The UCL Practitioner

New Prop. 64 "injury in fact" decision: O'Brien v. Camisasca Automotive Mfg., Inc.

In O'Brien v. Camisasca Automotive Manufacturing, Inc., ___ Cal.App.4th ___ (Mar 27, 2008), the Court of Appeal (Fourth Appellate District, Division Three) affirmed summary judgment in the defendant's favor, holding that the plaintiff lacked standing to assert UCL or CLRA claims because he did not suffer injury in fact as a result of the defendant's alleged misconduct. The suit challenged the defendant's purported mislabeling of its products as "Made in the U.S.A.," even though no such representation appeared in the catalog from which the plaintiff ordered the product, so the plaintiff had not seen any such label before purchasing the product and could not have relied on it in making the purchase. The tone of the opinion suggests that the Court of Appeal found the case particularly unpalatable. It would be better for the profession and for litigants if such cases were not filed at all. Thanks to the readers who emailed me about this new decision.

New UCL/CLRA "preclusion" decision: Wells Fargo Bank v. Superior Court

In Wells Fargo Bank v. Superior Court, ___ Cal.App.4th ___ (Jan. 25, 2008), the Court of Appeal (First Appellate District, Division One) held that "the Securities Litigation Uniform Standards Act of 1998 (Pub.L. No. 105–353 (Nov. 3, 1998) 112 Stat. 3227) (SLUSA) precludes plaintiffs’ class action complaint," which alleged UCL, CLRA and other claims. Slip op. at 1-2. The opinion explains that:

SLUSA is a preclusion provision[, rather than a preemption provision,] because it does not displace state law with federal law, but makes some state law claims nonactionable through the class action device in both federal and state courts. (See Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit (2006) 547 U.S. 71, 87 [164 L.Ed.2d 179, 193, 126 S.Ct. 1503, 1514] (Dabit).) Thus, once a court determines that SLUSA applies to a given state law action, the action cannot be maintained on a class basis in either state or federal court. (Kircher v. Putnam Funds Trust (2006) 547 U.S. 633, ___ [165 L.Ed.2d 92, ___, 126 S.Ct. 2145, 2155].)

Id. at 3 n.2. The opinion goes on:

SLUSA provides in relevant part: “Limitations on remedies [] (1) Class action limitations. [] No covered class action based upon the statutory or common law of any State or subdivision thereof may be maintained in any State or Federal court by any private party alleging— [] (A) a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security; or [] (B) that the defendant used or employed any manipulative or deceptive device or contrivance in connection with the purchase or sale of a covered security.” (15 U.S.C. § 78bb(f).) Congress enacted SLUSA in response to the marginal success the Private Securities Litigation Reform Act of 1995 (PSLRA) had in achieving its goal of combating strike suits and securities class actions. (See SLUSA, Pub.L. No. 105–353, § 2(1)-(5) (Nov. 3, 1998) 112 Stat. 3227; 15 U.S.C. 788bb(f).) In enacting PSLRA, Congress targeted “perceived abuses of the class-action vehicle in litigation involving nationally traded securities.” (Dabit, supra, 547 U.S. 71, 81.) However, “[r]ather than face the obstacles set in their path by [PSLRA], plaintiffs and their representatives began bringing class actions under state law,” alleging violations of state statutory or common law. (Id. at p. 82.) Subsequently, Congress passed SLUSA to prevent plaintiffs from frustrating the objectives of PSLRA. (Ibid.)

An action will be dismissed under SLUSA if it (1) is a “covered class action”; (2) is based on state law; (3) involves a “covered security”; and (4) alleges a “misrepresentation or omission of a material fact” or use of “any manipulative or deceptive device . . . in connection with the purchase or sale of a covered security.” (15 U.S.C. § 78bb(f); see, e.g., Behlen v. Merrill Lynch, supra, 311 F.3d 1087, 1092.) A “covered class action” is a lawsuit in which damages are sought on behalf of more than 50 people. (15 U.S.C. § 78bb(f)(5)(B).) A “covered security” is one traded nationally and listed on a regulated national exchange. (15 U.S.C. § 78bb(f)(5)(E).) In determining whether an alleged misrepresentation or omission “coincides” with a securities transaction, courts look at “the gravamen” – whether the complaint, as a whole, involves an untrue statement or substantive omission of a material fact, and whether that conduct coincides with a transaction involving a covered security. (Kutten v. Bank of America, N.A. (E.D.Mo., Aug. 29, 2007, Civ. No. 06-0937 (PAM)) 2007 U.S.Dist. Lexis 63897, at pp. *4–5 (Kutten).) The court focuses on the substance of the claim, not the plaintiffs’ characterization of it. (Miller v. Nationwide Life Ins. Co. (5th Cir. 2004) 391 F.3d 698, 702 [whether SLUSA applies “hinges on the context of the allegations—not on the label affixed to the cause of action”].)

Id. at 4-5. The Court then applies these rules to the case before it:

Here, it is undisputed that both the class and the mutual funds at issue are “covered” as defined by SLUSA. It is also clear from the complaint that the action is based on state law. Thus, the key question is whether the gravamen involves a misrepresentation or omission in connection with the purchase or sale of mutual funds. We conclude it does.

The essence of plaintiffs’ second amended complaint is that the Bank made misrepresentations and omitted material facts, including conflicts of interests and fees relating to the transfer of trust assets into proprietary and nonproprietary mutual funds. The complaint is replete with allegations that the Bank “failed to disclose” (i.e., omitted) details regarding fees and conflicts of interests, and that these omissions caused injury to the plaintiffs. ....

Further, each of the six causes of action hinges on harm caused by the Bank’s misrepresentations. (See Rowinski v. Salomon Smith Barney Inc. (3d Cir. 2005) 398 F.3d 294, 300 [misrepresentation prong was satisfied where the allegations of misrepresentation served as the “factual predicate” of state law causes of action].) .... The third cause of action for violation of the Consumers Legal Remedies Act and the fifth cause of action for unfair business practices contain allegations that the Bank engaged in deceptive practices in connection with its investments and trust services. .... Whether plaintiffs’ alleged omissions are couched in terms of a fiduciary duty or claims of fraud, they are, in essence, claims that the Bank misrepresented or omitted key information about the securities transactions in which they were involved, thereby causing plaintiffs’ injuries.

