The UCL Practitioner

"Principles of litigating consumer class actions"

The January 2015 issue of Plaintiff Magazine has this article, and several others, in a symposium edition on class action litigation.  The article by Joshua Haffner on class action trials is quite interesting.

New UCL Prop. 64 standing opinion: Sarun v. Dignity Health

In Sarun v. Dignity Health, ___ Cal.App.4th ___ (Dec. 15, 2014; pub. ord. Jan. 6, 2015), the plaintiff's UCL and CLRA causes of action alleged that the defendant hospital failed to disclose that it charged uninsured patients more for emergency medical care than it charges other patients.  The plaintiff himself received emergency medical care for which the defendant billed him over $23,000.  By the time he filed suit, however, he had paid only a portion of the balance due, and he had not applied for any available discounts from the defendant.   Slip op. at 1-4. 

Based on the latter facts, the trial court sustained the defendant's demurrer without leave to amend, holding that the plaintiff had not suffered injury in fact or lost money or property, and therefore lacked standing.  Id. at 5-6. 

The Court of Appeal (Second Appellate District, Division Seven) disagreed, and reversed.

Citing both Kwikset Corporation v. Superior Court, 51 Cal.4th 310 (2011) and Clayworth v. Pfizer, Inc., 49 Cal.4th 758 (2010), the Court of Appeal explained that the plaintiff had adequately alleged an economic injury based on the defendant's assertion against him of an obligation to pay, and on the transaction costs that wold be required to avoid the injury:

To satisfy Proposition 64 a plaintiff “must now establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e. caused by, the unfair practice or false advertising that is the gravamen of the claim.”  (Kwikset, at p. 322.) 

“Injury in fact” as used in Proposition 64 has the same meaning as under federal law:  “‘[A]n invasion of a legally protected interest which is (a) concrete and particularized, [citations]; and (b) “actual or imminent, not ‘conjectural’ or ‘hypothetical,’” [citations].’”  (Kwikset, supra, 51 Cal.4th at p. 322.)  Proposition 64, however, imposes the additional requirement that the plaintiff have lost money or property.  (Ibid.)  Indeed, loss of money or property—that is, “economic injury”— “is itself a classic form of injury in fact.”  (Id. at p. 323; see id. at p. 325, fn. 8 [“proof of lost money or property will generally satisfy the element of injury in fact”].)  Economic injury may be shown in many ways including a plaintiff  “surrender[ing] in a transaction more, or acquir[ing] in a transaction less, than he or she otherwise would have”; “hav[ing] a present or future property interest diminished”; and “be[ing] required to enter into a transaction, costing money or property, that would otherwise have been unnecessary.”  (Id. at p. 323.)

....

....  Although Dignity had not begun any collection activity, the existence of an enforceable obligation, without more, ordinarily constitutes actual injury or injury in fact.  (See Hale, supra, 183 Cal.App.4th at pp. 1383-1384; see generally Adams v. Paul (1995) 11 Cal.4th 583, 591, fn. 5 [“actual injury . . . may well precede quantifiable financial costs”].)

....

.... [And, a]lthough a further discount from Dignity’s “full charges”—even a complete elimination of the charges in excess of what Sarun already had paid—may have been available, the invoice as presented to Sarun (which was before the trial court after it granted Dignity’s unopposed motion for judicial notice) stated a $23,487.90 balance was due.  Sarun was not merely “exposed” to the allegedly unlawful pricing system—that is, a list price expressly subject to negotiation like the sticker price on an automobile on a dealer’s lot or a shouted offer at the souk—Dignity’s invoice told him to pay the full remaining sum unless he sought relief.  Indeed, the form admissions agreement Sarun had signed after arriving by ambulance at the hospital obligated him to pay Dignity’s full charges unless other discounts applied, but did not obligate him to apply for such discounts, and further provided he would be liable for attorney fees and collection expenses if the matter was referred for collection.  As in Hale, upon receipt of this bill Sarun faced at least an imminent invasion of a legally protected interest. 

