The UCL Practitioner

Court of Appeal construes UCL's "as a result of" standing requirement: Orcilla v. Big Sur, Inc.

This is another case from earlier in the year. 

In Orcilla v. Big Sur, Inc., 244 Cal.App.4th 982 (Feb. 11, 2016), the plaintiffs sued their bank (and other defendants) for wrongful foreclosure, asserting UCL and other claims.  Id. at 990-93.   The bank raised a standing challenge to the UCL claim, arguing that the plaintiffs had not adequately alleged that they "lost money or property as a result of" any wrongdoing by the bank, as required by Prop. 64 (Bus. & Prof. Code § 17204 (emphasis added)).  According to the bank, the plaintiffs lost their home because they defaulted on their loan, not because of anything the bank did later. Id. at 1012-13.

The Court of Appeal disagreed with this supervening-cause-style argument:

Liberally construed, count 12 and the allegations it incorporates allege that the Bank Defendants engaged in an unlawful or unfair business practice by enforcing the underlying loan and the loan modification agreement, both of which were unconscionable. (Shadoan v. World Savings & Loan Assn. (1990) 219 Cal.App.3d 97, 101-102 [“that a contractual provision is unconscionable may be relevant to the question of whether a party who drafted—and seeks to enforce—the provision, has committed an unfair business practice”].) We have already concluded that the complaint adequately alleges that both agreements were unconscionable. With respect to causation, we can reasonably infer from the allegations that the Orcillas would not have lost the Property if the Bank Defendants had not enforced the unconscionable agreements by way of foreclosure proceedings.

Id. at 1013.  Orcilla thus stands for the proposition that for UCL standing purposes, the defendant's conduct must be a cause of the plaintiff's loss, but it need not be the only cause, or even the primary cause.  This is consistent with ordinary principles of causation in other contexts.

New UCL standing decision: Bower v. AT&T Mobility

In Bower v. AT&T Mobility, LLC, ___ Cal.App.4th ___ (Jun. 29, 2011), the Court of Appeal (Second Appellate District, Division One) addressed UCL standing and applied the Supreme Court's decision in Kwikset Corp. v. Superior Court (Benson), 51 Cal.4th 310 (2011).

New Court of Appeal opinion in Mervyn's on remand

Yesterday, the Court of Appeal (First Appellate District, Division Four) handed down its third opinion (and its second published one) in the case between Mervyn's and Californians for Disability Rights: Californians for Disability Rights v. Mervyn's, LLC, ___ Cal.App.4th ___ (Jul. 30, 2008). In it, the Court held that Mervyn's violated the UCL's "unlawful" prong by failing to comply with the federal Americans with Disabilities Act (42 U.S.C. §§ 12101 et seq.). Today's San Francisco Chronicle has an article on the opinion.

For our purposes, the opinion's discussion of the procedural history is most interesting:

While this case was pending on appeal, the voters of California amended the statute under which the case had been prosecuted. The voters’ enactment, popularly known as Proposition 64, was passed in the California General Election on November 2, 2004, and went into effect the next day. (Cal. Const., art. II, § 10, subd. (a).) At the time this case was tried, the UCL authorized any person acting for the general public to sue for relief from unfair competition. (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 228 (Mervyn’s).) “Standing to bring such an action did not depend on a showing of injury or damage.” (Ibid.) Proposition 64 amended the UCL to limit private enforcement to those who have suffered injury in fact and have lost money or property as a result of such unfair competition. (Ibid.) Proposition 64 did not state whether this new limitation applies to pending cases. (Id. at p. 229.)

On December 6, 2004, Mervyn’s moved to dismiss this appeal upon the claim that Proposition 64’s change in standing requirements apply to pending cases. We denied the motion because new legislative enactments are presumed to operate prospectively, rather than retroactively, to avoid unfair impairment of existing rights and obligations. In July 2006, the California Supreme Court reversed our ruling, upon concluding that application of Proposition 64’s standing requirements to pending cases would not constitute a retroactive application of the law because the initiative measure did not change any existing rights or obligations. (Mervyn’s, supra, 39 Cal.4th at pp. 232-234.) While the measure “withdraws the standing of persons who have not been harmed to represent those who have,” it did not impair any rights because lack of standing is a jurisdictional challenge that can be raised at any time in a legal proceeding. (Id. at pp. 232-233.) The high court reversed our denial of Mervyn’s motion to dismiss the appeal and remanded the case to us “for further proceedings consistent” with its opinion. (Id. at p. 234.)

On remand to this court, CDR asked leave to move for substitution of plaintiff on appeal—it did not contend that it had standing to appeal in its own right as a party aggrieved by the judgment under Code of Civil Procedure section 902. We denied CDR’s request and granted Mervyn’s motion to dismiss the appeal for lack of standing by CDR. CDR petitioned for review in the Supreme Court. The Supreme Court granted review and transferred the case to us with directions to vacate our decision and to reconsider the cause in light of United Investors Life Ins. Co. v. Waddell & Reed, Inc. (2005) 125 Cal.App.4th 1300 (United Investors) and Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235 (Branick).

