Consumer Watchdog Urges California Supreme Court to Reaffirm "Organizational Standing" in Unfair Competition Cases

LOS ANGELES, June 15, 2022 /PRNewswire/ -- Consumer Watchdog filed a "friend of the court" brief urging the California Supreme Court to reaffirm the ability of non-profit organizations and other groups to bring lawsuits on behalf of the public under California's landmark Unfair Competition Law.

Consumer Watchdog filed its amicus brief on behalf of the plaintiff in the case, California Medical Association. The suit against Aetna Health of California addresses the issue of access to physicians not participating in an insurer's network, known as "out of network" physicians.

Download the brief here: https://consumerwatchdog.org/sites/default/files/2022-06/FileStampedCopyAmicusBrief.pdf

In the upcoming case, the California Supreme Court will decide whether organizations acting on behalf of the public have "standing" to bring a lawsuit under the state Unfair Competition law – the "UCL." Organizational standing under the UCL has been called into question after the passage of Proposition 64 in 2004, which added a requirement that plaintiffs show they have "lost money or property" as a condition of bringing a lawsuit. 

As the Supreme Court found in a prior case, the "UCL's purpose is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services," and its "scope is broad." (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.)

Consumer Watchdog argued in its brief filed with the Court today that:

"The Court of Appeal's decision below, if left undisturbed, will have a wide-ranging impact on organizations seeking to bring both UCL and non-UCL claims alike, effectively precluding membership organizations from ever bringing direct suit over injuries personally suffered in responding to and assisting their members. [Aetna] would have this Court go even further, arguing that the doctrine of direct organizational standing is incompatible with Proposition 64, which would preclude all organizations, membership or not, from seeking redress under the UCL for harms they suffer when a defendant frustrates their organizational mission."

Recognizing direct organizational standing as a proper means to show UCL standing directly serves the broad remedial purpose of the UCL to protect consumers, according to Consumer Watchdog.

The California Medical Association sued Aetna over its policy to restrict or eliminate patient referrals to out-of-network physicians, which is critically important for patients with serious illness who need access to specialists. The California Medical Association argued Aetna's policy harmed the public by interfering with the ability of its member doctors to exercise "sound medical judgment."

The Court of Appeal incorrectly concluded that when California voters passed Proposition 64 in 2004 voters intended to foreclose lawsuits brought by organizations on behalf of the public. In fact, the UCL, as amended by Proposition 64, is entirely compatible with the "direct organizational standing" doctrine. The California Medical Association appealed to the California Supreme Court to reverse the lower court's ruling.

"It is critically important for California consumers that organizations have the ability to challenge anti-consumer practices by bringing lawsuits on behalf of the public," said Ryan Mellino, a law fellow with Consumer Watchdog. "It is essential that the California Supreme Court recognize that the direct organizational standing doctrine is entirely compatible with the UCL after Proposition 64, and to reject the Court of Appeal's and Aetna's invitations to find to the contrary."

Proposition 64 targeted so-called "shakedown suits" by amending the UCL to require that all plaintiffs (including organizations) suffer an economic injury before bringing a lawsuit.

Pursuant to the "direct organizational standing" doctrine, an organization is economically injured when it diverts resources to protect the public. This was the conclusion reached by the Court of Appeal in the case Animal Legal Defense Fund ("ALDF") v. LT Napa Partners LLC (2015) 234 Cal.App.4th 1270. Consumer Watchdog urged the California Supreme Court to adopt the reasoning of the ALDF court and to reject the Court of Appeal's illogical decision in the present case that ignores the plain language of the law.

The case at the California Supreme Court is California Medical Association v. Aetna, Case No. S269212.

Consumer Watchdog is a non-profit and non-partisan public interest organization.
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SOURCE Consumer Watchdog