California Supreme Court On The Consumer Legal Remedies Act

UPDATE: After more than two years, on February 3, 2009, the California Supreme Court finally set argument in an important UCL case, In re Tobacco II for Tuesday, March 3, 2009, at 9:00 a.m., in San Francisco. With the Court's 90-day rule, a decision can be expected by June 1, 2009 in the ordinary course.

California product liability lawsuits against life sciences defendants often include claims under California's Unfair Competition Law (or 'UCL"), Cal. Bus. & Prof. Code § 17200 et seq. Sometimes UCL claims are the main theory of liability against life sciences clients, particularly when the plaintiff, or plaintiff class, has not suffered personal injuries from a medical device or drug they have used.

The UCL is controversial. For many years, critics complained that allowed individuals or groups to sue businesses on behalf of the "general public" over allegedly "unfair", fraudulent, or illegal practices, even if they never suffered any type of loss or harm, personal injury or otherwise. The voters passed Proposition 64 in November 2004, however, and imposed limitations to stem what were fairly viewed as abuses of this law. UCL plaintiffs now must show that they suffered an actual injury and lost money or property as a result of the defendant's alleged practice, and lawsuits brought on behalf of the general public now also must meet must traditional class action requirements. 

In response to Proposition 64, some entreprenurial plaintiffs' lawyers turned from the UCL to another statute, California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §1750 et. seq., seeking another broad and malleable cause of action. (For more background about the UCL and CLRA, see this page or the always informative UCL Practitioner.

But the CLRA remains more limited than the pre-Proposition 64 version of the UCL. Last week, the California Supreme Court issued an important new CLRA decision, Meyer v. Sprint Spectrum L.P., unanimously affirming judgment for Sprint and concluding that a CLRA plaintiff lacks standing "without some allegation that he or she has been damaged by an alleged unlawful practice." Sprint was represented in the California Supreme Court by Reed Smith's own Ray Cardozo and Dennis Maio.

Meyer began in early 2004 with allegations, on behalf of the general public, that Sprint violated the UCL by including mandatory binding arbitration and other provisions in its customer service agreements. After Proposition 64, the original plaintiff (who was not a Sprint customer) was replaced by new named plaintiffs, and CLRA and declaratory relief causes of action were added. Sprint challenged the amended complaint because even the new plaintiffs had not alleged that the contract provisions had been enforced against them, and they also did not allege that they were personally damaged by the provisions. Although plaintiffs argued that the CLRA imposed no damage requirement whatsoever, the court concluded that California's Legislature had "set a low but nonetheless palpabale threshold of damage." It also noted that with statutes like the UCL and CLRA, "any rule that would expand the ability of individuals to bring lawsuits has costs as well as benefits." There is little to say other than that Meyer is a sound and well-reasoned decision that provides important and clear guidance for future CLRA claims.

On a different subject, more traditional personal injury class actions, the Drug and Device Law Blog has a good post regarding a Washington Legal Foundation paper by John Beisner and Jessica Miller, "Litigate the Torts, Not the Mass: A Modest Proposal for Reforming How Mass Torts are Adjudicated," proposing some long-overdue revisions to American Pipe tolling.

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