely told business owners that settling the case would protect them from similar lawsuits fled by other plaintiffs. Further, the complaint alleges, the Trevor Law Group and CEWC demanded the settlements be kept secret from the public, whose interests the defendants purported to serve. Finally, according to the complaint, the Trevor Law Group and CEWC entered into an illegal agreement which called for the firm to share with CEWC some of the money it received from settlements. The Attorney General's Office continues to investigate four other law firms and their named- plaintiff organizations for possible abuses of Section 17200. They include: Brar & Gamulin of Long Beach and Consumer Watchdog; Callahan, McCune & Willis of Tustin and Citizens for Fair Business Practices; Brian Kindsvater of Sacramento and Consumer Action League; and David Byers of Sacramento and Californians for Fair Business Practices BACK OFFICE OF THE AG I PROGRAMS & SERVICES I NEWS & ALERTS I PUBLICATIONS I CONTACT US I SEARCH REGISTERING WITH US I CAREER OPPORTUNITIES I LINKS TO STATE SITES Privacy Policy I Terms & Conditions I © 2001 DOJ http://aL,.ca.szov/newsalerts/200')/03-021.htm 2/26/2003 Attorney General Sues Southern California Law Firm SACRAMENTO 2.26.03, 2:39p - In what he calls a bit of "delicious irony," Attorney General Bill Lockyer is using a decades-old consumer protection law to sue a Southern California law firm that is accused of abusing it. The Trevor Law Group of Beverly Hills allegedly used California's Unfair Competition Law, also known as the Business and Professions Code 17200, to file thousands of lawsuits, seeking millions of dollars in settlements. "There's some delicious irony in using 17200 against people who are abusing it," Lockyer said Wednesday after filing the lawsuit in Los Angeles Superior Court. The law allows private attorneys to act on behalf of the public to sue businesses that engage in price-fixing, false advertising or other unfair business practices. But critics say the law fuels frivolous lawsuits because it lets attorneys sue even if the business did nothing illegal. According to the lawsuit, lawyers from the Trevor Group sued more than 3,200 auto repair shops and restaurants on behalf of a one-man, for-profit company called the California Enforcement Watch Corp., which shares an address with the law firm. Many of the lawsuits were based on minor violations posted on the Web sites of state agencies., . Shortly after filing the lawsuits, the Trevor Law Group sent the defendants settlement offers ranging from $6,000 to $26,000, the lawsuit says. One settlement offer, printed on red paper and obtained by The Associated Press, read: "Either pay even more money to fight in court or settle out of court and get on with business." The law firm did not return calls Wednesday from The Associated Press. Also named as defendants in the lawsuit are Consumer Enforcement Watchdog owner Ron Jamal Kort and Trevor Group attorneys Damian Trevor, Shane Han and Allan Hendrickson. The lawsuit asks that the firm be ordered to return all settlement money obtained through 17200 lawsuits and pay at least $1 million in civil penalties. On the Net: The California Attorney General: http://ag.ca.gov The Associated Press I BILL LOCKYER Attorney General 2 HERSCHEL T. ELKINS Senior Assistant Attorney General 3 ALBERT NORMAN SHELDEN Supervising Deputy Attorney General 4 SABRINA S. KIM, State Bar No. 186242 Deputy Attorney General 5 HOWARD WAYNE, State Bar No. 54773 Deputy Attorney General 6 110 West A St., Suite 1100 San Diego, CA 92101 7 P.O. Box 85266 San Diego, CA 92186-5266 8 9 Attorneys for Plaintiff, People of the State of California 10 IN THE SUPERIOR COURT OF THE S TATE OF CALIFORNIA II FOR THE COUNTY OF LOS ANGELES 12 13 PEOPLE OF THE STATE OF CALIFORNIA, Case No.: 14 Plaintiff, COMPLAINT FOR .INJUNCTION, 15 RESTITUTION, OTHER V. EQUITABLE RELIEF; AND CIVIL 16 PENALTIES TREVOR LAW GROUP, LLP; SHANE C. HAN; 17 ALLAN HENDRICKSON; DAMIAN TREVOR; CONSUMER ENFORCEMENT WATCH 18 CORPORATION; RON KORT, also known as RON / JAMAL and RON JAMAL KORT; and DOES 1 19 through 50, inclusive, 20 Defendants. 21 22 23 24 25 26 27 28 Plaintiff, the People of the State of California, by and through Bill Lockjyer, Attorney General of the State of California, allege on information and belief: DEFENDANTS Defendant TREVOR LANAI GROUP, LLP, is a partnership that does business in Los Angeles County and elsewhere in California. 2. Defendant SHANE C. HAN is sued in his individual capacity and in his official capacity as. an owner, partner or associate of TREVOR LAW GROUP, LLP, and as COMPLAINT FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES 2 3 4 5 6 7 8 9 to such he has at all relevant times directed and controlled the business activities of TREVOR LAW GROUP, LLP. 3. Defendant ALLAN HENDRICKSON is sued in his individual capacity and in his official capacity as an owner, partner or associate of TREVOR LAW GROUP, LLP and as such he has at all relevant times directed and controlled the business activities of TREVOR LAW GROUP, LLP. 4. Defendant DAMIAN TREVOR is sued in his individual capacity and in his official capacity as an owner, partner or associate of defendant TREVOR LAW GROUP, LLP, and as such he has at all relevant times directed and controlled the business activities of TREVOR LAW GROUP, LLP. 5. Defendant CONSUMER ENFORCEMENT WATCH Q 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CORPORATION ("CEWC") is incorporated under the laws of the State of California as a domestic corporation and does business in Los Angeles County and "elsewhere in California. 