United Investors held that a plaintiff has standing to appeal dismissal of a UCL complaint following demurrer even if it has no authority to maintain its suit in superior court, because plaintiff “is sufficiently aggrieved by the dismissal of its complaint that it has standing to appeal under Code of Civil Procedure section 902.” (United Investors, supra, 125 Cal.App.4th at p. 1305.) Branick held that Proposition 64 does not forbid amendment of complaints in the trial court to substitute new plaintiffs for those who have lost standing under the new measure. (Branick, supra, 39 Cal.4th at pp. 241-242.) The “ordinary rules governing the amendment of complaints” apply. (Id. at p. 239.)

Upon reconsideration, we denied Mervyn’s motion to dismiss the appeal in a ruling we issued on April 17, 2007. We concluded that the two cases referenced by the high court, “when read in conjunction, lead to the following conclusion: CDR is a party aggrieved by entry of judgment against it and thus has standing to appeal the judgment even if CDR has no authority to maintain its suit in superior court (United Investors, supra, 125 Cal.App.4th at pp. 1304-1305); and, if CDR succeeds in its effort to reverse the judgment on appeal, it may seek leave in the superior court to amend its complaint to substitute a plaintiff who meets the Proposition 64 standing requirement.” (Branick, supra, 39 Cal.4th at pp. 240-244.) Mervyn’s petitioned for review in the Supreme Court, and the petition was denied on July 18, 2007.

The parties completed briefing on the merits of the appeal in January 2008, and the matter was argued and submitted for decision. We now turn to the trial court’s factual findings following the bench trial, and then proceed to discuss CDR’s claims raised on appeal.

Slip op. at 3-4. After concluding that the trial court erred by entering judgment in Mervyn's favor, the Court went on:

As discussed above, CDR lost standing as a plaintiff when the voters adopted Proposition 64, which amended the UCL law to limit private party lawsuits to those who have lost money or property as a result of alleged unfair competition. (Mervyn’s, supra, 39 Cal.4th at p. 227.) We therefore cannot remand the case with directions to enter judgment in CDR’s favor. However, CDR is entitled to an opportunity to amend its complaint to substitute a new plaintiff with standing. (Branick, supra, 39 Cal.4th at pp. 239, 242-243.) We therefore remand the case to the trial court so that CDR may file a motion for leave to amend its complaint. “On remand, should plaintiff[] in fact file a motion to amend, the superior court should decide the motion by applying the established rules governing leave to amend.” (Id. at p. 238, citing Code Civ. Proc., § 473.) If the court grants the motion, the court shall enter judgment in favor of the newly substituted plaintiff and determine the appropriate scope of injunctive relief. In fashioning injunctive relief, the court shall consider appropriate alternative means for making merchandise available to disabled individuals who are denied physical access to the merchandise.

Id. at 30-31.

Supreme Court denies review this time in Californians for Disability Rights v. Mervyn's

On Wednesday, July 18, the Supreme Court denied a petition for review in Californians for Disability Rights v. Mervyns LLC, no. S153088. Although I haven't seen the petition, my guess is that Mervyn's challenged the Court of Appeal's unpublished opinion dated April 17, 2007, which held that Californians for Disability Rights was an "aggrieved party" and thus had standing to continue to pursue its appeal, even if it lost its trial-level standing due to Prop. 64. Here's my original blog post on that opinion. An article at the news site cbs5.com confirms this.

"Jurists Debate Who Can Sue After Prop. 64": Californians for Disability Rights v. Mervyn's LLC

Today's Daily Journal has this article (subscription) on the Court of Appeal's unpublished opinion in Californians for Disablitity Rights v. Mervyn's LLC (no. A106199) (Apr. 17, 2007). As I explained in this lengthy post, the Supreme Court issued a "grant and transfer" order after the Court of Appeal refused to allow Californians for Disability Rights to substitute a new plaintiff to pursue the case on appeal, and instead dismissed the appeal entirely, leaving CDR with no remedy in any court.

In its unpublished opinion, the Court of Appeal determined that neither dismissal nor substitution of parties would be necessary:

This case has had a strange procedural history on appeal. We denied Mervyn’s motion to dismiss the appeal, and the Supreme Court reversed. We then granted Mervyn’s motion to dismiss the appeal, and the Supreme Court reversed. This odd result is largely a product of the difficulty of applying Proposition 64—which is silent about its intended effect on pending cases—to particular cases in various stages of litigation. ....

