Recent federal UCL decision: Doe v. Texaco, Inc.

Doe v. Texaco, Inc., 2006 WL 2053504 (N.D. Cal. Jul. 21, 2006) is interesting because it was decided ten days after Pfizer and three days before Mervyn's. There, the court (Judge Alsup) cited Pfizer in granting the defendants' motion to dismiss the UCL claim:

Actions alleging violations of the Unfair Competition Law may be brought "by any person who has suffered injury in fact and has lost money or property as a result of such unfair competition." Cal. Bus. & Prof.Code § 17204. In the instant action, plaintiffs do not allege that they lost money or property as a result of Chevron's false statements about the environmental and health harms in Ecuador. For plaintiffs to prevail, they would have to claim that their cancer or increased risk of cancer caused them to lose property or money and that the false statements caused the cancer or increased risk thereof. Such a contention would be patently absurd and appears nowhere in the complaint.

In addition, the "as a result of" language in the statute means that, for a plaintiff to state a claim, he or she must allege that they relied upon the defendant's acts of unfair competition and, as a result, suffered injury in fact. Pfizer v.Super. Ct. of L.A. County, No. B188106, --- Cal.Rptr.3d ----, 2006 WL 1892581 at *9 (Cal.Ct.App. July 11, 2006). Plaintiffs here do not allege that they suffered cancer or increased risk of cancer due to misleading statements made by Chevron. Their claim founders on this silence.

2006 WL 2053504 at *3. It is somewhat difficult to analyze this language, because the order does not really explain who the plaintiffs are or what they were claiming the defendants did wrong. It talks about environmental pollution, people who contracted cancer, and the defendant's alleged "false statements." If the plaintiffs contracted cancer due to the defendants' environmental pollution, and spent money on a physician's care, then they certainly would have "lost money or property as a result of" the defendant's conduct. However, that does not seem to be what the complaint alleged. Leave to amend was granted, so it will be interesting to see what develops in this case, especially now that Pfizer has been impliedly overruled.

Comments

[John Hurley]

Regardless of what heppens with Pfizer, it seems that the result of this decision would stand, if not its reasoning. I thinnk payment of money to a third party should constitute economic loss confering standing under a plain reading of the statute, but it would not support a remedy of restitution. And unless the plaintiffs can plead and prove that they would personally suffer future harm, they could not obtain an injunction. Without an available remedy, they would have no claim.

[Kimberly]

You may be right about that. The "injury in fact" that I speculated about in my post probably would not fit the traditional definition of "restitution," but it would satisfy Prop. 64's new standing requirement. Of course, this raises the question first identified by Jeff Fazio here — now that the plaintiff must prove what amounts to damages, and now that the UCL's "streamlined procedure" has been complicated by a class certification requirement, why should damages not be recoverable as they were under early UCL jurisprudence? In any event, it's hard to say what the outcome should be in Doe v. Texaco because the order, unfortunately, does not describe the facts or the claims in sufficient detail.

[John Hurley]

The facts are definitely sparse and it would be nice to know more.

The more I think about it, based on the few facts that are apparent, maybe injunctive relief could be appropriate. Even if the name plaintiffs aren't going to be decieved in the future (since they already know the falsity of the defendant's statements) they might be able to get an injunction on the basis that deception of others in the future could result in harm to them personally due to additional resultant environmental damage.