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 would be the same, even if it would be to the plaintiff's detriment, because the ultimate question is intent.
Sturdevant then turned, of his own accord, to the "statutory repeal rule." He talked about this for quite a long time with no questions from any justices.
At length, Justice Kennard brought up something that I've never heard anyone mention in the discussions about Prop. 64 retroactivity. She asked whether the Court should consider the ramifications of Code of Civil Procedure section 1021.5 (the statute that allows attorneys fees awards in cases in which the plaintiff achieved a substantial benefit for the general public or a large class of persons). Sturdevant said no, other than as the Court construed Prop. 51 in the Evangelatos case, affording deference to the parties' reasonable expectations and reliance.
Sturdevant wrapped up his argument with a bang. He accused Mervyn's of perpetrating a "fiction." He asked the Court to assume that the proponents took a poll and that poll told them that they'd likely get a "yes" vote without retroactivity language, but with it, the proposition would probably fail. (Which probably is not far from the truth; in late 2004, the newspapers reported interviews with the drafters saying they deliberately omitted express retroactivity language.) Sturdevant said the drafters called Prop. 64 an "amendment"; included no statement of retroactivity; nothing saying it's a repeal; and lots of forward-looking language. "It's the intent of the voters that should be paramount. The voters should get what they enacted, not more and not less" (quoting one of the Supreme Court cases).
Then it was McDowell's turn for rebuttal. He cited a case called McKinney v. Board of Trustees (phonetic), holding that a plaintiff who lacks standing cannot state a valid claim. Justice Kennard jumped in: "What is your response to the argument that it would destroy the settled rights and expectations of the other side?" McDowell said that argument "rings quite hollow in light of the Government Code provision" and is inconsistent with the Court's holding in Tapia that the rules governing trials are subject to change.
Chief Justice George asked whether we are to infer that the voters had knowledge of all that. McDowell said that the voters, like the legislature, are presumed to know what the law is. Justice Kennard asked, "What about the expectation of fees under section 1021.5?" McDowell said that's not relevant. If the plaintiff has no claim, then it has no expectation of anything. Justice Kennard said is it your position that it's not a right but just an expectation, contingent on success in the litigation. McDowell confirmed it's not a right, and then sat down.
Next, Mr. Hodel argued on behalf of Downey Savings. He began his argument by discussing the "statutory repeal rule," and again was allowed to go on for quite some time with no questions. Much of what he said responded to Sturdevant's argument on this point. Eventually, he said that the true underpinning of the plaintiffs' position is that the voters aren't smart enough to understand the law. Chief Justice George then chimed in, "Of course, you're saying voters should be smart enough to know" all the rules about retroactive application. Hodel said, "Absolutely, because that's the law. Voters are presumed to know the law."
Justice Baxter then asked an interesting hypothetical question: "Isn't this also an area where advocates on both sides have an opportunity to explain to the voters the potential adverse impacts or positive consequences?" Hodel said, "That is not how the statutory repeal rule works"—attempting, I suppose, to get away from the question of the voters' intent. Justice Baxter said, "I'm not sure you understood my question. Don't they have an opportunity to present argument in the voters' pamphlets about the potential adverse impacts or positive consequences?" Hodel said yes, but it would not be incumbent upon anyone proposing a new law to warn the voters about the statutory repeal rule. He argued that in essence, plaintiffs are saying that there ought to be a different law for amendments by initiative.
Justice Baxter persisted: "What I'm really suggesting is that if a statute could be applied retraoctively, that is an argument that those opposed to the initiative could make in the ballot materials."
An aside here: If I were drafting the ballot argument against Prop. 64, there's no way I would feel comfortable asserting that if enacted, it would apply retroactively to pending cases and halt those cases in their tracks. We already know that the Courts of Appeal themselves have split on this issue. Without express retroactivity language, what would justify the opponents in unequivocally asserting that the amendments would apply retroactivity and halt pending cases? Plus, if you put that in your argument against the measure, then if the measure passed, that itself would certainly be taken as evidence of the voters' retroactive intent. Justice Baxter's hypothetical creates a no-win situation for the opponents.
