The UCL Practitioner

Supreme Court takes up UCL standing case: Goonewardene v. ADP

Last week, on February 15, 2016, the Supreme Court granted review in Goonewardene v. ADP, No. S238941.  In this case, the Court of Appeal affirmed dismissal of the plaintiff's UCL and FAL claims for lack of standing, but allowed several other claims to move forward.  Goonewardene v. ADP, LLC, 5 Cal.App.4th 154 (2016).  My original post on the opinion is here.

I haven't seen the petition for review, but it's possible that it focused on the other claims considered in the Court of Appeal opinion, rather than the UCL and FAL claims. This is the issue on review, according to the docket:

Does the aggrieved employee in a lawsuit based on unpaid overtime have viable claims against the outside vendor that performed payroll services under a contract with the employer?

Under Rule of Court 8.115(e), as amended last year, the Court of Appeal opinion remains citable despite the grant of review, although it lacks precedential effect. 

Could Nordstrom invoke the UCL over a Trump tweet?

I was asked this question today by a Politico reporter, and was subsequently quoted in his article, "Trump blasts Nordstrom for dropping Ivanka's clothing line." 

Although I have other serious concerns about this type of tweet by a sitting president, I have a hard time seeing a UCL claim for Nordstrom in this fact pattern.   The article sums up why.   (Welcome, Politico readers!)

Ninth Circuit considers CLRA attorneys' fees: Gonzales v. CarMax Auto Superstores, LLC

Back in October, I reported on an opinion in which the Ninth Circuit determined that the defendant had violated the CLRA and directed that summary judgment be entered in the plaintiff's favor on the CLRA claim.  Gonzales v. CarMax Auto Superstores, LLC, 840 F.3d 644 (9th Cir. 2016). 

Thereafter, the plaintiff invoked the CLRA's attorneys' fees provision by moving for fees incurred on appeal. In response, the defendant argued that fees could not be awarded because it offered to correct the violation after receiving the plaintiff's CLRA notice letter, in accordance with Civil Code section 1782.  The Ninth Circuit disagreed, observing that the plaintiff's complaint sought injunctive relief only, and not damages:

In the present case, Gonzales’ Second Amended Complaint did “not seek damages of any kind” on his CLRA claim, but rather sought only an “injunction prohibiting acts or practices which violate the CLRA.” As the California Supreme Court noted, “section 1782, subdivision (d) contemplates the filing of a CLRA action for injunctive relief alone, and such actions are not subject to the requirements of subdivisions (a) and (b) of notice and allowance for voluntary correction,” which apply only to an action for damages. Meyer v. Sprint Spectrum L.P., 200 P.3d 295, 301 (Cal. 2009). Because Gonzales sought only injunctive relief for violation of the CLRA, CarMax’s correction offer does not bar Gonzales from recovering attorney’s fees.

Gonzales v. CarMax Auto Superstores, LLC, ___ F.3d ___ (9th Cir. Jan. 6, 2017), slip op. at 6 (footnotes omitted).  The panel remanded the case to the district court for it to rule in the first instance on the other questions raised by the fee motion.

Interesting UCL standing decision from December: Veera v. Banana Republic, LLC

During a very busy December, I missed a highly interesting new UCL standing decision.  In Veera v. Banana Republic, LLC, 6 Cal.App.5th 907 (Dec. 15, 2016), the plaintiffs shopped at Banana Republic after seeing a "40% off" sign in the window, only to be told at the check-out counter that the discount was limited to certain merchandise. "[O]ut of frustration and embarrassment," they bought at least one item at full price anyway.  The Court of Appeal (Second Appellate District, Division Four) reversed summary judgment in the defendant's favor, holding that the plaintiffs had raised a triable issue on whether they suffered "economic injury" within the meaning of Kwikset.    

[H]ere, plaintiffs ... bought certain items at full price, even though (assuming plaintiffs’ evidence of misleading advertising is true) Banana Republic sold those items to them in violation of the UCL, FAL, and CLRA.  The economic harm thus suffered is the difference between the advertised price plaintiffs should have been charged, and the full price plaintiffs actually paid.  (See Kwikset, supra, 51 Cal.4th at p. 325 [“If a party has alleged or proven a personal, individualized loss of money or property in any nontrivial amount, he or she has also alleged or proven injury in fact.”].)

Slip op. at 14.  With one judge dissenting, the Court rejected the defendant's argument that its successful "bait and switch" tactic eliminated standing because the plaintiffs knew the actual price when they paid it:

Plaintiffs’ evidence portrays, in essence, a type of “bait and switch” advertising.  (See Hawaii Community Federal Credit Union v. Keka (2000) 11 P.3d 1, 15 [“[t]he term ‘bait and switch’ is usually applied in the context of advertising goods or services with the intent not to sell them as advertised”]; Stern, Cal. Practice Guide:  Bus. & Prof. Code Section 17200 Practice (The Rutter Group 2016) § 4:35 [“A ‘bait and switch’ is a form of false advertising in which advertisements may not be bona fide because what the merchant intends to sell is significantly different from that which drew the potential customer in.  [Citation.]”].)  In such a scheme, one of the dangers is that the consumer will rely on the deceptive advertising to decide to buy merchandise.  Then, when the deception is revealed, the consumer, now invested in the decision to buy and swept up in the momentum of events, nonetheless buys at the inflated price, despite his or her better judgment. 

