Wednesday, January 13, 2010

California Law Imposes No Standing Requirement

Except in the unusual context of the Unfair Competition statute, Business and Professions Code Section 17200, California does not include a standing requirement comparable to the injury-in-fact requirement imposed by Article III of the federal constitution. That's the holding in Jasmine Networks, Inc. v. Superior Court (here). The case arose as a garden-variety trade secret case; however, the plaintiff entered bankruptcy after the case was filed, in which it sold its rights to the trade secrets at issue while retaining its right to sue for misappropriation that had occurred before the rights were transferred. As a result of these transactions, the defendant contended that the plaintiff had lost its right to pursue its case, because it had sold the trade secrets at issue and could therefore no longer maintain a claim for misappropriation.

The Court of Appeal rejected the argument. While the federal constitution imposes a "case or controversy" requirement on cases in federal court, no such requirement appears in the California Constitution. To the contrary, Article VI, Section 10 gives a Superior Court power to hear any "cause" brought before it. While Code of Civil Procedure 367 requires that lawsuits be brought by the real parties in interest, this means only that a lawsuit must be brought by the plaintiff who has the right to sue under the relevant substantive law. It does not, unlike federal law, impose an additional requirement that is separate and distinct from the merits. Consequently, whether the plaintiff could bring the case turned on trade secret law, not some independent jurisdictional requirement of "standing."

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