In a suit that claimed tobacco companies ran fraudulent ads, by a 4-3 vote the California Supreme Court rejected the argument that every plaintiff in the class-action suit – millions of people – had to show they had seen an allegedly deceptive ad and relied on it to make a purchase. -DB
San Francisco Chronicle
May 19, 2009
By Bob Egelko
Consumers have the right to sue as a group over advertising they believe misled them into buying products, a divided state Supreme Court ruled Monday in reinstating a massive suit against the tobacco industry.
The 4-3 decision rejected business arguments that, if accepted, would have virtually prohibited class-action suits for false advertising by requiring proof that every plaintiff – millions of them, in some cases – had seen an allegedly deceptive ad and relied on it to make a purchase. The court majority said that evidence is required only for the single plaintiff or small group that represents the entire class.
“This gives the consumers rights to protect themselves from fraudulent advertising,” said Mark Robinson, a lawyer for the smokers who sued tobacco companies in 1997.
The ruling could make California “the class-action capital of the country,” retorted William Stern, a lawyer for business organizations and a co-author of Proposition 64, a 2004 ballot measure at the heart of the case.
The suit accused the companies of waging a long advertising campaign that concealed cigarettes’ addictive and harmful effects. Unlike individual suits over illnesses allegedly caused by tobacco company deception, the current suit seeks reimbursement of money spent by every Californian who bought cigarettes during the period covered by the case: June 10, 1993, to April 23, 2001.
The case was filed under California’s unfair-competition law, a far-reaching statute that lets private citizens sue on behalf of the general public over illegal business practices, including deceptive advertising. The law was narrowed by the business-sponsored Prop. 64, which requires a plaintiff to show that he or she had actually been harmed by the business practice.
Prop. 64 did not say, however, how the new requirement would affect class actions, in which an individual or a small group sues on behalf of consumers in the same circumstances. The crucial question Monday was whether every member of the class must show harm from the challenged business practice, a virtual impossibility in most cases.
Justice Carlos Moreno, in the majority opinion, said Prop. 64 was intended to halt “shakedown” suits in which a lawyer contacts a small business, claims a minor violation and demands a settlement, which is generally cheaper than going to court. Sponsors of the measure, Moreno noted, declared in ballot arguments that they were not weakening consumer-protection laws.
Those purposes would be served by requiring individual plaintiffs, who represent the class, to show they suffered some harm from the companies’ conduct, Moreno said.
He said extending the same requirement to every class member “would effectively eliminate the class-action lawsuit as a vehicle for the vindication of (consumer) rights.”
Dissenting Justice Marvin Baxter said Prop. 64 was intended to allow only those harmed by a business practice, including members of a class of consumers, to sue for damages. The ruling “encourages the very sort of abusive shakedown suits that Proposition 64 was designed to curb,” said Baxter, joined by Justices Ming Chin and Carol Corrigan.
The case was titled In re Tobacco II Cases, S146345.
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