Moreover, the Meyer Court, in discussing its earlier decision in Kagan v. Gibraltar Sav. & Loan Assn. (1984) 35 Cal.3d 582, also explained that incurring transaction costs to avoid the consequences of a deceptive practice “falls within the broad meaning of suffering ‘any damage as a result of the use or employment’ of an unlawful practice, whether or not those transaction costs are cognizable as ‘actual damages.’”  (Meyer v. Sprint Spectrum, L.P, supra, 45 Cal.4th at p. 643.)  Sarun was faced with just such transaction costs:  To avoid the consequences of its allegedly unlawful “full charges” pricing structure for uninsured emergency care patients, Dignity required Sarun to apply for financial assistance, including providing tax return information and other personal financial data.  The tangible burden of such an application process is far more than the “identifiable trifle” required to confer injury-in-fact standing.

Slip op. at 7-11 (italics in original; bold added). 

Also of interest is the Court of Appeal's recognition that mitigation of damages is not an element of a UCL or CLRA claim, nor is it a prerequisite to standing:

Our conclusion is reinforced by Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758 in which the Supreme Court held retail pharmacies had standing to assert UCL claims against pharmaceutical companies that had allegedly engaged in price fixing even though the retail pharmacies were able to pass on any overcharges to their customers.  (Id. at p. 788 [pharmacies “lost money:  the overcharges they paid”].)  The Court rejected the pharmaceutical companies’ argument the pharmacies ultimately “suffered no compensable loss because they were able to mitigate fully any injury by passing on the overcharges,” explaining “[t]he doctrine of mitigation, where it applies, is a limitation on liability for damages, not a basis for extinguishing standing.  [Citation.]  This is so because mitigation, while it might diminish a party’s recovery, does not diminish the party’s interest in proving it is entitled to recovery.”  (Id. at p. 789.)  Dignity’s argument Sarun was required to apply for financial assistance to perfect his claim (that is, to allege injury in fact) would be akin to requiring Sarun to mitigate his damages as a precondition to suit.  As in Clayworth, that is unnecessary here.

Id. at 11 (bold added).

Post-Brinker class certification opinion of note: Martinez v. Joe's Crab Shack Holdings (Updated)

Almost a year ago, I put together a list of twelve post-Brinker class certification opinions of note in wage and hour cases.  One of the opinions was Martinez v. Joe’s Crab Shack Holdings, 221 Cal.App.4th 1148 (2013), in which the Supreme Court granted review in early 2014. 

In the original Martinez opinion, filed in December 2013, the Court of Appeal (Second Appellate District, Division Seven) reversed the trial court's order denying class certification in an employee misclassification case.  Here is my blog post on the opinion. 

In July 2014, the Supreme Court transferred the case back to the Court of Appeal with directions to reconsider the matter in light of Duran v. U.S. Bank National Assn., 59 Cal.4th 1 (2014). 

In November 2014, the Court of Appeal handed down a new opinion, in which it once again reversed the order denying class certification.  Martinez v. Joe's Crab Shack Holdings, 231 Cal.App.4th 362 (2014).  The opinion discusses both Duran and Ayala v. Antelope Valley Newspapers, Inc., 59 Cal.4th 522 (2014), decided in late June 2014.

A petition for rehearing was denied in early December 2014, and a petition for review was filed in late December 2014. Here's the link to the Supreme Court's docket (No. S223373).  The deadline to grant or deny review will fall in late February 2015 (absent any extensions of time).  UPDATE: On February 11, 2015, the petition for review was denied. 

In related news, in September 2014, the Supreme Court declined to review the Court of Appeal's opinion in Hall v. Rite Aid Corp., 226 Cal.App.4th 278 (2014), a thirteenth post-Brinker opinion of note. In Hall, the Court of Appeal (Fourth Appellate District, Division One) reversed the trial court's order decertifying the class in a suitable seating case. 

At some point, I intend to update my list of post-Brinker opinions to include both of these developments. 

New UCL "unlawful" prong opinion: Audio Visual Services Group, Inc. v. Superior Court

In Audio Visual Services Group, Inc. v. Superior Court, ___ Cal.App.4th ___ (Jan. 21, 2015), the Court of Appeal (Second Appellate District, Division Three) held that the trial court should have sustained the defendant's demurrer to the plaintiff's UCL "unlawful" prong claim, without leave to amend, because the "borrowed" municipal ordinance did not apply to the plaintiff.  See slip op. at 8-14.

The Court did not consider whether the defendant's conduct might be "unfair," even if not "unlawful," as Cel-Tech allows, presumably because the plaintiff did not plead an "unfair" prong violation.  See id. at 14-15.  The Court had no problem with the idea that a municipal ordinance can form the predicate of a UCL "unlawful" prong claim. 

