The UCL Practitioner

Supreme Court requests supplemental briefing on UCL issue: McGill v. Citibank

On December 7, 2016, the California Supreme Court heard oral argument in McGill v. Citibank, No. S224086.  This case presents the question of whether the Federal Arbitration Act, as construed in Concepcion, preempts the Broughton-Cruz rule.  (See this blog post for more.)

In the vast majority of argued cases, the matter is submitted upon completion of oral argument, and the Court simply issues its opinion within 90 days of the argument date.   On Tuesday, January 24, 2017, however, the Court vacated submission and directed the parties to file supplemental briefs on an interesting UCL-related issue.  From the docket:

Submission is vacated to allow for supplemental briefing. The court requests that the parties serve and file supplemental briefs addressing the following question: Whether the 2004 amendments to the Unfair Competition Law and the false advertising law, through passage of Proposition 64, eliminated the ability of private plaintiffs to seek public injunctive relief? Amici curiae that have filed briefs in this matter may also file supplemental briefs addressing the above question if they so choose. All initial briefs addressing the above question must be served and filed simultaneously on or before February 6, 2017. Any reply to the supplemental briefs must be served and filed on or before February 13, 2017. This matter will be resubmitted, without further order, as of the date that the last supplemental brief is or could be timely filed under this or any subsequent order of this court. (See Cal. Rules of Court, rule 8.524(h).) Corrigan, J., was recused and did not participate.

(Emphasis added.)

Brinker is another example of a case in which the Court vacated submission post-argument and directed further briefing.  In that case, the eventual opinion did not turn on (or even mention) the issue on which supplemental briefing was ordered.  So, the McGill order is very interesting, to be sure, but it does not necessarily mean that this point will become a central focus of the Court's opinion.  What it does mean is that the opinion will be delayed by at least a few weeks. 

In my view, the clear answer to the Court's question is no, assuming the plaintiff meets the standing requirements imposed by Proposition 64.   The initiative did not alter any of the remedies afforded by the UCL (as held in Mervyn's; see this blog post), so all the same forms of injunctive relief should be available both before and after the amendments. 

Supreme Court grants review in UCL case: Amalgamated Transit Union v. Superior Court

Yesterday, the Supreme Court granted review in Amalgamated Transit Union v. Superior Court (First Transit) (no. S151615).

The Supreme Court's docket does not yet indicate the specific issues on which review has been granted, but the Court of Appeal's opinion addressed a union's standing to assert a UCL claim on behalf of its members post-Prop. 64:

In this writ proceeding, we hold:

(1) An individual’s statutory right to sue in a representative capacity, conferred under the Labor Code Private Attorneys General Act of 2004 (Labor Code section 2699) and under the unfair competition law (Business and Professions Code section 17203), may not be assigned to a third party.

(2) Section 17203 of the unfair competition law, as amended by Proposition 64, providing that representative claims may be brought only if the injured claimant “complies with Section 382 of the Code of Civil Procedure,” means that private representative claims must meet the procedural requirements applicable to class action lawsuits.

Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court, 148 Cal.App.4th 39 (2007) (modified Mar. 22, 2007) (slip op. at 2). My original post on the Court of Appeal's decision (now no longer citable) is at this link.

New Prop. 64 opinion: Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court

In Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court, ___ Cal.App.4th ___ (Feb. 28, 2007), the Court of Appeal (Second Appellate District, Division Eight) summarized its holdings as follows:

(1) We agree the Unions have standing as assignees to assert the claims of union members who have assigned to the Unions their rights to recover wages owing to them. The Unions may not, however, assert claims on behalf of members who have not assigned their claims to the Unions. An assignment purporting to transfer to the Unions “my right to sue in a representative capacity on behalf of current and former employees” is not a transfer “by the owner” of “a right to recover money or other personal property” within the meaning of Civil Code sections 953 and 954. Nor is such an assignment the transfer of an “injury in fact” from assignor to assignee that confers standing on the assignee within the meaning of Vermont Agency of Natural Resources v. United States ex rel. Stevens (2000) 529 U.S. 765 (Vermont Agency). Consequently, the Unions do not have standing under PAGA or the UCL to assert the rights of members who have not assigned their recovery rights to the Unions.

