Consumer Protection Cases

The Santa Barbara County District Attorney's Consumer Protection Unit has handled several noteworthy cases in the recent past. Here are some examples of how consumers and the public have been protected and restitution obtained.

Insuring Promises to Consumers Kept. The Fitness Gallery is a Woman's Health Club. It was located on Patterson Avenue in Goleta. Reportedly 300 to 400 women visited the club on a daily basis. During a promotional sale the Fitness Gallery sold numerous new memberships to women at a cost of $50 per year. Shortly after the promotion all members, new and old, were advised that the facility on Patterson would be closed. Due to financial hardships, it was being consolidated with a new facility located on Las Positas. Everyone was informed that they would have to pay a new fee of up to $250 per year.

The District Attorney's Consumer Mediation Unit received 200 complaints. A prompt review of the situation determined that the business was indeed suffering through difficult financial times. It was also determined that all contracts entered into by the members of the Fitness Gallery violated Business and Professions Code sections governing Health Studio Services.

The goal of the District Attorney's Consumer Protection Unit is to serve the public's interest by maintaining an even playing field for both competing businesses and between businesses and the consumer.

The main goal in this situation was to insure that the women who had paid for memberships should get the benefit of their bargain without any additional cost. This goal could not be achieved if the Fitness Gallery went out of business. This dilemma was resolved by an injunctive order from the court providing that:

1. Women who did not want to participate at the new location would receive a pro rata refund of the moneys paid;

2. Women who did wish to participate at the new location received a full-year service for the price originally agreed upon;

3. All members were required to execute new contracts which complied with the Business and Professions Code.

A $10,000 civil penalty was held in abeyance to encourage the business to remain open and continue to provide full service to their customers. Fortunately, for all parties concerned the business has remained open and fulfilled its obligation to its members.

Rite Aid - The Series. Led by Senior Deputy District Attorney Allan Kaplan, the Santa Barbara county District Attorney's Office joined forces with numerous other county prosecutors in a series of civil actions seeking injunctions and civil penalties in a series of marketing abuses. Here's how the trilogy unfolded.

#1 Scanner surveys done by the County Department of Weights and Measures demonstrated a disturbing pattern of scanner overcharges at Santa Barbara County Rite Aid stores. 701 items were selected from fifteen different Rite Aid locations over a four-month period. Of those 701 items, 62 scanned incorrectly resulting in an error rate of 8.84%.

During the preparation of our case against Rite Aid, we were contacted by other counties who had similar scanner problems with the Rite Aid stores in their jurisdictions. Further scanner surveys were conducted throughout California. In total 16,151 items were selected. Of those 16,151 items, 1,328 scanned incorrectly resulting in an error rate of 8.22%.

Santa Barbara joined forces with ten other prosecuting agencies to seek court action on behalf of the entire State of California. This resulted in a Final Judgment requiring Rite Aid to pay $1.6 million in civil penalties, $500,000 in cy près restitution, and the most comprehensive injunctive order ever issued in a scanner overcharge case in the State of California.

#2 Shortly after entering into the first settlement, it was discovered that Rite Aid was selling expired baby food. This discovery by Merced County led to further investigation and it was determined that Rite Aid was selling a multitude of expired products including baby food, condoms, and generic over-the-counter drugs. Santa Barbara joined Alameda, Merced and San Diego Counties. A complaint and request for temporary restraining order was filed. The Court granted our TRO. The case settled during pretrial proceedings. Broad injunctive relief prohibiting the sale of expired products, "cy près" restitution of $400,000 and civil penalties of $1 million were ordered. Santa Barbara County retained $220,000 of the civil penalty.

#3 Subsequently it was discovered that Rite Aid was ignoring the provisions of the injunctive relief ordered in Rite Aid #1 and Rite Aid #2. This caused the two Rite Aid task force groups to join forces for the purpose of enforcing the existing injunctions and obtaining further injunctive relief. Given Rite Aid's poor history of performance, the Rite Aid Task Force determined that it would seek as its goal a procedure whereby Rite Aid would be required to employ an independent third party to audit their compliance with provisions of all prior injunctive orders, respond to consumer complaints and provide automatic penalties for scanner over-charge violations. We succeeded in obtaining this unprecedented injunctive relief. In addition Rite Aid paid $2.8 million in civil penalties and costs. $200,000 in civil penalties were attributed to Santa Barbara County.

In total, these settlements represent payment by Rite Aid of more than $5 million. Of that amount the Santa Barbara County received approximately $558,688.

Overtime Parking Ticket Scam Halted. Santa Barbara enjoys a thriving tourist business. When there are big crowds one thing is usually certain. There is not enough parking. Almost everyone has at one time or another received a parking ticket, but it was extremely annoying when a private company started issuing parking tickets that were identical in appearance to the tickets issued by the City of Santa Barbara.

Overtime Parking, Inc. received permission from several businesses to regulate their private parking lots. They did so by posting signs warning customers that anyone parking without permission would be ticketed. Then they proceeded to "ticket" offending vehicles and send requests for payment of parking ticket penalties to the registered owners of the vehicles.

This matter came to the attention of the District Attorney's office after the July 4th holiday. By that time approximately 150 tickets had been issued since the business opened. The company was contacted and ordered to immediately cease and desist from issuing tickets in Santa Barbara County.

Subsequently, a civil injunction was obtained ordering that the company:

1. Refund all money received from the 150 tickets issued;

2. Notify everyone who received a ticket that they were not obligated to pay;

3. Remove all existing signs.

A civil penalty of $2,500 was assessed for the 90-day period in which this business operated in Santa Barbara County.

