In Kwikset Corp v Superior Court, the California Supreme Court sent a message to the business community: “Labels matter.” The lawsuit stemmed from Kwikset’s labeling of locksets it manufactures as “Made in U.S.A.” The plaintiffs brought suit under California’s Unfair Competition Law (UCL), alleging the labels were false because some lockset components originated abroad. While the case was pending, California voters enacted Proposition 64, which was designed to curtail “shakedown” suits by permitting a UCL plaintiff to sue only if he suffers an injury and loss of money as a result of the alleged misconduct. In response to Proposition 64, the plaintiffs filed an amended pleading alleging they would not have purchased the locksets but for the “Made in U.S.A.” representation. Although the lower court deemed the allegations insufficient to establish statutory standing, the California Supreme Court ruled for the plaintiffs. It 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’ within the meaning of Proposition 64 and have standing to sue.” Otherwise, consumers’ ability to rely on labels would be impaired and it would “encourage the marketplace to dispense with accuracy in favor of deceit.” The dissenting justice accused the majority of making it easier for plaintiffs to achieve standing under the UCL law, contrary to the electorate’s stated intent in passing Proposition 64. The dissent argued the plaintiffs lacked standing to sue over locksets that were neither malfunctioning nor overpriced. Many observers expect the ruling to lead to increased UCL litigation.
On the other side of the country, the District of Columbia Court of Appeals, sitting en banc, held that a plaintiff asserting a violation of the District’s Consumer Protection and Procedures Act must have traditional “injury in fact” standing to sue. In Grayson v. AT&T Corp., the court construed the Act’s language to conclude that the District’s Council did not intend to eliminate that requirement when it amended the Act in 2000.