The UCL Practitioner

Recent UCL "unfair" prong decision: Wilson v. Hynek

In Wilson v. Hynek, ___ Cal.App.4th ___ (Jun. 20, 2012; pub. ord. Jul. 16, 2012), the Court of Appeal (Fourth Appellate District, Division One) applied the post-Cel-Tech formulation of the "unfair" prong, and held that the trial court had properly sustained the defendant's demurrer to the UCL claim without leave to amend:

The Wilsons do not assert on appeal that any of the defendants' actions were "unlawful" or "fraudulent."  Rather, the sole basis for their assertion they have adequately pled such a cause of action under section 17200 is that the defendants' actions were "unfair."  This contention is unavailing.  

"Determination of whether a business practice or act is 'unfair' within the meaning of [section 17200] entails examination of the impact of the practice or act on its victim, '" ... balanced against the reasons, justifications and motives of the alleged wrongdoer.  In brief, the court must weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim ...."  [Citation.]'  [Citation.]  In general the 'unfairness' prong 'has been used to enjoin deceptive or sharp practices ....'"  (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969-970.)  

There is a split of authority in California as to the proper definition of "unfair."  The Wilsons assert the proper test for the unfairness prong is whether the practice "'offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.'"  (State Farm Fire & Casualty Co. v. Superior Court, supra, 45 Cal.App.4th at p. 1104.)

However, this court has, on three occasions, rejected that test and has applied a much narrower test, the so-called "Cel-Tech test" for establishing unfairness.  (See Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1366; Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 940; Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1147.)  Under that test, a plaintiff must prove that the defendant's "conduct is tethered to an[] underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law."  (Durell, at p. 1366.)

In both their opening and reply briefs, the Wilsons ignore these cases.  Moreover, they do not even attempt to show how their allegations in the second amended complaint can meet this test.  Nor can they.  As detailed, ante, their claims of alleged wrongdoing are directly contradicted by the terms of the deeds of trust, which they omitted as exhibits to their second amended complaint.  Accordingly, the court did not err in sustaining the defendants' demurer to the section 17200 claim.

Slip op. at 11-12 (footnote omitted).

New arbitration opinion: Sparks v. Vista Del Mar Child and Family Services

In Sparks v. Vista Del Mar Child and Family Services, ___ Cal.App.4th ___ (Jul. 30, 2012), the Court of Appeal (Second Appellate District, Division Five) affirmed an order denying arbitration of wrongful termination claims where the arbitration clause was buried in a lengthy employee handbook and was otherwise unconscionable.

While Sparks is not a class action, this excerpt is of interest:

The arbitration clause in question provides for the application of the Federal Arbitration Act.  Although that Act preempts state-law rules that stand as an obstacle to the accomplishment of the Act’s objective, i.e. rules that require classwide arbitration, (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __, 131 S.Ct. 1740, 1748 (Concepcion)) the issue of whether the parties agreed to arbitration is ordinarily decided under state law.  (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944; see also Cheng-Canindin v. Renaissance Hotel Associates, supra, 50 Cal.App.4th at p. 683 [“The question of whether the parties agreed to arbitrate is answered by applying state contract law even when it is alleged that the agreement is covered by the FAA [Federal Arbitration Act, 9 U.S.C. § 1 et seq.].  [Citations.]”].) Moreover, the United States Supreme Court in Concepcion did not eliminate state law unconscionability as a defense to the enforcement of arbitration agreements subject to the Federal Arbitration Act.  (Concepcion, supra, 563 U.S. __, 131 S.Ct. at p. 1746; Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138, 1150; Kanbar v. O’Melveny & Myers  (N.D. Cal. July 21, 2011, C-11-089211) __ F.Supp.2d__ [2011 WL 2940690 *6]; see also Rent-A-Center, West, Inc. v. Jackson (2010) __ U.S. __, 130 S.Ct. 2772, 2779 [arbitrator could decide unconscionability issue].)

Slip op. at 7 (emphasis added).

New Ninth Circuit class certification opinion: Hester v. Vision Airlines, Inc.

In Hester v. Vision Airlines, Inc., ___ F.3d ___ (9th Cir. Jul. 18, 2012), the Ninth Circuit affirmed an order granting class certification of claims brought by pilots and airline crew members for recovery of hazard pay earned in delivering supplies to military posts in Iraq and Afghanistan. 

Class certification opinion on remand: Harris v. Superior Court (Liberty Mutual)

On Monday, the Court of Appeal (Second Appellate District, Division One) handed down its opinion on remand in the employee misclassification case, Harris v. Superior Court (Liberty Mutual Ins. Co.), ___ Cal.App.4th ___ (Jul. 23, 2012).

