ANA Argues that California court decision poses serious risks for all marketers

Dan Jaffe, ANA Executive Vice President, stated: "Marketers had all hoped that Proposition 64, which was approved by California voters in 2004, had resolved some of the most serious problems with California's Unfair Competition Law (UCL). Unfortunately, a trial court's decision to certify a class action lawsuit will seriously impair the ability of all marketers to communicate with consumers in California. We are very hopeful that the appellate court will reverse the trial court's erroneous construction of the amended UCL."

The brief was filed with the Court of Appeal of the State of California in the case of Pfizer Inc., Petitioner v. Superior Court of the State of California, Los Angeles County, Respondent, Steve Galfano, Real Party in Interest, (Court of Appeal Case No. B188106). Joining ANA in the amicus brief were the Chamber of Commerce of the United States and the Coalition for HealthCare Communication.

Jaffe stated: "Prior to Proposition 64, California's UCL allowed any person to sue on behalf of the public at large for false advertising, regardless of whether that person or anyone else had suffered any injury as a result of the alleged false advertising. The UCL was a bonanza for frivolous lawsuits and raised serious First Amendment and interstate commerce problems. Proposition 64 amended the UCL so that lawsuits can be brought in the name of a private citizen only if that person has suffered injury in fact and has lost money or property as a result of such unfair competition."

The original plaintiff, Steve Galfano, filed a statewide class action lawsuit under the UCL alleging that Pfizer had made false statements about Listerine mouthwash in commercials and product labels. On November 22, 2005, the trial court certified the class action to cover "all persons who purchased Listerine in California from June 2004 through January 7, 2005." With respect to the UCL claims, the trial court held that the injury and causation requirements of Proposition 64 applied only to the plaintiff and not to other members of the class. Pfizer has petitioned the Court of Appeal to reverse the trial court's class certification and interpretation of the amended UCL.

The industry brief states: "The UCL, as construed by the trial court, allows an action to be maintained on behalf of class members who - for lack of injury, loss, or proximate causation - could not otherwise maintain an individual action in their own name. So construed, the UCL violates the First Amendment and the California Constitution by upsetting the balance between the competing interests of free speech and the regulation of false and misleading speech, and thereby chilling the speech of California advertisers. Furthermore, because California advertisers are typically national advertisers, the trial court's constitutionally infirm construction of the UCL also places an unconstitutional burden on interstate commerce."

Jaffe stated: "An improperly certified class is not simply a trivial procedural error. It can become the decisive point of a lawsuit, leading to settlements that are completely divorced from the merits of the original claim. In California, a state with more than 35 million people, a certified class of 'hypothetically injured' claimants is potentially staggering in scope and can have a very real chilling effect on marketers. We sincerely hope that the appellate court will reverse the trial court's decision and rescind the certification of the class action."

A copy of the brief can be viewed here.