The UCL Practitioner

Supreme Court sets oral argument in UCL case: Loeffler v. Target Corp.

On February 4, 2014, at 10:00 a.m. in Sacramento, the California Supreme Court will hear oral argument in Loeffler v. Target Corp., No. 173972, in which review was granted in 2009. The case arose out of a shopping trip to Target, where the plaintiff was charged sales tax on a cup of hot coffee "to go."

This is the issue on review, according to the docket:

Does article XIII, section 32 of the California Constitution or Revenue and Taxation Code section 6932 bar a consumer from filing a lawsuit against a retailer under the Unfair Competition Law (Bus. & Prof. Code sections 17200 et seq.) or the Consumers Legal Remedies Act (Civ. Code, section 1750 et seq.) alleging that the retailer charged sales tax on transactions that were not taxable?

The Court of Appeal (Second Appellate District, Division Three) held that "plaintiffs are attempting to resolve a sales tax dispute by using consumer and common law remedies rather than the procedure set forth by the Legislature [in the Revenue and Taxation Code]. This they cannot do under article XIII, section 32."  Loeffler v. Target Corp., 173 Cal.App.4th 1229, 1235 (2009).

My original take on this case was that it involved obscure issues involving the state tax code.  The Court of Appeal opinion says almost nothing about the UCL or CLRA.  But the UCL and CLRA issues appear to be moving to the forefront.  On December 16, 2013, the Court ordered supplemental briefing on these issues:

(1) May a cause of action be brought under the UCL (see Bus. & Prof. Code, § 17200 et seq.) or CLRA (see Civ. Code, § 1750 et seq.) based on an allegation that a retailer misrepresented that it was collecting an amount as tax reimbursement when in fact the retailer failed to remit the amount to the Board of Equalization?

(2) If so, do the allegations in plaintiffs' second amended complaint state a cause of action under the UCL or CLRA on this theory, and, if not, should plaintiffs be afforded an opportunity to amend their complaint to state such causes of action?

A few months earlier, on April 11, 2013, the Court ordered supplemental briefing on a very different issue:

The parties are requested to serve and file simultaneous supplemental letter briefs addressing whether and, if so, in what manner the doctrine of primary jurisdiction (see Jonathan Neil & Assoc., Inc. v. Jones (2004) 33 Cal.4th 917, 931-937), appropriately may be invoked and applied in the present case, including whether the issue was preserved in the trial and appellate courts and whether article XIII, section 32 of the California Constitution would be implicated by applying the doctrine.

Here are copies of some of the briefs:

• Opening Brief on the Merits (filed 11-09-09)
• Answer Brief on the Merits (filed 01-11-10)
• Reply Brief on the Merits (filed 02-01-10)
• Amicus Curiae Brief of State Board of Equalization (filed 04-15-10)
• Target's Consolidated Answer to Amicus Curiae Briefs (filed 05-05-10)
• Plaintiff's Consolidated Answer to Amicus Curiae Briefs (filed 05-05-10)
• Plaintiff's Request for Judicial Notice in Support of Consolidated Answer to Amicus Curiae Briefs (filed 05-05-10)
• Supplemental Amicus Curiae Brief of State Board of Equalization (filed 07-08-11)
• Plaintiffs' Response to Supplemental Amicus Curiae Brief of State Bd. of Equalization (filed 08-08-11)
• Target's Letter Brief re Primary Jurisdiction (filed 04-22-11)
• Plaintiff's Letter Brief re Primary Jurisdiction (filed 04-22-11)
• Target's Reply Letter Brief re Primary Jurisdiction (filed 04-25-11)
• Plaintiff's Reply Letter Brief re Primary Jurisdiction (filed 04-26-11)
• Target's Supplemental Brief re UCL and CLRA (filed 01-13-14)
• Plaintiff's Supplemental Brief re UCL and CLRA (filed 01-13-14)

There are several "grant and hold" cases also pending in the Supreme Court.  Does anyone know if any cases raising similar issues have been stayed in the lower courts pending resolution of Loeffler?

