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Monday, January 31, 2011

Kwikset: Broad Standing Rule Applies in 17200 False Advertising Case

In Kwikset Corporation v. Superior Court (Benson) (January 27, 2011) --- Cal.4th ----, 2011 WL 240278, the California Supreme Court decided an important standing issue in Unfair Competition Law (UCL) cases post-Prop. 64.

In 2000, plaintiff James Benson filed a representative action against defendant Kwikset, alleging Kwikset falsely marketed and sold locksets labeled as “Made in U.S.A.” that in fact contained foreign-made parts or involved foreign manufacture. Mr. Benson prevailed at trial, the trial court (Orange County Superior, Judge Velasquez) ordered injunctive relief, and Kwikset appealed. While the appeal was pending, the voters passed Proposition 64, which imposed new standing requirements in UCL cases.
We granted review to address the standing requirements of the unfair competition and false advertising laws in the wake of Proposition 64. We conclude Proposition 64 should be read in light of its apparent purposes, i.e., to eliminate standing for those who have not engaged in any business dealings with would-be defendants and thereby strip such unaffected parties of the ability to file “shakedown lawsuits,” while preserving for actual victims of deception and other acts of unfair competition the ability to sue and enjoin such practices. (Voter Information Guide, Gen. Elec. (Nov. 2, 2004) argument in favor of Prop. 64, p. 40; see also Prop. 64, § 1.) Accordingly, plaintiffs who can truthfully allege they were deceived by a product's label into spending money to purchase the product, and would not have purchased it otherwise, have “lost money or property” within the meaning of Proposition 64 and have standing to sue. Because plaintiffs here have so alleged, we reverse.
Slip op. at 1.

The opinion is available here.

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