Lawsuits & Settlements

SAN FRANCISCO -- California Attorney General Edmund G. Brown Jr. today issued an opinion granting the San Francisco City Attorney’s request to bring a civil action in quo warranto to remove Supervisor Ed Jew from office. Brown’s opinion takes no position on the merits of the case but acknowledges that substantial questions of fact and law warrant review by a court.

In today’s opinion Attorney General Brown asserts that, “We find that it would be in the public interest, particularly for the Board and the residents and voters of District Four, to have a prompt judicial resolution of whether Defendant has fulfilled the eligibility requirements for the public office he now occupies.”

In June, 2007, San Francisco City Attorney Dennis Herrera asked the attorney general for permission to sue Ed Jew in quo warranto, alleging that Jew had not resided at all times in the district in which he was elected.

Quo warranto actions are typically filed to remove a person from public office. The attorney general must approve all quo warranto actions to protect public officials from frivolous lawsuits. The attorney general reviews written pleadings filed by both parties and issues an opinion either granting or denying the application to sue.

As the chief law officer of the state, the California Attorney General provides legal opinions to public officials and government agencies on issues arising in the course of their duties. Legal opinions of the Attorney General issued since 1986 may be viewed on the attorney general’s Website: http://www.ag.ca.gov/opinions/

The opinion is attached.

SAN FRANCISCO -- California Attorney General Edmund G. Brown Jr. today announced a “groundbreaking settlement” with AT&T Mobility (formerly Cingular) that will prohibit the cell phone carrier from charging customers for any calls made after their phones are lost or stolen. Brown alleged that the company violated California law, including Public Utilities Code section 2890, which bars phone companies from charging customers for unauthorized services.

“No cell phone company should profit from calls made by thieves or unauthorized users,” Brown said.

The agreement, a stipulated judgment filed today with the San Francisco Superior Court, requires the company to credit a customer’s bill or immediately investigate customer reports that the calls were made after the phone was lost or stolen. The company may only charge a customer if an investigation determines that the customer actually authorized the charges.

The judgment requires AT&T Mobility to inform each of their customers of their legal rights regarding lost or stolen phones. Under the agreement, AT&T must either credit the disputed charges or inform customers of their legal rights which include:

• The right to have the case investigated within 30 days
• The right to provide information showing a customer did not authorize the calls
• The right not to pay disputed charges during the investigation
• The right to appeal the outcome of an investigation to the California Public Utilities Commission

AT&T must notify customers--in writing--of these new requirements and assist customers to obtain credit for amounts already paid on lost or stolen phones, back to year 2003. AT&T will also pay the Attorney General's Office $500,000 for costs of the investigation and for the Unfair Competition Law Fund, administered by the California District Attorneys Association.

“This groundbreaking settlement makes AT&T the first cell phone company that has agreed to protect its customers from cell phone rip-offs and other unauthorized uses,” Brown said. “It is now time for the rest of the cell phone industry to step forward and follow AT&T’s example,” Brown added.

The Attorney General’s Office began the investigation in 2006 after several consumers complained they were being charged thousands of dollars for calls made on cell phones that were stolen. In one case, calls originated from Mexico, a country the customer had never visited. Although customers could fully document that the calls were unauthorized, AT&T refused to credit the accounts.

The law for cell phones is similar to that for credit cards: customers have a right to dispute unauthorized charges and request an investigation. Customers should not be held responsible for charges until the investigation concludes.

By entering into the agreement, AT&T does not admit it violated any laws or engaged in any wrongdoing. The state’s complaint and the agreement are attached.

SACRAMENTO - Attorney General Edmund G. Brown Jr. today released the details of a settlement that requires Kern and Santa Cruz counties to improve accessibility to polling places. Each settlement requires the counties to upgrade polling facilities, employ an architectural consultant, and provide additional training to employees who select and setup accessible polling sites on election days.

These settlements resolve complaints filed by the Attorney General’s Office in 2005, after the state discovered that polling sites surveyed in Kern County and Santa Cruz County had barriers that could make access to the polling site difficult, hazardous or impossible for voters with disabilities.

Such barriers include: polling sites that had excessively steep slopes or other obstacles in the path of travel to the polling site, abrupt level changes in the walkways leading to the polling sites, accessible parking spaces that were not wide enough to accommodate vans and access ramps leading to polling sites that lacked handrails.

The settlement, which remains in effect until March 31, 2011, ensures polling sites in Kern and Santa Cruz will comply with state and federal architectural accessibility standards. Under the settlement, the counties must:

• Hire an architectural accessibility consultant who will inspect polling sites to ensure they conform to federal and state law.
• Hire experts to further educate the elections personnel who select polling sites.
• Create a committee to involve community members in the selection and location of accessible polling places and to encourage businesses to offer facilities for use as polling sites.