Also, if anyone plans to attend the argument and would like provide a report for publishing here (with or without attribution), please drop me a line.

UPDATE:  On May 1, 2014, the Supreme Court affirmed the Court of Appeal's judgment, holding that the tax code provides the exclusive remedy for the type of violation asserted in this case.  Loeffler v. Target Corp., 58 Cal.4th 1081 (2014). 

Class cert. cases relisted again: Whirlpool v. Glaser and Sears v. Butler (Updated)

This past week, the U.S. Supreme Court relisted the Whirlpool and Sears front-load washer cases for the third time.  Whirlpool Corp. v. Glaser, No. 13-431 (U.S.); Sears, Roebuck & Co. v. Butler, No. 13-430 (U.S.).

The cases are scheduled for conference again today (Friday, Jan. 24, 2014).  The Court has been announcing its cert. grants on Fridays lately, so if the cases are taken up, we may hear about it today.  UPDATE:  No cert. grants were announced on Friday, Jan. 24, so check the orders list Monday.

If they are relisted again, I would expect the dockets to be updated to reflect this on Monday.

For more on the cases, see these blog posts. 

In related news, the Court is considering a third cert. petition involving class certification issues, BSH Home Appliances Corp. v. Cobb, no. 13-138.  This case has been relisted four times, and will be conferenced again today. 

BSH also involves front-load washers, but the substantive issues for review appear to be different; they relate to the proper interpretation of Comcast as well as expert testimony at the class certification stage (an issue many thought would be addressed in Comcast but wasn't).  As stated in the cert. petition, these are the questions presented:

(1) Whether after Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), the absence of a showing that injury can be proved on a classwide basis precludes class certification under Federal Rule of Civil Procedure 23(b)(3).

(2) Whether at the class certification stage of litigation a district court must analyze the admissibility of expert testimony under the standards set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).

(Hyperlinks added.) The district court granted class certification, Tait v. BSH Home Appliances Corp., 289 F.R.D. 466 (C.D. Cal. 2012), and the Ninth Circuit denied the defendant's petition for permission to appeal under Rule 23(f). 

For links to more of the briefs, see the SCOTUSblog case page.

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Supreme Court depublishes UCL "unfair" prong opinion: Aspiras v. Wells Fargo Bank

This week, the Supreme Court depublished the Court of Appeal's opinion in Aspiras v. Wells Fargo Bank, N.A., 219 Cal.App.4th 948 (2013), discussed in this blog post.

This is an interesting development.  Aspiras created a split in authority with Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872 (2013), regarding the post-Cel-Tech formulation of "unfair" conduct.  There is a longstanding three-way split in authority on the meaning of "unfair," and these two cases created a sub-split. 

Under the post-Cel-Tech formulation, conduct is "unfair" if it contravenes a legislative expression of public policy.  I think of it as violating the spirit, rather than the letter, of the law. 

In Jolley, the defendant's conduct violated a law that the Legislature enacted after the conduct occurred. The Court of Appeal reasoned that by enacting the law, the Legislature had recognized the existence of a public policy, and that the defendant's conduct in contravention of that policy was "unfair" under the UCL. (Jolley is discussed in this blog post.)

The Court of Appeal in Aspiras disagreed with this line of reasoning, and accepted the defendant's argument that so construing the "unfair" prong would "effectuate an improper retroactive application of the [newly-enacted] law." 

I have not seen the depublication request, so it's possible the Supreme Court was concerned with some other aspect of the opinion, which addressed a number of issues.  But at minimum, the Supreme Court's depublication order eliminates this sub-split in authority.

U.S. Supreme Court relists class certification cases: Whirlpool v. Glaser and Sears v. Butler (Updated)

These two cases, involving class certification of claims related to mold growth in front-load washers, were distributed for consideration during the U.S. Supreme Court's conference of last Friday, January 10, 2013 2014.  (Oops, still trying to get used to the fact that it is now the year 2014.  And by the way, where's my flying car, my jetpak, and my robot maid?)

