State of California v. Levi Strauss, Inc.

When Levi Strauss, the blue jeans manufacturer, violated national and state anti-trust laws, California’s then Attorney-General, George Deukmejian, brought a class action on behalf  of all consumers in the state to obtain refunds for jeans overcharges. The company settled by paying $12.5 million into a damage fund that was to be disturbed to the injured class of consumers.

Deukmejiam subsequently proposed to “search” for several million individual injured consumers who had purchased Levi jeans during the relevant period by running an extensive television ad campaign, prominently featuring himself, just before the gubernatorial campaign (in which he was a candidate) was to begin.  Duekmajian convinced the Superior Court judge that all injured consumers must be “found” in this way, so that individual consumers could be refunded somewhere 25 cents and two dollars per pair of jeans.  Administering the proposed campaign, of course, would cost almost as much as the total monies that might ultimately find their way into individual consumer’s pockets.

At this point, several consumer advocacy groups intervened to propose a different kind of distribution.  An alternative procedure would provide a broad, inexpensive notice to class members allowing for verified individual refunds, but with the vast residual of the damaged funds pooled into a consumer trust fund.  Following a cy pres approach, the funding consumer protection research, investigation and litigation activities undertaken by public interest groups.  CLIPI represented the intervenor Consumers’ Union and authored the principal briefs on which the California Supreme Court relied in articulating the basis for, and the parameters of, the new legal theory.

Following the Supreme Court’s 1986 decision, then Attorney General John Van de Kamp agreed to settle the litigation, with half of the undistributed funds to be placed into a consumer trust fund and the other half to be distributed to governmental agencies with consumers protection offices.  The consumer trust fund has since been incorporated as the California Consumer Protection Foundation, and has already distributed several million dollars to nonprofit public interest organizations such as the Black Health Network, the Utility Consumers Action Network, the Chinatown Service Center and the National Consumer Law Center, in order to finance their consumer protection activities.  Ironically, under the settlement agreement, CLIPI was barred from receiving any grants for its further work in the consumer protection field because the Attorney General believed that only such a complete bar would prevent a perceived possible conflict of interest.

In later litigation, CLIPI successfully prosecuted two large consumer protection class actions against Toyota Motors and GTE/Sprint on behalf of injured consumers who had purchased car models with defective brakes, and consumers who had been overcharged for long distance telephone calls made on certain holidays, respectively.  Both of these class actions were settled with the defendant companies agreeing to provide full repairs and refunds to all known customers, while establishing substantial consumer protection funds to indirectly benefit injured consumers who could not be located.  These moneys have funded a variety of consumer protection activities, particularly several major projects undertaken by Voter Revolt and the Proposition 103 Enforcement Project on behalf of major insurance reform initiatives in California.