The UCL Practitioner

Ninth Circuit addreses UCL extraterritorial reach: AT&T Mobility LLC v. AU Optronics Corp.

In AT&T Mobility LLC v. AU Optronics Corp., ___ F.3d ___ (9th Cir. Feb. 14, 2013), the Ninth Circuit took up one of the indirect-purchaser opt-out cases in the LCDs price-fixing matter, and held as follows:

To the extent a defendant’s conspiratorial conduct is sufficiently connected to California, and is not “slight and casual,” the application of California law to that conduct is “neither arbitrary nor fundamentally unfair,” and the application of California law does not violate that defendant’s rights under the Due Process Clause. See Allstate Ins. Co. v. Hague, 449 U.S. 302, 312–13 (1981).

Slip op. at 4.  The Court reinstated the action, which sought recovery for purchases made outside California of mobile handsets with price-fixed LCD screens.  Id. at 8-17.  The opinion addressed only the due process question, and not the choice-of-law question.  See id. at 15.  If California law is ultimately chosen, this could allow nationwide indirect purchaser class actions in cases where the conspiracy originated from or was substantially connected to this state.

The opinion focuses on the Cartwright Act claim, but it has this footnote on the UCL:

We focus on Plaintiffs’ claims under the California Cartwright Act, Cal. Bus. & Prof. Code §§ 16700–16770 (Cartwright Act or Act), but the principles articulated herein apply equally to Plaintiffs’ claims under California’s Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq. (UCL). The UCL provides a cause of action for harms caused by “any unlawful, unfair or fraudulent business act or practice.” Id. It thereby “‘borrows’ violations from other laws by making them independently actionable as unfair competitive practices.” Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 943 (Cal. 2003). Because a violation of the Cartwright Act is, by definition, actionable under the UCL, we do not belabor our analysis in this case with respect to Plaintiffs’ UCL claims.

Slip op. at 4 n.1 (emphasis added). 

See this post for more on the UCL's extraterritorial reach.

"Class Dismissed"

The April 2012 issue of California Lawyer has an article by Pamela MacLean on the Ninth Circuit's decision in Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012). 

As I mentioned in this blog post, rehearing was denied in Mazza on March 16, 2012.

Incidentally, on March 6, 2012, Judge David O. Carter of the Central District of California issued a very interesting order construing Mazza.  Bruno v. Quten Research Inst., LLC, ___ F.R.D. ___, 2011 WL 5592880, *15-*26 (C.D. Cal. Nov. 14, 2011). (For some reason, Westlaw appended the March 2012 order to the end of an earlier order and gave them both the same cite. The new order starts at page *15.)

Judge Carter denied the defendants' motion to decertify the nationwide class and/or for reconsideration of the class certification order based on Mazza:

Defendants' argument fails because Mazza is not a material change in the law, given that: (1) Mazza did not and could not change state substantive law articulated by the California Supreme Court; (2) Mazza did not and could not overrule Ninth Circuit precedent interpreting state law; and (3) Defendants' interpretation of Mazza contradicts the express purpose of the Class Action Fairness Act. Alternatively, Mazza is distinguishable from the present case because Defendants' briefing in the prior motion differs from that of the defendants in Mazza and the facts of this case differ from those in Mazza.

Id. at *15 (emphasis in original).  In short, Judge Carter recognized what many commentators have also perceived:  Mazza misapplied California choice-of-law rules.   The complete order is worth a careful read. 

Supreme Court addresses UCL's extraterritorial reach: Sullivan v. Oracle Corp.

Yesterday, the Supreme Court handed down Sullivan v. Oracle Corp., ___ Cal.4th ___ (Jun. 30, 2011), in which it addressed the UCL's extraterritorial reach:

In this proceeding we address, at the request of the United States Court of Appeals for the Ninth Circuit, questions about the applicability of California law to nonresident employees who work both here and in other states for a California-based employer.  We conclude the Labor Code’s overtime provisions (id., §§ 510, 1194) do apply to plaintiffs’ claims for compensation for work performed in this state, and that the same claims can serve as predicates for claims under California’s unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.).  We also conclude that plaintiffs’ claims for overtime compensation under the federal Fair Labor Standards Act of 1938 (FLSA) (29 U.S.C. § 201 et seq.; see id., § 207(a)) for work performed in other states cannot serve as predicates for UCL claims.

Slip op. at 1 (footnote omitted).  Time permitting, I may have more on this opinion in a later post.

Ninth Circuit withdraws opinion in Sullivan v. Oracle Corp. and certifes questions to California Supreme Court

Today, the Ninth Circuit issued an order withdrawing its opinion in Sullivan v. Oracle Corp., 547 F.3d 1177 (9th Cir. 2008), and certifying these three questions to the California Supreme Court under Rule of Court 8.548:

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?

The order issued after the defendant filed petitions for rehearing and en banc rehearing. It is unclear from the order whether the panel opinion will be reinstated if the Supreme Court declines to accept the certified questions, but a second order indicates that the petitions have both been "dismissed as moot." My original blog post on the panel opinion is here.

Ninth Circuit refuses to enforce forum selection clause in UCL/CLRA case: Ramkissoon v. AOL LLC

In Ramkissoon  v. AOL LLC, 552 F.3d 1077 (9th Cir. Jan. 16, 2009), the Ninth Circuit refused to enforce a contract provision selecting Virginia state courts as the forum for all claims against AOL.  California's interest in enforcing its broad consumer protection statutes outweighed any interest of Virginia.  Virginia has no procedure for consumer class actions; by contrast, the CLRA expressly prohibits waiver of the rights conferred.  Civ. Code §1781. Hence, the majority concluded that the choice-of-law clause was unenforceable as well.  One judge believed further development of the record was needed to confirm that the plaintiffs were California consumers to whom the CLRA would apply in the first place.