Counties will remedy any violations by either selecting more accessible polling sites or purchasing temporary accessibility measures such as temporary ramps.

During the 2002 March and November statewide elections, the attorney general, in conjunction with several independent living centers, found the polling site accessibility violations. The attorney general attempted to resolve these architectural accessibility violations, but follow-up surveys during the 2004 March and November statewide elections exposed more violations.

During the 2004 elections, the attorney general’s office surveyed 83 of Kern’s 146 polling sites and found at least one accessibility violation in 94 percent of the sites surveyed. A similar survey in Santa Cruz County, found that the 72 percent of the sites contained at least one significant accessibility violation.

The state alleged that these barriers violated the federal American with Disabilities Act (ADA) that requires polling sites to be accessible for voters with disabilities. California law requires that local governments select polling sites that comply with state and federal laws requiring easy access for voters with disabilities.

The settlement agreements are attached.

LOS ANGELES – Halting the “anticompetitive effects” of a merger between the nation’s two largest school bus operators, California Attorney General Edmund G. Brown Jr. today announced a settlement with First Group, plc (also known as First Student) and Laidlaw Educational Services. Under the terms of the settlement, the merged company will divest its rights in a bus depot to Riverside Unified School District and agree that Los Angeles Unified School District may terminate certain contracts for school bus services.

Commenting on today’s agreement, Attorney General Brown said, “School districts must be able to choose the best school bus company to ensure that students have rapid and reliable school transportation. Today’s agreement protects school districts and strengthens healthy competition amongst school bus companies.”

Without this agreement, the merged companies would have controlled the majority of the Los Angeles Unified School District private contracts and the only two bus depots in the Riverside Unified School District. In addition to eliminating competition between the two companies, their merger would make it more difficult for competitors to enter the private school bus markets in Los Angeles and Riverside Counties. Today’s settlement will facilitate the entry of new competitors into the areas where the merger’s anticompetitive effects are felt.

Under the agreement, the merged company will transfer its rights to the Franklin Avenue Depot to the Riverside Unified School District and give the Los Angeles Unified School District the right to terminate specific school bus transportation contracts. The parties also agree not to enforce non-competition contracts which would prevent departing employees from starting new school bus transportation companies that would compete with the merged company. The parties will also give the Attorney General notice of any future acquisitions during the next six years and will pay $1.1 million to be divided among the participating states to defray legal fees.

The acquisition of Laidlaw by First Group was first announced in February 2007. FirstGroup, headquartered in Scotland, has operations throughout the United States. It is the second largest school bus operator in the United States. Laidlaw, headquarted in Naperville, Illinois, is the nation’s largest school bus operator.

School districts in California arrange transportation for their students using both in-house and private buses. While many Districts still organize and operate student transportation systems themselves, the practice of contracting with private providers is prevalent. To be eligible to compete for a private contract, bidders must hire personnel and acquire buses, insurance and parking. In many cases, the incumbent bus companies have competitive advantages that make it difficult for new competitors to enter the market.

The California Attorney General, along with ten other states and the U.S. Department of Justice, has been reviewing the proposed acquisition. Under the Clayton Act, Section 7, mergers are illegal if they may substantially lessen competition or tend to create a monopoly. Although the merger did not raise competitive concerns for regular bus services, investigators found that the transaction would significantly lessen competition for home to school and related transportation for Los Angeles Unified School District and Riverside Unified School District.

Brown joined ten other states, Alaska, Connecticut, Illinois, Maine, Massachusetts, Minnesota, Missouri, New Jersey, Rhode Island, and Washington in filing the consent decree agreement with FirstGroup and Laidlaw Education Services today in federal district court in Massachusetts. In agreeing to the consent decree, the merging parties did not admit liability.

The consent decree and the state’s complaint are attached.

SAN FRANCISCO – California Attorney General Edmund G. Brown Jr. today announced that ConocoPhillips has agreed to an “unprecedented global warming reduction plan” to off-set greenhouse gases caused by the expansion of its Northern California oil refinery.

Brown said that the oil company has agreed to offset greenhouse gas emission increases until the carbon-cutting regulations of AB 32 take effect in 2012.

“This agreement is a groundbreaking step in California’s battle to combat global warming and gives the state an early edge in meeting the greenhouse gas reduction goals of AB 32,” Brown told a news conference with ConocoPhillips at the Attorney General’s Office in San Francisco.

