The UCL Practitioner

List of pending Supreme Court cases

My list of pending Supreme Court cases involving UCL and/or class action issues has been updated.

Supreme Court issues "grant and hold" order in McAdams v. Monier

Yesterday, the Supreme Court issued a "grant and hold" order in McAdams v. Monier, no. S154088. Briefing is deferred pending resolution of In re Tobacco II Cases, no. S147345. The Court of Appeal's opinion, McAdams v. Monier, Inc., 151 Cal.App.4th 667 (2007), is no longer citable. Here is my original post on the review petition in this case, and here is my post on the Court of Appeal's opinion.

Supreme Court extends time to grant or deny review in McAdams v. Monier, Inc.

On Friday, August 24, 2007, the Supreme Court gave itself until October 3, 2007 to grant or deny review in McAdams v. Monier, Inc., no. S154088. If it hadn't, it would have had to grant or deny review during next week's conference. Thanks to the blog reader who emailed me with the tip. Here is my original post on the pending review petition in this case, in which the Court of Appeal reversed an order denying class certification of UCL and CLRA claims.

Petition for review filed: McAdams v. Monier, Inc.

On July 5, 2007, a petition for review was filed in McAdams v. Monier, Inc., no. S154088. The petition challenges the Court of Appeal's reversal of a trial court order denying certification of UCL and CLRA claims in a non-disclosure case. McAdams v. Monier, Inc., 151 Cal.App.4th 667 (2007). My original blog post on McAdams is here.

The petition has already been fully briefed. The answer to the petition was filed on July 25, 2007, and the reply was filed on August 2, 2007. Also, I've received copies of three amicus letters in support of the petition (none of which appears on the Supreme Court's docket as of this writing):

• Amicus Letter of CJAC and California Bankers Association (dated 08/16/07)
  

• Amicus Letter of Intel Corporation (dated 08/10/07)
  

• Amicus Letter of VeriSign, Inc. and DENTSPLY International, Inc. (dated 08/17/07)

All of the letters argue that, at a minimum, the Supreme Court should issue a "grant and hold" order pending resolution of In re Tobacco Cases II and Pfizer. They also argue that California law forecloses any possibility of establishing predominance through a classwide presumption of reliance in either a CLRA or a UCL case. But the doctrine of presumed reliance in a fraud-type claim has been well established since Vasquez v. Superior Court, 4 Cal.3d 800 (1971), and no later case has repudiated the doctrine, particularly in a case (like McAdams) that rests on the defendant's failure to disclose material information known to it about the product it was selling. None of the case authorities cited in the letters supports the notion that presumed reliance no longer exists in California jurisprudence in cases involving such facts (which is what the letters basically say). Mirkin v. Wasserman, 5 Cal.4th 1083 (1993), on which the letters rely, was not an omissions case, but instead involved the "fraud on the market" theory, which would have rested on a presumption of reliance by persons who may never have heard the defendants' affirmative misprepresentations at all. The Court refused to adopt the "fraud on the market" theory, but expressly reaffirmed that "actual reliance can be proved on a class-wide basis when each class member has read or heard the same misrepresentations." Id. at 1095. Similarly, "to prove reliance on an omission[, o]ne need only prove that, had the omitted information been disclosed, one would have been aware of it and behaved differently." Id. at 1093. Under Vasquez, this proof can be made on a classwide basis if the same material information was withheld from each class member. Nothing in Mirkin is to the contrary.

Unless the Court gives itself an extension of time, it has until approximately September 4, 2007 to grant or deny review. Therefore, we can expect some action during either today's conference or next week's.

UPDATE: The Supreme Court took no action on this case during its conference on Wednesday, August 22, 2007, so we will have to wait until next week. Also, thanks to the reader who emailed me to point out that the link to the VeriSign amicus letter was broken. The link has now been fixed.

Supreme Court grants review in another Prop. 64 "injury in fact" case: Meyer v. Sprint Spectrum

Yesterday, the Supreme Court granted review in Meyer v. Sprint Spectrum, no. S153846. In that case, the Court of Appeal (Fourth Appellate District, Division Three) said that Prop. 64 created a "two-part, statutory standing test," and held that the plaintiffs lacked Prop. 64 standing to challenge unconscionable provisions in their cellular telephone contracts because the defendant had not enforced or threatened to enforce the provisions against them. The Court also held that the plaintiffs' CLRA claim failed. Meyer v. Sprint Spectrum L.P., 150 Cal.App.4th 1136 (2007). My original post on the Meyer decision is available at this link.

This case was decided the day before the State Bar's UCL conference in Los Angeles, at which I spoke on May 18, 2007. Those of you who attended may recall that a copy was handed out to all attendees.

Summary of issues on review in Amalgamated

As I reported last week, the Supreme Court granted review in Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court, no. S151615. The Court's statement of issues on review is now available online:

This case presents the following issues: (1) Does a worker’s assignment to the worker’s union of a cause of action for meal and rest period violations carry with it the worker’s right to sue in a representative capacity under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) or the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.)? (2) Does Business and Professions Code section 17203, as amended by Proposition 64, which provides that representative claims may be brought only if the injured claimant “complies with Section 382 of the Code of Civil Procedure,” require that private representative claims meet the procedural requirements applicable to class action lawsuits?

