Lawsuits & Settlements

LOS ANGELES--California Attorney General Edmund G. Brown Jr. today attacked the U.S. Environmental Protection Agency for betraying its “sacred mission” to protect the environment and called upon Congress to require the agency’s top staff to explain, under oath, their flawed and illegal decision-making process.

“Charged with protecting the environmental trust, the EPA has instead betrayed its sacred mission,” Attorney General Brown told members of the Senator Barbara Boxer’s Senate Committee on the Environment and Public Works at a briefing in Los Angeles. “The agency’s top staff should explain, under oath, why they sabotaged the groundbreaking effort by California and fourteen other states to reduce dangerous greenhouse gases emitted by motor vehicles.”

Brown sued the EPA last week after the agency broke forty years of precedent by denying California’s request for a waiver, which would have allowed the state to cut tailpipe greenhouse gas emissions 30 percent by 2016. It was the first denial since the Clean Air Act was established in 1967.

EPA Administrator Stephen Johnson’s rejection decision, outlined in a two-page letter, contained no supporting technical or legal analysis. Brown’s lawsuit charged the EPA with not following the criteria for reviewing waiver requests, as set forth in Clean Air Act section 209, and failing to provide any facts to support its decision.

The EPA stated that California failed to demonstrate “compelling and extraordinary conditions,” as required by the Clean Air Act. This not only contradicted forty years of agency practice but it also ignored the dangerous consequences of global warming to the State of California. California’s unique topography and its high human and vehicular population have already caused higher ozone concentrations than other parts of the country. Global warming also threatens California’s coastline, levees, and Sierra mountain snow pack which provides one-third of the state’s drinking water.

For decades, EPA has agreed that California needs its own emissions program to meet these “compelling and extraordinary conditions.” In a 1975 waiver determination, EPA said that the waiver process is meant to ensure “that the Federal government would not second-guess the wisdom of state policy” and “that no ‘Federal bureaucrat’ would be able to tell the people of California what auto emission standards were good for them, as long as they were stricter than Federal standards.”

Administrator Johnson incorrectly asserted that the federal energy bill, which raises gas mileage to 35 miles per gallon by 2020, rendered California’s greenhouse gas emissions standards unnecessary. An analysis by the California Air Resources Board confirms that California’s emissions rules cut twice the level of greenhouse gases compared with federal program. The California program will also result in fuel efficiency—44 miles per gallon by 2020—that is far better than the federal standard.

14 other states, representing 44% of the nation’s population, have adopted California’s regulations: Arizona, Connecticut, Florida, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington. Four other states, Utah, Colorado, Illinois and Delaware are in the process of adopting the standards.

The EPA was established in 1970 under President Nixon to set and enforce environmental protection standards, conduct research on pollution, and recommend policies to the President for the protection of the environment. In 2005, President Bush appointed Stephen Johnson as the agency’s 11th administrator.

Under Johnson, the EPA has also failed to set greenhouse gas emissions standards for aircraft and ocean-going vessels, both major worldwide contributors to global warming. The agency has also weakened the Toxic Release Inventory, a program which requires facilities to report annual quantities of toxic chemicals that are emitted, prompting Attorney General Brown to file a lawsuit in November 2007.

For more information on climate disruption please visit: www.ag.ca.gov/globalwarming/

WASHINGTON D.C. — Attorney General Edmund G. Brown Jr., on behalf of the State of California, today sued the United States Environmental Protection Agency for “wrongfully and illegally” blocking the state's landmark tailpipe greenhouse gas emissions standards.

Brown filed the lawsuit in the U.S. Court of Appeals for the 9th Circuit to challenge the EPA’s denial of California's request to implement its emissions law—which requires a 30 percent reduction in motor vehicle greenhouse gas emissions by 2016. California's new standards require federal approval in the form of a waiver from the EPA. EPA Administrator Stephen Johnson denied California's request on December 19, 2007 in a letter to Governor Arnold Schwarzenegger.

“The denial letter was shocking in its incoherence and utter failure to provide legal justification for the administrator's unprecedented action,” California Attorney General Brown said. “The EPA has done nothing at the national level to curb greenhouse gases and now it has wrongfully and illegally blocked California's landmark tailpipe emissions standards, despite the fact that sixteen states have moved to adopt them.”