6. Defendant RON KORT also known as RON JAMAL and RON JAMAL KORT is the president and owner of CONSUMER ENFORCEMENT WATCH CORPORATION. He is sued in his individual capacity and in his official capacity as an owner, officer, director, principal, partner, and/or agent of defendant CONSUMER ENFORCEMENT WATCH CORPORATION and as such he has at all relevant times directed and controlled the business activities of CONSUMER ENFORCEMENT WATCH CORPORATION. 7. Plaintiff is not aware of the true names and capacities of the defendants sued herein as DOES 1 through 50, inclusive, and therefore sues these defendants by such fictitious names. Each of said fictitiously named defendants is responsible in some manner for the violations of law herein alleged. Plaintiff will amend this complaint to add the true names of the fictitiously named defendants once they are discovered. Whenever reference is made in this complaint to "defendants" or Trevor Law Group, LLP, such reference shall include Does 1 through 50, Shane C. Han, Allan Hendrickson, Damian Trevor, Consumer Enforcement Watch Corporation, and Ron Kort, also known as Ron Jamal and Ron Jamal Kort. 8. The violations of law alleged herein have been and are being carried out coNimAwr FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF, A.\D CIVIL PENALTIES 1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 within Los Angeles County and elsewhere in the state. 9. When reference in this complaint is made to any act or transaction of a defendant corporation, company, association, business entity, or partnership, such allegation shall be deemed to mean that said defendant,and its owners, officers, directors, agents, employees, or representatives did or authorized such acts while engaged in the management, direction, or control of the affairs of defendants and while acting within the scope and course of their duties. 10. Whenever in this complaint reference is made to any act of any individual defendant, such allegation shall be deemed to mean that said defendant is and was acting (a) as a principal, (b) under express or implied agency, and/or (c) with actual or ostensible authority to perform the acts so alleged on behalf of every other defendant herein. I1. Whenever in this complaint reference is made to any act of defendants, such allegation shall be deemed to mean the act of each defendant acting individually and jointly with the other defendants named in that cause of action. DEFENDANTS' BUSINESS PRACTICES 12. Defendants represent that they are in the business of enforcing consumer laws through litigation. Defendants are actually in the business of extracting money from small businesses under the guise of purporting to enforce consumer protection laws by engaging in the following scheme. 13. In April of 2002 defendants formed CEWC for the purpose of having a named plaintiff in their litigation. R. Jamal (Ron Jamal, whose full name is Ron .larval Kort) is the sole owner of CEWC. Merit Strausman, the wife of defendant Allan Hendrickson, was named as the agent for service of process. Defendants' Lack of Investigation Before Initiating Suit 14. Defendants review the web sites of various governmental administrative agencies, primarily the California Bureau of Automotive Repair ("BAR") and the Los Angeles County Department of Health Services, looking for any notice of alleged violations issued to a business within the authority of that agency. These notices of violations tend to be issued when an investigator for the administrative agency determines that the violation found does not warrant COMPLAINT FOR INJUNCTION. RESTITUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES I formal disciplinary action. The purpose of such notices is to inform the business owner of the 2 violation and to seek the owner's future voluntary compliance with the agency's regulations. No 3 penalty results from the issuance of a notice of violation. 4 15. Defendants bring suit against the types of businesses referenced in 5 paragraph 14 based solely on these public postings. Their boilerplate lawsuits first describe a 6 laundry list of laws and regulations governing the industry. They then allege "on information and 7 belief that each of the named businesses "are responsible for the act(s), practice(s), omissions(s) 8 and/or occurrence(s)" alleged in each complaint. Defendants then typically insert a short 9 paragraph for each named business which sets forth the information obtained from the public 10 posting. I1 Defendants' Filings Against Unrelated Businesses 12 16. Defendants, claiming to assert the interest of the general public, file mass 13 actions under the authority of Business and Professions Code sections 17200, et seq., and 17500 14 et seq., against hundreds or thousands of unrelated, improperly joined businesses and Does who 15 defendants have identified by reviewing.the web sites referenced in paragraph 14. 16 17. Defendants have filed some 22 different lawsuits. In approximately 14 of 17 these lawsuits they have named a total of approximately 2200 auto repair shops; in seven other 18 lawsuits, although they only list a single auto repair shop as the named defendant, they include 19 30,000 Does in each action. In the twenty second filed action defendants named over 1000 20 largely inunigrant-owned restaurants and markets. In each of these lawsuits there is no 21 connection among the businesses named or the conduct cited in defendants' lawsuits. The only 22 apparent commonality of the businesses named in each lawsuit is that they are subject to the 23 jurisdiction of the same administrative agency. 