Yesterday, in Wells v. One2One Learning Foundation, ___ Cal.4th ___ (Aug. 31, 2006), the Supreme Court addressed the word "person" as used in the UCL. Restitution and injunctive relief may be obtained against "[a]ny person who engages, has engaged, or proposes to engage in unfair competition …." Bus. & Prof. Code § 17203. A charter school, the Supreme Court concluded, falls within the definition of "person" under the UCL:
Slip op. at 37-38 (footnotes omitted).
[T]he UCL defines “persons” subject to that law to “mean and include natural persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons.” (Bus. & Prof. Code, § 17201.) The charter school defendants either are, or are operated by, corporations, and they also constitute “associations” or “organizations.” They are within the plain meaning of the statute.
Noting that several cases have held government entities are not “persons” who may be sued under the UCL (e.g., Community Memorial Hospital v. County of Ventura (1996) 50 Cal.App.4th 199, 209 (Community Memorial); see also People for the Ethical Treatment of Animals, Inc. v. California Milk Producers Advisory Bd. (2005) 125 Cal.App.4th 871, 877-883; California Medical Assn. v. Regents of University of California (2000) 79 Cal.App.4th 542, 551; Trinkle v. California State Lottery (1999) 71 Cal.App.4th 1198, 1203-1204; Janis v. California State Lottery Com. (1998) 68 Cal.App.4th 824, 831; Santa Monica Rent Control Bd. v. Bluvshtein (1991) 230 Cal.App.3d 308, 318; but see Notrica v. State Comp. Ins. Fund (1999) 70 Cal.App.4th 911, 939-945), the charter school defendants insist they are entitled, as part of the public school system, to this “public entity” exemption. The Court of Appeal agreed. We do not.
As we have indicated, charter schools are operated, pursuant to the CSA, by nongovernmental entities. Though, by statutory mandate, these institutions are an alternative form of public schools financed by public education funds, they and their nongovernmental operators are largely free and independent of management and oversight by the public education bureaucracy. Indeed, charter schools compete with traditional public schools for students, and they receive funding based on the number of students they recruit and retain at the expense of the traditional system. Insofar as their nongovernmental operators use deceptive business practices to further these efforts, the purposes of the UCL are served by subjecting them to the provisions of that statute.
Nor is the state’s sovereign educational function thereby undermined. Even if governmental entities, in the exercise of their sovereign functions, are exempt from the UCL’s restrictions on their competitive practices (see Community Memorial, supra, 50 Cal.App.4th 199, 209-211 [county was not “person” for purposes of UCL, such that county hospital’s treatment of paying patients in competition with private hospitals would be subject to statute], no reason appears to apply that principle to nongovernmental entities, covered by the plain terms of the statute, who compete with the traditional public schools for students and funding. We conclude that the charter school defendants are “persons” covered by the UCL.