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California’s New Standing Requirement For Unfair Competition Claims Applies to Pending Cases

As you may recall, in November 2004, California voters passed Proposition 64 which included a new standing requirement limiting who could sue for an alleged violation of the unfair competition laws. As a result of Proposition 64, an individual is only permitted to sue for unfair competition if he had actually been harmed by the conduct at issue. However, this new change in the law brought to the forefront an interesting legal question; what happens to the many pending cases in which plaintiffs, who suffered no injury themselves, alleged

violations of the unfair competition laws prior to Proposition 64’s passing?

In the last issue of the Dealers Advocate, we notified our readers that the California Supreme Court was expected to decide this summer whether California’s new standing requirement for unfair competition claims would apply retroactively to cases that were already pending when the proposition was passed. And, we are pleased to report that in the landmark case of Californians

for Disability Rights v. Mervyns, LLC, the California Supreme Court decided that Proposition 64 does, in fact, apply to cases that were already pending when voters passed Proposition 64. However, the California Supreme Court took some of the teeth out of this ruling in a companion case, Branick v. Downey Savings & Loan Association, wherein the court ruled that if a plaintiff lacks standing under Proposition 64 because he suffered no injury, the plaintiff may keep his case alive if he can amend the complaint to add a new plaintiff who did suffer an actual injury.

The Supreme Court’s decision to apply Proposition 64 to pending cases is great news for dealerships that were victimized by opportunistic plaintiffs’ attorneys who filed unfair competition claims against them with clients who suffered no actual injury. Although the court will allow these attorneys to try to amend their complaints to add a plaintiff who actually suffered an injury, it is quite possible that many of these attorneys will be unable to do so, and these unmeritorious lawsuits will hopefully be dismissed.

Our Irvine Office Has Moved ... The Irvine office of Burkhalter, Michaels, Kessler and George LLP has recently moved to 2020 Main Street, Suite 600, Irvine, CA 92614 and will keep the same phone number listed at the bottom of this page. Our Westlake Village address remains the same.

FORD continued from page 1 channel from AM General. Dealerships with existing AM General franchise agreements were targeted by GM and presented with a slew of onerous dealership requirements that made selling the franchise back to GM (which was GM’s apparent goal) the only viable alternative. Most of the targeted dealerships found themselves unable to battle GM and they lost their franchises. Two dealerships, however, resisted, and one who was hired by BMKG, ultimately received a $5.4 million dollar verdict as a result of GM’s coercive conduct. No doubt those dealerships had the ability to be on the offensive because they had adhered to their Dealer Agreements.

Every dealership should use Ford’s announcement as an opportunity to carefully review its contractual obligations under its Dealer Agreement. Careful review is even more important for those dealerships who feel an increase in the amount of negative feedback from their manufacturer. The bottom line is that if your dealership begins to see an uptick in visits from the manufacturer or if the manufacturer is sending more negative correspondence your way, be mindful that the manufacturer may be setting the stage for decisive action. Bring the situation to the attention of your legal team immediately. Rest assured, even the mightiest opponent has chinks in its armor and the dealerships in compliance with their Dealer Agreements will stand in the best position.


Burkhalter, Michaels, Kessler & George LLP

Dealers Advocate Newsletter Published By: Burkhalter, Michaels, Kessler & George LLP 2020 Main Street Suite 600 Irvine, CA 92614 Attention: Alton G. Burkhalter 949-975-7500 949-975-7501 fax www.DealersAdvocate.com

Industry Affiliations BMKG is a proud member of: California Motor Car Dealers Association Orange County Automobile Dealers Association Southland Motor Car Dealers Association

Burkhalter, Michaels, Kessler & George (BMKG) is a law firm based in Irvine, California. The BMKG lawyers bring almost a century of combined legal experience to their clients. BMKG has the largest jury verdicts in California for dealers against manufacturers. BMKG services include prosecution and defense of manufacturer disputes, strategic defense of consumer litigation, dealership/real estate acquisition and sales, and employment law. In addition, BMKG provides owners with comprehensive estate planning services through their State Bar Certified Estate Planning Specialist.


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