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 filing new lawsuits under the UCA and false advertising statute without court approval.
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 purpose is to obtain monetary payment for themselves to which they are not entitled."
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 filed 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 said it continues to investigate four other law firms and their named-plaintiff organizations for possible abuses of Section 17200.