January 31, 2011

California Supreme Court Adopts Per Se Theory of Standing for False Advertising Claims Based on Consumer's Purchasing Motivation and Reaffirms Separate Requirements for Obtaining Restitution

Summary: In an important follow-up to its landmark decision in In re Tobacco II Cases, 46 Cal. 4th 298 (2009), interpreting Proposition 64’s “standing requirements” to sue under California’s Unfair Competition Law (Bus. & Prof. Code §§ 17200, et seq.) (“UCL”), the California Supreme Court, on January 27, 2010, held that a consumer has standing if he alleges that he would not have purchased the defendant’s product but for the defendant’s alleged misrepresentation, when objectively the product was not defective, worked as advertised and did not cost more than competitive products. In making this ruling in Kwikset Corp. v. Super. Ct. of Orange County, 2011 Cal. LEXIS 532 (Cal. Jan. 27, 2011), the Court reiterated that the requirements for standing “are wholly distinct” from the requirement for obtaining restitutionary disgorgement – the only monetary relief permitted under the UCL – which must be proven in a “measurable amount” to “restore” to the plaintiff what has been acquired by violation of the statute. The net result of the decision is to make it easier for consumers to allege standing to sue under the UCL, but to make it more difficult to meet the standards for class certification. The attached Client Alert discusses the decision and its implications.

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