The UCL Practitioner

"Ten Tips for Excellence in Appellate Advocacy"

Howard Bashman has another article up at Law.com: "Ten Tips for Excellence in Appellate Advocacy" (Nov. 13, 2006). Here is tip number six:

6. Get outside help. The insights of an experienced and effective appellate practitioner can be invaluable in deciding what issues should be raised on appeal and how best to argue those issues to obtain the best possible result for the client. No one may know the case or the governing law better than the trial lawyer, but, to win on appeal, you will need to persuade appellate judges who themselves have no preexisting knowledge about your case and often have little, if any, experience with the law governing the outcome in your case. An experienced and effective appellate practitioner can assimilate what the trial lawyers know about the case and present even the most complicated legal and factual matters to appellate judges in the brief and at oral argument in a manner that is both easy to understand and persuasively reasoned. Highly qualified appellate practitioners do not want to take your client from you or control the case on remand to the trial court; rather, they want to work with you to ensure that your client gets the best possible result on appeal.

This is good advice. I'm available to work on appellate matters (hourly or contingency) if there are plaintiffs' attorneys out there who need help.

Petition for review filed in Alvarez collateral estoppel case

On November 21, 2006, a petition for review was filed challenging the Court of Appeal's opinion in Alvarez v. May Dept. Stores Co., ___ Cal.App.4th ___ (Oct. 11, 2006) (Second Appellate District, Division Four). Alvarez v. May Dept. Stores Co., no. S148276. Alvarez is the collateral estoppel/class certification opinion, my original post on which is here. The petition for review begins:

Cutting the legs out from under litigants, the California Court of Appeal for the Second Appellate District has added to the growing list of rulings that harm the class action device and prejudice the due process rights of litigants. (See Pfizer Inc. v. Superior Court, review granted November 1, 2006, S145775; Tobacco II Cases, review granted November 1, 2006, S147345; Gentry v. Superior Court, review granted April 26, 2006, S141502; Jones v. Citigroup, review granted April 26, 2006, S141753; Pioneer Electronics v. Superior Court (Olmstead), review granted July 27, 2005, S133794.) By severely restricting the ability of plaintiffs to pursue collective actions, the Second District has effectively limited access to our Courts, to the detriment of all Californians.

Many thanks to counsel for Mr. Alvarez for providing a copy of his brief.

UCL jury instructions? Muranaka Farm, Inc. v. Huacuja (unpublished)

In a recent unpublished opinion, Muranaka Farm, Inc. v. Huacuja, no. B183656 (Nov. 16, 2006), the Court of Appeal (Second Appellate District, Division Two), approved this UCL "unfair" prong jury instruction:

For purposes of statutory unfair competition law, conduct is unfair if the harm to the victim outweighs the utility of the conduct to the defendant.

Slip op. at 14 n.5. This jury instruction presumably derived from State Farm Fire & Cas. Co. v. Superior Court, 45 Cal.App.4th 1093 (1996), under which a UCL "unfair" prong claim is established if "the gravity of the harm to the alleged victim" outweighs "the utility of the defendant's conduct." Id. at 1103-04 (quoting Motors, Inc. v. Times Mirror Co., 102 Cal.App.3d 735 (1980)).

On appeal, the defendant argued that the narrower Cel-Tech formulation of "unfair" applied and that the instruction should have been different. The Court of Appeal held that (1) the defendant waived the argument by not raising it below, and that (2) any error was harmless because substantial evidence supported the jury's findings of liability for breach of fiduciary duty, conversion, and common law unfair competition, which in turn supported liability under the UCL's "unlawful" prong. Slip op. at 12-15. This part of the opinion is noteworthy because it amounts to explicit acknowledgment by an appellate court that a UCL "unlawful" prong claim may be predicated on a violation of common law (not just statutory law). (See this post for more on that issue.)

