Amicus Curiae Brief — Nike, Inc. v. Kasky

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No. 02-575 |

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ae ‘ ~~

IN THE

Supreme Court of the United States

NIKE, INC., et al.,

Petitioners,

v.

MARC KASKY,

Respondent.

On Wait oF CERTIORARI

TO THE SUPREME Court OF CALIFORNIA

BRIEF OF AMICUS CURIAE

THE CONSUMER ATTORNEYS OF CALIFORNIA

IN SUPPORT OF RESPONDENT

SHARON J. ARKIN

RoBINSON, CALCAGNIE & ROBINSON

620 Newport Center Drive

Seventh Floor

Newport Beach, CA 92660

(949). 720-1200

Counsel for Amicus Curiae

180085 ce

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

BEST AVAILABLE COPY

TABLE OF CONTENTS

Table of Cited Authorities .....................

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I. Since Every Violation Of California’s UCL

Causes Inherent Harm To Competitors Or

The Public, First Amendment Protections Are

Not Improperly Abrogated Or Limited In A

UCL Action Brought By A Private Attorney

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Il. The First Amendment’s Protections Can Be

Fully, Fairly And Properly Provided In AUCL

Action Prosecuted By A Private Attorney

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TABLE OF CITEDAUTHORITIES

Cases:

ABC Internat. Traders, Inc. v. Matsushita Electric

Corp., 14 Cal. 4" 1247, 61 Cal. Rptr. 2d 112, 931

ee eco islbawéeseuess

Associated Industries v. Ickes, 134 F.2d 694 (2d Cir.

aE ses GREE rn as no

Bank of the West v. Superior Court (Industrial

Indemnity Co.), 2 Cal. 4" 1254, 10 Cal. Rptr. 2d

Siu Gue bees henesebes éuveiss eee

Cel-Tech Communications, Inc. v. Los Angeles

Cellular Telephone Co., 20 Cal. 4" 163, 83 Cal.

Sy PU PET ccccccccoccovesece

Chern v. Bank of America, 15 Cal. 3d 866, 127 Cal.

Rptr. 110, 544 P.2d 1310 (1976) .............

Deposit Guaranty Nat'l Bank v. Roper, 445 U.S. 326

SP Secee cob be edd bonnes eacede et ncdiecac

Fletcher v. Security Pacific National Bank, 23 Cal.

3d 442, 153 Cal. Rptr. 28, 591 P.2d 51 (1979) ..

FTC v. Algoma Lumber Co., 291 U.S. 67 (1934) ..

Kraus v. Trinity Management Services, Inc., 23 Cal.

4" 116, 96 Cal. Rptr. 2d 485, 999 P.2d 718 (2000)

eeeeseeoeeee@Pwmeoeosmea@sesecoeoeoeeseeeeeneeesesee ee 6 66 6 6 6 6 6 6 6

Page

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ul

Cited Authorities

Massachusetts Mutual Life Ins. Co. v. Superior Court

(Karges), 97 Cal. App. 4" 1282 (2002) ........

NAACP v. Button, 371 U.S. 415 (1963) ..........

People ex re. Most v. National Research Co. of Cal.,

201 Cal. App. 2d 765, 20 Cal. Rptr. 516 (1962) ...

Prata v. Superior Court, 91 Cal. App. 4" 1128 (2001)

e*eeeeeeeeeeeneeeeeeeeeeeeeeeeeeeeeeeeeeee ®

Rosenbluth International, Inc. v. Superior Court

(Serrano), 101 Cal. App. 4" 1073 (2002) ......

Rubin v. Green, 4 Cal. 4" 1187, 17 Cal. Rptr. 2d 828,

DED pocecacccecccoccecness

Sierra Club v. Morton, 405 U.S. 727 (1972) ......

Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17

Cal. 4" 553, 71 Cal. Rptr. 2d 731 (1998) ......

Vasquez v. Superior Court, 4 Cal. 3d 800, 94 Cal.