(2) We further conclude that the UCL requirement that a person pursuing relief on behalf of others must both meet standing requirements and “[compl[y] with Section 382 of the Code of Civil Procedure” means, as stated in the Voter Information Guide for Proposition 64, that unfair competition lawsuits on behalf of others, initiated by persons other than the Attorney General and local public prosecutors, must “meet the additional requirements of class action lawsuits.” (Voter Information Guide, Gen. Elec. (Nov. 2, 2004) analysis of Prop. 64 by Legislative Analyst, p. 39 (hereafter Guide).)

Slip op. at 5-6. One justice dissented from the first of these two holdings.

More thoughts on First American Title Ins. Co. v. Superior Court (Sjobring)

I was taking another look at First American Title Insurance Co. v. Superior Court (Sjobring), ___ Cal.App.4th ___ (Jan. 25, 2006) (see my original post here), and came across this paragraph:

California law is clear that a representative plaintiff must be a member of the class he seeks to represent. Indeed, Proposition 64 was enacted to prevent abuses of the class action system by “ ‘prohibit[ing] private attorneys from filing lawsuits for unfair competition where they have no client who has been injured in fact.’ ” (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 228.) We cannot permit attorneys to make an “end-run” around Proposition 64 by filing class actions in the name of private individuals who are not members of the classes they seek to represent and then using precertification discovery to obtain more appropriate plaintiffs.

Slip op. at 19 (emphasis added). This paragraph does not accurately capture the purpose of Proposition 64. Proposition 64 was not enacted "to prevent abuses of the class action system." Rather, it was enacted to prevent purported abuses of the "non-class" (to borrow a term from Will Stern) representative action system, which allowed unaffected plaintiffs to seek relief on behalf of the general public without class certification. The actions filed by the Trevor Law Group and others were not class actions; they were non-class, private attorney general actions. In fact, as the 1999 edition of Will's treatise noted, "these cases typically are not brought as class actions." William L. Stern, Unfair Business Practices and False Advertising: Bus. & Prof. Code §17200, para. 7:28 (Rutter Group 1999). Proposition 64 sought to prevent abuses of the non-class, representative action system by bringing UCL actions into the ambit of the class action system, a system of which such actions were not previously a part. Therefore, it is not correct to say that Proposition 64 was intended to prevent "abuses of the class action system."

If a plaintiff files a putative class action (as distinct from a pre-Prop. 64, non-class, representative action) knowing that he or she is not a putative class member, that really doesn't have anything to do with Proposition 64. Perhaps the plaintiff has abused the court system, or violated Code of Civil Procedure section 128.7, but Proposition 64 is not implicated. The First American Title case bears this out. In that case, the plaintiff pleaded causes of action for violation of the CLRA, breach of fiduciary duty, constructive fraud, and unjust enrichment, in addition to a UCL claim. Slip op. at 4. The Court of Appeal basically held that it was improper for the plaintiff to continue to pursue the class claims once he realized he was not a member of the class he sought to represent, and that such a plaintiff should not be allowed to conduct discovery to identify an appropriate class representative. Id. at 18-21, passim. That conclusion would obtain regardless of what causes of action the plaintiff was pursuing. In fact, the Court could simply delete the paragraph quoted above without altering the import of its holding. It should consider doing so, because the paragraph is misleading.

More Pfizer briefs and depublication requests

Two more briefs and one amicus letter have been filed with the Supreme Court in Pfizer:

• Answer to Petition for Review (filed August 31, 2006)
• Reply to Answer to Petition for Review (filed September 8, 2006)
• Amicus Letter Brief of Public Citizen and the Center for Auto Safety (dated September 14, 2006)

In addition, at least six more depublication requests have been filed. I have copies of two of them, including the one that I drafted on behalf of my firm, The Furth Firm LLP:

• Depublication Request of The Furth Firm LLP (filed September 8, 2006)
• Depublication Request of the Law Offices of Barry L. Kramer (filed September 11, 2006)

My depublication request explains why Mervyn's impliedly overruled Pfizer. If anyone has copies of the other depublication requests, please forward them and I'll put them up.