If anyone has a copy of the petition for review, please send it along by email (uclpractitioner@gmail.com).

Supreme Court grants review in UCL case: Amalgamated Transit Union v. Superior Court

Yesterday, the Supreme Court granted review in Amalgamated Transit Union v. Superior Court (First Transit) (no. S151615).

The Supreme Court's docket does not yet indicate the specific issues on which review has been granted, but the Court of Appeal's opinion addressed a union's standing to assert a UCL claim on behalf of its members post-Prop. 64:

In this writ proceeding, we hold:

(1) An individual’s statutory right to sue in a representative capacity, conferred under the Labor Code Private Attorneys General Act of 2004 (Labor Code section 2699) and under the unfair competition law (Business and Professions Code section 17203), may not be assigned to a third party.

(2) Section 17203 of the unfair competition law, as amended by Proposition 64, providing that representative claims may be brought only if the injured claimant “complies with Section 382 of the Code of Civil Procedure,” means that private representative claims must meet the procedural requirements applicable to class action lawsuits.

Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court, 148 Cal.App.4th 39 (2007) (modified Mar. 22, 2007) (slip op. at 2). My original post on the Court of Appeal's decision (now no longer citable) is at this link.

Supreme Court transfers final Prop. 64 retroactivity case: Benson v. Kwikset Corp.

On April 23, 2007, the Supreme Court issued a transfer order in the last remaining Prop. 64 retroactivity "grant and hold" case, Benson v. Kwikset Corp., no. S132443. I previously pointed out that this case was overlooked when the other "grant and hold" cases were transferred in March.

Two more amicus briefs in Tobacco II

Here are two more amicus briefs in In re Tobacco II Cases, no. S147345. Both support the consumers' position:

• Amici Curiae Brief of the National Consumer Law Center and National Association Of Consumer Advocates (submitted 04/23/07) (via Consumer Law & Policy Blog)
  

• Amici Curiae Brief of Public Citizen, Inc., and The Center for Auto Safety (submitted 04/24/07)

More of the briefs are collected at this post. A number of other amicus briefs have been filed; if you have copies, please email them.

Supreme Court finally transfers Prop. 64 "grant and hold" cases back to Courts of Appeal

Today, the Supreme Court disposed of all of the "grant and hold" Prop. 64 retroactivity cases, which have been pending in appellate limbo since Mervyn's and Branick were decided in July 2006. The cases have all been transferred back to their respective Courts of Appeal for further proceedings. These are the affected cases:

• BIVENS v. COREL CORPORATION • S132695 • D043407 • Dismissed - to CA 4/1

• BIVENS v. GALLERY CORPORATION • S140396 • D045557 • Dismissed - to CA 4/1

• COHEN v. HEALTH NET • S135104 • G033868 • Dismissed - to CA 4/3

• CONSUMER ADVOCACY GROUP v. KINTETSU ENTERPRISES • S135587 • B158840 • 2/8 Transferred after hold

• HARTFORD FIRE INSURANCE v. S.C. (TURNER) • S140272 • A109257 • 1/1 Transferred after hold

• LYTWYN v. FRYS ELECTRONICS • S133075 • D042401 • Dismissed - to CA 4/1

• SCHULZ v. NEOVI DATA CORPORATION • S134073 • G033879 • 4/3 Transferred after hold

• SCHWARTZ v. VISA INTERNATIONAL SERVICE ASSOCIATION • S138751 • A105222 • Dismissed - to CA 1/2

• THORNTON v. CAREER TRAINING CENTER • S133938 • D044598 • Dismissed - to CA 4/1

• YOUNG AMERICA CORPORATION v. S.C. (LYNCH) • S141766 • C049337 • 3 Transferred after hold

The Supreme Court seems to have forgotten one of the "grant and hold" cases, Benson v. Kwikset Corp., no. S132443, in which a "grant and hold" order was issued in April 2005.

Supreme Court issues "grant and transfer" order in Mervyn's II

Yesterday, the Supreme Court issued a "grant and transfer" order in Californians for Disability Rights v. Mervyn's LLC, no. S148962 (docket), granting review in that proceeding for the second time (I'll call it "Mervyn's II"). The Court of Appeal (First Appellate District, Division Four) will be reconsidering whether Californians for Disability Rights should be permitted to amend its complaint to substitute a new, affected plaintiff under Branick v. Downey Savings & Loan Assn., 39 Cal.4th 235 (2006).

As everyone knows, the first grant of review resulted in the Supreme Court's retroactivity opinion, Californians for Disability Rights v. Mervyn's LLC, 39 Cal.4th 223 (2006) (Mervyn's I). On August 8, 2006, Californians for Disability Rights filed a petition for rehearing, asking the Supreme Court to clarify whether, under Branick, it would be permitted leave to seek to amend its complaint to substitute an affected plaintiff (as explained in this post). On August 30, 2006, the Supreme Court denied the petition for rehearing (as explained here).

