July 12, 2006
The California Court of Appeal has issued an opinion which provides substantial protection for marketers from frivolous class action lawsuits under California’s Unfair Competition Law (UCL). The case is 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). The Association of National Advertisers (ANA) and two other industry groups had filed a “friend of the court” brief urging the Court of Appeal to reverse a trial court’s certification of a class action lawsuit against Pfizer for alleged false marketing claims. The Court of Appeal decision set aside the class certification and remanded the case for further action.
Dan Jaffe, ANA Executive Vice President, stated: “This decision is a major victory for all marketers and a reaffirmation of the desire of the voters of California when they adopted Proposition 64 in 2004. That proposition was intended to address the abuses of frivolous class action lawsuits against marketers. The Court of Appeal decision upholds an appropriate balance between the competing interests of free speech and the regulation of false or misleading advertising.”
Jaffe stated: “Prior to Proposition 64, which was approved by voters in 2004, California’s Unfair Competition Law (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 petitioned the Court of Appeal to reverse the trial court’s class certification and interpretation of the amended UCL. ANA, the U.S. Chamber of Commerce and the Coalition for HealthCare Communication filed a “friend of the court” brief in April on behalf of Pfizer’s petition.
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 are very pleased that the appellate court reversed the trial court’s decision and rescinded the certification of the class action.”
Jaffe concluded: “The court’s decision is fair and balanced. It allows consumers to continue to bring class action lawsuits for alleged false marketing, but only if all members of a class actually saw and relied on the false or misleading ad and suffered injury in fact and lost money or property as a result of the ad. The Court’s decision upholds the goal of Proposition 64 --- to put an end to the shakedown of marketers through frivolous lawsuits.”
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ANA is the industry’s premier trade association dedicated exclusively to marketing and brand building. Representing more than 370 companies with 8,000 brands that collectively spend over $100 billion in marketing communications and advertising, the Association’s members market products and services to consumers and businesses. ANA serves the needs of its members by providing marketing and advertising industry leadership, legislative leadership, information resources, professional development and industry-wide networking. Founded in 1910, the ANA maintains offices in New York City and Washington, D.C. More information is available at www.ana.net