UCL "unlawful" prong hypothetical

A reader writes in with the following question:

Can a California plaintiff assert an action against a California defendant under the UCL based on a violation of another state's laws? According to the 17200 Rutter Group treatise, this is an open question. I believe it would be possible in the proper circumstances. But, I would be interested in seeing if there are any trial court decisions around the state that opine on this issue.

What do you think?

Comments

[Greg Taylor]

When the questioner refers to "a violation of another state's laws," is that referring to an actual violation of the law in another jurisdication, or does it refer to conduct that would violate the law if the foreign law were the law here in California?

[Greg Taylor]

notice of errata: jurisdiction

[John Hurley]

The hypothetical seems to include a few different factual situations that could dictate different results:

1) An in-state defendant's acts towards an in-state plaintiff. The think that answer there would clearly be "no."

2) An in-state defendant's acts towards an out-of-state plaintiff.

3) An out-of-state defendant's acts towards an in-state plaintiff.

I guess the real issue is choice of law. If a court determines that California has a sufficient interest such that California law applies, does it then remove the law of the other state from the equation completely? I don't know the answer to that.

[Scott]

Assuming an in-state Defendant and an in-state Plaintiff, I'd think you could state a cause of action if the violation of the other state's law caused harm to the Plaintiff. I'm imagining a relatively narrow set of circumstances where, for example, two California parties enter into a business transaction that takes place in anther state. Wouldn't it be a UCL violation if one party doesn't abide by another state's law that regulates the transaction, causing harm to the second party?

[Bryan]

In Kearney v. Salomon Smith Barney the Calif. Supreme Court ruled on a situation similiar to John's #3 proposition. In that case, Kearney accused Smith Barney of recording phone conversations. Since only one party must approve such recording in Georgia, where SB is based, the trial and appellate courts found the practice was not unlawful under Georgia law.

The California Supreme Court reversed the ruling and found that SB was subject to Calif. law and that a failure to apply it would impair the state's interest in protecting its citizens.

[Scott]

Although Kearney isn't really the inverse or contrapositive of the hypothetical. If an out-of-state act isn't a violation of law in another state, Kearney won't provide guidance as to whether an out-of-state violation of law is actionable under the UCL.

This hypothetical requires a separation of the jurisdiction/choice of law/state interest questions and the issue of whether, assuming other issues don't end the analysis, a violation of law anywhere else can provide the basis for a UCL claim. I think it logically follows that it can. The UCL protects California citizens from unlawful conduct. Why wouldn't it protect them from unlawful conduct as defined elsewhere?

[rb]

Ok. Let's take the Smith Barney case and see how far it extends. Suppose a rent-a-car company uses a website to book rentals in CA, which includes terms sufficient to bind the renter to rent a vehicle in another state. A CA resident books on-line a rental in another state. While renting the vehicle in another state, rent-a-car company imposes charges which would be considered unlawful in CA. Will Smith Barney extend 17200 that far?

[John Hurley]

The actual imposition of the charges? No, since that conduct takes place entirely in the other state. But if the charges aren't fully disclosed when the reservation is booked by the California resident, I think the answer is yes.