Young America Corp. v. Super. Ct.

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Filed 1/30/06 Young America Corp. v. Superior Court CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or
ordered published for purposes of rule 977.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
YOUNG AMERICA CORPORATION,
Petitioner,
v.
THE SUPERIOR COURT OF SACRAMENTO
COUNTY,
Respondent;
ROBERT LYNCH,
Real Party in Interest.
C049337
(Super. Ct. No. 02AS01561)
This case raises the issue of the retroactivity of
Proposition 64’s amendments to Business and Professions Code
sections 17203 and 17204. We conclude the statutory repeal
rule, in accordance with the plain language of the amended
statutes after the enactment of Proposition 64, requires the
application of Proposition 64’s amendments to all pending cases.

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Real party in interest Robert Lynch (Lynch) brought suit
against petitioner Young America Corporation (Young America) as
“an individual, on behalf of the general public” for unfair
business practices under California’s Unfair Competition Law
(UCL). (Bus. & Prof. Code, § 17200 et seq.)1 Lynch alleged
Young America, a promotion fulfillment company,2 violated
California’s Unclaimed Property Law (Code Civ. Proc., § 1500 et
seq.) by keeping funds from uncashed rebate checks sent to
consumers in California rather than reporting and surrendering
the funds to the State of California. Lynch alleged he is a
California resident, bringing the action pursuant to the UCL.
Young America demurred to the complaint, contending Lynch
lacked standing to bring the action because Lynch was not truly
suing on behalf of the public, but on behalf of the California
State Controller’s office and the State of California was
already investigating and pursuing the same remedies by making
1 Undesignated statutory references are to the Business and
Professions Code.
2 Young America describes a promotion fulfillment company as a
company providing services to manufacturers who sponsor
contests, games and rebate programs as part of the advertising
of their products. With respect to rebate programs, the
fulfillment company receives claims submitted by the customer or
consumer, processes those claims and sends out checks to the
customer or consumer. A percentage of the rebate checks that
are mailed out never get cashed. The amount of money
represented by uncashed checks is known in the industry as
“slippage.” Slippage is either returned to the manufacturer or
booked as revenue by the fulfillment company, depending on the
contractual arrangement between the manufacturer and the
fulfillment company.

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an audit demand of the records of Young America. Young America
contended Lynch lacked standing as a private attorney general
because the lawsuit was unnecessary. In the alternative, Young
America asked for a stay of the action pending resolution of a
federal lawsuit and the actions of the State of California. The
trial court overruled the demurrer and denied the request for
stay.
On November 2, 2004, the California electorate approved
Proposition 64, which amended sections 17203 and 17204 to limit
standing to bring a cause of action under the UCL to government
prosecutors or individuals who have suffered actual injury, and,
if acting on behalf of others, have satisfied the class
certification requirements set forth in Code of Civil Procedure
section 382. Proposition 64 became effective on November 3,
2004. (Cal. Const., art. II, § 10, subd. (a).)
Following the passage of Proposition 64, Young America
moved for judgment on the pleadings, arguing Proposition 64
retroactively applied to eliminate any standing Lynch had under
the UCL. The trial court denied Young America’s motion, ruling
the amendments approved in Proposition 64 did not apply to
pending actions. Pursuant to Code of Civil Procedure section
166.1, the trial court expressed its belief “that the key
question presented on Young America’s Motion - whether or not
Proposition 64 should be applied prospectively only or
retroactively - is a controlling question of law as to which
there are substantial grounds for differences of opinion,

