Court Opinion

ID: 9555370
Source: CourtListenerOpinion
Date Created: 2023-08-11 20:03:57.024563+00
Date Added: 2024-06-11T15:42:30.558239
License: Public Domain

Filed 08/11/23

                  CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                     FIRST APPELLATE DISTRICT

                            DIVISION FIVE

 ANDREW WILLIAMSON,
           Plaintiff and Appellant,          A164426
 v.
 GENENTECH, INC., et al.,                    (San Mateo County
           Defendants and Respondents.       Super. Ct. No. 19-CIV-01022)

       The question in this case is whether a plaintiff who lacks
standing under California’s unfair competition law (Bus. & Prof.
Code, § 17200 et seq.)1—because he suffered no economic injury
caused by the alleged unfair practices (§ 17204)—can establish
standing by borrowing an economic injury from his insurer. The
plaintiff asks us to extend the collateral source rule, under which
a tortfeasor must fully compensate a victim and cannot subtract
compensation the victim may have received from their insurer or
other collateral source. (Helfend v. Southern California Rapid
Transit Dist. (1970) 2 Cal.3d 1, 6 (Helfend).) We agree with the
trial court that the collateral source rule does not apply; the
plaintiff lacks standing under section 17204. The trial court
properly sustained the defendants’ demurrer without leave to
amend.

       Undesignated statutory references are to the Business
       1

and Professions Code.
                                      1
                         BACKGROUND

                                A.

       Defendants Genentech, Inc. and Genentech USA, Inc. are
pharmaceutical companies that manufacture and sell Rituxan,
which is a drug used to treat leukemia and lymphoma. Rituxan
is sold in single-use vials. After plaintiff Andrew Williamson was
diagnosed with follicular lymphoma, he was treated with Rituxan
beginning in 2016.

       Williamson later sued Genentech, on behalf of himself and
a putative class of similarly situated individuals, alleging that
Genentech violates the unfair competition law by selling Rituxan
(and three other medications) in excessively large single-use
vials.

      In his operative (third amended) complaint, Williamson
alleges that, because the appropriate dosage varies based on a
patient’s body size, Genentech’s vial sizes are too large for most
patients. He insists Genentech should be required to offer
smaller vial sizes (of all four medications) to reduce waste of
expensive medicine. In addition to injunctive relief, Williamson
seeks restitution—to recover the amount the class spent on
wasted Rituxan (in addition to wasted amounts of three other
medications). However, Williamson alleges that he took only
Rituxan, not the other three medications, and that, to do so, he
paid a $231.15 deductible. He admits that “[a]ll remaining
payments” were made by his health insurer, Blue Cross and Blue
Shield of Kansas City (Blue Cross).

                                B.

      Genentech filed a demurrer, asserting that Williamson
lacks statutory standing (§ 17204) because—as Williamson would
have paid the same deductible ($231.15) even if Genentech made
smaller vials available—he alleges no economic injury caused by
its packaging practices.
                                2
      In his opposition, Williamson conceded that he would have
paid the same out-of-pocket deductible ($231.15) even if
Genentech had made smaller vials. However, he insisted that he
has standing because the collateral source rule allows him to
recover (as restitution) the amount his insurer (Blue Cross) paid
for wasted medicine. Alternatively, Williamson sought leave to
amend the complaint so that he could “locate and add a new class
representative.”

      The trial court sustained Genentech’s demurrer without
leave to amend and entered a judgment of dismissal in its favor.

                           DISCUSSION

                                A.

      Williamson argues that the trial court erred by declining to
apply the collateral source rule to the standing question. After
independently reviewing Williamson’s complaint and the
applicable law (Mathews v. Becerra (2019) 8 Cal.5th 756, 768), we
conclude the trial court did not err.

                                1.

      Unfair competition actions may be brought by a public
prosecutor or a private person. (§ 17204.) However, the statute
limits private standing to “a person who has suffered injury in
fact and has lost money or property as a result of the unfair
competition.” (Ibid.)

      Our Supreme Court has construed this language to mean
that a plaintiff must “establish a loss or deprivation of money or
property sufficient to qualify as injury in fact, i.e., economic
injury” and demonstrate that the economic injury was caused by
the unfair business practice that is the subject of their claim.
(Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322, 326
(Kwikset).) In using the phrase “injury in fact,” the statute
incorporates the established meaning from federal law. (Id. at p.