Under the Clean Air Act, passed by Congress in 1963, California is expressly allowed to impose environmental regulations that are stricter than federal rules in recognition of the state’s “compelling and extraordinary conditions” which include unique topography, climate, and high number and concentration of vehicles.

The administrator stated in his decision that California did not need its tailpipe emissions standards to meet “compelling and extraordinary conditions,” a finding which reversed decades of agency practice and ignored the dangerous consequences of global warming to the State of California.

Global warming threatens California's Sierra mountain snow pack, which provides the state with one-third of its drinking water. California also has approximately 1,000 miles of coastline and levees that are threatened by rising sea levels.

Section 307 of the Clean Air Act gives California the authority to challenge adverse decisions by filing a petition for review two weeks after a rejection is issued. According to sources from within the EPA--as quoted in several national media accounts--Administrator Johnson rejected the unanimous recommendation of his agency’s legal and technical staff to grant the waiver.

In the 40-year history of the Act, EPA has granted approximately 50 waivers to California for innovations like catalytic converters, exhaust emission standards, and leaded gasoline regulations. Until last month, a waiver request had never been denied. The National Academy of Sciences has reviewed the waiver system and strongly supports maintaining California's role as “a proving ground for new-emission control technologies that benefit California and the rest of the nation.”

Cars generate 20% of all human-made carbon dioxide emissions in the United States, and at least 30% of such emissions in California.

Fifteen other states or state agencies—Massachusetts, Arizona, Connecticut, Delaware, Illinois, Maine, Maryland, New Jersey, New Mexico, New York, Oregon, Pennsylvania Department of Environmental Protection, Rhode Island, Vermont, and Washington—are joining today's lawsuit as interveners.

“The EPA’s attempt to stop New York and other states from taking on global warming pollution from automobiles is shameful,” said New York Attorney General Andrew Cuomo. “As recognized by the scientific community and most world leaders, global warming will have devastating impacts on our environment, health, and economy if it continues to go unchecked.”

In December, the U.S. District Court in Fresno rejected the auto industry's challenge to California’s emissions law, concluding that both California and the EPA are equally empowered to limit greenhouse gas emissions from motor vehicles. In September, a federal court judge in Vermont also rejected a similar effort, by the same automobile industry group, to block the state from implementing California’s tailpipe emissions law.

EPA’s rejection letter is attached along with the state’s lawsuit challenging the denial.

LOS ANGELES—Attorney General Edmund G. Brown Jr. and Insurance Commission Steve Poizner today announced a $7.2 million settlement with American Investors Life Insurance Company, Family First Insurance Services, and Family First Advanced Estate Planning, resolving allegations that the companies sold thousands of annuities with exorbitant fees to vulnerable senior citizens.

“These companies tricked senior citizens into buying annuities that would not pay out for years and had substantial early withdrawal fees—investments that made no sense for elderly people,” Attorney General Brown said. “California took action against these companies and today’s settlement marks the end of their unlawful practices,” Brown added.

“I refuse to tolerate insurance fraud in California,” said Commissioner Poizner. “Targeting our state’s vulnerable seniors to make an extra buck is especially egregious. Today’s settlement is a victory for seniors and all California consumers.”

Today’s multi-million dollar settlement resolves a lawsuit filed in 2006 which alleges that the companies tricked senior citizens into buying annuities—long-term financial vehicles with high penalties for early withdrawal. The annuities offered the possibility of future payments, but only after a lengthy surrender penalty period. Such annuities are generally acquired as long-term investments for future retirement income and not considered wise vehicles for seniors’ savings.

Under the scheme exposed by the attorney general and the insurance commissioner, Family First sent sales representatives, who were not authorized to practice law, to senior citizens’ homes to provide legal advice on estate planning. At no time during the initial solicitation or the home visits did Family First disclose that their ultimate goal was to sell annuities. After preparing the living trust documents the agents returned to the seniors’ homes—under the guise of acting as their financial or estate advisors—and induced the seniors to move their liquid assets into annuities.

The representatives did not disclose that seniors would be unable to withdraw more than the specified amounts while waiting for the investment to mature—sometimes up to 15 years—without incurring substantial penalties. The scheme, known as a Living Trust Mill, is a growing threat to senior citizens who are lured by the free seminars and sales agents who pose as financial or legal experts.

