Supreme Court of California Justia
Citation 51 Cal. 4th 310, 246 P.3d 877, 120 Cal. Rptr. 3d 741

Kwikset Corp. v. Super. Ct.

Filed 1/27/11



IN THE SUPREME COURT OF CALIFORNIA



KWIKSET CORPORATION et al.,

Petitioners,

S171845

v.

Ct.App. 4/3 G040675

THE SUPERIOR COURT OF ORANGE )
COUNTY,

Orange County

Super. Ct. No. 00CC01275

Respondent;

JAMES BENSON et al.,

Real Parties in Interest.



This case arises from Kwikset Corporation‟s (Kwikset) manufacturing of

locksets it labeled as “Made in U.S.A.” James Benson brought suit under the

unfair competition and false advertising laws to challenge the labels‟ veracity.

After a bench trial, the trial court entered judgment for Benson.

While the case was pending on appeal, the electorate enacted Proposition

64 (Gen. Elec. (Nov. 2, 2004)), which called into question Benson‟s standing to

challenge Kwikset‟s country of origin representations. Benson then filed an

amended complaint in which he alleged he purchased Kwikset‟s locksets and

would not have done so but for the “Made in U.S.A.” labeling. The Court of

Appeal concluded this allegation was insufficient to establish standing because it

1


did not satisfy Proposition 64‟s requirement that a plaintiff have “lost money or

property.” (See Prop. 64, §§ 3, 5.)

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.

FACTUAL AND PROCEDURAL BACKGROUND

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. The original complaint contained four counts, three asserting

violations of the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et

seq.) for unlawful, unfair, and fraudulent business practices, and a fourth brought

under the false advertising law (Bus. & Prof. Code, § 17500 et seq.). The UCL

count for unlawful business practices alleged Kwikset‟s marketing violated both

specific state and federal statutes regulating country of origin labeling (see Bus. &

Prof. Code, § 17533.7; Civ. Code, § 1770, subd. (a)(4); 15 U.S.C. § 45a) and

general statutes governing false advertising (Bus. & Prof. Code, § 17500 et seq.;

2

Civ. Code, § 1770, subd. (a)(5), (7), (9), (16); 15 U.S.C. § 45). Benson sought

both injunctive relief and restitution.

After a bench trial, the trial court entered judgment for Benson. It

concluded Kwikset had violated Business and Professions Code section 17533.71

and Civil Code section 1770, subdivision (a)(4)2 between 1996 and 2000 by

placing “Made in U.S.A.” or similar labels on more than two dozen products that

either contained screws or pins made in Taiwan or involved latch subassembly

performed in Mexico. Based on these violations, the trial court concluded

Kwikset had engaged in unlawful, unfair, and deceptive business practices under

Business and Professions Code section 17200 and false advertising under Business

and Professions Code section 17500 and found for Benson on each of his four

causes of action.

The trial court‟s subsequent judgment enjoined Kwikset “from labeling any

lockset intended for sale in the State of California „All American Made,‟ or „Made

in USA,‟ or similar unqualified language, if such lockset contains any article, unit,

or part that is made, manufactured, or produced outside of the United States.” The

trial court further ordered Kwikset to notify its California retailers and distributors

of the falsely labeled products and afford them the opportunity to return

improperly labeled inventory for either a monetary refund or replacement with

1

Business and Professions Code section 17533.7 provides: “It is unlawful

for any person, firm, corporation or association to sell or offer for sale in this State
any merchandise on which merchandise or on its container there appears the words
„Made in U.S.A.,‟ „Made in America,‟ „U.S.A.,‟ or similar words when the
merchandise or any article, unit, or part thereof, has been entirely or substantially
made, manufactured, or produced outside of the United States.”

2

Civil Code section 1770, subdivision (a)(4) prohibits “[u]sing deceptive

representations or designations of geographic origin in connection with [the sale or
lease of] goods or services.”

3

properly labeled items. However, the trial court denied Benson‟s request for

restitution to consumers, the end purchasers of the locksets. It concluded

restitution “would likely be very expensive to administer, and the balance of

equities weighs heavily against such a program” where the violations had ceased3

and “the misrepresentations, even to those for whom the „Made in USA‟

designation is an extremely important consideration, were not so deceptive or false

as to warrant a return and/or refund program or other restitutionary relief to those

who have been using their locksets without other complaint.”

Both sides appealed. In November 2004, while the appeals were pending,

the electorate approved Proposition 64, substantially revising the UCL‟s and false

advertising law‟s standing provisions for private individuals. (See Bus. & Prof.

Code, §§ 17204, 17535.)4 We held these amendments applied to pending cases

(Californians for Disability Rights v. Mervyn‟s, LLC (2006) 39 Cal.4th 223, 232-

233), but that a party who had filed suit on behalf of the general public before

Proposition 64‟s enactment should be given the opportunity to allege and prove

facts satisfying the new standing requirements (Branick v. Downey Savings &

Loan Assn. (2006) 39 Cal.4th 235, 242-243).

Thereafter, the Court of Appeal affirmed the trial court‟s decision on the

underlying merits (Benson v. Kwikset Corp., supra, 152 Cal.App.4th at pp. 1267-


3

In response to the filing of this lawsuit, Kwikset decided to discontinue its

country of origin labels. As well, the Federal Trade Commission (FTC) launched
an unrelated investigation into Kwikset‟s use of country of origin labeling on its
products, and Kwikset ultimately entered into a consent order with the FTC legally
restricting its use of such labels. (Benson v. Kwikset Corp. (2007) 152
Cal.App.4th 1254, 1265.)

4

All further unlabeled statutory references are to the Business and

Professions Code.

4

1284) but vacated the judgment in light of questions concerning Benson‟s

standing. Because Benson filed this action before passage of Proposition 64, he

had neither pleaded nor proven standing sufficient to meet the newly enacted

requirements. In accordance with Branick v. Downey Savings & Loan Assn.,

supra, 39 Cal.4th 235, the Court of Appeal remanded the case to the trial court to

afford Benson the opportunity to do so, directing the trial court to reenter its

original judgment if Benson could demonstrate standing and to dismiss the action

if he could not. (Benson, at pp. 1264, 1284.)

Benson sought and obtained leave to add additional plaintiffs (Al Snook,

Christina Grecco, and Chris Wilson) and eventually filed what is now the

operative complaint, the second amended complaint for equitable relief. The

amended complaint alleges each plaintiff “purchased several Kwikset locksets in

California that were represented as „Made in U.S.A.‟ or [contained] similar

designations.” When purchasing the locksets each plaintiff “saw and read

Defendants‟ misrepresentations . . . and relied on such misrepresentations in

deciding to purchase . . . them. [Each plaintiff] was induced to purchase and did

purchase Defendants‟ locksets due to the false representation that they were „Made

in U.S.A.‟ and would not have purchased them if they had not been so

misrepresented. In purchasing Defendants‟ locksets, [each plaintiff] was provided

with products falsely advertised as „Made in U.S.A.,‟ deceiving [him or her] and

causing [him or her] to buy products [he or she] did not want. Defendants‟ „Made

in U.S.A.‟ misrepresentations caused [each plaintiff] to spend and lose the money

[he or she] paid for the locksets. [Each plaintiff] has suffered injury and loss of

money as a result of Defendants‟ conduct . . . .” The second amended complaint

retains the four UCL and false advertising law claims from the original complaint

but, consistent with the terms of the trial court‟s 2002 judgment, seeks only

injunctive relief, not restitution.

5

Kwikset demurred, but the trial court overruled the demurrer. It held

plaintiffs had adequately alleged standing: “Because the plaintiffs allege they

relied upon the alleged misrepresentations on the product packaging and were

induced to buy products they did not want and (under the rules of liberal

interpretation) suggest[ed] the products were unsatisfactory to them, the demurrer

lacks merit.” The complaint‟s allegation that Kwikset‟s “alleged deception caused

the plaintiffs „to buy products [they] did not want‟ ” was “a sufficient statement

the plaintiffs suffered injury in fact and lost money or property as a result of the

alleged fraud and deception.”

Kwikset sought and obtained writ relief. In an opinion directing the trial

court to sustain Kwikset‟s demurrer and enter a judgment dismissing the action,

the Court of Appeal explained that while plaintiffs had adequately alleged injury

in fact, they had not alleged any loss of money or property. (See §§ 17204

[a private plaintiff must show “lost money or property”], 17535 [same].) Plaintiffs

spent money to be sure but, the Court of Appeal reasoned, they received locksets

in return, locksets they did not allege were overpriced or defective. Thus, while

their “patriotic desire to buy fully American-made products was frustrated,” that

injury was insufficient to satisfy the standing requirements of sections 17204 and

17535.

We granted review to further explicate the UCL‟s and false advertising

law‟s standing requirements in light of Proposition 64, in particular, the

proposition‟s added “lost money or property” requirement. (§§ 17204, 17535; see

Prop. 64, §§ 3, 5.)

DISCUSSION

I. The UCL, the False Advertising Law, and Proposition 64

The UCL prohibits, and provides civil remedies for, unfair competition,

which it defines as “any unlawful, unfair or fraudulent business act or practice.”

6

(§ 17200.) Its purpose “is to protect both consumers and competitors by

promoting fair competition in commercial markets for goods and services.”

(Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949; see Hall v. Time Inc. (2008) 158

Cal.App.4th 847, 852.) In service of that purpose, the Legislature framed the

UCL‟s substantive provisions in “ „broad, sweeping language‟ ” (Cel-Tech

Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th

163, 181; see also Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266

[“The Legislature intended this „sweeping language‟ to include „ “anything that

can properly be called a business practice and that at the same time is forbidden by

law.” ‟ ”]) and provided “courts with broad equitable powers to remedy

violations” (ABC Internat. Traders, Inc. v. Matsushita Electric Corp. (1997) 14

Cal.4th 1247, 1270). The state‟s false advertising law (§ 17500 et seq.) is equally

comprehensive within the narrower field of false and misleading advertising. (See

generally Kasky, at pp. 950-951; Committee on Children‟s Television, Inc. v.

General Foods Corp. (1983) 35 Cal.3d 197, 210-211.)

While the substantive reach of these statutes remains expansive, the

electorate has materially curtailed the universe of those who may enforce their

provisions. As we recently explained: “In 2004, the electorate substantially

revised the UCL‟s standing requirement; where once private suits could be

brought by „any person acting for the interests of itself, its members or the general

public‟ (former § 17204, as amended by Stats. 1993, ch. 926, § 2, p. 5198), now

private standing is limited to any „person who has suffered injury in fact and has

lost money or property‟ as a result of unfair competition (§ 17204, as amended by

Prop. 64, as approved by voters, Gen. Elec. (Nov. 2, 2004) § 3; see Californians

for Disability Rights v. Mervyn‟s, LLC[, supra,] 39 Cal.4th [at pp.] 227-228.) The

intent of this change was to confine standing to those actually injured by a

defendant‟s business practices and to curtail the prior practice of filing suits on

7

behalf of „ “clients who have not used the defendant‟s product or service, viewed

the defendant‟s advertising, or had any other business dealing with the defendant

. . . .” ‟ (Californians for Disability Rights, at p. 228, quoting Prop. 64, § 1, subd.

(b)(3).) [¶] While the voters clearly intended to restrict UCL standing, they just as

plainly preserved standing for those who had had business dealings with a

defendant and had lost money or property as a result of the defendant‟s unfair

business practices. (Prop. 64, § 1, subds. (b), (d); see § 17204.)” (Clayworth v.

Pfizer, Inc. (2010) 49 Cal.4th 758, 788.) Proposition 64 made identical changes to

the standing provision of the false advertising law; where once “any person acting

for the interests of itself, its members or the general public” (§ 17535, as amended

by Stats. 1972, ch. 711, § 3, p. 1300) could sue, now standing is limited to “any

person who has suffered injury in fact and has lost money or property as a result of

a violation of this chapter” (§ 17535, as amended by Prop. 64, § 5). The question

here is what these changes, and especially the requirement that a party have “lost

money or property,” actually mean.

“We interpret voter initiatives using the same principles that govern

construction of legislative enactments. (Professional Engineers in California

Government v. Kempton (2007) 40 Cal.4th 1016, 1037 [56 Cal.Rptr.3d 814, 155

P.3d 226].) Thus, we begin with the text as the first and best indicator of intent.

(Ibid.; Elsner v. Uveges (2004) 34 Cal.4th 915, 927 [22 Cal.Rptr.3d 530, 102 P.3d

915].) If the text is ambiguous and supports multiple interpretations, we may then

turn to extrinsic sources such as ballot summaries and arguments for insight into

the voters‟ intent. (Professional Engineers, at p. 1037; Legislature v. Eu (1991)

54 Cal.3d 492, 504 [286 Cal.Rptr. 283, 816 P.2d 1309]; Legislature v. Deukmejian

(1983) 34 Cal.3d 658, 673, fn. 14 [194 Cal.Rptr. 781, 669 P.2d 17].)” (People v.

Mentch (2008) 45 Cal.4th 274, 282-283; see also In re Tobacco II Cases (2009) 46

8

Cal.4th 298, 315-317 [applying these principles to the interpretation of Prop. 64‟s

standing requirement].)

As we have said, “Proposition 64 accomplishes its goals in relatively few

words.” (Californians for Disability Rights v. Mervyn‟s, LLC, supra, 39 Cal.4th at

p. 228.) Fewer than two dozen are at issue here: under the UCL, standing extends

to “a person who has suffered injury in fact and has lost money or property as a

result of the unfair competition” (§ 17204), while under the false advertising law,

in materially identical language, standing extends to “any person who has suffered

injury in fact and has lost money or property as a result of a violation of this

chapter” (§ 17535).

As we shall explain, a party who has lost money or property generally has

suffered injury in fact. Consequently, the plain language of these clauses suggests

a simple test: To satisfy the narrower standing requirements imposed by

Proposition 64, a party must now (1) establish a loss or deprivation of money or

property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show

that that economic injury was the result of, i.e., caused by, the unfair business

practice or false advertising that is the gravamen of the claim. We explore these

elements in turn.