ConocoPhillips has proposed an oil refinery expansion at its Rodeo facility in Contra Costa County, including a hydrogen plant to make cleaner-burning gasoline and diesel fuels from the heavy portion of crude oil. Brown appealed to the Contra Costa County Board of Supervisors, challenging the environmental documentation for the project and the failure to mitigate the increased greenhouse gas emissions resulting from the operation of the hydrogen plant.

The Attorney General said he would now withdraw the state’s appeal based on the significant greenhouse gas emission offsets agreed to by ConocoPhillips.

Brown added, “Under this unprecedented global warming reduction plan, ConocoPhillips becomes the first oil company in America to off-set greenhouse gas emissions from a refinery expansion project. This is a breakthrough.”

The hydrogen project will initially emit approximately 500,000 metric tons of CO2 per year. ConocoPhillips will take the following actions as part of its efforts to offset these emissions:

• Auditing all its California refineries and identifying all greenhouse gas emission sources and reduction opportunities.

• Conducting an energy efficiency audit at Rodeo to identify feasible energy efficiency measures.

• Funding a $7 million offset program that the Bay Area Air Quality Management District will use to support offset projects in the Bay Area.

• Funding $2.8 million for reforestation efforts in California, with an estimated sequestration of 1.5 million metric tons of greenhouse gases over the life of the reforestation projects.

• Funding $200,000 for restoration of the San Pablo wetlands.

• Surrendering the operating permit for the calciner at the Santa Maria facility, which ConocoPhillips estimates emitted 70,000 metric tons of greenhouse gases annually.

• If ConocoPhillips reduces its greenhouse gas emissions at the Rodeo facility, it will get credit towards its contribution to the Bay Area Air Quality Management District offset fund.

ConocoPhillips also agrees to offset any CO2 emissions in excess of 500,000 metric tons per year from the hydrogen unit if it increases its use of hydrogen. The company may apply to receive offsets credits for reductions achieved through the projects and activities funded through this agreement, under AB 32, or any equivalent state or federal law or regulation.

In 2005, ConocoPhillips proposed a project, known as the Clean Fuels Expansion Project, designed to make cleaner-burning gasoline and diesel fuels from the heavy gas oil already produced at the refinery. The expansion included a hydrogen plant to produce steam and electricity for these refinery processes. ConocoPhillips estimated that the project would increase the supply of cleaner burning fuels by approximately one million gallons per day in California.

Under the California Environmental Quality Act (CEQA), Contra Costa County prepared an Environmental Impact Report on the project and accepted public comments. After the concluding that the report adequately addressed greenhouse gas emissions and climate change, the County Planning Commission certified the report. Attorney General Brown appealed to the Contra Costa County Board of Supervisors in May 2007 on grounds that the impact report did not adequately address the greenhouse gas emissions and the associated climate change impacts of the project.

Scientists throughout the world overwhelming agree that global warming is real, is here now, and will get worse. At current emissions levels, temperatures in California will increase by 4 to 10 degrees during this century. In 2006 Governor Arnold Schwarzenegger signed AB 32, landmark global warming legislation that commits the state to reduce greenhouse gas emissions to 1990 levels by 2020—a 25% reduction. But AB 32 regulations do not take effect until 2012 and there are no current limits on greenhouse gas emissions.

Today’s agreement with ConocoPhillips comes on the heels of a landmark agreement with San Bernardino County to reduce greenhouse gas emissions at the county level. These actions join a growing movement at the local level to combat climate change. As of June 2007, over 540 mayors from 50 states have signed the U.S. Mayors Climate Protection Agreement, a pledge to reduce global warming pollution in cities 7% below 1990 levels by the year 2012.

In California, the League of California Cities and the California State Association of Counties have partnered with the Institute for Local Government to launch a California Climate Action Network. The network proposes a variety of actions—from conserving energy to using lower carbon fuels—that can be taken by local jurisdictions to cut greenhouse gas emissions. For more information visit: http://www.ca-ilg.org/climatechange/

The attorney general’s global warming agreement with ConocoPhillips is attached.

DISTRICT OF COLUMBIA – California Attorney General Edmund G. Brown Jr. today filed a report questioning the effectiveness of the Microsoft consent decree. Brown joined Connecticut, Iowa, Kansas, Minnesota, Massachusetts and the District of Columbia in filing the Report on Remedial Effectiveness concerning the Microsoft Final Judgment.

Attorney General Brown said: “The decree has not lived up to its goal of increasing market competition.”

The report contains descriptions of the Final Judgment’s lack of effectiveness; it does not contain recommendations on how to improve the Judgment. The California Group will be prepared to discuss at the next Joint Status Conference on September 11, 2007, what, if any, changes the Court might consider in this case.