Rptr. 796, 484 P.2d 964 (1971) ............5.

Virginia State Bd. of Pharmacy v. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748, 96 S. Ct.

rt Gi ih: M, SP OEOED ceccscecccecses

iv

Cited Authorities

Page

United States Constitution:

a ee ee ee 2, 3, 5, 9, 17

Statutes:

California Business & Professions Code

SS CU, cbbbescaudceutundecdas 1,5

California Business & Professions Code

SE 6 tcbbedtuseed hee eee 4

California Business & Professions Code

Se itab vontdudettndneadk ke ce 2, 10, 12

California Business & Professions Code

I oe oie i ee ee ae 13

Rules:

United States Supreme Court Rule 37.6 ......... l

Vv

Cited Authorities

Page

Other Authorities:

Robert A. Anthony, Zone-Free Standing for Private

Attorneys General, 7 Geo. Mason L. Rev. 237

SEE DEED 66 cbbéscceusencenecsescsenes 12

Bryant Garth, Ilene H. Nagel, S. Jay Plager, The

Institution of the Private Attorney General:

Perspectives From An Empirical Study of Class

Action Litigation, 61 S. Cal. L. Rev. 353 (January,

SE SER SeKbdecénd dense vercocevavesesens 1]

Lee Goldman, The World's Best Article on

Competitor Suits for False Advertising, 45 Fia.

is, Ge GED nodes veceseouscaces: 8

Jeremy A. Rabkin, The Secret Life of the Private

Attorney General, 61 WTR law & Contemp.

eh, ee a he dc ecneedpeete ll

Wallace M. Rudolph and Janet L. Rudolph, Standing:

A Legal Process Approach, 36 Sw. L.J. 857

SL GED 6600b4606i0d0s ct céneecees 15

Michael L. Rustad, Smoke Signals From Private

Attorneys General in Mega Social Policy Cases,

51 DePaul L. Rev. 511 (Winter 2001) ......... 11,12

Roger E. Schecter, The Death of the Gullible

Consumer: Towards a More Sensible Definition

of Deception at the FTC, 1989, U. Ill. L. Rev. 571

vi

Cited Authorities

Page

Steven L. Schooner, Fear of Oversight: The

Fundamental Failure of a Businesslike

Government, 50 Am. U.L. Rev. 627 (February,

EE ehesecésvblbotdcduchaeubaiawcueses 11,17

Charles Shafer, Developing Rational Siandards for

An Advertising Substantiation Policy, 55 U. Cin.

L. Rev. 1 (1986) (pitetibaceieweidecdesed uae 8,9

U.S. Census Bureau, 2001 Statistical Abstract of the

United States, p. 423, Chart No. 648 .......... &

—. - = -

l

INTEREST OF THE AMICUS CURIAE

This brief is respectfully submitted on behalf of

Consumer Attorneys of California.' Consumer Attorneys

of California is a voluntary membership organization of

approximately 3,000 consumer attorneys practicing

throughout California. The organization was founded in 1962

and its members frequently utilize California’s Unfair

Competition Law (the “UCL,” California Business &

Professions Code §§ 17200, et seq.) to address consumer

fraud practices. Consumer Attorneys of California has

taken a leading role in advancing and protecting the rights

of consumers in both the courts and the Legislature and is

vitally interested in assuring the continuing ability to address

false and misleading statements disseminated by businesses

in the state and in assuring that the UCL remains a strong

and effective means of addressing false advertising.

SUMMARY OF ARGUMENT

In their briefs, both Petitioner Nike, Inc. and the United

States as Amicus Curiae assert that the First Amendment’s

protections cannot be effectively realized where a private

party brings an action under California Business &

Professions Code §§ 17200, et seg. (generally referred to as

the Unfair Competition Law, or the “UCL”). (See Nike’s Brief

for the Petitioners, pp. 37-49 and brief of the United States.)

