In one of the first rulings to define the scope of Proposition 64, a California appellate court has upheld a 2004 state referendum that bars a consumer from turning a complaint into a class-action lawsuit.

The Court of Appeals of California for Los Angeles County has set aside the class action certification in Pfizer, Inc. v. Galfano, a case in which the Coalition for Healthcare Communication submitted a successful friend-of-the-court brief in conjunction with the U.S. Chamber of Commerce and the Association of National Advertisers.

California’s Unfair Competition Law and its False Advertising Law, known collectively as California 17200, allow consumers to act as the state attorney general and file their own consumer-protection lawsuits against “false and deceptive” marketing.

“It was incredibly dangerous," said John Kamp, executive director of the Coalition for Healthcare Communication. He said the laws promoted "frivolous" suits in which the main aim was to get smaller companies to settle, but they also affect large companies.

Coalition partner Dan Jaffe, executive vice-president of the Association of National Advertisers, said "California has had some of the loosest class-action rules in the country and has seen a whole range of cases brought against advertisers."

California voters approved Proposition 64 in November 2004, imposing new restrictions on private enforcement and closing an existing loophole for lawsuit abuse by requiring proof of injury. This case was the first to consider how Proposition 64 applies to California law.

The Coalition filed an amicus brief in April, arguing that Proposition 64 clearly established that a consumer class action could not be certified unless every member of the plaintiff's class could show they suffered an injury as a result of the false advertising.       

Business and advertising groups across the country are hopeful the ruling will rein in a spate of California class-action suits filed against marketers. Because of California's size and importance, the decision could have far-reaching effects. "It's extremely big news and important for the marketing community," said Jaffe.