Stafford v. Spirit Sciences USA

Filed 6/30/06 Stafford v. Spirit Sciences USA CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, William C. Pate, Judge. Affirmed.

The sole issue in this case is whether Proposition 64, which amended the standing requirements for causes of action under California's unfair competition law (UCL; Bus. & Prof. Code,^[1] § 17200 et seq.) and false advertising law (§ 17500 et seq.), applies to cases filed before its effective date of November 3, 2004.^[2] In accordance with our opinion in Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1262 (Huntingdon), we answer the question in the affirmative.^[3] As the trial court ruled correctly on the issue, we affirm a judgment of dismissal for the defendants.

PROCEDURAL BACKGROUND

In July 2004 Charles R. Stafford sued Spirit Sciences USA, Inc., and Emil Chiaberi (together Spirit Sciences) for violation of the UCL and false advertising. The complaint alleged Spirit Sciences was promoting a product called " 'RU-21' as a way to drink alcohol to the point of 'getting bombed' without the worry of a hangover and other adverse effects of alcohol." It also alleged the Web site for RU-21 "implies that the drug can help prevent 'cancer, liver cirrhosis, premature skin aging, mutagenesis (damage to DNA cells), post-intoxication syndrome (hangovers), as well as development of alcoholism.' " Further, the complaint alleged the Web site falsely claimed RU-21 is safe and clinically proven, and favorable findings would be published in a British medical journal, thereby "encouraging irresponsible and unhealthy activity. Without regard to the negative effects of alcohol, [Spirit Sciences] admits [it sells] '$1 million worth of RU-21 on the [I]nternet every month.' "

Spirit Sciences moved for judgment on the pleadings. It argued Stafford lacks standing to pursue UCL and false advertising claims because Proposition 64, approved by voters after commencement of this action, amended sections 17204 and 17535 to require the plaintiff have actual injury, and Stafford's complaint did not allege he purchased or used RU-21 or suffered any injury. In opposition, Stafford argued against the application of Proposition 64 to cases commenced before its effective date.

The court found Proposition 64 applies to this action under Huntingdon, supra, 129 Cal.App.4th 1228, and granted Spirit Sciences' motion. The court entered a judgment of dismissal on July 11, 2005.

DISCUSSION

I

Section 17200 prohibits "any unlawful, unfair or fraudulent business act or practice." Section 17500 prohibits untrue or misleading advertising in the sale of real or personal property. When Stafford filed his complaint, any person "acting for the interests of itself, its members or the general public" could bring a UCL cause of action (former § 17204) or a false advertising cause of action (former § 17535). Representative actions "make it economically feasible to sue when individual claims are too small to justify the expense of litigation, and thereby encourage attorneys to undertake private enforcement actions." (Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 126.)

On November 2, 2004, the voters approved Proposition 64, and it became effective the following day. (Cal. Const., art II, § 10, subd. (a).) Proposition 64 amended Business & Professions Code section 17204 to state a UCL cause of action may be prosecuted "by any person who has suffered injury in fact and has lost money or property as a result of such unfair competition." (§ 17204.) Proposition 64 also amended section 17203 to require that a private party may bring a representative action only if he or she meets the standing requirement of section 17204 and complies with class certification requirements set forth in Code of Civil Procedure section 382. Correspondingly, Proposition 64 amended Business & Professions Code section 17535 to impose the actual injury and class treatment requirements.

Stafford concedes he has suffered no actual injury and is acting in a representative capacity on behalf of the general public. He does not assert he could amend his complaint to comply with Proposition 64's standing requirements.^[4] Rather, he contends we should not apply Proposition 64 to actions commenced before its effective date because it is unclear whether voters intended such a result.

This court explained as follows in Huntingdon, supra, 129 Cal.App.4th at pages 1261-1262: " ' "A retrospective law is one which affects rights, obligations, acts, transactions and conditions which are performed or exist prior to the adoption of the statute." ' [Citation.] A statute has retrospective effect when it substantially changes the legal consequences of past events. [Citation.] 'It is well settled that a new statute is presumed to operate prospectively absent an express declaration of retrospectivity or a clear indication that the electorate, or the Legislature, intended otherwise.' [Citation.]

