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.

Comments

[John Hurley]

I focused on this same section when I read the Mervyn's opinion this morning.

The particular paragrpah could be deemed to implicitly overrule Pfizer. But on the other hand, Mervyn's and Pfizer deal with two different aspects of the law. Mervyn's dealt with the elimination of private attorney general standing, and Pfizer dealt with adding a causation element. In any event, if Mervyn's impliedly overruled Pfizer, it only did so with respect to that aspect of the decision that added a reliance element to a claim for unlawful business practices. The other aspects of the decision dealing with general class action issues of commonality/typical would appear unaffected.

Although purporting not to decide anything, the Branick case appears to give trial courts wide latitude in allowing amendments to substitute injured plaintiffs for uninjured plaintiffs (and for such amendments to relate back) so long as the amendment doesn't seek to expand the underlying set of factual allegations beyond those in the original complaint.

[TommyK]

I think it is a stretch to say it overruled Pfizer. Pfizer styles its own analysis as a procedural rather than substantive issue. I think there is a decent chance that the Supremes will grant review of Pfizer though.

[Kevin Snyder]

In my view, Mervyn's suggests that the Court would approve Pfizer's conclusion that the class representative and the putative class members must both have suffered an actual injury: "In effect, section 17203, as amended, withdraws the standing of persons who have not been harmed to represent those who have". At the same time, it is hard to argue that the reliance requirement is not a substantive change at odds with the Court's view that "[t]he measure left entirely unchanged the substantive rules governing business and competitive conduct".