Consumer Law & Policy Blog

Let's welcome the Consumer Law & Policy Blog to the blogosphere. This new blog is sponsored by the Consumer Justice Project (part of the Litigation Group of Public Citizen, a non-profit consumer advocacy group), and covers nationwide developments in the area of consumer protection. A recent post on the Pfizer decision is of particular interest: "Dear California Supreme Court: Did Prop. 64 Impose A Reliance Requirement?"

"Proposition 64 and the 'Statutory Repeal Rule'"

My article on the "statutory repeal rule" is now available online at this link. The San Francisco Daily Journal published the article on May 31, 2006 in a slightly different form under the title "High Court Will Resolve Whether Proposition 64 is Retroactive." The article concludes the analysis that I began in a series of three blog posts on the "statutory repeal rule."

Prop. 64/wage & hour article

H. Scott Leviant of Arias, Ozzello & Gignac, LLP has published an interesting article in the U.C. Davis Business Law Journal: "Unintended Consequences: How the Passage of Ballot Proposition 64 May Increase the Number of Successful Wage and Hour Class Actions in California," 6 U.C. Davis Bus. L.J. 18 (2006).

"Unfair Competition Law Update: A Look at 2005"

The April 2006 issue of the California Civil Litigation Reporter, which is available online to paid subscribers, featured an article called "Unfair Competition Law Update: A Look at 2005." The article (which cites this blog!) is by Matthew G. Ball and William N. Hebert of Kirkpatrick & Lockhart Nicholson Graham LLP, who will be speaking at the Bridgeport class action and UCL conference in San Francisco on May 18-19. I will also be speaking at that conference, and I'm looking forward to meeting them. It's not too late to sign up to attend.

Prop. 64 and waiver

As I reported here, the Court of Appeal recently ruled that a defendant can waive the right to argue that Prop. 64 applies retroactively to a pending case by not raising the issue soon enough. Lyons v. Chinese Hosp. Assn., ___ Cal.App.4th ___ (Feb. 6, 2006) (slip op. at 2 n.2). Last week, a reader wrote in with the following question:

What does the recent appeals court’s ruling finding that the Prop 64 issue can be waived if not raised in a timely fashion say about or do to the argument that defendants have raised to the Supreme Court about standing being challengable at any time during the process, if anything? Are they safe because they challenged it early enough, or does this in some way strike a blow against that argument?

This was my response:

In answer to your question, off the top of my head, I think the rule that standing can be raised at any time derives from the related rule that challenges to the court's jurisdiction can be raised at any time. Indeed, the courts have a duty to raise jurisdictional problems sua sponte whenever they become aware of them. Normally, standing is jurisdictional, so if the plaintiff lacks standing, the court lacks jurisdiction. Thus, the rule developed that challenges to standing can be raised at any time. With Prop. 64, however, if the new standing rules do not apply retroactively, then there is no standing problem; instead, the old standing rules would apply, and the (unaffected) plaintiff would have standing. Thus, there is no jurisdictional problem that the court would be required to raise sua sponte, or that a party would be permitted to raise at any time. This may have been the reasoning underlying the court's decision that Prop. 64 retroactivity is not the kind of issue that can be raised at any time, and that it can, in fact, be waived.

It also seems to me that in all of the cases now pending before the Supreme Court, the defendants raised the Prop. 64 issue very quickly, within a couple of weeks or months, at most, after the initiative passed, so those defendants are safe from any waiver argument. Any other thoughts on this?

New unpublished UCL decision: Settle v. Knox Attorney Service

There are two interesting things about the Court of Appeal's unpublished opinion in Settle v. Knox Attorney Service, no. B180137 (Mar. 21, 2006) (Second Appellate District, Division Seven):

First, the Court of Appeal seems to agree with the idea that a UCL "unlawful" prong claim may be predicated on the infringement of a constitutional right (although it found no evidence of such an infringement in the case before it and affirmed summary judgment in the defendant's favor). (Slip op. at 7.)

Second, for some reason the plaintiff chose to concede that Prop. 64 applied retroactively to his case, which was filed before the initiative's effective date. (Slip op. at 8 n.4.) That's a huge concession. I'd think long and hard before I'd make it in any of my cases.

Thanks, as always, to JS for reading through the unpublished opinions to find this one.