24 Defendants' Settlement Scam 25 18. Shortly after filing their complaints, defendants directly contact by letter 26 the named businesses, and some businesses identified only as Does, to obtain a quick settlement. 27 One letter, known as the "red letter" because it is printed on red paper, advises the business that it 28 has been found to be in violation of automotive repair laws based on a review of the records from A COMPLAINT FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES i 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the Bureau of Automotive Repair. The "red letter" tells the business that many other businesses have chosen to settle so as "not to take the time, money, and, energy involved with the challenge . " It concludes: "Our client's case is very strong. Every single case that has been completed in this lawsuit has ended with an out of court settlement. Settling outright is clearly the most intelligent business option. Should you insist on litigation, you may hire an attorney to follow the necessary steps for you. Otherwise, putting this behind you is a simple matter of contacting Trevor Law Group, LLP, which will send you a supplemental package. Thank you." 19. In those situations where an automotive repair business sued by defendants obtains legal representation, defendants often send to the attorney for such business a form letter in which they seek to examine the business records of the business for the prior four years, and wam that through discovery they will uncover additional violations. Defendants then offer, in this same letter, to settle the case for a fixed sum if the matter is settled in a very short period of time, often a week or less from the date of the letter. Defendants' settlement letter, in addition, to stating the amount demanded, sets forth language similar to, or identical to the following: "Our experience reveals that cases, such as that against your client, have settled anywhere from $6,000 to $26,000. Accordingly, if , your client agrees to the proposed settlement, they need only sign the enclosed documents and return them along with their payment (cashier's check, money order, or wire transfer only). This offer will expire [within a short period of time] and have no force and effect thereafter." 20. In those situations where a restaurant or market sued by defendants obtains legal representation, defendants often send to the attorney for such business a form letter, similar to that set forth in paragraph 19, in which they seek to examine the business records of the business for the prior four years, but offer to resolve the case for a specific dollar amount, with COMPLAINT FOR INJUNCTION, REsTiTUnON, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the letter concluding similar to the following: "Our experience reveals that cases, such as that against your client, have settled anywhere from $7,000 to $13,000. Accordingly, if your client agrees to the proposed settlement, they need only sign the enclosed documents and return them along with their payment (cashier's check, money order, or wire transfer only). This settlement offer will expire [within a short period of time] and have no force and affect. thereafter." 21. Defendants represent that the settlement will confer res judicata and collateral estoppel, thus barring any and all other persons from tiling suit against the business based on the alleged violation of law. 22. If defendants settled with all of the automotive repair businesses they actually sued by name, for the figure set forth as the low range in the settlement letter ($6,000), they would collect a minimum of $13,200,000.00. If they settled at the mid-point ($16,000) with each named business, defendants would reap $22,000,000.00 Defendants, of course, potentially could receive even more because they also try to settle with businesses identified only as Does. 23. If defendants settled against all of the approximately 1,000 restaurants and markets for the figure set forth as the low-range in the settlement letter ($7,000), they would collect a minimum of another $7,000,000.00. Secret Settlements With No Public Benefit 24. Even though defendants claim that their actions are filed in the public interest, they seek to settle their cases by utilizing a secret, confidential settlement; which they call "Confidential Agreement and Mutual Release." In this document defendants purport, on behalf of the general public, to release all claims against the business that were alleged in the complaint. The agreement contains a confidentiality clause that creates a cause of action for defendants should the business breach the confidentiality provision: It is agreed and acknowledged that a breach of this provision for confidentiality may create a high risk of retaliation against COMPLAINT FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES 2 3 4 5 6 7 8 91 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CEWC and would hinder further investigation into the nature of the underlying acts/or omissions of this action. As a result, the Parties agree that a breach of this provision would severely damage CEWC, and CEWC may recover damages for each act or occurrence of a breach. Furthermore [name of business] acknowledges that damages are not a sufficient remedy and CEWC may bring a further action to enjoin a future breach or repudiation of this provision, and shall be entitled to attorneys' fees and cost for bringing [such] action...." 