California’s Unfair Competition Law, codified at California Business and Professions Code §17200, has long been regarded as one of the most expansive consumer protection laws in the nation. Until a few years ago, a representative action for relief under the Unfair Competition Law could be maintained by any person acting for the general public, irrespective of whether he or she had been personally injured by the alleged misconduct. Overzealous plaintiffs (and their counsel) seized upon this lenient standing requirement. Numerous lawsuits were brought by plaintiffs and consumer groups who had no prior business dealing with the defendant but nonetheless sought to represent a class of people who allegedly had been injured by the defendant’s fraudulent, unfair or unlawful business practices.
California voters sought to curb this abuse with the passage of Proposition 64, a 2004 ballot measure that amended the Unfair Competition Law to provide that a person may pursue representative claims or relief on behalf of others only if the claimant both complies with §382 of the California Code of Civil Procedure (the authorizing statute for class actions in California) and “has suffered injury in fact and has lost money or property as a result of the unfair competition.” California Business and Professions Code Section 17204 (as amended by Prop 64). Following the passage of Prop 64, a class action seeking redress under the Unfair Competition Law can only be maintained by a representative plaintiff who was personally injured by the defendant’s allegedly fraudulent, unfair or unlawful business practices. But what about all the absent class members that the representative plaintiff seeks to represent? Must they too have “suffered injury in fact and lost money or property as a result of” the alleged wrongdoing? As described below, in a long-awaited decision likely to impact numerous companies doing business in California, the California Supreme Court recently answered this latter question in the negative.
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