Statutory Repeal Post #3: In re Estrada and Collins

This is the third in my series of posts about California Supreme Court cases interpreting the so-called "statutory repeal rule." My first and second posts in the series addressed five of the earliest cases (from the ‘30s and ‘40s) in which the Supreme Court interpreted this “rule.” As I explained in those posts, a close analysis of the early cases demonstrates that the “rule” is grounded in legislative intent. Accordingly, whether a statutory amendment applies retroactively to pending cases cannot be determined without considering both the wording of the amendment and the express and implied intent of the legislature (or electorate) in changing the law.

In In re Estrada, 63 Cal.2d 740 (1965), the Supreme Court (the same justice who authored the Sekt decision discussed in post #2) again addressed a statutory repeal and determined its meaning by analyzing legislative intent. When the defendant escaped from prison in June 1963, the crime of escape was punishable by two years’ imprisonment. By the time the defendant was sentenced in September 1963, the legislature had amended the Penal Code and escape was punishable by only one year’s imprisonment. Id. at 743. The Supreme Court determined that the statutory amendment did apply retroactively, and that the defendant was entitled to the benefit of the new, lesser sentence. Id., passim.

In so holding, the Supreme Court immediately turned to the question of intent:

The problem, of course, is one of trying to ascertain the legislative intent—did the Legislature intend the old or new statute to apply? Had the Legislature expressly stated which statute should apply, its determination, either way, would have been legal and constitutional. It has not done so. We must, therefore, attempt to determine the legislative intent from other factors.

Id. at 744 (emphasis added). For purposes of the case before it, “[t]here is one consideration of paramount importance” that “leads inevitably to the conclusion that the Legislative must have intended, and by necessarily implication provided, that the amendatory statute should prevail.” Id. at 744-75 (emphasis added). That consideration was as follows:

When the Legislature amends a statute so as to lessen the punishment it has obviously expressly determined that its former penalty was too severe and that a lighter punishment is proper as punishment for the commission of the prohibited act. It is an inevitable inference that the Legislature must have intended that the new statute imposing the new lighter penalty now deemed to be sufficient should apply to every case to which it constitutionally could apply. The amendatory act imposing the lighter punishment can be applied constitutionally to acts committed before its passage provided the judgment convicting the defendant of the act is not final. This intent seems obvious, because to hold otherwise would be to conclude that the Legislature was motivated by a desire for vengeance, a conclusion not permitted in view of modern theories of penology.

Id. at 745 (emphasis added). Later in the opinion, the court mentioned both the rule that new legislation is presumed to operate prospectively only and the “statutory repeal rule,” but then observed that neither canon of statutory construction should be “followed blindly in complete disregard of factors that may give a clue to the legislative intent.” Id. at 746. In addition, the presence or absence of a savings clause, express or implied, “certainly is not conclusive on the legislative intent ….” Id. at 747.

The Supreme Court employed similar reasoning in People v. Collins, 21 Cal.3d 208 (1978). In Collins, prior law criminalized both forcible and non-forcible oral copulation. In 1976, after the defendant was convicted for non-forcible oral copulation, but before he was sentenced, the Legislature repealed the old statute and enacted a new one with the same number, completely supplanting the old one. The new statute criminalized only forcible oral copulation. Id. at 211. The Supreme Court held that the conviction must be reversed because the statute on which it was based had been repealed. Again, the Supreme Court explained that this result hinged on the presumed Legislative intent behind the “statutory repeal rule”:

In Sekt v. Justice’s Court (1945) 26 Cal.2d 297, 304, we discussed the rule’s theoretical basis: it presumes the Legislature, by removing the proscription from specified conduct, intended to condone past acts. …. [A]n amendment eliminating criminal sanctions is a sufficient declaration of the Legislature’s intent to bar all punishment for the conduct so decriminalized.

Id. at 212, 213 (emphasis added).

In both Estrada and Collins, if the “statutory repeal rule” had applied in the manner that the Courts of Appeal have recently applied it to Prop. 64—without reference to the electorate’s intent—the outcomes would have been the same, but the lengthy discussions of what the legislature intended would have been a total waste of time and effort. The Supreme Court is not known for engaging in idle, unnecessary examinations of legislative intent.

My next post on this topic will continue to address California Supreme Court precedent interpreting the “statutory repeal rule.”