" 'The repeal of a statutory right or remedy, however, presents entirely distinct issues from that of the prospective or retroactive application of a statute. A well-established line of authority holds: " ' "The unconditional repeal of a special remedial statute without a saving clause stops all pending actions where the repeal finds them. If final relief has not been granted before the repeal goes into effect it cannot be granted afterwards, even if a judgment has been entered and the cause is pending on appeal. The reviewing court must dispose of the case under the law in force when its decision is rendered." ' [Citations.]" [Citations.]' [Citation.]

" 'The justification for this rule is that all statutory remedies are pursued with full realization that the legislature may abolish the right to recover at any time.' [Citation.] 'Because it is a creature of statute, the right of action exists only so far and in favor of such person as the legislative [or initiative] power may declare.' [Citation.] Unlike a common law right, a ' "statutory remedy does not vest until final judgment." ' [Citation.]"

Based on those principles, in Huntingdon we held Proposition 64 applies to cases filed before its effective date. (Huntingdon, supra, 129 Cal.App.4th at p. 1262.) We explained that the UCL (§ 17200 et seq.) is a statutory remedy, rather than a common law remedy. The Supreme Court has held "the common law of unfair competition required a showing of competitive injury to one's business. The court noted such a showing is not required by statutes prohibiting unfair competition: '[S]tatutory "unfair competition" extends to all unfair and deceptive business practices. For this reason, the statutory definition of "unfair competition" "cannot be equated with the common law

definition . . . ." ' [Citation.] Moreover, Proposition 64 contained no saving clause." (Huntingdon, supra, 129 Cal.App.4th at p. 1262, citing Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264.)

Huntingdon did not involve a false advertising claim (§ 17500 et seq.), but its analysis also applies to such a claim. The formal liberal standing rule of false advertising law, as well as that of the UCL, was a creature of statute. It was not in conformance with common law, under which "only the owner of the legal right could sue." (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 103, p. 162.)

In accordance with Huntingdon, we conclude Proposition 64 applies to Stafford's action.^[5] The court properly granted Spirit Sciences' motion for judgment on the pleadings and dismissed the action.

II

Stafford relies on Myers v. Phillip Morris Companies, Inc. (2002) 28 Cal.4th 828 (Myers), for the proposition that we must presume the repeal of a purely statutory remedy applies only prospectively absent express legislative intent to the contrary. In other words, Stafford asserts the rule discussed above pertaining to the repeal of rights or remedies created solely by statute (statutory repeal rule) is not viable. We are unpersuaded.

In Myers, the court addressed two successive versions of Civil Code section 1714.45 pertaining to the liability of manufacturers and sellers of tobacco. The first version granted tobacco companies complete immunity from certain product lawsuits as of January 1, 1988 (Immunity Statute). The second version rescinded that immunity on January 1, 1998 (Repeal Statute). The question before the court was whether the Repeal Statute governed a claim that accrued after January 1, 1998, but was based on conduct that occurred before that date. (Myers, supra, 28 Cal.4th at p. 832.)

In resolving the issue, the court applied the rule against retroactive application of a statute absent evidence of legislative intent. (Myers, supra, 28 Cal.4th at pp. 842-845, 848.) Finding no such intent, the court concluded that holding tobacco companies liable for conduct occurring during the statutory immunity period would be an impermissible retroactive application of the law because it created liability for conduct not subject to liability during the immunity period. (Id. at pp. 840, 847.) The court held "the Immunity Statute continues to shield defendant tobacco companies in product liability actions but only for conduct they engaged in during the 10-year period when the Immunity Statute was in effect. The liability of tobacco companies based on their conduct outside the 10-year period of immunity is governed by general tort principles." (Id. at p. 848.)