II. Standing Under Section 17204

A. Injury in Fact

“Injury in fact” is a legal term of art. A long line of United States Supreme

Court cases has identified injury in fact as one of the three “ „irreducible

minimum‟ ” requirements for federal standing under article III, section 2 of the

United States Constitution, and has accorded the phrase a well-settled meaning.

(Northeastern Fla. Chapter, Associated Gen. Contractors of America v.

Jacksonville (1993) 508 U.S. 656, 664; see also, e.g., Friends of Earth, Inc. v.

Laidlaw Environmental Services (TOC), Inc. (2000) 528 U.S. 167, 180-181; Lujan

9

v. Defenders of Wildlife (1992) 504 U.S. 555, 560-561.) The text of Proposition

64 establishes expressly that in selecting this phrase the drafters and voters

intended to incorporate the established federal meaning. The initiative declares:

“It is the intent of the California voters in enacting this act to prohibit private

attorneys from filing lawsuits for unfair competition where they have no client

who has been injured in fact under the standing requirements of the United States

Constitution.” (Prop. 64, § 1, subd. (e), italics added; see also Buckland v.

Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 814.)5

Under federal law, injury in fact is “an invasion of a legally protected

interest which is (a) concrete and particularized, [citations]; and (b) „actual or

imminent, not “conjectural” or “hypothetical,” ‟ [citations].” (Lujan v. Defenders

of Wildlife, supra, 504 U.S. at p. 560, fn. omitted; see also Associated Builders &

Contractors, Inc. v. San Francisco Airports Com. (1999) 21 Cal.4th 352, 362.)

“Particularized” in this context means simply that “the injury must affect the

plaintiff in a personal and individual way.” (Lujan, at p. 560, fn. 1.)

As we shall discuss, proof of injury in fact will in many instances overlap

with proof of the next element of standing, to have “lost money or property.”

(§§ 17204, 17535.) Accordingly, litigants and courts may profitably consider

whether injury in fact has been shown in conjunction with the allegations and

proof of having lost money or property, to which we now turn.


5

There are sound reasons to be cautious in borrowing federal standing

concepts, born of perceived constitutional necessity, and extending them to state
court actions where no similar concerns apply. (See generally Jasmine Networks,
Inc. v. Superior Court
(2009) 180 Cal.App.4th 980, 990-993.) Here, however, the
electorate has expressly directed courts to do so. (See id. at p. 992, fn. 5.)

10



B. “Lost Money or Property”: Economic Injury

Proposition 64 requires that a plaintiff have “lost money or property” to

have standing to sue. The plain import of this is that a plaintiff now must

demonstrate some form of economic injury. (Peterson v. Cellco Partnership

(2008) 164 Cal.App.4th 1583, 1591 [rejecting a claim where the plaintiff failed to

allege “ „actual economic injury‟ ”]; Animal Legal Defense Fund v. Mendes (2008)

160 Cal.App.4th 136, 147 [“This language discloses a clear requirement that

injury must be economic, at least in part, for a plaintiff to have standing under”

§ 17204]; Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796, 803

[permitting a claim to proceed where “the allegations set forth a basis for a claim

of actual economic injury”].)

There are innumerable ways in which economic injury from unfair

competition may be shown. A plaintiff may (1) surrender in a transaction more, or

acquire in a transaction less, than he or she otherwise would have; (2) have a

present or future property interest diminished; (3) be deprived of money or

property to which he or she has a cognizable claim; or (4) be required to enter into

a transaction, costing money or property, that would otherwise have been

unnecessary. (See, e.g., Hall v. Time Inc., supra, 158 Cal.App.4th at pp. 854-855

[cataloguing some of the various forms of economic injury].) Neither the text of

Proposition 64 nor the ballot arguments in support of it purport to define or limit

the concept of “lost money or property,” nor can or need we supply an exhaustive

list of the ways in which unfair competition may cause economic harm. It suffices

to say that, in sharp contrast to the state of the law before passage of Proposition

64, a private plaintiff filing suit now must establish that he or she has personally

suffered such harm.

Notably, lost money or property—economic injury—is itself a classic form

of injury in fact. (See, e.g., Friends of Earth, Inc. v. Laidlaw Environmental

11

Services (TOC), Inc., supra, 528 U.S. at pp. 183-184 [economic harm is among the

bases for injury in fact]; Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th

1305, 1347 [“ „While it is difficult to reduce injury-in-fact to a simple formula,

economic injury is one of its paradigmatic forms‟ ” (quoting Danvers Motor Co.,

Inc. v. Ford Motor Co. (3d Cir. 2005) 432 F.3d 286, 291).].) However, because

economic injury is but one among many types of injury in fact, the Proposition 64

requirement that injury be economic renders standing under section 17204

substantially narrower than federal standing under article III, section 2 of the

United States Constitution, which may be predicated on a broader range of

injuries.6 (See Troyk v. Farmers Group, Inc., supra, 171 Cal.App.4th at p. 1348,

fn. 31 [“We note [the] UCL‟s standing requirements appear to be more stringent

than the federal standing requirements. Whereas a federal plaintiff‟s „injury in

fact‟ may be intangible and need not involve lost money or property, Proposition

64, in effect, added a requirement that a UCL plaintiff‟s „injury in fact‟

specifically involve „lost money or property.‟ ”].)

While the economic injury requirement is qualitatively more restrictive

than federal injury in fact, embracing as it does fewer kinds of injuries, nothing in

the text of Proposition 64 or its supporting arguments suggests the requirement


6

See Friends of Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc.,

supra, 528 U.S. at pages 183-184 (recreational and aesthetic harms may also
support injury in fact); Lujan v. Defenders of Wildlife, supra, 504 U.S. at pages
562 (loss of opportunity to watch animal species, “even for purely esthetic
purposes,” may constitute injury in fact); Japan Whaling Assn. v. American
Cetacean Soc.
(1986) 478 U.S. 221, 230-231, fn. 4 (impairment of whale watching
is injury in fact); United States v. SCRAP (1973) 412 U.S. 669, 686 (injury in fact
is not confined to “ „economic harm‟ ” and extends to harm to the “use and
enjoyment of the natural resources” of an area); Sierra Club v. Morton (1972) 405
U.S. 727, 734 (“ „injury in fact‟ ” extends to damage to aesthetic and
environmental interests).

12

was intended to be quantitatively more difficult to satisfy. Rather, we may infer

from the text of Proposition 64 that the quantum of lost money or property

necessary to show standing is only so much as would suffice to establish injury in

fact; if more were needed, the drafters could and would have so specified. (Cf.

Prop. 64, § 1, subd. (e) [“It is the intent of the California voters in enacting this act

to prohibit private attorneys from filing lawsuits for unfair competition where they

have no client who has been injured in fact under the standing requirements of the

United States Constitution.”].) In turn, federal courts have reiterated that injury in

fact is not a substantial or insurmountable hurdle; as then Judge Alito put it:

“Injury-in-fact is not Mount Everest.” (Danvers Motor Co., Inc. v. Ford Motor

Co., supra, 432 F.3d at p. 294.) Rather, it suffices for federal standing purposes to

“ „allege[] some specific, “identifiable trifle” of injury.‟ ” (Ibid.; accord, Hale v.

Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1383; Troyk v. Farmers Group,

Inc., supra, 171 Cal.App.4th at p. 1347.)7

Thus, in Clayworth v. Pfizer Inc., supra, 49 Cal.4th at pages 788-789, we

found standing where the plaintiffs alleged they had paid an overcharge—more

than they otherwise would have—because of an alleged price-fixing cartel. In

Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1090, we concluded the

plaintiff had standing because the unfair business practice allegedly had resulted in

repossession of her vehicle (a loss of property) and a monetary payment in

response to an unlawful debt collection demand (a loss of money). And in Aron v.

U-Haul Co. of California, supra, 143 Cal.App.4th at pages 802-803, the Court of


7

“ „The basic idea that comes out in numerous cases is that an identifiable

trifle is enough for standing to fight out a question of principle; the trifle is the
basis for standing and the principle supplies the motivation.‟ ” (United States v.
SCRAP
, supra, 412 U.S. at p. 689, fn. 14, quoting Davis, Standing: Taxpayers
and Others
(1968) 35 U. Chi. L.Rev. 601, 613.)

13

Appeal found standing where the plaintiff alleged he was required to purchase

more fuel than he otherwise would have because of the defendants‟ business

practices. In each instance, the plaintiff could allege or prove an identifiable

monetary or property injury.

We offer a further observation concerning the order in which the elements

of standing are best considered. Because, as noted, economic injury is itself a

form of injury in fact, proof of lost money or property will largely overlap with

proof of injury in fact.8 (See Troyk v. Farmers Group, Inc., supra, 171

Cal.App.4th at p. 1348 [where the alleged harm is economic injury, injury in fact

and lost money or property are “one and the same”].) If a party has alleged or

proven a personal, individualized loss of money or property in any nontrivial

amount, he or she has also alleged or proven injury in fact. Because the lost

money or property requirement is more difficult to satisfy than that of injury in

fact, for courts to first consider whether lost money or property has been

sufficiently alleged or proven will often make sense. If it has not been, standing is

absent and the inquiry is complete. If it has been, the same allegations or proof

that suffice to establish economic injury will generally show injury in fact as well

(ibid.), and thus it will again often be the case that no further inquiry is needed.


8

The dissent contends that by recognizing the potential for overlap in the

proof of the separate elements injury in fact and lost money or property, we have
conflated the two elements themselves (dis. opn., post, at pp. 3, 8) and, as a result,
made it easier for a plaintiff to establish standing (id. at pp. 1, 8). Not at all. We
simply state the obvious: that proof of lost money or property will generally
satisfy the element of injury in fact. Nowhere do we suggest the converse: that
proof of injury in fact will necessarily satisfy the element of lost money or
property.

14



C. “As a Result of”: Causation or Reliance

Proposition 64 requires that a plaintiff‟s economic injury come “as a result

of” the unfair competition or a violation of the false advertising law. (§§ 17204,

17535.) “The phrase „as a result of‟ in its plain and ordinary sense means „caused

by‟ and requires a showing of a causal connection or reliance on the alleged

misrepresentation.” (Hall v. Time Inc., supra, 158 Cal.App.4th at p. 855; see also

Troyk v. Farmers Group, Inc., supra, 171 Cal.App.4th at p. 1349 [“the phrase „as a

result of‟ connotes an element of causation (i.e., [plaintiff] lost money because of

[defendants‟] unfair competition)”]; Medina v. Safe-Guard Products, Internat.,

Inc. (2008) 164 Cal.App.4th 105, 115 [“the „as a result‟ language imports a

reliance or causation element into” § 17204].) This commonsense reading of the

language mirrors how we have interpreted the same language in other consumer

protection statutes such as the Consumers Legal Remedies Act. (See Meyer v.

Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 641 [Civ. Code, § 1780, subd. (a),

granting standing to consumers who have suffered damage “as a result of” a

violation, imposes a requirement that a violation must “caus[e] or result[] in some

sort of damage”]; Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97

Cal.App.4th 1282, 1292 [“as a result of” language in Civ. Code, § 1780, subd. (a)

imposes a cause requirement].)

This case, like In re Tobacco II Cases, “is based on a fraud theory

involving false advertising and misrepresentations to consumers.” (In re Tobacco

II Cases, supra, 46 Cal.4th at p. 325, fn. 17.) Our discussion there of the meaning

of the “as a result of” causation requirement is controlling here.9 Recognizing that


9

While plaintiffs also allege unlawful conduct, in that Kwikset violated

Business and Professions Code sections 17500 and 17533.7 and Civil Code
section 1770, subdivision (a)(4), these statutory provisions simply codify


(footnote continues on next page)

15

“reliance is the causal mechanism of fraud” (In re Tobacco II Cases, at p. 326), we

held that a plaintiff “proceeding on a claim of misrepresentation as the basis of his

or her UCL action must demonstrate actual reliance on the allegedly deceptive or

misleading statements, in accordance with well-settled principles regarding the

element of reliance in ordinary fraud actions” (id. at p. 306).10 Consequently, “a

plaintiff must show that the misrepresentation was an immediate cause of the

injury-producing conduct . . . .” (In re Tobacco II Cases, at p. 326.) However, a

“plaintiff is not required to allege that [the challenged] misrepresentations were


(footnote continued from previous page)

prohibitions against certain specific types of misrepresentations. The theory of the
case is that Kwikset engaged in misrepresentations and deceived consumers.
Thus, our remarks in In re Tobacco II Cases, supra, 46 Cal.4th 298, concerning
the cause requirement in deception cases, are apposite. (See Durell v. Sharp
Healthcare
(2010) 183 Cal.App.4th 1350, 1363 [“[T]he reasoning of Tobacco II
[concerning the cause requirement] applies equally to the „unlawful‟ prong of the
UCL when, as here, the predicate unlawfulness is misrepresentation and
deception.”]; Hale v. Sharp Healthcare, supra, 183 Cal.App.4th at p. 1385 [In re
Tobacco II Cases
‟ discussion of causation applies equally to unlawful UCL claims
based on misrepresentation].) As in In re Tobacco II Cases, at page 325, footnote
17, we need express no views concerning the proper construction of the cause
requirement in other types of cases.

10

“Reliance” as used in the ordinary fraud context has always been

understood to mean reliance on a statement for its truth and accuracy. (E.g.,
Spreckels v. Gorrill (1907) 152 Cal. 383, 395 [“ „Every contracting party has a
right to rely on the express statement of an existing fact, the truth of which is
known to the opposite party and unknown to him, as the basis of a mutual
agreement . . .‟ ”].) It follows that a UCL fraud plaintiff must allege he or she was
motivated to act or refrain from action based on the truth or falsity of a
defendant‟s statement, not merely on the fact it was made. (See Buckland v.
Threshold Enterprises, Ltd.
, supra, 155 Cal.App.4th at pp. 818-819 [concluding a
party who had bought a product suspecting it was mislabeled in order to pursue a
UCL fraud action had not established standing].)

