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■ In re Tobacco II Cases, No. S147345

Prior to the 2004 amendment of the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), by Proposition 64, “[a]ctions for relief [under the UCL could be] prosecuted . . . by the Attorney General or any district attorney or by any county counsel . . . [or] by a city prosecutor . . . [or] by a city attorney . . . or upon the complaint of any board, officer, person, corporation or association or by any person acting for the interests of itself, its members or the general public.”  (Bus. & Prof. Code, former § 17204, as amended by Stats. 1993, ch. 926, § 2, p. 5198; see also Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227 (Mervyn’s).) [1]  Post Proposition 64, the section provides, “[a]ny person may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of Section 17204 and complies with section 382 of the Code of Civil Procedure” (§ 17203, as amended by Prop. 64, § 2), that is, a “person who 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.)

The complaint before us alleges that the tobacco industry defendants violated the UCL by conducting a decades-long campaign of deceptive advertising and misleading statements about the addictive nature of nicotine and the relationship between tobacco use and disease.  Prior to passage of Proposition 64, the trial court had certified the case as a class action.  The class was defined as “All people who at the time they were residents of California, smoked in California one or more cigarettes between June 10, 1993 to April 23, 2001, and who were exposed to Defendants’ marketing and advertising activities in California.”  After Proposition 64 was approved, the trial court granted defendants’ motion to decertify the class on the grounds that each class member was now required to show an injury in fact, consisting of lost money or property, as a result of the alleged unfair competition.  The Court of Appeal affirmed.

On review, we address two questions:  First, who in a UCL class action must comply with Proposition 64’s standing requirements, the class representatives or all unnamed class members, in order for the class action to proceed?  We conclude that standing requirements are applicable only to the class representatives, and not all absent class members.  Second, what is the causation requirement for purposes of establishing standing under the UCL, and in particular what is the meaning of the phrase “as a result of” in section 17204?  We conclude that a class representative 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.  Those same principles, however, do not require the class representative to plead or prove an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign.  Accordingly, we reverse the order of decertification to the extent it was based upon the conclusion that all class members were required to demonstrate Proposition 64 standing, and remand for further proceedings regarding whether the class representatives in this case have, or can demonstrate, standing.


■ Held:

In a class action involving the advertising practices of the tobacco industry, trial court order granting defendants' decertification motion is reversed and remanded where: 1) Proposition 64 does not impose Bus. & Prof. Code sec. 17204's standing requirements on absent class members in a unfair competition law class action where class requirements have otherwise been found to exist; and 2) a plaintiff must plead and prove actual reliance to satisfy the standing requirement of sec. 17204, but is not required to necessarily plead and prove individualized reliance on specific misrepresentations or false statements where those misrepresentations and false statements were part of an extensive and long-term advertising campaign.
In re Tobacco II Cases -S147345-5/18/09 SC
In re Tobacco II Cases -S147345-5/18/09 SC

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