The Assembly Judiciary Committee this week delayed voting on a job killer bill that if passed, will expose businesses to costly litigation when goods are “substantially similar,” yet priced differently.
The bill, SB 899 (Hueso; D-San Diego), sponsored by the Consumer Federation of California, could subject businesses to a minimum $4,000 of damages for each violation.
SB 899 intends to force retailers and grocery stores to charge the same price for “male” versus “female” products, which will require the sellers to either engage in gender stereotyping of consumer goods or increase prices to the highest price for a good of “substantially similar or like kind,” as well as expose these employers to the same costly, drive-by litigation that has been plaguing businesses in California with regard to disability access.
Costly Litigation
Although recent amendments to SB 899 provide a limited list of “gender-neutral” reasons a good may be priced differently, proof of those reasons will come up only after litigation has already been filed and costs and attorney’s fees incurred, CalChamber Policy Advocate Jennifer Barrera explained to the committee on June 21.
Barrera gave an example: a consumer could go to a separate retailer/grocery store or even the same retailer/grocery store on a daily basis and purchase two items the consumer believes are similar in kind, yet priced differently (even $0.01 would be enough), and ask the business to settle for a minimum of $4,000 or face costly litigation.
While the business may very well be able to prove the price difference was based upon a gender-neutral reason, the cost of litigation to prove that defense is significant, Barrera said.
This is the exact type of frivolous litigation that businesses across California are struggling with for alleged violations of the Americans with Disabilities Act, as it is the same section of the Civil Code that covers both issues. “California businesses do not need exposure to another layer of such extortionist litigation as SB 899 will create,” Barrera said.
SB 899 seeks to expand on a 1995 law that banned pricing differences for men’s and women’s services, except in specific circumstances.
Business Owner Testifies
Jose Paniagua, owner of Chic Hair Studio in Riverside, testified in opposition to the bill. Paniagua is facing a lawsuit for a $4 cost difference between a man’s and a woman’s haircut. At the time of the price inquiry, the salon explained to the prospective customer the reason for the cost difference is a labor cost, which is permitted under state law. Now he is fighting to protect his business.
Paniagua said that his salon and 10 other businesses in his community have been subject to lawsuits from the same lawyer and the lawyer’s girlfriend, who have been requesting services from a variety of firms in the last couple of months.
If SB 899 passes, Paniagua told the committee that “without any regulations to protect small businesses, there is no doubt that we will get more lawsuits and owners will consider closing their businesses because they are afraid of getting sued over huge amounts of money.”
Paniagua explained that another business, a dry cleaner, is facing a $100,000 lawsuit over the 50-cent difference for dry cleaning a woman’s blouse versus a man’s laundered shirt.
Lawsuits about differently priced services are already having a bad impact on businesses, Paniagua told the committee. “Can you imagine what would happen if SB 899 becomes law and this impacts products? This is one more reason to kill jobs and close down business.”
Vote Delayed
The Assembly Judiciary Committee decided not to vote on the legislation on June 21 and chose instead to wait a week until the next committee meeting on June 28. There was a lot of discussion among the committee members about whether the bill’s language could be amended to deal with their concerns.
Asked about the prospects for changes removing objections to the bill, Barrera pointed out that CalChamber’s opposition letter has remained the same throughout the legislative process to date, meaning amendments have not resolved business concerns.
July 1 is the deadline for legislative policy committees to meet and report bills.
Action Needed
Contact your Assembly members and urge them to oppose SB 899.