[United Investors Life Insurance Co. v. Waddell & Reed, Inc. (2005) 125 Cal.App.4th 1300 and Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235], when read in conjunction, lead to the following conclusion: CDR is a party aggrieved by entry of judgment against it and thus has standing to appeal the judgment even if CDR has no authority to maintain its suit in superior court (United Investors, supra, 125 Cal.App.4th at pp. 1304-1305); and, if CDR succeeds in its effort to reverse the judgment on appeal, it may seek leave in the superior court to amend its complaint to substitute a plaintiff who meets the Proposition 64 standing requirement. (Branick, supra, 39 Cal.4th at pp. 240-244.)

....

We shall consider the merits of the appeal. Proposition 64 does not compel dismissal of the appeal given CDR’s appellate standing as an aggrieved person. (Code Civ. Proc., § 902.) Briefing on the merits was suspended when Mervyn’s filed its motion to dismiss the appeal. Only CDR’s opening brief has been filed. Briefing shall resume with the filing of Mervyn’s respondent’s brief.

Slip op. at 4, 5-6.

Two unpublished Prop. 64 opinions: Paz v. Sanders and Bivens v. Sanford

On January 9 and 10, the Court of Appeal issued two unpublished opinions, both of which address amending the complaint to substitute an affected plaintiff who can satisfy Prop. 64's standing requirements:

• In Paz v. Sanders Oldsmobile-Cadillac, Inc. (Jan. 9, 2007) (Fifth Appellate District), the trial court held in 2005 that Prop. 64 did not apply retroactively to pending cases. Under Mervyn's, the Court of Appeal had to reverse that holding as well as the resulting judgment in the plaintiffs' favor. It then held, in light of Branick, that the appropriate procedure was to remand the case to the trial court for it to determine, in the first instance, whether leave to amend to substitute an affected plaintiff would be appropriate. Slip op. at 15-16. What's also interesting about this opinion is the fact that, consistent with Mervyn's, the court cited the pre-Prop. 64 "likely to deceive" formulation of the UCL's "fraudulent" prong. Id. at 17. (A copy of the trial court's January 2005 statement of decision in this case is accessible here; my February 2005 post on this case is here.)

• In Bivens v. Sanford L.P. (Jan. 10, 2007) (Second Appellate District, Division Seven), the Court of Appeal held that the trial court abused its discretion by refusing to grant leave to amend to substitute an affected plaintiff. Slip op. at 5-7 (citing Branick and Foundation for Taxpayer & Consumer Rights v. Nextel Communications, Inc., 143 Cal.App.4th 131 (2006)). It reversed the judgment that the trial court had granted on the pleadings, and along with it, the award of costs in the defendant's favor. Id. at 7. The plaintiff had arged that "to allow costs arising from a judgment preordained by the passage of Proposition 64 amounted to an unlawful bill of attainder." Id. at 4. That's an interesting argument, but the Court of Appeal did not have to address it. (My December 2004 post on the trial court's tentative ruling on Prop. 64 retroactivity is here, and the tentative ruling itself is here.)

Thanks to the reader who emailed me about these unpublished opinions.

Court of Appeal grants motion to dismiss in Californians for Disability Rights v. Mervyn's

Last week, the Court of Appeal (First Appellate District, Division Four) heard oral argument on whether plaintiff/appellant Californians for Disability Rights should be permitted to substitute an affected party at the appellate level, rather than at the trial court level, to meet Prop. 64's standing requirements. Californians for Disability Rights v. Mervyn's, no. A106199. Yesterday, the court issued this order:

Appellant's request to grant leave to move for substitution of plaintiff in this court, or in the alternative for an order vacating the judgment and remanding the case to the trial court with leave to permit amendment, is denied. The appeal is dismissed for lack of standing.

You may recall that when Prop. 64 passed, this appeal was already pending. The Court of Appeal's original opinion in Mervyn's came after the defendant moved to dismiss the appeal, arguing that Prop. 64 had stripped away the plaintiff/appellant's standing. It seems that the motion to dismiss has now, at long last, been granted. My earlier coverage of the post-remand proceedings in Mervyn's is here and here.

New Prop. 64 amendment decision: Foundation for Taxpayer and Consumer Rights v. Nextel Communications

In Foundation for Taxpayer and Consumer Rights v. Nextel Communications, Inc., ___Cal.App.4th ___ (Sept. 21, 2006), the Court of Appeal (Second Appellate District, Division One) relied on Branick v. Downey Savings & Loan Association, 39 Cal.4th 235 (2006) in holding that the trial court abused its discretion by refusing to grant the unaffected plaintiff leave to amend its complaint to substitute an affected plaintiff who could satisfy Prop. 64's standing requirements:

