\.'
First District's
ruling that Prop 64
doesn't apply
retroactively
has its flaws
By Michael L. Mallow,
Nicole M. Lee and Eric J. Kohm
E
ver since Proposition 64 went into
effect Nov. 3, defensecounsel have
raced to courthousesthroughout the
state,briefs in hand, attempting to rid their
clients of unfair competition lawsuits filed
by uninjured plaintiffs who now lack the
requisite standingto prosecutesuch cases
as private attorneys genera]. But something happenedon the way to the courthouse.
OnFeb. ], the First District Court of Appeal issueda publishedopinion in Californians for Disability
_~MII'IRights v. Mervyns, 05
C.D.O.S. ]010, holding
that Prop 64's amendments to California's unfair competition
law (Business & Professions Code
§§11200,et. seq. and 11500,et. seq.) do
not apply to cases filed prior to Nov. 3,
2004.
In Mervyns, Californians for Disability
Rights, a nonprofit whose stated purpose
wasto protectthe interestsof disabledindividuals, filed suit againstMervyn's, a corporation operatingretail departmentstores
throughout California, seeking to enjoin
Mervyn's from allegedly denying storeaccessto persons with mobility disabilities.
After a bench trial, the trial court denied
COR's requestedrelief and enteredjudgment in favor of Mervyn's. COR appealed.
Whi]e COR's appealwas pending,California voters approved Prop 64, mandating, inter alia, that: (I) only the attorney
general or specified local public prosecutors may bring a lawsuit for unfair competition unless a person has suffered injury
and lost money or property; and (2) persons seeking representative relief must
satisfy the class action requirements of
California Code of Civil Procedure§382.
Based on the UCL's new standing requirementsenactedby Prop 64, Mervyn's
Michael L. MaUOwis a litigation partner
in the Los Angelesoffice of Kirkpatrick &
LockhartNicholsonGraham.He is currently defendingUCL casespending in the San
Francisco,Los Angelesand OrangeCounty
Superior Courts.Nicole M. Lee is a litigation and labor and employmentassociate
andEric J. Kohm is a litigation associateat
thefirm. All threeare membersofthefirm 's
California Unfair CompetitionLow practice
group.
Supreme
"
moved to dismiss COR's appeal. The
court, denying Mervyn's motion to dismiss, held that Prop 64's amendmentsdo
not apply to casespending before Nov. 3
becauseProp 64 containsno statutorylanguage expressingan intent that it applies
retroactively; and absentsuch intent, the
presumptionagainstretroactivity governs.
Mervyn's arguedthat a different rule applies where statutoryrights are at issue. In
support of its argument, Mervyn's purportedly cited a line of casesholding that
"a causeof action or remedydependenton
a statutefalls with a repeal of the statute,
even after the action thereonis pending,in
the absenceof a saving clause in the repealingstatute." Mervyn:' (quoting Callet
v. Alioto, 210 Cal. 65 (1930».
Rejecting the precedent establishedin
the line of casescited by Mervyn's, the
First District commencedits analysiswith
the premise that a "conflict in canons of
statutoryinterpretation" existed.
It continued: "On the one hand, legislative enactmentsare presumedto operate
prospectively. On the other hand, a court
should apply the law in effect atthe time it
renders its decision, including recent
statutoryamendments."
Relying on the U.S. Supreme Court
case,Landgrafv. USl Film Products,511
U.S. 244 (1994), and the California
Court case,
Evangelatosv,
Superior Court,
44
Cal,3d
1188
(1988), the Mervyn's court
essentiallyruled that absentan
expression of intent to the
contrary,the repealof a right
should not be applied to
casespending prior to the
repeal regardless of
whether the right is based
on statuteor common law,
The Mervyn s decision is flawed becausethe "conflict in canonsof statutory
interpretation"noted by the court doesnot
actuallyexist. California precedenthasestablisheda bright-line distinction between
how changes to common law rights are
treated versus the repeal of a statutory
right. When dealing with the repeal of a
statutory right, retroactive intent is irrelevantwhen determiningwhetherthe repeal
of the statutoryright appliesto pendinglitigation.
The Mervyn s court's determinationthat
a conflict in statutory interpretationexists
was basedentirely on the court's mistaken
belief that EvangelatosandLandgraf had
any relevanceto the issueof whetherProp
64 applies to pending litigation. The
court's belief was mistaken becauseneither Evangelatos nor Landgraf involved
the repealof a statutoryright.
In Evangelatos,the California Supreme
Court had to decide whether Prop 51 applied to litigation pending prior to the
proposition's effective date. Unlike
Proposition64, Prop 51 modified the common law doctrine of joint and severalliability (Evangelatos,44 Cal.3d at 1192).
Prop 51 did not repeal or modify any
statuteor statutoryright. Becausea common law right, rather than a statutory
right, was at issue, the Evangelatoscourt
properly conducted a retroactivity analysis.
Evangelatoshas no application to UCL
caseslike Mervyn s becauseProp 64 did
not affect any common law rights. Rather,
Prop 64 repealeda "private attorney general" remedy unknown to the common
law. This distinction was expresslyrecognized 12 yearsago in ARA living Centers
v. Superior Court ofSanMateo County,I8
Cal.App.4th 1556 (1993) (distinguishing
Evangelato.r on the grounds that the
statutes at issue in ARA living Centers,
"amendmentsto elder abuse statutes,do
not make a 'substantial change in this
state'straditional tort doctrine,' as was the
casein Evangelatos").