The Supreme Court heard oral argument in this case last October, and handed down its opinion in late December.  Harris v. Superior Court (Liberty Mutual Ins. Co.), 53 Cal.4th 170 (2011).  The high court reversed the Court of Appeal's earlier holding that the administrative exemption did not apply to the plaintiff insurance adjusters, as the employer had argued, and remanded the case back to that court for further proceedings.  The opinion did not address class certification. 

In its opinion on remand earlier this week, the Court of Appeal held that the employer's reliance on the administrative exemption was misplaced, and that the workers' claims for unpaid overtime were properly certified for class treatment:

We hold that, with the few exceptions we have noted, Adjusters’ work duties do not satisfy the qualitative component of the “directly related” requirement because they are not carried on at the level of policy or general business operations.  Adjusters therefore are not primarily engaged in work that is “directly related to management policies or general business operations.”  (Fed. Regs. § 541.205(a) (2000).)  It follows that Adjusters are not exempt administrative employees under either Wage Order 4-1998 or Wage Order 4-2001.  Accordingly, Adjusters’ motion for summary adjudication should have been granted, and, because the qualitative component of the “directly related” requirement is a predominant common issue under both wage orders, Employers’ motion for class decertification should have been denied in its entirety.

Slip. op. at 25-26.

UPDATE:  On October 24, 2012, the Supreme Court depublished the Harris opinion.  It is no longer citable as precedent.

New unpublished collateral estoppel opinion: Ellis v. Pacific Health Corp.

In an unpublished opinion, the Court of Appeal (Second Appellate District, Division Seven) held again that orders denying class certification do not have collateral estoppel effect as to unnamed class members:

We agree with Bridgeford [v. Pacific Health Corp., 202 Cal.App.4th 1034 (2012)] and its adoption as a matter of California law of the United States Supreme Court’s analysis in Smith v. Bayer Corp., supra, 564 U.S. ___ [131 S.Ct. 2368].  Here, Ellis and McCrary were not named parties in Larner nor in privity with any party to that action for purposes of collateral estoppel.  Although their economic interests may have been substantially aligned with Larner’s when she began her lawsuit against Los Angeles Doctors, without class certification issues decided in the prior proceeding cannot bind absent putative class members.  (See Bridgeford, supra, 202 Cal.App.4th at p. 1044; see also Johnson v. GlaxoSmithKline, Inc., supra, 166 Cal.App.4th at p. 1513, fn. 8.)

Ellis v. Pacific Health Corp., No. B226609 (nonpub. Jul. 24, 2012) (slip op. at 7).

My original post on Bridgeford is here. 

New class arbitration opinion: Nelsen v. Legacy Partners Residential, Inc.

In Nelsen v. Legacy Partners Residential, Inc., ___ Cal.App.4th ___ (Jul. 18, 2012), the Court of Appeal (First Appellate District, Division One) denied a writ petition challenging an order compelling arbitration of various wage and hour claims.

The opinion discusses the U.S. Supreme Court's Concepcion and Stolt-Nielsen opinions, as well as the California opinions Gentry, Kinecta, and Iskanian, the NLRB's D.R. Horton decision, and the Ninth Circuit's Kilgore and Coneff. 

Answer brief on the merits filed in Rose v. Bank of America

Many thanks to the blog reader who forwarded the answer brief on the merits filed last week in Rose v. Bank of America, no. S199074.

• Opening Brief on the Merits (filed 05-15-12)
• Answer Brief on the Merits (filed 07-17-12)

Tomorrow's Brinker program CANCELLED

If you registered for the Alameda County Bar Association panel on Brinker, which was to take place tomorrow (Tuesday, July 24) in Oakland, please note that the event has been cancelled.  I will let everyone know when the program is rescheduled. 

MCLE program on Brinker tomorrow in Oakland CANCELLED

UPDATE: Tomorrow's panel on Brinker has been CANCELLED.

There is still time to register for  Tomorrow's MCLE program on Brinker, sponsored by the Labor and Employment Section of the Alameda County Bar Association, has been CANCELLED.

The program will run from 12:00 to 1:30 p.m. in Oakland.  I will be one of the speakers, and I hope to see some of you there!  Click here for more details and to register.

This is the panel description:

Please join the Labor & Employment section for this MCLE program that will provide a thorough analysis of the Supreme Court’s decision in Brinker v. Superior Court of San Diego County. The discussion will include analysis of the ruling and the scope of an employer’s duty to provide meal and rest breaks. The panelists will also explain how the ruling may impact wage and hour litigation going forward.