Id. at 7-8.

The Court concludes by holding that plaintiffs should be allowed leave to amend their complaint: "Because plaintiffs are free to pursue their claims on an individual basis, and because some of their allegations, including their allegations regarding unreasonable charges for the preparation of tax returns, are outside the scope of SLUSA, plaintiffs may amend the second amended complaint to (1) assert state claims for a group of fewer than 50 plaintiffs; or (2) exclude allegations that trigger SLUSA preclusion." Id. at 15.

Supreme Court expresses potential interest in UCL "injury in fact" case: Buckland v. Threshold Enterprises, Ltd.

On January 3, 2008, the Supreme Court granted itself an extension of time, through February 1, 2008, to grant or deny review in Buckland v. Threshold Enterprises, Ltd., no. S157919. In Buckland, the Court of Appeal (Second Appellate District, Division Four) held that the plaintiff failed to adequately allege post-Prop. 64 standing because she could not allege actual reliance. The discussion of Prop. 64's "injury in fact" language is extensive. Buckland v. Threshold Enterprises, Ltd., 155 Cal.App.4th 798 (2007). My original post on Buckland is here.

Given the apparent overlap in issues, it would not be surprising to see a "grant and hold" order in this case pending resolution of In re Tobacco II Cases. In light of the Supreme Court's conference schedule, as a practical matter review will have to be either granted or denied no later than the conference on January 30. A depublication request was also filed.

UPDATE: On January 16, 2008, the Supreme Court denied review and depublication.

New federal CLRA decision: In re Late Fee and Over-Limit Fee Litigation

In In re Late Fee and Over-Limit Fee Litigation, 2007 WL 4106353 (N.D. Cal. Nov. 16, 2007), Judge Saundra Brown Armstrong had this to say about the CLRA and whether it applies to credit card transactions:

The plaintiffs' CLRA claim must also be dismissed because, as California appellate courts have held, credit card accounts are not "goods or services" subject to that statute. Berry v. Am. Express Publ'g, Inc., 147 Cal.App. 4th 224 (2007) (discussing Cal. Civ.Code § 1770(a)). Every federal court addressing the issue has followed this precedent. See Van Slyke v. Capital One Bank, 503 F.Supp.2d 1353, 1358 (N.D. Cal. 2007); Augustine v. FIA Card Servs., N.A., 485 F.Supp.2d 1172, 1175 (E.D. Cal. 2007). [FN9]

FN9. The plaintiffs have argued that credit card accounts are "goods or services" as that phrase is used in other statutes, but those diferent statutes are inapposite, especially in light of the particular legislative history of the CLRA making it clear that the legislature intentionally excluded credit. See, e.g., Van Slyke, 503 F.Supp.2d at 1358-59; Augustine, 485 F.Supp.2d at 1175.

Id. at *11.

New unpublished UCL/CLRA auto defect opinion: Hunter v. General Motors Corp.

Yesterday, in an opinion worthy of publication, the Court of Appeal (Second Appellate District, Division Five) held that the trial court had improperly sustained without leave to amend the defendant's demurrer to the plaintiffs' UCL and CLRA claims. Hunter v. General Motors, no. B190809.

The putative class action challenged the defendant's "development, design, manufacture, and sale of certain vehicles with a defective rear brake system." Slip op. at 2. The opinion addresses, among other things, the Federal Motor Vehicle Safety Standards promulgated by NHTSA. The Safety Standards are often the central focus of non-injury consumer class actions involving safety-related auto defects. This opinion is the first to interpret them in the context of UCL and CLRA claims. For example:

Plaintiffs allege that defendant violated section 1770, subdivision (a)(3) of the CLRA when it knowingly affixed a certification label or tag to each of the subject vehicles falsely stating, “This Vehicle Conforms to All Applicable U.S. Federal Motor Vehicle Safety Standards in Effect on the Date of Manufacture Show[n] above.” Defendant’s defective braking system, plaintiffs allege, violated Federal Motor Vehicle Safety Standards 105 and 135.

....

The trial court ruled that plaintiffs’ Federal Motor Vehicle Safety Standards allegations do not state a basis for a misrepresentation under the CLRA because they fail to allege that “the parking brake systems were not ‘capable’ of holding the subject vehicles stationary for 5 minutes in both a forward and reverse direction on a 30 percent grade, nor is there an allegation that the parking brake system did not hold the vehicle stationary for 5 minutes in both a forward and reverse direction on the grade.” The trial court’s reading of plaintiffs’ allegations is unduly narrow and inconsistent with the mandate to construe the CLRA liberally (§ 1760; Wang v. Massey Chevrolet, supra, 97 Cal.App.4th at p. 869) and to give the complaint a reasonable interpretation (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at pp. 966-967). Plaintiffs allege that the label or tag affixed to each of the subject vehicles certifying that the vehicle conformed to all effective Federal Motor Vehicle Safety Standards was false because the parking brake system was defective. Liberally construed, that allegation alleges that the parking brakes could not hold the subject vehicles as required by 49 C.F.R. part 571.105, subpart 5.2.1 and 49 C.F.R. part 571.135, subpart 7.12.3 and, accordingly, is sufficient to establish a misrepresentation under the CLRA.

Also, plaintiffs’ allegations establish a misrepresentation under the CLRA based on 49 C.F.R. part 571.135, subpart 5.6(a) which provides, in pertinent part, “[a]ll mechanical components of the braking system shall be intact and functional.” Plaintiffs allege that defendant knew that “the parking brakes on the Subject Vehicles were defective in that they did not work.” We must accept that allegation as true. (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at pp. 966-967.) If the parking brakes “did not work,” then they were not “functional” as required by subpart 5.6(a), and a certification that a vehicle equipped with such parking brakes conformed to “All Applicable U.S. Federal Motor Vehicle Safety Standards in Effect on the Date of Manufacture” is an actionable misrepresentation under the CLRA.