If such a scheme is unsuccessful – that is, if the consumer is able to resist the influence of the momentum to buy created by the chain of events flowing from the false advertising – the consumer has no standing to bring a private action under Proposition 64, because the consumer has suffered no economic injury. That result is consistent with the purpose of Proposition 64, which was intended to curb “use [of the UCL] by unscrupulous lawyers who exploited the generous standing requirement . . . to file ‘shakedown’ suits to extort money from small businesses.”  (Tobacco II, supra, 46 Cal.4th at p. 316.)  .... 

But under Banana Republic’s theory, if the scheme is successful – that is, if the consumer is influenced by the momentum to buy created by the false advertising, and therefore buys at the inflated price—the consumer, as a matter of law, also has no standing, because just before money changed hands, when the deception was finally revealed, the consumer learned the full price of the item bought.  Under this theory, only in the very rare case when the advertiser surreptitiously charges an inflated price, which the consumer does not realize he has paid until after money has changed hands, does the consumer have standing to bring a private action.  This result seems at odds with the intent of Proposition 64, which “did not propose to curb the broad remedial purpose of the UCL or the use of class actions to effect that purpose, but targeted only the specific abuse described above.”  (Tobacco II, supra, 46 Cal.4th at p. 317.)

In sum, we conclude that plaintiffs have raised a triable issue whether they lost “money or property sufficient to qualify as injury in fact, i.e., economic injury,” and whether “that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.”  (Kwikset, supra, 51 Cal.4th at p. 322.)

Id. at 18-19. 

This is an interesting case.  The record appears to show that Banana Republic did, in fact, post unqualified "40% off" signs in its windows for at least a few days during the class period.  Id. at 20.  If that happened, and assuming the named plaintiffs have standing, then the remedy is for the discount to simply be given to everyone who made a full-price purchase on those days, which should be recorded in the defendant's records, at least for non-cash purchases.  It looks like the next step here is class certification. 

Ninth Circuit approves magistrate judge's jurisdiction, but strikes down class settlement: Koby v. ARS National Services, Inc.

In Koby v. ARS National Services, Inc., ___ F.3d ___ (9th Cir. Jan. 25, 2017), the Ninth Circuit, on its own motion, considered whether the named plaintiffs in a class action have authority to consent to a magistrate judge's exercise of jurisdiction, and to bind the unnamed class members to that decision.  The panel concluded that they do, and that the unnamed class members are not considered "parties" for purposes of 28 U.S.C. section 636(c)(3):

We conclude that the statute requires the consent of the named plaintiffs alone and join three other circuits that have reached the same conclusion. See Day v. Persels & Associates, LLC, 729 F.3d 1309, 1316 (11th Cir. 2013); Dewey v. Volkswagen Aktiengesellschaft, 681 F.3d 170, 181 (3d Cir. 2012); Williams v. General Electric Capital Auto Lease, Inc., 159 F.3d 266, 269 (7th Cir. 1998).

As a purely linguistic matter, § 636(c)(1)’s reference to the consent of “the parties” could be read to encompass both the named plaintiffs and the absent class members, for the term does not have a single fixed meaning. In some contexts absent class members are treated as parties, see In re Cement Antitrust Litigation, 688 F.2d 1297, 1307–10 (9th Cir. 1982) (judicial recusal statute), while in other contexts they are not, see Snyder v. Harris, 394 U.S. 332, 340 (1969) (diversity jurisdiction statute). As the Supreme Court has observed, absent class members may be treated as parties “for some purposes and not for others.” Devlin, 536 U.S. at 10.

Viewing § 636(c) as a whole, it seems clear that Congress did not intend absent class members to be treated as parties in this context. .... 

Slip op. at 9.  The Court also rejected the argument of an amicus curiae that "§ 636(c) violates Article III of the Constitution by permitting magistrate judges to exercise jurisdiction over class actions without obtaining the consent of each absent class member."  Id. at 12-14.

The Court then turned to the objector's challenges to the magistrate judge's order approving the class action settlement, which provided for "worthless injunctive relief" but no other remedy (id. at 1), and held that the settlement should not have been approved: 

The magistrate judge abused her discretion by approving the settlement in this case. The settlement should not have been approved for one primary reason: There is no evidence that the relief afforded by the settlement has any value to the class members, yet to obtain it they had to relinquish their right to seek damages in any other class action.

Id. at 15.