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California Proposition 64 Update

In a win for litigation reformers in California, the California Court of Appeals in Pfizer v. Superior Court has enforced the Proposition 64 voter initiative so that all plaintiffs in a class action under California's UCL 17200 must have actual damages in fact (and not just the lead plaintiff, as the trial court had held).

The Court of Appeals noted:

The Unfair Competition Law (UCL) (Bus. & Prof. Code, � 17200 et seq.) was enacted to protect consumers as well as competitors from unlawful, unfair or fraudulent business acts or practices, by promoting fair competition in commercial markets for goods and services. (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.) The false advertising law (FAL) (� 17500 et seq., added by Stats. 1941, ch. 63, p. 727, � 1) likewise prohibits consumer deception, and any violation of the FAL necessarily violates the UCL. (Kasky, supra, at pp. 949-950.)

Over the years, the UCL was an integral part of California law. As the Supreme Court observed in Stop Youth Addiction, Inc., v. Lucky Stores, Inc., supra, 17 Cal.4th at page 570, �whenever the Legislature has acted to amend the UCL, it has done so only to expand its scope, never to narrow it.�

However, in recent years, the UCL became prone to the sort of abuse �which made the Trevor Law Group a household name in California in 2002 and 2003. The abuse [was] a kind of legal shakedown scheme: Attorneys form[ed] a front �watchdog� or �consumer� organization. They scour[ed] public records on the Internet for what [were] often ridiculously minor violations of some regulation or law by a small business, and sue[d] that business in the name of the front organization.� (People ex rel. Lockyer v. Brar (2004) 115 Cal.App.4th 1315, 1317.)

Proposition 64, an initiative measure approved at the November 2004 general election, was a response to abuse of the UCL and the FAL by certain lawyers, who were bringing �frivolous lawsuits against small businesses even though they had no client or evidence that anyone was damaged or misled.� (Ballot Pamp., General Elec. (Nov. 2, 2004) Ballot Argument in Favor of Prop. 64, p. 40.) Proposition 64 imposed new restrictions on private enforcement under the UCL and the FAL.

The opinion includes an informative history of UCL 17200 and the Proposition 64 reform, concluding that the initiative amended the law to require standing for all class members. The Civil Justice Association of California filed an amicus brief in the case.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.