The UCL Practitioner

"Light" cigarette class certification order "not junk"

You've probably heard about the order granting class certification (540-page pdf file) in the "light" cigarettes case (49-page pdf file). San Francisco Chronicle columnist David Lazarus had this to say in his column Wednesday:

[E]very so often a case comes along that serves as a potent reminder of why class-action suits are a vital tool for consumer protection, and why politicians and judges should be wary of moves that tip the legal balance too much in favor of corporate defendants. .... The class-action system isn't perfect, and a very real need exists to shake things up. But there's a reason many large businesses are fighting so aggressively to change the rules -- because class-action lawsuits are one of the few means at consumers' disposal to stick up for themselves. You don't want that going up in smoke.

"Blawg: Marketing Your Practice with a Weblog"

This article appeared in the August 2006 issue of Law Practice Today. It has good, basic advice for anyone thinking of starting a law blog. [Hat tip: Blawg Review]

Federal Judicial Center report on CAFA

On September 7, 2006, the Federal Judicial Center issued a report entitled "The Impact of the Class Action Fairness Act of 2005: Second Interim Report to the Judicial Conference Advisory Committee on Civil Rules." According to the introduction:

[T]he Federal Judicial Center has undertaken a long-term study of the impact of the Class Action Fairness Act of 2005 (CAFA) on the resources of the federal courts. The following report presents preliminary data on the number, frequency, and types of class action filing and removal activity in the federal district courts between July 1, 2001, through June 30, 2005.

Consumer Law & Policy Blog provides a more detailed summary of the report.

"'Less' is 'More'? Textualism, Intentionalism, and a Better Solution to the Class Action Fairness Act's Appellate Deadline Riddle"

This article was recently posted at SSRN:

Steinman, Adam, "'Less' is 'More'? Textualism, Intentionalism, and a Better Solution to the Class Action Fairness Act's Appellate Deadline Riddle" (August 25, 2006). University of Cincinnati Public Law Research Paper No. 06-13.

The full text is available for download here. My own blog posts on the recent federal decisions on the "less is more" issue are here, here, and here.

[Hat tip: How Appealing]

Supreme Court extends time to grant or deny review in Pfizer

On September 25, 2006, the Supreme Court gave itself an extension of time, through November 9, 2006, to grant or deny review in Pfizer. The Court's original deadline to grant or deny review was approximately October 10, 2006, 60 days after the petition for review was filed on August 11, 2006. Rule of Court 28.2(b)(1). November 9 is the longest extension of time (90 days after the petition was filed) that the Court may give itself under Rule of Court 28.2(b)(1). This development suggests that the Court is looking closely at the case. We saw some similar activity in the retroactivity cases last year.

"To Rely or Not Rely: §17200 Cases and the Conflict Between Mervyn's and Pfizer"

The September 2006 issue of Forum: The Magazine of Consumer Attorneys of California has an article by Sharon J. Arkin entitled "To Rely or Not Rely: §17200 Cases and the Conflict Between Mervyn's and Pfizer." The article is quite good, and addresses (among other things) Pfizer's disregard of California Supreme Court precedent on presumed reliance, such as Vasquez v. Superior Court, 4 Cal.3d 800 (1971) and Occidental Land, Inc. v. Superior Court, 18 Cal.3d 355 (1976). The article, which concludes by urging the Supreme Court to grant review in Pfizer, is available to CAOC members only.

Supreme Court grants review in UCL preemption case: WFS Financial v. Superior Court (De La Cruz)

Last week, the Supreme Court granted review in a UCL preemption case, WFS Financial, Inc. v. Superior Court (De La Cruz), no. S145304. According to the main case screen, the case raises the following issue:

Are the provisions of the Rees-Levering Automobile Sales Finance Act (Civ. Code, § 2981 et seq.) that require a creditor to include certain disclosures in a notice of intent to dispose of a vehicle after it has been repossessed and that condition the creditor's right to seek a deficiency judgment on compliance with these requirements (Civ. Code, § 2983.2), preempted by the federal Home Owners' Loan Act (12 U.S.C. § 1461 et seq.) when the creditor is a federally chartered savings institution?

As explained in my original post on this case, the Court of Appeal held that because HOLA preempted the Rees-Levering Act as applied to federal savings and loan associations, the defendant's alleged Rees-Levering violation could not support a UCL "unlawful" prong claim. WFS Financial, Inc. v. Superior Court (De La Cruz), ___ Cal.App.4th ___, 44 Cal.Rptr.3d 561 (June 15, 2006) (Third Appellate District).