The settlement, filed today in Los Angeles County Superior Court, requires American Investors Life Insurance and the Family First companies to pay $1 million in civil penalties and distribute $5.5 million to consumers who purchased the annuities through Family First and incurred surrender penalties. The judgment also requires the companies to pay $700,000 to reimburse the Office of the Attorney General and Department of Insurance for costs incurred during the investigation and prosecution of this case.

The settlement also requires American Investors Life Insurance to waive surrender penalties when consumers present evidence of a significant financial hardship. The company must let consumers redeem the annuities, without surrender charges, in the form of monthly payments. Consumers who have not already received a credit for 55% or more of future surrender charges will have an opportunity to receive the value of their annuities in monthly payments along with a bonus of either 1% or 1.25% of their principal investment.

The judgment forces Family First Insurance Services and Family First Advanced Estate Planning to permanently cease all business operations. The judgment bars American Investors Life Insurance Services from soliciting seniors without revealing that the consumer will be propositioned by an insurance agent. American Investors is no longer permitted to make false or misleading statements about the terms of any annuity or insurance policy and they must disclose all charges that may be incurred when redeeming an annuity. The defendants are also prohibited from engaging in the unauthorized practice of law.

Scam artists have capitalized on the growing popularity of estate planning and living trusts by establishing schemes, known as Living Trust Mills, which use the estate planning services as a cover to sell annuities. The sales agents lure seniors with free seminars and sometimes pose as estate planners or financial experts to gain trust, allowing them to review personal financial and investment information. Agents running a Living Trust Mill are known to pressure seniors into converting all their investments into annuities by scaring the seniors into believing their original investments are unsafe.

To avoid these scams, consumers should be especially wary if a sales agent exhibits any of the following warning signs:

• The sales agent claims to a trust expert, senior estate planner or paralegal, or to work with an attorney who is an expert in estate planning. These agents are not attorneys and not experts in living trusts. If seniors need assistance with preparing a trust or other estate plan, they should seek out their own attorney whose expertise is in estate planning.
• Offering a free seminar or sales presentation on living trust services.
• Requesting access to personal financial information while setting up or updating an existing living trust. Agents use this ploy to ultimately pitch annuity investments.
• Criticizing existing investments and saying that these investments carry more risk than the annuity.
• Not discussing the drawbacks of a particular investment option.

Consumers who believe they been victimized by Family First, another Living Trust Mill or by annuity fraud, should report the crime to their local district attorney or the Department of Insurance at 1-800-927-HELP or visiting www.insurance.ca.gov. They also may file a complaint at the Attorney General's Web site, http://www.ag.ca.gov/consumers/mailform.htm.

LOS ANGELES—California Attorney General Edmund G. Brown Jr. and California Labor Commissioner Angela Bradstreet today sued two janitorial companies for exploiting their employees and committing “flagrant violations” of California’s basic wage and hour laws. The two offices have joined forces to collect these unpaid wages, thereby both helping the workers and sending a strong message that California’s labor laws must be obeyed.

“These janitors toiled for long, hard hours and their paltry compensation was far below the legal minimum,” Attorney General Brown said. “Such flagrant violations of basic labor laws will not be tolerated,” Brown added.

California alleges that the janitorial companies, Excell Cleaning & Building Services and MO Restaurant Cleaning Services, paid below minimum wage, did not pay overtime, denied rest and meal breaks and did not provide itemized wage statements. Both companies conducted business in Counties including Los Angeles, San Diego and Orange. MO Restaurant Cleaning is currently suspended by the Franchise Tax Board and is not authorized to do business in California. Excell employs approximately 300 janitors to clean California chain restaurants and bars.

During an investigation by the Employment Development Department and the Labor Commissioner, officials interviewed approximately twenty Excell employees and found that company’s janitors were working 8 ½ to 10 hour night-shifts without breaks, seven days per week, for a flat sum of $50 per day. Investigators determined that the company owed these workers approximately $585,000 in overtime, minimum wage and compensation for denied rest breaks.

Investigators also discovered that Excell was misclassifying its janitorial workers as “independent contractors,” rather than employees, to avoid $247,000 in payroll tax and mandatory social security and Medical contributions.