The case then went back to the Court of Appeal (First Appellate District, Division Four). On November 13, 2006, that Court issued this brief order:

Appellant's request to grant leave to move for substitution of plaintiff in this court, or in the alternative for an order vacating the judgment and remanding the case to the trial court with leave to permit amendment, is denied. The appeal is dismissed for lack of standing.

As I observed in this post, "[t]he Court of Appeal's original opinion in Mervyn's came after the defendant moved to dismiss the appeal, arguing that Prop. 64 had stripped away the plaintiff/appellant's standing. It seems that the motion to dismiss has now, at long last, been granted." Because the appeal was from a judgment in favor of Mervyn's, the trial court would have lost jurisdiction long ago, and no further relief could be had from that court. Because the Court of Appeal refused to grant relief, Californians for Disability Rights was nearly out of options, even though no appellate court had ever reached the merits of its appeal.

On December 21, 2006, Californians for Disability Rights filed another petition for review with the Supreme Court (Mervyn's II). I have not seen the petition or other briefs, but I gather that the petition challenged the Court of Appeal's holding that amendment could not be sought in any court, in apparent contravention of Branick. Yesterday's "grant and transfer" order reads:

Request for judicial notice granted. Petition for review GRANTED. The above-entitled matter is transferred to the Court of Appeal, First Appellate District, Division Four, with directions to vacate its decision and to reconsider the cause in light of United Investors Life Insurance Co. v. Waddell & Reed, Inc. (2005) 125 Cal.App.4th, 1300 and Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235. (Cal. Rules of Court, rule 8.528(d).)

It strikes me as somewhat unusual that the Supreme Court would direct a Court of Appeal to reconsider its ruling in light of another Court of Appeal opinion. Such opinions are not binding on sister appellate courts. Perhaps it did so because the Court of Appeal did not prepare a written opinion explaining why it denied amendment.

It is also very interesting that the Supreme Court would cite United Investors in particular. As I explained in this post from January 2005, in that case, the Court of Appeal (Second Appellate District, Division Five) held that Prop. 64 did not strip away a plaintiff's appellate-level standing, even if it stripped away its trial-level standing: "Even if plaintiff has no authority to maintain its suit in superior court, it is sufficiently aggrieved by the dismissal of its complaint that it has standing to appeal under Code of Civil Procedure section 902." United Investors, 124 Cal.App.4th at 1305. I even mentioned on the blog back in January 2005 that in Mervyn's, the First District could have simply followed the lead of United Investors and denied the motion to dismiss, then addressed Prop. 64 retroactivity when it decided the merits of the appeal. I also observed in February 2005 that it was very interesting that the First District's opinion in Mervyn's did not even mention, much less follow, United Investors. If the First District follows United Investors now, I do not see how it could avoid either (a) holding that Branick requires that Californians for Disability Rights be allowed to seek leave to amend, whether at the trial or the appellate level, or (b) reaching the merits of CDR's appeal. What's more, it hardly seems fair that CDR should be trapped in the appellate twilight zone simply because Proposition 64 passed after its appeal was already pending.

In any event, it will be very interesting to see how this plays out. Congratulations to counsel for Californians for Disability Rights for effectively nagivating the appellate rules to achieve this result.

More on why full review was granted in Tobacco, not PFizer

In response to my top five reasons why the Supreme Court granted full review in Tobacco instead of Pfizer, a reader writes:

I think your reasons 2 3 4 and 5 as to why Tobacco II is the lead are all sound and plausible.

Reason 1, however, the expediting of consideration of the Tobacco II petition, is the consequence of the Court's decision to grant and hold Pfizer, not the reason for granting review of Tobacco II. As you note, Pfizer was extended to Nov. 9. Next week, however, is oral argument and the Court does not hold its weekly conference to consider petitions for review; thus, the final conference at which to grant review (or grant and hold) Pfizer was Nov. 1. Normally, in fact, the Court considers a petition at least two conferences before time to grant review expires. Thus, the likely scenario is that the Court considered Pfizer at the Oct 25 conference and was made aware that Tobacco II was pending and was probably a better lead case, Court tentatively decides that Tobacco II will probably be lead but wants to grant and hold Pfizer in case it presents additional issues; the only way to do this is to act on both petitions on Nov 1, the last conference before time to grant Pfizer expires, thus, the reason for the order to get the answer in Tobacco II in in time for consideration at the Nov 1 conference. Thus, I would be surprised if the Court actually expedites the appeal in Tobacco II because its reasons for expediting consideration of the petition for review had nothing to do with Tobacco II or any need to decide it quickly and everything to do with its desire to grant and hold Pfizer.

That is very interesting and helpful, and makes sense considering that the petition for review in Tobacco did not request expedited review. When the Supreme Court said it was considering expediting the petition, I assumed that an explicit request for expedited review had been made. That turns out not to be the case. Thanks to the person who wrote for taking time to share your insights.