Hodel turned back to the language of the ballot materials, saying that they put the voters on notice that there will be a change in law, and that rights will be affected. He said that the harm (that the voters were trying to rectify) is "immediate merely by the existence of attorney-driven cases with professional plaintiffs." These "unsupervised" cases "clog our courts" and cause businesses to leave the state. Voters were on notice, he argued, that the new law would change this.
He then said that the cases plaintiffs cite fall into one of two categories: (1) cases involving a change in a common-law rule (such as Evangelatos); or (2) cases like Myers, which involved a change in the consequences of past conduct (the substantive/procedural argument).
Justice Kennard then brought up the issue of whether it is proper to allow these unaffected plaintiffs (who have had no opportunity to seek leave to amend) to ask the trial court to be allowed to substitute an affected person. (The Supreme Court granted review of this question in Branick but not in Mervyn's). She asked whether it would frustrate the objectives of the voters to allow this, pointing out that the main objective was to prevent frivolous lawsuits and make sure that they involve only plaintiffs who have been harmed. She also asked whether this issue isn't always one for the trial court's sound discretion.
Hodel answered no, then started back on retroactivity, when Justice Werdegar jumped in for the first time, basically telling him to answer the question about leave to amend. Hodel said no, "for three reasons." He only got a chance to give the first two: (1) Granting leave to amend would "do violence" to the statutory repeal rule. The action terminates, disappears. The right to maintain the action no longer exists. Plaintiffs here have no duties to anyone, they are strangers to the dispute. The Court would have to find an exception to the statutory repeal rule that would resuscitate their rights; allow them to be "professional place holders"; but the voters don't want them to be. (2) "Wouldn't the voters be surprised to hear, after saying we no longer want you or your counsel involved, that they're grandfathered in; that they're still in control; that they get to pick the new plaintiff and communicate with them; that they get to draft the motion to amend?"
Another aside here: I do not think it serves the interests of any appellate advocate to adopt an insulting tone of voice. Prop. 64 did not purport to alter the First Amendment or curtail anyone's right to "communicate" with potential class representatives. Hodel went too far with this argument, in my opinion.
Justice Corrigan then said that there is a long-standing notion that when circumstances change, the complaint can be amended. Hodel said yes, but here, the proposal is simply to substitute one plaintiff for another with "no further scrutiny." Justice Kennard pointed out that amendment is within the trial court's discretion (in other words, the trial court would scrutinze whether the proposed amendment was proper). Hodel said there's no discretion where the plaintiff has no rights, no standing, no authority. Justice Kennard said that the plaintiff would merely be substituting an injured party. Hodel cited two cases involving proposed amendments substituting parties, in which leave to amend was denied.
Chief Justice George then said that Hodel's time was up.
Mr. Spencer began his argument by saying he would respond to Justice Baxter's question about whether the voters should be "allowed to engage in a robust debate" about retroactivity. He said that everyone would agree that the voters should be able to. The problem is, in this case, it was not clear that retroactivity was part of the debate.
Chief Justice George asked whether we presume that the voters are aware of the governing law. Spencer said yes. The Government Code provision talks about a "repeal"; the question is whether Prop. 64 is a repeal. The Government Code provision is not self-executing, he said. Are the voters cognizant of case law? They are presumed to know it — but what do these cases say? Is there such a thing as an automatic, mechanical repeal rule? "That is not the law." (In other words, the voters are presumed to know the law, but the law is not clear that a statutory repeal automatically applies retroactively.)
He then went on to discuss the "statutory repeal rule" in more detail, again with no questions from the justices. After he concluded by saying that the courts look at intent, Justice Werdegar asked, "If we do that, what do we see here?" Spencer then talked about how the word "repeal" is never used, but the present-tense word "file" is used repeatedly in the ballot materials.