1. Petitioner and Respondents have filed a blanket consent to

the filing of amicus briefs. Pursuant to Rule 37.6, Amicus discloses

that no counsel for a party authored any part of this brief, nor did

any person or entity other than Amicus Curiae, its members, or its

counsel make a monetary contribution to the preparation or

submission of this brief.

2

These arguments, however, misconstrue the meaning,

effect and power of the UCL. After first admitting that the

government has the power to regulate false, deceptive or

misleading speech, the Solicitor General then goes on to

assert that the First Amendment does not, however, “allow

States to create legal regimes in which a private party who

has suffered no actual injury may seek redress on behalf of

the public for a company’s allegedly false and misleading

statements.” (Brief of the United States, p. 8.) Further, the

Solicitor General argues, the requirement that in™private

causes of action” actual, personal harm must be demonstrated

by the plaintiff is necessary to “ensure that any restriction

on speech is justified.” (Brief of the United States p. 8.)

But this argument is predicated on several major false

assumptions. The first is that the cause of action alleged is a

“private cause of action” brought by a “private party.” Under

the statutory scheme embodied in California’s UCL, that is

simply not the case. Rather, the action is a representative

action brought on behalf of the general public. (California

Business & Professions Code § 17204; Kraus v. Trinity

Management Services, Inc., 23 Cal. 4" 116, 126, 137 and

138 (n.18), 96 Cal. Rptr. 2d 485, 999 P.2d 718 (2000).)

It is not a private action, by a private party, it is a public

civil enforcement action brought by a public representative.

That public representative, under the California statute,

may be the Attorney General, a district attorney or a city

attorney. (California Business & Professions Code § 17204.)

The public representative may also be an individual or entity.

(/d.) But whoever the representative is, they are not

prosecuting a private action, but a public action.

The second false assumption embedded in the Solicitor

General’s arguments is that the courts will necessarily litigate

3

UCL actions differently, depending on the representative.

The Solicitor General apparently has no complaint with a

governmental agency or officer bringing a UCL action — as

evidenced by its own support of actions under the essentially-

identical FTC Act. But the Solicitor General apparently

believes that when an individual brings exactly the same case

under exactly the same allegations of fact, and based on

exactly the same evidence, there will be different and lesser

due process, First Amendment and other protections for the

defendant than if a government actor is bringing the case.

There is, however, neither logical justification nor empirical

evidence to support that conclusion.

The Solicitor General’s third false assumption is that

because the individual plaintiff has not alleged direct harm

to himself, no harm has occurred. The Solicitor General

demands that not only must a UCL plaintiff allege that the

statements are false, but that the plaintiff personally relied

on them and suffered a personal injury — even though there

is no requirement under the Solicitor General’s analysis that

a government actor be required to make those same

allegations in the same context. Moreover, the Solicitor

General’s predicate completely fails to take into the account

the underlying purpose and effect of California’s UCL, i.e.,

to protect both competitors and the general public from the

harm that necessarily and inherently occurs when a business

— any business — makes misleading and deceptive statements.

Indeed, the Unites States’s position would return us to the

long-abandoned days of caveat emptor, “let the buyer

beware,” and would dispose of and dispense with decades of

consumer-interest legislation.

The Solicitor General’s arguments also ignore the fact

that while the UCL’s sweep and standing provisions are

4

broad, its remedies provision is very shallow. In fact, all that

is available under the UCL are equitable remedies, i.e.,

injuncticn and — in the absence of a certified class action — a

very limited form of restitution. (California Business &

Professions Code § 17203; Cel-Tech Communications, Inc.

v. Los Angeles Cellular Telephone Co., 20 Cal. 4" 163, 179,

83 Cal. Rptr. 2d 548, 973 P.2d 527; ABC Internat. Traders,

Inc. v. Matsushita Electric Corp., 14 Cal. 4" 1247, 1268, 61

Cal. Rptr. 2d 112, 931 P.2d 290 (1997).) Damages are not

recoverable at all. (Chern v. Bank of America, 15 Cal. 3d

866, 875, 127 Cal. Rptr. 110, 544 P.2d 1310(1976).) Because

of these limited remedy provisions, the Solicitor General’s

personal harm proposal is utterly unnecessary to protect either

speech or speakers.