De La Cruz is to be contrasted with the McKell case, decided last week (and discussed in this post), in which the Court of Appeal held that HOLA did not preempt the plaintiff's UCL "unlawful" prong claim. In McKell, the "unlawful" prong claim was predicated on an alleged violation of a federal law (RESPA), whereas in De La Cruz, the "unlawful" prong claim was predicated on an alleged violation of a state law (the Rees-Levering Act):

Insofar as plaintiffs are using the UCL to enforce federal law as set forth in RESPA, they are not seeking to enforce “state laws affecting the operations of federal savings associations.” ([12 C.F.R.] § 560.2(a) [HOLA's preemption provision].) The UCL does not “purport[] to regulate or otherwise affect [a savings association’s] credit activities” (ibid.) but only provides a means of enforcing federal requirements. It thus is the type of state law not preempted by federal law.

McKell v. Washington Mutual, Inc., ___ Cal.App.4th ___ (Sept. 18, 2006) (slip op. at 29).

Many thanks to the reader who emailed to advise of this development.

New Prop. 64 amendment decision: Foundation for Taxpayer and Consumer Rights v. Nextel Communications

In Foundation for Taxpayer and Consumer Rights v. Nextel Communications, Inc., ___Cal.App.4th ___ (Sept. 21, 2006), the Court of Appeal (Second Appellate District, Division One) relied on Branick v. Downey Savings & Loan Association, 39 Cal.4th 235 (2006) in holding that the trial court abused its discretion by refusing to grant the unaffected plaintiff leave to amend its complaint to substitute an affected plaintiff who could satisfy Prop. 64's standing requirements:

In general, courts liberally allow amendments for the purpose of permitting plaintiffs who lack or have lost standing to substitute as plaintiffs the true real parties in interest. (Branick v. Downey Savings and Loan Association, supra, 39 Cal.4th at p. 243; Klopstock v. Superior Court (1941) 17 Cal.2d 13, 19-21.) “The important limitation on the rule just mentioned is that the plaintiff proposed to be substituted may not ‘state facts which give rise to a wholly distinct and different legal obligation against the defendant.’ (Klopstock v. Superior Court, supra, 17 Cal.2d 13, 20.)” (Branick v. Downey Savings and Loan Association, supra, 39 Cal.4th at p. 243.) But “nothing more is meant [by that limitation] than that the defendant not be required to answer a wholly different legal liability or obligation from that originally stated.” (Klopstock v. Superior Court, supra, 17 Cal.2d at p. 20.)

Applying these standards, we conclude that it was an abuse of discretion to deny the FTCR leave to amend. The proposed amendment would not have required Nextel to answer a wholly different legal liability or obligation from that originally stated. On the contrary, the FTCR sought to add a plaintiff, Campbell, who is allegedly a member of the group of injured persons whom the FTCR originally sought to represent, and who alleges the same misconduct originally alleged by the FTCR. Amendments of this kind are liberally permitted, and there was no reason to prohibit the amendment in this case.

Slip op. at 4-5 (hyperlink added). This is the very kind of amendment that will be sought in most pre-Prop. 64 UCL actions filed by unaffected plaintiffs. Foundation for Taxpayer and Consumer Rights suggests that leave to amend should be granted in virtually every case.

"Blogs are liberating the profession from dull writing"

The September 11, 2006 issue of the National Law Journal reports that "Blogs are liberating the profession from dull writing":

The growing respect for blogging among legal professionals stems in part from the medium's tendency to resist the worst excesses of the traditional forms of legal writing and publication. Many legal documents and most traditional law review articles can be ponderous, with assertions over-wrought, arguments over-made, principles over-cited and everything over-written. The blog medium fosters and rewards succinct expression. For legal writers and legal readers, it is liberating and refreshing to have thought-provoking ideas about the law expressed in only a few paragraphs or even a few sentences.

The article is by Professor Douglas A. Berman, author of the blog Sentencing Law and Policy.

Illegal hiring suit does not plead UCL after all

In July, The Recorder reported on contemplated UCL actions against employers who hired illegal aliens in violation of the immigration laws, to the detriment of competing companies who hired lawful workers. My coverage of that is here. The Recorder's blog now reports that the first of the suits has been filed in Kern County Superior Court, and helpfully provides a copy of the complaint (PDF). It does not include a UCL claim after all.

Pfizer responds to depublication requests

On September 18, 2006, Pfizer filed its response to all of the depublication requests, including the one I filed on behalf of my firm.

