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Hundreds, if not thousands, of California unfair practice cases may have been thrown into limbo Monday when the state Supreme Court declared Proposition 64 retroactive without relying on the word “retroactive.” That is, the court ruled that the controversial ballot measure, which limits private attorney general suits, applies to cases “pending” on the date it passed � sort of a limited form of retroactivity. Disappointed plaintiffs’ lawyers mollified themselves, however, with the court’s simultaneous pronouncement in a companion decision that many of those pending cases could be kept alive by substituting in new plaintiffs with actual injuries in place of current plaintiffs who � under Monday’s two opinions � now lack standing. “The important limitation on the rule just mentioned,” Justice Kathryn Mickle Werdegar wrote for a unanimous court, “is that the plaintiff proposed to be substituted may not ‘state facts which give rise to a wholly distinct and different legal obligation against the defendant.’” Kimberly Kralowec, of counsel in The Furth Firm in San Francisco and a recognized expert on Prop 64, called the rulings a “measured decision” that “reached a middle ground.” “The court,” she added, “didn’t go out of its way to decide anything it didn’t need to decide.” But San Francisco attorney James Sturdevant, who represented Californians for Disability Rights in a losing effort, said the rulings encourage “deception and concealment.” “The court missed a singular opportunity to provide truth and clarity to the voters,” said The Sturdevant Law Firm partner. “If the proponents want an initiative to be retroactive and apply to pending cases, they should be required to say that clearly and understandably in the initiative language.” Prop 64 was passed by the state’s voters on Nov. 2, 2004, purportedly to stop frivolous lawsuits. The initiative amended Business and Professions Code � � better known as the private attorney general statute � to limit suits filed under the state’s unfair competition law to individuals actually injured by, or who lost money or property because of, someone else’s illegal acts. In Monday’s cases, Californians for Disability Rights had sued Mervyn’s department stores for allegedly refusing to provide full access to the disabled, while Downey Savings and Loan Association was sued by a couple of individuals for reportedly having improper lending practices. Neither the disability rights group nor the couple suing Downey had suffered harm themselves. San Francisco’s First District Court of Appeal found Prop 64 not retroactive and granted the disability rights group standing to sue, while Los Angeles’ Second District declared the measure retroactive and denied standing to plaintiffs Thomas Branick and Ardra Campbell. In Californians for Disability Rights v. Mervyn’s LLC, S131798 ( .pdf), the Supreme Court split the difference, dancing around the word “retroactive” while ruling that the provisions enacted by Prop 64 apply to “pending cases.” “To apply Proposition 64′s standing provisions to the case before us,” Justice Werdegar wrote, “is not to apply them ‘retroactively,’ as we have defined that term, because the measure does not change the legal consequences of past conduct by imposing new or different liabilities based on such conduct. “The measure left entirely unchanged the substantive rules governing business and competitive conduct,” she continued. “Nothing a business might lawfully do before Proposition 64 is unlawful now, and nothing earlier forbidden is now permitted. Nor does the measure eliminate any right to recover.” San Francisco attorney Kralowec said the “effect of the holding” is to declare Prop 64 retroactive. Plaintiffs lawyer Sturdevant agreed, and placed high hope in the court’s companion ruling in Branick v. Downey Savings and Loan Association, S131798 ( .pdf). In that decision, the high court held unanimously that while Prop 64 prevents anyone who hasn’t suffered direct harm from bringing a 17200 action, courts can be asked to amend suits to substitute plaintiffs with actual injuries. “To bar a meritorious action prosecuted by a substituted plaintiff ‘who hassuffered injury in fact and haslost money or property as a result of’ unfair competition or false advertising,” Werdegar wrote, “serves none of the voters’ articulated objectives.” Werdegar left it to the trial court to decide whether it was appropriate to allow substitute plaintiffs in the case against Downey Savings. In the suit against Mervyn’s, plaintiffs’ lawyer Sturdevant said that since about 16 disabled individuals testified against the retailer at trial, he believes his clients wouldn’t have any problem amending their complaint to comply with the high court’s ruling. Michael Spencer, a partner in Milberg Weiss Bershad & Schulman’s New York office who represented the plaintiffs against Downey Savings, said he felt the same way. “While our clients are disappointed that the Supreme Court interpreted Prop 64 to apply to pending cases,” he wrote in an e-mail, “the court’s reasoning should allow these cases to continue unimpaired once the complaints are amended to bring in plaintiffs who have suffered injury.” David McDowell Jr., a partner in Morrison & Foerster’s L.A. office who represented Mervyn’s, praised the rulings in a prepared statement. “Retailers, which especially have been prey to meritless 17200 cases,” he said, “have considerable reason to rejoice over the court’s ruling, which frees them from baseless claims of unfair practices.” Matthew Hodel, a partner in Irvine’s Hodel Briggs Winter who represented Downey Savings, couldn’t be reached. Kralowec, the Prop 64 expert, said Monday’s rulings raise questions about the validity of Pfizer Inc. v. Superior Court( Galfano), 06 C.D.O.S. 6279, a July 12 Second District ruling that seemed to apply Prop 64 broadly in false advertising cases. In reaching its ruling in Pfizer, Kralowec noted, the Second District found that Prop 64 had enacted substantial changes, while the Supreme Court on Monday declared them merely procedural. The full text of both rulings will appear in Wednesday’s California Daily Opinion Service.

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