You may be wondering, as I did, why the UCL claim went to the jury at all. UCL claims are equitable in nature and are normally tried to the court. The Court of Appeal held that the defendant waived the issue by not raising it below and that any error was harmless:

Appellant further contends that the trial court improperly submitted respondent’s claim of statutory unfair competition under Business & Professions Code section 17200 (hereafter section 17200) to the jury. Respondent asserts that appellant waived this claim because he did not object to the statutory unfair competition claim being decided by the jury or demand, as he does now on appeal, that the trial court prepare a statement of decision for this claim. Appellant has not responded to respondent’s claim of waiver as to the submission of the statutory unfair competition claim to the jury. Thus, we consider this issue to be waived. In any event, there is no reason to believe that the trial court would have ruled differently than the jury on this claim, since it was based on the same facts supporting the jury’s findings of liability on the other causes of action. Therefore, we also find that any error in submitting this equitable claim to the jury was harmless.

Slip op. at 7 n.3. Thanks to the reader who emailed me about this unpublished opinion.

A UCL "unlawful" prong hypothetical

A reader writes in with the following hypothetical:

Are you aware of any California cases addressing basing a UCL claim on federal law when there is a California law that expressly allows conduct? Given that federal law trumps state law I could see an argument that the California law is just invalid. At the same time, I would think that if a specific California law permits a practice, the UCL (as a more general California law) cannot make it invalid.

For what it's worth, I think this is an issue left open by the Olszewski case where conduct violates a federal statute, is expressly allowed by a state statute, but the state statute arguably is preempted by the federal statute. The question is whether the Cel-Tech safe harbor applies, which requires the answer of two questions (1) does the Cel-Tech safe harbor ever apply to "unlawful" prong cases; and (2) if so, does it apply when the state law that creates the safe harbor is preempted by federal law?

What do you think?

Happy Thanksgiving!

That's it for postings this week. Best wishes for a Happy Thanksgiving to you and yours.

New Second Circuit CAFA decision: DiTolla v. Doral Dental

In DiTolla v. Doral Dental IPA of New York, Inc., ___ F.3d ___ (Nov. 17, 2006), the Second Circuit addressed CAFA's requirement that appeals be decided within 60 days after "filing":

CAFA’s 60-day clock for rendering judgment starts running on the day that the Court’s order granting permission to appeal is filed. In so holding, we join several of our sister circuits. See Hart v. FedEx Ground Package System Inc., 457 F.3d 675, 678 (7th Cir. 2006); Evans v. Walter Industries, Inc., 449 F.3d 1159, 1162-63 (11th Cir. 2006); Patterson v. Dean Morris, L.L.P., 444 F.3d 365 (5th Cir. 2006); Bush v. Cheap Tickets, Inc., 425 F.3d 683, 685-86 (9th Cir. 2005).

Slip op. at 6-7. Next, the court held that CAFA did not alter the rule that the party seeking removal bears the burden of establishing jurisdiction:

It is well-settled that, prior to CAFA’s enactment, “[t]he party asserting federal jurisdiction [bore] the burden of proving that the case [was] properly in federal court.” Gilman v. BHC Sec., 104 F.3d 1418, 1421 (2d Cir. 1997) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). It is an issue of first impression in this Court whether CAFA has changed this traditional rule. Substantially for the reasons articulated by the District Court, we join three of our sister circuits and hold that it has not. See Miedema v. Maytag Corp., 450 F.3d 1322, 1328-29 (11th Cir. 2006); Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006); Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005).

Slip op. at 7. Finally, the court construed CAFA's "amount in controversy" provision in the context of an accounting claim. It determined that the amount of the fund of which the accounting was sought was not "in controversy," as that term is used in CAFA:

[Plaintiff's] complaint does not even purport to suggest the value of, much less lay claim to, the [fund]. It seeks only an accounting, the results of which are presently unknown. For that reason, no one can say how much money may be ultimately claimed by [plaintiff]. .... [W]e may infer that if the accounting were to reveal such potential fraud, [plaintiff] and the putative class would stand to gain court-ordered restitution or a settlement. We cannot say beyond mere speculation, however, whether those damages, if they are awarded, would be more than $5 million. [Defendant] has thus failed to demonstrate that the claim here satisfies CAFA’s jurisdictional amount in controversy.

