Some attorneys are warning that California businesses may want to brace for the effects of a recent state Supreme Court decision that could “open the floodgates” to frivolous and nuisance class-action lawsuits.

Proposition 64 was a 2004 ballot measure aimed at reining in such lawsuits. But, according to some, the 4-3 California Supreme Court decision against tobacco companies in the latest round of class-actions against them appears to have negated some of that proposition’s intent.

After years in which California had what corporate defense attorneys characterized as the most liberal class-action standing requirements in the nation, many believed the passage of Proposition 64 would usher in an era of fewer so-called frivolous lawsuits.

“The impact remains to be seen, but this may mean the unraveling of Proposition 64,” said Horvitz and Levy partner, Brad Pauley, who added that, recently, there had been signs that unmerited class-action suits were slowing.

But, according to Pauley, prior to 64, anyone could sue a company for just about anything as long it could be argued that it had engaged in unfair competition – regardless of whether or not they had personally suffered a loss of money or property.

“In 2004, voters imposed limits on the unfair competition law (UCL), which is the statute under which most class actions are filed,” Pauley said. “In 64, voters were saying anyone bringing an action has to have suffered the loss of money or property as a direct result of the challenged practice.”

The standard for establishing loss as a direct result of unfair competition practices, such as deceptive advertising, represented a notably higher bar for what is called “standing,” or having a legitimate interest in a case.

The court agreed there was a need for the higher standard in principle, yet still decided to overturn a lower court’s decision that required unnamed class members suing tobacco companies for deceptive advertising to meet that standard.

“We conclude that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements,” wrote Justice Carlos R. Moreno in the majority opinion.

Nevertheless, the court ruled to overturn an appeals decision that would have decertified the standing of the majority of the class action members in a case known as Tobacco II.

In essence, in writing for the majority, Justice Moreno said the tobacco companies’ argument that every one of the individual class-action plaintiffs must show that a particular, deceptive advertisement compelled them to go out and buy cigarettes was unreasonable.

Thus, the court sent it back for trial, allowing tobacco companies to be sued by plaintiffs for having been deceived into smoking.

Justices did not duck the issue of possibly negating the voters’ intent when they passed Proposition 64, acknowledging, however vaguely, that the decision in Tobacco II bypasses the measure.