Justice Werdegar then asked Spencer to address the right to amend. Spencer replied that he would get to that in a minute, but that first he wanted to talk about the "statutory repeal rule" some more. He said that numerous cases from the 1930s forward involved a "repeal" of a statutory right, yet the Court held that the amendments applied prospectively only (and he named a series of cases, ending with Myers). He then said there is no language in Prop. 64 clearly suggesting in either direction what the law will be, so there can't be informed public debate.
Justice Baxter took the hint, and asked: "Did the opponents have an opportunity to point this out in the arguments against?" Spencer said he respectfully disagreed that the voters rely on the ballot arguments (as opposed to other parts of the ballot materials). Justice Baxter said, "It seems to me so obvious that the issue of whether it was retroactive was common knowledge among the plaintiff's bar and the defense bar" prior to the election, and "both sides were afraid to mention it. The voters were, in effect, denied a discussion of the issue."
Another aside here: I personally do not recall any discussion of retroactivity until after Prop. 64 passed. Prop. 64 was trailing in the polls all the way up to election day, and I did not think it was going to pass. Perhaps Justice Baxter is referring to something in the record in either Mervyn's or Branick that I haven't seen.
Spencer replied that for the voters to have an opportunity for discussion, retroactivity language should have been put in the text of the law, explicitly. Justice Baxter then said he thought both sides made a political decision not to address the issue in the ballot arguments, and instead to "dump it in the laps of the judiciary." Spencer replied that's why there's a clear rule in the case law: when in doubt, apply the amendment prospectively.
Spencer then turned to the amendment issue, pointing out that amendment would also allow a public prosecutor to be substituted in. Justice Kennard asked whether it was his view that Prop. 64 doesn't say anything about amendment and therefore doesn't affect the normal rules regarding amendment? Spencer said yes, Prop. 64 does not affect Code of Civil Procedure section 473. He said that the fundamental rule that cases should be decided on the merits favors allowing amendment.
Justice Chin asked about one of the cases cited by Hodel at the end of his argument, in which leave to amend was not granted to substitute a new plaintiff. (That case apparently involved two sisters who were in a car wreck, only one was injured, and their lawyer accidentally put the wrong name in the complaint. The problem was not noticed until after the statute of limitations had run, and the court denied leave to amend.) Spencer distinguished the case on its facts, saying that amendment was not fair to the defendant in that case because the complaint gave no notice that any other person had even been present during the accident. This case, by contrast, was brought for the benefit of all injured persons, and it raises the same issues that any injured plaintiff would have raised. The general rule is that amendment should be allowed unless it brings up a wholly different liability or obligation. The amended complaint would be "virtually the same lawsuit."
Justice Moreno asked whether Spencer was saying that the trial court would have virtually no discretion, then, in deciding whether to grant leave to amend. He pointed out that typically, the trial court considers a variety of factors (e.g., due diligence, etc.), and here we have a change in the legal landscape. Spencer replied that, in his view, the scope of the trial court's discretion is the most important issue in the case. He said that unless the Court wants these cases coming back up with differing results, the Court should give some indication of what the trial courts should do.
Spencer then addressed two arguments raised in amicus curiae briefs about why leave to amend should not be granted. He dismissed the first—prejudice to the defendant—as a non-issue. He then addressed the second, which was that if the case is allowed to proceed as a class action, that would impose additional burdens on the defendant. He then made a very interesting argument. He said that all Prop. 64 says is that the case must "meet the requirements of" Code of Civil Procedure section 382 (the class action statute). However, section 382 "doesn't say that the case needs to be class certified. In appropriate cases, a class does not need to be certified when it goes back to the trial court." He pointed out that the injunctive relief statute (Code of Civil Procedure section 572(b)(1)) states that injunctive relief can be prosecuted in a class action "whether or not a class is certified." In injunctive relief cases, the trial court does not have to hold class certification proceedings because the injunction can proceed without that. He said it should be an easy matter for the trial court to decide that the "requirements" of section 382 are met.
