The petition for rehearing is denied. George, C.J., was recused and did not participate. Baxter, Chin and Corrigan, JJ., are of the opinion the petition should be granted. Eileen C. Moore, Associate Justice, Court of Appeal, Fourth Appellate District, Division Three, was assigned by the Acting Chief Justice pursuant to article VI, section 6 of the California Constitution.
In Munson v. Del Taco, Inc., ___ Cal.4th ___ (Jun. 11, 2009), a case involving disability discrimination under the Unruh Civil Rights Act, the Supreme Court discussed the UCL's "unlawful" prong:
Gunther also noted that under its interpretation of section 51, subdivision (f), violations of the ADA that do not involve intentional discrimination might still find a remedy in California law through an action charging an unlawful business practice (Bus. & Prof. Code, §§ 17200, 17203). (Gunther, supra, 144 Cal.App.4th at p. 234.) Though true, that could not have been a purpose of adding subdivision (f) to section 51 of the Civil Code. Violations of federal as well as state and local law may serve as the predicate for an unlawful practice claim under Business and Professions Code section 17200. (See Quacchia v. DaimlerChrysler Corp. (2004) 122 Cal.App.4th 1442, 1450, fn. 5; Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 838-839.) Assuming all other requirements for such an action were met, therefore, violations of the ADA’s accessibility mandate, whether involving intentional discrimination or not, would be remediable through Business and Professions Code sections 17200 and 17203. It did not take incorporation of the ADA mandate into the Unruh Civil Rights Act to achieve that result.
Slip op. at 18-19 (bold added). I believe this is the first time that the Supreme Court, rather than the Court of Appeal, has confirmed that a UCL "unlawful" prong claim may be predicated on violations of federal and local laws as well as state laws. This language is also useful for its confirmation that the UCL carries no "intent" element (or any other element of scienter).
The opinions are both up. Here are quick excerpts from the introductions:
We hold that an employee who, on behalf of himself and other employees, sues an employer under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) for Labor Code violations must satisfy class action requirements, but that those requirements need not be met when an employee‘s representative action against an employer is seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.).
This case presents two issues. First, may a plaintiff labor union that has not suffered actual injury under the unfair competition law, and that is not an "aggrieved employee" under the Labor Code Private Attorney General Act of 2004, nevertheless bring a representative action under those laws (1) as the assignee of employees who have suffered an actual injury and who are aggrieved employees, or (2) as an association whose members have suffered actual injury and are aggrieved employees? The answer is "no." Second, must a representative action under the unfair competition law be brought as a class action? The answer is "yes," for the reasons stated in the companion case of Arias v. Superior Court (June 29, 2009, S155965) ___ Cal.4th ___.
This morning the Supreme Court announced that on Monday at 10:00 a.m., it will be handing down its decisions in the Arias and Amalgamated cases, which were argued in early April. These cases address, among other issues, whether formal class certification is required in PAGA and UCL actions (post-Prop. 64) in which relief is sought on behalf of others. Amalgamated may also address whether associational standing survived Prop. 64.
See this blog post for the statements of the issues and links to the Court of Appeal opinions. Reports on the oral arguments are available here and here. When the decisions are posted, they will be avialable at these links:
Yesterday, the Supreme Court denied review and depublication in the Troyk case (docket). Justices Baxter, Chin and Corrigan voted to grant review. An article (subscription) by Mike McKee in yesterday's Recorder discussed this case in more detail.
On Tuesday, June 2, 2009, a petition for rehearing was filed in In re Tobacco Cases II, no. S147345. The answer will be due on Wednesday, June 10, and the Supreme Court's ruling can be expected by June 17 (unless the court grants itself an extension of time).
Additionally, on Monday, June 1, a substitution of attorneys was filed, substituting Reed Smith in place of Loeb & Loeb as counsel for one of the defendants. According to the Daily Journal, Loeb & Loeb represents Chief Justice George in connection with his estate planning, which is why he was recused from hearing the case. Justice Eileen Moore of the Fourth Appellate District, Division Three, sat in his stead.
A rehearing petition was also filed, and denied, recently in Meyer v. Sprint Spectrum, no. S153846. In that case, the Supreme Court granted itself an extension of time before denying the petition.
