Class Action

Kwikset Corp. v. Superior Court (Benson): the opinion is up

By Kimberly A. Kralowec

The Kwikset opinion is up.  It is a 5-2 decision with Justices Chin and Corrigan dissenting.  It appears that the plaintiffs have won the case, as summarized in the introductory paragraphs quoted below.  More later.

This case arises from Kwikset Corporation?s (Kwikset) manufacturing of locksets it labeled as ?Made in U.S.A.? James Benson brought suit under the unfair competition and false advertising laws to challenge the labels? veracity. After a bench trial, the trial court entered judgment for Benson.

While the case was pending on appeal, the electorate enacted Proposition 64 (Gen. Elec. (Nov. 2, 2004)), which called into question Benson?s standing to challenge Kwikset?s country of origin representations. Benson then filed an amended complaint in which he alleged he purchased Kwikset?s locksets and would not have done so but for the ?Made in U.S.A.? labeling. The Court of Appeal concluded this allegation was insufficient to establish standing because it did not satisfy Proposition 64?s requirement that a plaintiff have ?lost money or property.? (See Prop. 64, §§ 3, 5.)

We granted review to address the standing requirements of the unfair competition and false advertising laws in the wake of Proposition 64. We conclude Proposition 64 should be read in light of its apparent purposes, i.e., to eliminate standing for those who have not engaged in any business dealings with would-be defendants and thereby strip such unaffected parties of the ability to file ?shakedown lawsuits,? while preserving for actual victims of deception and other acts of unfair competition the ability to sue and enjoin such practices. (Voter Information Guide, Gen. Elec. (Nov. 2, 2004) argument in favor of Prop. 64, p. 40; see also Prop. 64, § 1.) Accordingly, plaintiffs who can truthfully allege they were deceived by a product?s label into spending money to purchase the product, and would not have purchased it otherwise, have ?lost money or property? within the meaning of Proposition 64 and have standing to sue. Because plaintiffs here have so alleged, we reverse.

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