The UCL Practitioner

Prop. 64 can be waived: Lyons v. Chinese Hosp. Assn.

In Lyons v. Chinese Hosp. Assn., ___ Cal.App.4th ___ (Feb. 6, 2006) (published Feb. 24, 2006), the Court of Appeal (First Appellate District, Division Two) held that the defendant waived its right to argue that Prop. 64 applied to the case by not raising the issue soon enough:

In a letter filed less than one week before oral argument, defendant CHA advised this court of its intent to rely at oral argument upon three cases relating to the issue of the retroactive application of Proposition 64. Proposition 64 was passed by the electorate on November 2, 2004, and became effective the following day. It amended certain provisions of the Unfair Competition Law and the false advertising law. At no time during the past year has defendant raised in this appeal any issue relating to the retroactive impact of Proposition 64. Clearly defendant has waived the right to raise the issue in this appeal. (Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4; Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (The Rutter Group 2004) 9:21, p. 9-6.)

(Slip op. at 2 n.2.) The Court of Appeal then held that the trial court should have awarded attorneys' fees under Code of Civil Procedure section 1021.5 to a UCL plaintiff who successfully obtained injunctive relief but whose other causes of action failed.

New UCL "unfair" prong decision: Bardin v. DaimlerChrysler Corp.

In Bardin v. DaimlerChrysler Corp., ___ Cal.App.4th ___ (Feb. 23, 2006), the Court of Appeal (Fourth Appellate District, Division Three) was very concerned about whether the pre- or post-Cel-Tech formulation of "unfair" applied to consumer actions. According to the docket, the Court went out of its way to request supplemental briefs from the parties and amicus briefs from Consumer Attorneys of California on that very question. The opinion discusses both formulations in detail, then lists Cel-Tech's unanswered questions:

Did the Supreme Court limit its holding in Cel-Tech to UCL actions brought by competitors simply because the circumstance of a consumer UCL action was not before it, or because the definition of “unfair” should be different depending on whether the action is brought by a consumer or a competitor? Was the Supreme Court expressing the view that regulation of competitive conduct is contained in existing legislation, but there is no analogous law pertaining to consumers? Should a broader definition of “unfair” apply in consumer actions because consumers require more protection than competitors even though such a distinction between consumers and competitors is not reflected in the language of the statute? Is the Cel-Tech definition of “unfair” too narrow to sufficiently protect consumers? Is the definition of “unfair” applied in Smith [v. State Farm Mut. Auto. Ins. Co.], 93 Cal.App.4th 700 [(2001)] too amorphous in the consumer context, and does it provide “too little guidance to courts and businesses”? (Cel-Tech [Communications, Inc. v. Los Angeles Cellular Tel. Co.], 20 Cal.4th [163,] 184-185 [(1999)].)

(Slip op. at 20 (hyperlinks added).) Finally, the Court asked the Legislature or the Supreme Court to help:

In light of the uncertain state of the law regarding the proper definition of “unfair” in the context of consumer UCL actions, we urge the Legislature and the Supreme Court to clarify the scope of the definition of “unfair” under the UCL.

(Id.) Ultimately, the Court applied both formulations to the facts before it, and determined (in a very fact-specific analysis) that the plaintiff's complaint did not state a claim for relief under either. The opinion also addresses the UCL's "fraudulent" prong and the CLRA.

"Blogs and RSS Feeds"

On Wednesday, March 1, 2006, I will speak at "The Law Library 2006: Skills, Strategies and Solutions," an annual seminar sponsored by PLI. My panel is entitled "Blogs and RSS Feeds," and my co-speakers will be Susan Nevelow Mart, Adjunct Professor of Law at U.C. Hastings and co-author of LibraryLaw Blog, and Nick Worthington, law librarian at Sonnenschein Nath & Rosenthal LLP.

Review granted in Bivens v. Gallery Corp.

On Wednesday, the Supreme Court granted review in Bivens v. Gallery Corp., no. S140396. Briefing is deferred pending consideration of Mervyn's and Branick. My original posts on Bivens are here and here, and the Court of Appeal's (previously) published opinion is here.

