In re Tobacco II Cases
In re Tobacco Cases II is a California Supreme Court case about whether tobacco companies violated the state's Unfair Competition Law "by conducting a decades-long campaign of deceptive advertising and misleading statements about the addictive nature of nicotine and the relationship between tobacco use and disease."
Proposition 64, passed in 2004, became a factor in the pre-existing lawsuits when its provisions were said to prevent certain litigants from joining the suit on behalf of those said to be harmed by tobacco products in an actionable way.
Prior to passage of Proposition 64, a California trial court had certified In re Tobacco II Cases as a class action suit. The class was defined as “All people who at the time they were residents of California, smoked in California one or more cigarettes between June 10, 1993 to April 23, 2001, and who were exposed to Defendants’ marketing and advertising activities in California.”
After Proposition 64 was approved, the defendants in the suit asked the court to decertify the class on the grounds that each class member was now required to show an injury in fact, consisting of lost money or property, as a result of the alleged unfair competition. The California Court of Appeal upheld the trial court's de-certification action.
On May 19, 2009, the state's high court overturned the lower court rulings, which cleared the way for the case to go forward as a class action lawsuit.
The court's holding
- Who in an Unfair Competition Law class action must comply with Proposition 64’s standing requirements? Must the class representatives only or must all unnamed class members.
- The court decided that "standing requirements are applicable only to the class representatives, and not all absent class members."
- What is the causation requirement for purposes of establishing standing under the UCL, and in particular what is the meaning of the phrase “as a result of” in section 17204?
- The court concluded that a class representative "proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions." However, the court went on to say, these principles do not require "the class representative to plead or prove an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign.