Lawsuits & Settlements

LOS ANGELES - Attorney General Edmund G. Brown Jr. has filed a $6.6 million lawsuit against eight car washes after an investigation revealed a 'widespread pattern of worker exploitation,' unpaid wages and illegal business practices.

“The owners routinely denied wages, breaks and overtime pay to workers at their unlicensed car washes,' Brown said. 'This lawsuit seeks to end this widespread pattern of worker exploitation.'

Brown's lawsuit caps a five-month investigation of eight car washes in Fair Oaks, Folsom, Irvine, Laguna Hills, Laguna Niguel, Santa Monica, San Ramon and Venice.

Investigators interviewed more than 80 workers and found the car washes routinely denied workers minimum wage and overtime, failed to pay wages owed to those who quit or were terminated, denied rest and meal breaks, and created false records of time worked.

The car washes required employees to report to work hours early and be available, unpaid, until business picked up. When workers were paid, many received paychecks that could not be cashed because of insufficient company funds. Additionally, the car washes operated for years without licenses from the Labor Commissioner, which are required under California law.

Brown's lawsuit was filed against eight car washes and Dipu Haque, aka Dipu Haque Sikder, who spearheaded the operation. The suit alleges that the car washes violated California Business & Professions Code section 17200 and Labor Code sections 203 and 203.1, seeks $6.6 million to pay back lost wages and civil penalties, and an injunction to prevent the defendants from committing similar violations in the future.

Sergio Diaz-Esquivel and Juvenal Diaz-Esquivel worked for the Wash & Go Hand Wash in Irvine during 2005 and 2006. They quit because of the poor working conditions. They worked seven days per week and were not paid for all the hours they worked, nor paid the overtime wages due to them. After they quit, Wash & Go Hand Wash continued to refuse to pay them, which forced the workers to go to the Labor Commissioner. In August, 2007, they obtained judgments totaling $14,708.24, including penalties for the car wash's willful failure to pay them their wages. The car wash still has not paid them.

The car washes also owe more than $1.8 million in unpaid taxes, according to recorded liens.

The eight car washes named in today's lawsuit are:

- Bonus Car Wash located at 2800 Lincoln Blvd. in Santa Monica
- Crown Valley Car Wash located at 25991 Crown Valley Parkway in Laguna Niguel
- Gold Rush Auto Spa located at 7620 Folsom-Auburn Blvd. in Folsom
- Gold Rush Auto Spa II located at 4350 Sunrise Blvd. in Fair Oaks
- Laguna Hills Union 76 Station [Car Wash] located at 24795 Alicia Parkway in Laguna Hills
- Marina Car Wash located at 2305 Lincoln Blvd. in Venice
- Sponges Car Wash located at 2061 Camino Ramon in San Ramon
- Wash & Go Hand Wash (also known as Wash & Go Hand Carwash Corp and Irvine Auto Spa) located at 3080 Main St. in Irvine

This lawsuit follows another suit filed late last year by the Attorney General against Los Angeles-based Auto Spa Express Car Wash, which forced employees to work nearly 60-hour weeks without overtime, ignored minimum wage laws, and denied injured employees' their workers' compensation benefits.

Brown continues to crack down on businesses that abuse and exploit workers and violate California law to gain a competitive advantage. Already this year, Brown's Underground Economy Unit has:

- Won back pay for more than 200 construction workers denied fair wages by a Bakersfield-based drywall company.
- Sued a farm labor contractor in Southern California that failed to provide rest breaks, drinking water or shade to field workers.
- Won a $3.9 million settlement from a Livermore-based construction company that falsified payroll records, misclassified workers to reduce workers' compensation premiums and violated the state's prevailing wage laws, including an award of $2.2 million for unpaid wages.
- Won a lawsuit against a Southern California trucking company that misclassified port-based truck drivers and failed to pay state taxes, contribute to Social Security and Medicare, or provide W-2 forms to its employees.

California's 1,500 car washes employ a total of 28,000 workers per month, according to recent California Employment Development Department figures. One third of these car washes are unlicensed, according to a 2008 report by the state Labor Commissioner, and have not posted a bond to ensure payment of wages, as required by law.

