News Intelligence Analysis
Updates on Arnold's Win
Arnold to Settle Lawsuits for Pennies on the Dollar?
Reported by Katherine Yurica
[Editor's note: This article has been edited to reflect several word changes for clarification purposes.]
The Yurica Report has learned that only three days after Mr. Schwarzenegger won his victory in California, an aide announced that the governor-elect intends to settle pending energy fraud lawsuits. This apparently includes the suit filed by Cruz Bustamante under the California statute, Civil Code section 17200, of the Unfair Practices Act. The purpose of the act “is to safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition” the Act expressly prohibits, “unfair, dishonest, deceptive, destructive, fraudulent and discriminatory practices by which fair and honest competition is destroyed or prevented.”
According to news talk show host Bernie Ward of KGO radio, San Francisco, who reported the story Friday night on his radio show, (October 10th), Schwarzenegger's aid stated that the governor-elect's administration did not want to be saddled with someone else's lawsuits. The Unfair Practices Act, however, has provisions that require businesses who profit from unfair practices to pay the victims those profits. Although the Act does not authorize recovery of damages in a representative action, according to Hiliary N. Rowen, an attorney from the law firm of Thelen Reid & Priest, “the plaintiff—who need not have been harmed by the challenged conduct—may seek injunctive and restitutionary relief, including the disgorgement of profits on behalf of all those injured.” (See Hiliary Rowen's article).This provision would make the power companies, who profited an estimated $9 billion from the California energy scam, the losers.
In the meantime, Claire Cooper of the Sacramento Bee reported Friday on another lawsuit in the Federal Court. She reported the judges from the 9th U.S. Circuit Court of Appeals seemed skeptical of the Federal Energy Regulatory Commission's (FERC) “ contention that it acted legally three years ago, when it relied on competition among energy wholesalers to determine the cost of California's power supply and did not require them to file the rates they would charge.” California sued FERC, claiming it is due a refund of $9 billion in gouged profits because the Federal Power Act didn't authorize FERC to approve a fluctuating marketbased rate structure. The question is, does the governor-elect intend to settle the federal suit also?
Mr. Schwarzenegger's announcement to settle the lawsuits comes on the heels of an article written on the eve of the election by investigative reporter Greg Palast. Palast, whose reports appear on BBC television's Newsnight, said that the Los Angeles based Foundation for Taxpayer and Consumer Rights uncovered Enron internal memos regarding Mr. Schwarzenegger's secret meeting in May 2001 with Kenneth Lay, the former CEO of Enron. The intent of the power company, according to Palast, was to sabotage the Davis-Bustamante plan to win back the $9 billion dollars in illegal profits earned by power moguls. The plan has worked so far. Clearly Mr. Schwarzenegger should be questioned about his agenda.
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