Plaintiffs also allege that defendant violated section 1770, subdivisions (a)(5) and (a)(7) of the CLRA when defendant represented that the subject vehicles had characteristics and benefits they did not have and were a particular standard, quality, or grade they were not. In support of their CLRA cause of action, plaintiffs allege that defendant made representations about the quality, safety, and performance of the parking brake system on the subject vehicles while failing to disclose information it knew about the defect in the parking brakes. The list of proscribed practices in section 1770 includes the concealment or suppression of material facts. In the CLRA context, “[f]raud or deceit may consist of the suppression of a fact by one who is bound to disclose it or who gives information of other facts which are likely to mislead for want of communication of that fact.” (Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 37; compare with Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255 and Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 835 [“although a claim may be stated under the CLRA in terms constituting fraudulent omissions, to be actionable the omission must be contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obliged to disclose”].) Plaintiffs’ allegations are sufficient to state a violation of the CLRA based on defendant’s alleged representations about the parking brakes and concealment of the defect. (See Outboard Marine Corp. v. Superior Court, supra, 52 Cal.App.3d at p. 37.)

Slip op. at 12-14 (footnotes omitted). The discussion of the plaintiffs' claims under the UCL's three prongs is equally interesting, including the holding that the plaintiffs "need not wait for a catastrophic event such as brake failure to bring an action under the UCL based on the facts alleged in the fourth amended complaint." Id. at 19. I would not be surprised to see publication requests filed here.

By the way, thanks again to JS, who continues to tirelessly mine the unpublished Court of Appeal opinions and send me the gems like this one.

Recorder article on Fairbanks and the CLRA

An article in Friday's Recorder, "Heller Lawyer Named GC at California Department of Insurance" (subscription), had some interesting commentary by Lisa Perrochet on the Fairbanks case and the CLRA:

In another development Wednesday affecting the insurance industry, the state Supreme Court agreed to hear Fairbanks v. Superior Court, S157001, a case that could limit plaintiffs' ability to challenge insurers under the Consumers Legal Remedies Act.

In August, the 2nd District Court of Appeal held that insurance is neither a "good" nor a "service" as defined and regulated by the CLRA. Since Proposition 64 made private claims under California's Unfair Competition Law more difficult to file, the CLRA has become a more attractive vehicle for consumer lawsuits, some lawyers have suggested.

While the Fairbanks case "is tied very closely to the issue of insurance," said Horvitz & Levy partner Lisa Perrochet, "it may be that [generally] people are focusing more on CLRA claims. This may be a harbinger of more aggressive use of those claims."

The CLRA provides for injunctive relief, punitive damages, attorney fees and other remedies, Perrochet said. The Unfair Insurance Practices Act, by contrast, only allows claims under a more narrow scope of circumstances, and it offers far fewer remedies than the CLRA, she said.

I think the better way to characterize Fairbanks would to say that it might confirm (not limit) plaintiffs' ability to challenge insurers under the CLRA (given the Court of Appeal's holding).

Statement of issue on review in Fairbanks v. Superior Court

The Supreme Court's statement of the issue on review in Fairbanks v. Superior Court, no. S157001 (review granted 11/14/07), is very straightforward:

Is insurance a "good" or a "service" that is subject to the Consumers Legal Remedies Act (Civ. Code, § 1750)?

This is the second CLRA case in three months in which the Supreme Court has granted review. See Meyer v. Sprint Spectrum, no. S153846 (review granted 08/16/07) (discussed in these blog posts).

Supreme Court grants review in CLRA case: Fairbanks v. Superior Court (Farmers New World Life Ins. Co.)

Yesterday, the Supreme Court granted review in Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), no. S157001. In Fairbanks, the Court of Appeal held that insurance was neither a "good" nor a "service" within the meaning of the CLRA, effectively exempting insurers from CLRA coverage. Fairbanks v. Superior Court, 154 Cal.App.4th 435 (2007) (Second Appellate District, Division Three). My original post on Fairbanks is here.

When the Supreme Court's summary of the issues presented on review is available, I will update this post. Meanwhile, here is a copy of the amicus letter of the Foundation for Taxpayer and Consumer Rights in support of review.

New unpublished UCL "injury in fact" opinion: Freeman v. Mattress Gallery

Yesterday, the Court of Appeal (Fourth Appellate District, Division Two) handed down an unpublished opinion, Freeman v. Mattress Gallery, no. E039614. The unpublished opinion warrants comment because of its summary of recent case law construing Prop. 64's "injury in fact" language, which concludes with this paragraph:

[C]ases published since the most recent amendments to Business and Professions Code sections 17204 and 17535 have concluded, either directly or through implication, that in order to have standing under those sections a plaintiff must allege either (1) that money was expended by the plaintiff due to the defendant's acts of unfair competition (Aron, supra, 143 Cal.App.4th at pp. 802-803; R & B Auto Center, Inc v. Farmers Group, Inc., supra, 140 Cal.App.4th at p. 360; Monarch Plumbing Co. v. Ranger Ins. Co. (E.D.Cal., Sept. 25, 2006, No. Civ. S-06-1357) 2006 U.S.Dist. Lexis 68850, [p. 20]; Witriol v. LexisNexis Group (N.D.Cal., Feb. 10, 2006, No. C05-02392) 2006 U.S.Dist. Lexis 26670, [pp. 18-19]; Southern Cal. Housing v. Los Feliz Towers Homeow. (C.D.Cal. 2005) 426 F.Supp.2d 1061, 1069; Laster v. T-Mobile USA, Inc. (S.D.Cal. 2005) 407 F.Supp.2d 1181, 1194), (2) that money or property was lost or suffered a diminution in value (Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal.App.4th 688, 716 (Overstock.com, Inc.); Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1240, 1262), or (3) that plaintiff was denied money to which plaintiff had a cognizable claim (Progressive West Ins. Co. v. Superior Court (2005) 135 Cal.App.4th 263, 269-270, 285, fn. 5; Filiti v. USAA Casualty Ins. Co. (E.D.Cal., June 20, 2007, No. Civ. S-06-2694) 2007 U.S.Dist. Lexis 44691, [p. 6]; 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, [pp.1, 18-19]).