Writ of supersedeas granted in Estrada v. Fed Ex Ground

Thanks to the reader who notified me that on January 26, 2006, the Court of Appeal (Second Appellate District, Division One) granted the defendant's petition for a writ of supersedeas and ordered the appeal expedited in Estrada v. FedEx Ground Package System, Inc., nos. B187951 and B189031. This appellate proceeding challenges an order in which the trial court allowed a pre-Prop. 64 UCL judgment to stand, even though class certification had not been granted, because (a) the plaintiff was injured, (b) the other claims were certified, and (c) the UCL claim could easily have been certified, too, had the law required it. In other words, the trial court held that even if Prop. 64 applied, its requirements were, in effect, satisfied. My original post on the Estrada order is here. The Court of Appeal has ordered an expedited briefing schedule and has already set the matter for oral argument on July 26, 2006 at 9:00 a.m. before Justices Spencer, Mallano, and Vogel. If anyone from LA can attend, I'd love to receive a report. This promises to be a very interesting case.

A.B. 759 - proposed amendment to UCL's public prosecutor provisions

The Recorder recently reported on amendments to A.B. 759, which would ensure that the San Francisco City Attorney may continue to bring UCL actions on behalf of the general public. Business & Professions Code section 17204 permits "any city attorney of a city, or city and county, having a population in excess of 750,000" to seek relief on behalf of the general public. According to the Recorder article, some defendants have begun challenging the City Attorney's standing, arguing that San Francisco's population has dropped below 750,000. The 2004 census indicates that the population shrank by over 4% since 2000 and is now estimated at 744,230.

A.B. 759 would not lower the 750,000 minimum, but would create, in effect, an exception for San Francisco. The Assembly Floor Analysis states that A.B. 759:

Ensures that the City and County of San Francisco will maintain its standing to bring actions under California's Unfair Competition Law (UCL). Specifically, this bill ensures San Francisco's standing by authorizing the city attorney of a consolidated city and county to bring an action under the UCL.

San Francisco is the only consolidated city and county in California. As a resident of San Francisco for almost ten years now, I see no reason why a population drop of 6,000 residents should result in dismissal of the city's pending enforcement actions, or why the city's efforts in that regard should be halted. San Francisco City Attorney Dennis Herrera's 2004 speech, "Public Prosecution: Using §17200 to Police the Marketplace," is of interest. The bill passed in the Assembly on January 30 and is now being reviewed in the Senate Committee on the Judiciary.

"The Blog Establishment"

This week's issue of New York Magazine is devoted to blogs and blogging:

• Blogs to Riches: The Haves and Have-Nots of the Blogging Boom
• Linkology: How the 50 Most Popular Blogs Are Related
• The Early Years: A Timeline of How Blogging All Began
• Five Cool Blogs to Check Out Now
• Meet the Bloggers
• The Long Tail Theory: Why B-list Blogs Can Make It, Too

I figure I must be one of the C-list blogs in the long tail ... but boy do I have a devoted niche readership!

"Blog Law and Blogging for Lawyers"

On April 20-21, 2006, Law Seminars International will present a two-day MCLE conference, "Blog Law and Blogging for Lawyers." The conference focuses on the legal ramifications of blogging and is geared toward corporations and large law firms. It does not really appear to be a how-to seminar on the basics of creating your blog, choosing your area of focus, or developing content and an audience. The seminar will take place in San Francisco and will repeat in Chicago on July 31-Aug. 1. [Hat tip: Patently-O]

"O.C. Judge Jails Brea Lawyer for Filing Frivolous Suits"

This article was in Saturday's LA Times. I haven't seen anything about this in the legal press. Here are some related posts. It seems to me that the moral of this story is that the system is working as it should, and that the responsible lawyers—not the law—should have been blamed (and penalized) for the abuses that led to Prop. 64. [Hat tip: Wage Law.]

New blog feature: list of UCL practice guides

Please take a look at my new list of UCL practice guides. The first guide listed is, of course, Will Stern's Bus. & Prof. C. §17200 Practice, published by The Rutter Group. I'm aware of two other practice guides, one published by Matthew Bender and the other published by the State Bar of California's Antitrust and Unfair Competition Law Section. I've also listed Competition, the journal of the Antitrust and Unfair Competition Law Section, which frequently publishes interesting articles about the UCL. If you know of any UCL practice guides that I haven't listed, please drop me a line.

Latest issue of Competition

The Fall/Winter 2005 issue of Competition: The Journal of the Antitrust and Unfair Competition Law Section of the State Bar of California is now out. The latest issue is a symposium entitled "Antitrust Policy in the World of High-Technology." The only article focusing on the UCL is "California Antitrust and Unfair Competition Law Update" by Thomas Greene and Thomas A. Papageorge, which is a useful feature of every issue of the Journal.

Today's California Supreme Court oral arguments start in 15 minutes and can be viewed online

The California Supreme Court is holding oral arguments in Sacramento today starting at 1:00 p.m., and for the second time this year, the arguments will be televised and made available via web feed (scroll down and click on "California Supreme Court Oral Arguments **LIVE**") through The California Channel. A list of the cases to be argued is available in this press release from last week (PDF). I hope this practice continues. [Via lrc-orbit.]