Speakers:

• Latika Malkani, Partner, Siegel, LeWitter & Malkani, Oakland
• Rhonda Nelson, Shareholder, Severson & Werson, San Francisco
• Kimberly Kralowec, Principal, The Kralowec Law Group, San Francisco
• Matthew Bainer, Senior Associate, Scott Cole and Associates, Oakland

U.S. Supreme Court takes up another case potentially affecting class action practice: Genesis HealthCare Corp. v. Symczyk

Many thanks to the blog reader who pointed out that on June 25, in addition to granting cert. on limited issues in Comcast Corp. v. Behrend, no. 11-864, the U.S. Supreme Court also granted cert. in another case that may turn out to be relevant to class action practice, Genesis HealthCare Corp. v. Symczyk, no. 11-1059.

Genesis is a FLSA collective action, not a class action under Rule 23.  The Third Circuit held that the defendant could not "pick off" the FLSA representative:

Laura Symczyk sought relief under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 207 and 216(b), on behalf of herself and all others similarly situated. The District Court for the Eastern District of Pennsylvania dismissed Symczyk's complaint for lack of subject matter jurisdiction after defendants Genesis HealthCare Corporation and ElderCare Resources Corporation extended an offer of judgment under Fed.R.Civ.P. 68 in full satisfaction of her alleged damages, fees, and costs. At issue in this case is whether a collective action brought under § 216(b) of the FLSA becomes moot when, prior to moving for "conditional certification" and prior to any other plaintiff opting in to the suit, the putative representative receives a Rule 68 offer. We will reverse and remand.

Symczyk v. Genesis HealthCare Corp., 656 F.3d 189 (3d Cir. 2011).

This is the Supreme Court's statement of the question presented: 

Whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff's claims.

The question is framed quite broadly, so the Court's holding may well impact ordinary class action litigation in the federal courts under Rule 23.  The Ninth Circuit recently held that defendants may not "pick off" the class representative in Rule 23 class cases.  Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011) (discussed in this blog post).  The Seventh Circuit, by contrast, held that they can—if they do it before the class certification motion is filed.  Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011) (discussed in this blog post).  Both of these opinions are cited in the cert. petition in Genesis.

The following links to documents from Genesis are courtesy of SCOTUSblog:

• Opinion below (3d Cir.)
• Petition for certiorari
• Brief in opposition
• Motion for leave to file and amicus brief of DRI - The Voice of the Defense Bar
• Motion for leave to file and amicus brief of Chamber of Commerce of the United States of America et al.
• Reply of petitioners

Supreme Court denies review in arbitration case: Kinecta Alternative Financial Solutions v. Superior Court

Last week, I reported that on July 11, 2012, the Supreme Court had denied review in Samaniego v. Empire Today, no. S202510.  In Samaniego, the Court of Appeal affirmed an order denying a petition to compel arbitration. 

It turns out that on the same day, the Supreme Court also denied review in another arbitration case, Kinecta Alternative Financial Solutions v. Superior Court, no. S203076.  In Kinecta, the Court of Appeal affirmed an order granting a petition to compel arbitration.  My original post on Kinecta is here. 

The Supreme Court may have lost interest in taking up additional post-Concepcion cases, now that it has granted review in Sanchez v. Valencia Holding Co., no. S199119, and given that Sonic-Calabasas A, Inc. v. Moreno, no. S174475, remains pending on remand from the U.S. Supreme Court. 

We will have to watch for action on any review petitions that may be filed in the Iskanian and Hoover cases.

New Ninth Circuit UCL and CLRA opinion: Sateriale v. R.J. Reynolds Tobacco Co.

In Sateriale v. R.J. Reynolds Tobacco Co., ___ F.3d ___ (9th Cir. Jul. 13, 2012), the Ninth Circuit affirmed dismissal, for lack of standing, of UCL and CLRA claims based on alleged misrepresentations surrounding R.J. Reynolds' termination of its "Camel Cash" customer rewards program. 

Before addressing the UCL and CLRA claims, the court held that plaintiffs' complaint did adequately allege breach of contract and promissory estoppel.  Slip op. at 8090-8105.

The opinion's detailed discussion of those claims is quite interesting and brings back many pleasant memories of first-year contracts class.  Who could forget that the doctrine of mutuality of obligation, while fully applicable to bilateral contracts, does not apply to unilateral contracts?  Id. at 8102.  Or that "an enforceable termination clause that gives a promisor an unrestricted power to terminate a contract at any time" renders that contract illusory and unenforceable, at least so long as the contract remains wholly executory?  Id. at 8103.

