A California appeals court has determined that a dietary-supplement maker cannot stop a consumer from filing a false-advertising claim under the Consumers Legal Remedies Act (CLRA ) by bringing an action against the consumer and her attorneys, seeking a declaration that its ads were accurate and legal. Lunada Biomedical v. Nunez, Nos. B243205 & B246602 (Cal. Ct. App., decided October 9, 2014). So ruling, the court affirmed the trial court’s grant of the consumer and attorneys’ motion to strike the company’s complaint under the state’s anti-SLAPP (Strategic Lawsuit Against Public Participation) statute. The court further upheld the attorney’s fee award to the consumer and her attorneys and remanded for calculation of fees incurred in connection with the appeal.
The court determined that (i) the declaratory-judgment action arose from a protected activity, i.e., the filing of a CLRA notice-and-demand letter, required under the law as a prerequisite to filing a CLRA lawsuit; and (ii) the company did not demonstrate a probability of prevailing on the claim because “it may not sue for declaratory relief regarding a claim for damages under the CLRA .”
According to the court, the declaratory-judgment action would thwart certain important CLRA incentives and goals, including (i) mandatory attorney’s fees, (ii) the possibility of avoiding litigation by providing an opportunity to remedy statutory violations after the demand letter is served but before a lawsuit seeking damages is filed, and (iii) the elimination of the class-action rights of consumers who would have joined the CLRA class action. In its view, the declaratory-relief action would undermine the CLRA . Because the plaintiff was precluded from filing the declaratory-relief claim, the court determined that it could not demonstrate a probability of prevailing on that claim. The court also found that without an actual controversy between the company and the plaintiff’s attorneys, who are not consumers under the CLRA and cannot bring a CLRA claim on their own behalf, the company “cannot prevail on its claims against the law firm defendants.”