Slip op. at 15-16. What's also very interesting is that the Court of Appeal held that the plaintiff's allegation that he suffered "loss of the cost of gasoline and accompanying wear and tear on his vehicle" when he drove to the defendant's store in response to the defendant's "bait and switch" advertisement -- but then didn't buy anything -- constituted "injury in fact" and "loss of money or property." Id. at 16-17. The Court of Appeal reversed the order granting the defendant's motion for judgment on the pleadings as to the UCL claim without leave to amend. Id. The opinion does not go on to discuss whether the plaintiff in this case would be able to recover restitution. Injunctive relief would likely be available if the defendant was still running the misleading advertisement. The Court of Appeal's affirmance of the order striking the class allegations (id. at 21-25), however, complicates this further.

A lengthy dissenting opinion disagrees with the majority's holding, concluding, in effect, that to qualify as "injury in fact," the monetary loss must also be recoverable as "restitution":

In order to effectuate the statute's purpose, I conclude that a mere loss, monetary or otherwise, is not enough to confer standing. When a court orders restitution, it orders the defendant to give up his gains to the claimant, as opposed to compensating the claimant for his or her loss. To satisfy the section 17204 "injury in fact" standing requirement, regardless of whether the relief sought is court-ordered restitution or an injunction, the loss suffered must be recoverable. Damages are not recoverable under the UCL (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1148) and they should not be sufficient to confer standing. This requirement, without going so far as to imply a transaction is necessary, prescribes that there be at minimum an interaction between the parties in which not only a loss but a gain results.

Slip op., dissent at 9. I am not aware of any California Court of Appeal opinions that hold this, but there is one federal ruling that does. Walker v. USAA Casualty Ins. Co., 474 F.Supp.2d 1168 (E.D. Cal. 2007). This argument has always seemed to me contrary to the language of Prop. 64.

The Freeman decision also appears to conflict with another case in which the Supreme Court recently granted review, Meyer v. Sprint Spectrum L.P., 150 Cal.App.4th 1136 (2007) (review granted 08/16/07, no. S153846). There, the Court of Appeal held that the plaintiffs could not maintain a CLRA claim against a defendant who merely included an unconscionable provision in its contract, if that provision had not been enforced against them to their detriment. In the unpublished Freeman decision, however, the Court of Appeal said:

The trial court also sustained the demurrer to the CLRA cause of action based upon the failure of the complaint to allege that Freeman suffered any damage as required by Civil Code section 1780, subdivision (a). As indicated above, our Supreme Court has interpreted Civil Code section 1780 to state that in order to have standing to bring an action for violation of the CLRA, all a plaintiff need allege is that the defendant violated a provision of Civil Code section 1770. (Kagan, supra, 35 Cal.3d at p. 593.) The first amended complaint alleges that Defendants violated Civil Code section 1770, subdivision (a)(3), (5), (7), (9), (10), and (13). Hence, for the reasons stated above, the allegations of the complaint are sufficient to establish Freeman's standing to pursue injunctive relief for violation of the CLRA.

Slip op. at 20. This is precisely the opposite of what the Court of Appeal held in Meyer, also citing Kagan. The dissent had this to add on this point:

Although the California Supreme Court in Kagan stated that suffering "any damage" includes the infringement of any legal right as defined by Civil Code section 1770 (Kagan, supra, 35 Cal.3d at p. 593), I would find that there is still room for debate as to what type of damage is sufficient to confer standing. While plaintiffs do not have to allege monetary loss to have standing under the CLRA, they must suffer some damage as a result of defendant's conduct. In other words, despite the fact that a plaintiff has alleged a violation of the CLRA, which, according to Kagan, would be sufficient to confer standing, the fact that he or she did not sustain any tangible loss precludes him or her from bringing claims. Thus, in my opinion, damage requires something more than a mere allegation of an infringement upon a right protected by Civil Code section 1770.

....

By allowing a plaintiff who alleges unfair business practices to secure standing under the CLRA, we begin down a slippery slope. The California Supreme Court in Kagan seems to have obliterated the meaning of the phrase "suffers any damage as a result of" in the CLRA standing requirements. (Kagan, supra, 35 Cal.3d at pp. 590, 593; Civ. Code, § 1780, subd. (a).) In so doing, our high court has inhibited the judiciary from applying a meaningful limit on the damage and causation requirements of the CLRA. Because alleging a violation, suffering damage, and alleging causation have all been rolled into one requirement (Kagan, supra, 35 Cal.3d at p. 593), courts are left asking, "Is there any limit on the damages that are sufficient to confer standing under the CLRA?" If gas money is sufficient, then why not wear and tear on one's tires? What about loss of time? Why not something as intangible as an alleged violation of Civil Code section 1770? The term "any damage" admittedly sounds limitless. However, if a court is forced to allow a mere allegation of unfair business practices to satisfy the "any damage" standing requirement of the CLRA, the judiciary of this state should brace itself for the imminent flood of litigation. At some point, the maxim of "the law disregards trifles" must be applied to limit the "any damage" requirement of the CLRA. (Harris v. Time, Inc. (1987) 191 Cal.App.3d 449, 458 [holding that a suit for damages based on being forced to open junk mail is frivolous litigation and not a sufficient cause of action].)

Slip op., dissent at 11-12, 13.

In sum, this is a very interesting unpublished opinion. Thanks to the blog reader who emailed me to bring it to my attention.

New CLRA and UCL "injury in fact" decision: Buckland v. Threshold Enterprises, Ltd.