This morning, the Supreme Court affirmed the Court of Appeal's reversal of a $1 billion verdict in a UCL/CLRA case. Miller v. Bank of America, NT & SA, ___ Cal.4th ___ (Jun. 1, 2009). The opinion contains no particular discussion of any UCL or CLRA issue. Instead, it focuses in on certain provisions of the Financial Code governing fee setoffs by banks, and holds that BofA's practices did not run afoul of those provisions.
The case raises UCL and CLRA claims in the following context:
Does California law, which provides that a bank account into which public benefit funds or Social Security payments have been electronically deposited is exempt from attachment and execution, prohibit a bank from exercising its right to setoff as to charges—such as overdraft fees and insufficient fund fees—arising out of use of that same account?
It would be very appropriate for the Supreme Court to take up Kwikset, especially now that Tobacco has been decided. In Tobacco, the Court interpreted Prop. 64's "as a result of" language in the context of a UCL "fraudulent" prong claim. Kwikset would address Prop. 64's "lost money or property" language in the same context. The question naturally flows next from what the Supreme Court decided in Tobacco.
Once "actual reliance" is established under Tobacco (that is, that the defendant's misrepresentation was "a substantial factor" in the named plaintiff's purchasing decision (Tobacco, slip op. at 30)), the lower courts will still need to address whether the money the named plaintiff paid for the falsely-represented product counts as having been "lost" or whether (as Kwikset held) the product must be somehow defective or inferior -- in addition to falsely represented. It will be quite interesting to see what the Court does.
(1) In order to bring a class action under Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), as amended by Proposition 64 (Gen. Elec. (Nov. 2, 2004)), must every member of the proposed class have suffered “injury in fact,” or is it sufficient that the class representative comply with that requirement? (2) In a class action based on a manufacturer’s alleged misrepresentation of a product, must every member of the class have actually relied on the manufacturer’s representations?
My report on the oral argument, which took place in early March, is available at this link.
On April 6, 2009, a petition for review was filed in Kwikset Corp. v. Superior Court (Benson), no. S171845. The answer and reply have also been filed, as well as a depublication request, and I've heard that multiple amicus letters in support of review are coming in. So far, I have copies of two items:
Today, the Supreme Court took up two cases involving UCL issues.
First, the Court granted review in Pineda v. Bank of America, no. S170758, in which the Court of Appeal (First Appellate District, Division Three) held that Labor Code “section 203 penalties may not be recovered as restitution under Business and Professions Code section 17203.” Pineda v. Bank of America, N.A., 170 Cal.App.4th 388, 390 (2009) (discussed in this blog post). That opinion is no longer citable as precedent.
First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?
Second, does §17200 apply to the overtime work described in question one?
Third, does §17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?
Sullivan v. Oracle Corp., 557 F.3d 979 (9th Cir. 2009) (listing certified questions). See this blog post for more on the Ninth Circuit's withdrawn opinion, Sullivan v. Oracle Corp., 547 F.3d 1177 (9th Cir. 2008).
The Supreme Court has posted its statement of issues on review in Clayworth v. Pfizer, Inc., no. S166435. The UCL-related issues are particularly interesting:
(1) When plaintiffs pay overcharges on goods or services as a result of the anticompetitive conduct of defendant sellers but recover the overcharges through increased prices at which the goods or services are sold to end users, may defendants assert a "pass-on" defense and argue that plaintiffs were not injured because they did not suffer financial loss as a result of the anticompetitive conduct? (2) Is restitution available under the Unfair Competition Law (Bus. & Prof. Code, 17200 et seq.) to plaintiffs who recovered from third persons the overcharges paid to defendants? (3) When plaintiffs recover from third persons the overcharges paid to defendants, have they suffered actual injury and lost money or property for purposes of establishing standing under the Unfair Competition Law, as amended by Proposition 64?
Yesterday, the Supreme Court granted review in Clayworth v. Pfizer, Inc., no. S166435. In Clayworth, the Court of Appeal held that the "pass-on" defense applied to a price-fixing case brought by intermediate purchasers under California's Cartwright Act, and also that if the plaintiffs have passed on the entirety of their losses, they can no longer recover restitution under the UCL. Clayworth v. Pfizer, Inc., ___ Cal.App.4th ___, 83 Cal.Rptr.3d 45 (2008) (review granted). See this blog post for more on Clayworth.