The court then turned to the UCL and CLRA claims: 

Because the plaintiffs’ UCL claim sounds in fraud, they are required to prove “actual reliance on the allegedly deceptive or misleading statements,” Kwikset Corp. v. Superior Court, 246 P.3d 877, 888 (Cal. 2011) (quoting In re Tobacco II Cases, 207 P.3d 20, 26 (Cal. 2009)) (internal quotation marks omitted), and that “the misrepresentation was an immediate cause of [their] injury-producing conduct,” In re Tobacco II Cases, 207 P.3d at 39. The complaint does not satisfy these requirements.

In particular, the plaintiffs do not allege reliance.  They do not allege that they purchased additional Camel cigarettes in reliance on the October 1 announcement [that the rewards program would terminate six months later]. They also do not allege that they delayed redeeming their saved Camel Cash certificates in reliance on the announcement. Even if they had alleged delay, they do not explain how this delay could have caused their injury: under the allegations of the complaint, RJR ceased accepting C-Notes for redemption as soon as it delivered the October 1 announcement, so delay could not have caused the plaintiffs’ loss. Given the absence of an alleged causal connection between the alleged misrepresentations
and the plaintiffs’ injuries, the district court properly dismissed the UCL claim.

....

As with the UCL, consumers seeking to recover damages under the CLRA based on a fraud theory must prove “actual reliance on the misrepresentation and harm.” Nelson v. Pearson Ford Co., 112 Cal. Rptr. 3d 607, 638 (Ct. App. 2010); accord Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682, 697 (Ct. App. 2010); In re Vioxx Class Cases, 103 Cal. Rptr. 3d 83, 94 (Ct. App. 2009).  

The plaintiffs have not satisfied these requirements here ...  as we explained in connection with the plaintiffs’ UCL claim. We therefore affirm dismissal of the plaintiffs’ CLRA claim as well.

Slip op. at 8105-06, 8107 (footnote omitted).

Ninth Circuit addresses cy pres doctrine in new class settlement decision: Dennis v. Kellogg Co.

In Dennis v. Kellogg Co., ___ F.3d ___ (9th Cir. Jul. 13, 2012), the Ninth Circuit reversed final approval of a class action settlement because the cy pres recipients who would receive the settlement fund residual were "divorced from the concerns embodied in consumer protection laws such as the UCL and the CLRA."  Slip op. at 8120-21.  The court also found the attorneys' fees award excessive.  Id. at 8125-29.

The case involved UCL and CLRA claims against Kellogg Co. for representing that Frosted Mini-Wheats cereal "was scientifically proven to improve children’s cognitive functions for several hours after breakfast."  Id. at 8114. 

MCLE program on Brinker next Tuesday in Oakland

On Tuesday, July 24, 2o12 from 12:00-1:30 p.m., the Labor and Employment Section of the Alameda County Bar Association will present a seminar on the Brinker decision.  I will be one of the speakers, along with three experienced and knowledgeable co-panelists.  Click here for more details and to register.

Here is the panel description:

Please join the Labor & Employment section for this MCLE program that will provide a thorough analysis of the Supreme Court’s decision in Brinker v. Superior Court of San Diego County. The discussion will include analysis of the ruling and the scope of an employer’s duty to provide meal and rest breaks. The panelists will also explain how the ruling may impact wage and hour litigation going forward.

Speakers:

• Latika Malkani, Partner, Siegel, LeWitter & Malkani, Oakland
• Rhonda Nelson, Shareholder, Severson & Werson, San Francisco
• Kimberly Kralowec, Principal, The Kralowec Law Group, San Francisco
• Matthew Bainer, Senior Associate, Scott Cole and Associates, Oakland

"Lessons from SCOTUSblog"

To follow up on my post from last Sunday, this past week The New Yorker had a piece called "Six Lessons from the Misreporting of the Health-Care Decision." 

For those of us (like me) fascinated by how far SCOTUSblog has come over the past ten years, this whole story is of keen interest.  SCOTUSblog is one of the first law blogs I became aware of and began following, and it is great to see it catapult to nationwide prominence.  It couldn't happen to a better blawg.

An excerpt from the New Yorker piece:

And then there is the matter of how we learned about the decision—and the media reports, notably by CNN and Fox News, that got it wrong. There are lessons there, several of which were drawn out in a seven-thousand-word post Tom Goldstein, of SCOTUSblog, wrote about how the story unfolded between 10:06 and 10:15 A.M. E.T. on Thursday, June 28th. Some of them we already know—for example, that SCOTUSblog itself did an exemplary job. But there’s more, too, with some conclusions that go beyond this case. Six of the lessons are below.

[via]

Supreme Court denies review in arbitration case: Samaniego v. Empire Today LLC

On Wednesday, July 11, 2012, the Supreme Court denied review in Samaniego v. Empire Today, no. S202510.

