Tuesday, May 19, 2009
S.C. Revives Cigarette Advertising Class Action
By a MetNews Staff Writer
The California Supreme Court gave new life yesterday to a class action on behalf of smokers who were allegedly persuaded by false advertising with regard to the health effects of cigarettes.
In a 4-3 decision, the justices ruled that Proposition 64, which requires private plaintiffs in a suit under the Unfair Competition Law, to have “suffered injury in fact and . . . lost money or property as a result of such unfair competition,” applies only to named plaintiffs and not to unnamed class members.
The court also held, unanimously, that plaintiffs charging that they purchased the defendants’ products in reliance on an ongoing campaign of false advertisements need not prove that they relied on specific false statements in order to prevail under the UCL.
The justices reversed an order by the Fourth District Court of Appeal’s Div. One, which held that a UCL class action requires proof that every class member suffered injury in fact and that the putative class of smokers could not be certified as a result. On remand, the high court said, the trial court must determine whether the named plaintiffs have adequately pled standing under Proposition 64, and if not, whether they should be allowed to amend their complaint to supplement their allegations of injury in fact.
Suit Filed in 1997
The plaintiffs, who filed suit in 1997, allege that Phillip Morris USA Inc., R.J. Reynolds Tobacco Company, Lorillard Tobacco Company, Brown & Williamson Tobacco Corporation and others made false and misleading statements in their advertising denying or disputing the health hazards and addictiveness of cigarette smoking, and targeted minors, in violation of the UCL and other laws.
Purchasers who relied on those adds became addicted to cigarettes, the plaintiffs claim. They seek injunctive relief and restitution, as provided for in the UCL.
San Diego Superior Court Judge Ronald S. Praeger originally granted a motion to certify the suit as a class action with respect to the UCL claim because at the time the law did not require individualized determinations as to reliance. The class was composed of smokers who were residents of California between June 10, 1993, and April 23, 2001 and who were exposed to defendants’ marketing and advertising in California.
But Praeger decertified the class after California voters in 2004 approved Proposition 64, which eliminated the right of individuals to bring suit on behalf of the general public without showing that they had themselves been injured by the complained-of business practice.
Praeger ruled that to establish standing the individual plaintiffs and all class members were required to show injury in fact consisting of lost money or property caused by the unfair competition. He further found that the requirement of individual reliance meant the individual issues were predominate over the common ones, making the case unsuitable for a class action.
The Court of Appeal ruled that because a separate determination would have to be made as to what misrepresentations, if any, each individual class member relied upon, the trial judge correctly ruled that a class action was inappropriate.
But Justice Carlos Moreno, writing yesterday for the Supreme Court, said the Court of Appeal had overstated the scope of Proposition 64.
Citing the ballot materials, Moreno said the purpose of the statute was to prevent frivolous actions by uninjured parties, not to limit the relief available to class members when a legitimate injury had occurred.
Proposition 64, Moreno elaborated, amended the UCL by requiring a showing that the plaintiff has suffered injury “as a result of” an unfair, unlawful, or fraudulent act or practice. The initiative does not, he said, make “any reference to altering class action procedures to impose upon all absent class members the standing requirement imposed upon the class representative.”
The justice also noted that the initiative did not amend the remedies section of the UCL, Business and Professions Code Sec. 17203, which authorizes injunctive relief along with such restitution “as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.”
Pre-Proposition 64 decisions, Moreno noted, held that in a representative action under the UCL, restitution could be awarded to absent class members “without individualized proof of deception, reliance, and injury.” This is consistent, he said, with the language of Sec. 17203, which “is patently less stringent than the standing requirement for the class representative” under Proposition 64.
Moreno went on to say that Proposition 64’s injury-in-fact requirement does not require pleading or proof with “an unrealistic degree of specificity” as to which misrepresentations of the defendant the plaintiff was relying upon in purchasing the defendant’s products, when the misrepresentations were part of an ongoing campaign.
Moreno was joined by Justices Joyce L. Kennard and Kathryn M. Werdegar, and by Court of Appeal Justice Eileen Moore of the Fourth District’s Div. Three, sitting in place of the recused Chief Justice Ronald M. George.
Justice Marvin Baxter, joined by Justices Ming Chin and Carol Corrigan, dissented from the portion of the opinion dealing with class members’ standing. Baxter argued that the Court of Appeal’s ruling was correct.
“Even if the majority’s holding has some sympathetic appeal on the particular facts alleged here, the rule the majority announces will apply equally to less egregious cases, where it invites the very kinds of mischief Proposition 64 was intended to curtail,” the dissenting jurist argued. “Accordingly, I cannot join the majority’s erroneous determination, which turns class action law upside down and contravenes the initiative measure’s plain intent.”
The case was argued in the Supreme Court by Mark P. Robinson of Newport Beach’s Robinson, Calcagnie & Robinson for the plaintiffs and by Daniel P. Collins of Los Angeles’ Munger, Tolles & Olson for the defendants.
The case is In re Tobacco II Cases, 09 S.O.S. 2726.
Copyright 2009, Metropolitan News Company