In Buckland v. Threshold Enterprises, Ltd., ___ Cal.App.4th ___ (Sept. 25, 2007), the plaintiff purchased the defendant's products, suspecting that their packaging contained false and misleading advertising, for no reason other than to facilitate a potential lawsuit. The Court of Appeal (Second Appellate District, Division Four) held that the trial court properly sustained the defendant's demurrer to the plaintiff's fraud, CLRA, and UCL claims. The fraud claim failed because the plaintiff could not plead actual reliance. Instead of relying on the truth of the representations, she suspected they were false, negating any showing of actual reliance. Slip op. at 6-9. The CLRA claim failed for the same reason. Id. at 9-13. (Part of the CLRA discussion relied on McAdams v. Monier, Inc., 151 Cal.App.4th 667 (2007), even though the Supreme Court had granted review in that case the week before. Slip op. at 12-13. The opinion may need to be modified to omit that discussion.)

The UCL claim failed for lack of post-Prop. 64 standing. Id. at 13-24. Buckland is the first decision to address Prop. 64's preamble language stating that the intiative was intended "to prohibit private attorneys from filing lawsuits for unfair competition where they have no client who has been injured in fact under the standing requirements of the United States Constitution." Prop. 64 §1(e) (quoted in Buckland, slip op. at 17 (emphasis in original)). The opinion addresses "injury in fact" in a separate section from "lost money or property." The discussion of standing is quite detailed and worth reading.

New CLRA decision: Fairbanks v. Superior Court

In Fairbanks v. Superior Court, ___ Cal.App.4th ___ (Aug. 23, 2007), the Court of Appeal (Second Appellate District, Division Three) held that insurance is not a "good" or a "service" within the meaning of the CLRA. An article in today's Daily Journal, "Appellate Ruling Puts Insurers Outside Consumer Remedies Act" (subscription), reports that a petition for review is planned.

Statement of issues on review in Meyer v. Sprint Spectrum

Late last week, the Supreme Court posted the statement of issues on review in Meyer v. Sprint Spectrum, no. S153846:

This case presents the following issues: (1) Has a person suffered "damage" within the meaning of the Consumer Legal Remedies Act (Civil Code, § 1780, subd. (a)), such as to allow that person to bring an action under the Act if that person is a party to an agreement containing an unconscionable term (see Civil Code, § 1770, subd. (a)(19)), even though no effort has been made to enforce the unconscionable term? (2) Did plaintiffs have standing to seek declaratory relief?

Although the docket does not indicate that the order granting review limited the Court's review to specific issues, it appears that the CLRA claim, not the UCL claim, will be the focus of this case. As I observed here (with a hat tip to Jim Sturdevant), in Meyer, the CLRA claim kind of got pulled down into the Prop. 64 quicksand along with the UCL claim. If the Supreme Court reiterates the distinctions between the two claims, that will be helpful for lower courts and litigants alike. My original post on the grant of review is here.

Supreme Court grants review in another Prop. 64 "injury in fact" case: Meyer v. Sprint Spectrum

Yesterday, the Supreme Court granted review in Meyer v. Sprint Spectrum, no. S153846. In that case, the Court of Appeal (Fourth Appellate District, Division Three) said that Prop. 64 created a "two-part, statutory standing test," and held that the plaintiffs lacked Prop. 64 standing to challenge unconscionable provisions in their cellular telephone contracts because the defendant had not enforced or threatened to enforce the provisions against them. The Court also held that the plaintiffs' CLRA claim failed. Meyer v. Sprint Spectrum L.P., 150 Cal.App.4th 1136 (2007). My original post on the Meyer decision is available at this link.

This case was decided the day before the State Bar's UCL conference in Los Angeles, at which I spoke on May 18, 2007. Those of you who attended may recall that a copy was handed out to all attendees.

Some briefs, orders, and an update from the Ford trial

Many thanks to the blog reader who emailed to update me on the Ford bench trial in Sacramento (Ford Explorer Cases, JCCP nos. 4266 & 4270). I'm told that the plaintiffs rested their case yesterday, on the 31st day of trial; that the judge took Ford's motion for judgment under submission; and that Ford began presenting its defense yesterday afternoon.

I've also received some interesting materials from the case. These trial briefs provide a roadmap to a monetary award under the UCL, offering "three alternative models of calculating the amount of money that Ford acquired, by its wrongful conduct, from members of the class":

• Plaintiffs' Corrected Trial Brief (06/06/07)

• Supplement to Plaintiffs' Corrected Trial Brief Re: Disgorgement of Unjust Profits (07/26/07)

The briefs will be very useful to anyone pursuing a UCL case based on non-disclosures or misleading advertising. Also, here are several of Judge David De Alba's orders, including his orders denying Ford's motions to decertify the class and for summary adjudication:

• Order Granting Class Certification (02/08/05)

• Order Correcting Class Definition and Certifying Corrected Class (05/26/05)

• Order Regarding Class Action Notice Issues (08/29/05)

• Ruling on CLRA "No Merit" Motion (03/07)

• Ruling on Motion for Decertification (03/07)

• Ruling on Motion for Partial Summary Adjudication (03/07)

Thanks again to the blog reader who provided these materials.

CLRA article in Plaintiff magazine

The August 2007 issue of Plaintiff, which just arrived in the mail, has an article by James Sturdevant and Alexius Markwalader called "The Consumer Legal Remedies Act: Restoring the traditional pleading and proof requirements for claims of deception under Civil Code section 1750." The article points out that CLRA claims have been caught in the Prop. 64 quicksand, and that in both Tobacco and Pfizer, the Court of Appeal applied the same causation and reliance standards to the CLRA claims as to the UCL claims—even though the language and precedents governing the claims differ. The article also discusses two of the most recent CLRA decisions, Meyer v. Sprint Spectrum LP, 150 Cal.App.4th 1136 (2007) and McAdams v. Monier, Inc., 151 Cal.App.4th 667 (2007).

Petitions for review have been filed in both of these two recent cases. On June 26, 2007, a review petition was filed in Meyer v. Sprint Spectrum (no. S153846), followed by an answer to the petition on July 16 and the reply last Friday, July 27. On July 5, 2007, a petition for review was filed in McAdams v. Monier (no. S154088), followed by an answer on July 25.

My original post on Meyer is here, and my original post on McAdams is here.

New UCL/CLRA nondisclosure decision: Falk v. General Motors Corp.

