In California Medical Association v. Aetna Health of California, Inc., the Supreme Court today holds that an organization satisfies the standing requirement of California’s Unfair Competition Law, even as that requirement was restricted by Proposition 64 in 2004, if it, “in furtherance of a bona fide, preexisting mission, incurs costs to respond to perceived unfair competition that threatens that mission, so long as those expenditures are independent of costs incurred in UCL litigation or preparations for such litigation.” There can be standing under the rule, the court acknowledges, despite the organization being “neither a competitor of [the defendant] nor a consumer of that company’s services.”
Justice Kelli Evans’s first opinion for the court (see here), a unanimous one, explains that Prop. 64’s relevant provision requires a UCL plaintiff have “suffered injury in fact and [have] lost money or property as a result of the unfair competition” and that a prior decision provides an organization “may not base standing to sue on injuries to its members, but only on those to the organization itself.” The court concludes CMA presented enough evidence to avoid a summary judgment dismissal and to continue its challenge to a health insurer’s policy restricting or eliminating patient referrals by in-network physicians to out-of-network physicians.
The court says that when an organization has, as CMA did, “expended staff time or other resources on responding to a new threat to its mission, diverting those resources from other projects, [it] has suffered an economic injury in fact” sufficient to establish the UCL “lost money or property” standing requirement.
The opinion also finds CMA’s evidence satisfies the necessity that the injury be “as a result of the unfair competition.” “CMA’s decision to devote resources to responding to [the policy] was not a supervening or superseding cause under the law of proximate causation” because it was “highly foreseeable” that some physicians affected by the policy “would alert CMA, the state’s most prominent physician association” and that “CMA would come to their assistance by working to reverse or alter [the] policy, attempting to prevent its implementation in ways that impinged on its members’ medical practices.” Further, the injury was independent of the UCL lawsuit itself — “CMA undertook efforts to assist its members in dealing with [the] policy, to persuade [the insurer] to stop enforcing the policy, and to spur regulatory action against the policy.”
The court reverses the published opinion of the Second District, Division Eight, Court of Appeal.