The janitors began work between 11:30 p.m. and midnight and were required to work all night until 8:30 a.m. or longer. They were paid a flat rate of $50 regardless of how many hours were actually worked. Some janitors were paid with checks that bounced.

As a result of this payment scheme, janitors were given less than the legal minimum wage and did not get mandatory overtime, including double-time pay. Workers were also not allowed to take rest breaks and meal periods as required by California law.

The labor commissioner and the attorney general bring this lawsuit to recover unpaid wages, get the companies to stop their unlawful practices and get them to pay restitution to the exploited workers. Some of the penalties and denied payments include:

• Failure to pay in excess of $700,000 in wages
• Failure to pay at least $500,000 in minimum wages
• Penalties of at least $100,000 for violating minimum wage laws
• A penalty of at least $100,000 for denying up to $50,000 in overtime including double-time
• Penalties and restitution for denying payment upon termination
• At least $300,000 in penalties for not providing itemized wage statements
• Penalties and back wages for denying meal and rest breaks
• Penalties and back wages for writing paychecks with insufficient funds

In addition to the penalties and restitution for these labor violations, California seeks penalties and restitution for violations of Business and Professions Code 17200 which bars companies from engaging in unlawful, unfair or fraudulent business practices. Courts assess a civil penalty of $2,500 for each violation proved at trial.

The attorney general enforces California laws that require fair business practices in order to protect working men and women and ensure a level playing field where all businesses adhere to the same rules of conduct.

Last month, Attorney General Brown filed an unfair competition lawsuit against Brinas Corporation, a drywall contractor in Los Angeles which was fueling the underground economy by paying workers below minimum wage and off the books. In November, Brown also sued PacifiStaff, a Los Angeles-based company, for teaching construction companies how to avoid providing state mandated workers’ compensation benefits that protect employees who are injured on the job.

Excell is a Delaware corporation with its corporate office located in Houston Texas. The company is registered with the California Secretary of State and its California business address is in Santa Ana. Its CEO is Essam Omar. MO Restaurant, suspended by the Franchise Tax Board in April 2007, has the same Houston address as Excell. In March, Excell agreed to pay $278,483 in back wages to 166 janitors in Houston after a U.S. Department of Labor investigation found that the company failed to pay overtime, in violation of the federal Fair Labor Standards Act.

The Division of Labor Standards Enforcement, led by Labor Commissioner Angela Bradstreet, is authorized to enforce the California Labor Code. The commissioner adjudicates wage claims, investigates discrimination and public works complaints, and enforces state labor law and Industrial Welfare Commission wage orders.

Janitorial workers perform heavy cleaning duties such as washing walls and glass, cleaning floors, shampooing carpets and emptying trash and rubbish containers. Janitors may perform routine maintenance work and tend to furnaces and boilers. According to the California Employment Development Department, there were approximately 229,900 janitors and cleaners employed in California in 2004.

The state’s lawsuit, filed today in Los Angeles Superior Court is attached.

CONTRA COSTA—California Attorney General Edmund G. Brown Jr. today announced a $42.2 million dollar settlement agreement with Hanson Building Materials, a multi-national mining corporation. This settlement resolves allegations that the company improperly mined over two million cubic yards of sand from Suisun Bay and defrauded the state out of million of dollars in royalty payments for sand mined in San Francisco and Suisun Bays.

Commenting on the settlement agreement, Attorney General Brown said, “This settlement sends a strong message to businesses—act responsibly and honestly in your transactions with the state.”

The California State Lands Commission had previously issued leases to Olin Jones Sand Company and Moe Sand Company which allowed the companies to dredge sand from various state-owned areas in San Francisco and Suisun Bays. Under the leases, the companies were required to pay the state royalties and were prohibited from dredging sand outside the lease boundaries.

In 1999 Hanson Building Materials America of San Ramon, a subsidiary of Hanson PLC which is one of the world’s largest construction material producers, purchased the two companies for $88 million and acquired their mining rights.

Sand is used primarily to produce concrete. This makes it a valuable commodity to construction firms, which use it to construct buildings and roads. The sand mined from San Francisco Bay is especially important for construction purposes in the San Francisco Bay Area.

