The UCL Practitioner

The Wal-Mart verdict is in: $172 million

I want to congratulate my colleagues Fred Furth, Jessica Grant, Chris Lebsock, and Mike Christian on the jury verdict in the Wal-Mart case, which was handed down yesterday: $172,268,673. Fred and Jessica have been all over the news since yesterday afternoon. I was flying back from depositions on the East Coast yesterday and missed most of the excitement, but the atmosphere in the office this morning is still electrifying. The Furth Firm prosecuted this case single-handedly and I can't express how proud I am of our trial team. When I get a copy of the special verdict form, I will put it up.

UPDATE: Here is an ABC News report with video of Jessica about the case. Also, here are pictures of Fred and Jessica from the San Francisco Chronicle's story on the verdict.

UPDATE: Here is a copy of the special verdict (with the jury foreperson's signature redacted).

New UCL/CLRA/class action arbitration decision: Klussman v. Cross Country Bank

In Klussman v. Cross Country Bank, ___ Cal.App.4th ___ (Dec. 15, 2005), the Court of Appeal (First Appellate District, Division One) joined several other recent decisions by refusing to enforce a no-class-action arbitration clause under Discover Bank.

"Panel OKs Suit Against 'Shakedown'"

Yesterday's Daily Journal reported on American Products Co. v. Law Offices of Geller, Stewart & Foley, LLP, ___ Cal.App.4th ___ (Dec. 16, 2005) (Fourth Appellate District, Division Two), handed down last Friday, in which the Court of Appeal held that the litigation privilege did not bar a suit against lawyers accused of filing Trevor-like "shakedown" suits under the former UCL. In a now-familiar irony, the lawyers were themselves sued for violating the UCL, as well as for intentional interference with prospective economic advantage.

The article incorrectly reported that "[a]fter the Trevor debacle, lawmakers changed the law so that plaintiffs now have to cite specific damages in their claims and post notice to the class." It was not lawmakers, but rather the initiative process, that resulted in the amendment.

Review granted in Schwartz

Today, the Supreme Court issued a "grant and hold" order in Schwartz v. Visa Int'l Service Assn., 132 Cal.App.4th 1452 (2005). Briefing has been deferred pending the outcome of Mervyn's and Branick. Here is a link to the docket.

And as a programming note, my day job is ramping up considerably lately. As a result, posting may be less frequent than usual over the next several weeks.

Petitions for review filed in Bennett and Fireside Bank

Petitions for review were recently filed in two significant class action cases. First, on November 22, review was sought in Bennett v. Regents of the University of California, ___ Cal.App.4th ___ (Sept. 21, 2005). As I previously reported, this case represents an alarming expansion of the rules governing merits determinations at the class certification stage. The Court of Appeal denied a petition for rehearing and depublication request on November 1. The Supreme Court docket is here.

The second case in which review has been sought is Fireside Bank v. Superior Court, ___ Cal.App.4th ___ (Oct. 21, 2005) (petition for review filed Nov. 29, 2005). As explained in my prior post on the decision, Fireside Bank is the first case in many years to address so-called "one-way intervention" in class action litigation. It is no surprise that review is being sought. Here is a link to the docket.

It will be quite interesting to see what the Supreme Court does with these cases.

Recent federal Prop. 64 order: Anunziato v. eMachines, Inc.

Thanks to the readers who alerted me to an important federal order interpreting Prop. 64, Anunziato v. eMachines, Inc., 2005 U.S. Dist. LEXIS 28213 (Nov. 10, 2005). (It might actually be Annunziato v. eMachines, Inc., since the name is spelled one way in the caption but differently in the body.) In this order, Judge James V. Selna of the Central District of California "decline[d] to read a reliance requirement into the 'as a result of' language in either Section 17200 or Section 17500." Slip op. at 8. The Court noted that the plain language of Prop. 64 makes no mention of "reliance," then considered a variety of hypothetical fact patterns and the potential impact of imposing a "reliance" requirement. Id. at 2-8, passim. In "numerous situations ... the addition of a reliance requirement would foreclose the opportunity of many consumers to sue under the UCL and the FAL." Id. at 5. The Court concluded:

The goal of consumer protection is not advanced by eliminating large segments of the public from coverage under the UCL or the FAL where they suffer actual harm merely because they were inattentive or for one reason or another lacked the language skills to appreciate the particular unfair or false representation in issue. A construction of these statutes that reduced them to common law fraud would not only be redundant, but would eviscerate any purpose that the UCL and the FAL have independent of common law fraud. .... The Court finds that the remedial purposes of Proposition 64 are fully met without imposing requirements which go beyond actual injury.