In general, courts liberally allow amendments for the purpose of permitting plaintiffs who lack or have lost standing to substitute as plaintiffs the true real parties in interest. (Branick v. Downey Savings and Loan Association, supra, 39 Cal.4th at p. 243; Klopstock v. Superior Court (1941) 17 Cal.2d 13, 19-21.) “The important limitation on the rule just mentioned is that the plaintiff proposed to be substituted may not ‘state facts which give rise to a wholly distinct and different legal obligation against the defendant.’ (Klopstock v. Superior Court, supra, 17 Cal.2d 13, 20.)” (Branick v. Downey Savings and Loan Association, supra, 39 Cal.4th at p. 243.) But “nothing more is meant [by that limitation] than that the defendant not be required to answer a wholly different legal liability or obligation from that originally stated.” (Klopstock v. Superior Court, supra, 17 Cal.2d at p. 20.)

Applying these standards, we conclude that it was an abuse of discretion to deny the FTCR leave to amend. The proposed amendment would not have required Nextel to answer a wholly different legal liability or obligation from that originally stated. On the contrary, the FTCR sought to add a plaintiff, Campbell, who is allegedly a member of the group of injured persons whom the FTCR originally sought to represent, and who alleges the same misconduct originally alleged by the FTCR. Amendments of this kind are liberally permitted, and there was no reason to prohibit the amendment in this case.

Slip op. at 4-5 (hyperlink added). This is the very kind of amendment that will be sought in most pre-Prop. 64 UCL actions filed by unaffected plaintiffs. Foundation for Taxpayer and Consumer Rights suggests that leave to amend should be granted in virtually every case.

New Prop. 64 retroactivity decision: California ex rel. Grayson v. Pacific Bell Tel. Co.

In California ex rel. Grayson v. Pacific Bell Tel. Co., ___ Cal.App.4th ___ (Aug. 31, 2006), the Court of Appeal (Third Appellate District) held that Prop. 64 applies retroactively to pending cases. Although decided more than a month after Mervyn's, the decision asserts that "the [retroactivity] issue is awaiting resolution by the Supreme Court." Slip op. at 25 & n.4 (listing cases, including Mervyn's and Branick, that are supposedly still pending before the Supreme Court). I'm very surprised no one at the Court caught this error. Thanks to the reader who emailed to bring this case to my attention.

UPDATE: On September 12, 2006, the Court of Appeal issued a modification order. It deleted the discussion of Prop. 64 retroactivity in its entirety, including footnote 4, and replaced it with this sentence: "The Supreme Court rejected this contention in Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227, holding 'the new provisions do apply to pending cases.'"

New UCL/Prop. 64 decision: R&B Auto Center, Inc. v. Farmers Group, Inc.

On Friday, in R&B Auto Center, Inc. v. Farmers Group, Inc., ___ Cal.App.4th ___ (Jun. 9, 2006), the Court of Appeal (Fourth Appellate District, Division Three) reinstated a UCL claim for injunctive relief, holding that the trial court had improperly employed the motion in limine procedure to dismiss that cause of action. The opinion has several interesting components:

First, the Court held that the plaintiff's UCL claim was separate and distinct from its insurance bad faith/breach of contract claim:

After the trial court ruled on the motions in limine and held that there was no coverage as a matter of law, it also dismissed the three causes of action suggested by [defendant] Truck Insurance — those for breach of contract, bad faith and unfair competition. We cannot see why a ruling that the insurance contract provided no coverage for the Peralta litigation claim should translate into a ruling that [plaintiff] R & B cannot state a cause of action seeking to enjoin unfair business practices. Whether the insurance contract provided for lemon law coverage for used car sales was a question of law that the court readily answered by reviewing that contract. But the fact that the insurance contract limited lemon law coverage to new car sales hardly proves that Truck Insurance does not engage in unfair business practices in the sale of its new car lemon law coverage to used car dealerships. The court erred in disposing of the unfair business practices cause of action just because it held that the insurance contract did not provide coverage for the Peralta litigation.

(Slip op. at 33-34.)

Second, the Court reaffirmed its holding that Prop. 64 applies retroactively to pending cases, in part because the plaintiff conceded the point:

We invited the parties to file supplemental briefs on the retroactivity of Proposition 64 and the effect of any retroactive application on the case before us. The parties all agreed that the proposition is retroactive, citing this court’s opinion in Benson v. Kwikset Corp. (2005) 126 Cal.App.4th 887, review granted April 27, 2005, S132443. The Supreme Court granted review of Benson, and several other cases addressing the retroactivity of Proposition 64, after the filing of the supplemental letter briefs in the matter before us. Pending a Supreme Court decision on the question of retroactivity, the trial court is directed to apply the Proposition 64 statutory amendments to this case.

(Slip op. at 38-39.)

