California Supreme Court Establishes Economic Injury Threshold for Unfair Competition and False Advertising Claims

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The California Supreme Court has declared that “labels matter,” and that under California’s Unfair Competition Law, a consumer’s subjective sense of feeling duped translates to a cognizable economic injury.

The Court’s majority opinion in Kwikset Corporation v. Superior Court (.pdf), issued today, January 27th, held that 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,’” and therefore have standing to sue under California’s Unfair Competition Law and False Advertising Law. The Court reversed a decision of the Fourth District Court of Appeal, and potentially opened the door to class action litigation brought by plaintiffs who have experienced no dissatisfaction with the actual function or performance of a manufacturer’s product.

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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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