State of California v. Levi Strauss, Inc.

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

Deukmejiam subsequently proposed to “search” for several million individual injured California consumers who had purchased Levi jeans during the relevant period by running an extensive television ad campaign, prominently featuring himself, just as the gubernatorial campaign (in which he was a candidate) was beginning. 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 damages distribution campaign would cost almost as much as the total monies that might ultimately find their way into individual consumer’s pockets.

Representing the Consumers Union, CLIPI attorneys proposed an alternative procedure that 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. The pooled fund monies would be used to fund consumer protection research, investigation and litigation activities undertaken by public interest groups—all of which would indirectly benefit the injured consumer class. CLIPI authored the principal briefs on which the California Supreme Court relied in articulating the basis for, and the parameters of, the new legal doctrine.

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 law enforcement agencies that had consumers protection programs. The consumer trust fund was incorporated as the California Consumer Protection Foundation, which, in the next few years, distributed $5 million to nonprofit public interest organizations such as the Consumers Union, the Utility Consumers Action Network, the Chinatown Service Center and the National Consumer Law Center.

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