A copy of today's complaint, filed in Los Angeles County Superior Court, is attached.

LOS ANGELES — Attorney General Edmund G. Brown Jr. today announced a settlement with a charity that “betrayed the trust of its donors” by using deceptive fundraising tactics and diverting thousands of dollars from the care of burn victims to pay for meetings in resort communities.

“The trustees of this charity grossly abused their responsibilities as guardians of charitable assets,” Brown said. “They betrayed the trust of donors by squandering donations on such things as an expensive Caribbean cruise and trips to posh resorts.”

The Association for Firefighters and Paramedics, Inc., based in Santa Ana, misrepresented how and where donations would be spent, and mailed out invoices for pledges that had never been never made. Board members also diverted $33,000 from the charity for out-of-town board meetings in San Diego and Las Vegas, and a Caribbean cruise for board members and their families before a meeting in Florida.

The settlement, filed in the Orange County Superior Court, recovers $100,000 in funds diverted from the charity, plus attorney’s fees and investigative costs. For the next four years, the charity’s fundraising materials and program expenses will be closely monitored.

In May 2009, Brown’s office filed eight lawsuits against 12 charities and 17 fundraising groups that performed telemarketing on their behalf. The lawsuits were filed as part of a nationwide effort to crack down on fraudulent fundraising activities by or on behalf of charities with names that give the false impression that the charities are associated with public safety organizations.

Through its investigation, Brown’s office obtained a list of California residents who donated to the Association for Firefighters and Paramedics. Responses to a questionnaire sent to those California residents revealed that telemarketers calling on behalf of the charity told people their donation would be used to help pay for the care of burn victims in their area, along with supporting the fire department and paramedics in their town.

The charity’s website reiterated this claim, noting that the charity would seek out cases “within a reasonable radius of your area so that the impact of your donation can be felt close to home.”

In fact, the grants were only made to Southern California residents, even though funds were solicited nationwide, and none of the funds were used to support local fire departments or paramedics. Further, donors who asked were told that 80 to 100% of their donation would go to the charity when, in fact, the charity received less than 15 percent. Eighty to ninety percent of the donations received were used to pay for the charity’s fundraising expenses.

A copy of the settlement with the Association for Firefighters and Paramedics is attached.

LOS ANGELES -- Attorney General Edmund G. Brown Jr., charging fraud, civil conspiracy, waste of public funds and breach of fiduciary duty, sued eight top Bell officials and council members today, and demanded they return hundreds of thousands of dollars in unwarranted salaries.

Brown’s lawsuit also called for a reduction of pension benefits for the officials.

“We are filing our lawsuit on behalf of the public to recover the excess salaries that Bell officials awarded themselves and to ensure their future pensions are reduced to a reasonable amount,” Brown said.

Brown also said he is widening his statewide probe of public salaries and benefits, and called for specific legislative action to reform salary and pension practices.

As part of the broadened investigation, he is serving a subpoena on the city of Vernon to obtain compensation records for city officials and employees. News articles have reported that one city official there received an annual salary of $785,000, and another received compensation totaling $1.6 million in a single year. Vernon, an industrial city near Bell, has a population of less than 100.

Brown’s statewide probe will focus on the many local and other government agencies that are paying annual salaries in excess of $300,000 and on the dozens of public pensioners who are receiving annual pensions in excess of $200,000. Examples include:

• An annual pension for a former city manager that is over half a million dollars.

• Annual compensation for the chief administrator of a public hospital that is over $800,000.

• Annual compensation for a county administrator that is over $420,000.

• Annual compensation in a single year of over $438,000, including payments for unused sick leave and vacation, for a city manager of a city of 36,000.

“These high salaries and pensions demand prompt and comprehensive reform,” Brown said. “Accordingly, I am calling for legislative action to:

• Establish a Compensation Commission to cap public salaries at reasonable levels,
• Eliminate loopholes that allow exceptions to the limits on pension benefits,
• Require a full and complete public posting of all public employee salaries, and
• Amend the state Constitution to require charter cities to comply with salary and pension laws.”

