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Dennis the (Corporate) Menace

Scott Lucas | June 11, 2013 | Story Politics

City Attorney Dennis Herrera’s battle of suit and countersuit with Monster Beverage over the energy drink’s caffeine content and marketing claims raises the question: Who elected him to be our Michael Bloomberg? The short answer is: No one had to. Whereas New Yorkers are deeply ambivalent about the anti-fat, anti-fun crusades of their nanny mayor, San Franciscans love a self-righteous meddler. And unlike most city attorneys around the country, Herrera enjoys a broad set of powers (and incentives) that let him morph from mild-mannered municipal lawyer to consumer watchdog with a flick of the writ. (Update: This dynamic was on clear display in yesterday's announcement by Herrera's office that the city attorney is suing three out-of-state gun accessory makers and a Utah-based gun show promoter, alleging they sold high-capacity magazines disguised as repair kits.)

Herrera has been pursuing alleged corporate wrongdoers nonstop since he was first elected in 2001—everyone from payday lenders to Bank of America (for unfair consumer arbitration) to Kellogg (for claiming that its cereals boost the immune systems of kids). As it happens, he is one of only four city attorneys in the state currently authorized to take on cases like these (the others are in Los Angeles, San Diego, and San Jose). His smaller-city peers spend their time dispensing advice to officials and handling issues like garbage-truck accidents and police brutality. Consumer rip-offs and other unfair business practices are supposed to be referred to the local district attorney. Good luck with that. Patrick Whitnell, general counsel for the League of California Cities, notes that DAs can be “reluctant” to file consumer actions. “My district attorney has a firm policy of not going after these kinds of cases,” Riverside’s city attorney, Greg Priamos, says. And Herrera concurs that it would be “unreasonable” to expect DAs to take on an aggressive watchdog role, given their already large criminal workload.

So that leaves the playing field open to someone like Herrera, who enjoys other important advantages. Unlike most city attorneys, he’s elected, not appointed, so he doesn’t need a mayor’s permission to sue. And he can count on voters to root for him— indeed, to a lot of San Franciscans, the bigger the target, the better. Herrera’s predecessor, Louise Renne, spent much of her 16-year tenure taking on giants: gun makers, tobacco companies, utilities. “I think our philosophy is the same,” Herrera says.

By comparison, other city attorneys have to think smaller and closer to home. “Our bias is local,” says Jan Goldsmith, city attorney in moderate-to-conservative San Diego, whose targets have included a boxing gym that deceptively charged fees to military personnel when they were deployed. “Of all the divisions in our office, consumer protection tends to be more controversial. People often ask us, ‘Why are taxpayers paying for this?’ A lot of people down here think that government should stay out.”

Herrera also has a powerful, if complex, financial incentive to hunt down bad-guy businesses. In 2004, a coalition of interests, including Philip Morris, Microsoft, and the U.S. Chamber of Commerce, poured millions into the passage of Proposition 64, which greatly curtailed what corporations like to call “shakedown” lawsuits. Among other things, the measure requires city and state attorneys to plow money collected from consumer cases back into enforcement—that is, more litigation. Since its passage, Herrera’s consumer protection unit has brought in around $20 million, including $4.75 million from McKesson Corporation for overcharging city workers for medications and $7.6 million from AU Optronics, a Taiwanese manufacturer of LCD screens, for price fixing. “We don’t make our decision on profit motive,” Herrera says. Still, the law demands that consumer protection winnings fund more of the same.

And let’s not forget: Bringing these cases is pretty good for Herrera’s political brand—after all, he might want to run for mayor again, despite his 2011 defeat by Ed Lee. What’s more, according to Chuck Thompson of the International Municipal Lawyers Association (of which Herrera was recently president), San Francisco’s example is intriguing to city attorneys across the land. “Rather than being seen as going out on a limb, there is great interest in replicating this model,” Thompson says. Herrera asserts that “vindicating the public interest” is his primary concern. “It’s not,” he insists, “because I’m grabbing headlines and looking for the next office.” He won’t comment on future litigation, but he does make one promise: “I’m not going after coffee.”

Originally published in the July 2013 issue of San Francisco

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