Preliminary thoughts on Fireside Bank

Fireside Bank v. Superior Court (Gonzalez), ___ Cal.4th ___ (Apr. 16, 2007) is a densely-packed decision. Here are some thoughts on certain aspects of it.

My initial impression was that this case was a win for the plaintiffs. And for the named plaintiffs in this specific case, it is. Their class certification order has been affirmed, and they will get to re-file their summary adjudication motion motion for judgment on the pleadings after notice has been given and opt-out period has expired. Summary adjudication The motion was granted before, and will likely be granted again. They are sitting pretty.

Was this case also a win for class action plaintiffs generally? That is less certain. The opinion does contain some plaintiff-favorable class certification language and, because it is a UCL case, some interesting language there as well. I will start out, in this post, by talking about the class certification and UCL aspects of the opinion, leaving the "one-way intervention" aspects for a later post.

Fireside Bank challenged only the "typicality" and "superiority" elements of class certification. As to typicality, Fireside Bank argued first of all that the named plaintiff "failed to present evidence establishing she has standing and has suffered injury typical of the class." Slip op. at 24.

The Supreme Court disagreed. What's interesting for UCL purposes is the way the Court analyzed the standing question. It addressed the declaratory and injunctive relief remedies separately from the restitution remedies:

Gonzalez has standing. She, like other members of the putative class, was subjected to the same alleged wrong: deprivation of a fair opportunity to redeem the financed vehicle, followed by an unlawful demand for payment. The record demonstrates Fireside Bank repossessed Gonzalez’s vehicle and pursued a deficiency judgment against her. She thus has standing to seek a declaration that Fireside Bank is unlawfully asserting a debt against her, as well as an injunction against all further collection efforts. The record further shows Gonzalez (or someone on her behalf) made a postrepossession payment against the alleged deficiency; upon proof she made that payment, Gonzalez also has standing to seek restitution.

Id. (footnote omitted). This is interesting because the Court is saying that the named class representative would have standing to seek injunctive relief under the UCL even if she could not recover restitution—in other words, even if she had not lost money or property as a result of the defendant's UCL violation. All she would have to show was that she was "depriv[ed] of a fair opportunity to redeem the financed vehicle, followed by an unlawful demand for payment" (not an actual payment). This may very well answer a previously-unanswered question in the brave new post-Prop. 64 world: In a UCL action for injunctive relief only, is "lost money or property" required for standing purposes? Under Fireside Bank, the answer is no. It is enough to show that the defendant's UCL violations threaten harm.

The Supreme Court made this even more clear in the footnote accompanying the language quoted above:

We leave it for the trial court to determine whether, on remand, it may be appropriate or necessary to designate subclasses consisting of those subjected to demands who made payments and have restitution claims, and those who did not and thus have only injunctive and declaratory relief claims. Contrary to Fireside Bank’s assertion, the fact the record does not (as yet) disclose in which general group Gonzalez falls does not render the trial court’s conclusion that her claims are typical an abuse of discretion.

Id. n.8. This language obviously very favorable as to the "typicality" prong. But it also could hardly be clearer that an out-of-pocket payment of money is not a prerequisite to a UCL injunctive or declaratory relief action, even after Prop. 64.

Fireside Bank's second attack on typicality was the argument that the class representative was subject to unique defenses not typical of the class. Slip op. at 25-26. Again, the Supreme Court disagreed: "Contrary to Fireside Bank’s assertion ... , a defendant’s raising of unique defenses against a proposed class Fireside Bank's alleged "unclean hands" defense "may be resolved without significant distraction from the common class issues at the heart of this case." Id. at 26.

Finally, the Court addressed Fireside Bank's "superiority" challenge. That challenge was based on pre-Prop. 64 authorities, most notably Frieman v. San Rafael Rock Quarry, Inc., 116 Cal.App.4th 29 (2004) and Alch v. Superior Court, 122 Cal.App.4th 339 (2004), holding that a certified UCL class action would not be "superior" to the more streamlined representative procedure afforded by the UCL. According to Fireside Bank, a non-class UCL representative action would "provide a simpler alternative" to class certification. Slip op. at 28. (See this prior post for more on that argument.) The Supreme Court confirmed that after Prop. 64, which eliminated the non-class, representative procedure of yore, this superiority argument fails. Id.

Those are my preliminary thoughts on some of the class certification and UCL aspects of this case. Thanks to the readers who emailed me to share your insights earlier in the week. More comments, anyone?

Comments

[rb]

The injunctive/declaratory relief thing is huge news, if true.

[Joe Ruby]

Not being a California practioner, perhaps I'm missing something. But how can you conclude that she hasn't "suffered injury in fact and lost money or property"? They took the car, didn't they? Didn't she have legal title to the car? And how can your square your conclusion that a plaintiff doesn't need to show injury-in-fact/lost-money-or-property in order to maintain an injunction claim, when that's what section 17204 says the plaintiff must show? The court may be saying that you don't need a restitution claim in order to seek an injunction, but you still need an injury-in-fact/lost money-or-property. Perhaps I don't get it, but I'd like to know why.