The report is attached.

LOS ANGELES – California Attorney General Edmund G. Brown Jr. today announced a “landmark settlement” of the state’s global warming lawsuit against San Bernardino County. The agreement, approved today by the County Board of Supervisors, establishes a unique greenhouse gas reduction plan that will identify sources of emissions and set feasible reduction targets for the County.

“San Bernardino now sets the pace for how local government can adopt powerful measures to combat oil dependency and climate disruption. This landmark agreement establishes one of the first greenhouse gas reduction plans in California. It is a model that I encourage other cities and counties to adopt,” Brown told a news conference at the Attorney General’s Office in downtown Los Angeles.

Under today’s agreement, the County will embark upon a thirty month public process aimed at cutting greenhouse gas emissions attributable to land use decisions and County government operations. The Greenhouse Gas Emissions Reduction Plan mandates the following:

• An inventory of all known, or reasonably discoverable, sources of greenhouse gases in the County.
• An inventory of the greenhouse gas emissions level in 1990, currently, and that projected for the year 2020.
• A target for the reduction of emissions attributable to the county’s discretionary land use decisions and its own internal government operations.

Commenting on the agreement, San Bernardino County Board of Supervisors Vice Chairman Gary C. Ovitt said, “Only a handful of California counties and cities have formally addressed climate change issues, and San Bernardino County will lead the way in the implementation of strategies and steps to enhance our future and serve as a model for others.”

Under California law, the state is committed to reducing greenhouse gas emissions to 1990 levels by 2020 and then reducing 80% below 1990 levels by 2050. Currently, California generates approximately 500 million metric tons of CO2 equivalent, significantly above 1990 levels. To achieve the 2020 target, California must reduce current emissions by at least 25%.

“Local government action to combat global warming is absolutely essential to meet the goals which Governor Schwarzenegger and the California Legislature set forth in AB 32,” Brown asserted.

To date, the Attorney General has submitted formal comments, under the California Environmental Quality Act (CEQA), to San Bernardino, San Diego, Sacramento, Orange County, Merced, Kern, Fresno, San Joaquin, Contra Costa, Yuba, Richmond, and San Jose.

On their own, the following communities in California are already initiating measures to reduce greenhouse gas emissions: Los Angeles, San Francisco, Sonoma, Santa Monica, Berkeley, Marin, Palo Alto, Chula Vista, Modesto and Healdsburg.

Feasible mitigations include the following:

• High-density developments that reduce vehicle trips and utilize public transit.
• Parking spaces for high-occupancy vehicles and car-share programs.
• Electric vehicle charging facilities and conveniently located alternative fueling stations.
• Limits on parking.
• Transportation impact fees on developments to fund public transit service.
• Regional transportation centers where various types of public transportation meet.
• Energy efficient design for buildings, appliances, lighting and office equipment.
• Solar panels, water reuse systems and on-site renewable energy production.
• Methane recovery in landfills and wastewater treatment plants to generate electricity.
• Carbon emissions credit purchases that fund alternative energy projects.

Today’s settlement resolves a lawsuit, filed by the Attorney General in April, contesting the adequacy of San Bernardino’s general plan under the California Environmental Quality Act. Brown contended that the plan, a blueprint for the physical development of land until year 2030, did not adequately analyze the effects of development on global warming nor did it identify feasible mitigation measures.

San Bernardino currently generates about 10 trips per household per day, and over 84% of the work trips are made by car. The County, one of the fastest growing in California, projects a 25% increase in population, more than 400,000 people.

The settlement agreement is attached.

In response to today's California Supreme Court Decision In Re Tobacco Cases II, California Attorney General Edmund G. Brown Jr. issued the following statement:

"This decision, while upholding some restrictions, nevertheless reaffirms the full authority of the California Attorney General to enforce the multi-billion dollar tobacco settlement, especially when minors are involved.'

LOS ANGELES — California Attorney General Edmund G. Brown Jr. today announced that Corinthian Schools, Inc. and Titan Schools, Inc. will pay $6.5 million, including $5.8 million in consumer restitution, to settle a lawsuit alleging that the for-profit vocational operator engaged in false advertising and unlawful business practices by presenting inaccurate salary and employment information to students.

According to the complaint, Corinthian students pay between $7,000 and $27,000 for vocational courses, which typically take from six months to one year to complete. Corinthian allegedly overstated the percentage of its students who obtained employment from these courses, inflated starting salary information, and used these misrepresentations to convince potential students to enroll. Students wound up paying tuition fees through a combination of government grants, taxpayer-subsidized loans, and private loans arranged by Corinthian.