In this case, the Court of Appeal (First Appellate District, Division Three) refused to enforce an arbitration clause, finding it unconscionable under Armendariz and rejecting the defendant's argument that Concepcion precluded that result.  Samaniego v. Empire Today LLC, 205 Cal.App.4th 1138 (2012). 

Here is my original post on the unpublished opinion handed down on April 5, 2012.  The opinion was ordered published on May 7, 2012. 

Supreme Court UCL preemption opinion: Parks v. MBNA America Bank, N.A.

In Parks v. MBNA America Bank, N.A., ___ Cal.4th ___ (Jun. 21, 2012), the Supreme Court held that the National Bank Act preempted a UCL "unlawful" prong claim predicated on violation of Civil Code section 1748.9, "a California law requiring that certain disclosures accompany preprinted checks that a credit card issuer provides to its cardholders for use as credit."  Slip op. at 1. 

The opinion says nothing substantive about the UCL in particular; its focus is on section 1748.9 and the provisions of the National Bank Act.

New CLRA attorneys' fees opinion: Pierce v. Western Surety Co.

In Pierce v. Western Surety Co., ___ Cal.App.4th ___ (Jun. 22, 2012), the Court of Appeal (Fifth Appellate District) addressed the CLRA and its attorneys' fees provision in the context of evaluating the scope of a surety's liability for acts of its principal.  Slip op. at 8-10.

The Court of Appeal summarized its opinion:

In sum, [Vehicle Code] section 11711 does not provide for attorney fees.  Therefore, attorney fees are not recoverable based on that section.  However, a surety that issues a bond pursuant to section 11711 is subject to general surety law.  Under Civil Code section 2808, a surety’s liability is commensurate with that of the principal within the express terms of the bond and any applicable statutes.  Thus, if the principal would have been liable for attorney fees based on conduct secured by the bond, the surety is liable for such fees.

Slip op. at 10.  Because the principal would have been liable for attorneys' fees under the CLRA, the surety was similarly "liable for such fees." See id.

[Via California Personal Property Finance Law]

New class certification opinion: Sotelo v. MediaNews Group, Inc.

In Sotelo v. MediaNews Group, Inc., ___ Cal.App.4th ___ (May 31, 2012; pub. ord. July 2, 2012), the Court of Appeal (First Appellate District, Division Two) affirmed an order denying class certification of various wage and hour claims arising out the defendant's alleged treatment of workers as independent contractors rather than employees.  The opinion does not cite Brinker.

Court of Appeal hands down rare defendant class decision: City of San Diego v. Haas

In City of San Diego v. Haas, ___ Cal.App.4th ___ (Jun. 29, 2012), the Court of Appeal (Fourth Appellate District, Division One) affirmed class certification of a defendant class (also sometimes called a "defense class"). 

The opinion relied on both Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012) and Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011) (although the citation of the latter case is a little odd because that case did not address predominance, the issue for which it is cited in Haas).  Slip op. at 36-41.

SCOTUSblog vs. CNN: Real-time reporting on U.S. Supreme Court's healthcare ruling

Tom Goldstein of SCOTUSblog has a very interesting post on the real-time reporting that took place within the first 15 minutes after the U.S. Supreme Court handed down its healthcare ruling on June 28, 2012. 

Tom seems too modest to say it in quite this way, but essentially what happened is SCOTUSblog out-reported CNN. 

District court construes Mazza: Keegan v. American Honda Motor Co.

In Keegan v. American Honda Motor Co., ___ F.R.D. ___, 2012 WL 2250040 (C.D. Cal. Jun. 12, 2012), Judge Margaret M. Morrow of the Central District of California construed and distinguished the Ninth Circuit's opinion in Mazza v. American Honda, 666 F.3d 581 (9th Cir. 2012), and partially granted class certification of UCL, CLRA and other claims.

Here is one passage addressing Mazza:

The court is mindful of the Ninth Circuit's warning that differences in state law concerning the need for proof of reliance can “spell the difference between the success and failure of the claim.” Mazza, 666 F.3d at 591. Mazza, however, addressed omissions in advertisements and oral statements that included differing information. The Ninth Circuit concluded that “[a] presumption of reliance [could] not arise when class members ‘were exposed to quite disparate information from various representatives of the defendant.’ “ Id. at 596 (quoting Stearns, 655 F.3d at 1020). It noted further: “For everyone in the class to have been exposed to the omissions, as the dissent claims, it is necessary for everyone in the class to have viewed the allegedly misleading advertising. Here the limited scope of that advertising makes it unreasonable to assume that all class members viewed it.” Id.