Finally, the Solicitor General’s arguments also overlook

the simple reality that whether brought by a private party

who suffered individual harm or whether brought by a private

attorney general, no regulation occurs and no remedies —

however limited — are imposed, unless it is proven that, in

fact, the speech is false, deceptive or misleading. Either way,

the same due process and procedural protections remain in

place: Legal power is limited to regulating only false,

deceptive or misleading speech — which even the Solicitor

General, under this Court’s prior rulings, must concede is

appropriate.

Thus, the entire foundation for these arguments is built

on unjustified assumptions, insupportable presumptions

and indefensible supposition. As such, these arguments

should be disregarded and this Court’s analysis should be —

focused on the real — and very narrow — issue presented in

this case: Whether — as specifically and explicitly alleged in

ee ee ee eee

5

this action — a commercial business’s false and misleading

statements about its own operations which were made for

the purpose of promoting its own products constitutes

commercial speech.

ARGUMENT

I.

SINCE EVERY VIOLATION OF CALIFORNIA’S UCL

CAUSES INHERENT HARM TO COMPETITORS OR

THE PUBLIC, FIRST AMENDMENT PROTECTIONS

ARE NOT IMPROPERLY ABROGATED OR LIMITED

IN AUCL ACTION BROUGHT BY A PRIVATE

ATTORNEY GENERAL

The Solicitor General’s arguments are predicated on its

erroneous presumption that, absent proof of harm by a private

plaintiff, the First Amendment precludes regulation of even

false and misleading commercial speech. (Brief of the United

States, p. 10.) But that argument ignores the reality that harm

is inherent in an action brought under California’s UCL.

Over six decades ago, the California Legislature

established — first under Civil Code section 3389, which was

later re-enacted as Business & Professions Code section

17200, et seq. — a public right of action, enforceable in equity,

to enjoin unfair business competition. (Stop Youth Addiction,

Inc. v. Lucky Stores, Inc., 17 Cal. 4" 553, 567, 71 Cal. Rptr.

2d 731, 740 (1998).) Indeed, the UCL was patterned after

the United States’s own, similar FTC Act. (Rubin v. Green,

4 Cal. 4" 1187, 1200, 17 Cal. Rptr. 2d 828, 847 P.2d 1044

(1993).)

6

But the fact that the action is directed toward unfair

business competition does not restrict its application only to

situations in which business competitors are harmed. Indeed,

the goal of the act is much broader and is intended to address

the general societal harm that results when business

enterprises act illegally or unethically. As noted by the

California Supreme Court in People ex re. Mosk v. National

Research Co. of Cal., 201 Cal. App. 2d 765, 770, 20 Cal.

Rptr. 516, 520 (1962):

Historically, the law of unfair competition and of

trademark infringement evolved in the general

field of torts. [Fn. Omitted] It was concerned

primarily with wrongful conduct in commercial

enterprises that resulted in business loss to

another, ordinarily by the use of unfair means

in drawing away customers from a competitor.

With passage of time and accompanying epochal

changes in industrial and economic conditions,

the legal concept of unfair competition

[fn omitted] broadened appreciably. This was

occasioned, according to the Restatement, partly

by the flexibility and breadth of relief afforded

by equity, and partly by changing methods of

business and changing standards of commercial

morality. “[T]he tendency of the law, both

legislative and common, has been in the

direction of enforcing increasingly higher

standards of fairness or commercial morality

in trade. The tendency still persists.”

(Bold added, italics added by Mosk court.)

A ee ec.