UPDATE: I completed my analysis of California Supreme Court case law interpreting the "statutory repeal rule" in this article, which appeared in the San Francisco Daily Journal on May 31, 2006.

Prop. 64 can be waived: Lyons v. Chinese Hosp. Assn.

In Lyons v. Chinese Hosp. Assn., ___ Cal.App.4th ___ (Feb. 6, 2006) (published Feb. 24, 2006), the Court of Appeal (First Appellate District, Division Two) held that the defendant waived its right to argue that Prop. 64 applied to the case by not raising the issue soon enough:

In a letter filed less than one week before oral argument, defendant CHA advised this court of its intent to rely at oral argument upon three cases relating to the issue of the retroactive application of Proposition 64. Proposition 64 was passed by the electorate on November 2, 2004, and became effective the following day. It amended certain provisions of the Unfair Competition Law and the false advertising law. At no time during the past year has defendant raised in this appeal any issue relating to the retroactive impact of Proposition 64. Clearly defendant has waived the right to raise the issue in this appeal. (Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4; Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (The Rutter Group 2004) 9:21, p. 9-6.)

(Slip op. at 2 n.2.) The Court of Appeal then held that the trial court should have awarded attorneys' fees under Code of Civil Procedure section 1021.5 to a UCL plaintiff who successfully obtained injunctive relief but whose other causes of action failed.

UCL miscellany from the blog pile

The August 2005 issue of the Association of Business Trial Lawyers Report (San Diego chapter) ran an article called "Has the Class Certification Inquiry Changed Due to Proposition 64?"

An appellate brief in another pending appeal raising Prop. 64 retroactivity is accessible at this link. (Merritt v. Cingular Wireless, no. B178747, Second Appellate District, Division One.)

Another trial court tentative ruling on Prop. 64 retroactivity is accessible here. (Eustis v. Advanced Laser Clinics of California, Sacramento County Superior Court, case no. 04AS03204, Judge Thomas M. Cecil.)

In last Friday's paper, San Francisco Chronicle columnist David Lazarus mentioned section 17200 by name in his report on "The War Between The Stickers" — a possible UCL violation by a water heater repair company. (I think I got one of those stickers.)

Not to be outdone, The Recorder now has its own blog, Legal Pad, where reporters "drop by ... to blog about the stuff that might otherwise fall through the cracks." Hey, that's my job.

New class action decision: Figueroa v. Northridge Hospital Medical Center

In Figueroa v. Northridge Hospital Medical Center, ___ Cal.App.4th ___ (Oct. 20, 2005), which was published last week, the Court of Appeal (Second Appellate District, Division Two) held that an order denying a motion for leave to amend the complaint to add class action allegations is not an appealable order, at least when the parties and claims are otherwise unchanged. This case involved a UCL claim, but it did not arise in the context of Prop. 64. Nonetheless, it's obviously relevant. Many plaintiffs are seeking leave to amend their complaints to satisfy Prop. 64's requirements, including class action allegations. The lesson to be learned here: if leave to amend is denied, file a writ petition, not an ordinary appeal.

The "statutory repeal rule" - Post #2

This is the second in my series of posts about California Supreme Court cases interpreting the so-called "statutory repeal rule." My first post in the series addressed two cases from the 1930s, Callet v. Alioto, 210 Cal. 65 (1930) (per curiam) and Krause v. Rarity, 210 Cal. 644 (1930) (in bank). In both cases, the Supreme Court mentioned the "statutory repeal rule" but decided it did not apply.

In Hopkins v. Anderson, 218 Cal. 62 (1933), the Supreme Court also mentioned the "statutory repeal rule" and again decided that it did not apply. Hopkins involved a 1929 amendment to the state constitutional provisions governing the jurisdiction of the superior and municipal courts. Id. at 64-66. If applied retroactively, the amendment would have stripped away the plaintiff’s judgment, because the court that entered it would have lacked jurisdiction. See id. The Supreme Court cited Callet v. Alioto both for “the general rule that a cause of action or remedy dependent on statute falls with a repeal of the statute, even after the action thereon is pending, in the absence of a saving clause in the repealing statute” as well as for “the equally well settled and … fundamental rule of statutory construction that every statute will be construed to operate prospectively, and will not be given a retrospective effect, unless the intention that it should have that effect is clearly expressed.” Id. at 66-67. Although the case involved a purely statutory issue—superior and municipal court subject-matter jurisdiction—the Supreme Court declined to apply the amendment retroactively, holding that “[t]here is nothing in the 1929 amendment … indicating that it was intended to have a retroactive operation.” Id. at 67 (emphasis added).