Top five reasons why the Supreme Court made Tobacco, not Pfizer, the lead case

I confess I was surprised that the Supreme Court granted full review in Tobacco, but issued a "grant and hold" order in Pfizer. Given what I know about how the issues overlap in the two cases, I would have expected the opposite. Here are a few educated guesses about why the Supreme Court handled the cases this way:

1. Something about Tobacco warrants expedited review. (I won't be sure what that might be until I see the briefs, which I expect to get later today.) As I reported the other day, the Supreme Court denied respondents' motion for a seven-day extension of time to file their answer to the review petition, noting that it was considering expedited review. It then ordered respondents to file their answer by Monday, October 30 (just four days later and eleven days sooner than respondents were requesting). A reader pointed out that this order actually curtailed respondents' time to file their answer. Ordinarily, an answer to a petition for review is due 20 days after the petition is filed. Rule of Court 28(e)(4). In Tobacco, that due date would have been November 2 (today). Somebody probably worked all weekend to get the answer done and filed by October 30. If the Supreme Court is reviewing Tobacco on an expedited basis, then obviously that case comes ahead of Pfizer (in which the Supreme Court gave itself 90 more days to decide the petition).

2. Tobacco took the entire Prop. 64 analysis a step further than Pfizer, into the realm of class certification. It is therefore more efficient to review Tobacco before Pfizer. In theory, resolving all the issues raised in Tobacco would dispose of all the issues raised in Pfizer, and more, allowing the Supreme Court to transfer Pfizer back to the Court of Appeal once Tobacco is decided. By contrast, if the Supreme Court resolved Pfizer first, it would then have to turn to Tobacco to decide the class certification issues. (This reason may be a stretch, given that Tobacco did not expressly address the "likely to deceive" or reliance issues decided in Pfizer. On the other hand, Tobacco includes a CLRA claim, which Pfizer does not.)

3. Tobacco was decided after the Supreme Court handed down Mervyn's, and analyzed (albeit cursorily) the impact of Mervyn's. Pfizer preceded Mervyn's by almost two weeks. Therefore, the Supreme Court's review of the Court of Appeal's analysis in Tobacco will begin at a more advanced level, making the review more meaningful.

4. In Pfizer, two justices (Justices Chin and Corrigan) are disqualified and have recused themselves from participating. In Tobacco, only one justice has recused himself (Chief Justice George). (This information appears in the docket entries granting review.) The panel deciding Tobacco will therefore need only one specially-assigned justice, not two.

5. A case alleging improper marketing of cigarettes is more societally important than one alleging improper marketing of mouthwash. Tobacco thus presents a better context in which to decide critical questions about how Prop. 64 should be interpreted and its real-world ramifications.

Any other ideas?

BREAKING NEWS: Supreme Court grants review in In re Tobacco and issues "grant and hold" order in Pfizer

Today, the Supreme Court granted review in In re Tobacco II Cases, no. S147345, and issued a "grant and hold" order in Pfizer v. Superior Court, no. S145775. The "grant and hold" order in Pfizer reads:

Further action in this matter is deferred pending consideration and disposition of a related issue in In re Tobacco II cases, S147345 (see Cal. Rules of Court, rule 282(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 29.1, is deferred pending further order of the court. Chin and Corrigan, JJ., are recused and did not participate. Votes: George, CJ., Kennard, Baxter, Werdegar and Moreno, JJ.

Because a statement of the issues to be reviewed in Tobacco is not yet available online, and because I haven't seen the briefs in Tobacco, I cannot say precisely how the issues overlap with Pfizer. If/when I get more information, I will, of course, post it. Meanwhile, the Court of Appeal opinions in Pfizer and Tobacco are both no longer citable as precedent.

“The Unfair Competition Law After Proposition 64: The Supreme Court Speaks”

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:

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.

Id. at 44 (footnotes omitted).

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:

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.

Id. at 50.

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.

Supreme Court considering expedited review of In re Tobacco II Cases

Last Thursday, October 26, 2006, the Supreme Court issued the following order in In re Tobacco II Cases, no. S147345:

The request for an extension of time to file the answer to the petition for review, filed on October 25, 2006, is hereby denied. Because the Court is considering the possibility of acting upon the petition for review on an expedited basis, any answer to the petition for review must be filed in the San Francisco office of the Supreme Court by 12:00 p.m. on Monday, October 30, 2006. Filing may be effected by transmitting a copy of the answer by facsimile to the Clerk's Office in the Court's San Francisco office.

(Emphasis added.) In In re Tobacco II Cases, ___ Cal.App.4th ___ (Sept. 5, 2006), the Court of Appeal (Fourth Appellate District, Division One) affirmed an order decertifying UCL and CLRA claims for class treatment after Prop. 64. The answer to the petition for review was filed today, as ordered. I do not have a copy of either the petition for review or the answer, and would be grateful to anyone who is able to forward either or both of those documents.

Petition for review filed in In re Tobacco II Cases

On October 13, 2006, a petition for review was filed challenging the Court of Appeal's opinion in In re Tobacco II Cases, ___ Cal.App.4th ___ (Sept. 5, 2006). In that opinion, the Court of Appeal affirmed an order decertifying UCL and CLRA claims for class treatment after Prop. 64. Here is a link to the Supreme Court's docket. My original post on In re Tobacco II is here.