In addition, the Supreme Court denied review in Medrazo v. Honda of North Hollywood, no. S167170. In Medrazo, the Court of Appeal (Second Appellate District, Division Four) reversed an order denying class certification of UCL and CLRA claims predicated on the defendant's violation of certain Vehicle Code provisions. Medrazo v. Honda of North Hollywood, 166 Cal.App.4th 89 (2008). See this blog post for more on Medrazo.
Finally, the Supreme Court will be handing down its decision this morning at 10:00 a.m. in the Vasquez attorneys' fees case. When it does, the opinion will be available at this link. Time permitting, I will post a summary of the holding later today.
This case presents the following issue: May a public entity retain private counsel to prosecute a public nuisance abatement action under a contingent fee agreement?
It is interesting that the issue is specifically stated in terms of the public nuisance cause of action. I've been following this case because of its potential to impact public prosecutor UCL actions. We'll just have to wait (for about two years) and see how broadly the opinion ends up being worded.
Attorneys on both sides of the battle expressed relief at the court's decision, saying they welcome a ruling deciding the issue once and for all.
"It is a significant issue nationwide and has not been settled," said Santa Clara County Counsel Ann Ravel, whose office originally filed the suit eight years ago. "So it's definitely ripe for the Supreme Court to weigh in with [its] analysis and views."
The case ... is heavily lawyered. Forty-two attorneys are listed on the government agencies' side, while the manufacturers show 29 lawyers from 16 law firms nationwide.
Review was granted by five of the seven Supreme Court justices, with Justices Marvin Baxter and Carol Corrigan recusing themselves. Neither said why, but statements filed with the secretary of state reveal that Baxter owns stock in BP Amoco and Corrigan in E.I. duPont de Nemours.
Petition for Review GRANTED. Further action in this matter is deferred pending consideration and disposition of related issues in In re Tobacco II Cases, S147345, and Meyer v. Sprint Spectrum, LP, S153846 (see Cal. Rules of Court, rule 8.512(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.520(a) is deferred pending further order of the court.
In O'Brien, the Court of Appeal (Fourth Second Appellate District, Division Three) affirmed summary judgment in the defendant's favor, holding that the plaintiff lacked standing to assert UCL or CLRA claims because he did not suffer injury in fact as a result of the defendant's alleged misconduct. The suit challenged the defendant's purported mislabeling of its products as "Made in the U.S.A." O'Brien v. Camisasca Automotive Manufacturing, Inc., 161 Cal.App.4th 388 (2008). My original blog post on O'Brien is at this link.
In County of Santa Clara v. Superior Court (Atlantic Richfield Co.), 161 Cal.App.4th 1140 (2008), the Court of Appeal (Sixth Appellate District) held that public entities may hire outside counsel to represent them on a contingency-fee basis in "ordinary civil cases," so long as the contingency-fee agreements do not purport to delegate the public entities' discretionary decision-making power to private attorneys with a financial stake. For a more detailed discussion of the Santa Clara decision, see this blog post.
Many thanks to the blog reader who forwarded copies of the supplemental letter briefs filed in In re Tobacco II Cases, no. S147345, the case in which the Supreme Court will address whether reliance is an element of a UCL claim after Proposition 64. As I previously reported, in October, the Supreme Court ordered supplemental briefing on the impact, if any, of its preemption opinion handed down in August. SeeIn re Tobacco Cases II (Daniels), 41 Cal.4th 1257 (2007). The parties seem to agree that the preemption opinion should have no impact on the reliance case. Plaintiffs argue that the UCL claims in question are different from those the Court held were preempted, while defendants assert that "no substantive preemption ... issue is properly before the Court." Here are links to the letter briefs:
One of the letter briefs points out that a petition for a writ of certiorari is pending with the U.S. Supreme Court. Daniels v. Philip Morris USA, Inc., no. 07-740. The questions presented in the cert. petition are:
1. Whether the Federal Cigarette Labeling and Advertising Act, 15 U.S.C. 1334(b), preempts a claim that respondents engaged in unfair competition under California Bus. & Prof. Code 17200, by purposefully targeting persons under 18 years old in the marketing and advertising of cigarettes, thereby inducing and profiting from transactions that are prohibited under California law?