7

And as more recently noted by the California Supreme

Court in Bank of the West v. Siperior Court (Industrial

Indemnity Co.), 2 Cal. 4" 1254, 1264, 10 Cal. Rptr. 2d 538,

544 (1992):

The primary purpose of these statutes was to

“extend[ | to the entire consuming public the

protection once afforded only to business

competitors.” (Barquis v. Merchants Collection

Assn. (1972) 7 Cal. 3d 94, 109, 101 Cal. Rptr.

745, 496 P.2d 817, interpreting Civ. Code, former

§ 3369.)

(Emphasis added.)

The Solicitor General’s argument in this case essentially

stands for the proposition that false, deceptive and misleading

commercial speech does not, in and of itself, cause any

“harm,” and is therefore not actionable unless it causes

pecuniary damage to an identifiable person. That position

is naive. Indeed, as the California Supreme Court has

said, “Protection of unwary consumers from being duped

by unscrupulous sellers is an exigency of the utmost

priority in contemporary society.” (Vasquez v. Superior Court,

4 Cal. 3d 800, 808, 94 Cal. Rptr. 796, 484 P.2d 964,

968 (1971); Fletcher v. Security Pacific National Bank, 23

Cal. 3d 442, 451, 153 Cal. Rptr. 28, 591 P.2d 51 (1979).)

As the court went on to note in Fletcher, “our concern with

thwarting unfair trade practices has been such that we have

consistently condemned not only those alleged unfair

practices which have in fact deceived the victims, but also

those which are likely to deceive them.” (/d.)

8

As one commentator has noted, “if truthful informative

advertising is an unequivocal social good, false advertising

is unequivocally bad. In the short run, deceptive advertising

injures consumers and competitors. In the long run, false

advertising results in a reduction of product quality and a

misallocation of resources. If left unchecked, deceptive

advertising may eventually undermine the entire competitive

system.” (Lee Goldman, The World's Best Article on

Competitor Suits for False Advertising, 45 Fla. L. Rev. 487,

492 (July, 1993).) Indeed, in direct conflict with the

underlying predicate for the Solicitor General’s argument here

that, in the absence of a direct harm to an individual

plaintiff, there is no need or ability to regulate false

advertising, the same commentator notes that “even if a

product is effective and worth the price charged, some,

including the Supreme Court and the FTC, believe that

false advertising still injures the consumer. They maintain

that the seller’s failure to deliver the bargained-for goods

and the consumers’ consequent frustrated expectations

constitutes real, albeit nonquantifiable, harm.” (/d., at 493;

citing to FTC v. Algoma Lumber Co., 291 U.S. 67 (1934)

and Roger E. Schecter, The Death of the Gullible Consumer:

Towards a More Sensible Definition of Deception at the FTC,

1989, U. Ill. L. Rev. 571, 580.)

The impact of false advertising cannot be overstated.

In 1999, total personal consumption expenditures reached

$6.2 trillion dollars. (See U.S. Census Bureau, 2001

Statistical Abstract of the United States, p. 423, Chart

No. 648.) As noted in Charles Shafer, Developing Rational

Standards for An Advertising Substantiation Policy,

55 U. Cin. L. Rev. 1 (1986), a “substantial portion of those

9

consumer purchases result in some sort of dissatisfaction”

which, in turn,

“is a serious societal problem for a variety of

reasons. It indicates a misallocation of scarce

resources. It can be a significant factor in

producing the perception that the economic and

political institutions are unfair, ineffective, or

unresponsive. That perception can have wide

ranging political ramifications. Finally, it may be

an indication of genuine political and economic

unfairness.”

(/d. at 1-2.)

Clearly, even if it is impossible to quantify the harm false

advertising may do to a single individual, its existence in

the marketplace inflicts a powerful harm on society in

general. Thus, it is insupportable for the Solicitor General to

argue that First Amendment protections should be

unrestricted, even where admittedly false commercial speech

is involved, in the absence of individualized injury to a

particular plaintiff. As this Court has previously noted, it is

extremely important that “the stream of commercial

information flow cleanly as well as freely.” (Virginia State

Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc.,

425 U.S. 748, 96 S. Ct. 1817, 48 L. Ed. 2d 346 (1976).)

That goal can best be achieved where every form of false

commercial speech can be addressed through legal actions,

even when there is no evidence of harm to an individual

person.