New UCL/CLRA decision: McKell v. Washington Mutual

The Court of Appeal's opinion in McKell v. Washington Mutual, Inc., ___ Cal.App.4th ___ (Sept. 18, 2006) (Second Appellate District, Division One) contains several interesting holdings. The court:

1. applied the ordinary "likely to deceive" formulation of the UCL's "fraudulent" prong (a noteworthy development in light of the ongoing debate over the validity of Pfizer's holding that Prop. 64 abolished that formulation) (slip op. at 10);
2. applied the pre-Cel-Tech formulation of "unfair" (slip op. at 12);
3. declined to apply the "economic abstention doctrine" of Desert Healthcare Dist. v. PacificCare FHP, Inc., 94 Cal.App.4th 781 (2001) (and other cases) to bar the plaintiffs' UCL claim (for more on that doctrine, see this post) (slip op. at 13);
4. held that neither RESPA nor HOLA preempted the plaintiffs' UCL claim (slip op. at 14-30);
5. held that a transaction resulting in the sale of real property does not fall within the scope of the Consumers Legal Remedies Act (Civ. Code §§1750 et seq.) because real property is not a "good or service" (slip op. at 31).

More Pfizer briefs and depublication requests

Two more briefs and one amicus letter have been filed with the Supreme Court in Pfizer:

• Answer to Petition for Review (filed August 31, 2006)
• Reply to Answer to Petition for Review (filed September 8, 2006)
• Amicus Letter Brief of Public Citizen and the Center for Auto Safety (dated September 14, 2006)

In addition, at least six more depublication requests have been filed. I have copies of two of them, including the one that I drafted on behalf of my firm, The Furth Firm LLP:

• Depublication Request of The Furth Firm LLP (filed September 8, 2006)
• Depublication Request of the Law Offices of Barry L. Kramer (filed September 11, 2006)

My depublication request explains why Mervyn's impliedly overruled Pfizer. If anyone has copies of the other depublication requests, please forward them and I'll put them up.

Consumer Law & Policy Blog

Let's welcome the Consumer Law & Policy Blog to the blogosphere. This new blog is sponsored by the Consumer Justice Project (part of the Litigation Group of Public Citizen, a non-profit consumer advocacy group), and covers nationwide developments in the area of consumer protection. A recent post on the Pfizer decision is of particular interest: "Dear California Supreme Court: Did Prop. 64 Impose A Reliance Requirement?"

Supreme Court transfers Prop. 64 retroactivity case (Kids Against Pollution) back to Court of Appeal

On September 13, 2006, the Supreme Court issued the following order in Kids Against Pollution v. California Dental Association, no. S117156:

The above-entitled matter is transferred to the Court of Appeal, First Appellate District, Division Three, with directions to vacate its decision and to reconsider the cause in light of Californians for Disability Rights v. Mervyn's, LLC (2006) 39 Cal.4th 223 and Branick v. Downey Savings and Loan Assn. (2006) 39 Cal.4th 235. (Cal. Rules of Court, rule 29.3(d).)

In that case, review was granted in September 2003, more than a year before Prop. 64 passed. In fact, the case was fully briefed as of mid-2004, but when Prop. 64 passed, one of the parties filed a supplemental brief on Prop. 64 retroactivity, and a series of amicus filings followed. The Court of Appeal's docket is accessible here.

As of yesterday, still no activity in the ten cases in which the Supreme Court granted review but deferred further briefing pending the outcome of Mervyn's and Branick.

"Class Action Appeals"

For an interesting article on interlocutory appeals from class certification orders under Federal Rule of Civil Procedure 23(f), see Andrew M. Low, "Class Action Appeals," 35 The Colorado Lawyer 85 (June 2006).

[Hat tip: CAFA Law Blog]

Blog hiatus

I'm taking a week's vacation from blogging and plan to resume during the week of September 18th. Meanwhile, please continue to email me with new UCL-related opinions, orders, news developments, questions, ideas, etc.

"17200 after Mervyn's and Branick"

On September 20, 2006, the Litigation Section of the Bar Association of San Francisco will sponsor "17200 after Mervyn's and Branick," featuring San Francisco Superior Court Judge Richard A. Kramer, David F. McDowell of Morrison & Forester, and James C. Sturdevant of the Sturdevant Law Firm. As longtime readers of the blog may recall, Judge Kramer was one of the first trial judges to rule that Prop. 64 did not apply to pending cases (see these two orders). Mr. McDowell represented the defendant and Mr. Sturdevant the plaintiff in Californians for Disability Rights v. Mervyn's, LLC, 39 Cal.4th 223 (2006). This should be a very interesting program.

"Judges cite more blogs in rulings"

So reports this week's issue of The National Law Journal. The article derives from 3L Epiphany's detailed list of law blogs cited in judicial opinions.

New UCL/class certification decision: In re Tobacco II Cases

In In re Tobacco II Cases, ___ Cal.App.4th ___ (Sept. 5, 2006), the Court of Appeal (Fourth Appellate District, Division One) affirmed an order decertifying UCL and CLRA claims for class treatment. Yesterday's Daily Journal reported that "Appellate Panel Lets Tobacco Firm Off Class-Action Hook." Here is a copy of the trial court's order, my original post on which is here.