The attorney general brought a lawsuit in 2003 against Hanson after a whistleblower reported that the company had defrauded the state out of millions of dollars in royalty payments by failing to fully report sand taken from the acquired mining sites. The companies mined over 2 million cubic yards of sand from Suisun Bay, despite not having any permission to do so by the state. The lawsuit further alleged that Hanson, Olin Jones, and Moe Sand Company violated the California False Claims Act by knowingly submitting false records to the state, Unfair Practices Act by avoiding payment on royalties to the state, and provisions of the California Public Resources Code, for unauthorized dredging of sand on state-owned lands.

The companies transferred sand they mined to affiliated companies for a discounted price, and the affiliates resold the sand at market rates to construction firms and other businesses, which used the sand to make concrete and for other construction purposes. Hanson sold the sand to various companies for an average of $12.50 per cubic yard but reported only an average sale price of $3.30 to the State Lands Commission. These actions increased the companies’ profit margins at the State’s expense resulting in the loss of millions of dollars in royalty payments. Olin Jones commented to an environmental agency official that had fined his company for over-dredging that they couldn’t fine him enough to stop him from over-dredging sand because mining for State sand was like “mining gold.”

Under the terms of the settlement agreement, the defendants will pay the state $42.2 million. This amount covers the sand that Hanson took from state-owned lands without permission. It also includes the amount in royalties that Hanson should have paid the state.

Hanson and the State Lands Commission have agreed to a fixed royalty per cubic yard of sand dredged. This will result in Hanson paying a higher royalty amount to the state than it paid prior to the litigation, which will generate millions of dollars in royalty payments every year. Hanson also made additional and increased royalty payments of more than $6 million before the settlement was announced.

To ensure that Hanson dredges for sand in areas of San Francisco and Suisun Bays for which it has permits, the State Lands Commission will monitor Hanson’s activities through the use of Global Positioning Satellite tracking systems.

The settlement agreement and original lawsuit are attached.

NEW YORK — Charging the federal government with “subverting a key public safety measure,” California Attorney General Edmund G. Brown Jr. today sued the U.S. Environmental Protection Agency for allowing companies to hide information about toxic chemicals at thousands of facilities around the United States.

Brown joined eleven other states in challenging the EPA’s decision to weaken the Toxic Release Inventory, a program which requires facilities to report annual quantities of toxic chemicals emitted by refineries, chemical plants, and other manufacturing facilities.

Blasting the new disclosure requirements, Attorney General Brown said, “The EPA is subverting a key public safety measure that helps communities protect themselves from toxic chemicals. The federal government should require more--not less--disclosure of the toxic substances that the threaten public health and safety.”

Under the new rules, approximately 5,300 facilities nationally could be permitted to conceal vital safety information from the Environmental Protection Agency about toxic chemical levels and management of toxic waste. The new regulations increase by 10-fold the quantity of chemical waste that a facility can generate without providing detailed reports.

The attorney general is filing the lawsuit to invalidate EPA's revised regulations and return to the former, more stringent, reporting requirements. California asserts that EPA’s adoption of the new rule violates the federal Emergency Planning and Community Right-to-Know Act, a law which requires EPA to collect information on toxic chemicals. The law was passed under Ronald Reagan after a cloud of methyl isocyanate killed thousands of people in Bhopal, India and then a similar chemical release occurred at a sister plant in West Virginia.

Facilities covered by the Right-to-Know Act must disclose their releases of approximately 650 toxic chemicals as well as the quantities of chemicals they recycle, treat, burn, or otherwise dispose of on-site and off-site. The information in the database has been used by citizen groups, state and local governments and labor organizations to protect workers and monitor toxic chemicals.

The database has also been used in California to support Prop 65, a state law that requires companies to warn the public about exposure to chemicals known to the cause cancer or reproductive harm. Since the disclosure requirements were established in 1986, thousands of companies have voluntarily cut their toxic chemical releases by billions of pounds.

The states joining today’s lawsuit against the EPA include: Arizona, Connecticut, Illinois, Maine, Massachusetts, the Minnesota Pollution Control Agency, New Hampshire, New Jersey, New York, the Pennsylvania Department of Environmental Protection and Vermont.

The states’ lawsuit, filed today in United States District Court in Manhattan, is attached.

LOS ANGELES—California Attorney General Edmund G. Brown Jr. and Los Angeles City Attorney Rockard J. Delgadillo today sued twenty companies for manufacturing or selling toys with “unlawful quantities of lead.”