Supreme Court extends time to grant or deny review in Pfizer

On September 25, 2006, the Supreme Court gave itself an extension of time, through November 9, 2006, to grant or deny review in Pfizer. The Court's original deadline to grant or deny review was approximately October 10, 2006, 60 days after the petition for review was filed on August 11, 2006. Rule of Court 28.2(b)(1). November 9 is the longest extension of time (90 days after the petition was filed) that the Court may give itself under Rule of Court 28.2(b)(1). This development suggests that the Court is looking closely at the case. We saw some similar activity in the retroactivity cases last year.

Pfizer responds to depublication requests

On September 18, 2006, Pfizer filed its response to all of the depublication requests, including the one I filed on behalf of my firm.

Supreme Court transfers Prop. 64 retroactivity case (Kids Against Pollution) back to Court of Appeal

On September 13, 2006, the Supreme Court issued the following order in Kids Against Pollution v. California Dental Association, no. S117156:

The above-entitled matter is transferred to the Court of Appeal, First Appellate District, Division Three, with directions to vacate its decision and to reconsider the cause in light of Californians for Disability Rights v. Mervyn's, LLC (2006) 39 Cal.4th 223 and Branick v. Downey Savings and Loan Assn. (2006) 39 Cal.4th 235. (Cal. Rules of Court, rule 29.3(d).)

In that case, review was granted in September 2003, more than a year before Prop. 64 passed. In fact, the case was fully briefed as of mid-2004, but when Prop. 64 passed, one of the parties filed a supplemental brief on Prop. 64 retroactivity, and a series of amicus filings followed. The Court of Appeal's docket is accessible here.

As of yesterday, still no activity in the ten cases in which the Supreme Court granted review but deferred further briefing pending the outcome of Mervyn's and Branick.

Supreme Court denies rehearing in Mervyn's and publication in Branick

Yesterday, the Supreme Court denied the petition for rehearing in Mervyn's. My original post on the rehearing petition is here.

The Supreme Court also denied the request for partial publication of the Court of Appeal's opinion in Branick. That opinion will remain uncitable. My original post on the publication request is here.

Still no activity in any of the "grant and hold" Prop. 64 retroactivity cases, which are listed here.

Request for partial publication filed in Branick

A request for partial publication of the Court of Appeal's opinion has been filed with the Supreme Court in Branick. Under Rule of Court 976(d)(2), the Supreme Court has authority to order a Court of Appeal opinion published "at any time after granting review." The Court of Appeal's opinion, which was originally certified for publication, was effectively depublished in its entirety when the Supreme Court granted review. See Rule of Court 976(d)(1). An educated guess suggests that publication is being sought of the Court of Appeal's holding that the Home Owners' Loan Act (12 U.S.C. §§ 1461 et seq.) did not preempt the plaintiff's UCL claim. Branick v. Downey Sav. & Loan Assn., 126 Cal.App.4th 828, 835-39 (2005), aff'd, Branick v. Downey Sav. & Loan Assn., 39 Cal.4th 235 (2006).

Petition for rehearing filed in Californians for Disability Rights v. Mervyn's

Thanks to the reader who advised me that on August 8, 2006, Californians for Disability Rights filed a petition for rehearing in the Mervyn's case. Two days later, the Supreme Court granted itself an extension of time, through October 20, 2006, to rule on the petition. On August 16, 2006, Mervyn's filed its answer to the petition. I do not yet have copies of either of these briefs and would be grateful to anyone who forwards a copy. Here is a link to the Mervyn's docket.

UPDATE: The editor of Mealey's California Section 17200 Report kindly forwarded a copy of the Mervyn's petition for rehearing. The petition asks the Supreme Court to clarify that the Branick holding (which allows plaintiffs to seek leave to amend to substitute an affected person) will apply to the Mervyn's case itself on remand. It also asks for permission to seek leave to amend in the Court of Appeal instead of the trial court, which is an excellent strategy. That would allow the Court of Appeal to proceed to address the merits of the appeal faster than if the case were first remanded to the trial court. Depending on the state of the appellate record, that might also be a good strategy for some of the other cases, like Mervyn's, that were already pending on appeal when Prop. 64 passed.

UPDATE: A reader just forwarded a copy of the answer to the petition for rehearing, which Mervyn's filed on Wednesday. Mervyn's argues (among other things) that leave to amend can never be granted post-judgment. That strikes me as a dubious argument because Branick itself was pending on appeal, post-judgment, when Prop. 64 passed. In Branick, the Court of Appeal decided to address the substantive issue, and resolved it in the plaintiff's favor, before it addressed Prop. 64 retroactivity. But for its retroactivity holding, the judgment of dismissal would have been reversed and the plaintiff's case reinstated at the trial court level. Instead, the Court of Appeal opinion ends by saying that the case is remanded for the trial court to determine whether to grant leave to amend.

In Mervyn's, the Court of Appeal elected to decide the defendant's motion to dismiss first, and issued a published opinion denying the motion. That opinion addressed Prop. 64 retroactivity only. Supreme Court review was sought and granted, and the Court of Appeal suspended further briefing pending the outcome of the Supreme Court petition.