New Prop. 64 retroactivity decision: California ex rel. Grayson v. Pacific Bell Tel. Co.

In California ex rel. Grayson v. Pacific Bell Tel. Co., ___ Cal.App.4th ___ (Aug. 31, 2006), the Court of Appeal (Third Appellate District) held that Prop. 64 applies retroactively to pending cases. Although decided more than a month after Mervyn's, the decision asserts that "the [retroactivity] issue is awaiting resolution by the Supreme Court." Slip op. at 25 & n.4 (listing cases, including Mervyn's and Branick, that are supposedly still pending before the Supreme Court). I'm very surprised no one at the Court caught this error. Thanks to the reader who emailed to bring this case to my attention.

UPDATE: On September 12, 2006, the Court of Appeal issued a modification order. It deleted the discussion of Prop. 64 retroactivity in its entirety, including footnote 4, and replaced it with this sentence: "The Supreme Court rejected this contention in Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227, holding 'the new provisions do apply to pending cases.'"

Pfizer answer to petition for review and depublication request available online

Many thanks to counsel for the petitioner in Pfizer for forwarding a copy of the answer to the petition for review, which was filed on August 31, 2006. Also, here is a copy of the depublication request filed on August 23, 2006.

New UCL/CLRA preemption decision: In re Farm Raised Salmon Cases

In In re Farm Raised Salmon Cases, ___ Cal.App.4th ___ (Aug. 31, 2006), the Court of Appeal (Second Appellate District, Division Three) held that the federal Food, Drug, and Cosmetic Act (21 U.S.C. §§ 301 et seq.) preempted the plaintiffs' UCL and CLRA claims.

Supreme Court construes UCL term "person": Wells v. One2One Learning Foundation

Yesterday, in Wells v. One2One Learning Foundation, ___ Cal.4th ___ (Aug. 31, 2006), the Supreme Court addressed the word "person" as used in the UCL. Restitution and injunctive relief may be obtained against "[a]ny person who engages, has engaged, or proposes to engage in unfair competition …." Bus. & Prof. Code § 17203. A charter school, the Supreme Court concluded, falls within the definition of "person" under the UCL:

[T]he UCL defines “persons” subject to that law to “mean and include natural persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons.” (Bus. & Prof. Code, § 17201.) The charter school defendants either are, or are operated by, corporations, and they also constitute “associations” or “organizations.” They are within the plain meaning of the statute.

Noting that several cases have held government entities are not “persons” who may be sued under the UCL (e.g., Community Memorial Hospital v. County of Ventura (1996) 50 Cal.App.4th 199, 209 (Community Memorial); see also People for the Ethical Treatment of Animals, Inc. v. California Milk Producers Advisory Bd. (2005) 125 Cal.App.4th 871, 877-883; California Medical Assn. v. Regents of University of California (2000) 79 Cal.App.4th 542, 551; Trinkle v. California State Lottery (1999) 71 Cal.App.4th 1198, 1203-1204; Janis v. California State Lottery Com. (1998) 68 Cal.App.4th 824, 831; Santa Monica Rent Control Bd. v. Bluvshtein (1991) 230 Cal.App.3d 308, 318; but see Notrica v. State Comp. Ins. Fund (1999) 70 Cal.App.4th 911, 939-945), the charter school defendants insist they are entitled, as part of the public school system, to this “public entity” exemption. The Court of Appeal agreed. We do not.

As we have indicated, charter schools are operated, pursuant to the CSA, by nongovernmental entities. Though, by statutory mandate, these institutions are an alternative form of public schools financed by public education funds, they and their nongovernmental operators are largely free and independent of management and oversight by the public education bureaucracy. Indeed, charter schools compete with traditional public schools for students, and they receive funding based on the number of students they recruit and retain at the expense of the traditional system. Insofar as their nongovernmental operators use deceptive business practices to further these efforts, the purposes of the UCL are served by subjecting them to the provisions of that statute.

Nor is the state’s sovereign educational function thereby undermined. Even if governmental entities, in the exercise of their sovereign functions, are exempt from the UCL’s restrictions on their competitive practices (see Community Memorial, supra, 50 Cal.App.4th 199, 209-211 [county was not “person” for purposes of UCL, such that county hospital’s treatment of paying patients in competition with private hospitals would be subject to statute], no reason appears to apply that principle to nongovernmental entities, covered by the plain terms of the statute, who compete with the traditional public schools for students and funding. We conclude that the charter school defendants are “persons” covered by the UCL.

Slip op. at 37-38 (footnotes omitted).