Id. at 6-7.

New UCL decision: Feitelberg v. Credit Suisse

In an opinion just handed down this afternoon, the Court of Appeal (Sixth Appellate District) addressed whether non-restitutionary disgorgement of profits is recoverable in a certified UCL class action. Exacerbating the split in appellate authority on this question, the Court held that such a remedy is not available. Feitelberg v. Credit Suisse First Boston LLC, ___ Cal.App.4th ___ (Dec. 9, 2005).

Unpublished Prop. 64 opinion ordered published: Bivens v. Gallery Corp.

On Wednesday, the Court of Appeal issued a publication order in Bivens v. Gallery Corp., ___ Cal.App.4th ___ (Nov. 22, 2005). My original post on the unpublished opinion is here. After holding (consistent with its prior rulings) that Prop. 64 applied retroactively to the case, the Court of Appeal affirmed the judgment of dismissal that followed an order sustaining the defendant's demurrer without leave to amend. The Court of Appeal determined that leave to amend to substitute an affected plaintiff would not be granted because the underlying claims lacked merit as a matter of law. Applying the "reasonable consumer" standard, the Court determined that the defendant's allegedly misleading advertising was not misleading as a matter of law. Interestingly, throughout the opinion, the Court repeatedly applied the "likely to deceive" or "likely to mislead" standard when discussing the UCL's "fraudulent" prong (as well as the CLRA and the False Advertising Act), suggesting that the new "injury in fact and lost money or property" language does not alter that substantive liability standard. See, e.g., slip op. at 4, 5, 6, 16, 17, 18, 20, 21.

Discover Bank on remand

Yesterday, the Court of Appeal (Second Appellate District, Division One) issued its opinion on remand in Discover Bank v. Superior Court, ___ Cal.App.4th ___ (Dec. 7, 2005). The Court avoided the entire issue of whether the class action waiver was unconscionable under California law by holding that Delaware law applied.

UCL miscellany from the blog pile

The August 2005 issue of the Association of Business Trial Lawyers Report (San Diego chapter) ran an article called "Has the Class Certification Inquiry Changed Due to Proposition 64?"

An appellate brief in another pending appeal raising Prop. 64 retroactivity is accessible at this link. (Merritt v. Cingular Wireless, no. B178747, Second Appellate District, Division One.)

Another trial court tentative ruling on Prop. 64 retroactivity is accessible here. (Eustis v. Advanced Laser Clinics of California, Sacramento County Superior Court, case no. 04AS03204, Judge Thomas M. Cecil.)

In last Friday's paper, San Francisco Chronicle columnist David Lazarus mentioned section 17200 by name in his report on "The War Between The Stickers" — a possible UCL violation by a water heater repair company. (I think I got one of those stickers.)

Not to be outdone, The Recorder now has its own blog, Legal Pad, where reporters "drop by ... to blog about the stuff that might otherwise fall through the cracks." Hey, that's my job.

Recent UCL "unfair" prong decision: RLH Industries v. SBC Communications

RLH Industries, Inc. v. SBC Communications, Inc., ___ Cal.App.4th ___ (Nov. 3, 2005) (Fourth Appellate District, Division Three) is another recent UCL opinion in an action between competitors. Like Eddins v. Sumner Redstone, ___ Cal.App.4th ___ (Nov. 22, 2005), discussed in the post immediately below, it involved a Cartwright Act claim and construed Chavez v. Whirlpool Corp., 93 Cal.App.4th 363 (2001). The Court of Appeal applied the Cel-Tech formulation of "unfair," holding that "nothing suggests [the defendant's challenged] policy 'threatens an incipient violation' of the Cartwright Act, violates its policy or spirit, or otherwise threatens competition. .... Even if some unfair competition causes of action can survive independently of an actual antitrust violation, this one does not." Slip op. at 8-9 (citing Chavez, 93 Cal.App.4th at 375). The Court of Appeal affirmed the trial court's order granting summary judgment to one of the two defendants.

