2019-05-17 21:21:29

Giving lawyers new ways to file frivolous lawsuits not good for California economy

Contact: John Kabateck, California State Director, 916-956-9027, [email protected],
or Shawn Lewis, Policy Director, 916-342-9315; [email protected],

SACRAMENTO, May 17, 2019—The association representing California’s small-business owners praised yesterday’s stopping by the Senate Appropriations Committee from advancing Senate Bill 561 any further.

“The Legislature already has enough work trying to sort out all the ramifications contained in the California Consumer Privacy Act that it passed last year,” said John Kabateck, California state director for the National Federation of Independent Business. “Allowing people to sue for violations, which SB 561 would have done, when it hasn’t yet clarified those violations makes no sense whatsoever.”

Kabateck said small businesses in California have long memories about how things turned out for them with attorney abuses of the California Unfair Competition Law (Sec. 17200), Proposition 65, and now, federally, with the drive-by lawsuits occurring under the Americans With Disabilities Act.

“Senate Bill 561 would have opened a Pandora’s Box of needless legal trouble for small-business owners in the form of shakedown lawsuits,” said Kabateck. “We know. We’ve experienced it before. It is all too eerily similar to what occurred about 15 years ago when abuses in Section 17200 were rampant.”

Reporting for industry publication Insurance Journal at the time, Ken Gibson wrote, “The shakedown occurred when plaintiff attorneys sent form letters to the alleged wrongdoer seeking settlement money for minor technical violations. Many small businesses like nail salons, travel agents, small auto dealers, and restaurants were extorted by these abusive lawsuits. Trying to avoid the high cost of litigation, many small businesses capitulated and paid the extortionists to settle these sham lawsuits as quickly as possible.”

Added Kabateck, “No one should think the California Consumer Privacy Act only requires compliance by the biggest businesses. All businesses – even those that simply maintain sales records, offer customer loyalty programs, or process as few as 137 credit card sales per day – must collect, store, and provide that data to any individual upon request, or face serious financial and legal repercussions from the state attorney general.”

Passed last year without much debate about all its consequences, the Act is set to take effect Jan. 1, 2020. Seeing the problems ahead and fixing them now is what Assembly Bill 1564, Assembly Bill 873, and Senate Bill 753 are seeking to do. SB 561 would have only complicated matters unnecessarily.

“The CCPA’s overly broad definition of personal information will affect the ability of businesses, who rely on the internet for marketing and sales, to use inexpensive, targeted digital advertising to reach customers,” said Kabateck. “Enterprises such as content creators, artists, retailers, restauranteurs, and many others rely on internet advertising to connect with their customers through a variety of methods – by location, interest, or activities. These are not the firms the Act would tell you applies only to those with $25 million in income or annually collects 50,000 pieces of personal information. NFIB supports efforts to keep consumers information private. But we also want a functioning internet that allows a business to reach potential customers.”


For more than 75 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven association. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, please visit nfib.com.

921 11th St. Ste. 400
Sacramento, CA 95814
Twitter: @NFIB_CA
Facebook: @NFIB.CA

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