2. Whether (a) commercial advertising that is intentionally designed to encourage minors to obtain cigarettes is entitled to protection under the First Amendment, so long as its audience does not exclusively consist of minors and, if it is, (b) whether the California Supreme Court's conclusion -- that providing a civil remedy against those who actively induce and profit from unlawful cigarette sales is unconstitutional -- can be squared with this Court's exposition of the “narrow tailoring” prong of the Central Hudson test?
Daniels v. Philip Morris USA, Inc., 2007 WL 4231074, *i (Nov. 30, 2007).
UPDATE: On March 17, 2008, the U.S. Supreme Court denied the cert. petition in Daniels.
Looking at the decision more closely last night, it doesn't really say anything particularly new or interesting about the UCL or CLRA. The rationale for the decision was that the California law on which the UCL claim was predicated (i.e., the Sherman Food, Drug and Cosmetic Law (Health & Saf. Code §§ 109875 et seq.)) was "identical" to the relevant provisions of the Federal Food, Drug and Cosmetic Act (21 U.S.C. §§ 301 et seq.). The opinion did not analyze the CLRA claim separately from the UCL claim.
The opinion did have one interesting footnote that should remove any doubts concerning the propriety of citing unpublished federal district court rulings in California state courts:
In their briefs, the parties discuss an unpublished federal district court opinion which came to the same conclusion when considering nearly identical facts. (Vermont Pure Holdings, Ltd. v. Nestle Waters North America, Inc. (D.Mass., Mar. 28, 2006, No. Civ. A. 03-11465) 2006 WL 839486, *6, fn. 3.) Citing unpublished federal opinions does not violate our rules. (Cal. Rules of Court, rule 8.1115.) We find the court’s reasoning persuasive.
UPDATE: As Kelly Chen predicted in her report on the argument, the Supreme Court has held that the Federal Food, Drug, and Cosmetic Act does not preempt plaintiffs' UCL and CLRA claims:
Plaintiffs filed a class and representative action alleging that various grocery stores violated state law by selling artificially colored farmed salmon without disclosing to their customers the use of color additives. Defendants successfully demurred in the trial court, arguing the action was preempted by section 337(a) of title 21 of the United States Code, a provision of the Federal Food, Drug, and Cosmetic Act (FDCA) (21 U.S.C. § 301 et seq.). The Court of Appeal affirmed the resulting judgment of dismissal.
We granted review to decide whether plaintiffs’ action was preempted by the FDCA. We conclude that section 337(a) does not preempt the action as plaintiffs do not seek to “enforce[ ], or to restrain violations” of, the FDCA. (§ 337(a).) Rather, plaintiffs’ claims for deceptive marketing of food products are predicated on state laws establishing independent state disclosure requirements “identical to” the disclosure requirements imposed by the FDCA, something Congress explicitly approved in section 343-1. (§ 343-1(a)(3).) Accordingly, we reverse the Court of Appeal’s judgment and remand the matter to that court for further proceedings consistent with our opinion.
Today, the Supreme Court announced that it will be issuing its opinion Monday morning in an important preemption case, Farm Raised Salmon Cases, no. S147171. This case raises the following issue: "Does the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.) impliedly preempt plaintiffs’ state law claims [including a UCL claim] against defendants for deceptive marketing of food products by failing to disclose that farmed salmon sold in their stores contains artificial coloring?" The Court of Appeal answered yes. SeeFarm Raised Salmon Cases, 142 Cal.App.4th 805 (2006).
Attorney Kelly Chen attended the Supreme Court argument in December and wrote up a report, which is available at this link. Kelly reported that the justices' questions suggested that they are leaning against a finding of preemption.
When the opinion is posted online Monday morning at 10:00 a.m., it should be available here: Farm Raised Salmon Cases, ___ Cal.4th ___ (Feb. 11, 2008).
The Supreme Court's statement of issues on review in Reid v. Google, no. S158965, is up. It looks like the UCL restitution issue will not be a major focus of the case:
Petition for review after the Court of Appeal affirmed in part and reversed in part the judgment in a civil action. This case presents the following issues: (1) Should California law recognize the "stray remarks" doctrine, which permits the trial court in ruling on a motion for summary judgment to disregard isolated discriminatory remarks or comments unrelated to the decision-making process as insufficient to establish discrimination? (2) Are evidentiary objections not expressly ruled on at the time of decision on a summary judgment motion preserved for appeal?