Brown’s lawsuit was filed against former city manager, Robert Rizzo; former assistant city manager, Angela Spaccia; former police chief, Randy Adams; council members Oscar Hernandez, Teresa Jacobo, and George Mirabel; and former council members Victor Bello and George Cole. The suit’s charges include fraud, civil conspiracy, waste of public funds, and breach of fiduciary duty. It also alleges that the defendants deliberately misled the public about the true amount of their compensation.

The suit demands the defendants return all excessive compensation and asks the court to establish appropriate salary levels for pension purposes. Rizzo’s last annual base salary was $787,638, Adams’ $457,000, and Spaccia’s $336,000. Bell city council members were paid $96,000 a year before they took a recent cut. Cities of similar size pay their council members $4,800 a year.

Since 1993, the Bell city council raised Rizzo’s salary 16 times, with an average increase of 14 percent a year. In 2005 alone, the city council raised his salary by 47 percent. Since 2003, council members also awarded themselves salary increases of 16 percent a year.

In 2008, Rizzo had a phony memorandum prepared for public distribution that showed council members were paid $673 per month and Rizzo was paid $15,478 per month, Brown charged. In fact, council members were actually paid $7,666 per month, and Rizzo was paid $52,325 per month.

“I’m going to continue to do everything in my power to go after corrupt officials who, rather than doing the public’s business, scheme behind closed doors to line their own pockets,” Brown said. “These officials must be forced to give up their ill-gotten gains, and we must enact strict reforms to prevent these kinds of abuses in the future.”

CalPERS, the state’s public employee retirement system, applauded the Attorney General’s efforts.

“We welcome the support and involvement of the Attorney General in helping to scrutinize extraordinarily high compensation,” said Anne Stausboll, Chief Executive Officer of CalPERS. “I'm confident that CalPERS’ own efforts and those of the Attorney General will help protect our members and employers, and restore public confidence in pensions and their value in public service.”

Copies of the complaint and subpoena served in Vernon are attached.

OAKLAND – Attorney General Edmund G. Brown Jr. today secured a $3.9 million settlement, that includes $2.2 million in back pay for more than 120 construction workers “cheated hour-by-hour” by Livermore-based Country Builders, Inc., after investigators uncovered a multi-year scheme to shortchange employees and shave workers’ compensation costs.

“Country Builders won millions of dollars in government contracts to build housing for low-income Californians,” Brown said, “but then the company turned around and callously cheated its own workers hour-by-hour. Today’s settlement recovers more than $2 million its workers are owed.”

Brown’s office initiated its investigation into Country Builders in late 2008 after employees reported their pay stubs falsely indicated they were paid a higher hourly rate of pay than they actually received.

Investigators found that between 2006 and 2008, the company routinely failed to pay many of its workers the state’s prevailing wage for work done on government-funded construction projects, as required by law. A review of the company’s timesheets revealed that 124 employees were underpaid on at least one occasion.

The company also misreported its hourly wage rates to escape paying the full amount it owed the state in workers’ compensation premiums.

Brown filed suit against Country Builders in March, alleging that the company engaged in unfair competition and violated state labor laws.

Today’s $3.9 million settlement requires Country Builders to pay $2.2 million in back pay to employees (including unpaid payroll taxes), $1.6 million in civil penalties and other costs and $136,000 to the State Compensation Insurance Fund for unpaid workers’ compensation premiums.

Today’s settlement also prevents Country Builders from working on any government-funded public works project for three years, the maximum period allowed by state regulations.

Some of Country Builders’ government-funded construction projects included:

• The Fairways multi-family apartments in San Jose
• Giant Road Family Apartments in San Pablo
• Jubilee Senior Housing in Berkeley
• Seven Directions Apartments in Oakland
• Pioneer Heights student housing for California State University, East Bay
• University Village student housing for University of California, Berkeley

Country Builders will pay back wages in two equal installments of $1.1 million, the first by December 31, 2010, and the second by April 30, 2011. A restitution administrator will oversee the distribution of these funds to workers.

To report violations of the state’s labor laws, contact Brown's office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php.

Copies of Brown’s original complaint, filed in Alameda County Superior Court, and today’s settlement are attached.

