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

Page 731

71 Cal.Rptr.2d 731

17 Cal.4th 553, 950 P.2d 1086, 98 Daily Journal D.A.R. 1765

STOP YOUTH ADDICTION, INC., Plaintiff and Appellant, v. LUCKY STORES, INC., Defendant and Respondent.

No. S055373.

Supreme Court of California.

Feb. 23, 1998.

Donald P. Driscoll and William M. Henley, Albany, for Plaintiff and Appellant.

Louise H. Renne, City Attorney (San Francisco), Dennis Aftergut, Chief Assistant City Attorney, Elizabeth D. Laporte, Andrew Y.S. Cheng and Jayne C. Lee, Deputy City Attorneys, Scot D. Bernstein, Richard F. Ellers and Eric Berliner, Nevada City, as Amici Curie on behalf of Plaintiff and Appellant.

Gibson, Dunn & Crutcher, Gail E. Lees, Los Angeles, Richard D. Gluck, San Diego, John A. Arguelles, Irvine, and Lincoln D. Bandlow for Defendant and Respondent.

Daniel E. Lungren, Attorney General, Thomas F. Gede, Assistant Attorney General, Fred J. Hiestand, Sacramento, Fred L. Main, Daniel J. Popeo, Paul D. Kamenar, Haight, Brown & Bonesteel, Jeffrey B. Margulies, Santa Monica, Livingston & Mattesich, Carol Livingston, Gene Livingston, Horvitz & Levy, Lisa Perrochet, David M. Axelrad, Encino, Skadden, Arps, Slate, Meagher & Flom, Charlotte A. Lowell, San Francisco, Rogers, Joseph, O'Donnell & Quinn, Renee D. Wasserman, San Francisco, and Sean M. SeLegue, San Francisco, as Amici Curiae on behalf of Defendant and Respondent.

Dean Flippo, District Attorney (Monterey), Lydia Villarreal, Deputy District Attorney, Thomas J. Orloff, District Attorney (Alameda), Christopher C. Carpenter, Assistant District Attorney, Lawrence G. Brown, James C. Sturdevant, San Francisco, Ian Herzog, Santa Monica, Mary E. Alexander, San Francisco, Bruce A. Broillet, Santa Monica, David S. Casey, Jr., San Diego, Deborah David, Los Angeles, Douglas Devries, Sacramento, Laurence E. Drivon, Stockton, Thor Emblem, Escondido, Joseph F. Harbison III, Sacramento, Steven J. Kleifield, Los Angeles, Harvey R. Levine, San Diego, Moses Lebovits, Los Angeles, Wayne McClean, Woodland Hills David A. Rosen, Los Angeles, Leonard Sacks, Granada Hills, Daniel U. Smith, Kentfield, Chris Spagnoli, Robert R. Steinberg, Tony Tanke, Redwood City, Lea-Ann Tratten, Rick Simons, Hayward, Thomas G. Stoplman, William D. Turley, San Diego, Roland Wrinkle, Woodland Hills, Earl Lui, San Francisco, Kenneth W. Babcock, Kathleen A. Michon, Richard A. Rothschild, Bet Tzedek Legal Services, Los Angeles, and David A. Lash as Amici Curiae.

WERDEGAR, Justice.

The question presented is whether a private, for-profit corporation may maintain on behalf of the general public an unfair competition action against a retailer who, in violation of the Penal Code, sells cigarettes to minors. We conclude such an action is authorized under BUSINESS AND PROFESSIONS CODE SECTIONS 17200¹ through 17209 (the unfair competition law, or UCL). ² Accordingly, we affirm the judgment of the Court of Appeal.

FACTS

"Because this matter comes to us after the trial court sustained the defendant's demurrer, 'we must, under established principles, assume the truth of all properly pleaded material allegations of the complaint in evaluating the validity' of the decision below." (Lazar v. Superior Court (1996) 12 Cal.4th 631, 635, 49 Cal.Rptr.2d 377, 909 P.2d 981, quoting Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 170, 164 Cal.Rptr. 839, 610 P.2d 1330.) Plaintiff Stop Youth Addiction, Inc. (SYA) alleges, inter alia:

SYA, a California corporation, brings this action in the public interest.

Defendant Lucky Stores, Inc. (Lucky) and numerous other retailers in Northern California sell cigarettes to minor children in violation of Penal Code section 308. Many of these children become addicted to cigarettes, as they would not have had Lucky not illegally sold them cigarettes. Lucky profits from addicting such children to cigarettes because many, unable to overcome their addiction, return to buy cigarettes as both children and adults.