E-mails were flying between litigators Thursday as word spread that the California Supreme Court had agreed to resolve a thorny issue over how trial court judges should treat evidence.
Specifically, the high court decided Wednesday it was time to take a closer look at so-called Biljac rulings to clarify what lawyers and trial court judges must do to ensure that evidentiary objections are preserved for appellate review when summary judgment motions are decided.
Yesterday, the Supreme Court granted review in Reid v. Google, no. S158965. In that case, the Court of Appeal held (among other things) that the UCL did not permit the plaintiff to recover his unvested stock options as "restitution" in an individual action for age discrimination. Reid v. Google, Inc., 155 Cal.App.4th 1342 (2007).
Because the Supreme Court has not yet posted its statement of issues on review, we can't tell whether the Supreme Court will be reviewing the restitution issue or some other issue in the case. The Court of Appeal's opinion also addressed some interesting issues regarding summary judgment procedure, one of which might have grabbed the Supreme Court's attention. My original post on Reid v. Google is here.
The Supreme Court just announced that it will hand down two new opinions tomorrow at 10:00 a.m. While they are not strictly related to the UCL, they do sound very interesting, especially the second one, which addresses attorneys' fees under the private attorney general doctrine of Code of Civil Procedure section 1021.5:
ROSS (GARY) v. RAGINGWIRE TELECOMMUNICATIONS, INC.
S138130 (C043392 – Sacramento County Superior Court – 02AS05476)
Argued in Sacramento 11-06-07
This case includes the following issue: When a person who is authorized to use marijuana for medical purposes under the California Compassionate Use Act (Health & Saf. Code, § 11362.5) is discharged from employment on the basis of his or her off-duty use of marijuana, does the employee have either a claim under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) for unlawful discrimination in employment on the basis of disability, or a common law tort claim for wrongful termination in violation of public policy?
ADOPTION OF JOSHUA S., A MINOR.
S138169 (D045067 – San Diego County Superior Court – JA46053)
Argued in Sacramento 11-06-07
This case presents the following issue: Was the plaintiff in a civil action that was brought to confirm the validity of a so-called second parent adoption (see Sharon S. v. Superior Court (2003) 31 Cal.4th 417) entitled to attorney fees under Code of Civil Procedure section 1021.5 for enforcing an important right affecting the public interest, when the plaintiff had a strong and significant, but nonpecuniary, individual private interest in pursuing the litigation?
When the opinions come down, they will be available at these links:
On October 19, 2007, a petition for review was filed in Shersher v. Superior Court (Microsoft Corp.)., no. S157482. On December 6, 2007, the Supreme Court gave itself an extension of time, through January 17, 2008, to grant or deny review.
In Shersher, the Court of Appeal (Second Appellate District, Division Five) held that the use of the word "directly" in Korea Supply does not mean that restitution is unrecoverable in cases in which money passed from the plaintiff, through a retail intermediary, to a defendant who violated the UCL by misrepresenting or making or material omissions concerning the goods it was selling:
Nothing in Korea Supply conditions the recovery of restitution on the plaintiff having made direct payments to a defendant who is alleged to have engaged in false advertising or unlawful practices under the UCL.
My sincere thanks to Kelly Chen, who just passed the bar (congratulations, Kelly!), for attending Tuesday's argument in Farm Raised Salmon Cases, no. S147171, and for providing the following detailed report (complete with an outcome prediction):
Case Name: FARM RAISED SALMON CASES California Supreme Court Case No.: S147171
December 4, 2007 -- 9 a.m.
This morning in Los Angeles, the California Supreme Court heard oral argument in Farm Raised Salmon Cases. The issue presented before the court is: Does the Federal Food, Drug, and Cosmetic Act (“FDCA”) impliedly preempt plaintiffs' state law claims, including claims based on the UCL and CLRA?
Craig R. Spiegel argued on behalf of the plaintiffs (i.e., consumers). Rex S. Heinke argued for the defendants. Justice George recused himself from the case, and Justice Mihara from the court of appeal was assigned as justice pro tempore for this case. Justice Kennard took over the role as chief justice in this session.