LOS ANGELES — Attorney General Edmund G. Brown Jr. today announced a $1.1 million judgment against longtime Los Angeles attorney Mitchell Roth after he conned 2,000 desperate homeowners into paying him thousands of dollars to file “frivolous and phony” lawsuits that didn’t reduce a penny of mortgage debt for a single client.

“Roth promised foreclosure relief through aggressive litigation, but the frivolous and phony lawsuits he filed instead left 2,000 desperate homeowners in even greater debt,” Brown said. “This settlement forces Roth to pay $1.1 million and prohibits him from ever again preying on new victims.”

In 2008, Roth, a seasoned Los Angeles attorney, joined with Nevada-based United First, Inc. and the company’s owner, Paul Noe, to provide foreclosure relief services to homeowners struggling to pay their mortgages. Noe, who was previously convicted of wire fraud and the subject of a 2004 Department of Insurance Cease and Desist Order, operated the company and handled client solicitations, while Roth provided legal services.

Homeowners were told that if they worked with United First and hired Roth to pursue their cases in court, they could lower or eliminate their mortgage debt and save their homes.

United First charged homeowners some $1,800 in up-front fees, plus at least $1,250 each month, and 50 percent of the cash value of any settlement. If a homeowner’s debt was eliminated altogether, the homeowner was required to pay United First 80 percent of the value of the home.

After collecting up-front fees, Roth filed lawsuits on behalf of homeowners, pushing a novel legal argument that a borrower’s loan could be deemed invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it.

Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings. Instead, Roth tried to extend the lawsuits as long as possible to collect additional monthly fees from clients.

This approach did not generate a single victory in court and did not lower or eliminate the mortgage debt for a single one of the 2,000 homeowners who hired Roth and United First.

Brown filed suit last July, alleging that Roth, Noe and United First engaged in unfair competition, made untrue and misleading statements and violated California’s credit counseling and foreclosure consultant laws.

The settlement announced today requires Roth to pay $1 million in restitution to defrauded homeowners plus $125,000 in penalties, and prohibits him from ever engaging in similar conduct in the future.

Roth was admitted to the California State Bar in 1977 and resigned in April 2009, after the State Bar ordered his law firm closed.

Brown’s office continues to litigate the case against Noe and United First.

Homeowners who were defrauded by Roth and United First, or victimized by any other foreclosure rescue scam, should contact Brown’s office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php.

Homeowners can also file a complaint against a lawyer, a legal specialist or a company purporting to operate as a law firm with the State Bar by calling 1-800-843-9053 or visiting www.calbar.ca.gov.

United First customers who are eligible for a refund will be contacted by mail.

By law, all individuals and businesses offering mortgage-foreclosure consulting, loan modification and foreclosure-assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan modification consultants and businesses to charge up-front fees for their services.

Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.

Brown has sought court orders to shut down more than 30 fraudulent foreclosure-relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of deceptive loan modification consultants.

For more information on Brown’s action against loan modification fraud visit: http://ag.ca.gov/loanmod.

Copies of Brown’s original complaint, filed in Los Angeles County Superior Court, and the settlement announced today are attached.

SACRAMENTO – Attorney General Edmund G. Brown Jr. today filed a $34 million lawsuit against television’s “Tax Lady Roni Deutch” for orchestrating a “heartless scheme” that swindled thousands of people facing serious and expensive tax collection problems with the IRS.

“Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems,” Brown said. “She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”

Deutch manufactures credibility by boasting that her tax resolution law firm, which has annual revenues of at least $25 million, is the largest of its kind in the nation. She spends $3 million a year on advertising, much of it on late-night cable TV, and frequently offers tax advice on NBC’s Today Show, CNN, and CNBC.

Desperate debtors turn to Deutch based on her misleading ads that feature fictional testimonials claiming she secured large reductions in the featured clients’ federal tax debts.

For example, her ad entitled “It’s Your Turn” features three clients whom Deutch claims to have “saved” from having to pay thousands of dollars to the IRS. In fact, those clients still owe the IRS the full amount of their taxes, plus interest and penalties.

When potential clients call Deutch’s boiler room, sales agents employ high-pressure sales tactics plus a series of misrepresentations and false promises to persuade them to retain her firm. The sales agents claim Deutch’s success rate in dealing with the IRS is as high as 99 percent. But the percentage of clients whose tax bills Deutch actually reduces is a mere 10 percent.

