The Center celebrates the California Sixth Circuit Court of Appeal’s recent publication of its opinion in Chai v. Velocity Investments, which forcefully rejected the notion that California law contains any default standing requirement similar to the injury-in-fact standard of Article III.
The central question in Chai was whether bringing suit under California’s Fair Debt Buying Practices Act (FDBPA) required plaintiffs to show proof of concrete harm, monetary or otherwise. The court declared that the California Legislature has given no “indication that it intended Article III standing as the touchstone for standing to vindicate … rights in this state’s courts.” Accordingly, federal case law that has made it harder for consumers to achieve justice for violations of consumer protection statutes in federal courts has “no bearing” on cases brought under the FDBPA or any other state statute that provides for a remedy for non-compliance alone.
The Chai court repeatedly referenced arguments made by the Center and its allies in the amicus brief we filed, which was also cited numerous times by plaintiff’s counsel at oral argument.
Because all California Courts of Appeal have equal authority throughout the state, the Chai decision becomes a powerful counterpoint to the Fifth District’s opinion in Limon v. Circle K Stores Inc. That 2022 decision abruptly announced that Article III’s injury-in-fact requirement has always applied in cases brought in California state court—notwithstanding considerable case law and express legislative direction to the contrary. Indeed, as the Chai decision pointed out, many of California’s most essential labor and consumer protections embrace a much more expansive view of actionable conduct. Time and again, the “Legislature established a statutory right to information, treated violation of that right as an injury, and provided a monetary award to remedy that purely informational injury.” Article III requirements have no bearing on such statutorily-created standing.
With the decision in Chai, all California trial courts now have a published appellate decision to support the proposition that Article III standing principles do not apply by default in California courts. Moreover, the Chai opinion unambiguously declares that actual damages are irrelevant whenever “nothing in [a] statute suggests that any injury beyond the noncompliance is required to impose civil liability.” Similarly, defendants who have been energetically advancing the theory that all plaintiffs must show actual damage, even when a statute contains no such requirement, now must contend with a decision that holds that “California’s Legislature has the power to grant litigants access to the state’s own courts to vindicate rights the Legislature conferred.”
The Chai decision comes at a crucial time. With many federal agencies in turmoil and prohibited from moving enforcement actions forward, states have become the primary line of defense against predatory business practices. This decision ensures that California courts remain fully available to consumers who encounter deception and fraud, without forcing them to undergo the complicated and onerous process of establishing federal Article III standing.