16

the sole or even the decisive cause of the injury-producing conduct.” (Id. at

p. 328.)

Thus, for example, in Hale v. Sharp Healthcare, supra, 183 Cal.App.4th at

pages 1385-1386, the Court of Appeal found the complaint adequate where from

its allegations one could infer the plaintiff had relied on a defendant‟s

representation that it would charge its “ „ “regular rates.” ‟ ” In contrast, in Durell

v. Sharp Healthcare, supra, 183 Cal.App.4th at pages 1363-1364, the plaintiff

failed to allege any reliance on representations about rates; accordingly, a

demurrer to a UCL claim challenging those representations was properly

sustained. (See also Hall v. Time Inc., supra, 158 Cal.App.4th at p. 857 [a

demurrer was properly sustained where the plaintiff did not allege that

misrepresentations caused him to pay money for a book or that he would

otherwise have returned the book to avoid payment].)

III. Application of Section 17204 to Plaintiffs

We apply these principles to plaintiffs‟ pleadings. “[E]ach element [of

standing] must be supported in the same way as any other matter on which the

plaintiff bears the burden of proof, i.e., with the manner and degree of evidence

required at the successive stages of the litigation. [Citations.] At the pleading

stage, general factual allegations of injury resulting from the defendant‟s conduct

may suffice, for on a motion to dismiss we „presum[e] that general allegations

embrace those specific facts that are necessary to support the claim.‟ ” (Lujan v.

Defenders of Wildlife, supra, 504 U.S. at p. 561; see also Troyk v. Farmers Group,

Inc., supra, 171 Cal.App.4th at p. 1345.) At this stage, these plaintiffs need only

allege economic injury arising from reliance on Kwikset‟s misrepresentations.

According to the second amended complaint, (1) Kwikset labeled certain locksets

with “Made in U.S.A.” or a similar designation, (2) these representations were

false, (3) plaintiffs saw and relied on the labels for their truth in purchasing

17

Kwikset‟s locksets, and (4) plaintiffs would not have bought the locksets

otherwise. On their face, these allegations satisfy all parts of the section 17204

standing requirement, as we shall explain.11

Simply stated: labels matter. The marketing industry is based on the

premise that labels matter, that consumers will choose one product over another

similar product based on its label and various tangible and intangible qualities they

may come to associate with a particular source. (E.g., FTC v. Proctor & Gamble

Co. (1967) 386 U.S. 568, 572 [noting the central role of advertising and sales

promotion in generating market share, where the competing products are

functionally identical].) An entire body of law, trademark law (see, e.g., 15 U.S.C.

§ 1051 et seq. [Lanham Act]), exists to protect commercial and consumer interests

in accurate label representations as to source, because consumers rely on the

accuracy of those representations in making their buying decisions.

To some consumers, processes and places of origin matter. (See Kysar,

Preferences for Processes: The Process/Product Distinction and the Regulation of

Consumer Choice (2004) 118 Harv. L.Rev. 525, 529 [“[C]onsumer preferences

may be heavily influenced by information regarding the manner in which goods

are produced.”]; ibid. [Although the circumstances of production “generally do not

bear on the functioning, performance, or safety of the product, they nevertheless


11

Kwikset contends these allegations are untrue, at least as to James Benson

if not the other more recently added plaintiffs. At the demurrer stage, however,
we must take the allegations as true. (Avila v. Citrus Community College Dist.
(2006) 38 Cal.4th 148, 152, fn. 1.) At succeeding stages, it will be plaintiffs‟
obligation to produce evidence to support, and eventually to prove, their bare
standing allegations. (Lujan v. Defenders of Wildlife, supra, 504 U.S. at p. 561;
Troyk v. Farmers Group, Inc., supra, 171 Cal.App.4th at pp. 1345, 1351; see also
United States v. SCRAP, supra, 412 U.S. at p. 689 [standing “allegations must be
true and capable of proof at trial”].) If they cannot, their action will be dismissed.

18

can, and often do, influence the willingness of consumers to purchase the

product.”].)12 Whether a particular food is kosher or halal may be of enormous

consequence to an observant Jew or Muslim. Whether a wine is from a particular

locale may matter to the oenophile who values subtle regional differences.

Whether a diamond is conflict free13 may matter to the fiancée who wishes not to

think of supporting bloodshed and human rights violations each time she looks at

the ring on her finger. And whether food was harvested or a product

manufactured by union workers may matter to still others. (See Kasky v. Nike,

Inc., supra, 27 Cal.4th at p. 969 [“For a significant segment of the buying public,

labor practices do matter in making consumer choices.”].)


12

The analogy between trademark designations, which have been protected

since medieval times (Diamond, The Historical Development of Trademarks
(1975) 65 Trademark Rep. 265, 277-280) and process or source designations such
as those at issue in this case is actually quite close. (See Kysar, Preferences for
Processes: The Process/Product Distinction and the Regulation of Consumer
Choice
, supra, 118 Harv. L.Rev. at p. 611 [noting that in certain respects “process
representations by manufacturers function quite similarly to trademarks, logos,
brands, and other conventional product emblems that typically do not affect the
compositional features of the product, but that nevertheless exert great influence
over consumer decisionmaking.”].)

13

See generally United Nations General Assembly Resolution No. 55/56

(Dec. 1, 2000) (recognizing the problem of “conflict diamonds” and supporting an
international certification process for rough diamonds); 19 U.S.C. § 3901(1)
(“Funds derived from the sale of [conflict] diamonds are being used by rebels and
state actors to finance military activities, overthrow legitimate governments,
subvert international efforts to promote peace and stability, and commit horrifying
atrocities against unarmed civilians”); Fishman, Is Diamond Smuggling Forever?
The Kimberley Process Certification Scheme: The First Step Down the Long Road
to Solving the Blood Diamond Trade Problem
(2005) 13 U. Miami Bus. L.Rev.
217, 219-224 (discussing the role of blood diamonds in supporting war and human
rights violations).

19

In particular, to some consumers, the “Made in U.S.A.” label matters. A

range of motivations may fuel this preference, from the desire to support domestic

jobs, to beliefs about quality, to concerns about overseas environmental or labor

conditions, to simple patriotism. The Legislature has recognized the materiality of

this representation by specifically outlawing deceptive and fraudulent “Made in

America” representations. (§ 17533.7; see also Civ. Code, § 1770, subd. (a)(4)

[prohibiting deceptive representations of geographic origin].) The object of

section 17533.7 “is to protect consumers from being misled when they purchase

products in the belief that they are advancing the interests of the United States and

its industries and workers. (Sen. Holmdahl, sponsor of [Sen. Bill No. 1004 (1961

Reg. Sess.)] [which became § 17533.7] . . . , letter to Governor Brown, May 23,

1961) [„There are many Americans who feel that American-made articles are of

higher quality, and who rely on the “Made in U.S.A.” label‟].)” (Colgan v.

Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663, 689.) The Legislature

evidently recognized some companies were using or might be tempted to use

inaccurate “Made in America” labeling, that some consumers might be deceived

by and rely on it, and that consumers and competitors who honestly made their

wares in the United States and marketed them as such were being or would be

harmed.

For each consumer who relies on the truth and accuracy of a label and is

deceived by misrepresentations into making a purchase, the economic harm is the

same: the consumer has purchased a product that he or she paid more for than he

or she otherwise might have been willing to pay if the product had been labeled

accurately. This economic harm—the loss of real dollars from a consumer‟s

pocket—is the same whether or not a court might objectively view the products as

functionally equivalent. A counterfeit Rolex might be proven to tell the time as

accurately as a genuine Rolex and in other ways be functionally equivalent, but we

20

do not doubt the consumer (as well as the company that was deprived of a sale)

has been economically harmed by the substitution in a manner sufficient to create

standing to sue. Two wines might to almost any palate taste indistinguishable—

but to serious oenophiles, the difference between one year and the next, between

grapes from one valley and another nearby, might be sufficient to carry with it real

economic differences in how much they would pay. Nonkosher meat might taste

and in every respect be nutritionally identical to kosher meat, but to an observant

Jew who keeps kosher, the former would be worthless.

A consumer who relies on a product label and challenges a

misrepresentation contained therein can satisfy the standing requirement of section

17204 by alleging, as plaintiffs have here, that he or she would not have bought

the product but for the misrepresentation.14 That assertion is sufficient to allege

causation—the purchase would not have been made but for the misrepresentation.

It is also sufficient to allege economic injury. From the original purchasing

decision we know the consumer valued the product as labeled more than the

money he or she parted with; from the complaint‟s allegations we know the

consumer valued the money he or she parted with more than the product as it

actually is; and from the combination we know that because of the

misrepresentation the consumer (allegedly) was made to part with more money

than he or she otherwise would have been willing to expend, i.e., that the


14

The dissenting opinion objects to having a plaintiff‟s subjective motivations

in making a purchase play any role in deciding standing. (Dis. opn., post, at pp. 4-
7.) Of course, such considerations are a routine part of common law deceit
actions: we will allow one party who subjectively relied on a particular deception
in entering a transaction to sue, while simultaneously precluding another who
subjectively did not so rely from suing. To consider them in the context of a
statutory deceit action thus is wholly unremarkable.

21

consumer paid more than he or she actually valued the product. That increment,

the extra money paid, is economic injury and affords the consumer standing to

sue.15

Were we to conclude otherwise, we would bring to an end private

consumer enforcement of bans on many label misrepresentations, contrary to the

apparent intent of Proposition 64. (See Prop. 64, § 1, subd. (d) [preserving in part

the right of private individuals to sue].) That public prosecutors can still sue is of

limited solace, given the significant role we have recognized private consumer

enforcement plays for many categories of unfair business practices. (In re

Tobacco II Cases, supra, 46 Cal.4th at p. 313; Kraus v. Trinity Management

Services, Inc. (2000) 23 Cal.4th 116, 126.)16 The UCL and false advertising law

are both intended to preserve fair competition and protect consumers from market

distortions. (Kasky v. Nike, Inc., supra, 27 Cal.4th at p. 949; Cel-Tech

Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th at

p. 180; Committee on Children‟s Television, Inc. v. General Foods Corp., supra,


15

Because the issue here is only the threshold matter of standing, not whether

and how much to award in restitution, a specific measure of the amount of this loss
is not required. It suffices that a plaintiff can allege an “ „identifiable trifle‟ ”
(United States v. SCRAP, supra, 412 U.S. at p. 689, fn. 14) of economic injury.
Once this threshold pleading requirement has been satisfied, it will remain the
plaintiff‟s burden thereafter to prove the elements of standing and of each alleged
act of unfair competition, and the trial court‟s role to exercise its considerable
discretion to determine which, if any, of the various equitable and injunctive
remedies provided for by sections 17203 and 17535 may actually be warranted in
a given case.

16

Notably, the public prosecutors who have appeared in this action, amicus

curiae the California District Attorneys Association, support plaintiffs‟
construction of the standing requirement and express many of the same concerns
noted in the text about the consequences of the Court of Appeal‟s reading of the
statute.

22

35 Cal.3d at pp. 209-210; Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d

94, 110.) Contrary to that general purpose, if we were to deny standing to

consumers who have been deceived by label misrepresentations in making

purchases, we would impair the ability of consumers to rely on labels, place those

businesses that do not engage in misrepresentations at a competitive disadvantage,

and encourage the marketplace to dispense with accuracy in favor of deceit.

The Court of Appeal offered three interrelated reasons for concluding

plaintiffs had not lost money or property within the meaning of section 17204:

they failed to allege any overcharge or functional defects in the locksets; they

received the benefit of their bargain; and they were ineligible for restitution.

Kwikset echoes these arguments in its briefs, and the dissenting opinion takes

them up as well. We consider each in turn.

The Court of Appeal reasoned that plaintiffs could not show economic

injury because, while they had spent money, they “received locksets in return.”

(See also dis. opn., post, at p. 4.) Plaintiffs did not allege the locksets were

defective, overpriced, or of inferior quality. In the Court of Appeal‟s and dissent‟s

eyes, cognizable economic harm is confined to these sorts of objective

“functional” differences.

We discern two textual difficulties with this view. First, while the alternate

allegations of loss the Court of Appeal posited and the dissent demands might well

satisfy the economic injury requirement, nothing in the open-ended phrase “lost

money or property” supports limiting the types of qualifying losses to functional

defects of these sorts and excluding the real economic harm that arises from

purchasing mislabeled products in reliance on the truth and accuracy of their

labels. Second, the economic injuries the Court of Appeal would require in order

to allow one to sue for misrepresentation are in many instances wholly unrelated

to any alleged misrepresentation. An allegation that Kwikset‟s products are of

23

inferior quality, for example, even if it might demonstrate lost money or property,

would not demonstrate lost money or property “as a result of” unfair competition

or false advertising about the product‟s origins. (§§ 17204, 17535.) The Court of

Appeal‟s take on standing, underinclusive as to the economic injuries that might

qualify, is overinclusive as to the injuries that might be considered causally related

to false advertising.

Next, at the core of both the Court of Appeal‟s ruling and Kwikset‟s and

the dissent‟s position is that plaintiffs should not be accorded standing because

they received the benefit of their bargain. Kwikset argues, and the Court of

Appeal agreed, that consumers who receive a fully functioning product have

received the benefit of their bargain, even if the product label contains

misrepresentations that may have been relied upon by a particular class of

consumers. (See also Peterson v. Cellco Partnership, supra, 164 Cal.App.4th at

p. 1591 [plaintiffs lacked standing because “they received the benefit of their

bargain, having obtained the bargained for insurance at the bargained for price.”].)

Whether or not a party who actually received the benefit of his or her

bargain may lack standing, in this case, under the allegations of the complaint,

plaintiffs did not. (Cf. Troyk v. Farmers Group, Inc., supra, 171 Cal.App.4th at

p. 1348, fn. 30 [declining to apply the benefit of the bargain rationale where the

record showed the plaintiff in fact had not received the benefit of his bargain].)

Plaintiffs selected Kwikset‟s locksets to purchase in part because they were “Made

in U.S.A.”; they would not have purchased them otherwise; and, it may be

inferred, they value what they actually received less than either the money they

parted with or working locksets that actually were made in the United States.