Rather than cut clients’ debts, Deutch often escalates them. She places clients in an endless loop of requests for duplicate documents that increases her fees and, due to further delays in payments to the IRS, increases clients’ IRS fines and penalties.

One woman from Pico Rivera, who owed the IRS $13,000, turned to Deutch after seeing a TV ad. She paid Deutch a $1,900 retainer, but by the time the Deutch firm ended its representation, she owed the IRS hundreds of dollars more in interest and penalties, and the IRS had placed a levy against her Social Security benefits. Despite failing to take any effective action on her behalf, Deutch refused to refund the woman’s retainer by falsely billing her for time the firm did not spend on her case. Deutch regularly uses false billing statements to deny her clients’ refund requests.

Hundreds of clients have filed complaints with the Attorney General and other government agencies, describing Deutch’s failure to reduce their IRS debts as she advertised and her refusal to refund retainers of as much as $4,700.

Brown’s lawsuit says thousands of consumers in California and around the country have fallen victim to Deutch’s unlawful scam, losing millions of dollars that could have been used to pay their IRS tax liabilities. The lawsuit charges that Deutch operates a deceptive tax resolution scheme that employs “a bevy of false promises and misrepresentations.”

Brown’s action seeks to permanently prevent Deutch from engaging in such unfair business practices and false advertising, and force her to pay victims restitution of at least $33.9 million plus civil penalties.

Brown's lawsuit follows the consumer alert he issued on March 30, 2010, warning consumers to be wary about tax debt scams. It is also one of a series of actions he has taken to protect consumers who suffered during the financial crisis and resulting economic downturn, including his 2008 lawsuit against Countrywide Home Loans that resulted in an $8.68 billion settlement, as well as recent enforcement actions against scams in the foreclosure consultant, loan modification, and property tax reassessment industries.

LOS ANGELES - Attorney General Edmund G. Brown Jr. today announced a half-million-dollar settlement with the operator of a sham nursing school in Los Angeles that created “the illusion it was training future nurses” by pretending to offer an accredited nursing program and tricking graduates into believing they had qualified to become registered nurses.

As many as 300 students paid $20,000 each to enroll and attend classes at RN Learning Center, which advertised its fast-track program for earning a bachelor of science degree in nursing in less than two years.

“By creating the illusion it was training future registered nurses,” Brown said, “the school destroyed the aspirations of hundreds of students who also lost thousands of dollars in wasted tuition. The school will shut its doors today and pay back its former students as fully as it can.”

In the settlement negotiated by Brown’s office on behalf of the Board of Registered Nursing, Junelou Chalico Enterina, owner and operator of RN Learning Center, which operated on Wilshire Boulevard in Los Angeles, agreed to close his business and pay victims restitution of $500,000. He also agreed never again to open a nursing school in California.

The board, which is the state agency that oversees the practice and education of nurses, believes no student of RN Learning Center was able to use her degree to qualify for the state’s nursing exam or become a registered nurse. However, the board is contacting every medical facility in the state to warn about unaccredited schools such as RN Learning Center.

The settlement today concludes a board investigation that began in early 2007. Despite purporting to be a nursing school, RN Learning Center never applied to the nursing board to obtain accreditation as a school of nursing. Three years ago, the board ordered the school to close. It also disciplined two licensed registered nurses associated with the school and posted a notice on its website warning prospective students that unaccredited schools were operating in California.

Despite the scrutiny, RN Learning Center continued to operate, targeting mostly Filipino-Americans who already worked in the health field. The school’s marketing materials promised the program would, “Advance Your Education. Increase Your Earnings. Secure Your Financial Future.” Just as they would in a real nursing school, students took classes in anatomy, microbiology and learned to do sutures. They traveled to the Philippines for a month of clinical study in hospitals and prisons, and attended classes at a foreign nursing school that also had not been approved by California’s board.