Third, the Court interpreted the "suffered injury in fact and lost money or property" language of Prop. 64:

Truck Insurance says that R & B lacks standing, under Business and Professions Code section 17204, to maintain the unfair competition cause of action because it has not alleged that it has “lost money or property as a result of unfair . . . competition.” With this assertion, we certainly disagree. R & B alleges that it paid premiums for illusory coverage and it had to make payment on a lemon law claim that it would not have had to pay had the Truck Insurance policy said what it was represented to say. This is an allegation of loss caused by the purported misrepresentations concerning the scope of coverage. The standing requirement is met.

(Slip op. at 39-40 (emphasis added).)

Fourth, the Court addressed (without deciding) whether a UCL claim seeking injunctive relief only must satisfy the class certification requirements of Code of Civil Procedure section 382:

Next, Truck emphasizes that R & B cannot seek injunctive relief on behalf of the general public unless it meets the requirements of Code of Civil Procedure section 382, with reference to class actions. .... Truck Insurance states that R & B may only seek class action injunctive relief if it can demonstrate compliance with these requirements. However, Truck Insurance does not assert that R & B cannot do so.

R & B contends that it can meet the class certification requirements and points us to its offer of proof with respect to the anticipated testimony of Fena, Rusich and Sweet. R & B requests that this court remand the matter so that it will have an opportunity to show that it can satisfy the requirements of Code of Civil Procedure section 382. It is only fair to grant this request, since at the time R & B filed its third amended complaint it was not required to comply with Code of Civil Procedure section 382.

(Slip op. at 40.)

Evidently, the plaintiff chose not to raise the argument that an injunctive-relief-only UCL claim should not have to satisfy section 382, and to argue instead that it can meet section 382's requirements (which is probably the better strategy in many situations). This case could be an example of the "be careful what you wish for" aspect of Prop. 64. On remand, the plaintiff will seek formal class certification of the injunctive relief claim, and based on the opinion alone, I see no reason why the plaintiff should not also amend to seek restitution (at least for itself, if not on a classwide basis). Overall, the amended UCL claim could enhance, not lessen, the defendant's potential exposure.

Unpublished split decision holds Prop. 64 applies to pending cases: AICCO, Inc. v. Insurance Co. of North America

In another unpublished opinion, handed down just two days ago, the Court of Appeal (First Appellate District, Division Five) held 2-1 that Prop. 64 applies to pending cases. AICCO, Inc. v. Insurance Co. of North America, no. A110367. Justice Reardon, who was on the panel in Mervyn's, dissented. The dissent is noteworthy for its discussion of Myers v. Philip Morris Cos., 28 Cal.4th 828 (2002), a case that various courts addressing Prop. 64 retroactivity have interpreted in widely divergent ways. It will be quite interesting to see how the Supreme Court views it.

New unpublished Prop. 64 retroactivity opinion: Banales v. AT&T Wireless

Last week, the Court of Appeal (Second Appellate District, Division Eight) held in an unpublished opinion that Prop. 64 does not apply retroactively to pending cases. Banales v. AT&T Wireless Services, Inc., no. B184031. This is the same District and Division that decided Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America, 129 Cal.App.4th 540 (2005) (review granted 09/28/05).

UPDATE: I believe this is the trial court's underlying order granting judgment on the pleadings in Banales. The order received some press coverage at the time (Dec. 2004) because it was one of the earliest trial court orders on Prop. 64 retroactivity. Last week's appellate decision reverses that order (or, more precisely, the judgment of dismissal that would have followed that order) and reinstates the plaintiff's case.

Updated lists of Prop. 64 opinions, pending appeals, and briefs

My lists of Prop. 64 opinions, pending appeals, and briefs have been updated. I've also revised and expanded my welcome page and added a new resource to my list of UCL practice guides.

Yet another unpublished Prop. 64 retroactivity opinion: Young America Corp. v. Superior Court

In Young America Corp. v. Superior Court, no. C049337 (Third Appellate District) (Jan. 30, 2006), the Court had this to say about Prop. 64's "injury in fact" language:

We do not consider and need not decide the precise meaning of “injury in fact” for purposes of amended sections 17203 and 17204. It is clear after the enactment of Proposition 64 the sections require some wrong or harm to an interest or right over and above the interests and rights held in common with the public at large in order for an individual to have standing to sue. Otherwise, the amendments to sections 17203 and 17204 enacted by Proposition 64 will have changed nothing ....

(Slip op. at 11-12.)

Another unpublished Prop. 64 retroactivity opinion: Brazil v. Sara Lee

In Brazil v. Sara Lee Corp., no. D045925 (Fourth Appellate District, Division One) (Jan. 26, 2006), the Court followed Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 129 Cal.App.4th 1228 (2005) in holding that Prop. 64 applies retroactively to pending cases. However, the Court then very carefully held that the case should be remanded for the trial court to determine whether the plaintiff should be allowed leave to amend to substitute an affected plaintiff. In fact, the Court went to the trouble of deciding the substantive preemption issue raised on appeal, which would not have been necessary but for its holding that amendment was possible. (The Court held that the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) (7 U.S.C. §§36 et seq.) did not preempt the plaintiff's UCL claim.) Thanks to JS for emailing this opinion.

