June 3, 2015

You can't sue businesses just because you don't like something they do

By Anastasia P. Boden Attorney

Yesterday PLF filed this letter brief asking the California Supreme Court to review an Unfair Competition Law (UCL) case that threatens important civil justice reforms enacted by California voters.

The UCL forbids any “unfair,” “misleading,” or “unlawful,” business practice.  Once enacted, that broad and ill-defined ban brought a trove of lawsuits based on all sorts of conduct consumers deemed “unfair.”  In one case, the plaintiff alleged that it was “unfair” for an airline to fail to provide sufficient leg room for extraordinarily tall passengers.  In others, the plaintiffs alleged that it was “unfair” for a hotel to charge a fee for room service, and “misleading” to use abbreviations like “APR on their paperwork instead of writing Annual Percentage Rate.”  In yet another, a court was even forced to explain that the UCL did not prohibit retailers from selling at a profit.

Abuse of the civil justice system under the UCL was compounded by the fact that, as it was originally written, the law allowed anybody to sue based on any perceived violation of the UCL—regardless of whether he or she had actually frequented the accused’s restaurant or shop, or purchased their product, or been harmed by the challenged practice. Under these circumstances, litigation flourished, and cases were brought by parties who simply had an ideological dispute with the defendant and its practices, or worse, by plaintiff’s attorneys using the cases for their own gain.

That’s why in 2004, Californians voted to enact Proposition 64—which limits the ability to bring UCL lawsuits to people who suffer an actual injury and economic harm from the challenged conduct.  The case of Animal Legal Defense Fund v. LT Napa Partners—which PLF asked the Supreme Court to overturn—threatens to undo that measure, and authorize the frivolous litigation that preceded it.

In that case, the Fund sued a Napa area restaurant for purportedly violating the state ban on sales of foie gras.*  The Fund didn’t claim that anyone who worked at the organization was served foie gras, or that anyone from the Fund even dined at the restaurant.  Yet the court held that the Fund satisfied Proposition 64 and could sue the restaurant because it was harmed when it paid investigators to investigate the suspected illegal acts, and because any sale of foie gras “harms” the Fund’s “organizational mission.”

As we argue in our brief, this holding would eviscerate the limits on Proposition 64.  By deeming the act of paying someone to investigate the suspected violation of the law an “injury,” the court will allow plaintiffs to bootstrap injuries and manufacture lawsuits.  Prop 64 only permits citizen suits by plaintiffs that have been injured as a result of the challenged conduct.  When parties undertake injuries for the purpose of litigation, they suffer an injury as a result of their own behavior.  This invites exactly the type of abuse that preceded Prop 64.

Moreover, “harm” to an organizational mission does not satisfy Prop 64.  That measure was enacted exactly to prevent lawsuits where the plaintiffs have only an ideological dispute with the defendant, or seek to foist their preferred practices onto California businesses.  Prop 64 requires that plaintiffs suffer an injury apart from merely disagreeing with business conduct before bringing suit.

*The ban on foie gras has since been overturned, providing an additional reason to dismiss the lawsuit.  Advocacy organizations shouldn’t be able to bring suit to enforce laws that even the Attorney General is forbidden from enforcing.

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