July 20, 2023
Decided July 17, 2023
California Medical Association v. Aetna Health of California, Inc., S269212
This week, the California Supreme Court held that organizations have standing to sue for violations of California’s Unfair Competition Law if they spent resources fighting the business practice they challenge as unfair.
Background: The California Medical Association (“CMA”), a nonprofit organization that advocates on behalf of member physicians, sued Aetna Health of California over Aetna’s implementation of a “Network Intervention Policy,” which limited in-network providers’ ability to refer patients to out-of-network providers. The CMA alleged that the policy violated California’s Unfair Competition Law (“UCL”).
Under the UCL, private plaintiffs have standing to sue only if they have “suffered injury in fact” and “lost money or property as a result of” the business practice they challenge as unlawful or unfair. (Bus. & Prof. Code, § 17204.) CMA argued that it met this standard because it had diverted more than 200 hours of staff time to responding to Aetna’s Network Intervention Policy. CMA alleged that, among other things, it prepared a letter to California regulators and advised affected physicians about the policy.
Aetna argued that CMA lacked statutory standing because it had not lost money or property as a result of the policy. The trial court agreed that the diversion of organizational resources is not the same as the loss of money or property and entered summary judgment for Aetna. The Court of Appeal affirmed.
Issue: California’s Unfair Competition Law requires private plaintiffs to have “suffered injury in fact” and “lost money or property as a result of the unfair competition” the plaintiffs challenge. Can plaintiffs satisfy this requirement by pointing to the costs they incurred in responding to the challenged business practice?
Yes. When an organization incurs costs responding to perceived unfair competition that threatens its bona fide, preexisting mission, and those costs were not incurred through litigating or preparing to litigate the organization’s UCL claims, the organization has satisfied the UCL’s standing requirements.
“[T]he UCL’s standing requirements are satisfied when an organization … incurs costs to respond to perceived unfair competition that threatens [its] mission…”
Justice Evans, writing for the Court
What It Means:
The Court’s opinion is available here.
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