They bargained for locksets that were made in the United States; they got ones that

were not. The same points may be made generally with regard to consumers who

purchase products in reliance on misrepresentations. The observant Jew who

24

purchases food represented to be, but not in fact, kosher; the Muslim who

purchases food represented to be, but not in fact, halal; the parent who purchases

food for his or her child represented to be, but not in fact, organic, has in each

instance not received the benefit of his or her bargain.

The argument that a consumer in plaintiffs‟ position has received the

benefit of the bargain notwithstanding any misrepresentation may rest on one of

two unstated predicates: that either (1) the misrepresentation at issue should be

deemed not a material part of the bargain, or (2) even if the consumer does not

value what he or she received as much as what he or she paid, the marketplace

would, and its valuation should be dispositive.

“A misrepresentation is judged to be „material‟ if „a reasonable man would

attach importance to its existence or nonexistence in determining his choice of

action in the transaction in question‟ . . . .” (Engalla v. Permanente Medical

Group, Inc. (1997) 15 Cal.4th 951, 977, quoting Rest.2d Torts, § 538, subd.

(2)(a).) In the alternative, it may also be material if “the maker of the

representation knows or has reason to know that its recipient regards or is likely to

regard the matter as important in determining his choice of action, although a

reasonable man would not so regard it.” (Rest.2d Torts, § 538, subd. (2)(b).)

Here, the Legislature has by statute made clear that whether a product is

manufactured in the United States or elsewhere is precisely the sort of

consideration reasonable people can and do attach importance to in their

purchasing decisions. (See § 17533.7.)17 Indeed, Kwikset packaged its products

with labels like “All American Made & Proud Of It” and “Made in U.S.A.”

17

Notably, the United States government certainly does. (See 41 U.S.C.

§ 10a [requiring federal agencies generally to purchase goods made in the United
States].)

25

because it determined such marketing might sway reasonable people in their

purchasing decisions. In any event, as materiality is generally a question of fact

(Engalla, at p. 977), it is not a basis on which to decide this case on demurrer.

Under the second implicit line of reasoning, a consumer who has acquired a

mislabeled product has lost no money or property if the marketplace would

continue to value the product as highly as the amount the consumer paid for it,

whether or not he or she would do so.18 The argument that plaintiffs got the

benefit of their bargain because they received locksets is shorthand for the idea

that they could as easily turn around and sell the locksets to someone else for the

same price. There are four difficulties with this way of concluding no money or

property has been lost in the original transaction.

First, it assumes there is a functioning aftermarket for resale that would

allow a plaintiff to liquidate the good in question by reselling it to those for whom

the misrepresentation is immaterial. This plainly is not so in many instances.

While there are certainly consumers for whom the kosher or halal or organic

quality of food is immaterial, there is no functioning aftermarket that would permit

easy resale of, for example, perishable foodstuffs and small-ticket consumer

goods. A gallon of nonorganic “organic” milk cannot be resold. A consumer who

has purchased products mislabeled in this fashion cannot recoup his or her

purchase price.


18

This line of reasoning appears to lie at the heart of the dissent‟s position:

the dissenting opinion essentially argues that we should read into the text of
Proposition 64 a requirement that overpayments induced by fraud are only
cognizable and a basis for standing if they can be measured according to some
independent, objective market. Aside from the absence of a textual basis for such
a limitation, this approach is flawed for reasons we detail hereafter. (See maj.
opn., post, pp. 26-28.)

26

Second, it assumes a consumer has no qualms—religious, ethical, or

otherwise—that would preclude his or her partaking in resale of the mislabeled

product, or at least none that the law should respect.

Third, it assumes that resale will not involve transaction costs and that an

individual consumer will be able to resell the mislabeled product at the same price.

But even for goods where there is a functioning aftermarket, resale will generally

require the deceived buyer to sell at a reduced price to account for the facts the

good is being resold and the source (an individual consumer) is less reliable than

the original seller (a commercial establishment). In such instances, there still has

been a loss of money.

Fourth, it ignores that the law generally disregards such “pass-on” sales.

(See Clayworth v. Pfizer, Inc., supra, 49 Cal.4th at pp. 768-769.) Kwikset‟s

argument, that a deceived buyer has lost nothing because he or she has the value of

the item still possessed, can be viewed as a pass-on defense in disguise: the buyer

has an item that, through a presumed functioning aftermarket, he or she could

convert back into an equivalent amount of money, recouping through the

subsequent sale any perceived loss. But in the eyes of the law, a buyer forced to

pay more than he or she would have is harmed at the moment of purchase, and

further inquiry into such subsequent transactions, actual or hypothesized,19

ordinarily is unnecessary. (Id. at pp. 768-769, 788-789.)20


19

Here there is no evidence of any resale. Accordingly, plaintiffs are still out

the money they paid and have in its place only a product they value at less than
what they paid.

20

Kwikset‟s implicit argument is that the materiality of a representation must

be proven by reference to a market that charges more for products that carry a
particular label. The implications of this argument are significant. In any market
with generally parallel pricing (whether through conscious parallelism or


(footnote continues on next page)

27

In its benefit of the bargain argument, Kwikset relies as well on two real

property fraud cases, each of which recites the rule that damages for fraud in the

sale of property are measured principally by the difference in the actual value of

what was parted with and what was received (the “out-of-pocket loss” rule). (See

Gagne v. Bertran (1954) 43 Cal.2d 481, 490-492; Jacobs v. Levin (1943) 58

Cal.App.2d Supp. 913, 915-918; Civ. Code, § 3343 [codifying rule].) In the

context of a common law deceit action, the rule‟s only purpose is to provide the

measure of damages; it limits neither standing nor the availability of equitable

remedies. (See Jacobs, at p. 918 [deceived party can seek rescission]; Civ. Code,

§ 3343, subd. (b)(2) [damages rule shall not be used to “[d]eny to any person

having a cause of action for fraud or deceit any legal or equitable remedies to

which such person may be entitled.”].)

Nothing in the text or history of Proposition 64 suggests the electorate

intended to borrow this rule, developed in the context of a remedy (damages)

unavailable under the UCL and false advertising law, and deploy it for a wholly

unrelated purpose, as a restriction on standing. Indeed, doing so would render

standing under the UCL and false advertising law substantially more difficult to

establish than standing to assert common law deceit: As Kwikset‟s counsel

properly acknowledged at oral argument, a consumer who purchased a product in

reliance on an alleged misrepresentation would under the common law have

standing to sue for fraud, misrepresentation, and rescission without having first to


(footnote continued from previous page)

otherwise), where competitors use representations about features principally to
increase market share rather than to charge a premium, any deception in such
representations would no longer be privately enforceable by consumers. We do
not see expressed in Proposition 64 any intent to deregulate the commercial speech
marketplace of ideas to this extent.

28

prove, as Kwikset argues the UCL and false advertising law now require, that the

product received was worth less than the money paid for it. While Proposition 64

clearly was intended to abolish the portions of the UCL and false advertising law

that made suing under them easier than under other comparable statutory and

common law torts, it was not intended to make their standing requirements

comparatively more onerous.21 We thus decline to write the out-of-pocket loss

damages rule into section 17204‟s standing definition.

Finally, the Court of Appeal rested its holding in part on a line of cases that

have read the “lost money or property” requirement as confining standing under

section 17204 “ „to individuals who suffer losses . . . that are eligible for

restitution.‟ ” (Quoting Buckland v. Threshold Enterprises, Ltd., supra, 155

Cal.App.4th at p. 817; see also Silvaco Data Systems v. Intel Corp. (2010) 184

Cal.App.4th 210, 245; Citizens of Humanity, LLC v. Costco Wholesale Corp.


21

Proposition 64‟s Findings and Declarations of Purpose (Voter Information

Guide, Gen. Elec. (Nov. 2, 2004), p. 109) expressed concern that the UCL and
false advertising law were being “misused by some private attorneys” (Prop. 64,
§ 1, subd. (b)) to file suits on behalf of “clients who [had] not used the defendant‟s
product or service, viewed the defendant‟s advertising, or had any other business
dealing with the defendant” (id., subd. (b)(3)) and had not “been injured in fact”
(id., subd. (b)(2)) as a way of “generating attorney‟s fees without creating a
corresponding public benefit” (id., subd. (b)(1)). In short, voters focused on
curbing shakedown suits by parties who had never engaged in any transactions
with would-be defendants. (See In re Tobacco II Cases, supra, 46 Cal.4th at
pp. 316-317.) No corresponding concern was expressed about suits by those who
had had business dealings with a given defendant, and nothing suggests the voters
contemplated eliminating statutory standing for consumers actually deceived by a
defendant‟s representations. (See Clayworth v. Pfizer, Inc., supra, 49 Cal.4th at
p. 789, fn. 25 [accepting the defendant‟s arguments “would render the UCL‟s
standing requirement substantially more stringent than other state unfair
competition statutes such as the Cartwright Act, under which [the plaintiffs‟]
standing is undisputed. Again, we see nothing in the text or history of Proposition
64 that suggests the voters intended such a result.”].)

29

(2009) 171 Cal.App.4th 1, 22; Walker v. GEICO General Ins. Co. (9th Cir. 2009)
558 F.3d 1025, 1027 [following Buckland].) Because plaintiffs were not entitled

to restitution, the Court of Appeal reasoned, they necessarily lacked standing.

As we recently have noted, however, the standards for establishing standing

under section 17204 and eligibility for restitution under section 17203 are wholly

distinct. (See Clayworth v. Pfizer, Inc., supra, 49 Cal.4th at p. 789.) For the

drafters of Proposition 64, which amended both sections 17203 and 17204, to

make standing under section 17204 expressly dependent on eligibility for

restitution under section 17203 would have been easy enough,22 but nothing in the

text or history of Proposition 64 suggests this was intended. (Clayworth, at

pp. 788-789.) We thus rejected in Clayworth the argument that if the plaintiffs

could demonstrate no compensable losses or entitlement to restitution under

section 17203, they would lack standing under section 17204. As we explained,

“this argument conflates the issue of standing with the issue of the remedies to

which a party may be entitled. That a party may ultimately be unable to prove a

right to damages (or, here, restitution) does not demonstrate that it lacks standing

to argue for its entitlement to them.” (Clayworth, at p. 789.)

Moreover, to interpret standing as dependent on eligibility for restitution

would narrow section 17204 in a way unsupported by its text. Restitution under

section 17203 is confined to restoration of any interest in “money or property, real

or personal, which may have been acquired by means of such unfair competition.”


22

Compare, for example, the language of section 17204 with the language of

Civil Code section 1780, subdivision (a), which includes in the standing
requirements under the Consumers Legal Remedies Act (CLRA) that a consumer
be able to prove damages. (See Meyer v. Sprint Spectrum L.P., supra, 45 Cal.4th
at p. 646 [“the Legislature . . . set a low but nonetheless palpable threshold of
damage” for standing to sue under the CLRA].)

30

(Italics added.) A restitution order against a defendant thus requires both that

money or property have been lost by a plaintiff, on the one hand, and that it have

been acquired by a defendant, on the other. (See Kraus v. Trinity Management

Services, Inc., supra, 23 Cal.4th at pp. 126-127.) But the economic injury that an

unfair business practice occasions may often involve a loss by the plaintiff without

any corresponding gain by the defendant, such as, for example, a diminishment in

the value of some asset a plaintiff possesses. (See Overstock.com, Inc. v. Gradient

Analytics, Inc. (2007) 151 Cal.App.4th 688, 716 [a plaintiff who alleged that a

defendant‟s defamatory statements diminished its assets and reduced its market

capitalization adequately alleged UCL standing]; Huntingdon Life Sciences, Inc. v.

Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1240,

1262 [a plaintiff whose home and car were vandalized by defendant animal rights

protesters adequately alleged lost property under Prop. 64].) Such injuries satisfy

the plain meaning of section 17204‟s “lost money or property” requirement,

qualify as injury in fact, and would permit a plaintiff to seek an injunction against

the offending business practice even in the absence of any basis for restitution.

(See Clayworth v. Pfizer, Inc., supra, 49 Cal.4th at pp. 789-790 [parties may seek

an injunction under the UCL whether or not restitution is also available]; ABC

Internat. Traders, Inc. v. Matsushita Electric Corp., supra, 14 Cal.4th at p. 1268

[§ 17203 “contains . . . no language of condition linking injunctive and

restitutionary relief”].)

This leads to a larger point: To make standing under section 17204

dependent on eligibility for restitution under section 17203 would turn the

remedial scheme of the UCL on its head. Injunctions are “the primary form of

relief available under the UCL to protect consumers from unfair business

practices,” while restitution is a type of “ancillary relief.” (In re Tobacco II Cases,

supra, 46 Cal.4th at p. 319.) As the availability of an injunction depends on

31

standing to sue, if standing to sue depends on eligibility for restitution, then

injunctive relief—the primary form of relief under the UCL—has been rendered

dependent on the availability of a mere ancillary form of relief. As we have

recognized, “Proposition 64 did not amend the remedies provision of section

17203.” (In re Tobacco II Cases, at p. 319.) We have no reason to believe it sub

silentio dramatically changed the relative availability of the remedies contained in

section 17203.

Accordingly, we hold ineligibility for restitution is not a basis for denying

standing under section 17204 and disapprove those cases that have concluded

otherwise. (See Silvaco Data Systems v. Intel Corp., supra, 184 Cal.App.4th 210,

245; Citizens of Humanity, LLC v. Costco Wholesale Corp., supra, 171

Cal.App.4th 1, 22; Buckland v. Threshold Enterprises, Ltd., supra, 155

Cal.App.4th 798, 817.)

DISPOSITION

For the foregoing reasons, we reverse the Court of Appeal‟s judgment and

remand this case for further proceedings consistent with this opinion.

WERDEGAR, J.

WE CONCUR:

KENNARD, ACTING C. J.
BAXTER, J.
MORENO, J.
GEORGE, J.
*


*

Retired Chief Justice of California, assigned by the Chief Justice pursuant

to article VI, section 6 of the California Constitution.