Then, he turned to restitution cases. He mentioned the Schwartz case as an example, and said that if the Court holds Prop. 64 retroactive, that case will go back to the trial court, which entered a large restitution judgment. What will the trial court do then? He said that the Supreme Court had always been very liberal in allowing consumer claims to go forward without class certification (citing cases called Jensen, Gas Retailers, Pacific Land, Lowery (a Court of Appeal decision) and Kraus).
He then said that the trial courts should be told that on remand, pre-existing proceedings, especially judgments, should be left intact once a substitute person or public entity is added.
That was the end of his time.
On rebuttal, Mr. Hodel said that if the plaintiffs' argument is that, with every statutory repeal, the inquiry should be intent, then why have a statutory repeal rule? "To find for plaintiffs, you'd have to repeal the repeal rule, or say that you have a different rule for voters." He said that no one would argue that the legislature didn't know about the repeal rule, and that it would be "paternalistic" to hold that the voters needed it explained to them.
He then went into a fact-specific discussion of two more cases involving substitution of plaintiffs. One case involved substitution of one decedent's estate for another, a technical change where amendment was allowed. Another case involved a homeowners' association. While the case was pending, the Court of Appeal ruled that homeowners' associations lack standing, so the members were substituted in. Hodel distinguished these cases on the facts, arguing that these cases involved "simple X-ing out of one plaintiff's name and putting in another."
Hodel argued that the plaintiffs in this case have suffered no prejudice because they have no rights, and they always knew they had no rights because statutory rights are subject to repeal at any time. He also observed that no one is clamoring to bring these claims. He asked, if substitution is allowed, "How will this be supervised? Why does this plaintiff have a right to continue to control, dictate, communicate, to draft the motion to amend?" "Plaintiffs always knew that this day would come, since the Younger case in 1978. You always operate in full contemplation that your rights could end at any time." He ended by referring to the plaintiff's right as an "unnatural right" (as distinct from a "natural right" deriving from the common law).
And that was the end of the argument. I'm not going to venture a guess as to the outcome here. I think the justices' questions revealed very little. I'd like to hear what others think. Please post comments (or send me an email) with your thoughts, and for those who attended, please add feel free to expand on my summary (or offer corrections) about any aspect of the arguments.
I think this is an excellent summary, Kimberly -- I was also there and I don't see anything in my notes that I would add. And I think I agree with pretty much all of your interpretation (though you were mostly just reporting, I know) except maybe as to that argument by Hodel.
I think the point he was trying to make (maybe inartfully, although I thought otherwise he did the best job of the four) was that there's no doubt that Prop 64 was intended to stop the abuse of the UCL by *some* plaintiffs' counsel who represented uninjured parties. Voters (those who understood what they were doing, anyway) likely *would* be surprised, as he suggested, to find that those attorneys would be able to go back for another try. Of course, his argument downplayed (well, omitted) the fact that Prop 64 also affected cases that did not involve abuse at all, which is very likely what renders that argument insulting to plaintiffs' counsel who did not abuse the law.
The problem (from the defense point of view) is that the ability to file lawsuits with no injured plaintiff is so susceptible to abuse that you have to get rid of that ability altogether, as a policy matter, and then there are some plausible policy arguments that amendment should not be allowed either, if only for the virtue of having a bright-line rule. But the fact that all no-injury UCL cases were not alike probably does argue in favor of allowing trial courts to exercise discretion in weeding the bad ones out via an attempted amendment process. Of course, Hodel would not have been the one to bring that up.
I will venture a guess as to the outcome, although I probably shouldn't, especially on an issue where the law is as unclear as this. My guess would be that the Court will (1) find that Prop 64 does apply to pending cases but (2) will allow attempts to amend the pleadings in those cases if an injured plaintiff can be found. Could go either way, but I would bet there is at least a narrow majority for both those propositions.
