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Prop. 64 Passes, Limiting ‘Shake Down' Lawsuits Against California Retailers

3 Nov, 2004 By: Kurt Indvik

California's Proposition 64, which limits the potential for “frivolous” lawsuits directed at small businesses, including video stores, passed by a 59 percent to 41 percent margin Nov. 2. That was the one key state initiative in the U.S. elections the Video Software Dealers Association (VSDA) was tracking, according to Sean Bersell, VP of public affairs.

“That's a real victory for us, and removes a Sword of Damocles that has been hanging over the heads of video retailers in California,” Bersell said.

Whereas before virtually anyone could file a lawsuit against a retailer if he or she felt the retailer was in even the most minor infraction of a state business regulation, now, among other stipulations, Proposition 64 requires that the individual filing the suit shows he or she has been injured by, and suffered financial or property loss because of the improper business practice.

While it doesn't excuse any improper or illegal business practices, Bersell said, the proposition means retailers won't be open to “frivolous” and “shake down” lawsuits that forced small businesses to often settle with scheming lawyers rather than facing the costs and time of protracted legal defense in court.

The measure had been losing in earlier polls taken in the state, but Bersell gave credit to Gov. Arnold Schwarzenegger, who came out strongly in favor of the proposition in the final weeks before Nov. 2 and raised awareness of the issue.

As far as the presidential and congressional elections, Bersell said the VSDA did not see any significant shifts in support or focus that would affect the association's agenda relating to copyright and piracy issues in 2005, with the Republicans now holding strong majorities in both the Senate and House of Representatives.

“These have been pretty much bipartisan issues,” Bersell said. “But we're going to have some new faces in Congress, so we'll need to get up there and introduce them to the home video industry and our agenda.”

Because of Republican Senate rules, there will be changes of leadership in the Senate Judiciary and Commerce committees. Incoming Judiciary chairman Arlen Spector (R–Penn.) is expected to bring more attention to content copyright issues, Bersell said. Sen. Ted Stevens (R-Alaska) is expected to be the chairman of the Commerce Committee, with Daniel Inoye (D–Hawaii) the committee's ranking Democrat, Bersell said.

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