32











DISSENTING OPINION BY CHIN, J.




I respectfully dissent.

In 2004, voters passed Proposition 64, which substantially changed the

standing requirements for a private plaintiff to sue under the unfair competition

law (UCL) (see Bus. & Prof. Code, § 17200 et seq.).1 “The voters‟ intent in

passing Proposition 64 and enacting the changes to the standing rules in Business

and Professions Code section 17204 was unequivocally to narrow the category of

persons who could sue businesses under the UCL.” (Hall v. Time Inc. (2008) 158

Cal.App.4th 847, 853 (Hall).) To have standing under the UCL, a plaintiff must

have suffered “injury in fact” and have “lost money or property” as a result of an

unfair business practice. (§ 17204, as amended by Prop. 64, as approved by

voters, Gen. Elec. (Nov. 2, 2004) § 3 (Proposition 64); see also § 17203.) In direct

contravention of the electorate‟s intent, the majority disregards the express

language of the amendment and makes it easier for a plaintiff to achieve standing

under the UCL.


1

While the voters made identical changes to the standing provision of the

false advertising law (Bus. & Prof. Code, § 17535, as amended by Prop. 64, § 5;
see maj. opn., ante, at pp. 4, 8), my focus is on the UCL. Further undesignated
statutory references are to the Business and Professions Code.

A.

Meaning of “Lost Money or Property”

As relevant here, in the wake of Proposition 64 section 17204 now provides

that a private plaintiff may bring a UCL action if he or she “has suffered injury in

fact and has lost money or property as a result of such unfair competition.”

(§ 17204, as amended by Prop. 64, § 3, italics added.) The amendment clearly sets

out two requirements to establish standing. (See Peterson v. Cellco Partnership

(2008) 164 Cal.App.4th 1583, 1590 (Peterson) [“private plaintiff must make a

twofold showing”].) As the majority correctly points out, the crux of the issue

here is the meaning of “lost money or property.” (Maj. opn., ante, at p. 8.)

Several Courts of Appeal have defined a loss for purposes of section 17204

as “ „[a]n undesirable outcome of a risk; the disappearance or diminution of value,

usu. in an unexpected or relatively unpredictable way.‟ ” (Hall, supra, 158

Cal.App.4th at p. 853, quoting Black‟s Law Dict. (8th ed. 2004) p. 963; see

Peterson, supra, 164 Cal.App.4th at p. 1592.) In other words, a person has not

“lost” money simply when the money is “ „no longer in [his or her] possession‟ ”

because “this proposed definition encompasses every purchase or transaction

where a person pays with money.” (Peterson, supra, 164 Cal.App.4th at p. 1592.)

Despite finding section 17204‟s meaning to be “plain” (maj. opn., ante, at

pp. 9, 31), the majority does not actually attempt to define what “lost money or

property” means except to find that it now requires a UCL private plaintiff to

“demonstrate some form of economic injury.” (Maj. opn., ante, at p. 11 [citing

cases]; cf. id. at p. 23 [“open-ended phrase „lost money or property‟ ”].)

Throughout its opinion, the majority refers to “economic injury” as shorthand for

the statutory requirement. (Id. at pp. 11, 14, 21, 23, 31.) However, the Court of

Appeal cases on which the majority relies do not support this conclusion. In

discussing economic injury, each of these cases was referring to the requirement

of “injury in fact” and not, as the majority suggests, to “lost money or property.”

2

(See Peterson, supra, 164 Cal.App.4th at pp. 1591-1592 [by failing to allege “they

suffered actual economic injury,” plaintiffs failed to allege facts showing “injury

in fact”]; Hall, supra, 158 Cal.App.4th at pp. 854-855 [listing examples

constituting “injury in fact”]; Aron v. U-Haul Co. of California (2006) 143

Cal.App.4th 796, 802 (Aron) [plaintiff has claim for actual economic injury by

alleging “ „injury in fact‟ in that he suffered economic loss”]; see also Animal

Legal Defense Fund v. Mendes (2008) 160 Cal.App.4th 136, 147 [language that

plaintiffs “have suffered „injury in fact and [have] lost money or property‟ ”

“discloses a clear requirement that injury must be economic”].) Thus, although

the majority catalogues the “innumerable ways” in which economic injury may be

shown (maj. opn., ante, at p. 11), this does not shed light on the meaning of “lost

money or property” under section 17204.

The majority later correctly recognizes that economic injury is a type of

injury in fact. (See maj. opn., ante, at pp. 11, 14.) However, this observation does

little to clarify what the statute actually means. By failing to expressly define “lost

money or property” and instead equating it with economic injury, the majority

effectively collapses the two separate requirements of section 17204 into one.

This is far more than what the majority acknowledges it is doing, namely,

recognizing the overlap between the proof of the “injury in fact” and “lost money

or property” elements. (See id. at p. 14.) Rather, the majority‟s conclusion that

“[a]t this stage, these plaintiffs need only allege economic injury arising from

reliance on Kwikset‟s misrepresentations” (id. at p. 17), effectively renders one of

the two statutory requirements “ „redundant and a nullity.‟ ” (Buckland v.

Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 817.) “We must take the

language . . . , as it was passed into law, and must, if possible without doing

violence to the language and spirit of the law, interpret it so as to harmonize and

give effect to all its provisions.” (People v. Garcia (1999) 21 Cal.4th 1, 14.)

3



In this case, plaintiffs alleged that “Defendants‟ „Made in U.S.A.‟

misrepresentations caused [each plaintiff] to spend and lose the money [he or she]

paid for the locksets.” (Maj. opn., ante, at p. 5.) The majority claims that the

economic harm suffered in this context is “the loss of real dollars from a

consumer‟s pocket . . . .” (Id. at p. 20.) Plaintiffs, however, received the locksets

in return, which were not alleged to be overpriced or otherwise defective. Aside

from paying the purchase price of the locksets, plaintiffs have not alleged they

actually “lost” any money or property. (See Peterson, supra, 164 Cal.App.4th at

p. 1592; ante, at p. 2.)

In that regard, the cases the majority relies on (see maj. opn., ante, at pp.

13-14) are readily distinguishable. In each, the UCL plaintiff did not simply

purchase a product or service as a result of an alleged unfair business practice, but

suffered an actual measurable loss in the transaction. (Clayworth v. Pfizer, Inc.

(2010) 49 Cal.4th 758, 788 [plaintiffs “lost money: the overcharges they paid”];

Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1090 [plaintiff was

deprived of a “fair opportunity to redeem the financed vehicle, followed by an

unlawful demand for payment”]; Aron, supra, 143 Cal.App.4th at pp. 802-803

[plaintiff had standing where he paid more to refuel rental truck than required

under contract]; see also Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th

1305, 1348 [plaintiff‟s “alleged payment of money in addition to the premium

stated in his insurance sufficiently alleges lost money” (italics added & omitted)].)

B.

Subjective Motivations

In order to bolster its conclusion that plaintiffs have “lost money” (or in its

view, suffered “economic injury”) under section 17204, the majority focuses on

the plaintiffs‟ subjective motivations, noting that “to some consumers, the „Made

in U.S.A.‟ label matters” (maj. opn., ante, at p. 20), and that in purchasing a

4

mislabeled product, a consumer may have “valued the money he or she parted

with more than the product as it actually is.” (Id. at p. 21.) The majority

concludes “that because of the misrepresentation, the consumer (allegedly) was

made to part with more money than he or she otherwise would have been willing

to expend, i.e., that the consumer paid more than he or she actually valued the

product. That increment, the extra money paid, is economic injury and affords the

consumer standing to sue.” (Id. at pp. 21-22.) I disagree on several grounds.

First, “there is no statutory basis, at least in terms of the Proposition 64

amendment, to differentiate UCL actions based on the subjective motivation of the

plaintiff; the differentiation is between instances where there is actual loss of

property versus no such loss.” (Medina v. Safe-guard Products, International, Inc.

(2008) 164 Cal.App.4th 105, 115, fn. 11 (Medina).) Whatever value the consumer

may subjectively assign to the product (as the majority points out, ante, at p. 20,

the preference to buy U.S.-made products may stem “from the desire to support

domestic jobs, to beliefs about quality, to concerns about overseas environmental

or labor conditions, to simple patriotism”), plaintiffs have failed to allege that their

personal preference is reflected in any cost differential between the mislabeled and

correctly labeled products.2 Contrary to the majority‟s suggestion, my concern is

not directed towards whether or not a party subjectively, or actually, relies on a

particular deception, which may be relevant in a common law deceit action. (Maj.

opn., ante, at p. 21, fn. 14; see id. at p. 16 [“ „reliance is the causal mechanism of


2

The majority asserts that the economic injury need only be in a “nontrivial

amount” (maj. opn., ante, at p. 14) or an “ „ “identifiable trifle” ‟ ” to establish
standing at this pleading stage (id. at pp. 13 & fn. 7, 22, fn. 15.) But this
characterization goes to injury in fact (see United States v. SCRAP (1973) 412
U.S. 669, 686), and not, as I have pointed out, to the “lost money” requirement
under section 17204. (See ante, at pp. 2-3.)

5

fraud‟ ”].) Rather, under the majority‟s holding, it is enough for a private plaintiff

to simply allege, “I would not have bought the product but for the

misrepresentation,” to establish not only causation but also an injury cognizable

under section 17204. (Id. at p. 21.) An allegation that merely identifies the

party‟s subjective motivation clearly does not track the language of the section.

Second, it is unclear what constitutes the “extra money paid” in this context

(maj. opn., ante, at p. 22, italics added), where plaintiffs simply paid the purchase

price for the mislabeled but otherwise fully functional locksets. Of course, the

majority presents striking examples of products for which a consumer would have

overpaid because of certain misrepresentations. For instance, the majority

maintains that a consumer who buys a counterfeit Rolex watch believing it to be a

genuine Rolex (though both watches may accurately tell time), “has been

economically harmed by the substitution in a manner sufficient to create standing

to sue.” (Id. at p. 21.) It also asserts that consumers who purchase mislabeled

kosher, halal, or organic foods would satisfy the UCL‟s new standing

requirements. (See id. at pp. 19, 24-25.) One can hardly dispute that these

genuine products have greater value placed on them than on their mislabeled

counterparts,3 and consumers who buy the latter may allege and prove they

actually paid (and therefore, lost) extra money based on the mislabeling. Yet even

these examples, though extreme, obscure the breadth of the majority‟s holding,


3

Generally speaking, a counterfeit Rolex watch, which is inferior in quality

with substandard parts, is clearly overpriced, and a consumer has actually lost
money in that transaction by buying what he or she thought was a real Rolex.
Likewise, both kosher and halal foods are more expensive than their conventional
counterparts because the former require special handling and adherence to special
customs. Similarly, organic foods are also typically more expensive because they
are grown, handled, and processed differently than conventional foods.

6

which in fact does not require that plaintiffs allege any price differential. Under

the majority‟s holding, a consumer may satisfy the UCL‟s new standing

requirements merely by alleging that “he or she would not have bought the

product but for the misrepresentation. That assertion is sufficient to allege

causation — the purchase would not have been made but for the

misrepresentation. It is also sufficient to allege economic injury.” (Maj. opn.,

ante, at p. 21, fn. omitted.) This is simply too low a threshold to meet, and, more

importantly, it is not the one contemplated by Proposition 64.

To counter any natural inclination to construe the term “lost money or

property” as an additional requirement to “injury in fact,” the majority focuses on

what it perceives to be the main purpose of Proposition 64, 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‟ . . . .” (Maj. opn., ante, at p. 2; see id. at pp. 7-8, 29, fn. 21.)

In other words, because Proposition 64‟s materials do not “purport to define or

limit the concept of „lost money or property,‟ . . . [i]t suffices to say that, in sharp

contrast to the state of the law before the passage of Proposition 64, a private

plaintiff filing suit now must establish that he or she has personally suffered such

harm.” (Id. at p. 11.) The issue here, however, is not that a plaintiff must show

that he or she personally suffered harm, but that the harm alleged must be an

actual measurable loss of money or property.

C.

Intent Behind Proposition 64

The text of the amendment, as the majority recognizes, is “the first and best

indicator of intent.” (People v. Mentch (2008) 45 Cal.4th 274, 282; see maj. opn.,

ante, at p. 8.) As discussed above, Proposition 64 amended section 17204 to add

two separate requirements to establish standing, i.e., a private plaintiff must have

7

suffered “injury in fact” and “lost money or property as a result of such unfair

competition.” (§ 17204, as amended by Prop. 64, § 3.) Instead of interpreting the

statutory language, however, the majority focuses on certain language in

Proposition 64‟s “Findings and Declarations of Purpose” (Voter Information

Guide, Gen. Elec. (Nov. 2, 2004) p. 109), which explained to voters that some

private attorneys were misusing the UCL by filing “frivolous lawsuits as a means

of generating attorney‟s fees without creating a corresponding public benefit,”

lawsuits where no client has been injured in fact,” “lawsuits for clients who have

not used the defendant‟s product or service, viewed the defendant‟s advertising, or

had any other business dealing with the defendant,” and “lawsuits on behalf of the

general public without any accountability to the public and without adequate court

supervision.” (Prop. 64, § 1, subd. (b)(1)-(4), italics added.) Based partly on the

italicized language, the majority asserts that “[n]o corresponding concern was

expressed about suits by those who had had business dealings with a given

defendant, and nothing suggests the voters contemplated eliminating statutory

standing for consumers actually deceived by a defendant‟s representations.” (Maj.

opn., ante, at p. 29, fn. 21.)

I believe the majority misperceives the intent of Proposition 64 by focusing

too heavily on the genesis of the initiative, i.e., misuse of certain UCL lawsuits by

some attorneys, while giving the language of the amendment short shrift. Rather

than grapple with the meaning of “lost money or property,” the majority conflates

this requirement with “injury in fact,” effectively making it easier for a plaintiff to

establish standing through a “simple test” (maj. opn., ante, at p. 9; see ante, at pp.