 In this case, by contrast, plaintiffs allege that defendants did not disclose to any member of the class information regarding the potential for excessive and premature tire wear caused by negative camber. There is no question of different statements being made to different groups of consumers, or certain class members being exposed to information others were not. Consequently, the court concludes that any potential differences in state law concerning the proof of reliance that is necessary to prevail on consumer protection claims do not defeat predominance in this case.

Keegan, 2012 WL 2250040 at *33-*34.

The order also has this passage on class certification of a UCL "fraudulent" prong claim:

As is clear from the California Supreme Court's decision in In re Tobacco II Cases, 46 Cal.4th 298 (2009), moreover, there is no need to prove reliance on an individual basis. Rather, “In re Tobacco II Cases set out a liberal approach to the reliance inquiry,” permitting plaintiffs to prove a UCL violation by presenting “generalized evidence that Defendants' conduct was ‘likely to deceive’ members of the public.” Plascencia v. Lending 1 st Mortgage LLC, 259 F.R.D. 437, 448 (N.D. Cal. 2009). Indeed, as with the CLRA, materiality is relevant to prove reliance, since “a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material.” In re Tobacco II,46 Cal.4th at 327. Consequently, a violation of the UCL can be proved with common evidence regarding the nature of the design defect in question, the likely effect of the defect on class vehicles, its likely impact on vehicle safety, what Honda knew or did not know, and what it disclosed or did not disclose to consumers. See Yamada, 275 F.R.D. at 578 (“[I]t is unlikely that a member of the putative class would have purchased the NobelDirect product without having been influenced by Defendants' uniform marketing claims. Furthermore, it is reasonable to assume that no rational member of the putative class would have purchased and used the NobelDirect implant had he or she been aware of the alleged defective design”); Delarosa v. Boiron, Inc., 275 F.R.D 582, 594 (C.D. Cal. 2011) (“In addition, Defendant's arguments that it can present proof that Coldcalm worked for some individual class members goes to the proof of the merits of Plaintiff's claim, not to the common question as to the overall efficacy of the product”).

Id. at *23.

Many thanks to the friend who forwarded this decision.

BREAKING NEWS: U.S. Supreme Court grants cert. on limited issues in Comcast Corp. v. Behrend

Today, the U.S. Supreme Court announced that it has granted cert. on a limited question in Comcast Corp. v. Behrend, no. 11-864:  

The petition for a writ of certiorari is granted limited to the following question: “Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.”

The order was issued today, after the case was relisted seven times. The Third Circuit's opinion is Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011). 

I hope to have more on this development, including the cert. petition and other documents, later. 

UPDATE:  The following links to documents from the Behrend case are courtesy of SCOTUSblog:

• Opinion below (3d Cir.)
• Petition for certiorari
• Brief in opposition
• Reply of petitioners

New private attorney general attorneys' fees opinion: Azure Limited v. I-Flow Corp.

The Court of Appeal (Fourth Appellate District, Division Three) addressed attorneys' fees under the private attorney general doctrine (Code of Civil Procedure § 1021.5) in a new opinion handed down last Thursdsay.  Azure Limited v. I-Flow Corp., ___ Cal.App.4th ___ (Jun. 21, 2012).

The opinion construed (and distinguished) the Supreme Court's decision last year in Serrano v. Stefan Merli Plastering Co., 52 Cal.4th 1018 (2011). 

 

Ninth Circuit addresses UCL standing: Pom Wonderful LLC v. The Coca-Cola Co.

The end of a recent Ninth Circuit opinion, Pom Wonderful LLC v. The Coca-Cola Co., ___ F.3d ___ (9th Cir. May 17, 2012), contains this passage on UCL standing:

To have standing to bring a claim under the UCL, a private plaintiff must show that it “has suffered injury in fact and has lost money or property as a result of” unfair competition; to have standing under the FAL, a private plaintiff must make the same showing of injury and loss as a result of an FAL  violation. Cal. Bus. & Prof’l Code §§ 17204, 17535. The district court interpreted the “lost money or property” language to require a plaintiff to show that it is entitled to restitution from the defendant—even if the plaintiff seeks only injunctive relief. That was error. The California Supreme Court has now made clear that standing under section 17204 (the UCL standing provision) does not depend on eligibility for restitution. See Kwikset Corp. v. Superior Ct., 246 P.3d 877, 895 (Cal. 2011); Clayworth v. Pfizer, Inc., 233 P.3d 1066, 1088 (Cal. 2010). We are inclined to interpret the materially identical language in section 17535 (the FAL standing provision) the same way. Nevertheless, because these cases came down after the district court entered judgment in this case, we will vacate the judgment as to Pom’s state law claims and remand to the district court to rule on standing in light of Kwikset and Clayworth.