RN Learning Center kept the deception going by holding formal graduation ceremonies. About 50 of its students applied to the nursing board to take the National Council Licensing Examination, which qualifies nursing school graduates to become licensed registered nurses. The students submitted transcripts that were declared fraudulent, so they were unable to meet the eligibility requirements and were not allowed to take the licensing exam. Because RN Learning Center was unlicensed, none of the course work taken there can be counted toward completing a Bachelor of Science in Nursing.

One student, Faith, described how she applied to RN Learning Center because the class schedule allowed her to also work and juggle childcare. She attended classes for two years, driving 240 miles twice a week from Bakersfield to Los Angeles with her two children. When she raised questions, such as asking about the school’s lack of clinical training, the staff reassured her. “My children, ex-husband, brother, friends and everyone I worked with, can attest to my commitment and sacrifice I made to complete this program,” she said in a declaration. “We the students have lost a lot.”

If you were a nursing student of RN Learning Center, please contact the Attorney General’s Office at (213) 897-2000. For more information about the California Board of Registered Nursing, please see http://www.rn.ca.gov/

OAKLAND – Continuing his fight to ensure the safety of equipment used by children, Attorney General Edmund G. Brown Jr. today filed a lawsuit against several companies involved in manufacturing children’s bounce houses because some of the inflatable structures contain unsafe amounts of lead.

Testing done by the Center for the Environmental Health and the Attorney General’s office found that some of the vinyl in the bounce houses contains lead levels that violate both federal and state regulations.

“Kids at birthday parties can spend hours playing in bounce houses,” Brown said. “The goal of our lawsuit is to eliminate any chance they will be exposed to lead while they’re jumping around having a good time.”

Bounce houses are large inflatable structures designed for children to play in and on. Facilities that feature indoor inflatables are popular sites for children’s parties, serving millions of children a year. Companies also rent inflatables for use at children’s parties.

In February and March 2010, the Attorney General’s office received notices from the Center for Environmental Health alleging that its testing showed parts of some bounce houses were contaminated with high levels of lead, ranging from 5,000 parts per million (ppm) to 29,000 ppm. Federal limits on lead in children’s products are 90 ppm for painted surfaces and 300 ppm for all other parts.

Today’s lawsuit is intended to force these companies to stop using lead-containing vinyl immediately and to cease selling the lead-containing products. In addition, the action is intended to warn purchasers of these products, and require party places and rental companies to post warnings.

The main exposure pathway from the bounce house to the child is hand-to-mouth. Lead is transferred from the vinyl to a child’s hand during play and then to the mouth.

There is no safe exposure to lead. The tested levels of lead are not high enough by themselves to cause acute health problems, but some people, especially children, who are exposed to lead from a variety of sources can suffer health problems. For that reason, it’s important to eliminate sources of lead whenever possible.

Companies named in the lawsuit include:

Bay Area Jump
Cutting Edge Creations
Funtastic Factory, known as einflatables.com
Magic Jump
Leisure Activities Co.
Thrillworks
The Inflatable Store
Jump for Fun, Inc.
Jump for Fun National, Inc.

In the past year, Brown has initiated several enforcement actions against manufacturers and retailers for lead in products designed for children.

In July, Brown reached a settlement with artificial turf manufacturers to lower lead levels in turf fields and playgrounds. In June, Brown demanded that Rainbow and 5-7-9 stores remove from shelves jewelry with parts containing as much as 97% lead.

Earlier this year, Target removed teddy bears from its stores after Brown notified the company that lead was found in the product. In November 2009, Brown warned several retailers, including Walmart, Sears and Walgreens, to remove several products designed for children that were found to contain excessive levels of lead.

A copy of today’s complaint is attached.

OAKLAND – Attorney General Edmund G. Brown Jr. today announced a settlement with Sottera, one of the country’s largest electronic cigarette producers, to prevent the company from targeting minors and claiming that electronic cigarettes are a safe alternative to smoking.

"Electronic cigarette companies have targeted minors with fruit-flavored products and misleading claims that their products are safe,' Brown said. 'This settlement will stop Sottera from marketing these dangerous and addictive products to kids.”

Brown and Sottera reached the settlement without litigation based on Sottera’s willingness to adopt measures that address Brown’s concerns about the dangers of its electronic cigarettes. In January this year, Brown filed suit against the nation’s other leading e-cigarette retailer, Smoking Everywhere. That lawsuit is proceeding in Alameda County Superior Court.

