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Cryoport filed an Unfair Competition Law (Business & Professions Code sections 17200 et seq.) action on behalf of the general public just one day before Proposition 64 eliminated the standing of private parties to pursue such actions. When the trial court sustained defendants’ demurrer to Cryoport’s original complaint with leave to amend based on lack of standing, Cryoport filed a new complaint but did not amend its allegations either to assert its own standing or to substitute a different plaintiff who had suffered a loss of money or property as required by Proposition 64. So when defendants demurred again based on lack of standing, the demurrer was again sustained -- this time without leave to amend -- and the action was dismissed. On appeal, Cryoport argued that reversal was required so it could attempt to amend its complaint to substitute in a new plaintiff with standing to pursue a UCL claim.
The Court of Appeal affirmed, concluding that Cryoport failed to show how it could allege it has standing under the UCL, or identify a substitute plaintiff who does. The court also rejected Cryoport's suggestion that the case should be remanded so that Cryoport could conduct discovery to identify a new plaintiff with standing. The court held that: (1) Cryoport failed to request that relief in the trial court; and (2) a plaintiff with no interest in the action does not have a right to discovery to find a substitute plaintiff to keep the action alive, which would “‘permit attorneys to make an ‘end-run’ around Proposition 64 by filing class actions in the name of private individuals who are not members of the classes they seek to represent and then using precertification discovery to obtain more appropriate plaintiffs.’”
Horvitz & Levy LLP represented defendants CNA Insurance Companies, Continental Casualty Company, and Valley Forge Insurance Company on appeal in the case.
