"UCL Suits to Target Illegal Hiring"

This morning's Recorder has the story (subscription required) with a quotation from yours truly! An excerpt:

An Orange County attorney thinks he's devised a novel way to stymie employers of undocumented workers: sue them under California's Unfair Competition Law. David Klehm said he will file up to 10 lawsuits in the coming months on behalf of business owners who accuse competitors of undercutting them by hiring illegal aliens willing to work for dirt-cheap wages and long hours with no overtime. ....

The concept of using UCL suits against such employers is actually "a pretty old one," and one that faces a significant hurdle, said William Stern, a partner in the San Francisco office of Morrison & Foerster. Courts have been reluctant to enter frays touching on sweeping economic policy, preferring instead to let legislators handle enforcement issues, Stern said. ....

Like Stern, UCL expert Kimberly Kralowec does not know the specifics of Klehm's cases. But after reading a brief summary of his strategy, she suggested in an e-mail that he might prevail if he avoids the larger issue of illegal immigration's economic impacts. "A narrowly-tailored action, alleging that one competitor's specific violations of law caused another competitor to suffer identifiable harm, might be the best approach," Kralowec wrote.

UPDATE: Here's the full text of my email to the reporter:

Given the broad scope of the UCL, my initial reaction is that this type of UCL competitor action should be viable. Based solely on your email summary, a narrowly-tailored action, alleging that one competitor's specific violations of law caused another competitor to suffer identifiable harm, might be the best approach. That would be the best way to avoid a defense based on the "economic abstention doctrine" and the potentially unfavorable decision of Diaz v. Kay-Dix Ranch, 9 Cal.App.3d 588 (1970) (copy available at this link: http://login.findlaw.com/scripts/callaw?dest=ca/calapp3d/9/588.html). Diaz interpreted Civil Code section 3369, which is the predecessor to Bus. & Prof. Code section 17200, and it always comes to mind whenever I hear the UCL and immigration mentioned in the same sentence. The case, which involved the problem of illegal immigration, is frequently cited for its application of the "economic abstention doctrine," which bars some UCL actions. (I wrote a short post on that doctrine here: http://www.uclpractitioner.com/
2006/02/new_ucl_equitab.html.) Part of the problem in Diaz was that the plaintiffs sought extremely broad injunctive relief that would have required indefinite court supervision. The case is also distinguishable because the plaintiffs there were legal workers who claimed that defendants' employment of illegal immigrants cost them their jobs. I would need to know more about the specifics of the contemplated actions to opine on whether the "economic abstention doctrine" would or would not apply. But the best way to avoid this defense would be to read Diaz (and other economic abstention cases) carefully before filing suit and tailor the complaint accordingly. That is advice I would give to any plaintiff's attorney contemplating a UCL case in a heavily-regulated field.

Now that I've read the full Recorder article, I'm thinking that it might be a good idea for Mr. Klehm to file the best action as a test case and see what the court does with the Diaz precedent.