Electronic cigarettes, or e-cigarettes, are battery-operated devices with nicotine cartridges designed to look and feel like conventional cigarettes. Instead of actual smoke, e-cigarettes produce a vapor from the nicotine cartridge that is inhaled by the user. Sottera and other electronic cigarette makers have claimed in advertisements and other marketing materials that the e-cigarettes have no carcinogens, no tar, no second-hand smoke, and are therefore safe.

However, the U.S. Food and Drug Administration (FDA) has determined that electronic cigarettes contain a variety of dangerous chemicals, including nicotine, carcinogens such as nitrosamines and, in at least one case, diethylene glycol, commonly known as antifreeze.

The products are often marketed with advertisements, and flavors like strawberry, chocolate, mint, banana and cookies-and-cream, that are designed to appeal to a youthful target audience.

Today’s settlement prohibits Sottera from marketing to minors and from making false or misleading claims about electronic cigarettes. Specifically, the company has agreed that it will not:

• Sell electronic cigarettes to minors. Its website will be age-restricted, and a customer will need to provide a government ID before making a purchase. Retail products will be behind a counter. Any advertising will note the age restriction.
• Sell flavored electronic cigarette cartridges, such as strawberry, mint or bubblegum, that could appeal to minors.
• Advertise its product as a smoking cessation device unless the FDA approves it as such.
• Sell cartridges that contain vitamins unless the company obtains competent and reliable scientific evidence to support an implied health claim.
• Claim that the product is safer than cigarettes, contains no tobacco, no tar, no carcinogens or no second-hand smoke unless there is competent reliable scientific evidence to support the claims.

Sottera also agreed to adopt and implement quality control standards for its products to preclude the presence of harmful substances. The company will regularly be subject to independent audits.

Sottera will also provide a Proposition 65 warning that its products contain nicotine, a chemical known by the State of California to cause birth defects or reproductive harm. The warning will include additional information about risks associated with nicotine, including that it is addictive and toxic if swallowed. The warning will appear on product packaging, Sottera’s website and at retail sites.

Sottera will also pay $85,000 in penalties and fees.

A copy of the consent judgment is attached.

PLEASANTON – Attorney General Edmund G. Brown Jr. and the City of Pleasanton have reached a precedent-setting agreement ending Pleasanton’s restrictions on new housing and opening the way for jobs and new housing to be located close to each other.

“This agreement clears the way for new jobs, less congested freeways and cleaner air,” Brown said. “It requires homes to be built closer to where people work to reduce long commutes and create a more neighborly urban environment.”

Tuesday night, the Pleasanton City Council voted unanimously to accept the agreement.

In 2006, the nonprofit group Urban Habitat filed a lawsuit challenging Pleasanton’s housing cap, which placed a permanent limit of 29,000 housing units in the city. Brown intervened in the case in 2009 and argued the housing cap violated state law by promoting urban sprawl and clogging the freeways with unnecessarily long commutes.

In March 2010, the Alameda County Superior Court ruled in the Attorney General’s favor.

In the settlement approved last night, Pleasanton agreed to remove restrictions on new housing and to accommodate affordable housing adjacent to the city’s BART station. Along with creating jobs and fulfilling the city’s share of regional housing, the new development will enable workers to live within walking distance of a major transit hub.

While Pleasanton has been a magnet for new employment, housing has lagged far behind the number of new jobs, despite ample land for development, including property adjacent to the Pleasanton BART station. In the last decade, the number of new jobs nearly doubled – from 31,683 to more than 58,000. Unable to find affordable housing within the city, some workers were forced to commute two hours per day or more. One study found that 79 percent of workers lived outside of Pleasanton.

Brown has taken an active role in encouraging local governments and businesses to help the state reach its greenhouse gas reduction goals. He has commented on several dozen environmental review documents, including those created for the General Plans of cities and the regional transportation plans of counties, as well as for projects related to oil refineries, cement plants, and dairy expansions. Brown has also reached path-breaking settlements with the County of San Bernardino and the City of Stockton, which required them to develop plans to ensure sustainable growth with a reduced carbon footprint.