Email
Password
(Forgot Password?)
The list of government bailouts grows with each passing day. The plaintiffs’ bar — specifically, those who file Unfair Competition Law class actions — cheerfully joins the ranks of the bailout recipients having received a stimulus package for their law practices, courtesy of the California Supreme Court.
The court’s holding in In Re Tobacco Cases II seriously undermines the impact of the California voters’ initiative to curb lawsuit abuse and opens once again the floodgates for class...
Jump to full article »
Some attorneys are warning that California businesses may want to brace for the effects of a recent state Supreme Court decision that could "open the floodgates" to frivolous and nuisance class-action lawsuits.
Proposition 64 was a 2004 ballot measure aimed at reining in such lawsuits. But, according to some, the 4-3 California Supreme Court decision against tobacco companies in the latest round of class-actions against them appears to have negated some of that proposition's intent.
After years in which California had what corporate defense attorneys characterized as the most liberal class-action standing requirements in the nation, many believed the passage of Proposition 64 would usher in an era of fewer so-called frivolous lawsuits. . . .
Thus, the court sent it back for trial, allowing tobacco companies to be sued by plaintiffs for having been deceived into smoking.
Justices did not duck the issue of possibly negating the voters' intent when they passed Proposition 64, acknowledging, however vaguely, that the decision in Tobacco II bypasses the measure.
Where was the tobacco industry in the Prop. 64 campaign? Philip Morris USA, the world's largest cigarette-maker, gave $200,000 to help pass the initiative. Now that the consumers' tobacco lawsuit can proceed in California courts, Philip Morris has the most to lose.
To sell the measure to voters, the backers made no mention that tobacco companies could benefit. They made no mention of AIG, Countrywide or any other big business. As stated in the official ballot pamphlet, proponents said the goal was narrow: "Protect small businesses from frivolous lawsuits. Close the shakedown loophole."
The California Supreme Court struck a blow not just for the little guy with its ruling. It also decreed that initiative promoters ought to be a little less slick with their campaign rhetoric.
On May 18, 2009, the California Supreme Court in In re Tobacco II Cases (No. S147345), issued a landmark opinion addressing Proposition 64, in the context of fraud and false advertising. The Court's decision should be of interest to all companies that do business with California consumers or face class action claims in the state. The Court's 4-3 decision potentially permits plaintiffs who have not suffered injury to band together with thousands of other uninjured class members to seek monetary restitution and injunctive relief, provided they can find just one plaintiff who actually was injured to serve as the named class plaintiff. The plaintiffs' bar is ecstatic.
The Court's decision is in many ways an unwelcome return to the pre-Proposition 64 days. . . .
Under this reasoning, companies can expect to see plaintiffs' attorneys trolling for a plaintiff with actual injury, in an attempt to construct a large class of absent plaintiffs without regard to whether any of the absent members were injured. If courts permit these types of suits, California will have returned to a world in which plaintiffs can bring a representative action on behalf of thousands of people who might not have suffered any actual injury. . . .
Justice Moreno provided a framework for pleading actual reliance: the plaintiff must allege that the defendant's misrepresentations were an immediate cause, but need not show they were the sole cause or even the decisive cause of plaintiffs' injury. The allegation of reliance is not defeated where there is alternative information available to the consumer "even regarding an issue as prominent as whether cigarette smoking causes cancer." . . .
Regrettably, the Supreme Court's decision likely will reinvigorate the use of Section 17200 as a tool by which plaintiffs attempt to extract money from businesses. There had been a strong trend since the passage of Proposition 64 to reject putative class actions that seemed to involve little "real" injury to consumers. This new opinion will reverse that trend and leave California businesses exposed to more costly litigation.
The California Supreme Court reinstated a class action lawsuit against tobacco manufacturers on Monday, giving consumers the go-ahead to sue for fraudulent advertising they allege hid the harmful effects of tobacco use. . . .
From a practical standpoint, to require all potential class members to show personal loss would be impossible, and would effectively end fraud-based class actions in California. Indeed, the suit at issue potentially involves millions of consumers affected by the alleged fraud.
The case has been remanded to the Court of Appeals for further proceedings. The suit was filed in 1997 by lead plaintiff Willard Brown. The class was granted by a San Diego County Superior Court judge in 2001, who subsequently decertified the class after Prop 64's passage. The decertification was affirmed by the Court of Appeals in 2006.
In addition to the count under Prop 64, the suit alleges a violation of California's false advertising law. The action seeks an injunction and damages.
Audet & Partners, LLP, a well known plaintiffs' consumer law firm, noted that the Supreme Court of California recently issued a pro-consumer ruling regarding Proposition 64 and found that consumers still have the right to seek class action status under California law. The ruling, In re Tobacco II Cases, 09 C.D.O.S. 5993, was published on May 18, 2009.