New unpublished Prop. 64 opinion: Dunham v. Memberworks

Last Thursday, December 29, 2005, the Court of Appeal (First Appellate District, Division Five) issued its opinion in Dunham v. Memberworks, Inc., case no. A107261. The Court held that Prop. 64 applies retroactively to pending cases but that the trial court has discretion to grant leave to amend to add an affected plaintiff.

Unpublished Prop. 64 opinion ordered published: Bivens v. Gallery Corp.

On Wednesday, the Court of Appeal issued a publication order in Bivens v. Gallery Corp., ___ Cal.App.4th ___ (Nov. 22, 2005). My original post on the unpublished opinion is here. After holding (consistent with its prior rulings) that Prop. 64 applied retroactively to the case, the Court of Appeal affirmed the judgment of dismissal that followed an order sustaining the defendant's demurrer without leave to amend. The Court of Appeal determined that leave to amend to substitute an affected plaintiff would not be granted because the underlying claims lacked merit as a matter of law. Applying the "reasonable consumer" standard, the Court determined that the defendant's allegedly misleading advertising was not misleading as a matter of law. Interestingly, throughout the opinion, the Court repeatedly applied the "likely to deceive" or "likely to mislead" standard when discussing the UCL's "fraudulent" prong (as well as the CLRA and the False Advertising Act), suggesting that the new "injury in fact and lost money or property" language does not alter that substantive liability standard. See, e.g., slip op. at 4, 5, 6, 16, 17, 18, 20, 21.

New Prop. 64 retroactivity opinion: Hartford Fire Ins. Co. v. Superior Court

This afternoon, the Court of Appeal (First Appellate District, Division One) issued its opinion in Hartford Fire Insurance Co. v. Superior Court, ___ Cal.App.4th ___ (Nov. 30, 2005). That is the case in which I handled the oral argument. Unfortunately, we lost. The opinion contains an interesting discussion of Myers v. Philip Morris Companies, Inc., 28 Cal.4th 828 (2002).

Two new unpublished Prop. 64 retroactivity opinions

I hope everyone had a Happy Thanksgiving. Last week, the Court of Appeal (Fourth Appellate District, Division One) issued two more unpublished opinions on Prop. 64 retroactivity. Both are consistent with that Division's prior rulings. Privacy Rights Clearinghouse v. JetBlue Airways Corp., no. D045568 (Nov. 22, 2005); Bivens v. Gallery Corp., no. D045557 (Nov. 22, 2005). In a third case before that Division, the Prop. 64 retroactivity issue was raised but not decided. Gutierrez v. Nick Pecoraro Painting & Decorating, Inc., no. D044666 (Nov. 23, 2005).

New UCL preemption decision: Viva! v. Adidas

On Monday, the Court of Appeal (First Appellate District, Division One) held that federal law preempted a UCL "unlawful" prong claim predicated on an alleged violation of Penal Code section 653o, which "bans the import of products made from certain animals, including kangaroos, into California." Viva! International Voice for Animals v. Adidas Promotional Retail Operations, Inc., ___ Cal.App.4th ___ (Nov. 21, 2005) (slip op. at 1). This is the case that was argued on the same day that I argued the Prop. 64 retroactivity issue before the same Division in the Insurance Broker cases. The Prop. 64 retroactivity issue was also argued in the Viva! case, but the Court determined that "[i]n light of this conclusion, we need not reach ... other issues raised by defendants, including the applicability of Proposition 64, pending before the Supreme Court in Californians for Disability Rights v. Mervyn’s (2005) 126 Cal.App.4th 386, review granted April 27, 2005, S131798 and Branick v. Downey Savings & Loan Assn. (2005) 126 Cal.App.4th 828, review granted April 27, 2005, S132433." (Slip op. at 17-18 n.14.)

I had no idea that Adidas made its shoes out of kangaroo leather.

Court of Appeal requires trial court to grant leave to amend to meet Prop. 64 requirements

Many thanks to the reader who forwarded this unpublished Court of Appeal order in Mejia v. Superior Court, case no. B182259 (Second Appellate District, Division Two). The order directs the trial court to grant the plaintiffs leave to amend their complaint to satisfy the requirements of Proposition 64, even though that would mean postponing the trial. The order is dated April 19, 2005, and cites Benson and Lytwyn, two Fourth District cases. Eight days later, the Supreme Court granted review in both of those cases. Evidently, the plaintiffs did not challenge the trial court's retroactivity ruling, and I am unaware of any cases in which the Second District, Division Two, has ruled on Prop. 64 retroactivity. The trial court's order, which was subsequently amended to comply with the Court of Appeal's directive, is accessible here. I'm told that the battle in the trial court is now over whether the amendment "relates back" for statute of limitations purposes.