Since harm to competitors, society and the general public

is inherent whenever false advertising occurs, there is ample

10

justification for permitting the state to regulate such conduct

even where no identifiable harm to an identifiable individual

exists.

THE FIRST AMENDMENT?’S PROTECTIONS CAN BE

FULLY, FAIRLY AND PROPERLY PROVIDED INA

UCL ACTION PROSECUTED BY A PRIVATE

ATTORNEY GENERAL

Contrary to the Solicitor General’s assertions in its

briefing, a UCL action is not a “private right of action”

brought by a “private party.” It is nothing more — and

nothing less — than a representative action, one brought on

behalf of the general public. The action can be brought by

statutorily delineated representatives. (California Business

& Professions Code § 17204.) The fact that the plaintiff in a

UCL action is, in fact, acting as a representative has been

repeatedly noted by the California courts. (Kraus v. Trinity

Management Services, Inc., 23 Cal. 4" 116, 126, 137, 138

(n.18); Prata v. Superior Court, 91 Cal. App. 4" 1128, 1133-

1134 (2001); Massachusetts Mutual Life Ins. Co. v. Superior

Court (Karges), 97 Cal. App. 4" 1282, 1290, n.3 (2002).)

And though that statutory delineation is broad, it is,

nonetheless, not unbounded. As the California Supreme Court

has noted, that representative has duties and responsibilities

and must be a competent representative. (Kraus v. Trinity

Management Services, Inc., 23 Cal. 4" 116, 138 (2000);

see also Rosenbluth International, Inc. v. Superior Court

(Serrano), 101 Cal. App. 4" 1073 (2002).)

1]

This type of private attorney general concept has a

decades-long histo. y and has been embraced by Congress as

well as this Court. Since the inception of the concept in the

context of the New Deal regulatory provisions as established

in Associated Industries v. Ickes, 134 F.2d 694, 704 (2d Cir.

1943), it has been legislatively endorsed by Congress on

numerous other occasions in various other contexts, including

the environmental, civil rights, qui tam and class action

arenas. (See, e.g., Sierra Club v. Morton, 405 U.S. 727

(1972); NAACP v. Button, 371 U.S. 415 (1963); Deposit

Guaranty Nat'l Bank v. Roper, 445 U.S. 326, 338 (1980).)

Although the private attorney general concept has

evolved over the decades (see, e.g., Bryant Garth, Ilene H.

Nagel, S. Jay Plager, The Institution of the Private Attorney

General: Perspectives From An Empirical Study of Class

Action Litigation, 61 S. Cal. L. Rev. 353 (January, 1988))

and has in some respects fallen into disrepute (see, e.g.,

Jeremy A. Rabkin, The Secret Life of the Private Attorney

General, 61 WTR law & Contemp. Probs. 179 (Winter

1998)), there are still sound public policy reasons why the

concept remains not only a useful but vital tool in the justice

system — and one whose utility should not be circumscribed,

but expanded. (Steven L. Schooner, Fear of Oversight:

The Fundamental Failure of a Businesslike Government,

50 Am. U.L. Rev. 627, 681, et seg. (February, 2001)

[discussing the importance of the private attorney general

doctrine in the qui tam context]; Michael L. Rustad, Smoke

Signals From Private Attorneys General in Mega Social

Policy Cases, 51 DePaul L. Rev. 511 (Winter 2001)

[analyzing the value of the private attorney general process

in the tobacco litigation].) As Professor Rustad notes, “social

policy torts empower ordinary Americans to address the

12

concerns of the community. . . . [J] The whole point of social

policy torts is to permit ordinary citizens to change corporate

practices.” (Rustad, supra, at 527.)

