The Supreme Court's opinion in In re Tobacco Cases II, ___ Cal.4th ___ (Aug. 2, 2007), has very little to say about the UCL, but much to say about preemption. One notable thing is that the Court relied entirely on pre-Prop. 64 precedents in its single-paragraph description of the UCL:
The state unfair competition law (Bus. & Prof. Code, § 17200 et seq.) authorizes civil suits for “unfair competition” (id., § 17204), which it defines to “include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” (id., § 17200). “It governs ‘anti-competitive business practices’ as well as injuries to consumers, and has as a major purpose ‘the preservation of fair business competition.’ ” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) “By defining unfair competition to include any ‘unlawful . . . business act or practice’ [citation], the [unfair competition law] permits violations of other laws to be treated as unfair competition that is independently actionable.” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.)
Slip op. at 6-7 (alterations in original).
The UCL "unlawful" prong claim in this case was predicated on alleged violations of Penal Code section 308, which prohibits sale of tobacco to minors. Id. at 3. The Supreme Court determined that it was bound by Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001), which held that the Federal Cigarette Labeling and Advertising Act ("FCLAA") (15 U.S.C. §§1331 et seq.) preempted state regulations enacted based on "concerns about smoking and health." Slip op. at 12-13, 16. In so holding, the Supreme Court overruled its prior contrary conclusion in Mangini v. R.J. Reynolds Tobacco Co., 7 Cal.4th 1057 (1994).
The Court explained that the particular UCL claim that these plaintiffs sought to pursue was based on "concerns about smoking and health" and thus preempted under Lorillard:
The state unfair competition law is a law of general application, and it is not based on concerns about smoking and health. Therefore, the FCLAA does not preempt that law on its face; nor would the FCLAA preempt a claim under that law that sought to impose only content-neutral restrictions on cigarette advertising—such as a requirement that the advertising not contain false statements of fact—that were unrelated to concerns about smoking and health. To the extent we so concluded in Mangini, supra, 7 Cal.4th 1057, we were correct, and we reaffirm those conclusions.
Here, however, as in Mangini, plaintiffs’ claim is based not only on the state unfair competition law but also on Penal Code section 308, which prohibits sales of tobacco products to minors and possession of tobacco products by minors. The purpose of Penal Code section 308 is to prevent minors from smoking or otherwise using tobacco products. ....
Plaintiffs’ unfair competition claim here seeks to impose on defendant tobacco companies a duty not to advertise in a way that could encourage minors to smoke. That is precisely the duty that the United States Supreme Court in Lorillard, supra, 533 U.S. 525, held subject to FCLAA preemption because it is necessarily and inherently based on concerns about smoking and health. Accordingly, plaintiffs’ unfair competition claim is preempted ....
Slip op. at 15-17. This language led me to wonder if the outcome would have been different if the UCL claim had been predicated on the "unfair" or "fraudulent" prongs, instead of the "unlawful" prong coupled with Penal Code section 308. On reflection, I don't think it would have. Any argument that marketing to minors was "unfair" because it was either (a) unscrupulous or (b) contrary to a legislatively-declared public policy (to briefly summarize the pre- and post-Cel-Tech formulations of "unfair") would have to be "based on concerns about smoking and health." As for the "fraudulent" prong, "plaintiffs have not alleged that [the advertising directed to minors] was misleading." Slip op. at 19.
This case, which I will call "Tobacco II (preemption)," does not appear to affect the other Tobacco case now pending before the Supreme Court, which I will call "Tobacco II (Prop. 64)." In re Tobacco II Cases, no. S147345. According to the Court of Appeal's opinion, Tobacco II (Prop. 64) involves both CLRA and UCL claims "that the tobacco companies had made false and misleading statements denying or disputing the health hazards and addictiveness of cigarette smoking" in addition to "their targeting of minors." In re Tobacco II Cases, 142 Cal.App.4th 891, 896 (2006) (review granted). In other words, Tobacco II (Prop. 64) is predicated on allegedly misleading advertisements, not on the problem of truthful marketing to minors. According to the Supreme Court in Tobacco II (preemption), the FCLAA does not preempt state-law claims that "[seek] to regulate cigarette advertising on the basis that it contained false assertions of fact—a content-neutral basis—and [that] sought to impose a duty—the duty not to deceive—that was broader and more general than concerns about smoking and health." Slip op. at 14 (citing Cipollone v. Liggett Group, Inc., 505 U.S. 504, 528-29 (1992); Lorillard, 533 U.S. at 552).
Also, the representative plaintiffs in Tobacco II (Prop. 64) (Willard R. Brown, Damien Bierly and Michelle Denise Buller-Seymore) are different from those in Tobacco II (preemption) (Devin Daniels, Bryce Clements, Daimon Fullerton, Nicole Morrow, and Maren Sandler), indicating that these are wholly separate cases.
In sum, the two cases appear to involve different claims and, indeed, different cases from among the group coordinated under J.C.C.P. no. 4042. Nothing on the face of the two opinions suggests that Tobacco II (preemption) will moot any of the issues pending on review in Tobacco II (Prop. 64).