Another new Seventh Circuit CAFA case: Knudsen v. Liberty Mutual

On January 27, 2006, the Seventh Circuit issued another CAFA opinion, this time holding that "a novel claim tacked on to an existing case commences new litigation for purposes of the Class Action Fairness Act." Knudsen v. Liberty Mutual Ins. Co., ___ F.3d ___ (7th Cir. Jan. 27, 2006). The defendant's previous effort to remove this case to federal court under CAFA failed. See Knudsen v. Liberty Mutual Ins. Co., 411 F.3d 805 (7th Cir. 2005). The latest opinion is noteworthy because I believe it is the first one in which a case originally filed before CAFA's effective date was successfully removed based on post-CAFA activity in the trial court. [Hat tip: How Appealing.]

Yet another unpublished Prop. 64 retroactivity opinion: Young America Corp. v. Superior Court

In Young America Corp. v. Superior Court, no. C049337 (Third Appellate District) (Jan. 30, 2006), the Court had this to say about Prop. 64's "injury in fact" language:

We do not consider and need not decide the precise meaning of “injury in fact” for purposes of amended sections 17203 and 17204. It is clear after the enactment of Proposition 64 the sections require some wrong or harm to an interest or right over and above the interests and rights held in common with the public at large in order for an individual to have standing to sue. Otherwise, the amendments to sections 17203 and 17204 enacted by Proposition 64 will have changed nothing ....

(Slip op. at 11-12.)

Another unpublished Prop. 64 retroactivity opinion: Brazil v. Sara Lee

In Brazil v. Sara Lee Corp., no. D045925 (Fourth Appellate District, Division One) (Jan. 26, 2006), the Court followed Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 129 Cal.App.4th 1228 (2005) in holding that Prop. 64 applies retroactively to pending cases. However, the Court then very carefully held that the case should be remanded for the trial court to determine whether the plaintiff should be allowed leave to amend to substitute an affected plaintiff. In fact, the Court went to the trouble of deciding the substantive preemption issue raised on appeal, which would not have been necessary but for its holding that amendment was possible. (The Court held that the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) (7 U.S.C. §§36 et seq.) did not preempt the plaintiff's UCL claim.) Thanks to JS for emailing this opinion.

New UCL economic abstention decision: Shamsian v. Dept. of Conservation

In Shamsian v. Department of Conservation, ___ Cal.App.4th ___ (Feb. 7, 2006), the Court of Appeal (Second Appellate District, Division Five) held that the trial court properly declined to hear a UCL "unlawful" prong claim predicated on alleged violations of the California Beverage Container Recycling and Litter Reduction Act (Pub. Res. Code §§14500 et seq.). After a lengthy discussion of that Act, the Court explained:

It is well-established that a court of equity will abstain from employing the remedies available under the unfair competition law in appropriate cases. .... In this case, the complex statutory arrangement of requirements and incentives involving participants in the beverage container recycling scheme is to be administered and enforced by the [D]epartment [of Conservation] consistent with the Legislature’s goals. For the court at this point to issue restitution and disgorgement orders against the corporate defendants would interfere with the department’s administration of the act and regulation of beverage container recycling and potentially risk throwing the entire complex economic arrangement out of balance. The public’s need for opportunities to recover its cash redemption value funds and to conveniently recycle its beverage containers is not so great as to warrant judicial interference in the administrative scheme designed to address those needs at this point.

(Slip op. at 22-23.) The opinion includes a useful string cite that lists most of the leading UCL "economic abstention" decisions. Generally speaking, the "economic abstention" doctrine applies in cases involving matters of complex economic policy that are better addressed by the legislature than the judiciary. See, e.g., Desert Healthcare District v. PacifiCare FHP, Inc., 94 Cal.App.4th 781 (2001). Whether the doctrine applies is typically determined on a very fact-specific, case-by-case basis.

Supreme Court grants review in Hartford Fire Ins. Co. v. Superior Court

Today, the Supreme Court granted our petition for review in Hartford Fire Ins. Co. v. Superior Court, case no. S140272. Briefing is deferred pending the outcome of Mervyn's and Branick. Accordingly, the Court of Appeal's opinion, previously published at 134 Cal.App.4th 649 (2005), is no longer citable. The Supreme Court is sticking to its pattern of granting review in all Prop. 64 cases in which the Court of Appeal published its opinion. As of today, the only citable, published opinion on Prop. 64 retroactivity is Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 129 Cal.App.4th 1228 (2005). For whatever reason, no review petition or depublication request was filed in that case.