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appellate resolution of which may materially advance the
conclusion of this litigation.”
The denial of a motion for judgment on the pleadings may be
reviewed by means of a petition for writ of mandate. (Fire Ins.
Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 451-452.)
An order overruling a demurrer, while not routinely reviewable
by writ proceedings, may be considered on a petition for a writ
of mandate where the issue is one of substantial legal
importance. (Babb v. Superior Court (1971) 3 Cal.3d 841, 851;
City of Ontario v. Superior Court (1993) 12 Cal.App.4th 894,
898.)
Young America filed a petition for writ of mandate or other
appropriate relief seeking review of the trial court’s rulings
on its demurrer and motion for judgment on the pleadings. We
issued the alternative writ and stayed further proceedings in
the superior court.
Young America argues Proposition 64 applies to this pending
case because: (1) it repealed the right of an uninjured person
to sue under the UCL; (2) the plain language of the amended UCL,
along with the findings, declarations, and ballot arguments for
Proposition 64, establishes the voters’ intent that Proposition
64 be applied to pending cases; and (3) the amendments were
procedural changes applicable to pending UCL actions. Young
America claims Lynch’s complaint cannot be amended to meet the
new standing requirements and asks that leave to amend be
denied. Even if Proposition 64 does not apply to pending

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actions, Young America claims Lynch lacks standing based on the
arguments set forth in its demurrer. Lynch contends Proposition
64 should not be given retroactive effect and the demurrer was
properly overruled. If Proposition 64 is determined to apply to
pending cases, Lynch claims he still has standing and asks to be
given leave to amend.
As the parties note, the issue of the retroactivity of
Proposition 64 is currently before the California Supreme Court.3
We agree with a majority of the related decisions that have been
granted review by the Supreme Court. These decisions hold the
statutory repeal rule is applicable to Proposition 64, requiring
the amended standing requirements of the UCL to be used in all
pending cases. The plain language enacted by Proposition 64
supports the application of the statutory repeal rule. As the
complaint filed by Lynch alleged only he was bringing this
action as an individual on behalf of the public, Lynch failed to
3 (See Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of
America (2005) 129 Cal.App.4th 540 [Second. Dist., Div. Eight],
petition for review granted September 28, 2005, S135587;
Thornton v. Career Training Center (2005) 128 Cal.App.4th 116
[Fourth Dist., Div. One], review granted July 20, 2005, S133938;
Lytwyn v. Fry’s Electronics (2005) 126 Cal.App.4th 1455 [Fourth
Dist., Div. One], review granted April 27, 2005, S133075; Bivens
v. Corel Corp. (2005) 126 Cal.App.4th 1392 [Fourth Dist., Div.
One], review granted April 27, 2005, S132695; Benson v. Kwikset
Corp. (2005) 126 Cal.App.4th 887 [Fourth Dist., Div. Three],
review granted April 27, 2005, S132443; Branick v. Downey
Savings & Loan Assn. (2005) 126 Cal.App.4th 828 [Second Dist.,
Div. Five], review granted April 27, 2005, S132433; Californians
for Disability Rights v. Mervyn’s LLC (2005) 126 Cal.App.4th 386
[First Dist., Div. Four], review granted April 27, 2005,
S131798.)

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satisfy the new standing requirements. Therefore, the trial
court erred in denying Young America’s motion for judgment on
the pleadings. We also conclude the complaint shows on its face
it is incapable of amendment to assert standing in an individual
under the amended UCL. In light of these conclusions, we need
not address the other issues presented by Young America’s
petition for writ of mandate.
DISCUSSION
I
Standard of Review for a Motion for Judgment on the Pleadings
“In deciding or reviewing a judgment on the pleadings, all
properly pleaded material facts are deemed to be true, as well
as all facts that may be implied or inferred from those
expressly alleged. [Citation.] A ruling on a motion for
judgment on the pleadings ‘resolves a mixed question of law and
fact that is predominantly one of law, viz., whether or not the
factual allegations that the plaintiff makes are sufficient to
constitute a cause of action. [Citation.] The resolution of a
question of this sort calls for examination de novo.
[Citation.]’ [Citation.]” (Fire Ins. Exchange v. Superior
Court, supra, 116 Cal.App.4th at pp. 452-453.)
II
The Statutory Repeal Rule
The UCL prohibits “any unlawful, unfair or fraudulent
business act or practice and unfair, deceptive, untrue or
misleading advertising.” (§ 17200.) “The Legislature intended

