The latest issue of Competition, the journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, has an article of interest to those handling UCL cases:
- "'Revisiting Materiality' is Revisionist History: An Express Warranty Defines Materiality Under the UCL and CLRA Absent an Unreasonable Safety Hazard," by Paul J. Riehle and Jia-Ming Shang
The article is a response to a piece published in the Spring 2012 issue, "Revisiting Materiality in the Context of CLRA and UCL Claims: Why Materiality Does Not Equal a Safety Risk," by James C. Shah and Rose F. Luzon (mentioned in this blog post).
These articles both address an important issue originating in Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006), namely, whether product manufacturers enjoy an escape hatch from liability under the CLRA and UCL for concealing known defects in their products. The escape hatch suggested by Daugherty (and seized on in later decisions) is offering an express warranty, and the hatch is open to all manufacturers unless the concealed defect creates a safety hazard for consumers.
In my view, this is an issue that the Supreme Court should take up when a proper case presents itself, because Daugherty (as interpreted, or rather misinterpreted, in later cases) upended years of UCL and CLRA jurisprudence.
The Court of Appeal's most recent word on this question is Collins v. eMachines, Inc., 202 Cal.App.4th 249 (2011). The Supreme Court denied review in Collins early this year. At the Golden State Institute last week, I learned of an unpublished Ninth Circuit opinion on the issue, Vitt v. Apple Computer, Inc., 469 Fed.Appx. 605 (9th Cir. 2012).
The two articles are both very well done and effectively present two opposing views on this question.