NEW CASE HOLDS PROPOSITION 64 APPLIES TO PENDING CASES, CREATING CONFLICT BETWEEN APPELLATE DISTRICTS

On November 2, 2004, California voters approved Proposition 64, which amended the Business and Professions Code to eliminate: (1) the prior statutory rule granting standing to “any person” to pursue an action under the "Unfair Competition Law" (the "UCL") (Bus. & Prof. Code, § 17200 et seq.), and (2) the prior statutory rule allowing private representative actions absent class certification. Proposition 64 did not expressly state whether its new requirements applied in pending cases.

In Californians for Disability Rights v. Mervyn's, LLC, ___ Cal.App.4th ___ (Feb. 1, 2005), the First District Court of Appeal held that Proposition 64 does not apply to pending cases filed before its effective date, meaning that plaintiffs in such cases do not have to meet Proposition 64's new standing and class certification requirements. For a brief period the Mervyn's decision was the only appellate decision addressing this question, and was binding on the trial courts.

Today, the Second Appellate District issued its decision in Branick v. Downey Savings & Loan Association, __ Cal.App.4th __ (Feb. 9, 2005), reaching the opposite conclusion. The decision expressly disagrees with the Mervyn's decision, holding "that Proposition 64, enacted by the California electorate on November 3, 2004, which amended sections 17200 et seq. and 17500 et seq. to eliminate the statutory grant of standing to bring actions to enforce those provisions to persons who did not suffer actual injury, applies to actions that were filed but not finally resolved before November 3, 2004, the effective date of the amendments."

Now that there are two conflicting decisions on the question of Proposition 64's application to pending cases, trial courts will be free to choose which decision to follow — at least until the Supreme Court grants review in or depublishes one of the cases. Please contact Horvitz & Levy partners Lisa Perrochet (lperrochet@horvitzlevy.com) or John Taylor (jtaylor@horvitzlevy.com), or call them at (818) 995-0800 if you would like more information on Proposition 64 issues.

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