A few years later, the Supreme Court addressed the “statutory repeal rule” again in Southern Service Co. v. County of Los Angeles, 15 Cal.2d 1 (1940). Defendants frequently cite this case in arguing that Prop. 64 applies retroactively, because Southern Service held that a certain amendment to the state tax laws applied retroactively and abated all pending actions. Prior law authorized refunds of taxes illegally assessed but paid without protest. Id. at 5-6. A 1939 amendment changed that law, and prohibited refunds “of any tax voluntarily paid which was levied prior to January 1, 1939 .…” Id. at 6. The Supreme Court observed that the right to a tax refund is “purely statutory,” and that “[t]he legislature may withdraw such a statutory right or remedy, and a repeal of such a statute without a saving clause will terminate all pending actions based thereon.” Id. at 11-12 (citing Callet v. Alioto and other cases). However, the Court applied this principle to the case before it only because the Legislature had expressly indicated that the change in law would apply to taxes “levied prior to January 1, 1939”:

True, the words of the 1939 statute are not expressly words of repeal without a saving clause, but the effect is the same in so far as the application of the principles is concerned when the legislature by apt expression has withdrawn the right and remedy in particular cases, including all pending actions based thereon. The legislature, no doubt having in mind the holding of this court in Krause v. Rarity, 210 Cal. 644, 654, 655, expressly provided that the withdrawal of the right to refund in the particular class of illegal taxes specified should terminate all pending actions. Its expression in this respect is sufficient to accomplish the declared intent and purpose.

Id. at 13. As I explained in my last post on this subject, the Supreme Court in Krause v. Rarity held the “statutory repeal rule” inapplicable because the necessary expression of legislative intent was absent. Accordingly, neither Southern Service nor Kraus v. Rarity supports the notion that Prop. 64 applies retroactively to pending cases.

The next case in which the Supreme Court addressed the “statutory repeal rule” is Sekt v. Justice’s Court, 26 Cal.2d 297, 304-307 (1945). In Sekt, the Supreme Court declared with even more force that this so-called “rule” is merely an application of the legislative intent doctrine.

A 1943 amendment expanded the superior court’s jurisdiction over certain criminal conspiracy cases and increased the potential punishment. Id. at 299. The defendant, who had been tried and convicted in the justice court and whose appeal was pending when the law was changed, argued that the amendment stripped away his conviction because the justice court no longer had jurisdiction over his case. Id. at 299-300. The Supreme Court disagreed for two reasons. First, it determined that the general savings clause of Government Code section 9608 was enacted to “avoid the strict common-law rule that the repeal of criminal statutes terminates all pending prosecutions not reduced to final judgment .” Id. at 300. Second, as “another and completely independent ground,” the Court determined that “the amendment … was not a repeal of the type to bring into operation the common-law rule that the repeal of a criminal statute, without a saving clause, operates to terminate all pending prosecutions.” Id. at 303-304. In so holding, it explained that the rationale behind this rule is grounded in legislative intent:

This rule is well settled at common law and is accepted by most American jurisdictions. It is based on presumed legislative intent, it being presumed that the repeal was intended as an implied legislative pardon for past acts. (See discussion, 22 C.J.S. § 27, p. 81.) This rule results, of course, in permitting a person who has admittedly committed a crime to go free, it being assumed that the Legislature, by repealing the law making the act a crime, did not desire anyone in the future whose conviction had not been reduced to final judgment to be punished under it. But this rule only applies in its full force where there is an outright repeal, and where there is no other new or old law under which the offender may be punished.