Sales Items Advertised at Different Prices in Different Newspapers. In this day and age consumers are bombarded by a variety of advertisements. Newspapers, television, radio and Internet are the major media outlets that reach most consumers.

The Consumer Protection Unit monitors advertising accuracy. Advertisements by national companies with numerous stores in varied locations are watched. In doing so, we conducted a six-month study of the advertisements contained in the Sunday editions of the Santa Barbara News-Press and Los Angeles Times. This study revealed that although 50 identical items were simultaneously advertised in both the Santa Barbara News-Press and Los Angeles Times, the advertised prices were not. 44 out of 50 times the price advertised in the Santa Barbara News-Press was higher than that for the identical item advertised on the same day in the Los Angeles Times. A single consumer purchasing those items would have been charged 7.3% more than advertised.

The Los Angeles Times advertisement listed their Santa Barbara store as a location where the products were available. As a result, Circuit City was ordered to pay a civil penalty of $39,600 and ordered to cease and desist from advertising different prices for identical items in the Los Angeles Times, which lists the Santa Barbara store.

Insurance Company Assumes Responsibilities for Unwitting "Title Branding" Fraud. When a vehicle is damaged beyond repair in an auto accident that car is determined to be a salvage vehicle. As such, the DMV brands the title of the vehicle as a salvage vehicle. Failure to do so is called "title branding." The Department of Motor Vehicles determined that Kemper Insurance hired a Santa Barbara resident to act as their salvage pool operator. This salvage pool operator failed to advise DMV of the salvage status of numerous vehicles.

After reviewing this matter, it was determined that although a non-employee committed the acts the insurance company was civilly liable for the misdeeds. Kemper Insurance was sued. In the course of this lawsuit, Kemper decided to provide restitution to over 100 individuals throughout central California who had unwittingly purchased these salvaged vehicles over the past nine years. Kemper was convinced to do so even though the majority of the claims were beyond the statute of limitations. Injunctive relief required Kemper to pay at the car owners option either one half the high retail blue book value of the vehicle to the consumer who decided to keep the vehicle or to purchase the vehicle outright for the full high retail blue book price. In addition, Kemper paid $40,000 in civil penalties.

Suppliers Bakery Goods Come Up Short-Weighted. Many items are sold by weight or have a weight listed as part of their label. Consumers assume that the weight listed is true and correct. It is one of the many jobs of the Department of Weights and Measures to insure that the weights stated are indeed correct. A Weights and Measures investigation determined that Vons Bakeries were selling underweight bakery items. At first it was thought that the problems were the result of human error. That is, the employees were not following the procedures for applying the filling and frosting to bakery items. In the process of the investigation it was determined that Vons suppliers were, in fact, furnishing under weight products.

The Santa Barbara Superior Court ordered payment of $17,500 in civil penalties, $2,139 in costs to the Department of Weights and Measures and injunctive relief designed to insure prevention of future sales of underweight bakery items.

D.A. Investigators Coordinate Telemarketing Sweep. Investigator Dan Raimer coordinated several telemarketing investigations. The biggest led to a sweep of several telemarketing firms in Santa Barbara. Over 100 law enforcement officers, including most all of our staff, as well as representatives from the Federal Trade Commission, U.S. Postal Inspector's Office, California Franchise Tax Board, Santa Barbara Police Department, Santa Barbara Sheriff's Department, and Ventura County District Attorney's Office, served search warrants and Federal Receiverships on 2 local businesses suspected of illegal and/or unfair business practices. Several businesses were closed and others resulted in having files and penalties meted out by the federal courts.

What do Torch Operating Co., Venoco, Inc. and Mobil Oil Companies all have in common? All have been the subject of lawsuits filed by the District Attorney's Environmental Protection Unit. Deputy District Attorney Jerry Lulejian was also instrumental in obtaining a settlement against a consultant illegally operating power generation equipment without APCD-required equipment or permits.

Chevron's Gaviota processing facility was also the subject of a District Attorney lawsuit. Senior Deputy District Attorney Allan Kaplan handled the litigation.

Two parallel underwater pipelines carry crude oil and gas ten miles from Platform Hermosa to landfall at Point Conception then 17 miles east on land to the Gaviota Gas and Oil Plant (Chevron) for processing. Two separate incidents at this facility precipitated enforcement action by the District Attorney's Environmental Protection Unit.

Pictured here (from left) are APCD Inspector Terry Snyder, Deputy District Attorney Jerry Lulejian, and APCD Engineering Supervisor Craig Strommen, at the Santa Maria Courthouse.

The first incident which triggered enforcement action was the failure of the facility to make a timely report of level one incidents by utilizing the 911 system.

The second incident demonstrated the importance of immediately reporting and correctly categorizing the nature of an emergency. This incident occurred when the plant caused the release of hydrogen sulfide (H2S). H2S is a colorless, foul smelling flammable gas. As a result of the release, a deadly cloud of gas passed over Highway 101. Numerous motorists experienced dizziness, nausea and vomiting as a result of the release.

Separate lawsuits were brought on these incidents in the Santa Barbara Superior Court for violation of the provisions of the facilities operating permit. The court ordered a combined total of $65,000 in civil penalties and $21,732 in costs. In addition, significant upgrades to the facilities machinery and procedures costing in excess of $103,000 were ordered by the court.