2-3), and emphasizes there is nothing in the initiative materials prohibiting such a

construction. (See maj. opn., ante, at pp. 2, 8, 29, fn. 21.) This cannot be what

voters envisioned in passing Proposition 64. (See Medina, supra, 164 Cal.App.4th

8

at p. 115 [“[t]he point of the Proposition 64 amendment was to impose additional

requirements on plaintiffs . . .”].)

In clearly stating to voters what the measure does, the “Official Title and

Summary” prepared by the Attorney General explained that Proposition 64

“[l]imits individual‟s right to sue by allowing private enforcement of unfair

business competition laws only if that individual was actually injured by, and

suffered financial/property loss because of, an unfair business practice.” (Voter

Information Guide, Gen. Elec. (Nov. 2, 2004), official title and summary of Prop.

64, p. 38, italics added.) The Legislative Analyst confirmed that the measure

prohibits a private person from bringing a UCL action “unless the person has

suffered injury and lost money or property.” (Id., analysis of Prop. 64 by Legis.

Analyst, p. 38, italics added.) Although the majority quotes certain language from

the Findings and Declarations of Purpose that do not cover the precise nature of

the present action, this does not in any way negate the broader language of the

amendment itself nor the summary and analysis discussed above.

Indeed, to the extent the majority contends there is nothing to suggest that

voters were concerned about frivolous lawsuits apart from those brought by

unaffected plaintiffs (see maj. opn., ante, at p. 29, fn. 21), we need look no further

than the present case. Proponents of Proposition 64 included the underlying action

on their Web site as an example of a “shakedown” lawsuit.4 One newspaper


4

(See the following materials archived at UCLA Online Campaign

Literature Collection: Californians to Stop Shakedown Lawsuits, Yes on 64
<http://digital.library.ucla.edu/websites/2004_996_013/facts_examples.html> [as
of Jan. 27, 2011]; ElectionWatchdog.org, No on 64 [compiling links to anti-Prop.
64 articles] <http://digital.library.ucla.edu/websites/2004_996_011/index.htm> [as
of Jan. 27, 2011]; Avalos, Prop. 64 Draws Strong Arguments, Contra Costa Times
(Oct. 25, 2004) <http://digital.library.ucla.edu/websites/2004_996_011/
nw/nw000155.php.htm> [as of Jan. 27, 2011].)

9

editorial explained at the time voters were considering the ballot initiative that “[a]

measure on the November ballot, Proposition 64, would do much to curb the

shakedown lawsuits to which Justice Sills [dissenting in Benson v. Kwikset Corp.]

referred. Such suits affect not only deep-pocket companies like Kwikset but also

untold thousands of small businesses in California.” 5 Another newspaper article

pointed out that Proposition 64‟s proponents asserted “Benson‟s case is a prime

example of the lawsuit abuse they seek to curb.”6 While these may not constitute

official materials presented to voters, these materials, at the very least, undermine

the majority‟s assertion that voters were concerned only about suits by parties who

had no business dealings with a given defendant and, more importantly, they

underscore the question we must answer here—what does “lost money or

property” mean in this context?

D.

Private Enforcement Actions

The majority also suggests that a contrary interpretation of section 17204

would sound the death knell for private enforcement actions based on label

misrepresentations. (Maj. opn., ante, at pp. 22-23.) I disagree. Plaintiffs here did

not allege that these mislabeled locksets were overpriced or defective, but simply

alleged that they would not have bought the locksets but for the mislabeling. This,

however, is not the kind of economic loss required by Proposition 64. In other

situations where plaintiffs do allege that a mislabeled product was overpriced, and


5

(Measure Would Curb Shakedown Lawsuits, San Diego Union-Tribune,

Oct. 6, 2004 <http://www.signonsandiego.com/uniontrib/20041006/
news_lz1ed6top.html> [as of Jan. 27, 2011].)
6

(Hinch, Lawsuit Cited as „Frivolous‟ Defended; Filer Says Prop. 64

Proponents are Misleading Voters About Case, Orange County Register (Oct. 28,
2004) <http://digital.library.ucla.edu/websites/2004_996_011/nw/nw000158.
php.htm> [as of Jan. 27, 2011].)

10

that they did in fact lose money, they would have standing to bring a private action

under the UCL. Moreover, as the majority points out (id. at p. 7), the UCL‟s

purpose “is to protect both consumers and competitors by promoting fair

competition in commercial markets for goods and services.” (Kasky v. Nike, Inc.

(2002) 27 Cal.4th 939, 949, italics added.) Although the action here focused on

alleged injuries to consumers, Kwikset‟s competitors may very well bring suit. A

competitor who properly labeled its locksets “Made in U.S.A.” and alleges it was

forced to charge higher prices for such locksets, and another who manufactured its

locksets outside the United States and alleges it lost customers to Kwikset, could

both claim they were at a competitive and economic disadvantage to Kwikset. In

each instance, these competitors could allege not only injury in fact, but also

economic injury for lost sales and profits due to Kwikset‟s misrepresentation.

E.

Conclusion

A consumer who purchases a product based on a defendant‟s

misrepresentation may very well achieve standing under the UCL‟s new

requirements. But the consumer must allege that he or she suffered an injury in

fact and lost money or property in the transaction (see § 17204); the loss must be

alleged by more than a simple reference to the price the consumer paid for the

product. Plaintiffs here have failed to do that. More importantly, the majority

relieves them of this burden. All plaintiffs now have to allege is that they would

not have bought the mislabeled product. (Maj. opn., ante, at p. 21.) This cannot

be what the electorate intended when it sought “unequivocally to narrow the

category of persons who could sue businesses under the UCL.” (Hall, supra, 158

Cal.App.4th at p. 853.) “[I]n the case of a voters‟ initiative statute . . . we may not

properly interpret the measure in a way that the electorate did not contemplate:

11

the voters should get what they enacted, not more and not less.” (Hodges v.

Superior Court (1999) 21 Cal.4th 109, 114.)


I respectfully dissent.

CHIN, J.

I CONCUR:

CORRIGAN, J.

12

See last page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Kwikset Corporation v. Superior Court
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted
XXX 171 Cal.App.4th 645
Rehearing Granted

__________________________________________________________________________________

Opinion No.
S171845
Date Filed: January 27, 2011
__________________________________________________________________________________

Court:
Superior
County: Orange
Judge: David C. Velasquez

__________________________________________________________________________________

Attorneys for Appellant:

Jones, Bell, Abbott, Fleming & Fitzgerald, Michael J. Abbott, Fredrick A. Rafeedie and William M. Turner
for Petitioners.

Fred J. Hiestand for The Civil Justice Association of California as Amicus Curiae on behalf of Petitioners.

Debra J. La Fetra and Timothy Sandefur for Pacific Legal Foundation as Amicus Curiae on behalf of
Petitioners.

Arnold & Porter, Trenton H. Norris, Angel A. Garganta, Ronald C. Redcay and James F. Speyer for
California Manufacturers & Technology Association, California Bankers Association, American Herbal
Products Association, VeriSign, Inc., and BP West Coast Products LLC as Amici Curiae on behalf of
Petitioners.

Robie & Matthai, James R. Robie, Kyle Kveton and Steven S. Fleischman for Southern California Defense
Counsel and Natural Balance Pet Foods, Inc., as Amici Curiae on behalf of Petitioners.

No appearance for Respondent.

Soltan & Associates, Venus Soltan; Coughlin Stoia Geller Rudman & Robbins, Robbins Geller Rudman &
Dowd, Timothy G. Blood, Pamela M. Parker, Kevin K. Green; Cuneo Gilbert & LaDuca, Jonathan W.
Cuneo and Michael G. Lenett for Real Parties in Interest.

Berman DeValerio, Joseph J. Tabacco, Jr., Kevin Shelley, Nicole Lavallee and Matthew D. Pearson for
California Teamsters Public Affairs Council, California Nurses Association and Service Employees
International Union as Amici Curiae on behalf of Real Parties in Interest.










Page 2 – S171845 – counsel continued

Seth E. Mermin, Thomas Bennigson, Colin L. Ward; The Sturdevant Law Firm, James C. Sturdevant and
Monique Olivier for Public Good, Public Citizen, National Association of Consumer Advocates, National
Consumer Law Center, Consumer Action, Consumer Watchdog, CALPIRG, Consumers for Auto
Reliability and Safety and Consumer Federation of California as Amici Curiae on behalf of Real Parties in
Interest.

The Arkin Law Firm and Sharon J. Arkin for Consumer Attorneys of California as Amicus Curiae on
behalf of Real Parties in Interest.

Blecher & Collins, Maxwell M. Blecher and Jennifer S. Elkayam for Agudath Israel of America as Amicus
Curiae on behalf of Real Parties in Interest.

Michael Wall and Jonathan Wiener for Environment California, Natural Resources Defense Council, Inc.,
and Sierra Club as Amici Curiae on behalf of Real Parties in Interest.

W. Scott Thorpe for California District Attorneys Association as Amici Curiae.







Counsel who argued in Supreme Court (not intended for publication with opinion):

Fredrick A. Rafeedie
Jones, Bell, Abbott, Fleming & Fitzgerald
601 South Figueroa Street, Twenty-Seventh Floor
Los Angeles, CA 90017-5759
(213) 485-1555

Jonathan W. Cuneo
Cuneo Gilbert & LaDuca
507 C Street, N.E.
Washington, DC 20002
(202) 789-3960


Petition for review after the Court of Appeal granted a petition for peremptory writ of mandate. This case includes the following issue: Does a plaintiff's allegation that he purchased a product in reliance on the product label's misrepresentation about a characteristic of the product satisfy the requirement for standing under the Unfair Competition Law (Bus. & Prof. Code, section 17200 et seq.) that the plaintiff allege a loss of money or property, or is such a plaintiff unable to allege the required loss of money or property because he obtained the benefit of his bargain by receiving the product in exchange for the payment?

Opinion Information
Date:Citation:Docket Number:Category:Status:
Thu, 01/27/201151 Cal. 4th 310, 246 P.3d 877, 120 Cal. Rptr. 3d 741S171845Review - Civil Appealsubmitted/opinion due

Parties
1Kwikset Corporation (Petitioner)
Represented by Michael J. Abbott
Jones Bell Abbott et al., LLP
601 S. Figueroa Street, 27th Floor
Los Angeles, CA

2Kwikset Corporation (Petitioner)
Represented by Fredrick A. Rafeedie
Jones Bell Abbott Fleming & Fitzgerald, LLP
601 S. Figueroa Street, 27th Floor
Los Angeles, CA

3Black & Decker Corporation (Petitioner)
Represented by Fred A. Rafeedie
Jones Bell Abbott Fleming & Fitzgerald, LLP
601 S. Figueroa Street, 27th Floor
Los Angeles, CA

4Superior Court of Orange County (Respondent)
Attn: Hon. David Velasquez, Dept. CX-101
700 Civic Center Drive West
Santa Ana, CA 92701

5Benson, James (Real Party in Interest)
Represented by Jonathan W. Cuneo
Cuneo Gilbert & LaDuca, LLP
507 "C" Street, N.E.
Washington, DC

6Benson, James (Real Party in Interest)
Represented by Michael G. Lenett
Cuneo Gilbert & LaDuca, LLP
507 "C" Street, N.E.
Washington, DC

7Benson, James (Real Party in Interest)
Represented by Venus Soltan
Soltan & Associates
450 Newport Center Drive, Suite 350
Newport Beach, CA

8Benson, James (Real Party in Interest)
Represented by Pamela M. Parker
Robbins Geller Rudman & Dowd, LLP
655 W. Broadway, Suite 1900
San Diego, CA

9Grecco, Christina (Real Party in Interest)
Represented by Pamela M. Parker
Robbins Geller Rudman & Dowd, LLP
655 W. Broadway, Suite 1900
San Diego, CA

10Snook, Al (Real Party in Interest)
Represented by Pamela M. Parker
Robbins Geller Rudman & Dowd, LLP
655 W. Broadway, Suite 1900
San Diego, CA

11Wilson, Chris (Real Party in Interest)
Represented by Pamela M. Parker
Robbins Geller Rudman & Dowd, LLP
655 W. Broadway, Suite 1900
San Diego, CA

12Agudath Israel of America (Amicus curiae)
Represented by Jennifer Sabrina Elkayam
Blecher & Collins
515 S. Figueroa Street, Suite 1750
Los Angeles, CA

13Agudath Israel of America (Amicus curiae)
Represented by Maxwell M. Blecher
Blecher & Collins, P.C.
515 S. Figueroa Street, Suite 1750
Los Angeles, CA

14American Herbal Products Association (Amicus curiae)
Represented by James F. Speyer
Arnold & Porter, LLP
777 S Figueroa St 44th Fl
Los Angeles, CA

15Association of Southern California Defense Counsel (Amicus curiae)
Represented by Kyle Kveton
Robie & Matthai
500 S. Grand, Suite 1500
Los Angeles, CA

16Association of Southern California Defense Counsel (Amicus curiae)
Represented by James R. Robie
Robie & Matthai
500 S. Grand, Suite 1500
Los Angeles, CA

17Association of Southern California Defense Counsel (Amicus curiae)
Represented by Steven Samuel Fleischman
Robie & Mathiai
500 S. Grand Avenue, 15th Floor
Los Angeles, CA

18BP West Coast Products, LLC (Amicus curiae)
Represented by James F. Speyer
Arnold & Porter, LLP
777 S Figueroa St 44th Fl
Los Angeles, CA

19California Bankers Association (Amicus curiae)
Represented by James F. Speyer
Arnold & Porter, LLP
777 S Figueroa St 44th Fl
Los Angeles, CA

20California District Attorneys Association (Amicus curiae)
Represented by W. Scott Thorpe
California District Attorneys Association
921 Eleventh Street, Suite 300
Sacramento, CA

21California Manufacturers & Technology Association (Amicus curiae)
Represented by Angel Antonio Garganta
Arnold & Porter, LLP
275 Battery Street, Suite 2700
San Francisco, CA