Id. at 304-305 (emphasis added). The Supreme Court reiterated that “legislative intent is the test” for determining whether a statutory “repeal” applies retroactively or not. Id. at 306 (emphasis added). As for the defendant’s conviction, it would stand under the prior law:

There is substantial and well-reasoned authority to the effect that where the later statute increases the punishment the Legislature has clearly demonstrated its intent that the act should be punished, and since the offender cannot be punished under the new law because of the ex post facto provision of the Constitution, he will be held under the old law. It is presumed from the very purpose of the amendment that the Legislature intended that all offenders should be punished, and a saving clause is implied. …. The very nature of the situation compels the conclusion that the Legislature must have intended that the amendment should operate prospectively, and that as to past offenders they should be punished under the old law. To imply a saving clause in such a situation is simply to give effect to the obvious intent of the Legislature.

Id. at 307, 311. Finally, the Court issued a stern warning to other courts against “blindly applying the common-law [statutory repeal] rule to a situation where the reason for the rule does not exist. Where the reason for the rule ceases the rule should not apply.” Id. at 308 (emphasis added).

My next post on this topic will address cases from the 1960s and 1970s in which the Supreme Court reiterated the legislative intent principle behind the so-called “statutory repeal rule.”

UPDATE: The third post in the series is accessible here.

The "statutory repeal rule" – Post #1

This is the first in a series of posts on the "statutory repeal rule" as interpreted by the California Supreme Court. The Court of Appeal opinions holding that Prop. 64 applies retroactively to pending cases all rely on this so-called "rule." I'm going to address the California Supreme Court cases chronologically in an effort to establish that the so-called "rule" is merely an application of the general principle that new statutes apply prospectively only, absent a very clear indication of legislative (or electoral) intent to the contrary. If my workload permits, I'll put up one or two posts a week until I've addressed all the cases.

The first of the early California Supreme Court cases is Callet v. Alioto, 210 Cal. 65 (1930) (per curiam). Callet has been cited in most of the appellate opinions on Prop. 64 retroactivity, and it has become the de facto leading case. Ironically, this is a case in which the Supreme Court held that the "statutory repeal rule" did not apply.

Callet involved the right of injured "guests" to recover damages against negligent drivers. Under the Civil Code, a guest could recover for injuries resulting from the driver's ordinary negligence. Id. at 67 (citing Civ. Code §§1714, 2096). In 1929, the Legislature enacted a new statute limiting a driver's liability to cases of gross negligence, willful misconduct, or intoxication. Id. at 66-67 (citing Veh. Code §141¾). Callet addressed whether this new statute applied retroactively to pending cases. See id.

The first thing the Court did was invoke the ordinary rule that every statute operates prospectively unless a contrary intent is "clearly expressed." Id. at 67. Next, the Court cited the "statutory repeal" canon, noting the exception for rights of action that have accrued "by virtue of a statute codifying the common law." Id. at 68. Ultimately, the Court wound up not applying the "statutory repeal canon" because it found, after carefully analyzing common-law remedies for ordinary negligence, that the right of a guest to recover for injuries caused by ordinary negligence was part of the common law. Id. at 68-70.

Krause v. Rarity, 210 Cal. 644 (1930) (in bank) was decided just three months after Callet. The case involved the very same new statute, which limited a driver's liability to cases of gross negligence, willful misconduct, or intoxication. Factually, however, Krause was different in a key respect. The plaintiff in Krause was the estate of a decedent killed by the defendant's ordinary negligence, rather than an injured passenger who survived the wreck and then filed suit personally. Id. at 647.

A decedent's estate enjoyed no common-law right to recover for ordinary negligence at all. That right was purely statutory. Id. at 653 (citing Code Civ. Proc. §377). Accordingly, the defendant argued that the new statute repealed that right, and that the plaintiff could recover only if it could prove gross negligence, willful misconduct, or intoxication. Id. at 652.

In rejecting that argument, the Supreme Court relied on the legislative intent, and determined that in light of other statutory language, the legislature could not have intended to halt all pending actions by decedents' estates for ordinary negligence:

It is apparent that, if the new section had been enacted without the proviso, the rule contended for by the defendant Rarity would apply, the plaintiffs' cause of action would have been wiped out, and no recovery could be had on the judgment against said defendant, for the reason that said judgment has not become final. In such case the Legislature would have been unrestrained by constitutional barriers, and its intention, in the absence of a saving clause, would have been conclusively manifest. But the Legislature did not stop with the enactment of the portions of the statute which would have worked a repeal irrevocably, but added the provision which in effect continued the right of action on account of the death of the guest. In other words, there has not been a moment of time since the enactment of section 377 to the present time when an action would not lie on behalf of the heirs on account of the death of the guest.

