Landmark Supreme Court CLRA decision: Meyer v. Sprint Spectrum L.P.

The Supreme Court's opinion is now up in Meyer v. Sprint Spectrum L.P., ___ Cal.4th ___ (Jan. 29, 2009).  It holds that Civil Code section 1780(a) creates a standing requirement even for CLRA injunctive relief cases, and that plaintiffs lacked standing where the defendant inserted an unconscionable provision into a contract (which the CLRA prohibits) but had not yet attempted to enforce it.  Slip op. at 3-14.  Notably, the opinion expressly disapproves part of Kagan v. Gibraltar Sav. & Loan Assn., 35 Cal.3d 582, 593 (1984), where the Supreme Court had previously said “we interpret broadly the requirement of section 1780 that a consumer ‘suffer[ ] any damage’ to include the infringement of any legal right as defined by section 1770.” Id. at 10 n.3.

I view this case as an outgrowth of Prop. 64. I do not think that litigants or courts would have focused so heavily on reading an actual damage "standing" requirement into the CLRA if not for that fact that most CLRA cases also include UCL claims. After Prop. 64, UCL standing was on everyone's mind and was actively and repeatedly litigated in cases that also included CLRA claims. We have seen Prop. 64 bleed over into several other causes of action, not just the CLRA. The CLRA is simply the most notable example of a related, but separate, claim that Prop. 64 jurisprudence has significantly affected. 

Comments

[John H.]

I'm not sure I agree that Prop 64 influenced the outcome of the Meyer v Sprint Spectrum decision at all. A claim must normally be brought by a real-party-in-interest who has either suffered damages or who otherwise has a live dispute with the defendant. The only exceptions are statutes that specifically convey private-attorney-general standing, such as the old 17200 or current Prop 65. I think the same result would have been reached regardless of when the Meyers v Sprint Spectrum case was heard.

This is not to say that Prop 64 has nothing to do with the case. After Prop 64, CLRA claims became more common -- since an affected plaintiff was required to assert 17200 claims, it made sense in many cases to assert CLRA claims as well due to the greater remedies under the CLRA.

The effect of Prop 64 is that the issue in Meyers would have never come to the Supreme Court previously since the claims would just have been asserted as 17200 private-attorney-general claims. This is illustrated by the history of the Meyers case itself, which was initiated prior to Propp 64 by an unaffected plaintiff.

[Kimberly A. Kralowec]

Yes, but after Prop. 64 passed, the complaint was amended to substitute an affected plaintiff, and that was when the standing arguments were raised. Also, take a look at p. 14 of the slip opionion, where the Court wrote:

It is evident that any rule that would expand the ability of individuals to bring lawsuits has costs as well as benefits. (See Californians for Disability Rights v. Mervyn’s LLC (2006) 39 Cal.4th 223, 228 [discussing ballot arguments in favor of passage of Proposition 64 which cite litigation abuses due to liberal standing rules under the UCL].) It is also apparent that the Legislature, in weighing these costs and benefits in drafting the CLRA, set a low but nonetheless palpable threshold of damage, and did not want the costs of a lawsuit to be incurred when no damage could yet be demonstrated. We therefore conclude that the Court of Appeal was correct in holding that plaintiffs’ complaint does not sufficiently allege a cause of action for injunctive relief under the CLRA.

This is Prop. 64 slippage, make no mistake about it.