Slip op. at 5258-59.

This was a UCL competitor and Lanham Act case brought by Pom Wonderful against Coca-Cola over the labeling of the latter's "Pomegranate Blueberry" juice, which "contains about 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice."  Id. at 5248.  In the first part of its analysis, the Ninth Circuit held that the federal Food, Drug and Cosmetic Act did not bar the Lanham Act claim.  Id. at 5252-58. 

Recent UCL public prosecutor decision addresses statute of limitations: People v. E*Poly Star, Inc.

In People v. E*Poly Star, Inc., 205 Cal.App.4th 1316 (May 14, 2012), the Court of Appeal (Second Appellate District, Division Seven) held that the trial court erred in concluding that the UCL's four-year statute of limitations barred public prosecutor claims brought under the UCL's "fraudulent" prong. 

As the opinion notees, the Supreme Court is considering whether the delayed discovery rule and the continuing violation doctrine apply to UCL claims.  Aryeh v. Canon Business Solutions, Inc., no. S184929 (review granted 10/20/10).  Aryeh has been fully briefed and is awaiting oral argument.

Seventh Circuit construes Smith v. Bayer Corp.: Smentek v. Dart

In Smentek v. Dart, ___ F.3d ___ (7th Cir. Jun. 19, 2012), the Seventh Circuit (Judge Posner) construed the U.S. Supreme Court's opinion last year in Smith v. Bayer Corp., 131 S. Ct. 2368 (2011).  The question considered was whether, under Smith, federal judges must afford "comity" to each other's orders denying class certification.  The answer was no:

Whatever the scope of the Supreme Court’s current concept of comity, the defendants’ argument that Smith v. Bayer Corp. adopted a rule of comity in class action suits that precludes granting class certification in a copycat class action must be rejected ....

The rule urged by the defendants in this case that the denial of class certification bars the certification of the same or a similar class in a suit by a member of the same class as the previous suit ... would contradict the holding of Smith v. Bayer Corp., which is that a class member who did not become a party to the previous parallel class action is not precluded from seeking class certification in his class action. ....

We are left with the weak notion of “comity” as requiring a court to pay respectful attention to the decision of another judge in a materially identical case, but no more than that even if it is a judge of the same court or a judge of a different court within the same judiciary. We emphasize, however, the qualification in “materially identical.” Even two class actions involving the same class may differ materially, for example in the suitability of the class representative or the adequacy of class counsel, and where they do the judge in the second, or third, or nth class action is on his own. This is not such a case; nevertheless the district judge gave plausible reasons for her disagreement with the judges in the two previous Cook County dental cases. Can more be required? The defendants’ claim that she was bound by the decisions of the other judges just because those decisions preceded and were contrary to her decision has no basis in law and flouts the principle that a district court decision does not have precedential effect. Camreta v. Greene, 131 S. Ct. 2020, 2033 n. 7 (2011); Wirtz v. City of South Bend, 669 F.3d 860, 862-63 (7th Cir. 2012). The defendants would have such decisions treated not as mere precedents but as super-precedents that no court lacking appellate authority could question.

The district judge’s grant of class certification is therefore affirmed.

Slip op. at 6, 7, 8-9 (emphasis added).

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What is a "business act or practice"? That v. Alders Maintenance Assn.

In That v. Alders Maintenance Assn., ___ Cal.App.4th ___ (Jun. 15, 2012), the Court of Appeal (Fourth Appellate District, Division Three) held that the conduct of an election by a homeowners association is not a "business act or practice" within the meaning of the UCL:

Plaintiff’s second cause of action, offered to circumvent the statute of limitations on the first, is under the UCL.  The UCL is codified in Business and Professions Code section 17200 et seq.  Section 17200 prohibits any “unlawful, unfair or fraudulent business act or practice.”  (Italics added.) 

We cannot find, and plaintiff does not cite, a single published case in which a homeowners association has been treated as a “business” under the UCL, and we are unpersuaded by plaintiff’s claims in favor of such a reading of the statute.  Plaintiff argues that associations are businesses, citing O’Connor v. Village Green Owners Assn. (1983) 33 Cal.3d 790.  That case is readily distinguishable.  In O’Connor, the California Supreme Court held that an association was a “business establishment” under the Unruh Civil Rights Act (Civ. Code, §51).  Treating associations as businesses in that context is consistent with — and indeed, necessary for — fulfilling the fundamental purposes of that statutory scheme, the protection of civil rights. 