Slip op. at 10, 12. [Hat tip: Consumer Law & Policy Blog]

New UCL/CLRA decision: Miller v. Bank of America

In Miller v. Bank of America, NT & SA, ___ Cal.App.4th ___ (Nov. 20, 2006), a judgment following a jury trial in a certified class action, with compensatory damages and penalties exceeding $1 billion, was reversed, wholesale. The Court of Appeal held that the defendant's conduct, which involved applying Social Security benefits deposited into its customers' accounts to pay various bank fees, did not violate either the UCL or the CLRA.

This morning's Daily Journal reports that "Billion-Dollar Reversal Lets Banks Tap Social Security Funds" (subscription), and the Recorder that "Billion-Buck BofA Ruling Struck Down" (subscription). In both articles, class counsel is quoted as saying he will seek Supreme Court review.

UPDATE: Here is a non-subscription link to the Recorder article. Also, the San Francisco Chronicle reports today that "Billion-dollar ruling against BofA tossed; Appeals court says deducting money to pay fees is OK." And the Los Angeles Times reports that "Judgment against BofA is overturned."

Miscellany from the blog pile

The Weblog Awards 2006 is accepting nominations for "Best Law Blog" in the comments to this post.

Blawg Review #84 is available this morning at the blog Transcending Gender. Links to past Blawg Reviews are collected at the main Blawg Review site.

Howard Bashman's most recent column is now available at Law.com: "Electronic Filing on Appeal: What Does the Future Hold?"

Now a month old, this article is still interesting: "Gimme an 'S': The High Court's Grammatical Divide." I remember debating this very issue with my judge during my clerkship. He put a lot of thought into that kind of thing.

"Up in Smoke - Will the Tobacco Cases Replace the Old 'But For' Standard in 17200 Class Actions?"

On December 13, 2006 at noon, the Antitrust and Unfair Competition Law section of the State Bar of California will present a teleseminar entitled "Up in Smoke: Will the Tobacco Cases Replace the Old 'But For' Standard in 17200 Class Actions? Catch Up on Causation, Reliance and Other Recent Developments in 17200 Law." The speakers are Bonny Sweeney of Lerach, Coughlin; Will Stern of Morrison & Forester; and Anita Stork of Covington & Burling. At $45, it's a bargain.

"Opening the Door Back Up for Consumer Claims"

For those of you interested in the enforceability of "no-class-action" arbitration provisions, Consumer Law & Policy Blog has this interesting summary of recent decisions and their implications for consumers. My own coverage of this topic is collected here.

Why are the Court of Appeal opinions in In re Tobacco and Pfizer no longer citable precedent?

Two weeks ago, when I reported on the Supreme Court's grant of review in In re Tobacco II and Pfizer, I pointed out that the two Court of Appeal opinions were "no longer citable as precedent." Since then, I've received more than one email from readers asking why this is, and whether the two opinions have any remaining precedential value. I'm happy to provide more information about this.

Under Rule of Court 977(a), only "published" opinions are citable as precedent:

Except as provided in (b) [relating to citation in the same action for purposes of res judicata, collateral estoppel, or law of the case], an opinion of a California Court of Appeal or superior court appellate division that is not certified for publication or ordered published must not be cited or relied on by a court or a party in any other action.

(Emphasis added.) Rule of Court 976(d)(1) states that when the Supreme Court grants review, the Court of Appeal's opinion is no longer considered "published":

(d) Changes in publication status

(1) Unless otherwise ordered under (2), an opinion is no longer considered published if the Supreme Court grants review or the rendering court grants rehearing.

(Emphasis added). Accordingly, when the Supreme Court grants review, the Court of Appeal's opinion may no longer be cited (except in the same action) and no longer operates as binding precedent.

An opinion's status as "published" may be restored after review is granted only if the Supreme Court takes action under subdivision (2) of Rule 976(d). The Supreme Court may "order publication of an opinion, in whole or in part, at any time after granting review." Rule of Court 976(d)(2). We saw such a publication request in Branick. The request, which was filed after the Supreme Court issued its opinion, was denied.

Court of Appeal grants motion to dismiss in Californians for Disability Rights v. Mervyn's

Last week, the Court of Appeal (First Appellate District, Division Four) heard oral argument on whether plaintiff/appellant Californians for Disability Rights should be permitted to substitute an affected party at the appellate level, rather than at the trial court level, to meet Prop. 64's standing requirements. Californians for Disability Rights v. Mervyn's, no. A106199. Yesterday, the court issued this order:

Appellant's request to grant leave to move for substitution of plaintiff in this court, or in the alternative for an order vacating the judgment and remanding the case to the trial court with leave to permit amendment, is denied. The appeal is dismissed for lack of standing.