Because of these procedural distinctions, the Supreme Court's opinion in Branick simply concludes by saying that the Court of Appeal's judgment is affirmed. The Mervyn's opinion, by contrast, states that the Court of Appeal's judgment is reversed and the case remanded for further proceedings. It seems to me that the next step in Mervyn's is for the Court of Appeal to decide whether the motion to dismiss the appeal must now be granted. It makes a great deal of sense to ask the Supreme Court to clarify whether that court may consider the request for leave to amend, because if an affected party may be substituted at the appellate level, there is no need to dismiss the appeal. What does not make sense would be to hold, contrary to Branick, that substitution is not permitted as a matter of law in Mervyn's, simply because of the procedural method the Court of Appeal chose to employ in deciding the Prop. 64 retroactivity question.

Petition for review filed in Pfizer v. Superior Court

Last Friday, a petition for review was filed challenging the Court of Appeal's opinion in Pfizer v. Superior Court, 141 Cal.App.4th 290 (Jul. 11, 2006). Here is a link to the docket. When I obtain a copy of the petition, I will put it up.

More thoughts on Branick

The Supreme Court's opinion in Branick v. Downey Sav. & Loan Association, ___ Cal.4th ___ (2006), is even shorter than its opinion in Mervyn's. The Court rejected the defendants' argument that permitting amendment would "contradict the policy objectives underlying Proposition 64":

The argument is not convincing. The policy objectives underlying Proposition 64 are fully achieved by applying the measure to pending cases, as we have concluded it must be applied. (See CDR [v. Mervyn's], supra, __ Cal.4th __.) An additional rule barring amendments to comply with Proposition 64 does not rationally further any goal the voters articulated. .... Proposition 64 does not expressly or implicitly forbid the amendment of complaints to substitute new plaintiffs ....

(Slip op. at 5 (emphasis in original).) The Court then turned to "the question ... whether the plaintiffs in this case may amend. Code of Civil Procedure section 473 states the governing rule." (Id. at 6 (emphasis in original.) Under the ordinary rules governing amendment to complaints (as set forth in Code of Civil Procedure section 473), the trial court should determine in the first instance whether leave to amend should be granted:

Because the voters adopted Proposition 64 while this case was on appeal, plaintiffs have had no opportunity to file a motion in the superior court for leave to amend. We thus do not know the facts that would necessarily inform the superior court’s discretionary decision on such a motion, such as the identity of any person plaintiffs might attempt to substitute and the nature of the claims any substituted plaintiff might assert. For this reason, and because the decision properly belongs to the superior court in the first instance (Haley v. Dow Lewis Motors, Inc., supra, 72 Cal.App.4th 497, 506), the Court of Appeal correctly concluded the matter must be remanded to the superior court to determine whether, if plaintiffs do move to amend their complaint, the circumstances of this case warrant granting leave to amend.

(Slip op. at 7.) Finally, the Court rejected several defense arguments as either wrong or premature:

Defendants argue plaintiffs should not be permitted to substitute a new plaintiff because their failure to name the new plaintiff in their original complaint was not a mistake. No such rule exists. To the contrary, courts have permitted plaintiffs who have been determined to lack standing, or who have lost standing after the complaint was filed, to substitute as plaintiffs the true real parties in interest. [Citations.] Amendments for this purpose are liberally allowed.

The important limitation on the rule just mentioned 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.” .... Given the question’s potential factual and legal complexity, and without knowing the identity of the hypothetical new plaintiff or the nature of the claims he or she might assert, for this court to attempt to decide at this stage of the proceedings whether any possible amendment would impermissibly change the nature of the action would be inappropriate.

(Slip op. at 7-8.) This is a very measured decision that takes great pains not to decide any issue not squarely presented.

Supreme Court holds in Mervyn's and Branick that Prop. 64 applies to pending cases, but trial court has discretion to grant leave to amend

The decisions, both unanimous, were just posted online. In Californians for Disability Rights v. Mervyn's LLC, ___ Cal.4th ___ (2006), the Supreme Court held that Proposition 64 applies to pending cases. Branick v. Downey Savings & Loan Assn., ___ Cal.4th ___ (2006), holds that the trial court has discretion to grant leave to amend to add an affected plaintiff. I will post a further summary as time permits.

UPDATE: The Mervyn's decision is relatively brief. The Court determined that Prop. 64 contains no unequivocal expression of the electorate's intent. (Slip op. at 4-5.) The Court did not address the "statutory repeal rule." (Id. at 8 n.3.) Instead, the holding is based purely on the substantive/procedural distinction. The following language is of interest:

To apply Proposition 64’s standing provisions to the case before us 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. (See Elsner, supra, 34 Cal.4th 915, 937.) The measure left entirely unchanged the substantive rules governing business and competitive conduct. 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. Now, as before, no one may recover damages under the UCL (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266), and now, as before, a private person may recover restitution only of those profits that the defendant has unfairly obtained from such person or in which such person has an ownership interest (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144-1150).

(Slip op. at 8-9 (footnote omitted) (emphasis added)). I believe that this language implicitly overrules Pfizer. I will post more later, if time permits. I haven't yet read Branick through. Meanwhile, everyone should please feel free to post comments.

