Suing Companies in California
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Interesting legal decision in California recently.
The California Supreme Court has ruled that a lobbying group for doctors can pursue a challenge to an Aetna Inc (QUEMAI.UL) unit’s referral policy, a decision that could pave the way for more lawsuits by nonprofit groups and unions.
The seven-member court on Monday unanimously held that organizations have standing to sue for unfair competition under state law when they expend money and time to address potentially illegal conduct on behalf of their members.
The court revived a lawsuit by the California Medical Association (CMA), which represents nearly 40,000 doctors, accusing Aetna Health of California Inc of unfair competition for terminating physicians from a referral service for referring patients to out-of-network providers.
The court on Monday rejected Aetna’s claim that merely expending resources on behalf of members did not amount to a “loss of money or property” that would give the association standing to sue under state law.
“When staff are diverted to a new project undertaken in response to an unfair business practice, the organization loses the value of their time, which otherwise would have been used to benefit the organization in other ways,” Justice Kelli Evans wrote for the court.
Michael Rubin of Altshuler Berzon, who represents the CMA, said the ruling will allow nonprofits and labor unions to bring a broader range of legal challenges to corporate activity.
I am not enough of a labor law expert to know how this might really impact union power, but I can think of so many scenarios where using the courts to hold corporations accountable would be tremendously useful for the cause of justice. I will let the lawyers out there discuss more how this might work or what chance there is that the federal courts will try to intervene here.