You may recall that when Prop. 64 passed, this appeal was already pending. The Court of Appeal's original opinion in Mervyn's came after the defendant moved to dismiss the appeal, arguing that Prop. 64 had stripped away the plaintiff/appellant's standing. It seems that the motion to dismiss has now, at long last, been granted. My earlier coverage of the post-remand proceedings in Mervyn's is here and here.

New UCL "unlawful" prong decision: SC Manufactured Homes, Inc. v. Canyon View Estates, Inc.

This case came down shortly before all the excitement surrounding In re Tobacco and Pfizer. In SC Manufactured Homes, Inc. v. Canyon View Estates, Inc., ___ Cal.App.4th ___ (Oct. 27, 2006), the plaintiff's UCL "unlawful" prong claim was predicated on an alleged violation of the Mobilehome Residency Law ("MRL") (Civ. Code §§ 798 et seq.). After filing suit, the plaintiff voluntarily dismissed some of the defendants from the action. Slip op. at 9. Those defendants moved for attorneys' fees under the MRL, which has an attorneys' fees provision. Id. The trial court denied the motion, and the Court of Appeal (Second Appellate District, Division Three) affirmed. Id. at 10.

The Court of Appeal expended a great deal of energy examining whether the action "arose out of" the MRL. Id. at 10-21. However, the case could have been resolved much more simply. The UCL's "unlawful" prong "borrows" the underlying statute's liability provisions; it does not "borrow" the underlying statute's remedies. UCL remedies are limited to restitution and injunctive relief. Attorneys' fees are unrecoverable in this action because the UCL has no attorneys' fees provision, even if the underlying, "borrowed" statute does. The reasoning is similar to that employed by federal courts when they hold that a UCL "unlawful" prong claim predicated on an alleged violation of federal law does not "arise under" federal law and is therefore not removable to federal court.

"Lawyers Face Right to Blog"

On Tuesday, the Chicago Tribune had a story called "Lawyers face right to blog: Online journals that contain legal discussions and background information are challenging traditional practices on attorney advertising." The article explains law blogs to laypersons who may never have heard of them, then discusses efforts by some states (notably Kentucky and New York) to regulate them as attorney advertising. I've seen other recent articles about this phenomenon, but I haven't blogged about them because I consider the entire discussion to be ridiculous. Kevin O'Keefe of LexBlog agrees.

My blog is not advertising. It's the equivalent of publishing a treatise or a practice guide, or of writing a focus article for the Daily Journal every day. It is scholarship and it is journalism. The blog's primary audience is other lawyers. They are who it's written for, as are most law blogs. If the blog enhances my profile in the legal community, leads to co-counseling relationships, or even generates client contacts, those are happy consequences but they do not transform the blog's fundamental nature from scholarship into solicitation. Fortunately, I have nothing to fear from the California State Bar (even with the proposed amendments to the Rules of Professional Conduct). It's too bad the regulators in these other states don't understand what law blogs are or the purposes they serve.

In a recent FindLaw.com article, "Are Lawyers' Blogs Protected by the First Amendment? Why State Bar Regulation of Law Blogs As 'Advertising' Would Be Elitist and Reductive" (Oct. 16, 2006), author Julie Hilden writes:

[C]haracterizing blogs as merely advertising for the attorney who writes them is so reductive as to be absurd. .... State bars should affirmatively encourage legal blogs, rather than chilling them by regulating them as if they were no more significant than a banner on the back of a bus.

Class member communication case to be argued December 5, 2006: Pioneer Electronics v. Superior Court

The Supreme Court just announced that it will hear oral argument in the class member communication case, Pioneer Electronics v. Superior Court, no. S133794, on December 5, 2006 at 9:00 a.m. The argument will be held at the Ronald Reagan State Office Building in Los Angeles. If anyone plans to attend the argument and would like to provide a report to be posted here, please let me know.