25. The type of settlement set forth in paragraph 24 not only prevents the public from discovering the settlement amount, but also precludes the public from knowing the other terms of the agreement by which the interests of the public are purportedly being served. 26.. Even in those instances when defendants procure injunctive relief, these injunctions filed with the court are in effect for only a limited period of time, typically ninety (90) days. Thus, defendants' business is not one of representing the public in enforcing consumer laws, but of abusing Business and Professions Code sections 17200 et seq. and 17500 et seq.; for private gain. Snlittina of Attornev's Fees With Non-Attornev 27. Defendant Trevor Law Group entered into a fee agreement with. defendants CEWC and Ron Kort whereby the defendants agreed that each would receive a portion of any recovery obtained from the Business and Professions Code sections 17200 et seq. and 17500 et seq., Mitigation tiled by defendants. 28. The confidential settlement agreement referred to in paragraph 24 requires monies to go towards recovering defendants' fees and costs, and to be made payable to both CEWC and Trevor Law Group. The settlement agreement does not break down the payment of the settlement amount among attorney's fees, cost of investigation, and court fees. Accordingly, a portion of the fees and costs, which by definition includes attorney's fees, accrues to non- attorney defendants CEWC and Ron Kort. COMPLAINT FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF. AND CIVIL PENALTIES 2 3 4 5 61 7 8' 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 25 26 27 28 FIRST CAUSE OF ACTION VIOLATIONS OF CALIFORNIA BUSINESS AND PROFESSIONS CODE SECTION 17200 (Against All Defendants) 29. Paragraphs 1 through 28 of this complaint are incorporated herein as though set forth in full. 30. Defendants and each of them, have engaged in and continue to engage in the following, among other, acts of unfair competition as defined in Business and Professions Code Section 17200: A. Establishing and maintaining the plan of filing litigation and attempting to secure settlements of such litigation in the manner more particularly described in paragraphs 13 through 28, above, which are incorporated herein as though set forth in full. B. Defendants have abused the process of law in that they have used the judicial process with an ulterior purpose aimed at an objective which'is not legitimate. Defendants have abused the process of law in the following way: 1. Defendants have instituted volume litigation under Business and Professions Code sections 17204 and 17535 in which they assert they are acting on behalf of the interest of the general public. Defendants real purpose is to obtain monetary payment for themselves to which they are not entitled. Defendants only seek moneys which they denominate as being for fees, including attorney's fees, and costs, and which only accrue,directly to the benefit of defendants. 2. Defendants have filed mass lawsuits prior to making adequate investigation to ascertain the facts necessary to establish their case. Defendants instead rely only on the public postings of minor violations by administrative agencies. Their improper purpose is to conduct volume litigation with minimal overhead so as to maximize their profits from settlements. 3. Defendants have improperly joined separate and distinct COMPLAINT FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 businesses as defendants, in violation of Code of Civil Procedure section 379; inasmuch as there is no factual nexus among the businesses other than the. fact they are licensed by the same administrative agency. Defendants have joined such separate and distinct businesses for an improper purpose: to avoid paying multiple filing fees and to impose onerous notice requirements on the businesses. 4. In the course of settlement, defendants falsely represent to the businesses that settlement with defendants will preclude lawsuits by others on these same facts. Judgments obtained by defendants also claim that businesses cannot be sued again for the underlying conduct. C. Defendants have engaged in the practice of filing lawsuits and having as part of their settlement strategy, an attempt to obtain money from businesses under threat of causing these businesses unlawful injury in the form of financial harm by defendants. Defendants do so by entwining these businesses in protracted, nonmeritorious lawsuits that were filed without adequate investigation, and which result in businesses being compelled to expend substantial amounts of money to defend these actions. D. Defendants, in filing suit, assert the interest of the general public. However, defendants attempt to conclude, and have succeeded in concluding, cases through confidential settlements, backed by the threat of suing a business which breaches the confidentiality provision. In concealing their compromise of the public interest in order to benefit themselves, defendants have committed an unfair practice. E. Defendants have repeatedly violated Code of Civil Procedure section 379, inasmuch as they have joined businesses as defendants in a single action when there is no connection among the businesses or the conduct of the businesses other than the fact they are licensed by the same governmental administrative