The Fall/Winter 2006 issue of Competition, the journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, recently arrived in the mail. It has an interesting article by Kevin K. Green of Lerach Coughlin entitled “The Unfair Competition Law After Proposition 64: The Supreme Court Speaks,” 15 Competition 37 (2006). The article “dissects the Supreme Court’s analysis in Mervyn’s and Branick, with an eye to how these decisions are likely to affect unfair competition and false advertising litigation going forward.” Id. at 38. The article analyzes the opinions in light of insights gathered while the author attended the oral arguments, and also addresses the Court of Appeal’s opinion in Pfizer.
One of the issues the article addresses is why the Supreme Court did not rely on the "statutory repeal rule." Every single Court of Appeal panel that held that Prop. 64 applies to pending cases relied on that so-called "rule." Yet, those of you who attended the Supreme Court oral argument (or read my report of it) may recall that the justices did not ask a single question during counsel's presentations on that "rule." The article offers these thoughts:
Although many lower courts felt duty-bound to apply the repeal notion as they perceived it, the Supreme Court, taking a global view, seemed to view the matter from a different vantage point. The justices may have been concerned foremost with maintaining consistency in the rules and presumptions governing statutory interpretation. The most recent high court pronouncements in this area have emphasized the presumption of prospectivity. A reinvigorated repeal rule might have created a confusing cross-current in modern Supreme Court precedent on the retroactive effect of statutes.
For all these reasons, the procedural/substantive approach (although itself an imperfect dichotomy) seems to have been a less controversial anchor for the Mervyn's outcome. The justices found common analytical ground in what is, for purposes of future UCL litigation, a more sweeping rationale for the decision. Summing up statutory amendments as either "procedural" or "substantive" generates waves through UCL doctrine after Proposition 64, in contrast to the ripples that might have flowed from a conclusion that the new standing rules are a statutory repeal.
Id.at 41 (footnote omitted).
The article also poses and answers some interesting questions relating to Branick's holding that leave to amend may be granted:
Id. at 44 (footnotes omitted).
For example, what proceedings are required in a case that has already gone to judgment in favor of an unaffected plaitniff who had standing to enforce the UCL on behalf of the "general public" before Proposition 64? The Supreme Court accepted on a grant and hold basis at least two cases fitting this description. Must the judgment be vacated, and if so, may it be reinstated following further proceedings in superior court under Proposition 64? The logic of Mervyn's suggests an answer. If the new plaintiff seeks to enforce the same liability against the defendant, based on the same asserted misconduct, then nothing should impede entry of a new judgment after the plaintiff substitution. A retrial of the same facts would be pointless and wasteful. Although apparently scant, there is authority allowing a judgment for the plaintiff to be reinstated following proceedings found necessary only after the judgment was entered. A plaintiff substitution due to Proposition 64 is in this category.
Next, the article tackles Pfizer, convincingly arguing that Proposition 64 does not require proof that all class members suffered an injury in fact; did not eviscerate the "likely to deceive" formulation of the UCL's "fraudulent" prong; and did not add a reliance element to a UCL claim. Id. at 45-49. The article then invokes the statutory-interpretation principle that "'[a] statute will be construed in light of common-law decisions, unless its language clearly and unequivocally discloses an intention to depart from, alter, or abrogate the common-law rule concerning the particular subject matter ...' Put another way, '[t]here is a presumption that a statute does not, by implication, repeal the common law. Repeal by implication is recognized only when there is no rational basis for harmonizing two potentially conflicting laws.'" Id. at 50 (quoting California Assn. of Health Facilities v. Department of Health Services, 16 Cal.4th 284, 297 (1997)). The article then argues:
Id. at 50.
Nothing in Proposition 64 "clearly and unequivocally" signals any intent to relegate to history nearly thirty years of UCL precedent on liability standards. Likewise, there is a more than "rational basis" for reconciling this precedent with Proposition 64. Of course, the person bringing the suit must meet the new standing requirements set forth in Business and Professions Code sections 17203, 17204 and 7535. This provides the accountability the voters sought in private UCL litigation. They declared that unaffected plaintiffs no longer have a key to the courthouse. But nothing indicates that the electorate meant to take the far more dramatic step of overhauling the established standards for proving a UCL cause of action. Again, section 17200 was not amended. Fully consistent with the letter of Proposition 64 and its stated goals, the defendant's liability to the represented group is proved under the familiar prongs and accompanying judicial articulations reaffirmed by the voters.
The article concludes by quietly calling the Supreme Court to action:
Because there is a wealth of Supreme Court case law fleshing out the UCL, Proposition 64's impact on proving a UCL claim directly impacts the viability of the court's own precedents. As before Proposition 64, the Supreme Court can be expected to have a central role in shaping UCL doctrine, especially if its precedents are called into question by lower courts as in Pfizer.
Id. at 51. I agree there is little reason why the Supreme Court should not step up to the plate now, grant review in Pfizer and/or In re Tobacco, and examine the continuing validity of its precedents sooner rather than later. The article as a whole is very good and worth reading in its entirety.