The Court of Appeal opinion in this case is Pioneer Electronics (USA), Inc. v. Superior Court (Olmstead), 128 Cal.App.4th 246 (2005) (Second Appellate District, Division Four). As I have previously reported, this case addresses precertification communications with putative class members, and the interplay between the right to discovery and the right to privacy.

List of Supreme Court appeals involving UCL and class action issues now updated

At long last, I've updated my list of appeals pending before the California Supreme Court that involve UCL and/or class certification issues. The list includes In re Tobacco and Pfizer, of course. In addition, four appeals involving UCL preemption and five appeals raising a variety of class action procedure issues are listed. Finally, there is one appeal of interest relating to the private attorney general doctrine for recovery of attorneys' fees.

New CLRA attorneys' fees opinion: Graciano v. Robinson Ford Sales, Inc.

In Graciano v. Robinson Ford Sales, Inc., ___ Cal.App.4th ___ (Oct. 26, 2006), the Court of Appeal (Fourth Appellate District, Division One) construed the CLRA's attorneys fees provision (Civ. Code §1780(d)). The court analyzed both the "prevailing party" concept and the standards for determining the appropriate amount of fees. The latter analysis draws largely on non-CLRA caselaw and therefore may be more broadly applicable to fee requests generally. The court held that the trial court abused its discretion by applying improper factors to reduce the plaintiff's fees award, and remanded the case with instructions to try again.

"Tobacco Case Pushes Limits on Class Suits"

This morning's Daily Journal reports (subscription) on the Supreme Court's grant of review in Tobacco:

The main question the court will decide in the newest case, lawyers for both sides said, is whether plaintiffs must show that each individual member of the class has been harmed, a nearly impossible burden. Much easier would be to prove that the named plaintiffs have suffered a loss and then later evaluate damages to the entire class.

More on why full review was granted in Tobacco, not PFizer

In response to my top five reasons why the Supreme Court granted full review in Tobacco instead of Pfizer, a reader writes:

I think your reasons 2 3 4 and 5 as to why Tobacco II is the lead are all sound and plausible.

Reason 1, however, the expediting of consideration of the Tobacco II petition, is the consequence of the Court's decision to grant and hold Pfizer, not the reason for granting review of Tobacco II. As you note, Pfizer was extended to Nov. 9. Next week, however, is oral argument and the Court does not hold its weekly conference to consider petitions for review; thus, the final conference at which to grant review (or grant and hold) Pfizer was Nov. 1. Normally, in fact, the Court considers a petition at least two conferences before time to grant review expires. Thus, the likely scenario is that the Court considered Pfizer at the Oct 25 conference and was made aware that Tobacco II was pending and was probably a better lead case, Court tentatively decides that Tobacco II will probably be lead but wants to grant and hold Pfizer in case it presents additional issues; the only way to do this is to act on both petitions on Nov 1, the last conference before time to grant Pfizer expires, thus, the reason for the order to get the answer in Tobacco II in in time for consideration at the Nov 1 conference. Thus, I would be surprised if the Court actually expedites the appeal in Tobacco II because its reasons for expediting consideration of the petition for review had nothing to do with Tobacco II or any need to decide it quickly and everything to do with its desire to grant and hold Pfizer.

That is very interesting and helpful, and makes sense considering that the petition for review in Tobacco did not request expedited review. When the Supreme Court said it was considering expediting the petition, I assumed that an explicit request for expedited review had been made. That turns out not to be the case. Thanks to the person who wrote for taking time to share your insights.

Tobacco petition for review and answer now available online

Here are the petition for review and answer in Tobacco:

• Petition for Review (filed October 13, 2006)
  
• Answer to Petition for Review (filed October 30, 2006)

My sincere thanks to the reader who forwarded them. Also, for everyone's convenience here are quick links to the Court of Appeal opinions in the two cases:

• In re Tobacco II Cases, 142 Cal.App.4th 891 (2006) (review granted)
  
• Pfizer, Inc. v. Superior Court (Galfano), 141 Cal.App.4th 290 (2006) (review granted)

Top five reasons why the Supreme Court made Tobacco, not Pfizer, the lead case

I confess I was surprised that the Supreme Court granted full review in Tobacco, but issued a "grant and hold" order in Pfizer. Given what I know about how the issues overlap in the two cases, I would have expected the opposite. Here are a few educated guesses about why the Supreme Court handled the cases this way:

