Source: http://www.baileydaily.com/2011/01/
Timestamp: 2019-04-22 04:33:07+00:00

Document:
We offer a further observation concerning the order in which the elements of standing are best considered. Because, as noted, economic injury is itself a form of injury in fact, proof of lost money or property will largely overlap with proof of injury in fact.  (See Troyk v. Farmers Group, Inc., supra, 171 Cal.App.4th at p. 1348 [where the alleged harm is economic injury, injury in fact and lost money or property are “one and the same”].) If a party has alleged or proven a personal, individualized loss of money or property in any nontrivial amount, he or she has also alleged or proven injury in fact. Because the lost money or property requirement is more difficult to satisfy than that of injury in fact, for courts to first consider whether lost money or property has been sufficiently alleged or proven will often make sense. If it has not been, standing is absent and the inquiry is complete. If it has been, the same allegations or proof that suffice to establish economic injury will generally show injury in fact as well (ibid.), and thus it will again often be the case that no further inquiry is needed.
There are innumerable ways in which economic injury from unfair competition may be shown. A plaintiff may (1) surrender in a transaction more, or acquire in a transaction less, than he or she otherwise would have; (2) have a present or future property interest diminished; (3) be deprived of money or property to which he or she has a cognizable claim; or (4) be required to enter into a transaction, costing money or property, that would otherwise have been unnecessary. (See, e.g., Hall v. Time Inc., supra, 158 Cal.App.4th at pp. 854–855 [cataloguing some of the various forms of economic injury].) Neither the text of Proposition 64 nor the ballot arguments in support of it purport to define or limit the concept of “lost money or property,” nor can or need we supply an exhaustive list of the ways in which unfair competition may cause economic harm. It suffices to say that, in sharp contrast to the state of the law before passage of Proposition 64, a private plaintiff filing suit now must establish that he or she has personally suffered such harm.
With regard to Prop 64’s “as a result of” requirement -- which the Court termed “causation or reliance” -- the Court referred to its ruling in Tobacco II, which the Court explained had previously resolved issues concerning the construction of this phrase in the context of the UCL’s fraud prong. Slip Opinion, at 15-16.
Applying these standards, the Court concluded that “[a] consumer who relies on a product label and challenges a misrepresentation contained therein can satisfy the standing requirement of section 17204 by alleging, as plaintiffs have here, that he or she would not have bought the product but for the misrepresentation.” Slip Opinion, at 21. Stated differently, the Court concluded that the mere purchase of a fully functioning product based on an alleged misrepresentation is, standing alone, sufficient to establish the requisite “economic injury” necessary for UCL standing.
As reasoned by the Court, for “each consumer who relies on the truth and accuracy of a label and is deceived by misrepresentations into making a purchase, the economic harm is the same: the consumer has purchased a product that he or she paid more for than he or she otherwise might have been willing to pay if the product had been labeled accurately.” Slip Opinion, at 20. According to the Court, “[t]his economic harm—the loss of real dollars from a consumer's pocket—is the same whether or not a court might objectively view the products as functionally equivalent.” See id.
In rendering this conclusion, the Court gave due regard to the fact that in the advertising world, “labels matter.” As the Court explained, “[t]he marketing industry is based on the premise … that consumers will choose one product over another similar product based on its label and various tangible and intangible qualities they may come to associate with a particular source.” Slip Opinion, at 18-21. In this regard, the Court directly linked the policy objectives underpinning the UCL’s fraud prong as being contingent on the Court's liberal construction of economic injury. As the Court explained, “if we were to deny standing to consumers who have been deceived by label misrepresentations in making purchases, we would impair the ability of consumers to rely on labels, place those businesses that do not engage in misrepresentations at a competitive disadvantage, and encourage the marketplace to dispense with accuracy in favor of deceit.” Slip Opinion, at 22-23.
Moreover, the Court’s conclusion that “labels matter” also exposed the flaw in the CAP’s conclusion that the named plaintiff had received the “benefit of the bargain” notwithstanding the alleged misrepresentations, as Kwikset’s use of the alleged deceptive promotions was itself evidence that Kwikset likely viewed the representations to be material to the consumer's decision to purchase the product. Slip Opinion, at 25-26 (“Kwikset packaged its products with labels like ‘All American Made & Proud Of It’ and ‘Made in U.S.A.’ because it determined such marketing might sway reasonable people in their purchasing decisions.”).