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this ‘sweeping language’ to include ‘“anything that can properly
be called a business practice and that at the same time is
forbidden by law.”’ [Citation.]” (Bank of the West v. Superior
Court (1992) 2 Cal.4th 1254, 1266.) Standing to sue was
expansive as well. Under former section 17204, a UCL action
could be brought by a public prosecutor or “‘by any person
acting for the interests of itself, its members or the general
public.’” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29
Cal.4th 1134, 1143.)
Proposition 64 amended section 17204 to limit standing to
public prosecutors and “any person who has suffered injury in
fact and has lost money or property as a result of such unfair
competition.” In addition, Proposition 64 amended section 17203
to require that a private party may bring a representative
action only if he or she meets the standing requirements of
section 17204 and complies with class certification requirements
set forth in Code of Civil Procedure section 382.4 (§ 17203.)
The amendments do not include a savings clause.
Courts ordinarily presume that a newly enacted statute
operates prospectively, but also hold “that when a pending
action rests solely on a statutory basis, and when no rights
have vested under the statute, ‘a repeal of such a statute
4 Code of Civil Procedure section 382 reads in part: “[W]hen the
question is one of a common or general interest, of many
persons, or when the parties are numerous, and it is
impracticable to bring them all before the court, one or more
may sue or defend for the benefit of all.”

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without a saving clause will terminate all pending actions based
thereon.’” (Governing Board v. Mann (1977) 18 Cal.3d 819, 829-
831 (Mann), quoting Southern Service Co., Ltd. v. Los Angeles
(1940) 15 Cal.2d 1, 11-12.) What has come to be known as the
statutory repeal rule applies regardless of whether the repeal
takes the form of an express repeal of the entire statute or an
amendment of a specific section that effectively results in a
repeal of the statutory provision under which the cause of
action arose. (Younger v. Superior Court (1978) 21 Cal.3d 102,
109; Wolf v. Pacific Southwest Discount Corp. (1937) 10 Cal.2d
183, 184-185.)
“The repeal of a statutory right or remedy . . . presents
entirely distinct issues from that of the prospective or
retroactive application of a statute. A well-established line
of authority holds: ‘“‘The unconditional repeal of a special
remedial statute without a saving clause stops all pending
actions where the repeal finds them. If final relief has not
been granted before the repeal goes into effect it cannot be
granted afterwards, even if a judgment has been entered and the
cause is pending on appeal.’”’” (Physicians Com. for
Responsible Medicine v. Tyson Foods, Inc. (2004) 119 Cal.App.4th
120, 125-126.) “‘The justification for [the statutory repeal]
rule is that all statutory remedies are pursued with full
realization that the [L]egislature may abolish the right . . .
at any time.’” (Brenton v. Metabolife Internat., Inc. (2004)
116 Cal.App.4th 679, 690, quoting Callet v. Alioto (1930) 210

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Cal. 65, 67-68; see Gov. Code, § 9606 [“Persons acting under any
statute act in contemplation of this power of repeal”].)
The statutory repeal rule applies only “when the right in
question is a statutory right and does not apply to an existing
right of action which has accrued to a person under the rules of
the common law, or by virtue of a statute codifying the common
law. In such a case, it is generally stated, that the cause of
action is a vested property right which may not be impaired by
legislation. In other words, the repeal of such a statute or of
such a right should not be construed to affect existing causes
of action. [Citations.]” (Callet v. Alioto, supra, 210 Cal. at
p. 68.)
The Supreme Court has repeatedly held that the UCL set
forth in section 17200 et seq., and its predecessor statute,
“cannot be equated with the common law definition of ‘unfair
competition.’” (Barquis v. Merchants Collection Assn. (1972) 7
Cal.3d 94, 109; see also Bank of the West v. Superior Court,
supra, 2 Cal.4th at pp. 1263-1264.) Lynch’s UCL claim rests
entirely on statutory grounds and does not derive from a common
law cause of action. We conclude the statutory repeal rule
applies to Proposition 64’s amendments to sections 17203 and
17204, leaving Lynch without standing to sue on behalf of the
public under the UCL.