1. Something about Tobacco warrants expedited review. (I won't be sure what that might be until I see the briefs, which I expect to get later today.) As I reported the other day, the Supreme Court denied respondents' motion for a seven-day extension of time to file their answer to the review petition, noting that it was considering expedited review. It then ordered respondents to file their answer by Monday, October 30 (just four days later and eleven days sooner than respondents were requesting). A reader pointed out that this order actually curtailed respondents' time to file their answer. Ordinarily, an answer to a petition for review is due 20 days after the petition is filed. Rule of Court 28(e)(4). In Tobacco, that due date would have been November 2 (today). Somebody probably worked all weekend to get the answer done and filed by October 30. If the Supreme Court is reviewing Tobacco on an expedited basis, then obviously that case comes ahead of Pfizer (in which the Supreme Court gave itself 90 more days to decide the petition).

2. Tobacco took the entire Prop. 64 analysis a step further than Pfizer, into the realm of class certification. It is therefore more efficient to review Tobacco before Pfizer. In theory, resolving all the issues raised in Tobacco would dispose of all the issues raised in Pfizer, and more, allowing the Supreme Court to transfer Pfizer back to the Court of Appeal once Tobacco is decided. By contrast, if the Supreme Court resolved Pfizer first, it would then have to turn to Tobacco to decide the class certification issues. (This reason may be a stretch, given that Tobacco did not expressly address the "likely to deceive" or reliance issues decided in Pfizer. On the other hand, Tobacco includes a CLRA claim, which Pfizer does not.)

3. Tobacco was decided after the Supreme Court handed down Mervyn's, and analyzed (albeit cursorily) the impact of Mervyn's. Pfizer preceded Mervyn's by almost two weeks. Therefore, the Supreme Court's review of the Court of Appeal's analysis in Tobacco will begin at a more advanced level, making the review more meaningful.

4. In Pfizer, two justices (Justices Chin and Corrigan) are disqualified and have recused themselves from participating. In Tobacco, only one justice has recused himself (Chief Justice George). (This information appears in the docket entries granting review.) The panel deciding Tobacco will therefore need only one specially-assigned justice, not two.

5. A case alleging improper marketing of cigarettes is more societally important than one alleging improper marketing of mouthwash. Tobacco thus presents a better context in which to decide critical questions about how Prop. 64 should be interpreted and its real-world ramifications.

Any other ideas?

"Court to reconsider huge tobacco lawsuit"

The Sacramento Bee reports here on yesterday's developments at the Supreme Court:

The Court of Appeal in San Diego ruled against the cigarette plaintiffs in September. The unanimous three-judge ruling said their suit was barred by Proposition 64, a 2004 initiative limiting private class actions under the unfair competition law to injured plaintiffs who have lost money or property as a result of alleged unfair competition.

That finding is the likely focus of the Supreme Court's review, which was ordered without explanation or dissent after the justices' weekly closed-door meeting on pending petitions.

Consumer Law and Policy Blog also noted the grant of review. Its post says that Public Citizen's Consumer Justice Project will be filing an amicus brief on the merits.

BREAKING NEWS: Supreme Court grants review in In re Tobacco and issues "grant and hold" order in Pfizer

Today, the Supreme Court granted review in In re Tobacco II Cases, no. S147345, and issued a "grant and hold" order in Pfizer v. Superior Court, no. S145775. The "grant and hold" order in Pfizer reads:

Further action in this matter is deferred pending consideration and disposition of a related issue in In re Tobacco II cases, S147345 (see Cal. Rules of Court, rule 282(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 29.1, is deferred pending further order of the court. Chin and Corrigan, JJ., are recused and did not participate. Votes: George, CJ., Kennard, Baxter, Werdegar and Moreno, JJ.

Because a statement of the issues to be reviewed in Tobacco is not yet available online, and because I haven't seen the briefs in Tobacco, I cannot say precisely how the issues overlap with Pfizer. If/when I get more information, I will, of course, post it. Meanwhile, the Court of Appeal opinions in Pfizer and Tobacco are both no longer citable as precedent.