Mr. Spiegel started his argument by discussing the reasoning behind the court of appeal’s holding that section 337(a) of the FDCA preempts plaintiffs’ state claims. Citing to the history of the regulation on the use of coloring on food, Mr. Spiegel discussed how California enacted regulations concerning this area as early as in 1905, long before the FDCA (which was enacted in 1938).
Justice Kennard then interjected and asked: Isn’t there another section of the FDCA that would help the argument against preemption? Specifically, Kennard referred to section 343-1, which permits states to establish standards concerning the use of coloring on food so long as those standards are “identical” to those imposed by FDCA. She asked: “Am I right to say that the language of these provisions helps your position?” Mr. Spiegel affirmed.
Note: Congress enacted section 343-1 in the Nutrition Labeling and Education Act of 1990 (“NLEA”).
Mr. Spiegel then discussed how Congress enacted section 337 in 1938, but in 1990, Congress via the enactment of section 341-1 permitted the states to establish and continue in effect regulations that are identical to the federal requirements.
Justice Moreno then jumped in and asked: “Are you relying on any of the FDCA violations?” Spiegel: “No.” Spiegel then explained that plaintiffs are relying on UCL violations, and that plaintiffs are only claiming that Congress via the enactment of section 341-1 says that states may establish or continue in effect regulations that are identical to the FDCA requirements.
Justice Kennard interjected and asked whether Spiegel’s reasoning is based on the language in section 341-1, which says that no states may establish or continue in effect a requirement for labeling of food “that is not identical to the requirement” of FDCA. Spiegel affirmed.
Justice Kennard continued: “So section 343-1 expressly preempts only non-identical state labeling requirements?” Spiegel: “Yes.”
Justice Kennard then asked: “What about the police power … as being another argument?” Spiegel agreed that the police power is another argument against preemption.
At this time, Justice Mihera jumped in (but I missed the question). Mr. Spiegel’s response talked about two cases that were cited against plaintiffs’ position, one of which is Buckman (where the USSC held that section 337(a) is clear evidence that Congress intended FDCA be enforced exclusively by the federal government). Spiegel nicely distinguished Buckman from the present case, explaining that the plaintiff in Buckman alleged “fraud on the FDA” -- thus, there was no police power argument in Buckman, because fraud on a federal agency is not within the realm of the police power.
Justice Moreno asked Spiegel whether FDA has a position regarding state enforcement. Spiegel was very prepared to answer this question. He cited a 1993 official rule and quoted “nothing in this act will preclude the states from enforcing their own requirement under their own [law].”
Spiegel then went on to talked about the interplay between sections 343 and 343-1 and 337(b), noting that 343 and 343-1 were adopted as part of the FDCA in 1990. I think his main idea was that if Congress meant to create FDCA preemption in section 337, then why did Congress bother to enact section 343-1, which permits states to “establish or continue in effect” state requirements?
Justice Mihera noted that barring non-identical state requirements seems to infer that identical state requirements will be okay. He then asked about defendants’ argument based on NLEA section 343-1, subsection 6(c)(3).
At this point, Justice Kennard pointed to subsection 6(c) of section 343-1 which states that NLEA “shall not be construed to preempt any provision of State law, unless such provision is expressly preempted….” Justice Kennard asked: “Is there any express preemption in the statute?” Response: “No.”
Mr. Heinke then argued on behalf of the defendants.
Justice Baxter jumped in with his first question: “Why wouldn’t Congress want private enforcement of these requirements?” Justice Chin then asked about the plain language of NLEA which seems to say there is no preemption if state requirements are identical to those required by NLEA. Mr. Heinke responded by explaining that the question presented is whether there can be private enforcement, citing section 337. Mr. Heinke noted that Congress in 1938 via section 337 said there is no private enforcement of FDCA. He added: “Did Congress really intend to change that by section 334-1? If yes, then Congress would have just said that it overturned the bar on private enforcement instead.”
Mr. Heinke then emphasized that section 334-1 didn’t say anything about “private enforcement.”
Justice Kennard, at this point, interjected and asked about the language in NLEA. She specifically asked why this court should agree with defendants’ arguments? Mr. Heinke’s response was that NLEA is not the basis for defendants’ argument. Instead, he noted that defendants are arguing section 337 as the basis for preemption. He then argued that Congress didn’t change a word in section 337 (since its enactment).