Proposition 64, however, did not increase any party's liability for past conduct, it merely abrogated a private person's right to bring a purely statutory action. In Myers, the 1998 statute did not repeal a cause of action or remedy. Rather, it restored the common law product lawsuits against tobacco companies. The 1998 statute in Myers did not satisfy requirements for applying the statutory repeal rule, and the court had no occasion to discuss it. "A decision is authority only for the point actually passed on by the court and directly involved in the case. General expressions in opinions that go beyond the facts of the case will not necessarily control the outcome in a subsequent suit involving different facts." (Gomes v. County of Mendocino (1995) 37 Cal.App.4th 977, 985; Chevron U.S.A., Inc. v. Workers' Comp. Appeals Bd. (1999) 19 Cal.4th 1182, 1195.)

Stafford's reliance on Evangelatos v. Superior Court (1988) 44 Cal.3d 1188 (Evangelatos) is also misplaced. Evangelatos concerned Proposition 51, "which modified the traditional, common law 'joint and several liability' doctrine, limiting an individual tortfeasor's liability for noneconomic damages to a proportion of such damages equal to the tortfeasor's own percentage of fault." (Evangelatos, supra, at p. 1192.) The court held that because there was no indication the voters intended a retroactive application of the initiative, it applies only prospectively. (Id. at pp. 1206-1209.) Evangelatos, however, concerned common law rights that are vested from the inception of a claim, while purely statutory rights are not vested until a final judgment is entered.

(Huntingdon, supra, 129 Cal.App.4th at pp. 1261-1262; Physicians Com. for Responsible Medicine v. Tyson Foods, Inc. (2004) 119 Cal.App.4th 120, 125-130; County of San Bernardino v. Ranger Ins. Co. (1995) 34 Cal.App.4th 1140, 1149.)^[6]

DISPOSITION

The judgment is affirmed. Spirit Sciences is entitled to costs on appeal.

McCONNELL, P. J.

WE CONCUR:

HALLER, J.

IRION, J.

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^[1] All further statutory references are to the Business & Professions Code unless otherwise indicated.

^[2] There is a split of authority among Courts of Appeal on the issue, and it is pending before the California Supreme Court. (Californians for Disability Rights v. Mervyns LLC (2005) 126 Cal.App.4th 386, review granted April 27, 2005, S131798; Branick v. Downey Savings & Loan (2005) 126 Cal.App.4th 828, review granted April 27, 2005, S132433; Thornton v. Career Training Center, Inc. (2005) 128 Cal.App.4th 116, 127, review granted July 20, 2005, S133938; Lytwyn v. Fry's Electronics, Inc. (2005) 126 Cal.App.4th 1455, 1480, review granted April 27, 2005, S133075; Bivens v. Corel Corp. (2005) 126 Cal.App.4th 1392, 1404-1405, review granted April 27, 2005, S132695; Benson v. Kwikset Corp. (2005) 126 Cal.App.4th 887, 902-903, review granted April 27, 2005, S132443; Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America (2005) 129 Cal.App.4th 540, 573, review granted Sept. 28, 2005, S135587; Schwartz v. Visa Intern. Service Assn. (2005) 132 Cal.App.4th 1453, review granted December 14, 2005, S138751; Hartford Fire Ins. Co. v. Superior Court (2005) 134 Cal.App.4th 649, review granted Feb. 8, 2006, S140272.) We decline the parties' request that we stay this appeal until our high court resolves the matter.

^[3] In Huntingdon, supra, 129 Cal.App.4th 1228, no petition for review was filed.

^[4] According to Spirit Sciences, "a class action is not an issue here, presumably because counsel found a new plaintiff and has already filed a separate class action complaint making essentially the same allegations against the same parties."

^[5] Despite the trial court's reliance on Huntingdon, supra, 129 Cal.App.4th 1228, Stafford does not address the opinion in his appellate briefing.

^[6] Stafford also discusses Proposition 64 cases that are on review. We do not discuss them as they have no precedental value.