BREAKING NEWS: Supreme Court to issue Prop. 64 retroactivity opinions on Monday

In today's "Notice of Forthcoming Filing," the Supreme Court announced that it will be issuing its decisions in Mervyn's and Branick on Monday, July 24, 2006 at 10:00 a.m. When the decisions are posted online, they should be available here (Mervyn's) and here (Branick). I will do my best to put up a report on the decisions at some point on Monday (workload permitting).

New Supreme Court retroactivity decision: Carter v. California Dept. of Veterans Affairs

Last week, in Carter v. California Department of Veterans Affairs, ___ Cal.4th ___ (Jun. 8, 2006), the California Supreme Court discussed retroactivity for the first time since McClung v. Employment Development Dept., 34 Cal.4th 467 (2004) (see my original post on McClung here). In a unanimous opinion, the Court held that a 2003 amendment to the Fair Employment and Housing Act (Gov. Code §§12900 et seq.) applied to pending cases because it "merely clarified existing law." In so holding, the Court penned the following language, which could be relevant to its upcoming analysis of Prop. 64 retroactivity in Mervyn's and Branick:

A statute that merely clarifies, rather than changes, existing law is properly applied to transactions predating its enactment. (Western Security Bank v. Superior Court (1997) 15 Cal.4th 232, 243 (Western Security Bank).) However, a statute might not apply retroactively when it substantially changes the legal consequences of past actions, or upsets expectations based in prior law. (Id. at p. 243; see also Landgraf v. USI Film Products (1994) 511 U.S. 244, 269 (Landgraf).) .... If we conclude the amendment did more than clarify existing law, we would then address whether the amendment should apply retroactively to the conduct present here, and whether a retroactive application would implicate due process concerns. (Landgraf, supra, 511 U.S. at p. 270.)

Slip op. at 6-7, 8 (emphasis and hyperlinks added).

Two aspects of this language warrant comment. First, during the Mervyn's/Branick oral arguments on May 31, those arguing against retroactive application of Prop. 64 focused heavily on the idea that applying the amendments to pending cases would "upset[] expectations based in prior law." The Supreme Court acknowledged the validity of that idea in Carter.

Second, the Court of Appeal (First Appellate District, Division Four) relied heavily on Landgraf in holding that Prop. 64 does not apply retroactively to pending cases. Californians for Disability Rights v. Mervyn's, LLC, 126 Cal.App.4th 386, 393-97 (2005) (review granted). Although the Mervyn's court has been harshly criticized for relying on Landgraf (because the principles set forth in Landgraf supposedly only apply to federal statutes), the Supreme Court showed no hesitancy in citing and relying on Landgraf itself in Carter.

Today's oral argument on Prop. 64 retroactivity

In Californians for Disability Rights v. Mervyn's, James C. Sturdevant of the Sturdevant Law Firm in San Francisco argued for the plaintiff, while David F. McDowell of Morrison & Foerster's Los Angeles office appeared for Mervyn's. In Branick v. Downey Savings & Loan Assn., plaintiff Branick was represented by Michael C. Spenser of Milberg Weiss in New York, while Matthew A. Hodel of Hodel Briggs Winter in Irvine argued for Downey Savings.

Every seat in the courtroom was taken, and my handwritten notes are eighteen pages long. All seven justices asked at least one question, and Justices Kennard and Baxter were particularly active questioners. However, there were also periods of silent listening, most notably during the discussion of the "statutory repeal rule." I don't think any justice asked even one question relating to that rule.

McDowell went first, and he had hardly begun speaking when Justice Kennard interrupted, asking him to articulate the "main differences between the old law and the current law." He obliged, focusing on the standing and "actual injury" requirements. Justice Kennard then asked why, in light of the ordinary presumption against retroactive application, reaffirmed just two years ago in Elsner (phonetic), the Court should agree with his client's position. McDowell started to talk about the "statutory repeal rule," but was again interrupted. Justice Kennard said she wanted to focus on the principle she just mentioned. "What do we have in this piece of legislation" that is a "clear indication that the legislature intended it to apply retroactively?"

McDowell argued that standing is an ongoing jurisdictional requirement, and that there is no issue of "retroactive" application if a new standing rule is applied to a pending action. Then Chief Justice George asked whether McDowell was saying that the general rule Justice Kennard mentioned doesn't apply. McDowell said yes. A new statute applies retroactively only if it affects "existing rights." In other words, the questions of Justices George and Kennard combined to focus the argument, at the outset, on whether the amendments (at least the standing amendment) was substantive or procedural.

McDowell then cited Government Code section 9606, which he views as a codification of the "statutory repeal rule." Justice Moreno asked McDowell to confirm whether he considered the standing amendments to be a procedural change, which McDowell did. Justice Chin then asked whether Prop. 64 changed or expanded the liability standards. McDowell said no, except possibly the element of causation.

Justice Baxter then asked, "What consequence is there, if any, where plaintiff and counsel have expended substantial funds (such as attorneys fees) prior to the change in law?" McDowell said, essentially, that's too bad for them, there have been plenty of cases in which the plaintiffs prevailed only to lose out on appeal after a change in law. He then pointed out that the plaintiff in Mervyn's sought injunctive relief only, that any injured persons still have a claim. No one has lost any rights, he said; Mervyn's could still be sued.

