In Hall v. Time Inc., ___ Cal.App.4th ___ (Jan. 8,
2007 2008), the Court of Appeal (Fourth Appellate District, Division Three) construed Prop. 64's "injury in fact" language and held that "causation" must also be pleaded to meet Prop. 64's standing requirement. Respecting "injury in fact," the Court explained:
Few cases since Proposition 64’s passage have directly addressed what constitutes injury in fact or loss of money as a result of unfair competition for purposes of determining standing. Cases decided since Proposition 64 changed the language of Business and Professions Code section 17204 have concluded a plaintiff suffers an injury in fact for purposes of standing under the UCL when he or she has:
(1) expended money due to the defendant’s acts of unfair competition (Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796, 802 803 [plaintiff alleged he was required to purchase excess fuel when returning rental truck]; Monarch Plumbing Co. v. Ranger Ins. Co. (E.D.Cal., Sept. 25, 2006, No. Civ. S 06 1357) 2006 U.S.Dist. Lexis 68850, *20 [plaintiff alleged he paid higher insurance premiums because of defendant insurer’s settlement policies]; Witriol v. LexisNexis Group (N.D.Cal., Feb. 10, 2006, No. C05 02392) 2006 U.S.Dist. Lexis 26670, *18 19 [plaintiff incurred costs to monitor and repair damage to his credit caused by defendants’ unauthorized release of private information]; Southern Cal. Housing v. Los Feliz Towers Homeow. (C.D.Cal. 2005) 426 F.Supp.2d 1061, 1069 [housing rights center lost financial resources and diverted staff time investigating case against defendants]; Laster v. T Mobile USA, Inc. (S.D.Cal. 2005) 407 F.Supp.2d 1181, 1194 [defendants advertised cellular phones as free or substantially discounted when purchased with cellular telephone service, but plaintiffs were required to pay sales tax on the full retail value of the phones]);
(2) lost money or property (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1240, 1262 [plaintiff’s home and car were vandalized by animal rights protestors]); or
(3) been denied money to which he or she has a cognizable claim (Progressive West Ins. Co. v. Superior Court (2005) 135 Cal.App.4th 263, 269-270, 285, fn. 5 [insurance company paid insured’s medical bills, then sued to recover that money when insured collected damages from the third party who caused his injuries; insured had standing to bring UCL claim against insurance company]; Starr Gordon v. Mass. Mut. Life Ins. Co. (E.D.Cal., Nov. 7, 2006, No. Civ. S 03 68) 2006 U.S.Dist. Lexis 83110, *1, *18 19 [plaintiff challenged the process by which defendant terminated her disability benefits]).
In this case, Hall did not allege he suffered an injury in fact under any of these definitions. He expended money by paying Time $29.51—but he received a book in exchange. He did not allege he did not want the book, the book was unsatisfactory, or the book was worth less than what he paid for it.
Slip op. at 8-9. In discussing "causation," the Court explained in a footnote that:
We use the word “causation” to refer both to the causation element of a negligence cause of action (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917), and to the justifiable reliance element of a fraud cause of action (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974). In a fraud case, justifiable reliance is the same as causation, thus, “[a]ctual reliance occurs when a misrepresentation is ‘“an immediate cause of [a plaintiff’s] conduct, which alters his legal relations,”’ and when, absent such representation,” the plaintiff “‘“would not, in all reasonable probability, have entered into the contract or other transaction.”’” (Engalla v. Permanente Medical Group, Inc., supra, 15 Cal. 4th at p. 976; see Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1092 [“specific pleading is necessary to ‘establish a complete causal relationship’ between the alleged misrepresentations and the harm claimed to have resulted therefrom”].) Cases construing the Proposition 64 amendments to the UCL often use the terms “causation” and “reliance” together or interchangeably. (E.g., Laster v. T Mobile USA, Inc., supra, 407 F.Supp.2d at p. 1194.)
Slip op. at 9-10 n.2.
The Court then cited three federal district court decisions, but no California appellate decisions, to construe causation/reliance in the UCL context. Id. at 10-12 (citing Cattie v. Wal-Mart Stores, Inc. 504 F.Supp.2d 939 (S.D. Cal. 2007); Brown v. Bank of America, N.A., 457 F.Supp.2d 82 (D. Mass. 2006); Laster v. T Mobile USA, Inc., 407 F.Supp.2d 1181 (S.D. Cal. 2005)). This is probably because the Supreme Court has taken up most of the California decisions addressing UCL reliance, making them uncitable under Rule of Court 8.1105(e)(1). It could also be that we are seeing more UCL cases in federal court due to CAFA. The Court also distinguished Anunziato v. eMachines, Inc., 402 F.Supp.2d 1133 (C.D. Cal. 2005), on which the plaintiff relied. Slip op. at 13.
In conclusion, the Court held that "the representative UCL plaintiff must plead he or she suffered an injury in fact caused by, or in justifiable reliance on, the alleged acts of unfair competition"; that the plaintiff's allegations "did not satisfy the injury in fact and causation requirements either expressly or by reasonable inference"; and that the trial court properly denied leave to amend the complaint. Id. at 14 (emphasis added).