Justice Mihera jumped in: “But they added section 334-1!” Mihera then asked: “Who bears the burden?” Response: “There is no burden.” Mihera: “There is!”
Justice Mihera then explained that because there is no express preemption, the defendants are relying on “implied” preemption -- which means that the defendants will need to establish an “obstacle to a federal objective.” He then asked what is the obstacle that will result in the private enforcement of state law that is identical & parallel to FDCA?
In response, Heinke cited the preamble of NLEA and talked about legislative history of what Congress is doing concerning private enforcement.
Justice Kennard then asked about the two USSC cases cited by the plaintiffs (i.e., Bates and Medtronics, in both cases the USSC upheld state private actions as long as they are not inconsistent to the federal requirement). Mr. Heinke’s response focused on 337 and the idea that there is no private enforcement of FDCA. First, he indicated Bates is not about FDCA. Second, he noted Medtronics was an FDCA case, but Medtronics did not discuss section 337, and therefore is not controlling here. Heinke then noted it is Buckman that should be looked at here.
Justice Moreno asked: “But one of the principles of Medtronics is to allow private enforcement of claims?” Response: “Yes, but that’s without looking at section 337.”
Justice Mehera and Mr. Heinke then had some discussion back and forth about the language in 334-1. Mr. Heinke said that Congress changed the language to “state enforcement” and not “private enforcement.” Justice Mehera corrected him by noting that section 334 does not use the word “enforcement” -- rather, it only talks about state “establishment” of it own requirements.
At this point, Justice Werdegar asked her first question: “What’s the policy reason [for no private enforcement]?” Response: Congress wants to ensure expertise -- private parties don’t have expertise in this area (and I think he mentioned something about plaintiffs’ lawyers and fees!).
Justice Baxter then said: “Congress did not provide private enforcement in the federal courts?” Response: “Exactly.”
Justice Kennard then jumped in: “You were saying you are not relying on NLEA, right? But just a moment ago you cited Congressman Waxman's comment which started out with ‘The NLEA….’” Justice Kennard was basically saying that in one context Mr. Heinke is relying on NLEA; whereas, in another context, he chose not to rely on NLEA.
At this time, it was Mr. Spiegel’s turn again. He started out indicating that the defendants had mischaracterized plaintiffs’ argument. Spiegel clarified that plaintiffs are basically arguing that defendants’ claim concerning section 337 is incorrect.
He then talked about how defendants are arguing Congress in 1938 through section 337 basically decided that there should be no more state law claims (without saying a word about it in the statute). He also noted that the cases defendants have cited all concerned FDA “approval” process and that states have never regulated such approval processes.
Justice Werdegar then asked questions that focused on “private enforcement” and the policy reason of whether private enforcement is a problem. Mr. Spiegel indicated the issue of private enforcement of FDCA has nothing to do with this case.
Justice Baxter then asked why shouldn’t section 334(b)[??] control? Mr. Spiegel explained because that section says “enforcement of FDCA.” Justice Baxter followed up with a question on section 337. Spiegel’s response talked about Buckman. He again explained that the claim in Buckman is preempted because the plaintiff there only relied on FDCA violations (and not state claims).
Predictions: Mihera, Kennard, Chin, Moreno: for the plaintiffs. Werdgar, Baxter: for defendants. Corrigan: not sure.
Thank you, Kelly, for providing such a detailed and interesting report of the argument! Yesterday's Daily Journal also had a (much less detailed) report on the argument, and also predicted that the plaintiffs are the likely winners: "Court Backs Salmon-Labeling Suit" (subscription). The decision is due by early March.
This morning at 9:00 a.m. in Los Angeles, the Supreme Court will hear oral argument in Farm Raised Salmon Cases, no. S147171. In that case, the Court of Appeal held that federal law preempted the plaintiffs' UCL claims, which alleged that the defendants failed to disclose to consumers that they used artificial coloring to turn grey-fleshed farm-raised salmon pink. Yesterday's Recorder reported that "State High Court Arguments to Get Fishy" (subscription).
A blog reader who is attending the argument has promised to provide a report for posting here tomorrow or the next day. Meanwhile, the Court of Appeal's opinion is here: Farm Raised Salmon Cases, 142 Cal.App.4th 805 (2006) (Second Appellate District, Division Three).