                                3
322.) Injury in fact, as required for federal standing under article
III, section 2 of the United States Constitution, is an invasion of a
legally protected interest that is (a) concrete and particularized,
and (b) actual or imminent, not “ ‘conjectural’ ” or
“ ‘hypothetical.’ ” (Kwikset, at p. 322.) “ ‘Particularized’ ” means
simply that the injury must affect the plaintiff in a personal and
individual way. (Id. at p. 323.)

       “[E]conomic injury is itself a form of injury in fact, [so]
proof of lost money or property will largely overlap with proof of
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.”
(Kwikset, supra, 51 Cal.4th at p. 325.) “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.” (Id. at p. 323.)

                                 2.

       The obvious problem here is that Williamson suffered no
injury. He paid a deductible of $231.15 to obtain Rituxan; his
insurer paid the remaining cost. He concedes that he would have
paid the same deductible regardless of the size of Genentech’s
vials. Thus, Genentech’s alleged unfair business practice—using
excessively large vials—has not injured Williamson in any way.
(See Kwikset, supra, 51 Cal.4th at pp. 323, 326.) Williamson does
not dispute this point.

                                  4
      Instead, Williamson wants to borrow an injury from
somebody else to establish standing, using the collateral source
rule. Specifically, he contends that his insurer’s overpayment for
wasted medication is an economic injury that establishes his
standing.

       It is a creative argument. The collateral source rule
concerns the amount of money owed by a tortfeasor to the injured
victim: “if an injured party receives some compensation for his
injuries from a source wholly independent of the tortfeasor, such
payment should not be deducted from the damages which the
plaintiff would otherwise collect from the tortfeasor.” (Helfend,
supra, 2 Cal.3d at p. 6.) The rule “embodies the venerable
concept that a person who has invested years of insurance
premiums to assure his medical care should receive the benefits
of his thrift” and that “[t]he tortfeasor should not garner the
benefits of his victim’s providence.” (Id. at pp. 9-10.) “The
collateral source rule expresses a policy judgment in favor of
encouraging citizens to purchase and maintain insurance for
personal injuries and for other eventualities. . . . If we were to
permit a tortfeasor to mitigate damages with payments from
plaintiff’s insurance, plaintiff would be in a position inferior to
that of having bought no insurance, because his payment of
premiums would have earned no benefit. Defendant should not
be able to avoid payment of full compensation for the injury
inflicted merely because the victim has had the foresight to
provide himself with insurance.” (Id. at p. 10.)

       Courts have also invoked the collateral source rule in
criminal restitution cases to require a defendant to fully
compensate the victim for her injuries, despite insurance
payments the victim received. (See, e.g., People v. Hamilton
(2003) 114 Cal.App.4th 932, 944; Pen. Code, § 1202.4, subds.
(a)(1) [“[i]t is the intent of the Legislature that a victim of crime
who incurs an economic loss as a result of the commission of a

                                   5
crime shall receive restitution directly from a defendant convicted
of that crime”], (f) [“[t]he court shall order full restitution”].)

       The collateral source rule has no application here. First, in
both tort and criminal restitution cases, the rule applies when a
defendant injured a victim, and the issue is simply how much
compensation the defendant owes to the victim in light of
payments from an insurer or other collateral source. Williamson
cites no cases in which the rule applied to a plaintiff who suffered
no injury.

       Second, several federal district courts have held that the
collateral source rule does not provide a plaintiff—whose insurer
suffered economic injury because of unfair competition—with
Article III standing. (See Williamson v. Genentech, Inc. (N.D.
Cal. Mar. 18, 2020, 19-cv-01840-JSC) [nonpub. opn.] 2020 WL
1281532, at pp. *4-*6; Krueger v. Wyeth, Inc. (S.D. Cal. 2019) 396
F.Supp.3d 931, 955, fn. 9; Lucas v. Breg, Inc. (S.D. Cal. 2016) 212
F.Supp.3d 950, 964-967 (Lucas).) As noted, this is also the
threshold for standing under the unfair competition statute.
(Kwikset, supra, 51 Cal.4th at p. 322.) As one federal court
observed, “The point of Helfend is to ensure that a tortfeasor who
injures another cannot use insurance payments paid on the
injured party’s behalf to mitigate the damages the tortfeasor
otherwise owes. The Court finds nothing in Helfend to support
the much more expansive proposition that a plaintiff can use
insurance monies paid to purchase or rent a product on the
plaintiff’s behalf as a source of injury on which to seek
restitution.” (Lucas, supra, 212 F.Supp.3d at p. 965, fn. 9, some
italics added.) While we are not bound by a federal court’s
interpretation of state law (Haynes v. EMC Mortgage Corp.
(2012) 205 Cal.App.4th 329, 335), we agree with this reasoning.2

