Callaw Reporter

When California voters passed Proposition 64 three years ago, many were responding to proponents’ arguments that the controversial measure would stop shakedown suits against small businesses.

But Pamela Pressley, litigation director for the Santa Monica-based Foundation for Taxpayer and Consumer Rights, insists voters were deceived by major corporations that are now trying to pervert the initiative for their own interests.

“It was a bait and switch,” Pressley says. “Voters were told one thing, and now the companies are turning around and using [Prop 64] as a shield against liability.”

Pressley’s allegations are the central theme of an amicus curiae brief her nonprofit group filed 10 days ago with the California Supreme Court in In re Tobacco Cases II, S147345, a major unfair-advertising suit against six of the nation’s largest tobacco manufacturers.

Prop 64, which limits private attorney general suits, was heavily funded by corporate interests. The brief — which enters territory not even raised by the plaintiffs in the case — claims that support was given under the guise of stopping frivolous suits against small businesses and protecting legitimate public interest cases.

FTCR, which actively fought Prop 64‘s passage, says companies are now using the initiative to dismiss unfair-competition suits by saying the measure added requirements that make it harder for consumers to have standing to bring allegations.

Carmen Balber, the FTCR’s consumer advocate, called Prop 64 “an attempt, and unfortunately a successful attempt, to roll back consumers’ ability to hold companies accountable for wrongdoing.” Prop 64, she said, “was a fraud sold to voters as reform.”

Attorneys representing some of the tobacco companies in the Supreme Court case didn’t return telephone calls or declined to talk about the case. And a spokesman for New York-based Altria Corporate Services Inc., the parent company of lead defendant Philip Morris USA, refused to comment on “another organization’s amicus briefs.”

But a couple of lawyers representing amici who back the tobacco companies dismissed the FTCR’s allegations as baseless.

“It’s a theme that we’ve heard before,” said Morrison Foerster partner William Stern. One of Prop 64‘s authors, he filed a brief on behalf of the Civil Justice Association of California and three other business groups. “It’s good PR because it’s always effective to beat up on tobacco companies. But that just covers up what I consider a shallow legal argument.”

Deborah La Fetra, a staff attorney with the Pacific Legal Foundation, which filed a brief aligned with the industry, said the Supreme Court will look at the voters’ intent.

“But only,” she added, “if that’s reflected in the official documents, such as the ballot pamphlets. I don’t think the court is going to be looking beyond those materials.”

FTCR’s allegations were filed in support of a class action in which Philip Morris and other tobacco companies stand accused of violating the state’s unfair competition law by targeting teens with provocative and deceptive cigarette ads.

San Diego County Superior Court Judge Ronald Prager initially OK’d the class action. But he decertified it after the passage of Prop 64, accepting the tobacco industry’s argument that the initiative requires all class members to show they have been injured by loss of money or property, and that they relied on the false advertising at issue.

San Diego’s Fourth District Court of Appeal affirmed the decertification last year.

FTCR’s amicus brief — prepared by Jully Pae, an associate in Los Angeles’ Gianelli Morris — says the appellate affirmation, as well as a favorable ruling last year for Pfizer Inc. by L.A.’s Second District in another case, show that Big Business has made progress in undermining Prop 64.

“As a result,” Pae wrote, “the will of the voters will be vitiated unless this court corrects this misinterpretation.”

Balber, of FTCR, had stronger words. She accused the tobacco companies of misleading the courts in this case to “get away with lying about the health effects of smoking and marketing cigarettes to children.”

Pressley speculated that if the high court adopts the tougher class certification standards, legitimate false-advertising cases could be stymied.

Whether the plaintiffs welcome FTCR’s aggressive arguments isn’t known. Thomas Haklar, a partner in San Diego’s Dougherty Hildre who represents the plaintiffs, didn’t return calls seeking comment, and his brief doesn’t get into the FTCR’s bait-and-switch arguments.

La Fetra, of PLF, said the FTCR’s argument reminds her of Bates v. Jones, 127 F.3d 839, a 1997 Ninth Circuit U.S. Court of Appeals ruling in which Judge Stephen Reinhardt overturned term limits for California legislators partly because he felt voters didn’t realize they were approving a lifetime ban.

“It was immediately heard en banc,” La Fetra said, “and reversed.”

MoFo’s Stern said FTCR’s position argues for a continuation of the kind of meritless suits Prop 64 — approved by 59 percent of the voters — outlawed.

“What this argument really boils down to,” he said, “is that Prop 64 accomplished only a cosmetic change, and that can’t be right.”