"We want to congratulate the fine work done by attorney Mark Robinson, a renowned fellow trial lawyer, for his excellent work in arguing the case before the California Supreme court" noted Audet & Partners, LLP founder William M. Audet. "Without a doubt, Mark Robinson's advocacy carried the day," . . .
This new ruling will clarify a number of legal issues, and will reject the idea that in a class action, each and every class member will have to show "reliance" on a fraudulent act to win a class action. This will mean that the hundreds of thousands of California residents who have been harmed by tobacco companies may seek relief in court.
"This is a great day for all California residents who have lost money or have been seriously injured by the egregious conduct of large corporations" says William M. Audet.
Big Tobacco and other major businesses took a hit Monday when the California Supreme Court ruled that class actions over alleged fraud can go forward, even if it's impossible to tell whether every plaintiff was harmed by deceptive ads.
"We conclude that standing requirements are applicable only to the class representatives, and not all absent class members," Justice Carlos Moreno wrote for a 4-3 court.
The ruling is important because it clarifies that Proposition 64, passed by the voters in 2004, doesn't prevent average citizens from acting as so-called private attorneys general in class actions under the state's unfair competition law. Some experts had argued that the ballot initiative limited the filing of UCL suits to government officials, such as the attorney general.
"This is a great day for the consumers of California," Mark Robinson, a partner in Newport Beach, Calif.'s Robinson, Calcagnie & Robinson who represented the plaintiffs, said during a conference call. "The reality is that this gives the consumers rights to protect themselves from fraudulent advertising."
Smoker Willard Brown filed the class action against Philip Morris USA Inc. and several other tobacco manufacturers in 1997, accusing them of violating the state's unfair competition law by allegedly denying that smoking causes serious illnesses, such as cancer, and advertising cigarettes as non-addictive. The class was seeking only injunctive relief and restitution.
The California Supreme Court has revived a class-action lawsuit against the tobacco industry alleging its advertisements misled consumers into believing some cigarettes were less harmful than others.
The 4-3 decision Monday reverses two lower court rulings that barred the consumer lawsuit because of the 2004 passage of Proposition 64. The voter-approved initiative says only consumers claiming they lost money or property can file such class actions.
Altria Group Inc., the maker of Marlboro cigarettes, and other tobacco companies lost a bid to block a group lawsuit claiming that they misled thousands of Californians about the dangers of smoking.
A divided California Supreme Court today reinstated a class-action, or group, lawsuit against tobacco companies, saying each smoker in the case isn’t required to prove that they relied on specific false statements when the alleged misrepresentations were part of “an extensive and long-term advertising campaign.”
Altria, the Richmond, Virginia-based parent company of Philip Morris USA, is the largest U.S. tobacco company. The lawsuit names Philip Morris and seven other tobacco companies as defendants.
Consumers have the right to sue as a group over advertising they believe misled them into buying products, a divided state Supreme Court ruled Monday in reinstating a massive suit against the tobacco industry.
The 4-3 decision rejected business arguments that, if accepted, would have virtually prohibited class-action suits for false advertising by requiring proof that every plaintiff - millions of them, in some cases - had seen an allegedly deceptive ad and relied on it to make a purchase. The court majority said that evidence is required only for the single plaintiff or small group that represents the entire class.
"This gives the consumers rights to protect themselves from fraudulent advertising," said Mark Robinson, a lawyer for the smokers who sued tobacco companies in 1997.
The ruling could make California "the class-action capital of the country," retorted William Stern, a lawyer for business organizations and a co-author of Proposition 64, a 2004 ballot measure at the heart of the case. . . .
The case was filed under California's unfair-competition law, a far-reaching statute that lets private citizens sue on behalf of the general public over illegal business practices, including deceptive advertising. The law was narrowed by the business-sponsored Prop. 64, which requires a plaintiff to show that he or she had actually been harmed by the business practice.
Prop. 64 did not say, however, how the new requirement would affect class actions, in which an individual or a small group sues on behalf of consumers in the same circumstances. The crucial question Monday was whether every member of the class must show harm from the challenged business practice, a virtual impossibility in most cases.
The California Supreme Court revived a major class action lawsuit against the tobacco industry Monday, ruling that smokers could hold it accountable for alleged deceptive advertising.
After years of consumer cases meeting their demise in lower courts, the state high court's 4-3 decision helped resuscitate a key consumer law that voters sharply limited in 2004 in the wake of lawsuit scandals.