Other commentators have noted that this Court’s

jurisprudence has rigorously upheld legislative standing

determinations similar to the UCL’s, even against various

“prudential barriers.” (See Robert A. Anthony, Zone-Free

Standing for Private Attorneys General, 7 Geo. Mason L.

Rev. 237, 243 (Winter, 1999).) In this case, the California

Legislature has determined the standing required for bringing

a UCL action:

Actions for any relief pursuant to this chapter shall

be prosecuted exclusively in a court of competent

jurisdiction by the Attorney General or any district

attorney ... upon their own complaint or upon

the complaint of any board, officer, person,

corporation or association or by any person acting

for the interests of itself, its members or the

general public.

(California Business & Professions Code § 17204.)

The California Legislature concluded that the imposition

of an “injury-in-fact” requirement on the specific plaintiff

was unnecessary in the context of a UCL action. Obviously,

as discussed in the preceding section, that is because of the

inherent injury done to the competitors and consumers and,

as a result, to the public. This Court should uphold the

California Legislature’s determination that there is no need

for personal injury-in-fact with the same rigor it affords to

Congress’s similar determinations.

13

Second, the thrust of the Solicitor General’s brief appears

to be that where a private attorney general is bringing the

action, the “rules” will somehow change and that the change

will necessarily deprive the defendant of the usual due

process and other substantive and legal protections offered

by the justice system. But the Solicitor General provides

neither legal justification nor even anecdotal evidence to

support that assertion.

Indeed, the proposition is ludicrous. Whether brought

by a “private attorney general,” i.e., an unharmed individual

acting on behalf of the general public, or by a law

enforcement or regulatory entity, such as the state Attorney

General or the FTC (who — it should be noted — are similarly

unharmed), the pleading standards, procedures and proof

standards remain exactly the same. The only thing that

changes, in fact, is that the available remedies are more

onerous where the action is brought by a law enforcement

plaintiff. In addition to the same injunctive and restitutionary

relief a private attorney general can obtain in a UCL action,

a law enforcement entity can also obtain civil penalties in

the amount of $2500 per violation. (California Business &

Professions Code § 17206.)

The fundamental fallacy underlying the Solicitor

General’s brief is that standing, alone, invokes due process

and constitutional protections. But that is not — and never

was — the purpose of prudential standing requirements:

In order to understand the concept of standing,

its purpose must be discovered. The purpose of

standing lies in the nature of the legal process and

the function of our judiciary. In Marbury v.

Madison Justice Marshall discussed the judicial

14

function in terms of the Court’s authority to

declare unconstitutional a statute enacted by

Congress. Marshall’s discussion serves as a fair

description of the nature of judicial power in

general, since any court’s power to act arises from

its constitutional grant of authority to decide cases

and controversies between parties. Because courts

are designed to settle specific disputes, they are

not competent to deal with generalized grievances

against society. Neither can courts give advisory

opinions. Hence, the classic example: Even

though Secretary of State Jefferson asked the

United States Supreme Court to answer certain

legal questions concerning the British blockade

of French ports, Chief Justice Jay respectfully

declined, since to do so was beyond the reach of

judicial power.

The constitutional and judicial rejection of

authority to deal with generalized grievances, as

well as the rejection of authority to grant advisory

opinions, arises from judicial recognition that a

court’s essential function is dispute settlement in

accordance with legal principles, not law

declaration. In the dispute-settlement process,

legal principles are applied to a known, fixed set

of facts, and the decision is thus limited to the

application of that principle to that set of facts.

Under this system, the parties come to the court

with a specific claim of right (either statutory or

customary) and argue that, under the peculiar facts

of the case, their claim of right should be upheld.

The court then chooses one of the claims of right

and explains how under the facts f the particular

15

case the appropriate claim of right was chosen.

Without particular facts and without particular

claims of right before the court, a decision of

the court is not compelled by the judicial

decisionmaking process.