22California Manufacturers & Technology Association (Amicus curiae)
Represented by Trenton Herbert Norris
Bingham McCutchen, LLP
Three Embarcadero Center
San Francisco, CA

23California Manufacturers & Technology Association (Amicus curiae)
Represented by Ronald C. Redcay
Arnold & Porter, LLP
777 S. Figueroa Street, 44th Floor
Los Angeles, CA

24California Manufacturers & Technology Association (Amicus curiae)
Represented by James F. Speyer
Arnold & Porter, LLP
777 S Figueroa St 44th Fl
Los Angeles, CA

25California Nurses Association (Amicus curiae)
Represented by Nicole Catherine Lavallee
Berman DeValerio
One California Street, Suite 900
San Francisco, CA

26California Teamsters Public Affairs Council (Amicus curiae)
Represented by Matthew David-Craig Pearson
Berman DeValerio
One California Street, Suite 900
San Francisco, CA

27California Teamsters Public Affairs Council (Amicus curiae)
Represented by Kevin Shelley
Berman DeValerio
One California Street, Suite 900
San Francisco, CA

28California Teamsters Public Affairs Council (Amicus curiae)
Represented by Joseph J. Tabacco
Berman DeValerio
One California Street, Suite 900
San Francisco, CA

29California Teamsters Public Affairs Council (Amicus curiae)
Represented by Nicole Catherine Lavallee
Berman DeValerio
One California Street, Suite 900
San Francisco, CA

30CALPIRG (Amicus curiae)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

31Civil Justice Association of California (Amicus curiae)
Represented by Fred J. Hiestand
Attorney at Law
1121 "L" Street, Suite 404
Sacramento, CA

32Consumer Action (Amicus curiae)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

33Consumer Attorneys of California (Amicus curiae)
770 "L" Street, Suite 1200
Sacramento, 95814

Represented by Sharon J. Arkin
Arkin Law Firm
333 S. Grand Avenue, 25th Floor
Los Angeles, CA

34Consumer Federation of California (Amicus curiae)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

35Consumer Watchdog (Amicus curiae)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

36Consumers for Auto Reliability & Safety (Amicus curiae for real party in interest)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

37Environment California (Amicus curiae)
Represented by Michael E. Wall
Natural Resources Defense Council, Inc.
111 Sutter Street, 20th Floor
San Francisco, CA

38Environment California (Amicus curiae)
Represented by Jonathan Wiener
Natural Resources Defense Council, Inc.
111 Sutter Street, 20th Floor
San Francisco, CA

39National Association of Consumer Advocates (Amicus curiae)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

40National Consumer Law Center (Amicus curiae)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

41Natural Balance Pet Foods, Inc. (Amicus curiae)
Represented by Steven Samuel Fleischman
Robie & Mathiai
500 S. Grand Avenue, 15th Floor
Los Angeles, CA

42Natural Resources Defense Council, Inc. (Amicus curiae)
Represented by Jonathan Wiener
Natural Resources Defense Council, Inc.
111 Sutter Street, 20th Floor
San Francisco, CA

43Pacific Legal Foundation (Amicus curiae)
Represented by Deborah Joyce Lafetra
Pacific Legal Foundation
3900 Lennane Drive, Suite 200
Sacramento, CA

44Pacific Legal Foundation (Amicus curiae)
Represented by Timothy Mason Sandefur
Pacific Legal Foundation
3900 Lennane Drive, Suite 200
Sacramento, CA

45Public Citizen (Amicus curiae)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

46Public Good (Amicus curiae for real party in interest)
Represented by Thomas Charles Bennigson
Public Good
3130 Shattuck Avenue
Berkeley, CA

47Public Good (Amicus curiae for real party in interest)
Represented by Monique Olivier
Duckworth Peters Lebowitz Olivier, LLP
235 Montgomery Street, Suite 1010
San Francisco, CA

48Public Good (Amicus curiae for real party in interest)
Represented by James C. Sturdevant
Sturdevant Law Firm
354 Pine Street, 4th Floor
San Francisco, CA

49Public Good (Amicus curiae for real party in interest)
Represented by Seth Edward Mermin
Public Good
3130 Shattuck Avenue
Berkeley, CA

50Service Employees International Union (Amicus curiae)
Represented by Nicole Catherine Lavallee
Berman DeValerio
One California Street, Suite 900
San Francisco, CA

51Sierra Club (Amicus curiae)
Represented by Jonathan Wiener
Natural Resources Defense Council, Inc.
111 Sutter Street, 20th Floor
San Francisco, CA

52VeriSign, Inc. (Amicus curiae)
Represented by James F. Speyer
Arnold & Porter, LLP
777 S Figueroa St 44th Fl
Los Angeles, CA


Opinion Authors
OpinionJustice Kathryn M. Werdegar
DissentJustice Ming W. Chin

Dockets
Apr 6 2009Petition for review filed
Real Party in Interest: Benson, JamesAttorney: Pamela M. Parker Real Party in Interest: Snook, AlAttorney: Pamela M. Parker Real Party in Interest: Grecco, ChristinaAttorney: Pamela M. Parker Real Party in Interest: Wilson, ChrisAttorney: Pamela M. Parker  
Apr 6 2009Application to appear as counsel pro hac vice (pre-grant)
  Michael G. Lenett, for RPIs
Apr 21 2009Answer to petition for review filed
Petitioner: Kwikset CorporationAttorney: Fredrick A. Rafeedie Petitioner: Black & Decker CorporationAttorney: Fred A. Rafeedie  
Apr 22 2009Record requested
 
Apr 24 2009Received Court of Appeal record
  one file jacket/briefs
Apr 24 2009Request for depublication (petition for review pending)
  by real parties in interest Kevin Green, firm of Coughlin, et al.
May 4 2009Reply to answer to petition filed
Real Party in Interest: Benson, James Real Party in Interest: Snook, Al Real Party in Interest: Grecco, Christina Real Party in Interest: Wilson, ChrisAttorney: Pamela M. Parker   timely per CRC 8.25b
May 4 2009Request for judicial notice received (pre-grant)
  from Real Parties in Interest
May 22 2009Time extended to grant or deny review
  The time for granting or denying review in the above-entitled matter is hereby extended to and including July 2, 2009 or the date upon which review is either granted or denied.
Jun 10 2009Petition for review granted
  The request [by Michael G. Lennett] to appear as counsel pro hac vice is granted. The request for judicial notice as to Exhibits 1, 2, 3 and 4 is granted. The request for judicial notice as to Exhibit 5 is denied. The petition for review is granted. Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Moreno, and Corrigan, JJ.
Jun 22 2009Certification of interested entities or persons filed
  James Benson, et al., RPI's Pamela Parker, counsel
Jun 25 2009Certification of interested entities or persons filed
  Kwikset Corp. et al, petitioners Fredrick Rafeedie, counsel
Jun 25 2009Request for extension of time filed
 
Jun 24 2009Application to appear as counsel pro hac vice (granted case)
  Jonathan W. Cuneo as counsel for Real parties in Interest.
Jul 6 2009Application to appear as counsel pro hac vice granted
  The application of Jonathan W. Cuneo for admission pro hac vice to appear on behalf of real parties in interest is hereby granted. (See Cal. Rules of Court, rule 9.40.)
Jul 8 2009Extension of time granted
  On joint application of parties and good cause appearing, it is ordered that the time to serve and file real parties' opening brief on the merits is extended to and including August 10, 2009. Petitioners' answer brief on the merits is to be served and filed on or before October 9, 2009 and real parties' reply brief on the merits is to be served and filed on or before November 9, 2009.
Aug 11 2009Opening brief on the merits filed
Real Party in Interest: Benson, JamesAttorney: Jonathan W. Cuneo Attorney: Michael G. Lenett Attorney: Pamela M. Parker Attorney: Venus Soltan Real Party in Interest: Snook, Al Real Party in Interest: Grecco, Christina Real Party in Interest: Wilson, Chris   James Benson, et al., RPI's, Pamela Parker, et al., counsel timely per CRC 8.25b
Oct 8 2009Answer brief on the merits filed
Petitioner: Kwikset CorporationAttorney: Fredrick A. Rafeedie Attorney: Michael J. Abbott Petitioner: Black & Decker Corporation  
Nov 5 2009Request for extension of time filed
  for RPI's to file the reply brief on the merits, to 11/20/09
Nov 6 2009Extension of time granted
  On application of real parties in interest and good cause appearing, it is ordered that the time to serve and file real parties' in interest reply brief on the merits is hereby extended to and including November 20, 2009.
Nov 23 2009Reply brief filed (case fully briefed)
Real Party in Interest: Benson, JamesAttorney: Pamela M. Parker Real Party in Interest: Snook, Al Real Party in Interest: Grecco, Christina Real Party in Interest: Wilson, Chris   CRC 8.25(b)
Dec 18 2009Application to file amicus curiae brief filed
  Pacific Legal Foundation Timothy Sandefur, counsel (in support of petitioners)
Dec 17 2009Application to file amicus curiae brief filed
  California District Attorneys Association, by W. Scott Thorpe, counsel
Dec 22 2009Application to file amicus curiae brief filed
  California Manufacturers and Technology Association, California Bankers Association, American Herbal Products Association, Verisign,Inc., & BP West Coast Products LLC, in support of petitioner; by James F. Speyer, counsel.
Dec 21 2009Application to file amicus curiae brief filed
  The Civil Justice Association of California, in support of petitioners; by Fred J. Hiestand, counsel.
Dec 22 2009Application to file amicus curiae brief filed
  Public Good, Public Citizen, National Association of Consumer Advocates, National Consumer Law Center, Consumer Action, Consumer Watchdog, Calpirg, Consumers for Auto Reliability and Safety, and Consumer Federation of California in support of real parties in interest; by Seth E. Mermin, counsel.
Dec 23 2009Application to file amicus curiae brief filed
  Consumer Attorneys of California in support of real parties in interest; by Sharon J. Arkin, counsel.
Dec 23 2009Permission to file amicus curiae brief granted
  The application of Pacific Legal Foundation for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Dec 23 2009Amicus curiae brief filed
Amicus curiae: Pacific Legal FoundationAttorney: Timothy Mason Sandefur  
Dec 23 2009Permission to file amicus curiae brief granted
  The application of The Civil Justice Association of California for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Dec 23 2009Amicus curiae brief filed
Amicus curiae: Civil Justice Association of CaliforniaAttorney: Fred J. Hiestand  
Dec 23 2009Permission to file amicus curiae brief granted
  The application of California District Attorneys Association for permission to file an amicus curiae brief is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Dec 23 2009Amicus curiae brief filed
Amicus curiae: California District Attorneys AssociationAttorney: W. Scott Thorpe  
Dec 23 2009Application to file amicus curiae brief filed
  California Teamsters Public Affairs Council, California Nurses Association, and Service Employees International Union in support of real parties in interest; by Nicole Lavallee, counsel
Dec 23 2009Application to file amicus curiae brief filed
  Environment California, Natural Resources Defense Council, Inc., and Sierra Club in support of real parties in interest; byJonathan Wiener, counsel.
Dec 24 2009Permission to file amicus curiae brief granted
  The application of California Manufacturers and Technology Association, California Bankers Association, American Herbal Products Association, VeriSign, Inc. and BP West Coast Products LLP, for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Dec 24 2009Amicus curiae brief filed
Amicus curiae: California Manufacturers & Technology AssociationAttorney: James F. Speyer Amicus curiae: California Bankers AssociationAttorney: James F. Speyer Amicus curiae: American Herbal Products AssociationAttorney: James F. Speyer Amicus curiae: VeriSign, Inc.Attorney: James F. Speyer Amicus curiae: BP West Coast Products, LLCAttorney: James F. Speyer  
Dec 24 2009Permission to file amicus curiae brief granted
  The application of Consumer Attorneys of California for permission to file an amicus curiae brief in support of real parties in interest is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Dec 24 2009Amicus curiae brief filed
Amicus curiae: Consumer Attorneys of CaliforniaAttorney: Sharon J. Arkin  
Dec 24 2009Permission to file amicus curiae brief granted
  The application of Public Good, Public Citizen, National Association of Consumer Advocates, National Consumer Law Center, Consumer Action, Consumer Watchdog, CALPIRG, Consumers for Auto Reliability and Safety, Consumer Federation of California, for permission to file an amicus curiae brief in support of real parties in interest is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Dec 24 2009Amicus curiae brief filed
Amicus curiae for real party in interest: Public GoodAttorney: Seth Edward Mermin Amicus curiae: Public CitizenAttorney: Seth Edward Mermin Amicus curiae: National Association of Consumer AdvocatesAttorney: Seth Edward Mermin Amicus curiae: National Consumer Law CenterAttorney: Seth Edward Mermin Amicus curiae: Consumer ActionAttorney: Seth Edward Mermin Amicus curiae: Consumer WatchdogAttorney: Seth Edward Mermin Amicus curiae: CALPIRGAttorney: Seth Edward Mermin Amicus curiae for real party in interest: Consumers for Auto Reliability & SafetyAttorney: Seth Edward Mermin Amicus curiae: Consumer Federation of CaliforniaAttorney: Seth Edward Mermin  
Dec 22 2009Application to file amicus curiae brief filed
  Association of Southern California Defense Counsel and Natural Balance Pet Foods, Inc., in support of petitioners, by Steven S. Fleischman, counsel.
Dec 23 2009Received:
  Amended Proof of Service to AC Brief Southern California Defense Counsel & Natural Balance Pet Foods, Inc.
Dec 28 2009Note: Mail returned (unable to forward)
  Monique Olivier - envelope indicates return to sender, not deliverable as addressed unable to forward.
Dec 24 2009Application to file amicus curiae brief filed
  Agudath Israel of America in support of real parties in interest, by Maxwell M. Blecher, counsel.
Dec 30 2009Request for extension of time filed
  by petitioners and real parties in interest to file a joint answer to amicus curiae briefs, by Pamela M. Parker and Fredrick A. Rafeedie, counsel
Jan 6 2010Permission to file amicus curiae brief granted
  The application of Agudath Israel of America for permission to file an amicus curiae brief in support of real parties in interest is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Jan 6 2010Amicus curiae brief filed
Amicus curiae: Agudath Israel of AmericaAttorney: Maxwell M. Blecher  
Jan 6 2010Permission to file amicus curiae brief granted
  The application of California Teamsters Public Affairs Council, California Nurses Association and Service Employees International Union for permission to file an amicus curiae brief in support of real parties in interest is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Jan 6 2010Amicus curiae brief filed
Amicus curiae: California Teamsters Public Affairs CouncilAttorney: Nicole Catherine Lavallee Amicus curiae: California Nurses AssociationAttorney: Nicole Catherine Lavallee Amicus curiae: Service Employees International UnionAttorney: Nicole Catherine Lavallee  
Jan 6 2010Permission to file amicus curiae brief granted
  The application of Environment California, Natural Resources Defense Council, Inc. and Sierra Club, for permission to file an amicus curiae brief in support of real parties in interest is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Jan 6 2010Amicus curiae brief filed
Amicus curiae: Environment CaliforniaAttorney: Jonathan Wiener Amicus curiae: Natural Resources Defense Council, Inc.Attorney: Jonathan Wiener Amicus curiae: Sierra ClubAttorney: Jonathan Wiener  
Jan 6 2010Permission to file amicus curiae brief granted
  The application of Association of Southern California Defense Counsel and Natural Balance Pet Foods, Inc., for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Jan 6 2010Amicus curiae brief filed
Amicus curiae: Association of Southern California Defense CounselAttorney: Steven Samuel Fleischman Amicus curiae: Natural Balance Pet Foods, Inc.Attorney: Steven Samuel Fleischman  
Jan 6 2010Note: Mail returned and re-sent
 