Approximately 90 percent of cigarette sales in northern California are to children or to adults who were addicted as children and who would like, but are unable, to quit smoking. Consequently, Lucky has unjustly enriched itself in an amount equal to 90 percent of its gross profits from the sale of cigarettes. Every dollar Lucky obtains through such cigarette sales results, on average, in more than a dollar spent on health care by the State of California.

SYA prays for $10 billion in restitution to be paid to the State of California, an injunction forbidding Lucky to sell cigarettes to children, costs and reasonable attorney fees.

The superior court sustained Lucky's general demurrer without leave to amend, opining that section 308, which prohibits the knowing sale of cigarettes to minors, "preempts" all private enforcement of section 308. The Court of Appeal, relying on our decisions in People v. McKale (1979) 25 Cal.3d 626, 159 Cal.Rptr. 811, 602 P.2d 731 and Committee on Children's Television, Inc. v. General Foods Corp., supra, 35 Cal.3d 197, 197 Cal.Rptr. 783, 673 P.2d 660 (Children's Television ), reversed the superior court's order sustaining Lucky's demurrer. We granted Lucky's petition for review.

DISCUSSION

We note at the outset what is not before us on review. Lucky and supporting amici curiae have attempted to call into question plaintiff's and its counsel's motives in prosecuting this action. Lucky points to plaintiff's for-profit status, requests judicial notice of similar actions plaintiff has filed, and notes that plaintiff names many retailer defendants. Lucky also notes one court in a different case filed by plaintiff noted with concern evidence of attempts by plaintiff's counsel to obtain monetary payments from certain defendants prior to filing the lawsuit. Lucky also suggests plaintiff's methods of gathering evidence were unlawful and that plaintiff brings this case for its own and its attorney's financial gain.

These are important concerns. As discussed below, no conclusion we reach respecting the viability of this action at demurrer stage should be taken as countenancing the illegal gathering of evidence. Generally however, we agree with amicus curiae the California District Attorneys Association (CDAA) that only the sufficiency of plaintiff's complaint, not the seemliness of its litigation strategy or its counsel's motives, is properly before us on review at this time. ³

As a threshold matter, it is plain that SYA, in alleging Lucky violates Penal Code section 308 in its retailing activities, adequately alleges unfair competition. ⁴ The UCL defines "unfair competition" as "... any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising...." (§ 17200.) As we recently explained in reviewing the scope and purpose of the unfair competition law and its remedial provisions, "[t]he Legislature intended this 'sweeping language' to include ' "anything that can properly be called a business practice and that at the same time is forbidden by law." ' " (Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1266, 10 Cal.Rptr.2d 538, 833 P.2d 545 quoting Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 111, 113, 101 Cal.Rptr. 745, 496 P.2d 817.)

Indeed, in expressly conceding "the right of ... public prosecutors to bring claims under section 17200 such as those at issue here, to supplement the prosecutors' enforcement rights under Penal Code section 308," Lucky impliedly concedes claims under section 17200 such as those at issue here are properly stated, i.e., that selling cigarettes to minors is unfair competition under the statute.

Lucky nevertheless contends the Court of Appeal erred in ruling this action may proceed. Lucky argues SYA's suit is barred both by the UCL (because, according to Lucky, SYA lacks standing to bring a UCL action predicated on violation of a statute for the direct enforcement of which there is no private right of action) and by Penal Code section 308 (because, Lucky asserts, section 308, together with the Stop Tobacco Access to Kids Enforcement Act, sections 22950-22959 (STAKE Act), embodies the Legislature's intent to create a comprehensive, exclusive scheme for combating the sale of tobacco to minors). Lucky also contends various public policy considerations militate against permitting this action to survive demurrer.

1. Standing

Section 17204 provides, in full: "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 or by any county counsel authorized by agreement with the district attorney in actions involving violation of a county ordinance, or any city attorney of a city, or city and county, having a population in excess of 750,000, and, with the consent of the district attorney, by a city prosecutor in any city having a full-time city prosecutor or, with the consent of the district attorney, by a city attorney in any city and county in the name of the people of the State of California 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." (Italics added.)

Amicus curiae Association for California Tort Reform (ACTR) suggests that, from a grammatical perspective, section 17204 confers UCL standing only on the public prosecutors listed therein. More specifically, as ACTR would parse the statute, all that "any person acting for the interests of itself, its members or the general public" (§ 17204) may do about unfair competition is to complain about it to one of the officials, as appropriate, listed in the statute, e.g., the Attorney General, district attorney, county counsel or city prosecutor.

ACTR's strained construction is contrary to our previous pronouncements. As Lucky concedes, pursuant to section 17200 as construed by this court and the Courts of Appeal, "a...