Commenting on the lawsuit which was filed today in Alameda County Superior Court, Attorney General Brown said, “Companies must take every reasonable step to assure that the products they handle are safe for children and their families and fully comply with the laws of California. Despite the lengthening global supply chain, every company that does business in this state must follow the law and protect consumers from lead and other toxic materials.”

“Lead in toys poses a significant threat to the health and well being of our children,” said Los Angeles City Attorney Rocky Delgadillo. “This lawsuit is intended to ensure that these companies eliminate lead and other harmful substances from children’s toys, once and for all.”

The state’s lawsuit alleges that companies knowingly exposed individuals to lead—a chemical known to the State of California to cause cancer and reproductive harm—and failed to provide any warning about this risk. Under the Safe Drinking Water and Toxic Enforcement Act of 1986, known as Proposition 65, businesses cannot expose individuals to hazardous chemicals without posting a clear warning.

Proposition 65 is enforced through lawsuits brought by the attorney general, district attorneys and city attorneys in cities with a population exceeding 750,000. Lawsuits may also be brought by private parties, but only after these parties notify the attorney general of the alleged violation.

The California Attorney General—who successfully negotiated settlements in the past to remove lead in candy, soda bottles, jewelry and other consumer products—launched an investigation into toy manufacturers and retailers after the federal Consumer Product Safety Commission began issuing recall notices for toys that exceeded federal lead limits. Beginning with the recall of 1.5 million Thomas the Tank Engine toys in June, 46 toy products have been recalled for excessive levels of lead—totaling approximately 6 million toys this year.

Following the national recall, the attorney general received notices of impending lawsuits against toy companies from the Center for Environmental Health, Environmental Law Foundation, and As You Sow. Under Prop 65, private parties must notify the attorney general of the allegations before bringing a lawsuit. The attorney general then has the option to take over these lawsuits or allow the complaints to proceed independently.

Although Proposition 65 only requires companies to post hazard warnings, many businesses choose to eliminate the toxic chemicals altogether. Last year, the attorney general prompted over 70 retailers and distributors to meet tougher lead standards for jewelry. Many companies subject to today’s lawsuit have indicated they are also committed to taking measures to ensure that lawful standards are met in the future.

Businesses that violate Proposition 65 are subject to civil penalties of up to $2,500 per day for each violation. In addition, courts may order businesses to stop committing the violation. Today’s lawsuit seeks to remedy past violations and prompt manufacturers and retailers to establish processes that prevent toys with lead from being sold in the future.

Proposition 65 requires the Governor to publish a list of chemicals that are known to the State of California to cause cancer, birth defects or other reproductive harm. Lead has been listed since 1987 as a chemical that can cause reproductive harm and birth defects, and has been on the list of chemicals known to cause cancer since 1992.

Lead is a toxic metal that damages the nervous system and other organs. Children are particularly susceptible to the risks of lead exposure. Children can ingest the lead in toys when they place the toys in their mouths, handle the toys and then touch their mouths, or transfer the lead from the toys to other items such as food.

Companies subject to today’s lawsuit include: Mattel, Fisher-Price, Michaels Stores, Toys R Us, Wal-Mart, Target, Sears, KB Toys, Costco Wholesale, A&A Global Industries, RC2 Corporation, Eveready Battery Company, Kids II, Kmart, Marvel Entertainment, Toy Investments.

For more information about Prop 65 and to view the private party notices please visit: http://ag.ca.gov/prop65/index.php. For more information about the national toy recall, please visit the Consumer Product Safety Commission at: http://www.cpsc.gov/cpscpub/prerel/prerel.html

The state’s lawsuit is attached.

WASHINGTON D.C. — In a precedent setting lawsuit, California Governor Arnold Schwarzenegger and Attorney General Edmund G. Brown Jr. today sued the U.S. EPA, to force the agency to take action on California’s request to curb greenhouse gas emissions from motor vehicles. The lawsuit, filed today in Washington D.C., charges the EPA with an unreasonable delay in reaching a decision on California’s landmark law, known as the Pavley bill, which mandates a 30 percent reduction in motor vehicle emissions by 2016.