The UCL’s purpose does not require the same broad construction of the word “business.”  “The UCL’s purpose is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.  [Citation.]”  (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.)  An association does not participate as a business in the commercial market, much less compete in it.  The dispute here is not related to any activity that might be deemed in the least bit commercial.  Indeed, it is solely related to the conduct of association elections, a subject covered thoroughly by the Davis-Stirling Act itself.  (Civ. Code, § 1363.03 et seq.) 

We do not foreclose entirely the notion that the UCL could apply to an association.  If, for example, an association decided to sell products or services that are strictly voluntary purchases for members or nonmembers, it might be liable for such acts under the UCL.  But applying the UCL to an election dispute would simply make no sense.  An association, operating under its governing documents to maintain its premises and conduct required proceedings, possesses none of the relevant features the UCL was intended to address.  Applying the UCL in this context would both misconstrue the intent of that statute and undermine the specific procedures set forth in the Davis-Stirling Act.  An action under the UCL “is not an all-purpose substitute for a tort or contract action.”  (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.)  We therefore find the court properly sustained defendant’s demurrer to the second cause of action.

Slip op. at 13-14 (footnote omitted) (emphasis added).

New opinion on arbitrability of public injunction claims: Hoover v. American Income Life Ins. Co

In Hoover v. American Income Life Ins. Co., ___ Cal.App.4th ___ (May 16, 2012; pub. ord. June 13, 2012), the Court of Appeal (Fourth Appellate District, Division Two), in refusing to enforce an arbitration clause in a collective bargaining agreement, said this: 

Certainly, the injunctive relief claim under the Unfair Business Practices Act (Bus. & Prof. Code, § 17200) is not arbitrable.  (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316; Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th at pp. 500-501.)

Slip op. at 19.

The citations of Cruz and Brown are significant. The California and U.S. Supreme Courts both declined to review Brown. The opinion’s reasoning may well be followed by other California state courts analyzing whether Cruz survived Concepcion -- notwithstanding the Ninth Circuit's opinion in Kilgore.

On an unrelated subject, Matt Cain's perfect game was beyond amazing.  Go Giants.

UPDATE:  The Complex Litigator has a detailed post on Hoover.  The post also discusses Iskanian (which this blog covered here).

Interesting passage on UCL standing in Ninth Circuit concurrence: Carijano v. Occidental Petroleum

A recent Ninth Circuit opinion concurring in the denial of en banc rehearing had this to say about UCL standing and Kwisket: 

Whoa!!! The Chief has put the proverbial cart before the horse. .... Occidental is free, on remand, to renew its motion to dismiss on the ground that Amazon Watch may not have standing to assert its claim under California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq. ....

The question of standing cannot be resolved on the bare pleadings, which is all we have before us given the procedural posture of this appeal. .... Here, Occidental disputes the existence, the cause and the redressability of the harm alleged by Amazon Watch. Resolving these issues will require factual development on a number of fronts. For example, to show harm, Amazon Watch may produce evidence of the manner in which Occidental’s conduct forced it to divert resources from its central mission of protecting the rainforest and advancing the rights of the indigenous people of the Amazon.  See Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322-24 (2011) (requiring economic harm to prove UCL standing). To show causation, Amazon Watch may also produce evidence linking Occidental’s alleged deceptive practices to Amazon Watch’s diminished ability to carry out its mission. See id. at 326 (affirming that fraud or reliance is a causal mechanism recognized under the UCL). Further, Amazon Watch may prove a continuing injury, which may be redressed through, for example, injunctive relief compelling Occidental to research and remediate environmental harms or to conduct outreach and education about health risks with the indigenous people. See id. at 336-37 (standing under the UCL is not dependent on the availability of restitution as a remedy).

The district court did not address standing, and we need not—indeed, could not—do so in the first instance here.

Carijano v. Occidental Petroleum, ___ F.3d ___, 2012 WL 1970375 (May 31, 2012) (Wardlaw, J., concurring in denial of en banc rehearing) (slip op. at 6009-11) (emphasis added). 

Judges Schroeder and Gould joined in Judge Wardlaw's concurrence.  Four judges joined Chief Judge Kosinski in dissenting from the denial of en banc rehearing. 

Judge Wardlaw wrote the opinion of which rehearing was sought, Carijano v. Occidental Petroleum, 643 F.3d 1216 (2011).  Her views in this concurrence will be useful not only on remand in this case, but in other cases as well. 

There can be little remaining doubt that harms such as investigative costs and diversion of resources caused by a defendant's UCL violations are sufficient to confer Prop. 64 standing.  Another recent case similarly interpreted Kwikset.  Glen Oaks Estates Homeowners Assn. v. Re/Max Premier Properties, Inc., 203 Cal.App.4th 913 (2012) (discussed in this blog post).

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