New Prop. 64 retroactivity decision: Schwartz v. Visa Int'l Service Assn.

Yesterday, the Court of Appeal (First Appellate District, Division One) issued another Prop. 64 retroactivity opinion, Schwartz v. Visa Int'l Service Assn., ___ Cal.App.4th ___ (Sept. 28, 2005). So now, in the First District, we have the Mervyn's case in Division Four (published but review granted), Wise v. PG&E in Division Five (Prop. 64 holding unpublished), and now Schwartz in Division Two (published). Schwartz holds that Prop. 64 applies to pending cases. The decision has been added to my list of Prop. 64 appellate opinions (which has been updated and moved over to the new site).

Second District, Division Eight reaffirms its views on Prop. 64 retroactivity in unpublished opinion

In Turner v. Aon Risk Services, Inc., no. B174111 (Sept. 6, 2005), the Court of Appeal (Second Appellate District, Division Eight) reaffirmed its holding in Consumer Advocacy Group v. Kintetsu Enters, Inc., 129 Cal.App.4th 540 (2005) that Prop. 64 does not apply to pending cases:

The initial question before us is whether applying Proposition 64 to pending cases would violate the established rule against retrospective application of a new statute. Respondents contend that this case should be dismissed because Proposition 64 applies to eliminate appellant’s standing to pursue the present claim. Appellant asserts he has standing because applying the Proposition would violate the well-established principle against retroactive application of new legislation. We agree with appellant. We recently held in Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America that the application of Proposition 64 to pending cases is a retroactive or retrospective application of the law. (Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America (2005) 129 Cal.App.4th 540, 569.) Therefore, we find that Proposition 64 does not apply to this case.

Slip op. at 3. What's interesting is that the unpublished Turner opinion was issued by a slightly different panel of justices. Justice Cooper authored Kintetsu, and was joined by Justices Boland and Johnson. Justice Flier authored Turner, and was joined by Justices Cooper and Boland. So we have a quorum of four justices in the Second District who believe that Prop. 64 may not be applied retroactively. Kintetsu remains the only citable published opinion that so holds.

Petrini opinion now on Court of Appeal's website

The Petrini opinion appeared on the Court of Appeal's website yesterday afternoon. See this post for more info.

First District, Division Five goes the other way on Prop. 64 retroactivity

In an opinion issued yesterday, most of which is unpublished, the First Appellate District, Division Five, parted company with its brethren in Division One Four, and held: "We agree with the reasons articulated in those cases that have concluded that Proposition 64 applies to pending cases because it repeals a right of action created wholly by statute and does not contain a saving clause." Wise v. Pacific Gas & Elec. Co., ___ Cal.App.4th ___ (Sept. 12, 2005) (slip op. at 23). Proposition 64 did not destroy the plaintiffs' case, however. They alleged actual harm, and would also be permitted to amend their complaint (which was filed long before Prop. 64 was enacted) to seek class certification. (Slip op. at 23.) Somehow it seems that the defendant was better off before, but maybe that's just me.

The panel's (unpublished) discussion of UCL "restitution" is also interesting:

The essence of plaintiffs’ action is that PG&E charged ratepayers for services it failed to deliver, to wit, replacement of obsolete gas regulators. In other words, plaintiff ratepayers paid for something they did not get after PG&E deceptively obtained a rate increase from the PUC on the representation the increase was necessary to carry out the replacement project. Plaintiffs have alleged a valid claim for restitutionary relief: through a deceptive business practice, PG&E obtained from plaintiffs money in which they have an ownership interest.

(Slip op. at 21 (citation omitted).) In other words, the UCL authorizes restitution to a plaintiff who paid for something that the defendant failed to deliver. The next question, which the opinion did not address, is how that something is valued for purposes of awarding restitution. In this case, the plaintiffs seem to be alleging that PG&E obtained a rate increase from the PUC by promising to replace old gas regulators, which it did not do. The restitution would simply be the amount of the rate increase, rather than, say, the value of the regulators.

Third District holds Prop. 64 retroactive in unpublished opinion

On Thursday, the Third District Court of Appeal issued its eagerly-awaited opinion in Petrini Van & Storage v. Superior Court (no. C049042). The opinion, which is unpublished, is not yet available on the Court of Appeal's website, but I'm happy to be able to say that a reader sent me a copy of it yesterday afternoon.

