This is the second part of a two-part series on defenses for defeating COVID-19 class action lawsuits in California at the motion to dismiss stage. Our first installment focused on general defenses. This article will hone in on statutory defenses to raise at the pleadings stage in these cases.

A. Statutory Defenses

1. Statutory Standing, Unfairness and “Borrowing” Under the UCL.

On Nov. 2, 2004, the California electorate passed Proposition 64 which amended the standing requirements of the UCL. Prior to the changes, any party could bring a representative action without regard to whether or not they had suffered an injury. The UCL, as amended (and the FAL, as well), now limits its cause of action to individuals who have “suffered injury in fact and has lost money or property as a result of the unfair competition.” Cal. Bus. & Prof. Code § 17204.  In Kwikset Corp. v. Superior Court, 246 P.3d 877, 885 (Cal. 2011), the court adopted a two-part test for interpreting the “lost money or property” standing requirement. Under Kwikset, a party “must now (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact (i.e., economic injury) and (2) show that the economic injury was the result of (i.e., caused by) the unfair business practice or false advertising that is the gravamen of the claim.”  Accordingly, a plaintiff must plead that he or she actually relied on the misrepresentation or omission to bring a UCL claim. “This showing of actual reliance under the UCL requires a plaintiff to allege that ‘the defendant’s misrepresentation or nondisclosure was an immediate cause of the plaintiff’s injury-producing conduct.’” In re Solara Med. Supplies LLC, Customer Sec. Data Breach Litig., 2020 WL 2214152, at *9 (S.D. Cal. May 7, 2020). Courts have been generous in interpreting economic harm.  See Cappello v. Walmart, Inc., 394 F. Supp. 3d 1015, 1023 (N.D. Cal. 2019) (allegation that retailer shared customer’s video purchase information with Facebook, in alleged violation of store’s privacy policy, stated a claim of economic loss under the UCL).