Class Action

Kwikset expressly disapproves Buckland and Citizens of Humanity on restitution issue

By Kimberly A. Kralowec

There's a lot to digest in this opinion, but one thing that stands out is the Court's express disapproval of Buckland and Citizens of Humanity on the restitution issue: 

Finally, the Court of Appeal rested its holding in part on a line of cases that have read the ?lost money or property? requirement as confining standing under section 17204 ? ?to individuals who suffer losses . . . that are eligible for restitution.? ?  (Quoting Buckland v. Threshold Enterprises, Ltd., supra, 155 Cal.App.4th at p. 817; see also Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 245; Citizens of Humanity, LLC v. Costco Wholesale Corp. (2009) 171 Cal.App.4th 1, 22; Walker v. GEICO General Ins. Co. (9th Cir. 2009) 558 F.3d 1025, 1027 [following Buckland].) Because plaintiffs were not entitled to restitution, the Court of Appeal reasoned, they necessarily lacked standing.

As we recently have noted, however, the standards for establishing standing under section 17204 and eligibility for restitution under section 17203 are wholly distinct.  (See Clayworth v. Pfizer, Inc., supra, 49 Cal.4th at p. 789.)  For the drafters of Proposition 64, which amended both sections 17203 and 17204, to make standing under section 17204 expressly dependent on eligibility for restitution under section 17203 would have been easy enough, but nothing in the text or history of Proposition 64 suggests this was intended.  (Clayworth, at pp. 788-789.)  We thus rejected in Clayworth the argument that if the plaintiffs could demonstrate no compensable losses or entitlement to restitution under section 17203, they would lack standing under section 17204. ....

....

Accordingly, we hold ineligibility for restitution is not a basis for denying standing under section 17204 and disapprove those cases that have concluded otherwise.  (See Silvaco Data Systems v. Intel Corp., supra, 184 Cal.App.4th 210, 245; Citizens of Humanity, LLC v. Costco Wholesale Corp., supra, 171 Cal.App.4th 1, 22; Buckland v. Threshold Enterprises, Ltd., supra, 155 Cal.App.4th 798, 817.)

Slip op. at 29-32 (footnote omitted; emphasis added).  Even the dissent acknowledges that a competitor who suffered "lost sales and profits due to Kwikset's misrepresentations" (which would not normally be recoverable as restitution) would have standing under Prop. 64.  Dissent, Slip op. at 11.

Full post as published by The UCL Practitioner on January 27, 2011 (boomark / email).