“Despite the mounting dangers of global warming, the EPA has delayed and ignored California’s right to impose stricter environmental standards,” Attorney General Brown told a news conference at the state capitol with Governor Schwarzenegger and California Air Resources Board chair, Mary Nichols. “We have waited two years and the Supreme Court has ruled in our favor. What is the EPA waiting for?” Brown asked.

Under the Clean Air Act, passed in 1963, California can adopt environmental standards that are stricter than federal rules, if the state obtains a waiver from the U.S. EPA. Congress allowed California to impose stricter laws in recognition of the state’s “compelling and extraordinary conditions.” After a California waiver request is granted, other states are permitted to adopt the same rules.

In the Act’s 40-year history, EPA has granted approximately 50 waivers for innovations like catalytic converters, exhaust emission standards, and leaded gasoline regulations. In today’s lawsuit, California asserts that EPA has failed to act in a reasonable length of time.

In 2002, California passed AB 1493 which require a 30 percent reduction in global warming emissions from vehicles by 2016, starting with model year 2009. In December 2005, the California Air Resources Board applied for a waiver to implement the law. Governor Schwarzenegger wrote to the EPA in April 2006 and in October 2006, requesting action on California’s application.

Sixteen other states— Arizona, Colorado, Connecticut, Florida, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, Washington —have adopted, or are in the process of adopting California’s emissions standards.

The state asserts that EPA does not need any additional time to review the facts—the California Air Resources Board submitted a detailed 251-page assessment in 2005 and the U.S. Supreme Court already issued a decision that greenhouse gases are pollutants. In September, a Vermont District Court ruled in favor of the state regulations, rejecting a challenge from the automobile lobby.

There are 32 million registered vehicles in California, twice the number of any other state. Cars generate 20% of all human-made carbon dioxide emissions in the United States, and at least 30% of such emissions in California. If California’s landmark global warming law—and the corresponding 30% improvement in emissions standards—were adopted nationally, the United States could cut annual oil imports by $100 billion dollars, at $50 per barrel.

Last year, Governor Arnold Schwarzenegger signed the landmark Global Warming Solutions Act, AB 32, which sets a goal to cut California greenhouse gas emissions back to 1990 levels by 2020. To meet this target, California must reduce emissions by 174 million metric tons. If California’s motor vehicle emissions law is implemented, it will account for 17% of this reduction target.

Climate research shows that global warming is having a profound effect on California’s temperature, weather, air quality, and mountain snowfall. Last year Southern California experienced its driest year since record-keeping began 130 years ago. Between 1949 and 1999, average temperature in California increased 1.03 degrees Fahrenheit and mountain snow accumulation declined ten percent. By 2099 there will be virtually no snow below 3280 feet.

California’s complaint, filed in the United States District Court for the District of Columbia is attached. California’s petition for review, filed in the United States Court of Appeals for the District of Columbia Circuit, is also attached.

Later today, fourteen other states are expected to support California as interveners in the lawsuit.

LOS ANGELES – California Attorney General Edmund G. Brown Jr. today sued PacifiStaff, a Southern California corporation that trained construction companies to violate workers’ compensation laws by the use of “fake corporations with phantom executives.” Today’s lawsuit comes on the heels of an underground economy lawsuit filed last week against Brinas Corp., a Los Angeles drywall company.

Commenting on the lawsuit, Attorney General Brown said, “PacifiStaff developed a sophisticated scheme whereby companies would fire their workers and rehire them in fake corporations with phantom executives. These illegal maneuvers enabled construction companies to avoid state laws which require all employers to provide workers’ compensation insurance.”

The California Department of Justice opened an investigation into PacifiStaff after receiving reports that a growing number of Southern California construction companies were starting to drop workers’ compensation for their construction workforce. These companies improperly labeled their employees as shareholding corporate executives to take advantage of Labor Code Section 3351 which does not require workers’ compensation insurance for such executives.

During the investigation, undercover agents attended PacifiStaff sales meetings where representatives pitched an illegal scheme to help construction companies avoid paying workers’ compensation to their employees. On print advertising, Internet promotions and during these sales pitches, the company falsely stated that their scheme was approved by a government agency.

Undercover investigators found that construction companies were directed, under advice from PacifiStaff, to fire their construction workers and rehire them as corporate officers of a sham corporation. These construction workers were then given executive titles and a single share of worthless stock in the new corporation. This sham corporation then sent the new fake executives back to construction sites—without the required workers’ compensation insurance.