Brenton v. Metabolife Int'l, 116
Cal.App.4th 679 (2004), a case decided
just last year, teaches the same lesson.
There the defendantfiled an anti-SLAPP
motion seeking to sirike the plaintiff's
complaint. Th~ trial court denied the motion andthe defendantappealed.While the
case was on appeal, the Legislature
amendedthe anti-SLAPP statuteby enacting Code of Civil Procedure §425.17,
which identified certain plaintiffs and
types of casesas not being subject to antiSLAPP requirements.The SLAPP statute
amendment provided an independent
ground for denying the defendant's motion. The defendantassertedon appealthat
applying §425.17's amendments to the
anti"SLAPPstatuteafter the casewas filed
and on appealwas an improper retroactive
application.
The court of appeal,quoting from Callet
v. Alioto, 210 Cal. 65 (1930), rejected the
defendant's assertion, stating in Brenton
that:
..Although the courts normally construe
statutes to operate prospectively, the
courts correlatively hold under the common law that when a pending action rests
solely on a statutory basis, and when no
rights have vestedunder the statute, 'a repeal of such a statute without a saving
clause will terminate all pending actions
basedthereon' (citing SouthernServicev.
Los Angeles,15Cal.2d 1,11-12).
..As explained nearly 50 years ago in
Callet v. Alioto (1930) 210Cal. 65, 67-68:
'It is too well settled to require citation of
authority,that .., every statutewill be construed to operate prospectively and will
not be given a retrospectiveeffect, unless
the intention that it should havethat effect
is clearly expressed....It is also a general
rule, subjectto certain limitations not necessaryto discusshere, that a causeof action or remedydependenton a statutefalls
with a repeal of the statute,even after the
action thereon is pending, in the absence
of a saving clause in the repealingstatute.
...The justification for 'this rule is that all
statutory remedies are pursued with full
realization that the legislaturemay abolish
the right to recover at any time.'"
The court's reliance on Londgrafv. USI
Film Products is similarly flawed. In
Londgra[. the SupremeCourt was not anSee PROP 64 next page
THE RECORDER' WEDNESDAY,FEBRUARY9, 2005 5
PROP64r
Continued from previous page
for the Legislature or the electorateto ex-
presssuch intent in Prop64.
alyzing a repeal of a statutory right.
Based on the languageof its decision,
Rather,the court was deternlining whether
amendmentsto Title VII, that had the ef- the Mervyn's court appearedtroubled by
fect of creating new rights, applied the notion that the electorate could strip
retroactively. As the SupremeCourt stat- CDR of standing to prosecuteits appeal.
As the court noted in Mervyn's:
ed, the statutory amendmentat issue"sig"CDR filed this lawsuit in May 2002,
nificantly expandsthe monetaryrelief potentially available to plaintiffs who would over two yearsbefore passageof Proposition
64. At that time, CDR had the right to
have been entitled to backpay under prior
law. ..[and] allows monetary relief for file and prosecutea UCL causeof action,
some fornls of workplace discrimination and maintained that right through trial in
August 2003, Dismissal of the appeal at
that would not previously have justified
any relief under Title Vll." Landgraf at this juncture would foreclose considera254 (emphasis in original). Unlike the tion of COR's claims that it should have
statutory amendment in Landgraf, Prop prevailedat trial, or is entitled to a newtri64 merely repealed the statutory right of al. Were Proposition 64 applied to pendany personto act asa private attorneygen- ing appeals,as Mervyn's advocates,even
eral; it did not expandor createanyrights. those plaintiffs who prevailed at trial
Simply put, the Mervyn's court failed to could be stripped of theirjudgments."
It may seemharshand perhapscounterapply the brighHine distinction between
statutory amendmentsthat alter common intuitive that a plaintiff, who has beenlitlaw rights versus statutory amendments igating a casefor years, can literally lose
standing overnight, But Californians for
that repeal statutoryrights.
California law has long supported the Disability Rights, like every other uninposition that the repeal of statutory rights jured individual or entity acting as a private attorneygeneralunderthe UCL, filed
applies to pending cases-notwithstanding the absenceof any intent indicating its lawsuit with the fun understandingthat
that suchchangesapply retroactively. See, the right to act as a private attorneygener'
e.g., Tapia v. Superior Court of Thlare al could be repealed at any time. Given
County, 53 Cal.3d 282 (1991); Brenton v. such notice, plaintiffs facing the terminaMetabolife Int'l, 116 Cal.App.4th 679 tion of their casesbasedon the application
(2004); ARA Living Centers v. Superior of Prop 64, cannot now c1aimthatsuchapCourt of San Mateo County, 18 plication is unfair,
For those of us who regularly defend
Cal.App.4th 1556 (1993); Robertson v.
Rodriguez, 36 Cal.App.4th 347 (1995); UCL cases,we can only hope the CaliforSouthCoa.ftRegional Commissionv. Gor- nia Supreme Court will quickly remedy
the Mervyn'" decision -before millions
don, 84 Cal.App.3d 612 (1978).
In fact, given the clarity of existing law of donarsare wasteddefendingcasesthat
prior to Mervyn's, it would be superfluous lack a real plaintiff, 8