Jan 8 2010Extension of time granted
  On application of petitioners and real parties in interest and good cause appearing, it is ordered that the time to serve and file the consolidated answers to amicus curiae briefs is extended to and including February 10, 2010.
Feb 10 2010Response to amicus curiae brief filed
Petitioner: Kwikset CorporationAttorney: Fredrick A. Rafeedie Petitioner: Black & Decker CorporationAttorney: Fred A. Rafeedie Real Party in Interest: Benson, JamesAttorney: Pamela M. Parker Real Party in Interest: Snook, AlAttorney: Pamela M. Parker Real Party in Interest: Grecco, ChristinaAttorney: Pamela M. Parker Real Party in Interest: Wilson, ChrisAttorney: Pamela M. Parker   consolidated answers to amicus curiae briefs from real parties in interest and petitioner.
Feb 23 2010Change of contact information filed for:
  Law Firm of Berman DeValerio
Apr 1 2010Change of contact information filed for:
  Pamela M. Parker counsel for real parties in interest. "Notice of Firm Name Change" effective March 31, 2010.
Oct 5 2010Case ordered on calendar
  to be argued on Wednesday, November 3, 2010, at 9:00 a.m., in San Francisco
Oct 14 2010Supplemental brief filed
Real Party in Interest: Benson, JamesAttorney: Pamela M. Parker  
Nov 3 2010Cause argued and submitted
 
Jan 3 2011Justice pro tempore assigned
  George, C.J. (retired), appointed as justice pro tempore to this case.
Jan 26 2011Notice of forthcoming opinion posted
  To be filed on Thursday, January 27, 2011 @ 10 a.m.

Briefs
Aug 11 2009Opening brief on the merits filed
Real Party in Interest: Benson, JamesAttorney: Jonathan W. Cuneo Attorney: Michael G. Lenett Attorney: Pamela M. Parker Attorney: Venus Soltan Real Party in Interest: Snook, Al Real Party in Interest: Grecco, Christina Real Party in Interest: Wilson, Chris  
Oct 8 2009Answer brief on the merits filed
Petitioner: Kwikset CorporationAttorney: Fredrick A. Rafeedie Attorney: Michael J. Abbott Petitioner: Black & Decker Corporation  
Nov 23 2009Reply brief filed (case fully briefed)
Real Party in Interest: Benson, JamesAttorney: Pamela M. Parker Real Party in Interest: Snook, Al Real Party in Interest: Grecco, Christina Real Party in Interest: Wilson, Chris  
Dec 23 2009Amicus curiae brief filed
Amicus curiae: Pacific Legal FoundationAttorney: Timothy Mason Sandefur  
Dec 23 2009Amicus curiae brief filed
Amicus curiae: Civil Justice Association of CaliforniaAttorney: Fred J. Hiestand  
Dec 23 2009Amicus curiae brief filed
Amicus curiae: California District Attorneys AssociationAttorney: W. Scott Thorpe  
Dec 24 2009Amicus curiae brief filed
Amicus curiae: California Manufacturers & Technology AssociationAttorney: James F. Speyer Amicus curiae: California Bankers AssociationAttorney: James F. Speyer Amicus curiae: American Herbal Products AssociationAttorney: James F. Speyer Amicus curiae: VeriSign, Inc.Attorney: James F. Speyer Amicus curiae: BP West Coast Products, LLCAttorney: James F. Speyer  
Dec 24 2009Amicus curiae brief filed
Amicus curiae: Consumer Attorneys of CaliforniaAttorney: Sharon J. Arkin  
Dec 24 2009Amicus curiae brief filed
Amicus curiae for real party in interest: Public GoodAttorney: Seth Edward Mermin Amicus curiae: Public CitizenAttorney: Seth Edward Mermin Amicus curiae: National Association of Consumer AdvocatesAttorney: Seth Edward Mermin Amicus curiae: National Consumer Law CenterAttorney: Seth Edward Mermin Amicus curiae: Consumer ActionAttorney: Seth Edward Mermin Amicus curiae: Consumer WatchdogAttorney: Seth Edward Mermin Amicus curiae: CALPIRGAttorney: Seth Edward Mermin Amicus curiae for real party in interest: Consumers for Auto Reliability & SafetyAttorney: Seth Edward Mermin Amicus curiae: Consumer Federation of CaliforniaAttorney: Seth Edward Mermin  
Jan 6 2010Amicus curiae brief filed
Amicus curiae: Agudath Israel of AmericaAttorney: Maxwell M. Blecher  
Jan 6 2010Amicus curiae brief filed
Amicus curiae: California Teamsters Public Affairs CouncilAttorney: Nicole Catherine Lavallee Amicus curiae: California Nurses AssociationAttorney: Nicole Catherine Lavallee Amicus curiae: Service Employees International UnionAttorney: Nicole Catherine Lavallee  
Jan 6 2010Amicus curiae brief filed
Amicus curiae: Environment CaliforniaAttorney: Jonathan Wiener Amicus curiae: Natural Resources Defense Council, Inc.Attorney: Jonathan Wiener Amicus curiae: Sierra ClubAttorney: Jonathan Wiener  
Jan 6 2010Amicus curiae brief filed
Amicus curiae: Association of Southern California Defense CounselAttorney: Steven Samuel Fleischman Amicus curiae: Natural Balance Pet Foods, Inc.Attorney: Steven Samuel Fleischman  
Feb 10 2010Response to amicus curiae brief filed
Petitioner: Kwikset CorporationAttorney: Fredrick A. Rafeedie Petitioner: Black & Decker CorporationAttorney: Fred A. Rafeedie Real Party in Interest: Benson, JamesAttorney: Pamela M. Parker Real Party in Interest: Snook, AlAttorney: Pamela M. Parker Real Party in Interest: Grecco, ChristinaAttorney: Pamela M. Parker Real Party in Interest: Wilson, ChrisAttorney: Pamela M. Parker  
Brief Downloads
application/pdf icon
s171845-1-real-parties-in-interest-petition-for-review.pdf (570299 bytes) - Real Parties' in Interest Petition for Review
application/pdf icon
s171845-2-petitioners-answer-to-petition-for-review.pdf (216153 bytes) - Petitioners' Answer to Petition for Review
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s171845-3-real-parties-in-interest-petition-for-review.pdf (217362 bytes) - Real Parties' in Interest Reply to Answer to Petition for Review
application/pdf icon
s171845-4-real-parties-in-interest-opening-brief-on-the-merits.pdf (507176 bytes) - Real Parties' in Interest Opening Brief on the Merits
application/pdf icon
s171845-5-petitioners-answer-brief-on-the-merits.pdf (746253 bytes) - Petitioners' Answer Brief on the Merits
application/pdf icon
s171845-6-real-parties-in-interest-reply-brief-on-the-merits.pdf (374635 bytes) - Real Parties' in Interest Reply Brief on the Merits
application/pdf icon
s171845-7-real-parties-in-interest-supplemental-brief.pdf (460127 bytes) - Real Parties' in Interest Supplemental Brief
If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website
Feb 1, 2011
Annotated by rgoral

(Opinion by Werdegar, J., with George, C. J., Kennard, acting C. J., Baxter and Moreno, JJ., concurring)

FACTS:

Kwikset was a manufacturer and seller of locksets labeled as “Made in U.S.A.”. James Benson, who purchased Kwikset’s product, sued the company alleging that it falsely marketed and sold its product, because the locksets contained parts made abroad. The complaint alleged unlawful, unfair, and fraudulent business practices in the sense of the unfair competition law (UCL) (Business & Professions Code, § 17200 et seq.), as well as false advertising (Business & Professions Code, § 17500 et seq.).

PROCEDURAL BACKGROUND:

After bench trial, having determined that Kwikset had indeed used parts made in Taiwan or Mexico, found for plaintiff on all four causes of action alleged by plaintiff. Both plaintiff and defendant appealed. Before the appeals were heard, however, Proposition 64 had been adopted curtailing the ability of private plaintiffs to sue under UCL or false advertising law by requiring that plaintiff establish he or she “has suffered injury in fact and has lost money or property” (Bus. & Prof. Code, §§ 17204, 17535).

Benson’s original complaint did not fulfill pleading and proof requirements imposed by Proposition 64. However, the Supreme Court of California explained that plaintiffs who had filed an action before Proposition 64 became law were to be given an opportunity to allege and prove facts satisfying the new standing requirements. Subsequently, the Court of Appeal affirmed the trial court’s decision on merits, but vacated the judgment and remanded the case back to the trial court so as to give Benson the chance to amend his complaint and show standing. The Court of Appeal instructed the trial court that if Benson satisfactorily demonstrated his standing, the original judgment should be reentered and if he did not, the case should be dismissed.

Over Kwikset’s demurral the trial court found that Benson’s complaint adequately alleged standing. Kwikset successfully challenged the order of the trial court in a petition to the Court of Appeal for a writ of mandate. The Court of Appeal took the position that Benson’s amended complaint failed to adequately allege economic injury, i.e., that he lost money because he purchased Kwikset’s locksets falsely labeled in respect of their country of origin. In exchange for his money, the Court reasoned, plaintiff received a product which he did not allege was defective or of inferior quality as a result of false labeling. Therefore, the Court determined, although his “patriotic desire to buy fully American-made products was frustrated,” plaintiff could not show “loss of money or property” as Proposition 64 required, which meant he lacked standing.

Benson petitioned the Supreme Court for review and the review was granted.

ISSUE:

Does a plaintiff's allegation that he purchased a product in reliance on the product label's misrepresentation about a characteristic of the product satisfy the requirement for standing under the Unfair Competition Law (Bus. & Prof. Code, section 17200 et seq.) that the plaintiff allege a loss of money or property, or is such a plaintiff unable to allege the required loss of money or property because he obtained the benefit of his bargain by receiving the product in exchange for the payment?

HOLDING:

Plaintiff who can truthfully allege he was deceived by a product's label into spending money to purchase the product, and would not have purchased it otherwise, has “lost money or property” within the meaning of Proposition 64 and has standing to sue.

ANALYSIS:

Two-prong test for standing

Bus. & Prof. Code, §§ 17204, 17535, as amended by Proposition 64, require that individual plaintiff demonstrate he or she has suffered injury in fact and has lost money or property as a result of defendant’s act of unfair competition or false advertising.

The Supreme Court held that in order to show standing, plaintiff must: (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was caused by the unfair business practice or false advertising alleged in the complaint.

Because, as the Court noted, economic injury is itself a form of injury in fact, if a party has alleged or proven a personal, individualized loss of money or property in any “nontrivial” amount, he or she has also alleged or proven injury in fact. The opposite is also true: the finding that plaintiff did not suffer any loss of money or property is sufficient to establish lack of standing.

The second prong of the test is the causation between an act of unfair competition or a violation of the false advertising law and plaintiff’s economic injury. Therefore, plaintiff must demonstrate actual reliance on the allegedly deceptive or misleading statements, but is not required to allege that such misrepresentations were the sole or even the decisive cause of the conduct that resulted in his economic injury.

Misrepresented labeling as inducement to buy sufficient to satisfy standing test

The Court noted that labels matter, as they influence purchase decisions consumers make. For a consumer who relies on the truth and accuracy of a label and is deceived by misrepresentations into making a purchase, the economic harm consists in buying a product that he or she would otherwise be willing to buy for less or would not buy at all. This, in the Court’s view, amounts to economic harm, regardless of the objective functionality of the inaccurately labeled good.

Therefore, a consumer who relies on a product label and alleges that the label contains a misrepresentation, can satisfy the standing requirement under Section 17204 (or 17353), i.e., both economic injury and causation, if he or she pleads that he or she would not buy the labeled product but for the misrepresentation.

Dissent (Chin, J., with Corrigan, J., concurring):

In his dissent, Justice Chin argues that the Court failed to define “lost money or property” and instead equated it with economic injury, effectively merging two separate requirements for standing (i.e., injury in fact and “lost money or property”) into one.

Moreover, Chin observes that under the majority’s holding, it is effectively enough for a private plaintiff to simply allege its subjective motivation in the purchase to establish standing, which is not supported by the language of the Proposition 64 amendment.

RELATED CASES:

Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758

Kasky v. Nike, Inc. (2002) 27 Cal.4th 939

Californians for Disability Rights v. Mervyn's, LLC 39 Cal.4th 227

TAGS:

standing, injury in fact, economic injury, labels, misrepresentation, unfair competition, false advertising, Proposition 64