Clayworth v. Pfizer, Inc

In Clayworth v. Pfizer, Inc., (2010) 49 Cal.4th 758, certain retail pharmacies, alleging unlawful price fixing, filed suit against companies that manufactured, marketed, and/or distributed pharmaceutical products. The plaintiffs asserted that they had been forced to pay overcharges they would not have had to pay in a competitive market. (Id. at pp. 764-765.) The defendants argued the claims were barred because the plaintiffs had not been injured, inasmuch as they had passed on any overcharges to third parties. (Id. at p. 765.) The trial court, in ruling on cross-motions for summary judgment/summary adjudication, concluded that the pass-on defense defeated the UCL claim because the plaintiffs had not lost money or property, as required for UCL standing. (Id. at p. 766.) The appellate court affirmed on the basis of lack of standing and ineligibility for relief. (Id. at p. 788.) The Supreme Court rejected the defendants' argument that the plaintiffs had suffered no loss because they were able to pass the overcharges on to others. It stated: "Section 17204 requires only that a party have 'lost money or property,' and the plaintiffs indisputably lost money when they paid an allegedly illegal overcharge. We decline the defendants' invitation to turn this facially simple threshold condition into a requirement that plaintiffs prove compensable loss at the outset." (Clayworth v. Pfizer, Inc., supra, 49 Cal.4th at p. 789.) The court also stated that the plaintiffs could seek injunctive relief, irrespective of whether they could also seek restitution. (Id. at pp. 789-790.) In Clayworth, the trial and appellate courts concluded that the plaintiffs had no UCL standing because they had suffered no injury. However, the Supreme Court held that the plaintiffs had indeed alleged injury, in the form of overcharges suffered. The Court concluded that retail pharmacies had standing to assert UCL claims against pharmaceutical companies that had allegedly engaged in price fixing even though the retail pharmacies were able to pass on any overcharges to their customers. (Id. at p. 788.) The court rejected the pharmaceutical companies' argument the pharmacies ultimately "suffered no compensable loss because they were able to mitigate fully any injury by passing on the overcharges," explaining "the doctrine of mitigation, where it applies, is a limitation on liability for damages, not a basis for extinguishing standing. This is so because mitigation, while it might diminish a party's recovery, does not diminish the party's interest in proving it is entitled to recovery." (Id. at p. 789.)