California Attorney General Brown said: “Corinthian students fully expected that their tuition payments would result in the glowing job opportunities the company promised. Unfortunately, their hopes were dashed as many of the students ended up unemployed and deep in debt. This groundbreaking settlement provides a measure of justice and fair restitution to these students. It also commits Corinthian to reforming its practices for the future.”

The complaint alleges that Corinthian engaged in additional unfair, unlawful or fraudulent business acts and practices, including falsifying records provided to the government, offering vocational programs that did not meet the minimum standards for course completion or subsequent employment, and using provisions in settlement agreements that bar former students from revealing anything about their disputes with Corinthian to government authorities.

Brown submitted the settlement today in Los Angeles County Superior Court, along with the lawsuit it resolves. The settlement, pending judicial approval, provides for a total of $5.8 million in restitution to students, of which $1.5 million is for debt cancellation and $4.3 million is in the form of refunds to former students. The settlement also provides for a payment of $700,000 in civil penalties and costs.

Aside from monetary payments, the settlement requires that Corinthian cease offering a total of 11 substandard programs, including the Pharmacy Technician and Medical Lab Assistant Programs, at various campuses in Anaheim, City of Industry, Gardena, Los Angeles, Ontario, San Bernardino, San Francisco and San Jose. The settlement also enjoins Corinthian from engaging in any of the unlawful business practices alleged in the complaint.

Corinthian, one of the nation’s largest for-profit vocational school chains, offers vocational courses in job occupations such as dental assisting, massage therapy, and medical assisting to thousands of students at its 14 California campuses of Bryman College, Everest College, and National Institute of Technology.
There are approximately 400,000 vocational school students in California. In 1989, the state established a regulatory agency to maintain oversight of vocational schools, today known as the California Bureau of Postsecondary and Vocational Education. This regulation was established, in part, as a response to a rising number questionable vocational schools and “diploma mills,” notorious for pumping out graduates with little education and massive tuition debt.

Consumers who believe they have been victimized by a vocational school can register a complaint by contacting the Public Inquiry Unit of the Attorney General's Office at www.ag.ca.gov/consumers, or by calling (800) 952-5225.

The complaint and judgment are attached.

SACRAMENTO - California Attorney General Edmund G. Brown Jr. today began mailing restitution claim forms to approximately 78,000 customers who were 'targets of improper sales practice' after joining a national $325 million lawsuit settlement with Ameriquest. The settlement provides $51 million for eligible California customers of Ameriquest Mortgage Company, Town and County Credit Corporation, and AMC Mortgage Services, Inc., formerly known as Bedford Home Loans.

The settlement resolves allegations that Ameriquest and its affiliates failed to adequately disclose home loan terms, failed to disclose whether loans carried fixed or adjustable rates, refinanced borrowers into inappropriate loans, inflated the appraisals used to qualify borrowers for loans, and charged excessive loan origination fees and prepayment penalties. The company engaged in these unlawful mortgage lending practices from 1999 through 2005.

"Hard-working families trying to buy a home wound up as targets of improper sales practice,' said Attorney General Brown. 'This settlement provides homebuyers with at least some of the restitution they deserve.'

Other parties in the $325 million settlement include the California Department of Corporations, Alameda, Los Angeles, Merced, Monterey, San Francisco, and San Mateo County District Attorneys, Attorneys General and banking and finance regulators from the District of Columbia and every state (except Virginia where Ameriquest did not conduct business).

The forms mailed today indicate the minimum payment that customers can expect to receive. The average restitution payment is $812.15 but the amount could be larger depending upon how many customers choose to participate in the settlement. Consumers who want the restitution payment should mail completed and signed forms to the settlement administrator by September 10, 2007.

Consumers who accept the restitution payment will relinquish their right to file lawsuits against Ameriquest unless their home goes into foreclosure. If a consumer's home goes into foreclosure, the consumer may still file a lawsuit against Ameriquest even if the restitution payment was accepted.

Consumers are encouraged to consult a private attorney or legal services attorney before deciding whether to participate in the settlement. A 'Frequently Asked Questions' pamphlet was mailed with the claim forms to provide additional information about the restitution process for eligible consumers. Consumers can also obtain detailed information about the settlement by contacting the Ameriquest Settlement Administrator at: or by calling 1-800-420-5875 (1-866-494-8274 for deaf or hard of hearing consumers).

The state's complaint against Ameriquest is attached. The court's judgment is attached. A copy of the information letter and 'Frequently Asked Questions' mailed today is also attached.