In Robinson v. U-Haul Company, ___ Cal.App.5th ___ (Oct. 18, 2016), the Court of Appeal (First Appellate District, Division Four) affirmed the trial court's issuance of a permanent injunction under the UCL, plus attorneys' fees under the private attorney general doctrine (Code Civ. Proc. § 1021.5). The injunction required the defendant, U-Haul, to stop attempting "to enforce against any former or current dealers the non-competition covenant in its dealer contracts," which the court had determined was void and unenforceable. Slip op. at 8.
On appeal, U-Haul argued that it had voluntarily stopped enforcing the covenant, and absent evidence of a continuing violation, no injunction may issue. The Court of Appeal disagreed, noting that "there is no hard-and-fast rule that a party’s discontinuance of illegal behavior makes injunctive relief against him or her unavailable." Id. at 11 (citing cases). This is especially true, the Court thought, when "there may be reason to doubt the bona fides of [the defendant's] newly established law-abiding policy" and where the injunction is directed to past recurring misconduct, rather than an "isolated" incident. Id. Other circumstances supporting the trial court's exercise of discretion included evidence that the defendant "had acted in knowing violation of the law over a period of many years" and that it "changed its policy only when threatened with an injunction." Id. at 11-12. In summary:
As we read [the trial court's] orders and judgment, the injunction was a response in part to U-Haul’s resistance to amending its policies, and its persistence in pursuing its anticompetitive litigation strategy over the years .... The injunction eliminates a practice that is now shrouded in uncertainty and plagued by a troubling past. We have no reason to overturn the trial court’s decision to issue an injunction, as it did not result from lack of evidence, legal error, or an abuse of discretion.
Id. at 12 (emphasis in original).
Next, U-Haul argued that the plaintiff lacked Prop. 64 standing, and therefore could not obtain an injunction, because he had not "suffered injury in fact or lost money or property" as a result of any UCL violation. The Court of Appeal, again, disagreed, pointing out that the plaintiff lost money (in the form of attorneys' fees and costs) when U-Haul sued him to enforce the covenant. Id. at 14. The opinion explains:
The alleged unfair business practice in this case was not just the inclusion of the noncompetition covenant in [U-Haul]’s dealer contracts, but the strategic use of litigation and threatened litigation to achieve its anticompetitive purpose. .... This is not a case where an unscrupulous attorney teamed up with a stick figure plaintiff to shake down a completely unrelated business. (See fn. 6, ante.) As one of the victims of [U-Haul]’s anticompetitive business practice, Robinson has standing.
The opinion goes on to address arguments raised by U-Haul concerning mootness, collateral estoppel, and an order excluding certain trial testimony. Id. at 14-20. The final section of the opinion (at pp. 21-26) addresses procedural questions concerning the timing of plaintiff's motion for attorneys' fees.
One other aspect of this opinion is worthy of note. The trial court issued, and the Court of Appeal affirmed, a broad-ranging injunction (stop the wrongful conduct, as opposed to stop harming the plaintiff) even though class certification of the UCL claim had been denied. See slip op. at 6 n.4. After Prop. 64, some questioned whether such an injunction could be issued without class certification, given this amended language in Business & Professions Code section 17204:
Any person may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of Section 17204 and complies with Section 382 of the Code of Civil Procedure ....
(Emphasis added.) These two blog posts touch on this issue. I am not aware of any published opinions squarely addressing the question, but this opinion certainly provides support for such injunctive relief. The Court of Appeal took pains to observe that the injunction benefited not only other dealers, but also U-Haul's competitors and the rental market in general:
T]he court found the anticompetitive impact of the covenant spread to more than just dealers. The trial court found the threat to competition extended to the dealers’ customers and to the truck rental market in general. UHC’s enforcement and threats to enforce the covenant in California negatively affected its competitors by denying them rental outlets for their trucks and hurt the rental market customers by limiting their access to rental trucks and restricting price competition. For the protection of UHC’s dealers, past dealers and prospective dealers, UHC’s competitors, and the members of the general public who participate in the truck and trailer rental market, an injunction was warranted.
Slip op. at 17. The Court of Appeal appears to have seen no procedural impediment to the issuance of this injunction under the UCL -- even though the Court was well aware of the concerns that led to the enactment of Prop. 64 in the first place. See id. at 13 n.6.