As for the other defendant, summary judgment should not have been granted. The Court of Appeal rejected that defendant's argument that the United States Constitution's dormant commerce clause bars UCL and antitrust claims against an out-of-state defendant for out-of-state anticompetitive conduct that impacts Californians. Slip op. at 14-16.

New UCL "unfair" prong decision: Eddins v. Sumner Redstone

In Eddins v. Sumner Redstone, ___ Cal.App.4th ___ (Nov. 22, 2005), the Court of Appeal (Second Appellate District, Division Eight) construed the UCL's "unlawful" prong in the context of an action between business competitors. The Court determined that the trial court properly granted summary adjudication of the plaintiffs' Cartwright Act claim, but erred in also granting summary adjudication of the UCL claim. The trial court relied on Chavez v. Whirlpool Corp., 93 Cal.App.4th 363, 375 (2001), which held that conduct is not "unfair" within the meaning of the UCL if it is "deemed reasonable and condoned under the antitrust laws." Citing Cel-Tech, the Court of Appeal found that Chavez only applies to a UCL "unlawful" prong claim predicated on the Cartwright Act, but not to a UCL "unfair" prong claim. I've always thought that this aspect of Chavez was inconsistent with Cel-Tech, so it's nice to see another panel decline to follow it.

Materials from yesterday's seminar

Thanks to everyone who came out in the rain to attend last night's MCLE program. I've put up a copy of the materials at this link.

Supreme Court denies review in Turner v. Aon Risk Services

On Wednesday, the Supreme Court denied the petition for review in Turner v. Aon Risk Services, no. S138015, an unpublished opinion in which the Second Appellate District, Division Eight held that Prop. 64 does not apply retroactively to pending cases. My original post on the Turner opinion is here.

"Court Sustains $1.8 Million Civil Penalty"

A story in this morning's Daily Journal reports on People ex rel. Lockyer v. Brar and briefly mentions the Hartford Fire Insurance opinion, calling it "the 10th from all state appellate courts on the [Prop. 64 retroactivity] question."

Reminder: MCLE program tonight in San Jose

I hope I will see some of this blog's readers tonight when I will be co-presenting "Be Careful What You Wish For: The UCL After Prop. 64" with Santa Clara County Superior Court Judge James P. Kleinberg and Winston & Strawn attorney Michael Sweet. The program is sponsored by the Santa Clara County Bar Association. Registration starts at 5:30 and the program runs from 6:00 to 8:00 p.m. at the Wyndham Hotel in San Jose. We're planning to have extra copies of the materials available for same-day registrants. See you there!

New UCL decision: People ex rel. Lockyer v. Brar

To complement the Daily Journal's story from Monday, the Court of Appeal (Fourth Appellate District, Division Three) yesterday issued yet another opinion called People ex rel. Lockyer v. Brar, ___ Cal.App.4th ___ (Nov. 30, 2005). The case involves the Attorney General's UCL action against a lawyer accused of abuses like those of the Trevor Law Group. The AG obtained a $1.7 million default judgment, representing substantial civil penalties, after the attorney failed to timely answer the complaint. The Court of Appeal affirmed the trial court's order denying the attorney's motion for relief from default. To say that the opinion is harsh is to put it mildly, so I will just say this. The CLRA is a very good alternative cause of action to consider in the post-Prop. 64 world. If your client has suffered injury in fact and you are seeking class certification anyway, pleading a CLRA claim should not significantly complicate your UCL action (assuming the CLRA applies to the defendant's conduct). But no one should try to file a Trevor-style "shakedown" case under the CLRA. Civil Code section section 1780(d) gives the trial court discretion to award attorneys' fees to a prevailing defendant if the plaintiff acts in subjective bad faith. Corbett v. Hayward Dodge, Inc., 119 Cal.App.4th 915, 925-26 (2004). The problem here is not with the law (either the CLRA or the UCL), but with the attorney who decides to abuse it.