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Ever since Proposition 64 went into effect Nov. 3, defense counsel have raced to courthouses throughout the state, briefs in hand, attempting to rid their clients of unfair competition lawsuits filed by uninjured plaintiffs who now lack the requisite standing to prosecute such cases as private attorneys general. But something happened on the way to the courthouse. On Feb. 1, the First District Court of Appeal issued a published opinion in Californians for Disability Rights v. Mervyn’s, 05 C.D.O.S. 1010, holding that Prop 64′s amendments to California’s unfair competition law (Business & Professions Code ��17200, et. seq. and 17500, et. seq.) do not apply to cases filed prior to Nov. 3, 2004. In Mervyn’s, Californians for Disability Rights, a nonprofit whose stated purpose was to protect the interests of disabled individuals, filed suit against Mervyn’s, a corporation operating retail department stores throughout California, seeking to enjoin Mervyn’s from allegedly denying store access to persons with mobility disabilities. After a bench trial, the trial court denied CDR’s requested relief and entered judgment in favor of Mervyn’s. CDR appealed. While CDR’s appeal was pending, California voters approved Prop 64, mandating, inter alia, that: (1) only the attorney general or specified local public prosecutors may bring a lawsuit for unfair competition unless a person has suffered injury and lost money or property; and (2) persons seeking representative relief must satisfy the class action requirements of California Code of Civil Procedure �382. Based on the UCL’s new standing requirements enacted by Prop 64, Mervyn’s moved to dismiss CDR’s appeal. The court, denying Mervyn’s motion to dismiss, held that Prop 64′s amendments do not apply to cases pending before Nov. 3 because Prop 64 contains no statutory language expressing an intent that it applies retroactively; and absent such intent, the presumption against retroactivity governs. Mervyn’s argued that a different rule applies where statutory rights are at issue. In support of its argument, Mervyn’s purportedly cited a line of cases holding that “a cause of action or remedy dependent on a statute falls with a repeal of the statute, even after the action thereon is pending, in the absence of a saving clause in the repealing statute.” Mervyn’s(quoting Callet v. Alioto, 210 Cal. 65 (1930)). Rejecting the precedent established in the line of cases cited by Mervyn’s, the First District commenced its analysis with the premise that a “conflict in canons of statutory interpretation” existed. It continued: “On the one hand, legislative enactments are presumed to operate prospectively. On the other hand, a court should apply the law in effect at the time it renders its decision, including recent statutory amendments.” Relying on the U.S. Supreme Court case, Landgraf v. USI Film Products, 511 U.S. 244 (1994), and the California Supreme Court case, Evangelatos v. Superior Court, 44 Cal.3d 1188 (1988), the Mervyn’scourt essentially ruled that absent an expression of intent to the contrary, the repeal of a right should not be applied to cases pending prior to the repeal regardless of whether the right is based on statute or common law. The Mervyn’sdecision is flawed because the “conflict in canons of statutory interpretation” noted by the court does not actually exist. California precedent has established a bright-line distinction between how changes to commonlaw rights are treated versus the repeal of a statutoryright. When dealing with the repeal of a statutory right, retroactive intent is irrelevant when determining whether the repeal of the statutory right applies to pending litigation. The Mervyn’scourt’s determination that a conflict in statutory interpretation exists was based entirely on the court’s mistaken belief that Evangelatosand Landgrafhad any relevance to the issue of whether Prop 64 applies to pending litigation. The court’s belief was mistaken because neither Evangelatosnor Landgrafinvolved the repeal of a statutory right. In Evangelatos, the California Supreme Court had to decide whether Prop 51 applied to litigation pending prior to the proposition’s effective date. Unlike Proposition 64, Prop 51 modified the common lawdoctrine of joint and several liability ( Evangelatos, 44 Cal.3d at 1192). Prop 51 did not repeal or modify any statute or statutory right. Because a common law right, rather than a statutory right, was at issue, the Evangelatoscourt properly conducted a retroactivity analysis. Evangelatoshas no application to UCL cases like Mervyn’sbecause Prop 64 did not affect any common law rights. Rather, Prop 64 repealed a “private attorney general” remedy unknown to the common law. This distinction was expressly recognized 12 years ago in ARA Living Centers v. Superior Court of San Mateo County, 18 Cal.App.4th 1556 (1993) (distinguishing Evangelatoson the grounds that the statutes at issue in ARA Living Centers, “amendments to elder abuse statutes, do not make a ‘substantial change in this state’s traditional tort doctrine,’ as was the case in Evangelatos“). Brenton v. Metabolife Int’l, 116 Cal.App.4th 679 (2004), a case decided just last year, teaches the same lesson. There the defendant filed an anti-SLAPP motion seeking to strike the plaintiff’s complaint. The trial court denied the motion and the defendant appealed. While the case was on appeal, the Legislature amended the anti-SLAPP statute by enacting Code of Civil Procedure �425.17, which identified certain plaintiffs and types of cases