In Falk v. General Motors Corp., 2007 WL 1970123 (N.D. Cal. Jul. 3, 2007), the plaintiffs alleged that GM knowingly sold vehicles with defective speedometers. Judge William Alsup denied GM's motion to dismiss the plaintiffs' CLRA and UCL claims.

Analyzing the CLRA claim, Judge Alsup distinguished both Daugherty and Bardin, then held that the alleged problem with the speedometers was material and that GM had a duty to disclose it. As for the UCL claim, Judge Alsup applied the ordinary "likely to be deceived" formulation of the "fraudulent" prong and the pre-Cel-Tech formulation of the "unfair" prong. He concluded that a claim was stated under all three prongs of the UCL. The opinion concludes:

In closing, it is worth saying that ordinarily an express warranty begins and ends the manufacturer’s duty to replace an item like the one in question. Here, however, the large number of articulate and credible Internet postings set forth in the complaint strongly indicates that GM knew of the problem and very likely had far more information on a material defect. At least at the pleading stage, this complaint states a claim that GM knew and concealed that its speedometers were defective and likely to fail far more often than expected by the consuming public. Discovery may or may not bear this claim out. But enough is alleged to authorize plaintiffs and their counsel to proceed to take discovery.

For the reasons given, defendant’s motion to dismiss plaintiffs’ unjust enrichment claim is GRANTED without leave to amend. Plaintiffs, however, allege sufficient factual support for all of their other claims. Although Daugherty and Bardin bar CLRA claims for omissions when there is no duty to disclose and when defendants have made no representations to the contrary, plaintiffs adequately plead that GM had a duty to disclose here, which it violated. Defendant’s motion to dismiss under Rules 12(b)(6) and 9(b) is therefore DENIED as to plaintiffs’ CLRA, UCL and fraud by omission claims. Discovery may begin immediately.

Falk, 2007 WL 1970123 at *10 (slip op. at 14). Thanks to the blog reader who emailed a copy of this decision.

Two more new UCL decisions: Akkerman v. Mecta Corp. and Benson v. Kwikset Corp.

Two more UCL decisions came down last week:

• Akkerman v. Mecta Corp., ___ Cal.App.4th ___ (June 27, 2007) (Second Appellate District, Division Six) (affirming denial of class certification of UCL claim)

• Benson v. Kwikset Corp., ___ Cal.App.4th ___ (June 29, 2007) (Fourth Appellate District, Division Three) (another post-Mervyn's remand decision)

New federal UCL/CLRA decision: Chavez v. Blue Sky Natural Beverage Co.

In Chavez v. Blue Sky Natural Beverage Co., 2007 WL 1691249 (N.D. Cal. Jun. 11, 2007), Judge Conti dismissed UCL and CLRA claims alleging that the defendant falsely represented that its beverages were manufacturered and bottled in New Mexico. The Court rejected the plaintiff's argument that "he would not have purchased Blue Sky beverages had he known the truth about the geographic origin of the products" and that he "lost the full value of the price paid for each can or bottle of soda" (id. at *3):

In contrast to Daghlian [v. DeVry Univ., Inc., 461 F.Supp.2d 1121, 1153-57 (C.D. Cal. 2006)] and Laster [v. T-Mobile, 407 F.Supp.2d 1181, 1194 (S.D. Cal. 2005)], the Plaintiffs in this case suffered no injury or damages as a result of Defendants' conduct. Plaintiff did not pay a premium for Defendants' beverages because the drinks purportedly originated in Santa Fe, New Mexico. Accepting the facts as stated by Plaintiffs and drawing all inferences in their favor, Defendants' promise concerning geographic origin had no value and Plaintiffs have suffered no damages by purchasing beverages they thought were produced in New Mexico by a New Mexico-based company, but actually originated in California. As a result of Plaintiffs' failure to allege any damages under all four causes of action, Plaintiffs have no standing to pursue their claims against Defendants.

Id. at *4. In other words, the plaintiff got what he paid for (the soda). Perhaps the plaintiff would have fared better if he had sought only a portion of the soda's purchase price, rather than "the full value of the price paid." Under Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663, 700 (2006), evidence of the “value of the consumer impact or the advantage realized by [the defendant]” is admissible to prove “the amount of restitution necessary to restore [the plaintiffs] to the status quo ante” (citing Korea Supply)). Evidently, Judge Conti thought that the alleged misrepresentation did not affect the soda's price and thus caused no harm as a matter of law.

Recent federal CLRA decisions: Van Slyke v. Capital One Bank, Augustine v. FIA Card Servs., Jefferson v. Chase Home Finance

Three recent federal decisions discuss the CLRA and its applicability to extensions of credit:

• Van Slyke v. Capital One Bank, 2007 WL 1655641 (N.D. Cal. June 7, 2007)
  
• Jefferson v. Chase Home Finance LLC, 2007 WL 1302984 (N.D. Cal. May 3, 2007)
  
• Augustine v. FIA Card Servs., N.A., ___ F.Supp.2d ___, 2007 WL 1176226 (E.D. Cal. Apr. 20, 2007)

For more decisions on that subject, see this blog post.

New UCL/CLRA decision: Belton v. Comcast Cable Holdings, LLC

In Belton v. Comcast Cable Holdings, LLC, ___ Cal.App.4th ___ (June 8, 2007), the Court of Appeal (First Appellate District, Division One) addressed the interplay between the UCL, the CLRA, and the Unruh Act (Civ. Code §51). Among other things, the Court applied the post-Cel-Tech formulation of "unfair" to this consumer action:

[Plaintiffs] rely upon the definition of “unfair” set forth in Cel-Tech, supra, 20 Cal.4th 163. In Cel-Tech, the court, in the context of an unfair competition claim by a competitor, defined “unfair” as “conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” (Id. at p. 187.) The Cel-Tech court further required “that any finding of unfairness to competitors under [Business and Professions Code] section 17200 be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition.” (Id. at pp. 186-187.) The court left open the question whether this definition should also apply in the context of unfair competition claims brought by consumers (id. at p. 187, fn. 12), leading to a split of authority on this question among the courts of appeal. (See Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255, 1273-1274 [noting the split of authority and urging the California Supreme Court to resolve it].) This court, however, has followed the line of authority that also requires the allegedly unfair business practice be “tethered” to a legislatively declared policy or has some actual or threatened impact on competition. (See Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 853-854.)