Id. at 654 (emphasis added). The Court also determined that "[t]here was no abolishment of the right or cause of action, but only a change in the proof required, not to maintain the action, but to permit a recovery." Id.

In several cases from the 1940s, the Supreme Court made it even clearer that the governing principle in any case of statutory interpretation—including a statutory repeal—is legislative intent. I'll talk about these cases in my next post in this series.

UPDATE: Click here for post #2 in the series.

Please participate in an informal Prop. 64 poll

In Friday's article in the San Diego Daily Transcript, blog reader Michael Mallow of Kirkpatrick & Lockhart Nicholson Graham LLP was quoted as saying that "to a great extent the impact has already been felt and adjustments have already been made by those pursing unfair competition claims." I think that's probably true, and I'd like to hear from other people about what they've experienced. Please post a comment or drop me an email if you know about a UCL case in which any of the following has happened:

(1) A UCL complaint has been amended to add a new, affected plaintiff;
(2) A UCL complaint has been amended to add class action allegations;
(3) The trial court has stayed a case pending Supreme Court resolution of the Prop. 64 retroactivity question;
(4) The parties have stipulated to a stay pending Supreme Court action;
(5) The parties have tacitly agreed to take a wait-and-see approach in a pending case.

Personally, I know of at least one case in which the parties stipulated to a formal stay, and of another case in which no formal stay has been entered, but everyone has sort of tacitly agreed to await the Supreme Court's ruling. I'd be particularly interested to hear about cases in which a trial court has granted leave to amend. If I receive copies of trial court orders, I'll put them up.

Supreme Court gives itself more time to grant or deny review in Kintetsu case

On Monday, September 12, the Supreme Court extended its time to grant or deny review in Consumer Advocacy Group v. Kintetsu Enterprises, case no. S135587. The Supreme Court now has until October 27 to act.

Kintetsu is one of the two remaining published opinions on the Prop. 64 retroactivity question. Compare Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America, 129 Cal.App.4th 540 (2005) (Prop. 64 does not apply to pending cases) with Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 129 Cal.App.4th 1228 (2005) (Prop. 64 does apply to pending cases). To the best of my knowledge, no review petition was filed in Huntingdon.

Is Prop. 64 an unconstitutional bill of attainder?

Consider the following fact pattern. An unaffected plaintiff filed a UCL "general public" action several years ago and has been litigating it ever since. After the November election, the defendant moved for judgment on the pleadings based on Prop. 64. The trial court held that Prop. 64 applies retroactively to pending cases, granted the motion, and dismissed the action with prejudice. The defendant, as the prevailing party, filed a memorandum of costs, seeking several thousand dollars in expenses incurred litigating the case over the past few years. Assume the case was meritorious when filed. The trial court denies the plaintiff's motion to tax, and makes a significant costs award.

A reader has suggested to me that Prop. 64, so applied, is an unconstitutional bill of attainder. The argument would go like this. If Prop. 64 applies to cases filed before its effective date, then it simply amounts to a decree that unaffected UCL plaintiffs shall lose their cases and shall become liable for the prevailing parties' costs. Moreover, the ballot materials and the proponents' advertising demonstrate that the intent of the amendment was to single out unaffected plaintiffs (and their lawyers) and punish them for the UCL cases they filed in the past. Once the amendment passed, there was nothing they could do to avoid becoming liable for costs.

I have to reserve final judgment on this until I look more closely at the caselaw on bills of attainder, but it does sound compelling. What do others think?

"The Baby and the Bathwater"

California Wage Law has an interesting post about Prop. 64 this week. It says that the amendments to the UCL have not stopped so-called "shakedown" suits. Coincidentally, a reader emailed me a copy of the complaint in the new 17200 case that is mentioned in that post. I'll see if I can put it up over the weekend. UPDATE: The pdf file includes the complaint itself but also some handwritten notes, which I can't really post online. In any event, the complaint is well-described in the Wage Law post. I express no view on whether it's a "shakedown" suit or not, but I do agree that Prop. 64 was far broader than necessary to remedy the problems it was meant to fix. A simple amendment requiring court approval of all settlements in UCL cases would have done the trick.