The dockets were both updated Monday morning to show that the cases have been relisted and redistributed for conference on Friday, January 17, 2013 2014.  Whirlpool Corp. v. Glaser, No. 13-431 (U.S.); Sears, Roebuck & Co. v. Butler, No. 13-430 (U.S.). 

For more details on these cases, including links to the lower court opinions and some of the briefs, see this blog post. 

In other news, the Court granted cert. in a case I've been following because the underlying action includes a UCL claim.  POM Wonderful LLC v. The Coca Cola Co., No. 12-761 (U.S.).  Before cert. was granted last Friday, the matter had been relisted once, and the Solicitor General was invited to file an amicus curiae brief, which it did in late November.  

Given the question presented as stated in the cert. petition, it appears unlikely that the Court's opinion in the case will touch on any UCL-related issues: 

Whether the court of appeals erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act.

The Ninth Circuit's opinion is Pom Wonderful LLC v. The Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012), discussed in this blog post.  The UCL claim was allowed to proceed, but the Lanham Act claim was not.  The cert. petition does not appear to have challenged the former ruling.  Indeed, a footnote in the solicitor general's amicus brief states as follows:

Petitioner also brought claims under various California laws.  Those claims are not at issue in this Court.  See pet. 1.  The district court granted summary judgment to respondent on those claims, No. 08-CV-6237, 2013 WL 543361 (C.D. Cal. Feb. 13, 2013), and petitioner's appeal is pending, No. 13-5570 (9th Cir).

Amicus Curiae Brief of United States at 5 n.2. In the cited decision, the district court held that the UCL claim was preempted by federal law. 

SCOTUSblog's case page for this matter has links to more of the briefs. 

New UCL preemption decision: Quesada v. Herb Thyme Farms, Inc.

Happy New Year!  I hope everyone enjoyed the holiday season.  There are a few recent developments of interest and I'm back to blogging this week.

In Quesada v. Herb Thyme Farms, Inc., ___ Cal.App.4th ___ (Dec. 23, 2013), the plaintiff alleged that the defendant, a grower of fresh herbs, violated the UCL, FAL and CLRA by selling packages of herbs labeled "Fresh Organic" and "USDA Organic" when the packages actually "contained a mix of organically grown herbs and conventionally grown herbs."  Slip op. at 3.  The defendant was a "certified grower with federal approval to label its organically grown herbs as 'USDA Organic.'"  Id.

The Court of Appeal (Second Appellate District, Division Three) held that the claims were impliedly (but not expressly) preempted by the federal Organic Foods Production Act of 1990 (7 U.S.C. § 6501 et seq.), in particular "Congress’s mandate precluding private enforcement of the national organic standards to ensure national consistency in the production and labeling of agricultural products as 'organic.'"  Id. at 18.

This is an interesting decision and it's hard to say what its broader impact might be on lawsuits involving false representations that foods are "organic."  The existence of such misrepresentations by unscrupulous sellers factored heavily into Justice Werdegar's reasoning in Kwikset:

The observant Jew who purchases food represented to be, but not in fact, kosher; the Muslim who purchases food represented to be, but not in fact, halal; the parent who purchases food for his or her child represented to be, but not in fact, organic, has in each instance not received the benefit of his or her bargain.

Kwikset Corp. v. Superior Court (Benson), 51 Cal.4th 310, 332 (2011) (emphasis added).  I have a very clear memory of Justice Werdegar mentioning "organically grown" foods during the oral argument in Kwikset.

Of course, Kwikset did not involve either foodstuffs or preemption.  And Quesada's reasoning appears to apply only if the defendant is a federally-certified grower: 

With this state-federal statutory framework in mind, we turn to the preemption question, that is, whether Quesada’s state consumer lawsuit against a certified organic grower based on mislabeling its product as “organic,” in violation of the OFPA or COPA is preempted.  

Slip op. at 7-8 (emphasis added).