UPDATE:  I was reading this opinion again and noticed that in his concurrence, Judge Bea cited a law blog -- The Wall Street Journal Law Blog.  552 F.3d at 1088 n.3. 

New federal nationwide class certification decision: Mazza v. American Honda Motor Co.

The court (Judge Valerie Baker Fairbank) granted nationwide class certification of UCL and CLRA claims in an auto defect action, Mazza v. American Honda Motor Co., ___ F.R.D. ___, 2008 WL 5256432 (C.D. Cal. Dec. 16, 2008). Many thanks to the blog reader who forwarded the order.

New Ninth Circuit decision on the UCL's extraterritorial operation: Sullivan v. Oracle Corp.

In Sullivan v. Oracle Corp., ___ F.3d ___ (9th Cir. Nov. 6, 2008), the Ninth Circuit addressed whether non-residents of California may invoke the UCL's "unlawful" prong against a defendant with its principal place of business in California. According to the Ninth Circuit (opinion by Judge Fletcher), the answer depends on the underlying, "borrowed" law.

After a lengthy analysis, the court held that non-Californians may invoke the Labor Code directly for work performed in California (slip op. at 15266-75), and therefore may also state a UCL "unlawful" prong claim for Labor Code violations (id. at 15276). However, they could not invoke the UCL's "unlawful" prong to obtain redress for violation of the federal Fair Labor Standards Act for work performed outside California. Id. at 15276-77 (citing Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214 (1999)). The opinion concludes:

We reverse the district court’s grant of summary judgment on Plaintiffs’ first two claims. We hold that California’s Labor Code applies to work performed in California by nonresidents of California. We affirm the district court’s grant of summary judgment on Plaintiffs’ third claim. We hold that § 17200 does not apply to allegedly unlawful behavior occurring outside California causing injury to nonresidents of California.

Id. at 15277 (emphasis added). 

The opinion spends little time discussing the fact that the defendant's principal place of business is in California or the possibility that its FLSA violations may have emanated from California.  That factor could have impacted the analysis of the UCL's extraterritorial application under Norwest.  The opinion seems to assume that for non-Californians performing work outside California, any FSLA violations also necessarily emanated from outside California.  I do not think that is necessarily true in every case against a California-based defendant who employs workers out of state.  For more discussion of the Norwest decision, see this blog post. 

New Illinois Supreme Court class certification decision: Barbara's Sales, Inc. v. Intel Corporation

In Barbara's Sales, Inc. v. Intel Corporation, ___ N.E.2d ___ (Nov. 29, 2007), the Illinois Supreme Court applied Illinois choice-of-law principles and declined to apply California law (including the UCL and CLRA) in a putative nationwide class action against Intel:

[T]he parties concede that Illinois and California laws conflict and this conflict may have an outcome-determinative difference. In short, plaintiffs need not prove actual deception of the named plaintiffs under California law as found in California’s Unfair Competition Law, as they would under Illinois law as found in the Illinois Consumer Fraud Act. Compare 815 ILCS 505/10a (West 2002); Shannon v. Boise Cascade Corp., 208 Ill. 2d 517, 525 (2005) (“deceptive advertising cannot be the proximate cause of damages under the Act unless it actually deceives the plaintiff”); with Cal. Bus. & Prof. Code §17200 (Deering 2007); Massachusetts Mutual Life Insurance Co. v. Superior Court, 97 Cal. App. 4th 1282, 1288, 119 Cal. Rptr. 2d 190, 193 (2002) (individualized proof of deception and reliance is not required under the Unfair Competition Law). Stated differently, specific class members proceeding under California law need prove only an inference of “common reliance” on the part of the class as opposed to actual reliance on any particular deception. Massachusetts Mutual Life Insurance Co., 97 Cal. App. 4th at 1293, 119 Cal. Rptr. 2d at 198. Because California and Illinois law conflict, we next look to the conflicts law of our forum state, Illinois. Esser v. McIntyre, 169 Ill. 2d 292, 297 (1996); Nelson v. Hix, 122 Ill. 2d 343 (1988); Restatement (Second) of Conflict of Laws §122 (1971).

....

[A]s to the policies and interests of California, it is undoubtedly true that California has an interest in regulating Intel, as its principal place of business is located there. Further, it is also true that California has a consumer-friendly consumer protection law–as a suit may be brought alleging “common reliance” rather than “actual deception”–which may inure to the benefit of plaintiffs. However, neither California consumers, nor the interests of California in regulating Intel, will necessarily suffer if Illinois law is applied in the instant matter. California has no interest in extending its laws to noncitizens and to actions that occurred outside of California borders. Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214, 222, 85 Cal. Rptr. 2d 18, 23 (1999). Moreover, the courts of California will likely have the opportunity to decide this issue under its own law. The record reveals another putative nationwide class action with allegations similar to those advanced in this case. This class action seeks a nationwide application of California’s consumer protection statutes and is currently pending in California state court. Skold v. Intel Corp., Case No. RG 04 145635 (Cal. Super. Ct. Alameda County).

Slip op. at 12, 14-15. The Illinois Supreme Court affirmed the trial court's decision to apply Illinois law and to limit the class to Illinois residents, but then determined that class certification was not appropriate. The opinion does not mention Proposition 64 or the two pending California Supreme Court cases, Tobacco and Pfizer, in which the "reliance" question is expected to be addressed.

[Via How Appealing.]