On January 27, 2011, the California Supreme Court issued its opinion in Kwikset Corp. et al. v. Superior Court, __ Cal.4th __ (2011), reversing the Fourth District’s determination that UCL standing under the fraud prong was contingent on allegations that the product was overpriced or defective. The Court of Appeal had previously concluded that standing was lacking in that case because the named plaintiff, who purchased a lockset promoted as being made in America, received the benefit of the bargain, and as such was foreclosed from claiming any loss of money or property. The California Supreme Court reversed, concluding that “plaintiffs who can truthfully allege they were deceived by a product’s label into spending money to purchase the product, and would not have purchased it otherwise, have ‘lost money or property’ within the meaning of Proposition 64 and have standing to sue.” See Slip Opinion, at 2.
The Court’s opinion is fairly dense. However, based on my first read, it appears that the Court’s overarching conclusion is that the UCL’s provisions governing standing and restitution are not coterminous, and that equating the two improperly would limit the primary function of the UCL to enjoin deceptive conduct. I will post more on this important opinion in the next few days.
The petition for review is granted. Further action is this matter is deferred pending consideration and disposition of a related issue in Brinker Restaurant Corp. v. Superior Court, S166350 (see Cal. rules of Court, rule 8.524 (c)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.528, is deferred pending further order of the court. Votes: Cantil-Sakauye, C.J., Kennard, Baxter, Werdegar, Chin, Moreno and Corrigan, JJ.
On December 13, 2010, Southern District Court Judge, Marilyn L. Huff, certified a nationwide FLSA collective action and a California Rule 23 action arising from an alleged policy maintained by Costco which required closing shift hourly employees to remain locked inside Costco warehouses without pay while supervisors performed closing activities, such as removing jewelry from cases and emptying cash registers. See Stiller v. Costco, 2010 U.S. Dist. LEXIS 140297, at 3-4.
In opposing Plaintiffs' motion for class certification, Costco argues that common issues do not predominate over individualized issues, and that individual inquiries would govern attempts to determine liability arising from Costco's practices. (Doc. No. 98 at 20.) Costco argues that certification is inappropriate in cases where no uniform policy creates off-the-clock work. (Id.) In their reply, Plaintiffs point out that in this case, Costco had a centralized policy outlined in the 2004 Manual, which caused class members to be detained on a regular basis without pay during lockdowns. (Doc. No. 102 at 10.) Plaintiffs also brought substantial allegations of Costco's centralized policies that discouraged class members from seeking compensation for the recurring wait time. Thus, Plaintiffs argue that these generalized off-the-clock claims present a common, class-wide core of disputes between Costco and the class members. Plaintiffs argue that here, as in Local Joint Exec. Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152 (9th Cir. 2001), the individualized issues are few. In Local Joint, the Ninth Circuit concluded that given the number and importance of the common issues, the need for individual damages determinations does not bar class certification, and the variation in individual damages was enough to defeat predominance under Rule 23(b)(3). 244 F.3d at 1163.
See Stiller, 2010 U.S. Dist. LEXIS 140297, at 20-22.
The Court notes that that the state court in Castaneda did not issue a written opinion, or make findings of fact or conclusions of law. Here, Costco does not cite any portion of the Castaneda transcript where the court purportedly found a lack of predominating common issues as to all hourly, non-exempt, non-union employees who were subject to Costco's closing lockdown procedures. The Court concludes that Costco has not met its burden of establishing that the issues decided in Castaneda were identical to those in this case such that collateral estoppel would bar class certification in this case.
See Stiller, 2010 U.S. Dist. LEXIS 140297, at 24-25.
8th Circuit’s Disapproval of Tobacco II Deemed Unpersuasive by a Second California District Court: Chavez v. Blue Sky Natural Bev. Co.
On November 22, 2010, a second Northern District Court declined a request to follow the 8th Circuit’s recent decision in Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023 (8th Cir. 2010) as a basis for decertification of a UCL deceptive advertising class. As previously discussed here, Avritt disapproved of Tobacco II’s holding that absent class members are excused from establishing individual reliance on misrepresentations which form the basis of a UCL claim.
In Chavez v. Blue Sky Natural Bev. Co, 2010 U.S. Dist. LEXIS 138696 (N.D. Cal. Nov. 22, 2010), Judge Vaughn R. Walker denied defendant’s motion for leave to reconsider the Court’s order certifying a UCL deceptive advertising class (268 F.R.D. 365) based on Avritt, which defendant claimed constituted “new law” on the issue of “whether unnamed plaintiffs pursuing section 17200 claims must have independent Article III standing….” See id, at 4. The Court disagreed, citing to analysis contained in the Court’s certification order concluding that only the named plaintiff is required to establish standing. Id.
As previously discussed here, Judge Claudia Wilken similarly declined to follow Avritt in Greenwood v. Compucredit Corp., 2010 U.S. Dist. LEXIS 127719 (N.D. Cal. Nov. 19, 2010).
Further discussion of the Chavez Court’s certification order may be found at the UCL Practitioner here.

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