Groups Want Reversal on Ruling That Companies Can Continue Illegal
Practices Until Someone Gets Hurt

SANTA MONICA, Calif., Feb. 20 /PRNewswire-USNewswire/ -- In an
extraordinary request made late yesterday, eight public interest
organizations asked the California Supreme Court to scrap its recent
decision barring consumers from going to court to block unlawful terms
in a contract unless the consumer suffered "some damage." The groups
said the decision of the court leaves businesses unaccountable for clear
violations of the law.

The groups said the ruling undermines the chief purpose of California's
Consumers Legal Remedies Act (CLRA), which was enacted to help consumers
protect themselves against illegal and unfair practices of businesses.
The groups' letter can be downloaded from
http://www.consumerwatchdog.org/resources/Ltr_CJRG.pdf

The case, Meyer v. Sprint Spectrum L.P., involved a clause in a cell
phone contract that prohibited Sprint customers from bringing any kind
of class action lawsuit against the company. Numerous courts, including
the California Supreme Court, have held such clauses "unconscionable"
and unenforceable. The Consumers Legal Remedies Act (CLRA), one of
California's two major consumer protection laws, makes it unlawful to
"insert [] an unconscionable provision in the contract." Meyer, a Sprint
customer, sued under the CLRA to ask the court to invalidate the
clause.

In a decision issued on January 29, the California Supreme Court
determined that before a consumer is allowed to bring suit under the
CLRA, he or she must wait until the company attempted to "enforce" the
illegal clause and the consumer suffered "some damage." The decision
reverses a 1984 ruling by the Supreme Court on the same issue.

In their letter, the organizations point out that the statute itself
authorizes consumers to challenge the "insertion" of an unlawful clause
in a contract and does not require that consumers wait until they are
damaged. Further, the letter points out that other provisions of the
CLRA would be effectively negated by the ruling: the prohibitions on
misrepresenting the reasons for price decreases; misrepresenting the
geographic origin of goods; misrepresenting the authority of a
salesperson or agent to negotiate the final terms of a transaction with a
consumer; and the prohibition on the dissemination of an unsolicited
prerecorded message by telephone without first obtaining consent from
the consumer. (Civ. Code, Section 1770(a)(13), (18), (21), (22).) It is
not clear how a consumer could show "damage" due to these violations,
the letter says.

The organizations making the request include: The Center for Responsible
Lending, Consumer Action, Consumer Watchdog, Consumers for Auto
Reliability and Safety, The National Association of Consumer Advocates,
the National Consumer Law Center, Public Citizen, and United
Policyholders.

A Petition for Rehearing was filed by Meyer on February 17. The petition
can be found at http://www.consumerwatchdog.org/resources/PFR_filed.pdf.

The groups' letter to Chief Justice Ronald George can be found at: http://www.consumerwatchdog.org/resources/Ltr_CJRG.pdf.


The Supreme Court decision is available here: http://appellatecases.courtinfo.ca.gov/search/case/mainCaseScreen.cfm?dist=0&doc_id=477917&doc_no=S153846.


SOURCE Consumer Watchdog