Investigations revealed that PacifiStaff brushed off questions about what might happen if a construction worker were actually injured on the job. Investigators also found that staff representatives engaged in the unauthorized practice of law by offering legal advice without a license.

State law requires employers to provide workers with the no-fault protection of workers' compensation insurance. Workers' compensation provides benefits such as medical care for work-related injuries, disability payments while injured, and death benefits for the families of employees. Companies who evade workers’ compensation costs gain an unfair advantage over competitors who protect their workers by following the law.

According to the California Department of Industrial Relations, there were nearly 49,000 nonfatal injuries and illnesses among California construction workers in 2006. 30,000 of these cases resulted in missed days at work, transfers, or restrictions of duty. In 2005, there were 102 construction industry fatalities due to transportation accidents, falls, or exposure to harmful substances. There were approximately 935,000 Californians employed in the construction industry in 2006.

“Construction work can be extremely dangerous and those workers injured on the job deserve and depend upon the benefits afforded by California law,” Attorney General Brown said. “Today’s lawsuit sends a strong message that employers who try to short-circuit the system will be prosecuted to the full extent of the law,” Brown added.

PacifiStaff, using the trade name “Workforce Solutions,” has billed itself as the “Antidote to Workers’ Compensation.” PacifiStaff continues to market its services to its prospective clients through trade shows, print advertising and over the Internet at: www.theworkforcesolutions.com. PacifiStaff also conducts direct sales meetings with prospective client employers. PacifiStaff maintains an office at 2125 E. Katella Avenue, Suite 330, in Anaheim, California.

The lawsuit against PacifiStaff was brought under Business & Professions Code, Section 17200, which expressly prohibits unlawful or unfair business practices.

The state’s lawsuit is attached.

LOS ANGELES—Citing the threat of a “shadowy, underground economy,” California Attorney General Edmund G. Brown Jr. today sued the Brinas Corporation, a Los Angeles drywall contractor that unlawfully forced its employees to work without the benefit of legally mandated conditions.

“The company exploited employees, engaged in unfair business practices and violated worker protections. Today’s lawsuit will send a strong message—California demands that workers be treated fairly and not be exploited in a shadowy, underground economy,” Attorney General Brown said.

In August, the Attorney General launched an investigation into the employment, payroll and record-keeping practices of the Brinas Corporation and its predecessor; B. Wallco, Inc. Officials investigated construction sites, interviewed witnesses and reviewed records.

Investigators founds that the company engaged in flagrantly unlawful business practices to slash labor costs and underbid competition. Brinas participated in a variety of schemes to deny employee rights including:

• Failure to pay minimum wage
• Failure to pay overtime pay
• Failure to provide paid rest breaks
• Failure to provide a lunch break
• Failure to provide the tools necessary to perform the work
• Failure to provide pay check subs
• Failure to provide accurate wages information to the Employment Development Department
• Failure to provide accurate information to the State Compensation Insurance Fund

Workers who labored for the drywall company suffered substantial monetary losses and are entitled to restitution. In this particular case, the attorney general brings a lawsuit to halt the company’s illegal practices and get restitution for the workers who lost wages during the last four years.

The attorney general enforces California laws that require fair business practices in order to protect working men and women and ensure a level playing field where all businesses adhere to the same rules of conduct. Brown sued Brinas under Business & Professions Code, section 17200, which expressly prohibits unlawful or unfair business practices.

Brinas Corporation was incorporated in Nevada in June 2003. It obtained a California contractors license on March 4, 2005 and recorded Jose Andres Garcia Brinas as its CEO. In 2004, the company’s predecessor B. Wallco was sued by a private plaintiff, Drywall Committee, for many of the same violations cited in today’s complaint. As part of a 2005 settlement, the company agreed to obey all laws and provide the Committee with information on all work in Southern California.

Brinas is currently known to be engaged in drywall installation at constructions including Triana at Warner Center in Woodland Hills, Archstone Warner Apartment Complex in Canoga Park, Broadstone Beaudry Apartments in the City of Los Angeles, and Reserve 4S Ranch in north San Diego County.

The state’s lawsuit is attached.