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California Supreme Court to Hear Oral Argument Regarding Scope of Local Prosecutors’ Recovery for UCL ViolationsMarch 26, 2020
On April 7, the California Supreme Court will hear oral argument in Abbott Laboratories v. Superior Court, which addresses whether a local prosecutor can recover monetary remedies for statewide violations of California’s Unfair Competition Law (UCL).
California’s UCL empowers the Attorney General as well as any district attorney, any county counsel, and certain city attorneys to file a civil consumer protection action on behalf of the People of the State of California. See Cal. Bus. & Prof. §§ 17204, 17206. Pursuant to this authority, local prosecutors regularly bring civil actions for injunctive and monetary relief alleging unfair competition violations occurring throughout the State of California. However, in Abbott Laboratories, 24 Cal. App. 5th 1 (2018), the California Court of Appeal held that local prosecutors acting on behalf of the People could only recover monetary penalties to redress UCL violations that occurred within their local jurisdictions. The California Supreme Court will resolve this question of the permissible scope of recovery for UCL violations by a local prosecutor.
Background of Abbott Laboratories
This dispute arises from a UCL action filed by the Orange County District Attorney against several pharmaceutical companies. The district attorney alleged that the defendant pharmaceutical companies had conspired to prevent manufacturers from producing a generic drug, causing California consumers to overpay. Bringing a UCL action on behalf of the People of California, the district attorney sought monetary recovery to redress the alleged violations not only in Orange County, but statewide. Defendants filed a motion to strike claims for monetary relief outside the jurisdiction of Orange County, which the Superior Court denied.
On a writ petition, the California Court of Appeal vacated the Superior Court’s decision. Emphasizing that the California Constitution recognizes the Attorney General as “the chief law officer of the State,” the California Court of Appeal reasoned that the UCL’s grant of standing to local prosecutors “cannot reasonably or constitutionally be interpreted as conferring statewide authority or jurisdiction to recover such monetary remedies beyond the county the district attorney serves, or restricting the Attorney General’s constitutional power to obtain relief on behalf of the entire state.” The California Court of Appeal further noted that if the Legislature had wished to confer upon local prosecutors the same remedial authority given to the Attorney General, the UCL would have explicitly vested local prosecutors with that authority.
The outcome in Abbott Laboratories could significantly impact UCL enforcement actions brought by local prosecutors in California. If the California Supreme Court agrees that local prosecutors cannot recover monetary relief for UCL violations outside their local jurisdictions, then the geography of alleged UCL violations will become an important litigation consideration. Local prosecutors and defendants would increasingly dispute whether an enforcement action has a sufficient nexus to local violations—and not just at the relief stage, but also at the investigatory, pleading, and discovery stages. Local prosecutors would ultimately have to limit the geographic scope of their enforcement actions or develop coalitions with other local prosecutors or the Attorney General to seek broader relief. Defendants may also be less willing to settle one-off litigation at the risk of encouraging enforcement actions by all 58 California counties. Such obstacles would likely result in more UCL enforcement actions overall, but fewer seeking statewide relief.
This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Hannah Y. Chanoine, an O’Melveny partner licensed to practice law in New York and Massachusetts, Richard B. Goetz, an O'Melveny partner licensed to practice law in California, Daniel R. Suvor, an O'Melveny partner licensed to practice law in California, and Marissa Roy, an O’Melveny associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
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