April 23, 2012

Supreme Court fails to rein in class action abuse

By Deborah J. La Fetra Senior Attorney

California’s hostile business climate is exemplified by the state’s Unfair Competition Law (UCL), which invites plaintiffs with trivial and even nonexistent injuries to bombard companies with “consumer protection” lawsuits.  Because these lawsuits benefit the trial bar far more than consumers, California voters enacted Proposition 64, which required UCL plaintiffs to have actually suffered some injury.  But in In re Tobacco II Cases, the California Supreme Court gutted the standing requirement by permitting noninjured members of a purported class to be represented by a single lead class member who could demonstrate some injury.

California’s pro-litigation, anti-business statutes and judicial decisions will do nothing to stem the flow of companies fleeing the state, to the detriment of all Californians.  But now, thanks to the Ninth Circuit, California’s uniquely generous standing doctrine extends to the federal courts.  Article III of the U.S. Constitution, which governs the jurisdiction of federal courts, requires all plaintiffs to show an injury as a precondition to filing a lawsuit.  Alas, the Ninth Circuit Court of Appeals ruled in Ticketmaster v. Stearns that, even in federal court, plaintiffs who invoke California’s UCL can bootstrap standing for class certification as permitted in Tobacco II.  PLF supported Ticketmaster’s request to the Supreme Court to review the decision, but today the Court declined.  The Ninth Circuit decision now leaves the door open for further class action abuse, as the trial bar leverages a single named plaintiff into a class action to pressure defendants into settlements that primarily benefit lawyers, not consumers.

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