Thoughts on Today's Prop 64 Conference

[UPDATE: Apparently, a Court of Appeal has allowed a UCL action with no injured-in-fact Plaintiff to proceed. Shows what I know.]

[UPDATE: Apparently at least one demurrer has been granted on the basis that Prop. 64 applies retroactively by a Judge in Los Angeles. Shows what I know.]

I sat in on today's teleconference given by the anti-trust section of the state bar on the changes to the UCL brought on by prop 64. I have to say that I was pretty unimpressed with the arguments presented by the defense bar (of which I am a member). I don't blame them for making them--it's their job--but I just don't think they're convincing at all. My apologies to those who disagree, but it seems to me that this only became a research project since Election Day, and there hasn't been much notice of the increasingly stronger anti-retroactivity language coming out of California's courts in the past years.

I also think the argument flowing from the procedural/substantive distinction is, frankly, farcical. I think there is merit to the contention that the portion that requires class certification might be considered purely procedural, but the part that withholds standing from others destroys their former substantive right to enforce laws against unfair competition. In other words, from the point of view of a citizen or a public interest group that didn't lose actual money or property, they now do not have a right they previously had. If that's not substantive, I don't know what is. I think we can also dismiss summarily the arguments that because the right is statutory that it can be retroactively changed automatically (clearly refuted by the recent McClung case, ruling on the FEHA, which involves statutory rights) or that it "merely" governs how these actions are prosecuted, and, most absurbly, distorting the language of the voter information pamphlets—of all things—to coax an inference of retroactivity.

I will at least grant that the style, if not the substance, of the defense bar presenters was excellent. It's just that I can only picutre in my mind what an appellate panel would do to it.

There was high level political genius behind Proposition 64. First, those who explained that the funding provision of the penalty amendments was done to give the appearance that this wouldn't hurt consumer protection because it would provide funding for the public agencies responsbile for it to do so plainly ignored the commentary given by the District Attorney who was present. This was meant to give that appearance, but not only to the people voting on it, but also to the Legislators controlling the purse strings later. They can rely on this, correctly or not, to fund this enforcement and slash its funding from the general fund. Political tactics of this level of genuis only come from very well put-together organizations. The Prop 64 opponents were not playing on this level, and they weren't playing on that level when they failed to reach a legislative compromise last spring. Welcome to the NFL.

So far, the only court to rule on this has agreed with me. In my practice, every single UCL case I defend against (or have brough as a plaintiff) includes a plaintiff who was injured in fact, and the majority now include class allegations. I understand if you're in the middle of defending a "public interest" case that you hope this will save you, but I doubt it will. You can run it up to the Appeals systems, but something tells me most Courts are just going to allow amendments to the pleadings to include class allegations and a correctly injured plaintiff (if there is one), and the courts will probably stretch the "money and property" provision as far as they can. There will probably be a small number of outright dismissals—and it seems to me those won't be the cases of the family business, but environmental ones.

In sum, I know the issue of retroactivity is hot right now, but I don't think it's really all that important except in cases of vague injury in fact, which, to me, is where the action will be in the courts.

[Editorial Note: I normally refrain from expressing opinions, as is my policy. I am not expressing my opinion on the propriety of Proposition 64 or the UCL itself; just on the arguments put forth for and against the retroactive application of Prop 64, which is consistent with my meta-commentary on the reporting and editorializing done by others, without commenting on the underlying issue. Please do not take offense.]