Another reader, who attended the oral argument, correctly predicted that the Court would hold that Prop. 64 applies retroactively to pending cases. Justice Sims filed a concurrence expressing the view that "the plain meaning of language enacted by Proposition 64 says that its standing requirement applies to pending actions." Slip op., concurrence at 1. For reasons I've already explained, I respectfully disagree. The concurrence quotes a single word from Prop. 64—"prosecuted"—without mentioning the other language in Prop. 64 that creates doubt and ambiguity about the electorate's intent. It would be as logical to isolate the word "bringing" and conclude therefrom that the electorate expressly intended prospective application.

First District does not address Prop. 64 in Wilson v. Brawn of California

An eagerly-anticipated decision from the First Appellate District, Division One did not reach the Prop. 64 retroactivity question, despite the parties' supplemental briefing on the question. Wilson v. Brawn of California, Inc., ___ Cal.App.4th ___ (Sept. 2, 2005).

Lists updated to reflect recent developments; new unpublished Prop. 64 opinion

I've updated my list of Prop. 64 pending appeals and my list of Prop. 64 appellate opinions to reflect yesterday's developments.

Also, another new unpublished opinion, Quatman v. Raceway Ford, Inc. (Fourth Appellate District, Division Two) (July 20, 2005), was handed down yesterday. In Quatman, the unaffected plaintiff's UCL claim was reduced to judgment before Proposition 64 passed. The defendant's appeal was pending, but only from the attorneys' fees award, not from the underlying judgment itself. The Court of Appeal explained:

Here, Quatman’s claims under the Unfair Competition Law progressed to final judgment on the merits. No appeal was taken from such judgment. Instead, this appeal is limited to the amount which the trial court awarded to Quatman for his attorney fees and costs. Because there has been no challenge to the merits of the judgment, it stands. While it is true that, in an appeal from a postjudgment order awarding attorney fees we may review the entitlement to, as well as the amount of, the fees awarded [citation], here, the entitlement to the fees vested upon the vesting of Quatman’s claims under the Unfair Competition Law. [citation] Accordingly, the passage of Proposition 64 has not affected Quatman’s standing to continue his pursuit of attorney fees and costs.

(Slip op. at 4-5.)

Another unpublished Prop. 64 opinion

In Tyquiengco v. Cal. Assn. of Realtors (First Appellate District, Division Four) (July 15, 2005), the panel that authored Californians for Disability Rights v. Mervyn's LLC wrote:

[Plaintiffs] contend that they have standing to bring this unfair competition action ... on behalf of all California consumers. In so doing, they challenge the trial court’s ruling that Proposition 64 applies retroactively to bar their lawsuit. We have already considered this issue in an unrelated case and have concluded that Proposition 64 does not apply retroactively to cases such as the one before us that were filed before its November 3, 2004 effective date. (See Californians for Disability Rights v. Mervyn’s (2005) 126 Cal.App.4th 386, 390-397, review granted Apr. 27, 2005, S131798.) The California Supreme Court has granted review in that case and we base our decision in the case at bar on another ground.

Slip op. at 4 n.4 (hyperlink added). The opinion goes on to include an interesting melding of the pre- and post-Cel-Tech formulations of "unfair":

A business practice is unfair and thus violates the UCL if it offends an established public policy or is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers. (Gregory v. Albertson’s, Inc. [(2002)] 104 Cal.App.4th [845,] 854.) A business practice may be unfair even if it is not unlawful. (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) If the Legislature has not proscribed a business practice, courts may properly make a judicial determination that it is unfair under the UCL. (Id. at p. 183.) When a UCL allegation of unfair business practice is predicated on an assertion that the practice violates public policy, courts may not apply purely subjective notions of fairness. Instead, the violation of public policy must be linked to some specific constitutional, statutory or regulatory provision. (Id. at pp. 184-185; Gregory v. Albertson’s, Inc., supra, 104 Cal.App.4th at p. 854.)

Slip op. at 6-7 (hyperlinks added). What this paragraph seems to be saying is that the post-Cel-Tech formulation of "unfair" applies in consumer actions only when the plaintiff asserts that the defendant's conduct violates "public policy." Presumably, the pre-Cel-Tech formulation would apply when the "unfair" claim is based on some other theory, such as the argument that the conduct is oppressive or unscrupulous or that its benefits are outweighed by its potential for harm. Finally, the court applied (without any mention of Prop. 64) the ordinary "likely to deceive" standard for "fraudulent" conduct. Slip op. at 7.

Recent unpublished Prop. 64 opinions

Prop. 64 retroactivity continues to come up in unpublished appellate opinions. Some recent ones include:

• Zamora v. CFN Investment Holdings, LLC (July 8, 2005) (Fourth Appellate District, Division One)

• Mabie v. Kaplan Higher Education Corp. (June 10, 2005) (Fourth Appellate District, Division One)

• Boling v. Trendwest Resorts, Inc. (May 19, 2005) (Fourth Appellate District, Division Three)

My thanks to JS for poring through the unpublished opinions to find these.