agency. F. Defendants have committed an unfair practice by attempting to obtain, in the guise of fees and expenses, civil penalties which may only be awarded in actions brought by the public officials and agencies set forth in Business and Professions 0 COMPLAINT FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES Code section 17206., G. Pursuant to the agreement between defendants, defendants 5 6 7' 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Consumer Enforcement Watch Corporation and Ron Kort are to receive a portion of the monetary recovery obtained from the Business and Professions Code sections 17200 et seq. and 17500 et seq., litigation filed by defendants. Defendants Consumer Enforcement Watch Corporation and Ron Kort are not entitled to recover any moneys from an action brought under Business and Professions Code section 17200 et seq. and/or 17500 et seq.,' except for their out of pocket costs of suit. SECOND CAUSE OF ACTION VIOLATIONS OF CALIFORNIA BUSINESS AND PROFESSIONS CODE SECTION 17200 (Against Attorney Defendants Trevor Law Group, LLP, Shane Han, Allan Hendrickson, and Damian Trevor) 3]. Paragraphs I through 28 of this complaint are incorporated by reference as though set forth in full. 32. Trevor Law Group, LLP, Shane Han, Allan Hendrickson, and Damian Trevor ("Attorney defendants") have engaged in and continue to engage in, the following, among other, acts of unfair competition as defined in Business and Professions Code section 17200: A. Attorney defendants commit the practice of exciting groundless judicial proceedings. B. Attorney defendants commit the practice of instituting volume litigation without probable cause and for the purpose of harassing small businesses into settling, as described in paragraphs 1 through 28, which paragraphs are incorporated by reference as though set forth in full. C. Attorney defendants commit the practice of encouraging and facilitating the commencement and maintenance of abusive litigation by engaging in the scheme described in paragraphs 12 through 28. D. By failing to make an inquiry reasonable under the circumstances regarding the conduct of the businesses, prior to filing suit against these businesses, COMPLAINT FOR INJUNCTION, RESTJTUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES defendants have violated Code of Civil Procedure section 128.7, subdivision (b). WHEREFORE, plaintiff prays for judgment as follows: I. Pursuant to Business and Professions Code section 17203, that defendants and each of them, personally or through their successors, agents, representatives; employees, and any and all other persons who act under, by, through, or on behalf of defendants be permanently restrained and enjoined from: A. Failing to dismiss all suits brought under the authority of Business and Professions Code sections 17200 et seq. and 17500 et seq. 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. Filing any new action under the authority of Business and Professions Code sections 17200 et seq. and 17500 et seq., except with the express prior approval of this Court. 2. Pursuant to Business and Professions Code section 17206, that defendants and each of them be assessed a civil penalty of $2,500.00 for each violation of Business and Professions Code section 17200 as proven at trial, but in an amount of not less than $1 ,000,000.00. 3. That plaintiff have such other and further relief as the nature of the case may require'and the court deems proper, including an order that defendants make full restitution of all money or other property that they may have acquired by their violation of Business and Professions Code sections 17200 et seq. 111 111 111 111 Ill 111 COMPLAINT FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES 1 4. That plaintiff recover its costs. 2 DATED: February 26, 2003 3 BILL LOCKYER, Attorney General of the State of California 4 HERSCHEL T. ELKINS Senior Assistant Attorney General 5 ALBERT NORMAN SHELDEN Supervising DeputyAttomey General 6 SABRINA S. KIM Deputy Attorney General 7 8 9 BY HOWARD WAYNE 10 Deputy Attorney General 11 Attorneys for Plaintiff People of the State of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COMPLAINT FOR INJUNCTION, RESTITUTION, OTHER EQUITABLE RELIEF, AND CIVIL PENALTIES Pa-e 1 of I \v San Gabriel Valley Tribune State acts to halt suits against area businesses Trevor allegedly extorting businesses By Howard Breuer Staff Writer - Wednesday, February 26, 2003 = PASADENA The state attorney general sued a Beverly Hills law firm for $1 million Wednesday, saying it misused a consumer protection law to "shake down' thousands of small businesses for cash settlements. The lawsuit says the Trevor Law Group has filed 22 blanket lawsuits against 210,000 unnamed plaintiffs, 2,207 auto repair shops and more than 1,000 restaurants and markets at least 250 of them run by Asian immigrants in the San Gabriel Valley. "These buys are just shakedown artists,' said attorney general's spokesman Tom Dresslar, who couldn't recall any such lawsuit ever being filed in 17 years. 