A Quick Analysis of Kwikset: Labels Might Matter, But No Reset to Proposition 64

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On January 27, 2011, the California Supreme Court held in Kwikset Corp. v. Superior Court, Case No. S171845, that plaintiffs have standing under California’s Unfair Competition Law (UCL) and False Advertising Law (FAL) if they “can truthfully allege that they were deceived by a product’s label into spending money to purchase the product, and would not have purchased the product otherwise.” From the business defense perspective, the concern with this new opinion is whether it signals a retreat from the beachhead gained by Proposition 64: will the opinion allow businesses to once again be subjected to lawsuits brought by cardboard plaintiffs serving as fronts for lawyer-driven lawsuits? The opinion itself is not anti-business. But, for the business defense community, there is concern that parts of the opinion can be twisted as purported support for a UCL action based on an individual’s “subjective” valuation even though the plaintiff (and all others similarly situated) received the “benefit of the bargain,” with a monetary award that is again based on a “subjective” valuation. Such an action, however, is not even remotely supported by the opinion. This note briefly addresses each of the red flags raised by the opinion.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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