New Seventh Circuit CAFA case: Phillips v. Ford Motor Co.

The Seventh Circuit has probably issued more CAFA decisions than any other Circuit, and they are certainly more interesting. Last week, in Phillips v. Ford Motor Co., ___ F.3d ___ (7th Cir. Jan. 30, 2006), the Seventh Circuit held that substituting representative plaintiffs in a pending putative class action does not "commence" a new suit and permit removal under CAFA:

Substitution of unnamed class members for named plaintiffs who fall out of the case because of settlement or other reasons is common and normally an unexceptionable ("routine") feature of class action litigation. [Citations.] But there is a potential complication here: the plaintiff class ... has not been certified ....

Strictly speaking, if no motion to certify has been filed (perhaps if it has been filed but not acted upon), the case is not yet a class action and so a dismissal of the named plaintiffs' claims should end the case. If the case is later restarted with a new plaintiff, it is a new commencement, a new suit. But the courts ... are not so strict. Unless jurisdiction never attached, ... or the attempt to substitute comes long after the claims of the named plaintiffs were dismissed, substitution for the named plaintiffs is allowed. [Citations.]

The courts thus disregard the jurisdictional void that is created when the named plaintiffs' claims are dismissed and, shortly afterwards, surrogates step forward to replace the named plaintiffs.

(Slip op. at 3, 4.) The Court held that the determinative question is whether, under state law, such an amendment "relates back" for statute of limitations purposes. If it does, then no new action has been "commenced" under CAFA.

A recent Court of Appeal decision, Shapell Industries, Inc. v. Superior Court, 132 Cal.App.4th 1101 (2005), is a prime example of a (non-CAFA) case in which the "jurisdictional void" was disregarded. The Shapell court also noted the "unusual procedural scenario" presented when the representative plaintiff's claims are dismissed prior to certification, yet allowed amendment to substitute a new representative plaintiff. (My original post on Shapell is here.)

UCL preemption decision ordered published: Smith v. Wells Fargo Bank

On January 26, 2006, the Court of Appeal (Fourth Appellate District, Division One) issued a publication order in Smith v. Wells Fargo Bank, N.A., ___ Cal.App.4th ___ (Dec. 29, 2005). My original post on the Smith decision is here.

Supreme Court grants review in Fireside Bank

On Wednesday, the Supreme Court granted review in Fireside Bank v. Superior Court, ___ Cal.App.4th ___ (Oct. 21, 2005). That is the case in which the Court of Appeal (Sixth Appellate District) rejected the defendant's argument that impermissible "one-way intervention" would result if the plaintiff were allowed to seek a merits ruling prior to class certification. My original post on the decision, which discusses "one-way intervention" in more detail, is here. It will be interesting to see what the Supreme Court does. As I observed in my original post, the whole concept of "one-way intervention" originated (at least in California) in two Court of Appeal decisions from the 1970s. The Supreme Court has never before weighed in.

Court of Appeal modifies UCL "restitution" opinion: Colgan v. Leatherman Tool Group, Inc.

On Tuesday, January 31, 2006, the Court of Appeal issued an Order Modifying Opinion and Denying Respondents' Petition for Rehearing in Colgan v. Leatherman Tool Group, Inc., ___ Cal.App.4th ___ (Jan. 10, 2006). My original post on Colgan is here. The most interesting thing in the modification order is new footnote 24, concerning the nature of "restitution":

“[T]he terms equity and equitable are not always used to refer to remedial characteristics of a case. ... [E]quitable ... sometimes refers to fairness, sometimes to the jurisdictional mass of equity precedent, sometimes to remedies.” (Dobbs, Law of Remedies (2d ed. 1993) Meaning of Equity, § 2.1(3), p. 55; see 12 Corbin on Contracts (Interim edition 2002) Restitution, § 1103, p. 10 [“The remedy of restitution . . . can not properly be described as either ‘legal’ or ‘equitable’ in any narrowly restricted signification of those terms”].)

(Mod. Order at 2.)

"Appeal Courts at Odds Over Meal Breaks"

My colleague Jessica Grant was quoted in this article (subscription required) in Monday's Recorder on the split in appellate authority over whether the extra hour of pay mandated by the Labor Code for meal and rest break violations is a "wage" or a "penalty." Three conflicting decisions have come down over the past month (Wage Law has more). I agree with Jessica that a split among the districts increases the likelihood that the Supreme Court will grant review. That's precisely what happened with Prop. 64 retroactivity.