'There are thousands of businesses being unfairly treated and being subjected to. this abuse.' He said investigators subpoenaed documents and concluded the Trevor Law Group misled businesses by promising owners they couldn't be sued again after paying a settlement, and entered illegal deals with a dummy corporation to share the settlement proceeds. Assemblywoman Judy Chu, D- Monterey Park., cheered the news and said the law firm "has wreaked havoc against businesses in my community and the Attorney General is now giving them a well-deserved taste of their own medicine.' Trevor Law Group partner Damian Trevor, a defendant in the lawsuit, did not return a call seeking comment. Other defendants in the Los Angeles Superior Court lawsuit are Shane C. Han and Allan Hendrickson attorneys at the firm; Consumer Enforcement Watch Corporation, and the corporation's sole owner, Ron Jamal Kort. The lawsuit alleges the lawyers created the corporation solely to have a named plaintiff in their litigation. "Defendants represent that they are in the business of enforcing consumer laws through litigation,' the lawsuit says. "Defendants are actually in the business of extracting money from small businesses.' Dressler explained that the lawyers "scan the Web sites of government agencies for violations that even the agencies say don't warrant disciplinary actions, and uses them to sue small businesses.' He said the law firm then sends letters to the businesses, offering to settle for at least $6,000 for the auto repair businesses and $7,000 for the restaurants. If the businesses had all settled for as much as they were asked, the firm would have collected $13 million to $22 million from the auto repair shops and at least $7 million from the restaurants, the lawsuit says. Many businesses have joined together to fight the lawsuits. - Howard Breuer can be reached at (626) 578-6300, Ext. 4444, or by e-mail at howard.breuer@sgvn.com. litin evxgr;hune.com/cda/article/print/0,1674-205%257EI2220%257E1208000,00.html 2/27/2003 Message BILL CROWE Paee 1 of 2 From: Joe A. Gonsalves & Son [gonsalvi@pacbell.net] Sent: Tuesdav, March 04, 2003 1:27 PM To: BILL CROWE Subject: Sacramento Bee,Article This story is taken from politics at sacbee.com. Dan .Walters: In ironic twist, law firm finds itself on other end of suit By Dan Walters Bee Columnist (Published March 3, 2003) Attorney General Bill Lockyer describes as "delicious irony" the lawsuit that his office filed last week against a Beverly Hills law firm, accusing it of engaging in unfair business practices by filing numerous unfair business practices suits against small businesses. And it is, indeed, ironic that Lockyer would use the same legal weapon against the Trevor Law Group that Trevor and others have employed for great financial gain against thousands of small business owners. Auto-repair shops, nail salons, restaurants and markets, many of them owned by recent immigrants, have been hit with the suits filed by Trevor and other law firms which usually then offer to drop the actions if certain payments are made to the lawyers. "The Trevor Law Group operates a shakedown operation designed to extract attorneys' fees from law-abiding small-business owners," Lockyer said as he announced the suit. "With its unlawful practices, the Trevor Law Group has abused one of the state's most important consumer protection statutes and dishonored attorneys who practice law in the public interest." Trevor and other law firms engaged in the lucrative unfair business practices trade typically would cull through records of state regulatory and licensing agencies for names of firms that had received various forms of reprimand, often merely procedural, and then file the unfair business practices suits against them. As the number of the suits mounted, and the demands of lawyers for hush money became more blatant, it created a political backlash that put Lockyer and other Democratic'politicians in a huge bind. Democrats could not ignore the pleas from poor immigrant business owners, obviously, but at the same time they didn't want to change the unfair business practices law itself, as business-backed "tort reform" groups were demanding. Lockyer and others argued that while the law may be misused in the suits filed by Trevor and others on behalf of self-serving front groups, it's also a valuable tool for curbing genuine corporate misconduct. The Consumer Attorneys of California, whose lawyer-members specialize in personal injury and class-action lawsuits, also doesn't want to have the law weakened, and it is among the Democratic Party's most loyal and generous campaign contributors. The California Civil Justice Association, a business-backed consortium that seeks broader changes in the personal injury law, 3/4/2003 Palle j of - BILL CROWS - - From San Gabriel Vallev Tribune by Emal Sent: Friday, March 14, 2003 4.37 PM To: BRAD JOHNSON, BILL CROWE Subject: Law firm. Paces action for This article was emailed to you at the request of : Brad The sender included the following brief message : Check out btie rosemead business named in the a; Licle. View this article V ew_S_an Gabriel Valley Tribune Law firm faces-action for Firm allegedly extorted money from small businesses By Howard Breuer, Staff Writer Thursday, March 13, 2003 LOS ANGELES The state bar on Thursday started disbarment proceedings against three Beverly Hills attorney's accused of filing consumer protection-style lawsuits to extort money from thousands of small businesses. The Trevor Law Group allegedly filed 22 blanket lawsuits against 210,000 unnamed plaintiffs, 2,207 auto repair shops and more than 1;000 restaurants and markets at least 250 of them run by Asian immigrants in the San Gabriel Valley. , BaP officials said they took the highly unusual step of announcing the proceedings at a press conference because fellow attorneys are disgraced by media reports about the Trevor Law Group. "Other attorneys want to see these