Justice Carlos R. Moreno, writing for the majority, said Proposition 64 was intended to stop "shakedown" lawsuits that enriched only lawyers and "did not propose to curb" genuine consumer grievances.
The decision, the court's most significant interpretation of Proposition 64, was a departure from many lower court rulings that interpreted the measure as having broader sweep.
Trial lawyers called the ruling a major consumer victory, while corporate litigators predicted a flood of frivolous lawsuits and accused the court of ignoring voters.
The case against the tobacco industry, which lower courts had dismissed, charges the industry with luring people to smoke with deceptive ads about cigarette safety. . . .
The court's three most conservative justices dissented, arguing that the majority ruling invited "mischief" and frivolous lawsuits that Proposition 64 was designed to halt.
The ruling will be applied "not only to the unsympathetic facts alleged in the case -- i.e., that larger tobacco companies lured consumers into nicotine addiction by falsely claiming over many years that cigarettes were safe -- but also to myriad situations in which the anti-consumer implications are far less dire," wrote Justice Marvin R. Baxter, joined by Justices Ming W. Chin and Carol A. Corrigan.
The complaint before us alleges that the tobacco industry defendants violated the UCL by conducting a decades-long campaign of deceptive advertising and misleading statements about the addictive nature of nicotine and the relationship between tobacco use and disease. Prior to passage of Proposition 64, the trial court had certified the case as a class action. The class was defined as “All people who at the time they were residents of California, smoked in California one or more cigarettes between June 10, 1993 to April 23, 2001, and who were exposed to Defendants’ marketing and advertising activities in California.” After Proposition 64 was approved, the trial court granted defendants’ motion to decertify the class on the grounds that each class member was now required to show an injury in fact, consisting of lost money or property, as a result of the alleged unfair competition. The Court of Appeal affirmed.
On review, we address two questions: First, who in a UCL class action must comply with Proposition 64’s standing requirements, the class representatives or all unnamed class members, in order for the class action to proceed? We conclude that standing requirements are applicable only to the class representatives, and not all absent class members. Second, what is the causation requirement for purposes of establishing standing under the UCL, and in particular what is the meaning of the phrase “as a result of” in section 17204? We conclude that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions. Those same principles, however, do not require the class representative to plead or prove an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign. Accordingly, we reverse the order of decertification to the extent it was based upon the conclusion that all class members were required to demonstrate Proposition 64 standing, and remand for further proceedings regarding whether the class representatives in this case have, or can demonstrate, standing.
Philip Morris International Inc. and other cigarette makers lost a bid to block a group lawsuit claiming that the companies misled thousands of California smokers about the dangers of smoking.
The California Supreme Court today reinstated a class- action, or group, lawsuit against tobacco companies, saying each smoker in the case isn’t required to prove that they relied on specific false statements when the alleged misrepresentations were part of “an extensive and long-term advertising campaign.”
The case, filed in 1997, accused tobacco companies of making misleading statements about the health risks and addictiveness of smoking, and sought restitution for money that smokers spent on cigarettes.
Yesterday morning, the Supreme Court heard oral argument in In re Tobacco II Cases, no. S147345. Attorney Mark P. Robinson of Robinson Calcagnie & Robinson argued for the plaintiffs. Attorney Daniel P. Collins of Munger, Tolles & Olson argued for the defendants. Court of Appeal Justice Eileen C. Moore sat in place of Chief Justice Ronald M. George, who was recused.
Mr. Robinson began his argument by saying that with the UCL, the Legislature and the Supreme Court, for the past 35 years, have sought to protect consumers from deceitful marketing practices by use of the "likely to deceive" standard. Case law, including Chern and Justice Tobriner in Fletcher, has not required individualized proof of reliance. That is because, as the court in Fletcher pointed out, it is often impossible to prove in a class setting. The lightened burden of proof is part of the damages trade-off noted by the Court in Bank of the West. The purpose of the lightened burden is to effectuate the intent of the Legislature. Proposition 64 changed who can sue, it changed standing.
Justice Kennard was the first justice to speak and she wanted to get right to "the threshold inquiry." She asked whether the class was decertified because of the trial court's belief that the heightened standing requirement pertained to every class member. Mr. Robinson said that Judge Prager read Proposition 64 to require individualized proof of reliance for every member of the class. Justice Kennard: So your short answer is yes. Robinson: Yes. . . .
The final question was from Justice Kenard: Must the misrepresentations be a substantial factor in causing the plaintiff’s conduct? Mr. Robinson replied that the misrepresentation had to be material and likely to deceive the general public. He cited Harper v. 24 Hour Fitness, then concluded it’s up to the trial court to decide how the class is defined.
And that was the end of the argument.
Description: Affirmed in full
Date: 09/05/2006