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More thoughts on Clayworth v. Pfizer

By Kimberly A. Kralowec

Another notable part of Clayworth v. Pfizer, Inc., ___ Cal.4th ___ (Jul. 12, 2010) is its confirmation that plaintiffs who did not purchase a product "directly" from the defendant may nonetheless bring a UCL claim and recover restitution if the plaintiff's loss can be traced to the defendant's pockets.  This was an issue in some cases involving purchases of products from retail intermediaries, until the Court of Appeal rejected the argument in Shersher v. Superior Court, 154 Cal.App.4th 1491 (2007) (discussed in this blog post).

The Supreme Court adopted the rule of Shersher in Clayworth:

While the voters clearly intended to restrict UCL standing, they just as plainly preserved standing for those who had had business dealings with a defendant and had lost money or property as a result of the defendant?s unfair business practices. (Prop. 64, § 1, subds. (b), (d); see § 17204.) Under that standard, Pharmacies have established standing. To distribute their pharmaceuticals, Manufacturers depend on a network of wholesalers and retailers. Pharmacies acted as retailers for Manufacturers? drugs and thus had indirect business dealings with Manufacturers. (See Shersher v. Superior Court (2007) 154 Cal.App.4th 1491, 1499-1500 [indirect purchases may support UCL standing].) They lost money: the overcharges they paid. (See Hall v. Time Inc. (2008) 158 Cal.App.4th 847, 854 [§ 17204 standard is satisfied when the plaintiff has ?expended money due to the defendant?s acts of unfair competition?].) Finally, that loss was the result of an unfair business practice: Pharmacies paid more than they otherwise would have because of a price-fixing conspiracy in violation of state law. The voters? intent that under Proposition 64 suits be limited to those who suffer injury in fact is satisfied here. (See Chattanooga Foundry v. Atlanta, supra, 203 U.S. at p. 396 [?A person whose property is diminished by a payment of money wrongfully induced is injured in his property.?].)

Slip op. at 38-39 (emphasis added).

Full post as published by The UCL Practitioner on July 13, 2010 (boomark / email).