Slip op. at 14. The Court of Appeal affirmed the judgment in the defendant's favor on all causes of action.

"Recent Developments in Class Certification of Consumer Products Cases in California Under the Consumers Legal Remedies Act and the Unfair Competition Law"

I recently found an interesting paper by Michael F. Ram of Levy, Ram & Olson in San Francisco. The paper is called "Recent Developments in Class Certification of Consumer Products Cases in California Under the Consumers Legal Remedies Act and the Unfair Competition Law." The paper, which appears to be dated late 2006, discusses Chamberlan, Bardin, Pfizer, and other relatively recent decisions. It's quite good and is worth a read.

Another new Prop. 64 "injury in fact"/reliance decision: McAdams v. Monier, Inc.

Yesterday, in McAdams v. Monier, Inc., ___ Cal.App.4th ___ (May 30, 2007), the Court of Appeal (Third Appellate District) reaffirmed that UCL and CLRA class actions alleging failure to disclose material information are alive and well in California. The Court reversed a trial court order denying class certification of such claims, holding that they may be established through a classwide inference of reliance, and that individualized proof of each class member's actual reliance is not required. The Supreme Court is expected to decide this precise question in In re Tobacco Cases II.

Regarding the CLRA claim, the McAdams court explained:

The court in Massachusetts Mutual concluded ... that th[e] causation requirement under the CLRA did not render the case before it unsuitable for class treatment. Drawing from two state Supreme Court decisions, Vasquez v. Superior Court (1971) 4 Cal.3d 800 (Vasquez) and Occidental Land, Inc. v. Superior Court (1976) 18 Cal.3d 355 (Occidental), Massachusetts Mutual concluded that this causation requirement can be satisfied if the record permits an “inference of common reliance” to the class. (Massachusetts Mutual, supra, 97 Cal.App.4th at pp. 1292-1293.)

Slip op. at 10. After carefully considering Vasquez, Occidental, and Massachusetts Mutual, the Court of Appeal concluded that "[t]he record here permits an inference of common reliance among the CLRA class." Slip op. at 12. "The class action is based on a single, specific, alleged material representation. Monier knew but failed to disclose that its color roof tiles would erode to bare concrete long before the life span of the tiles was up. ... [I]n this context, class treatment is appropriate." Id. at 9.

As for the UCL claim, it was "based on the same material misrepresentation" as the CLRA claim — "Monier's failure to disclose the premature color erosion of the roof tiles" (slip op. at 20) — so the same analysis applied:

The real nub of the issue of UCL class suitability here turns on the element of reliance (causation). As amended by Proposition 64, section 17204 requires, for purposes of standing, that a private plaintiff have “suffered injury in fact and [have] lost money or property as a result of such unfair competition.” Furthermore, it is a basic principle of standing that “‘[t]he definition of a class cannot be so broad as to include individuals who are without standing to maintain the action on their own behalf. Each class member must have standing to bring the suit in his own right.’” (Collins v. Safeway Stores, Inc. (1986) 187 Cal.App.3d 62, 73, quoting McElhaney v. Eli Lilly & Co. (D.S.D. 1982) 93 F.R.D. 875, 878; Feitelberg v. Credit Suisse First Boston, LLC (2005) 134 Cal.App.4th 997, 1018.) As we shall explain, the concept of “inference of common reliance” (as opposed to “actual reliance”) can be applied here to satisfy these two quoted principles of standing, rendering plaintiff’s UCL action suitable for class treatment.

Massachusetts Mutual again points the way. As we discussed in the previous section of this opinion, that decision applied an “inference of common reliance” in determining that a fraud-based class action under the CLRA was suitable for class treatment.

Slip op. at 22-23. The Court of Appeal found no reason why the "inference of reliance" analysis should not apply to both the CLRA claim and the UCL claim for class certification purposes:

Several factors support our conclusion that this standard of “inferred reliance” from the CLRA class context may also be applied to the Proposition 64 UCL class context, instead of requiring a showing of “actual reliance.” The CLRA and the UCL are both consumer protection statutes with traditionally less rigorous proof burdens than common law fraud. (See Civ. Code, § 1760; § 17200; Consumer Advocates v. Echostar Satellite Corp. (2003) 113 Cal.App.4th 1351, 1360; Comment, The California Consumers Legal Remedies Act (1973) 10 Cal. Western L. Rev. 161.) After Proposition 64, the two acts’ language on reliance is similar (i.e., suffer “damage” (CLRA), or “injury in fact” (UCL), “as a result of”). (Civ. Code, § 1780, subd. (a); § 17204.) The two acts are often alleged in the same lawsuit, and a CLRA violation can serve as the “unlawful” prong and furnish the “fraudulent” basis of a UCL action. (See Daugherty, supra, 144 Cal.App.4th at pp. 837-838.) The Proposition 64 amendments on UCL standing at issue here were designed simply to close a “loophole” that allowed private persons to bring UCL actions on behalf of the abstract “general public,” even though no one had been damaged or misled. (Voter Information Pamp., supra, analysis by Legislative Analyst, pp. 38-39; argument in favor of Prop. 64, p. 40; see Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 232 (Mervyn’s) [Proposition 64 “left entirely unchanged the substantive rules governing business and competitive conduct”].) And if the principle of inferred reliance is sufficient to satisfy the element of reliance/causation as to a CLRA fraud-based class action, in which damages can be awarded, it certainly is sufficient to satisfy that element for a similar UCL class action where the remedies are essentially limited to injunctive and restitutionary relief.

Slip op. at 25-26 (footnote omitted). McAdams is the first opinion that comes anywhere close to acknowledging the holding in Mervyn's that Prop. 64's amendments were "procedural," not substantive. However, any reliance requirement, whether inferred or actual, would be a substantive change to the UCL, not a procedural one. This opinion gamely tries to find a middle ground by holding that reliance on material omissions may be inferred. But any holding that Prop. 64 imports reliance as an element still runs afoul of Mervyn's.