as not being subject to anti-SLAPP requirements. The SLAPP statute amendment provided an independent ground for denying the defendant’s motion. The defendant asserted on appeal that applying �425.17′s amendments to the anti-SLAPP statute after the case was filed and on appeal was an improper retroactive application. The court of appeal, quoting from Callet v. Alioto, 210 Cal. 65 (1930), rejected the defendant’s assertion, stating in Brentonthat: “Although the courts normally construe statutes to operate prospectively, the courts correlatively hold under the common law that when a pending action rests solely on a statutory basis, and when no rights have vested under the statute, ‘a repeal of such a statute without a saving clause will terminate all pending actions based thereon’ ( citing Southern Service v. Los Angeles, 15 Cal.2d 1, 11-12). “As explained nearly 50 years ago in Callet v. Alioto(1930) 210 Cal. 65, 67-68: ‘It is too well settled to require citation of authority, that � every statute will be construed to operate prospectively and will not be given a retrospective effect, unless the intention that it should have that effect is clearly expressed. � It is also a general rule, subject to certain limitations not necessary to discuss here, that a cause of action or remedy dependent on a statute falls with a repeal of the statute, even after the action thereon is pending, in the absence of a saving clause in the repealing statute. � The justification for this rule is that all statutory remedies are pursued with full realization that the legislature may abolish the right to recover at any time.’” The court’s reliance on Landgraf v. USI Film Productsis similarly flawed. In Landgraf, the Supreme Court was notanalyzing a repeal of a statutory right. Rather, the court was determining whether amendments to Title VII, that had the effect of creating new rights, applied retroactively. As the Supreme Court stated, the statutory amendment at issue “significantly expands the monetary relief potentially available to plaintiffs who would have been entitled to backpay under prior law . . . [and] allows monetary relief for some forms of workplace discrimination that would not previously have justified anyrelief under Title VII.” Landgrafat 254 (emphasis in original). Unlike the statutory amendment in Landgraf, Prop 64 merely repealed the statutory right of any person to act as a private attorney general; it did not expand or create any rights. Simply put, the Mervyn’scourt failed to apply the bright-line distinction between statutory amendments that alter common law rights versus statutory amendments that repeal statutory rights. California law has long supported the position that the repeal of statutory rights applies to pending cases — notwithstanding the absence of any intent indicating that such changes apply retroactively. See, e.g., Tapia v. Superior Court of Tulare County, 53 Cal.3d 282 (1991); Brenton v. Metabolife Int’l, 116 Cal.App.4th 679 (2004); ARA Living Centers v. Superior Court of San Mateo County, 18 Cal.App.4th 1556 (1993); Robertson v. Rodriguez, 36 Cal.App.4th 347 (1995); South Coast Regional Commission v. Gordon, 84 Cal.App.3d 612 (1978). In fact, given the clarity of existing law prior to Mervyn’s, it would be superfluous for the Legislature or the electorate to express such intent in Prop 64. Based on the language of its decision, the Mervyn’scourt appeared troubled by the notion that the electorate could strip CDR of standing to prosecute its appeal. As the court noted in Mervyn’s: “CDR filed this lawsuit in May 2002, over two years before passage of Proposition 64. At that time, CDR had the right to file and prosecute a UCL cause of action, and maintained that right through trial in August 2003. Dismissal of the appeal at this juncture would foreclose consideration of CDR’s claims that it should have prevailed at trial, or is entitled to a new trial. Were Proposition 64 applied to pending appeals, as Mervyn’s advocates, even those plaintiffs who prevailed at trial could be stripped of their judgments.” It may seem harsh and perhaps counterintuitive that a plaintiff, who has been litigating a case for years, can literally lose standing overnight. But Californians for Disability Rights, like every other uninjured individual or entity acting as a private attorney general under the UCL, filed its lawsuit with the full understanding that the right to act as a private attorney general could be repealed at any time. Given such notice, plaintiffs facing the termination of their cases based on the application of Prop 64, cannot now claim that such application is unfair. For those of us who regularly defend UCL cases, we can only hope the California Supreme Court will quickly remedy the Mervyn’sdecision — before millions of dollars are wasted defending cases that lack a real plaintiff. Michael L . Mallowis a litigation partner in the Los Angeles office of Kirkpatrick& Lockhart Nicholson Graham. He is currently defending UCL cases pending in the San Francisco, Los Angeles and Orange County Superior Courts. Nicole M . Leeis a litigation and labor and employment associate and Eric J. Kohmis a litigation associate at the firm. All three are members of the firm’s California Unfair Competition Law practice group.Practice Center articlesinform readers on developments in substantive law, practice issues or law firm management. Contact News Editor Candice McFarland with submissions or questions at [email protected]or go to www.therecorder.com/submissions.html.

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