people removed as much as anyone else,' said state bar spokeswoman Kathleen Seitiks. The bar filed a petition Thursday seeking involuntary inactive enrollment for the three lawyers: Damian S. Trevor, 29; Allan Charles Hendrickson, 39; and Shane Chang Han, 32. The action similar to a restraining order would prevent the attorneys from practicing, and is taken only when the bar feels an attorney poses a threat to the public. A hearing on the motion will be held April 7. The bar would then have 45 days to file formal disciplinary charges seeking disbarment. The state Supreme Court would then rule on the matter. ,Attorneys at the Trevor Law Group did not return a call seeking comment. The firm is accused of scanning the Web sites of government agencies for violations that even the agencies say don't warrant disciplinary actions and using the citations as an excuse to sue small businesses under the state's consumer protection laws. in many cases, the firm allegedly offered to settle for a few thousand dollars. b disbarred fo suits cafleld, shakedown Local.biisitie"sses applaud ,the State Bar s decs,lon on zhe - Trevor L a«r Group • ByLISA MUNoZ znd.ANORE W'GF LVIW THE ORANGE CCUNTI REGISTER • Th- State 'Bar of -Galiforrva - called -Thursd3); far -the . dts- - - - barment of tlvee atiorne% at the Trevor Law Groupt;'hose a-._ , : legedly frivolous lawsuits aga - ino ;hundreds -ofbrangeGoui~il~ au~o.;. shops and restaurants havebeen r : denounced as a'shakedoum op eranon b?t,state Attorne}.6en-, " - - eral Bill Lod,Ver ' The Los f:ngele= District t-„ - - turne} s Office in consider criminal charges against Shane - . .`L9, and,..j, Han '?-Damian Trevor; Allan Hendrickson ;9, after re-, . - vdeunng'the findings' of. what the b, chef r - - - - - os "Mike Nispe (trial- counsel,: described'.a= the' ' "largest---.'~investieation ._u ache bar s history.". The -three. Beverh Illls-, - .based attorneys have,sued about - 500 small businesses in loath-.. " 3 , ern California inanY,of them . - - i inom-and-pop operatione.rwr h}' _ ` immigrants vaith limite English ir- , skids - under the stat.e's uma m coinpe itioh law for Brno - d frac~,ion such a= not sipnno an " ? - s u late sheep The fin hen i q GS EE TREVOR • PAGE 4 uEa.u. / P, i 1 I € E EVDR: Ac,-usations include fraud, unlicensed practice r FROM -e Lr t arm lasers in U,e bnsineases demandlnSt 5500 to 514000 td. :.drop me suite. brio and Hench-uh an 'laughed Tnurea., when a Iii Inner told them the mr in- -LenCS U sake rv well IF censer to practice lax. "Tnev have to CIVe us a -ham n5" Hendrickson said. "Thos ear's just Lake lour h awa¢" ,,-Mess) Business owners end law- makers in Charnel, On.", wenQ .leased a; the Moo, Matthew C ie, chief leraecutive of Camper aliber Collision Center.. in ]wine, said the [Trevor croup had "held Cab- an "bQr anC other innuoural or California hos'uroll Humberto Galvice, owner of .Dads Machine Shop in San's nom, Ad. He was arl to hear ,the arturrneys could be dis- barred, over though they had 'sued him for something be said ire never did. "Thane's not what 1 want" Gamer said. "E"verybody has to wort for a Irving P Galvice vane sued for el -idly not writing up a formal :.estimate on some work he did :.more than a year ago. The m- ' mrneys said he could pay urea l S1p50 up front and 5750 'Pater no settle ate case our of court, Galvea said. He paid the 51,750 about a yea: "go, partly heczuse a s causing him MO much emnd...I distress to be sued. But Ule pa onvol used a -domae effect on is finances, =and to date be hasn't r, eeovered. G.Not said he would tike to have Is, money back. At a onunc r" confer- ence at the hart, Us Angeles office, inv..upstate laid out ttheir cane aeains cite Trevor '!ax Co.... rpesturine to about 45 sic` binders ofesd - .dente, including depositions ^fr.m !,000 people. They au cured its three attarneve of ,operating a slid corporation ^d,.,i,,d to "uerpetup to f, aid" ant w wi-eM lie gen- a.ate attorney fees. "I mink these guys actually don't think they did trMhUing •rong" said.John N.mnen, the lead investigation for the Saw Ban. "1 thiN: this blew u t in blear face Noonan said oNy a few at- torneys in the slate each year face sates yuicY, ao"Mu N.,.eroa said he would ask the State Par Court no force the tax'e's w area practicing It,, rending a full disciplinary bearing That natural will be heard April 7. The Same Pear Court can end disbarment, but ant final action would have w me fi om the Coldor'ena .se- !»reme Cents, said Mali. Mailer., a profassm Me 4,TIt. tier law School in Co.. Ness. He said disbarment. r.. edam. can bible, a year w Martinets, including ap_teaL The bar eh.rge< that Han, Trev.r and Handrid:son con- ired to uefreud d,fial ill= and illegaliv soli! fees vdth hats-atUarnepe. It oln,ms tit, Orel ...on reserved themselves to the pubb, and to She venturQ capital firm mat Steve tire- 1,600,000 w pursue the auto-shap r sett. h also aCCucea them of non- Simon prosiouthim. mail and wire fraud, and frre8 b; :also oreleral The bar also alleges that Han uracticed law wdthor a license from the sire be o ad cared from Western Sale College of Lava in Fullortun in 1999 until about hull, 200"_, shortly after he becan wors- inp wdm Trevor mod Hen- drickson. ]nve_naeawrs ac- cuse Trevor and Eenurickson of aiding and abemug Han be- cause imlarmawre say Grey re Eau was practic- ing in, withe , a license. Before working with Tre- and Hill nkson, Iran, worked with former Wesbern Sate clessmaws Elba.. A~irny and Reuben Nathan in a Nal walk firm. Acmrciog