New Prop. 64 "injury in fact" opinion: Meyer v. Sprint Spectrum L.P.

In a case sure to be discussed at today's conference (same-day registration available!), the Court of Appeal examined Prop. 64's "injury in fact" language in depth. Meyer v. Sprint Spectrum, L.P., ___ Cal.App.4th ___ (May 16, 2007). The Meyer plaintiffs alleged that "Sprint improperly included certain illegal and unconscionable terms in its customer service agreement. Plaintiffs did not allege Sprint had asserted or threatened to assert those terms against them." Slip op. at 2. The Court of Appeal (Fourth Appellate District, Division Three) held that the plaintiffs lacked standing to assert either a UCL or a CLRA claim.

With respect to the UCL claim, the Court of Appeal determined that the language "'injury in fact' and 'lost money or property as a result of [the alleged] unfair competition'' creates a "two-part, statutory standing test." Id. The entire decision is worth reading, but the following excerpt is of particular interest:

The cases decided since Proposition 64 changed the language of 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 California Housing Rights Center v. Los Feliz Towers Homeowners Assn. Bd. (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]);

(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. Massachusetts Mutual 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]).

Unlike the plaintiffs in the foregoing cases, plaintiffs here have not suffered any injury in fact. They have not been required to pay any money out of their own pockets (other than the fees they paid for their cellular telephone service), they have not lost money or property, and they have not been denied any money that they can allege is rightfully theirs.

Id. at 6-7.

Supreme Court grants review in UCL/CLRA case: Miller v. Bank of America

Yesterday, the Supreme Court granted review in Miller v. Bank of America, no. S149178. In Miller, the Court of Appeal reversed an enormous judgment, approaching $300 million in compensatory damages and restution, plus even more in statutory penalties, holding that the defendant bank's conduct did not violate the UCL or the CLRA. Miller v. Bank of America, NT & SA, 144 Cal.App.4th 1301 (2006). My original post on Miller is here, and today's Recorder reports that "Supreme Court Takes Up $1B Banking Case" (subscription). UPDATE: Here is a non-subscription version of the Recorder article.

Supreme Court denies review in Daugherty and Alvarez

Yesterday, the Supreme Court denied review and depublication in both Daugherty and Alvarez. Daugherty is the CLRA/UCL case involving liability for non-disclosures; my original post on Daugherty is here. Alvarez is the class certification/res judicata case; prior Alvarez posts are here and here.

New CLRA decision: Berry v. American Express Publishing

In Berry v. American Express Publishing, Inc., ___ Cal.App.4th ___ (Jan. 31, 2007), the Court of Appeal (Fourth Appellate District, Division Three) held: "After considering CLRA’s text and legislative history, we conclude the extension of credit, such as issuing a credit card, separate and apart from the sale or lease of any specific goods or services, does not fall within the scope of the act." Slip op. at 2.

Interestingly, the opinion does not cite McKell v. Washington Mutual, Inc., 142 Cal.App.4th 1457 (2006), from September, in which the Court of Appeal (Second Appellate District, Division One) held that a transaction resulting in the sale of real property does not fall within the scope of the CLRA because real property is not a "good or service."

Nor does the opinion cite another decision that came to my attention last week as a result of my membership in Consumer Attorneys of California: Knox v. Ameriquest Mortgage Co., 2005 WL 1910927 (N.D. Cal. 2005). Knox held that "California courts generally find financial transactions to be subject to the CLRA." Id. at *4 (citing Corbett v. Hayward Dodge, Inc., 119 Cal.App.4th 915 (2004); Kagan v. Gibraltar Savings and Loan Ass'n, 35 Cal.3d 582 (1984)).

This week at the Supreme Court: review denied in three cases, while a fourth is transferred

On Wednesday, January 3, 2007, the Supreme Court denied review in three cases involving plaintiff-favorable, published Court of Appeal opinions:

1. Aron v. U-Haul Co., ___ Cal.App.4th ___ (Oct. 3, 2006) (review denied 01/03/07, no. S148020). As explained in my original post, the Aron court reversed an order granting judgment on the pleadings of the plaintiff's UCL and CLRA claims.

2. Hood v. Santa Barbara Bank & Trust, ___ Cal.App.4th ___ (Sept. 28, 2006) (review and depublication denied 01/03/07, no. S147931). There, the Court of Appeal held that federal law did not preempt the plaintiff's UCL, CLRA or other state-law claims. (Here is my original post on Hood.)

3. Cohen v. DirecTV, Inc., 142 Cal.App.4th 1442 (Sept. 18, 2006) (review denied 01/03/07, no. S147997). Cohen held that a no-class-action arbitration provision was unconscionable under Discover Bank. (Click here for my original post on Cohen.) This order is consistent with the Supreme Court's other recent activity in no-class-action arbitration clause cases. It has been granting review in cases upholding such clauses, and denying review in cases striking them down.

In a fourth, defendant-favorable preemption case, WFS Financial, Inc. v. Superior Court (De La Cruz), 140 Cal.App.4th 637 (June 15, 2006), in which review was granted in September, the Supreme Court issued the following order, according to the docket:

In light of the parties' settlement, their stipulated request that the court vacate the Court of Appeal's judgment is granted. (Code Civ. Proc. § 128, subd. (a)(8).) The court finds there is no reasonable possibility that the interests of nonparties or the public will be adversely affected by vacating the judgment. (Ibid.) The court further finds that the reasons of the parties for requesting the vacating of the judgment outweigh any countervailing considerations. (Ibid.) The Court of Appeal is directed to dismiss the writ proceeding so that the superior court may consider the class settlement.

Accordingly, the Supreme Court will no longer be deciding the UCL preemption issue raised in this case, and the Court of Appeal's opinion remains uncitable. (See my prior posts on the opinion here and here.)

Petition for review filed in UCL/CLRA case: Daugherty v. American Honda Motor Co.

On November 8, 2006, the Court of Appeal (Second Appellate District, Division Eight) published its opinion in