BREAKING NEWS: The California Supreme Court will issue the IN RE TOBACCO II CASES Opinion on Monday, May 18, 2009

According to the Notice posted on the California Courts website, the California Supreme Court will issue the IN RE TOBACCO II CASES Opinion on Monday, May 18, 2009.  The issues presented are described as follows:

This case includes the following issues: (1) In order to bring a class action under Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), as amended by Proposition 64 (Gen. Elec. (Nov. 2, 2004)), must every member of the proposed class have suffered “injury in fact,” or is it sufficient that the class representative comply with that requirement? (2) In a class action based on a manufacturer’s alleged misrepresentation of a product, must every member of the class have actually relied on the manufacturer’s representations?

Class action news of note: Tobacco II arguments leaves everyone guessing, and more

This past week, the California Supreme Court heard oral argument in the Tobacco II cases.  Extensive coverage of the oral argument is available from the UCL Practitioner in this post.  The obligatory reading of tea leaves has, in this instance, revealed little.  For examle, Mike McKee, writing for The Records, said, "Just a few weeks ago, the California Supreme Court ruled that lawsuits under the Consumer Legal Remedies Act can only be filed by individuals who suffer real damage from unlawful business practices. But during oral arguments on Tuesday it wasn't clear where the court stood on applying that same rule to every participant of class actions filed under the state's Unfair Competition Law."  (Mike McKee, Calif. Justices Air Standing for UCL Class Actions Against Tobacco Industry (March 4, 2009)  Having watched the argument myself, I agree that it was hard to discern much from the Justices.  The cynic in me always assumes that the creep of Proposition 64 will keep on spreading its tendrils, but the argument itself gives me little actual evidence to support that guess.

Meanwhile, the significance of the Ninth Circuit's decision in Davis v. HSBC Bank Nevada, N.A., et al. (February 26, 2009) reached the legal media:  "In a blow to plaintiffs class action lawyers, the 9th U.S. Circuit Court of Appeals has made it tougher to hold that a national company is a 'citizen' of California merely based on the disproportionate size of the state's population."  (Pamela A. MacLean, 9th Circuit Deals a Blow to Plaintiffs Lawyers in 'Principal Place of Business' Test (March 9, 2009)  Not that Tosco actually held that a state's population size governed corporate citizenship, but the remainder of the article is accurate.  This blog noted the decision in this short post.

Finally, while a bit late to the party, another ISP and the defunct Adzilla were sued for deep packet inspection for the purposes of obtaining the advertising holy grail: complete knowledge of each consumer's behaviors and preferences.  (Ryan Singel, Another ISP Ad Snooper Hit With Lawsuit (March 3, 2009)  I've already expressed my contempt for this behavior by ISPs.  Luckily, these projects appear dead in the United States.  But don't count on them staying down forever.

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CLE: The Rutter Group offers upcoming 17200 seminar

The Rutter Group will be offering a seminar in March on the newest developments in 17200 (and CLRA) practice.  Live programs will be held on March 3, 2009 in San Francisco and March 5, 2009 in Los Angeles.  Other locations will offer video replays later in March.  All programs are from 6:00 p.m. to 9:15 p.m.  New case discussions will include, among others, Meyer v. Sprint Spectrum L.P.  For more information, visit

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More coverage of Meyer v. Sprint Spectrum

Greatsealcal100In Meyer v. Sprint Spectrum L.P. (January 29, 2009), the California Supreme Court considered a matter, arising under the California Consumer Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.), in which plaintiffs sued the defendant cellular telephone company, alleging that its arbitration agreement and other remedial provisions were unconscionable. In Meyer, the plaintiffs did not allege that these provisions had been enforced against them or caused them damage. The primary issue considered by Meyer was whether, under these circumstances, a plaintiff may obtain injunctive relief to compel the removal of the allegedly unconscionable provisions under the CLRA. The ancillary issue was whether a plaintiff may obtain declaratory relief pursuant to Code of Civil Procedure section 1060 to declare these provisions unlawful and unenforceable. The Supreme Court concluded that neither form of relief was available to plaintiffs, affirming the decision below.

The Meyer decision has all the hallmarks of a case that will be misused and misunderstood for years to come.  Its holding regarding "damages" will be grist for the deceptive briefing mill. One significant point made in the decision, and likely to be ignored when inconvenient for some defendant's demurrer, is that “any damages” can be something other than “actual” or “pecuniary damages”:

As to the first argument, plaintiffs contend that the phrase “any damage” is not synonymous with “actual damages,” which generally refers to pecuniary damages. The language of section 1780(a) indicates that plaintiffs are correct. If “any damage” and “actual damages” were synonymous, then it seems likely only the latter phrase would have been used in the first part of subdivision (a). The juxtaposition of the two phrases so close together indicates that the phrases have different meanings. Moreover, the breadth of the phrase “any damage” indicates a category that includes, but is greater than, “actual damages,” i.e. those who are eligible for the remedy of “actual damages” are a subset of those who have suffered “any damage.” Sprint does not dispute this point. It concedes that “any damage” may encompass harms other than pecuniary damages, such as certain types of transaction costs and opportunity costs.

(Slip op., at p. 5, footnote omitted.) Construing Kagan v. Gibraltar Sav. & Loan Assn. (1984) 35 Cal.3d 582 to fit this rubric, the Meyer Court noted that in Kagan, the plaintiff wasn’t charged an improper fee, but did expend time and resources resisting the fee after the financial institution announced its intention to assess the fee. (Slip op., at pp. 8-9.)

The opinion has other interesting holdings. For example, the Meyer Court explicitly declares that the statute of limitation applicable to a CLRA claim is subject to a delayed discovery rule, based on an objective reasonable consumer standard. (Slip op., at p. 12, citing Chamberlain v. Ford Motor Co. (N.D.Cal. 2005) 369 F.Supp.2d 1138, 1148.) The decision also confirms that settling with a plaintiff individually does not undermine a plaintiff’s status as a legitimate class representative.

From the consumer standpoint, Meyer is mixed bag of holdings. But on the damage issue, the UCL Practitioner likely has the right of it when noting that this looks suspiciously like Proposition 64 creep.

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