Wallace M. Rudolph and Janet L. Rudolph, Standing: A Legal

Process Approach, 36 Sw. L.J. 857, 858 (September, 1982).

As expressed in Rudolph, then, there are two basic

reasons for requiring standing: (1) Courts should not deal

with generalized grievances; and (2) Courts should not grant

advisory opinions. The judicial process that demands

standing thus requires: (1) A specific claim; (2) A fixed set

of facts; and (3) Application of appropriate legal principles.

All of those parameters exist and those requirement are

met in a UCL claim brought by a private attorney general

acting on behalf of the general public — and specifically exist

in the context of the action brought by Mr. Kasky against

Nike:

¢ There is not a generalized grievance. There

is, rather, an explicit and specific grievance,

based on demonstrable violations. In this case,

for example, Nike made false and misleading

statements in a commercial context. What is

notable here — and is a fact which is virtually

ignored in the briefs of Nike, its amici and the

Solicitor General — is that this case was

decided at the pleading stage and the pleading

was clear, explicit and specific: Nike made

advertising statements to advance its own

commercial interests and those statements

16

were false and misleading. That must be

assumed to be true for the purposes of this

decision. Thus, it is not a generalized

grievance about amorphous statements are

constitutionally protected. This case is raises

a specific grievance in the context of

expressly-stated facts.

Similarly, no advisory opinion is sought.

Rather, an actual adjudication of whether those

specific statements were false and misleading

is requested.

Because those general purposes have been

fulfilled, the specific requirements are

similarly met:

* There is a specific claim: Nike’s

statements about its business operations

were made for a commercial purpose and

they are false and misleading;

* There are a fixed set of facts, predicated

on the explicit pleading of the complaint

about exactly what Nike did; and

¢ There are specific legal principles which

apply to determine the precise issue of

whether Nike committed the alleged

wrongs and what the consequences should

be to Nike for having committed the

alleged wrongs.

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Thus, the prudential concerns which require standing are

fulfilled in a UCL action, both generally-speaking and

specifically in this case. That being true, there is no

justification for the Solicitor General’s unsupported

foundational assertion that the First Amendment will be less

stringently applied or that due process will be more lax where

the representative plaintiff in the case is a private attorney

general rather than a public prosecutor. In fact, that

perspective impliedly, and wrongly, disparages the trial court

judges and appellate justices who try and review these

cases — as though they would be distracted and confounded

by the presence of a private attorney general representative

and would, therefore, impair or limit the defendant’s rights,

constitutional or otherwise. The Solicitor General’s stand

makes a mockery of the fundamental principle of our legal

system that “Justice is Blind” and that the court does not

take note of who or what either party is, but applies the laws

to the facts without favoritism or bias.’

2. In fact, if there is, indeed, any bias in the trial or appellate

courts it is against private attorneys general, who have sometimes

come to be perceived as the “bounty hunters” of the legal system

during the last few years. (See, e.g., Steven L. Schooner, Fear of

Oversight: The Fundamental Failure of Businesslike Government,

50 Am. U. L. Rev. 627, 681, n.176 (February 2001).)

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CONCLUSION

This Court should not become distracted from deciding

the fundamental — and important — constitutional issues here

about what constitutes commercial speech based on the

specific allegations in this case to the effect that, in fact,

Nike was trying to sell its product when it misrepresented

the nature of its business operations to existing and potential

customers. The issue of standing as raised by Nike and the

United States is immaterial and irrelevant because, in fact,

the representative plaintiff here properly has standing to

challenge false and misleading commercial speech in order

to protect California’s businesses and citizens from the harm

that inherently results from false and misleading advertising.

For the foregoing reasons, the judgment of the California

Supreme Court should be affirmed.

Respectfully submitted,

SHARON J. ARKIN

Rosinson, CALCAGNIE & ROBINSON

620 Newport Center Drive

Seventh Floor

Newport Beach, CA 92660

(949) 720-1200

Counsel for Amicus Curiae