Recent UCL "unlawful" prong opinion: Las Canoas Co. v. Kramer

In Las Canoas Co. v. Kramer, 216 Cal.App.4th 96 (May 7, 2013), the Court of Appeal (Second Appellate District, Division Six) affirmed dismissal of UCL "unlawful" and "unfair" prong claims predicated on alleged violations of Code of Civil Procedure section 2025.510, which, among other things, requires the fees charged by court reporters for copies of deposition transcripts to be "reasonable."

The Court of Appeal observed that the statute allows a motion to be brought in the original action to enforce this requirement.  Slip op. at 3. The Court then held that this mechanism is the exclusive remedy, and that a later UCL "unlawful" (or "unfair") prong claim is barred.  Id. at 3-4.  It concluded that:

a non-noticing party who does not move for such an order in the pending action may not bring a subsequent action to obtain restitution for "unreasonable" copy charges or obtain injunctive relief setting a "reasonable rate" to be charged by that court reporter in all future actions.

Id. at 1.

I think this case was incorrectly decided.  The decisional law is very clear that any statute may form the predicate of a UCL "unlawful" prong claim, regardless of whether the law carries its own, separate private enforcement mechanism.  The UCL "borrows" the statute's liability standards, engrafts the UCL's own more streamlined procedures and limited remedies, and disregards any remedies that may be written into the "borrowed" statute.  Here, the statute contains no explicit safe harbor or exclusive remedy language, which are, under Cel-Tech, the only things that should preclude a UCL claim for its violation. 

The Supreme Court is considering similar arguments in Zhang and Rose, which were heard last month.  The opinions in those cases are due to be handed down by approximately the first week of Augusut.  Las Canoas would be a good candidate for a "grant and hold" order pending resolution of one or both of those cases. 

UPDATE: On behalf of CAOC, I filed a request for depublication of this opinion, as well as an amicus letter urging the Court to issue a "grant and transfer" order following issuance of its opinions in Zhang and Rose.  On July 3, 2013, the Court granted itself an extension of time through September 4, 2013 to grant or deny review on its own motion.  Las Canoas Co. v. Kramer, No. S211651.  The time to grant review (or depublish) otherwise would have expired that week.  Ultimately, the Court may not depublish or take any other action, but I thought it was worth a try.  Counsel for the defendant filed response letters opposing both depublication and review. 

UPDATE:  On August 14, 2013, the Supreme Court denied the depublication request and declined to grant review on its own motion.

Comments

[Chris]

What one hand giveth, the other taketh away.

If the California legislature can provide a civil remedy for unlawful business practices via the UCL, why can't it also provide some laws that preclude a UCL remedy? It seems to me that this all boils down to a matter of statutory interpretation, i.e. should we interpret CCP 2025.510 as providing an exclusive remedy. Now that is a difficult question to answer: there is no exclusive language associated with 2025.510, but it seems terribly inefficient and chaotic to circumvent the CCP with the UCL.

In the end, the courts should set a very high burden to show that a given statute preempts a UCL remedy. If the threshold is too low then the UCL exception will be frequently misapplied since the relationship of every single statute to the UCL would be an issue of first impression. In Rose and Zhang I would go with the plaintiffs. I'm not so sure about Kramer, though that's largely owing to the fact that I'm psychologically unsettled by the thought that the CCP is not the only set of procedures applicable in my California cases.

[Kimberly A. Kralowec]

Hi Chris, the legislature could do that, problem is it didn't here.