Yesterday, the Court of Appeal (First Appellate District, Division Four) handed down its third opinion (and its second published one) in the case between Mervyn's and Californians for Disability Rights: Californians for Disability Rights v. Mervyn's, LLC, ___ Cal.App.4th ___ (Jul. 30, 2008). In it, the Court held that Mervyn's violated the UCL's "unlawful" prong by failing to comply with the federal Americans with Disabilities Act (42 U.S.C. §§ 12101 et seq.). Today's San Francisco Chronicle has an article on the opinion.
For our purposes, the opinion's discussion of the procedural history is most interesting:
While this case was pending on appeal, the voters of California amended the statute under which the case had been prosecuted. The voters’ enactment, popularly known as Proposition 64, was passed in the California General Election on November 2, 2004, and went into effect the next day. (Cal. Const., art. II, § 10, subd. (a).) At the time this case was tried, the UCL authorized any person acting for the general public to sue for relief from unfair competition. (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 228 (Mervyn’s).) “Standing to bring such an action did not depend on a showing of injury or damage.” (Ibid.) Proposition 64 amended the UCL to limit private enforcement to those who have suffered injury in fact and have lost money or property as a result of such unfair competition. (Ibid.) Proposition 64 did not state whether this new limitation applies to pending cases. (Id. at p. 229.)
On December 6, 2004, Mervyn’s moved to dismiss this appeal upon the claim that Proposition 64’s change in standing requirements apply to pending cases. We denied the motion because new legislative enactments are presumed to operate prospectively, rather than retroactively, to avoid unfair impairment of existing rights and obligations. In July 2006, the California Supreme Court reversed our ruling, upon concluding that application of Proposition 64’s standing requirements to pending cases would not constitute a retroactive application of the law because the initiative measure did not change any existing rights or obligations. (Mervyn’s, supra, 39 Cal.4th at pp. 232-234.) While the measure “withdraws the standing of persons who have not been harmed to represent those who have,” it did not impair any rights because lack of standing is a jurisdictional challenge that can be raised at any time in a legal proceeding. (Id. at pp. 232-233.) The high court reversed our denial of Mervyn’s motion to dismiss the appeal and remanded the case to us “for further proceedings consistent” with its opinion. (Id. at p. 234.)
On remand to this court, CDR asked leave to move for substitution of plaintiff on appeal—it did not contend that it had standing to appeal in its own right as a party aggrieved by the judgment under Code of Civil Procedure section 902. We denied CDR’s request and granted Mervyn’s motion to dismiss the appeal for lack of standing by CDR. CDR petitioned for review in the Supreme Court. The Supreme Court granted review and transferred the case to us with directions to vacate our decision and to reconsider the cause in light of United Investors Life Ins. Co. v. Waddell & Reed, Inc. (2005) 125 Cal.App.4th 1300 (United Investors) and Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235 (Branick).
United Investors held that a plaintiff has standing to appeal dismissal of a UCL complaint following demurrer even if it has no authority to maintain its suit in superior court, because plaintiff “is sufficiently aggrieved by the dismissal of its complaint that it has standing to appeal under Code of Civil Procedure section 902.” (United Investors, supra, 125 Cal.App.4th at p. 1305.) Branick held that Proposition 64 does not forbid amendment of complaints in the trial court to substitute new plaintiffs for those who have lost standing under the new measure. (Branick, supra, 39 Cal.4th at pp. 241-242.) The “ordinary rules governing the amendment of complaints” apply. (Id. at p. 239.)
Upon reconsideration, we denied Mervyn’s motion to dismiss the appeal in a ruling we issued on April 17, 2007. We concluded that the two cases referenced by the high court, “when read in conjunction, lead to the following conclusion: CDR is a party aggrieved by entry of judgment against it and thus has standing to appeal the judgment even if CDR has no authority to maintain its suit in superior court (United Investors, supra, 125 Cal.App.4th at pp. 1304-1305); and, if CDR succeeds in its effort to reverse the judgment on appeal, it may seek leave in the superior court to amend its complaint to substitute a plaintiff who meets the Proposition 64 standing requirement.” (Branick, supra, 39 Cal.4th at pp. 240-244.) Mervyn’s petitioned for review in the Supreme Court, and the petition was denied on July 18, 2007.
The parties completed briefing on the merits of the appeal in January 2008, and the matter was argued and submitted for decision. We now turn to the trial court’s factual findings following the bench trial, and then proceed to discuss CDR’s claims raised on appeal.
Slip op. at 3-4. After concluding that the trial court erred by entering judgment in Mervyn's favor, the Court went on:
As discussed above, CDR lost standing as a plaintiff when the voters adopted Proposition 64, which amended the UCL law to limit private party lawsuits to those who have lost money or property as a result of alleged unfair competition. (Mervyn’s, supra, 39 Cal.4th at p. 227.) We therefore cannot remand the case with directions to enter judgment in CDR’s favor. However, CDR is entitled to an opportunity to amend its complaint to substitute a new plaintiff with standing. (Branick, supra, 39 Cal.4th at pp. 239, 242-243.) We therefore remand the case to the trial court so that CDR may file a motion for leave to amend its complaint. “On remand, should plaintiff in fact file a motion to amend, the superior court should decide the motion by applying the established rules governing leave to amend.” (Id. at p. 238, citing Code Civ. Proc., § 473.) If the court grants the motion, the court shall enter judgment in favor of the newly substituted plaintiff and determine the appropriate scope of injunctive relief. In fashioning injunctive relief, the court shall consider appropriate alternative means for making merchandise available to disabled individuals who are denied physical access to the merchandise.
Id. at 30-31.