Joyce Kennard

SAN FRANSISCO (Legal Newsline) - Labor unions cannot sue under California's unfair competition law, the state Supreme Court said in a ruling that affirmed an appeals court decision.

Issues in the Los Angeles County case included whether a plaintiff labor union that has not suffered actual injury and that is not an "aggrieved employee" can bring a representative action under the unfair competition law, outlined in the California Unfair Competition Act.

While unions may bring a class action under the unfair competition law, the justices said unions may not sue if it has not suffered injury.

The Amalgamated Transit Union Local 1756 and Teamsters Joint Council 42 brought the original case against defendants First Transit, Inc., Progressive transportation Services Inc.

The unions alleged that they were representatives of defendants' employees. They claimed the defendants had violated the state unfair competition law and are subject to civil penalties under the Labor Code Attorneys General Act of 2004 for failing to provide meal or rest periods.

The complaint sought injunctive relief, restitution of $10.6 million in unpaid wages; 30 days' wages for each employee who was terminated without being paid; $2.6 million in civil penalties in addition to prejudgment interest and attorney fees.

At trial, a court ruled that the unions lacked standing because they suffered no actual injury, under the unfair competition law, and they lacked standing under the Labor Code Private Attorneys General Act of 2004 because they were not aggrieved employees.

Before 2004, the state unfair competition law allowed "any person acting for the interests of itself, its members or the general public" to seek injunctive relief or restitution. The law now requires that a representative claim may be brought only by a person who has "suffered injury in fact and has lost money or property as a result of the unfair competition."

California Proposition 64 amended the unfair competition law, requiring the plaintiff to be the one "who has suffered injury in fact and has lost money or property as a result of the unfair competition."

Although the unions conceded that they did not meet the legal threshold, they argued that they had standing in a representative capacity.

The majority's conclusion, written by Associate Justice Joyce Kennard, found that the unfair competition law, as amended by Proposition 64, requires that representative actions be brought as class actions.

The state Supreme Court said the amendment confers standing to bring a representative action only on a "person who has suffered injury in fact and has lost money or property as a result of the unfair competition."

The Labor Code Private Attorneys General Act of 2004 is a procedural statute that allows an aggrieved employee to recover civil penalties for violations of the California Labor Code.

The plaintiff unions claim the legal concept of associational standing. This doctrine was developed in the federal courts under the "case or controversy" requirement of Article III of the U.S. Constitution.

The U.S. Supreme Court has held that an association, such as a labor union, may bring an action on behalf of its members when the association itself would not otherwise have standing.

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