      2Because Article III standing is broader than standing
under the unfair competition statute—as the former requires
only injury in fact while the latter requires both injury in fact and
                                 6
       Third, we reject Williamson’s argument that the rule’s
policy rationale justifies extending it to the scenario here. (See
Helfend, supra, 2 Cal.3d at p. 10 [collateral source rule is based
on “a policy judgment in favor of encouraging citizens to purchase
and maintain insurance for personal injuries and for other
eventualities”].) Williamson suggests people would be
encouraged to buy medical insurance if they could use their
insurer’s purchase of medication as a source of injury to establish
standing for an unfair competition claim. He also argues that, if
the rule is not applied, people with insurance will be worse off
than people without insurance. He overlooks the fact that people
with insurance, like Williamson, are not injured, and people
without insurance are injured. And although it is prudent and
socially valuable to buy insurance to cover the risk of personal
injuries, we cannot say the same about buying insurance simply
to participate in lawsuits.

      Regardless of any dubious policy rationale, Williamson
ignores the fact that standing under the unfair competition law is
defined by statute. (§ 17204.) California voters intended to
address perceived abuses of the unfair competition law by
changing section 17204 to narrow the standing rules to apply
only to people who suffered economic injuries. (Kwikset, supra,
51 Cal.4th at p. 322; Hall v. Time Inc. (2008) 158 Cal.App.4th
847, 853, disapproved on another ground by Kwikset, supra, at
pp. 332-333.) It is not the courts’ role to rewrite the statute to
loosen the rules. (See People v. Leal (2004) 33 Cal.4th 999, 1008.)

      Our holding does not mean a windfall for Genentech or that
no one has standing to challenge its practices. We simply hold
that a plaintiff like Williamson, who lacks standing because he
was not injured, cannot invoke the collateral source rule to

economic injury—we reject Williamson’s attempt to distinguish
the federal cases. (See Kwikset, supra, 51 Cal.4th at pp. 322-
324.)

                                 7
borrow an injury from his insurer. The trial court properly
sustained the demurrer.

                                B.

      Nor did the trial court abuse its discretion in denying leave
to amend. (See Foundation for Taxpayer & Consumer Rights v.
Nextel Communications, Inc. (2006) 143 Cal.App.4th 131, 135
[standard of review].)

      When a demurrer is sustained without leave to amend, we
“decide whether there is a reasonable possibility that the defect
can be cured by amendment: if it can be, the trial court has
abused its discretion and we reverse.” (City of Dinuba v. County
of Tulare (2007) 41 Cal.4th 859, 865.) The plaintiff bears the
burden of demonstrating such a reasonable possibility.
(Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)

      Williamson maintains that courts must liberally allow
amendment of pleadings to substitute a plaintiff with standing—
regardless of whether the original plaintiff lacked standing to
prosecute the action from its inception. We assume he is right.
(See Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th
235, 243; CashCall, Inc. v. Superior Court (2008) 159 Cal.App.4th
273, 287-290.)

      Here, Williamson has had three prior opportunities to
amend his complaint and more than three years since Article III
standing was put at issue. Nonetheless, Williamson fails to
identify any substitute plaintiff, much less describe the nature of
that person’s claims. (See Branick v. Downey Savings & Loan
Assn., supra, 39 Cal.4th at pp. 242-243 [noting that such facts
“necessarily inform the superior court’s discretionary decision” on
leave to amend]; Foundation for Taxpayer & Consumer Rights v.
Nextel Communications, Inc., supra, 143 Cal.App.4th at pp. 134-
136.) Without such information, Williamson cannot satisfy his
burden to show a reasonable possibility he could cure the

                                 8
complaint’s standing defect, and the trial court did not abuse its
discretion in denying leave to amend. (See Cryoport Systems v.
CNA Ins. Cos. (2007) 149 Cal.App.4th 627, 632-633.)

                           DISPOSITION

     The judgment is affirmed. Genentech is entitled to its costs
on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)

                                 9
                                    ______________________
                                    BURNS, J.

We concur:

____________________________
JACKSON, P.J.

____________________________
CHOU, J.

A164426

                               10
San Mateo County Superior Court, No. 19-CIV-01022, Hon.
Marie S. Weiner.

Arias Sanguinetti Wang & Torrijos LLP, Mike Arias, Robert M.
Partain, and M. Anthony Jenkins, for Plaintiff and Appellant.

Shook, Hardy & Bacon L.L.P, M. Kevin Underhill, for Defendants
and Respondents.

                              11