U.S. Supreme Court denies cert. in class arbitration case: CLS Transportation Los Angeles LLC v. Iskanian

Last June, the California Supreme Court handed down its opinion in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (Jun. 23, 2014), a wage and hour class action.  The Court held that a no-class-action arbitration clause in an employment agreement was enforceable under Concepcion, and that Concepcion had abrogated the Court's earlier opinion to the contrary in Gentry v. Superior Court, 42 Cal.4th 443 (2007).  Iskanian, 59 Cal.4th at 362-66.  (Gentry is discussed in this blog post; Concepcion is discussed here.)  

The Court also held, however, that Concepcion did not mandate individual arbitration of the employee-plaintiff's representative PAGA claim.  Instead, the contractual provision purporting to waive the right to bring such representative actions was unenforceable.   Iskanian, 59 Cal.4th at 378-391.

The defendant filed a cert. petition with the U.S. Supreme Court, attempting to challenge the latter ruling.  The cert. petition was denied yesterday, after one re-list.  CLS Transportation Los Angeles, LLC v. Iskanian, No. 14-341.  Here is the SCOTUSblog case page with links to the petition and other filings. 

In related, but much older, news, the U.S. Supreme Court also denied, last June, the cert. petition in Sonic-Calabasas A, Inc. v. Moreno, No. 13-856, another arbitration-related case.  That cert. petition had challenged the California Supreme Court's decision in Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (2013) (discussed in this blog post).  I did not have a chance to mention this development on my blog.  Things were quite busy for me during the second half of last year. 

Ninth Circuit addresses UCL "unfair" prong: City of San Jose v. Office of the Commissioner of Baseball

In City of San Jose v. Office of the Commissioner of Baseball, ___ F.3d ___ (9th Cir. Jan. 15, 2015), the Ninth Circuit affirmed the district court's dismissal of state and federal antitrust claims under the baseball exemption, which Judge Kozinski described as "one of federal law's most enduring anomalies."  Slip op. at 3.  

The opinion disposed of the UCL claim as well, in this passage: 

San Jose also alleges a violation of California’s unfair competition law (UCL). However, under California law, “[i]f the same conduct is alleged to be both an antitrust violation and an ‘unfair’ business act or practice for the same reason—because it unreasonably restrains competition and harms consumers—the determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not ‘unfair’ toward consumers.” Chavez v. Whirlpool Corp., 113 Cal. Rptr. 2d 175, 184 (Ct. App. 2001). An independent claim under California’s UCL is therefore barred so long as MLB’s activities are lawful under the antitrust laws.

Id. at 11.

I've explained before that Chavez is inconsistent with Cel-Tech on this point.  The issue may be resolved by the California Supreme Court in the Cipro matter, which is fully briefed and awaiting oral argument.  In re Cipro Cases I & II, No. S198616.  My amicus brief for CAOC in Cipro discusses the issue.  

Supreme Court takes up UCL public prosecutor action: Solus Industrial Innovations v. Superior Court

Happy New Year to all readers of this blog!  I hope everyone had a great holiday season. 

On Wednesday, January 14, 2015, the Supreme Court granted review in Solus Industrial Innovations v. Superior Court (People), No. S222314.  The Court's two newest justices joined in the unanimous vote to take up the case.

In this UCL public prosecutor action, the Orange County District Attorney seeks civil penalties against an employer for violating California's workplace safety standards.  In its original opinion, the Court of Appeal (Fourth Appellate District, Division Three) held that the UCL claim was preempted by Fed/OSHA (the federal Occupational Safety and Health Act of 1970 (29 U.S.C. § 651 et seq.)).

My post on the Court of Appeal's original opinion is here.

In July, the Supreme Court issued a "grant and transfer" order directing the Court of Appeal to "reconsider the matter in light of Statutes 1972, chapter 1084, pp. 2020-2021."    My post on the "grant and transfer" order is here. 

In September, the Court of Appeal issued a new opinion in which it again concluded that the UCL claim was preempted.  Solus Industrial Innovations LLC v. Superior Court (People), 229 Cal.App.4th 1291 (2014), review granted.   The District Attorney petitioned for review, and the Supreme Court has now taken up the case on the merits.