w depositions given by Ao:my and Nathan, they fired Han of. ter disenvering that be wasn't Ilcensarl no practice law in Cal if that. Nm,e,,.a fund hi all Con- tinues a shedlar Inver-ieavon into Long beach lax More Error Section 17200 Private attorneys can use section 17200 of the Ca hone Business and PmL•sions Code to sue any Winners, even when his ah limeys do not nave an imure0 or Deceived lieut. Lawrvits are filet on behalf of the general public - usually represented by a thmadfil inta ne ion. These n®rm tatldns. trills shame, ate sometimes set up by the very he' [if., ex-s9ming Ina.. More than 20 larsuits related to 1i?00 have been filed in Ine oast year. neminc more than .1.500 businesses a'. determallts Stale' wide. B'. Cate lid, which sued nail salons in Grange Col lot using me rare nail-polish arw plhul on different deans. Assanbl,run Lou Conn., 0-Slrtlla .4r:i whose district includes honotive of Intel nesses dust were Mond, said he was happy wish the bar's. ac. Lion but Dunks bit be needs no be Changed- "it's a statute, like any omen ...Lou. that Can be misused" The State Bar of Ufi Dinh', charges against the Trevor Law Group ' Unh:enseC granite of law 1 ' Conmirary m geiraug' • Malineof prosecution man and wile baud j Violations of tariff orders Comactino i mesented defend j ants ' I,, st iifinp 1 • their by best pretenses Atone without authority 1 Amuse of motes, I Japirutlimiarp ary ms It, In, Se p ate e J Committee The Process: A State Bar Court will hear the :ace against the 4evm attorneys. The lawyers can then appeal - numnthe State Bar and to the i Cahill Supreme Coutl. Redman staff writers Danielle H...bin, 1 Michele H.... a berg and 1:.hi inn Nguyen n,raliam,nd N LME'."I READ_P. POLL ON LOCAL 3- Law chronology o state Imilm er la» Is mas, fire an anderrs who say z.., lawyers ns using r to fun I n pnuels it in, ens, m amau bleresses. Esl oast s mite 11200 was htsl wain-, to ororecl tallemer ,merena 1933: Loidaia ena[n tone- one N."l ins dam. Section 1,1201 in, alums m wile rnd"Inauae ens moues to sue munme"Wil't.tea al ammr busd,!st na bil, on oenall of .11 ,ra' DuOLe. 1972: Ito stale suDeme card are ""aS 1'..... ril Laledra, ASSN Wtim,, thi marl allows olamtins at guys to use 1120[, unnenp the main lot more suit: tour maze Imes.. Lahr 1980S: i :tare Supreme Caan a." all maRS automrpi@ billion. lees Wnanvt. Same race'.; soya- oulancrt0lual ealal then a, car, Lan, MOL 1995:1 State ",a,, saints 1T?0O oic ...dames in, law has several flaws J...ap' 2002: tawvms memn ruin, home londle her tats, all m Los Ahrelet. Iranian ant San inner .in. 'mall lam mrsairl or am" ;nan 10.001. oeleaaanu. Wren 2002, tat sass[ Into Era: e uamulin files suit or. allay d Can Irmo nal:noa5. a rehr an consumer said, amnal gram; miners am noes slures In;aura Clar Coamy for aIIY,PGIy Iealhp denIIP, -par 01 In- tin movies, wltn u, to 30.00 man m ilra.C Age 2002, Saztamente County tray if aa.....! are SVee 4 Compurn M hat Loome, van Will Ile Lac to 5,000 oetearmul Jmly 2o@: irenh tar umur owarre tihn, lawsuits against aula ar act shoos, aflame vauous r nlradim, iron mm In, slate on retain of Consume, Hit.... real Whoun Ior a total m up In 120.000 In ter Angeles -mma, 2000 in Gaups County and 1,00 moil In Satramenm. admen, 2002: Era' L Grbrmlr, eves San renatomo ant Bilvasiw, rail. tons. trapial ansanilan practices, vin um ID 1000 inervind s. November ado Demon 20021ne ott file Stoup fiM, an,ors Hall um ID 40poi) Illnul anlr In In, Arr Iles Cl on oenall of Helping Haan lot the BIm4 an FSbblishet rarily. Drina r 11, 2D02: A Ion blenaD Lot COnea Nltaaarer Sees In IM talaotnie lemnumure is an ene.gl in anent the on],., CDmoerhan lea. Daerntr, 12, 2002: Ill Line Gmue Aires boaareen ,it, on m> nan Di Consumer 1n.a....1 warm atter Heenan, hand: Ito Itt, Blind means Has lath Ine firm Marta 13, added: Sean Car aeains Clsnormal gmwedm re aoainsl toe "rem. rev' Gino - By till Mal The ho lea H. LOa9EN <V 11. 18C REGIS i EF TARGET: Humberto GmveL Owner at Dent Machine Shop In Santa Ana, wants the law tbm to return SL750 he omt IV. CONSENT CALENDAR (CC-C was removed for discussion purposes) CC-A AUTHORIZATION TO ATTEND ANNUAL CHAMBER OF COMMERCE PLANNING CONFERENCE, APRIL 11-12, 2003, PALM SPRINGS ~C-B AUTHORIZE LETTER OS SUPPORT COMMENDING ATTORNEY GENERAL'S SWIFT ACTION IN FILING LAWSUIT TO CURTAIL ABUSE OF UNFAIR COMPLETION LAW CC-C APPROVAL OF TRACT MAP NO. 54046 - 5016 EARLE AVENUE Councilman Taylor asked if this item was a final approval or if the design would be coming back to the Council. His concern was about sound insulation due to the close proximity of additional trains that are part of the Alameda Corridor project. Ken Rukavina, City Engineer, advised that the proposed use is a manufacturing and storage business and not a residential use. With the approval of the final tract map, the land will be subdivided and any development will be in accordance with the city's zoning laws for the site. MOTION BY COUNCILMAN BRUESCH, SECONDED BY COUNCILMAN IMPERIAL that the foregoing items on the Consent Calendar be approved. Vote resulted: Yes: Bruesch, Imperial, Taylor, Vasquez No: None .Absent: Clark Abstain: None V. MATTERS FOR DISCUSSION AND ACTION - None VI. STATUS REPORTS - None VIL MATTERS FROM OFFICIALS -None VIII. ORAL COMMUNICATION'S FROM THE AUDIENCE Juan Nunez asked how do you file a complaint report if you do not known who the person is? Councilman Taylor stated that we have to establish a pattern and to inform the Sheriffs of this activity.