The fact that there was not a single question about the statutory-repeal rule is hard to interpret. It could mean that the justices have already decided to apply it, except that if they had I can't figure out why they would have been so interested in retroactivity. I would guess (lots of guessing here) that they will not apply that rule but instead will parse out the language on retroactivity, maybe coming up with some compromise such as distinguishing injunctive-relief-only actions as being "forward-looking." (Moreno referred to this repeatedly, though that could be for a dissent.) I'm not sure that distinction makes any sense, personally, but we could very well end up with a baffling compromise decision of the kind that I think we got in the Myers case.
Thanks again for the excellent summary.
Posted by: Account Deleted | Thursday, June 01, 2006 at 10:06 AM
Thanks for the great review. Were there any comments about whether all class members have to show reliance? We have a certified class case that is on hold. The defense has claimed that since the class representative has to show reliance under Prop. 64, that all class members also have to show reliance due to commonality. Thanks, Ron Packard
Posted by: Ron Packard | Thursday, June 01, 2006 at 10:39 AM
Excellent summary. I have to say that from a defense persepctive, I was disappointed with the quality of the advocacy on the defense side. I thought the plaintiff-side attorney did a much better job framing the debate in their terms and in answering the questions of the justices. Baxter was tossing softballs at Spencer, and Spencer was swinging and missing.
Still, I have to concur with Mr. Underhill prediction on the likely result -- Prop 64 applies to pending cases but allowing leave to amend. To me, Baxter and Chin at least seemed convinced that Prop 64 should apply to pending cases. The others were a harder read and kept things close to the vest.
Posted by: John Hurley | Thursday, June 01, 2006 at 12:23 PM
That was extremely informative, far more so than any of the articles in today's legal rags.
Posted by: michael walsh | Thursday, June 01, 2006 at 12:25 PM
I agree. This is the most informed summary of oral argument I have seen, and in record time, too. Your blog is the best. Thank you for building a community for practitioners.
Posted by: Wendell Tong | Thursday, June 01, 2006 at 04:23 PM
Once again, we appreciate the sacrifice that you've made to put this blog together and to keep it current.
Posted by: Scott McMillan | Thursday, June 01, 2006 at 07:14 PM
Your summary was so good it staggers the mind that what is probably the best is freely available: a beautiful thing. thank you very much.
Posted by: Mary | Friday, June 02, 2006 at 03:01 PM
Thanks to everyone for your comments and especially for the positive feedback. In answer to Ron's question, the issue of reliance did not come up during the argument at all. Mr. McDowell briefly mentioned that Prop. 64 may have changed the law respecting causation (which sounds like a substantive change to me), but he did not mention reliance.
And to Kevin — thanks for your thoughtful response. Clearly, Mr. Hodel believes his client's particular case is one of those "frivolous," "attorney-driven" cases with a "professional plaintiff." Let's suppose it is. It still would have been more effective to tailor his remarks specifically to his client's case, rather than insult the rest of the plaintiff's bar. Mr. Spencer could at least defend himself. But as you point out, that approach probably would raise an issue concerning amendment that the defense bar would not want to raise.
The broader question is this: Does anyone really want trial courts making judgments about whether each case is "frivolous" or "attorney-driven" when deciding whether to grant leave to amend? What standard of proof would apply to such an analysis? Would it become a mini-summary judgment hearing, without the procedural safeguards built into the summary judgment process? Truly "frivolous" cases can be dealt with in other ways. That was true before Prop. 64 and it is still true now. I simply cannot agree that plaintiffs (or attorneys) who relied on pre-Prop. 64 law when they filed suit should now be considered tainted, and for that reason unable to seek leave to amend as a matter of law.
Posted by: Kimberly | Wednesday, June 07, 2006 at 02:14 PM