Low, Ball & Lynch’s

WEEKLY LAW RESUME

December 8, 2005 Issue   By: Ray Coates

California Unfair Competition Law - Application of Proposition 64 Amendment

Hartford Fire Ins. Co. v. Superior Court

Court of Appeal, First District

 (November 30, 2025)

California’s Unfair Competition Law (UCL), codified under Business & Professions Code section 17200 et seq., is California’s consumer protection statute.  In this case, Scott Turner, an attorney, filed suit against three groups of insurance companies, including Hartford Fire Ins. Co., alleging violations of the UCL.  The suit, brought on behalf of the general public, claimed that the insurance companies were receiving illegal kickbacks through its relationships with insurance brokers.  Turner’s complaint did not allege that he personally had suffered any injury.

When Turner filed suit, the UCL permitted private parties to bring consumer protection actions on behalf of the general public.  In November 2004, California voters approved Proposition 64, which repealed the provision of the UCL permitting suits on behalf of the general public.  Proposition 64 amended the UCL to only allow suits by private parties that have suffered actual injury or damage.

Given the change in the UCL, the insurance companies sued by Turner filed a motion in the superior court, seeking judgment on the pleadings on the grounds that Turner lacked standing to pursue his claims.  The superior court denied the motion.  The insurance companies appealed.  The First District Court of Appeal overturned the ruling.

The issue before the Court of Appeal was whether Proposition 64 should be applied retroactively, thereby requiring dismissal of pending UCL suits brought by persons who had not themselves suffered actual injury from the alleged unfair business practice.  Turner contended that a statute should not be given retrospective operation unless there is a clear legislative intent to do so.  The First District agreed that there was little in Proposition 64 expressing legislative or voter intent to have the change in the law apply to pending litigation.

The Court of Appeal, however, focused on a legal principle called the “statutory repeal rule.”  Under the statutory repeal rule, when a pending action is based solely on statute, a repeal of such a statute, without a savings clause, will terminate all pending actions.  In other words, a statutory remedy does not vest until final judgment.  In this case, the Court of Appeal reasoned that Turner’s right to pursue a UCL action was created by statute.  That right could not vest until final judgment.  When Proposition 64 went into effect, it did not retroactively affect a vested right.  Rather, it simply repealed earlier legislation, thereby depriving persons such as Turner of the standing to prosecute such a claim. As such, the Court of Appeal issued a peremptory writ of mandate commanding the superior court to vacate its prior order, and to enter a new order granting the motion for judgment on the pleadings.

COMMENT

There is a split in authority on the effect of Proposition 64 on cases not final as of the proposition’s effective date.  This case holds that pending UCL actions brought by persons who have not suffered actual injury should be dismissed.  The California Supreme Court has granted review on several cases addressing this issue.  We will keep you posted.

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