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III
The Plain Language of Amended Section 17204
Our conclusion regarding the application of the statutory
repeal rule to Proposition 64 is supported by the plain meaning
of the language enacted by Proposition 64.
Section 17204, as amended by Proposition 64, provides, in
part: “Actions for any relief pursuant to this chapter shall be
prosecuted exclusively . . . by [a government prosecutor] or by
any person who has suffered injury in fact and has lost money or
property as a result of such unfair competition.” (Italics
added.) By using the term “prosecuted” rather than “filed” or
“brought,” the Legislature in previous versions of the statute,
and the electorate, pursuant to Proposition 64, meant for this
statute to provide the continuing standing to litigate the
action, not just to file the action. “Prosecute” means to
“commence and carry out a legal action.” (Black’s Law Dict.
(8th ed. 2004) p. 1258, italics added; see Marler v. Municipal
Court (1980) 110 Cal.App.3d 155, 160-161 [“prosecution” includes
every step from commencement to final determination of action].)
The text of Proposition 64 makes it clear that “prosecute” means
more than just filing: “It is the intent of California voters
in enacting this act that only the California Attorney General
and local public officials be authorized to file and prosecute
actions on behalf of the general public.” (Prop. 64, § 1(f),
italics added; see California Mfrs. Assn. v. Public Utilities

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Com. (1979) 24 Cal.3d 836, 844 [construction of statute
rendering some words surplusage or redundant to be avoided].)
IV
Leave to Amend
Young America contends there is no “need to allow Lynch an
opportunity either to attempt to amend his complaint to allege
injury in fact or to attempt to substitute a new party with
injury in fact” because neither Lynch nor any other individual
plaintiff can establish injury in fact from Young America’s
retention of any money from uncashed rebate checks. Lynch
responds he has been harmed by Young America’s practices within
the meaning of Proposition 64 and requests leave to amend to
allege additional facts regarding his standing. Lynch reasons
that if Young America had complied with the escheat law of
California, the State of California would have use of such
monies for the benefit of Lynch and other residents. Therefore,
Young America’s alleged failure to report and surrender the
funds from uncashed rebate checks issued to California residents
deprived Lynch and other residents of California of benefits
that could have been funded with such monies. According to
Lynch, he and the other California residents “have been injured
in the same manner as if Young America had taken money directly
from their pockets.” Young America has the better argument.
We do not consider and need not decide the precise meaning
of “injury in fact” for purposes of amended sections 17203 and
17204. It is clear after the enactment of Proposition 64 the

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sections require some wrong or harm to an interest or right over
and above the interests and rights held in common with the
public at large in order for an individual to have standing to
sue. Otherwise, the amendments to sections 17203 and 17204
enacted by Proposition 64 will have changed nothing, contrary to
the expressed intent of the California voters “that only the
California Attorney General and local public officials be
authorized to file and prosecute actions on behalf of the
general public.” (Prop. 64, § 1(f).) If an individual
asserting an injury coextensive in scope and kind with the
general public could still claim an “injury in fact” and bring
an action under the UCL, the amendments would be meaningless.
Such a construction must be rejected. (Hassan v. Mercy American
River Hospital (2003) 31 Cal.4th 709, 723; Manufacturers Life
Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, 274 [“Well-
established canons of statutory construction preclude a
construction which renders a part of a statute meaningless or
inoperative”].)
Given the nature of the unfair business practice alleged by
this complaint, that is, Young America’s business practice of
retaining monies that should escheat to the State of California,
we can conceive of no individual or class of individuals who
could allege an injury in fact on this cause of action different
from the injury general to the public at large. Since the
complaint shows on its face it is incapable of amendment to
assert standing in a specific individual or class of individuals

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under the amended UCL, leave to amend must be denied. (See
Virginia G. v. ABC Unified School Dist. (1993) 15 Cal.App.4th
1848, 1852.)
DISPOSITION
Let a writ of mandate issue directing respondent superior
court to vacate its order denying Young America’s motion for
judgment on the pleadings and enter a new and different order
granting that motion and denying leave to amend. The stay of
proceedings in Sacramento County Superior Court No. 02AS01561 is
vacated upon finality of this opinion. Young America is awarded
costs. (Cal. Rules of Court, rule 56(l)(1).)
CANTIL-SAKAUYE , J.
We concur:
SIMS , Acting P.J.
DAVIS , J.

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