Just a few weeks ago, the California Supreme Court ruled that lawsuits under the Consumer Legal Remedies Act can only be filed by individuals who suffer real damage from unlawful business practices.
But during oral arguments on Tuesday it wasn’t clear where the court stood on applying that same rule to every participant of class actions filed under the state’s Unfair Competition Law.
Careful questioning and poker faces by the justices left the outcome mostly a mystery in a case of major interest to the tobacco industry and more than 25 amici curiae who weighed in on one side or the other. But a couple of amici on the consumers’ side predicted the justices would reverse the appellate court, which upheld class decertification.
The underlying suit, filed 12 years ago, accused Philip Morris USA Inc. and five other tobacco manufacturers of violating the UCL and the state’s False Advertising Law by allegedly denying links between smoking and serious illnesses. The suit also accused the companies of marketing cigarettes — often to minors during the Joe Camel campaigns and other youth promotions of the ’90s — as having no additives and being non-addictive.
“The massive, long-term public campaign by the tobacco industry worked beautifully,” plaintiffs lawyers wrote in Supreme Court briefs. “People who were already addicted to cigarettes used the industry’s propaganda to rationalize their refusal to stop smoking and people who wanted to smoke (usually adolescents) used it as justification to start smoking.”
The suit doesn’t seek damages, just injunctive relief and restitution for money plaintiffs spent on cigarettes.
San Diego County Superior Court Judge Ronald Praeger granted class certification in 2001, allowing smokers who lived in California between June 10, 1993, and April 23, 2001, to pursue claims under the UCL and FAL. But after voters passed Proposition 64 in 2004, he decertified the class, saying that under the ballot measure’s terms, individual plaintiffs and class members didn’t have standing to sue unless they actually suffered harm by loss of money or property.
San Diego’s 4th District Court of Appeal affirmed in 2006.
During Tuesday’s oral arguments in San Francisco, Mark Robinson Jr., a partner with Newport Beach’s Robinson, Calcagnie & Robinson who represents the purported class, argued that Prop 64 doesn’t require all members of a class action to have suffered actual injury. Only the class representatives — in this case smokers Willard Brown, Damien Bierly and Michelle Buller-Seymore — must show actual harm.
Proposition 64, Robinson argued, “changed the standing only. It said a class rep has to be affected, has to have an injury in fact.”
He maintained that individuals who have interpreted Prop 64, including the state’s legislative analyst, “talk about the claimant” having to meet standing requirements. “I take that to mean only the class rep,” and not the whole class, Robinson said.
Justice Joyce Kennard, who seemed sympathetic to Robinson’s argument, gave him a boost by pointing out that federal case law supports Robinson’s stand. (In the absence of Chief Justice Ronald George, who recused himself for unexplained reasons, Kennard was presiding over the arguments, and 4th District Court of Appeal Justice Eileen Moore was sitting pro tem.)
There was some skepticism, though. Justice Marvin Baxter wanted to know whether class members who never saw or heard the allegedly misleading ads would have standing to sue, and pointed out that some of the individual plaintiffs in the case said ads weren’t directly responsible for their choices to smoke.
“Would that person be eligible?” he asked.
Robinson said all the class needs to show is whether the ads had the ability to deceive customers.
As he put it in his court papers: “No showing of actual deception, reliance or damages is necessary. Rather, a plaintiff seeking injunctive or restitutive relief on behalf of others need only demonstrate that the defendant’s conduct was ‘likely to deceive.’”
Surprisingly, Daniel Collins, a partner in Los Angeles’ Munger, Tolles & Olson who represented the tobacco companies, agreed that Prop 64 refers to a claimant alone, but argued that well-settled class certification law requires each class member to have standing to bring a suit on his or her own behalf.
“So,” Justice Baxter asked, “if a private individual couldn’t satisfy standing by filing his own lawsuit, then that same individual shouldn’t be allowed to proceed as a member of a class? Is that what you’re saying?”
“That’s correct,” Collins answered. “There has to be that commonality of interests.”
In court papers, Collins had argued that his opponent’s position on standing “would create an anomalous situation in which the class representatives, by definition, would have UCL claims that are not typical of the absent class members.”
He also contended that Judge Praeger got it right when he ruled that the plaintiffs’ claims raised primarily individualized issues, particularly regarding how the alleged misleading ads affected each person’s decision to smoke or not.
A ruling in In re Tobacco II Cases, S147345 (pdf), is due within 90 days.