Justice Kennard then said that retrospective application is one that improperly changes the legal consequences of past conduct. "Focusing on past conduct, is it your view that the legal consequences have not changed?" McDowell said that the question of whether Mervyn's discriminated against people with disabilities has not changed. Justice Kennard then said, basically, "So your view is that the unfair competition alleged is still illegal?" McDowell said the claim still exists. Justice Kennard then asked whether it would be "proper to say that the only party whose rights have been changed are the rights of the injured party." McDowell was careful not to adopt Justice Kennard's term "rights," and argued that it is merely a change in procedure. Justice Kennard replied, "You argue that because standing is a jurisdictional issue, applying it to pending cases would be prospective application," and McDowell agreed.

Chief Justice George then interrupted saying McDowell's time was up.

Mr. Sturdevant's first question came from Justice Moreno: "Is it correct you're only seeking injunctive relief? If so, what law applies"? Sturdevant replied yes, but standing, in the context of this case, when you look at its effect, not its label, is a substantive issue. In 2002, he said, when Californians for Disability Rights ("CDR") filed suit, and in 2003 when the case went to trial, Stop Youth Addiction and Korea Supply allowed anyone to sue. The change in the standing requirement is substantive, not procedural, he argued.

Justice Moreno then said let's assume you do have standing, but in the interim the law changes, and you are seeking injunctive relief, does the trial court apply the old or new law? Sturdevant said there is no change in the cause of action, the remedy or the liability standards. CDR had standing when it brought the case and tried it, and it should have standing to continue to prosecute it. He pointed out that the trial court made three specific findings of disability discrimination, but ruled in Mervyn's favor only because it permitted Mervyn's to assert certain defenses that only exist under federal law, not state law. (That was apparently the original basis for the appeal that was pending in Nov. 2004, when Prop. 64 passed.) Assuming CDR prevailed on that substantive argument, the only issue on remand for the trial court to address is the scope of the injunctive relief.

Justice Chin then said, "Didn't the voters intend to allow these actions to continue?" Sturdevant caught this soft ball and replied that "intent is paramount"; nothing in the language of the initiative says anything about retroactive intent; at best the language sends a mixed message. He then quoted from Myers (without naming the case), in which the Supreme Court said that if the retroactivity language is ambiguous, then the amendment is "unambiguously prospective." He pointed out that caselaw holds that voters should not be presumed to understand "complex legal documents and technical terms." He said that Mervyn's argues the statutory repeal rule, which hinges on an assessment of whether the rights have a common-law origin or are purely statutory, and asserts that the amendments are merely procedural rather than substantive, yet there's nothing in the ballot materials that explains this. There's nothing in those materials suggesting that the voters knew all this.

Justice Baxter asked (following up on Justice Moreno's earlier question) if it's irrelevant whether the plaintiff's claim is for "damages" or injunctive relief. Sturdevant said there is no real distinction for purposes of the amendments here. He pointed out that there are other "grant and hold" cases that involve both injunctive relief and restitution. He gave two examples: Schwartz, in which a multi-million-dollar restitution award was reversed (see my posts on Schwartz here and here); and Benson v. Kwikset, in which the trial court ordered a "refund system" (to rectify misstatements about whether certain products were "Made in U.S.A."). Sturdevant then said, "We're asking the Court in this case to provide clarity to voters" that their intent is paramount, and also that amendments will apply prospectively only if there's a clear retroactive intent.

Justice Corrigan then asked her first question: "Is standing a question of jursidictional magnitude?" Sturdevant said yes, it is. The question is whether CDR had standing when the case was brought. Justice Corrigan replied, "If it's a question of jurisdiction, doesn't that requirement exist throughout the case, and isn't that a problem?" Sturdevant said that to apply the amendment to this case, the Court would have to hold that it is retroactive, but there is no retroactive intent. Corrigan was dissatisfied with that response, and basically told him to answer the question. Sturdevant rose to the challenge, pointing out that standing can be lost in many ways, for example, as in the LaSala case (phonetic), or if the plaintiff files bankruptcy and the trustee has to step in, or in cases of death or disability. Here, none of those things happened. The only thing that happened was Prop. 64, but there is no indication in Prop. 64 that it should apply retroactively.

Justice Corrigan said, "If standing can be lost at any time because of a change in circumstances, why can't we hold there's been a change in the law. Why not be consistent?" Sturdevant said the Court should not so hold because there's been no expression of retraoctive intent. He also pointed out that the Court has said (citing the case involving Prop. 51) that amendments should not be held retroactive when substantial resources have been expended in reliance on the old law. He invoked "fundamental notions of fairness, notice, reasonable reliance, fair play and substantial justice," and argued that CDR took steps based on the law that was in effect in 2002.

Justice Baxter then said: "Suppose there was a restrictive standing requirement, but because of an amendment it was expanded. In other words, reverse it. Would your argument be the same?" Sturdevant cited the Aetna Casualty case, in which an amendment expanded the measure of payments owed to the plaintiff. The Court held this amendment was not retroactive because there was no unambiguous expression of intent. Sturdevant's point was yes, his argument woul