The UCL Practitioner

Supreme Court requests supplemental briefing on UCL issue: McGill v. Citibank

On December 7, 2016, the California Supreme Court heard oral argument in McGill v. Citibank, No. S224086.  This case presents the question of whether the Federal Arbitration Act, as construed in Concepcion, preempts the Broughton-Cruz rule.  (See this blog post for more.)

In the vast majority of argued cases, the matter is submitted upon completion of oral argument, and the Court simply issues its opinion within 90 days of the argument date.   On Tuesday, January 24, 2017, however, the Court vacated submission and directed the parties to file supplemental briefs on an interesting UCL-related issue.  From the docket:

Submission is vacated to allow for supplemental briefing. The court requests that the parties serve and file supplemental briefs addressing the following question: Whether the 2004 amendments to the Unfair Competition Law and the false advertising law, through passage of Proposition 64, eliminated the ability of private plaintiffs to seek public injunctive relief? Amici curiae that have filed briefs in this matter may also file supplemental briefs addressing the above question if they so choose. All initial briefs addressing the above question must be served and filed simultaneously on or before February 6, 2017. Any reply to the supplemental briefs must be served and filed on or before February 13, 2017. This matter will be resubmitted, without further order, as of the date that the last supplemental brief is or could be timely filed under this or any subsequent order of this court. (See Cal. Rules of Court, rule 8.524(h).) Corrigan, J., was recused and did not participate.

(Emphasis added.)

Brinker is another example of a case in which the Court vacated submission post-argument and directed further briefing.  In that case, the eventual opinion did not turn on (or even mention) the issue on which supplemental briefing was ordered.  So, the McGill order is very interesting, to be sure, but it does not necessarily mean that this point will become a central focus of the Court's opinion.  What it does mean is that the opinion will be delayed by at least a few weeks. 

In my view, the clear answer to the Court's question is no, assuming the plaintiff meets the standing requirements imposed by Proposition 64.   The initiative did not alter any of the remedies afforded by the UCL (as held in Mervyn's; see this blog post), so all the same forms of injunctive relief should be available both before and after the amendments. 

Six pending cases to watch in 2011

Here are six important cases to follow in the coming months (listed in no particular order):

1. Kwikset Corp. v. Superior Court (Benson), no. S171845 (Cal.).  This UCL case was argued in the California Supreme Court on November 3, 2010, which means that the opinion is due by Tuesday, February 1, 2010.  Because the Court hands down opinions on Mondays and Thursdays, we can expect the opinion no later than Monday, January 31, 2011 -- assuming former Chief Justice George sends his vote in from Antarctica!  In this case, the Supreme Court will be interpreting Prop. 64's "lost money or property" language. 
   
   
2. AT&T Mobility LLC v. Concepcion, no. 09-893 (U.S.).  This case was argued in the U.S. Supreme Court on November 9, 2010.  The issue is whether the FAA preempts state-law unconscionability principles as applied to no-class-action arbitration clauses in consumer contracts of adhesion, and the continuing vitality of our own Supreme Court's Discover Bank decision could be at stake.  The opinion will be filed by the end of the current Term, which means no later than June 27, 2011. 
   
3. Brinker Restaurant Corp. v. Superior Court (Hohnbaum), no. S166350 (Cal.).  This wage and hour case raises substantive questions relating to California's meal period and rest break laws, but could also be a significant class certification case.  The Supreme Court has not directly addressed core class certification issues since Sav-on in 2004.  The case is fully briefed, but has not yet been scheduled for oral argument.  It may or may not be set this year.  [Disclosure:  My firm is co-counsel for the workers in Brinker.]
   
   
4. Wal-Mart Stores, Inc. v. Dukes, no. 10-277 (U.S.).  The U.S. Supreme Court granted cert. in this case on December 6, 2010, and has scheduled oral argument for March 29, 2010. The opinion will be filed by the end of June 2011, when the current Term ends.  The district court granted class certification of certain employment discrimination claims under Rule 23(b)(2), and the Ninth Circuit, sitting en banc, affirmed in part. 
   
   
5. Mazza v. American Honda Motor Co., no. 09-55376 (9th Cir.).  In this auto defect case, the district court granted nationwide class certification of UCL and CLRA claims for recovery of economic losses.  Mazza v. American Honda Motor Co., 254 F.R.D. 610 (C.D. Cal. 2008).  The Ninth Circuit granted a Rule 23(f) petition for permission to appeal, and the case was argued on June 11, 2010.  One day after the Supreme Court granted cert. in Dukes, however, the Ninth Circuit issued a sua sponte order deferring submission of the action pending resolution of that case.
   
   
6. Sullivan v. DB Investments, Inc., no. 08-2784 (3d Cir.). In this antitrust case for price-fixing in the diamond industry, the Third Circuit reversed the district court's order granting final approval of a nationwide class action settlement.  Sullivan v. DB Investments, Inc., 613 F.3d 134 (3d Cir. 2010).  On August 27, 2010, en banc rehearing was granted, and the case has been scheduled for argument on February 23, 2011.  On November 10, 2010, the Court ordered supplemental briefing on some broad class-certification-related questions. 

Oral argument preview: Kwikset Corp. v. Superior Court (Benson)

This morning at 9:00 a.m., the Supreme Court will hear oral argument in in Kwikset Corp. v. Superior Court (Benson), no. S171845, in which the issue on revivew is as follows:

Does a plaintiff's allegation that he purchased a product in reliance on the product label's misrepresentation about a characteristic of the product satisfy the requirement for standing under the Unfair Competition Law (Bus. & Prof. Code, section 17200 et seq.) that the plaintiff allege a loss of money or property, or is such a plaintiff unable to allege the required loss of money or property because he obtained the benefit of his bargain by receiving the product in exchange for the payment?

The Court of Appeal opinion, which found no standing under those facts, is here: Kwikset Corp. v. Superior Court (Benson), 171 Cal.App.4th 645 (2009) (rev. granted 06/10/09). 

I'm planning to attend the argument and will endeavor to provide a report later in the week.

Supreme Court briefs in Kwikset Corp. v. Superior Court (Benson)

The Supreme Court has posted online copies of the briefs in Kwikset Corp. v. Superior Court (Benson), no. S171845, which is scheduled for oral argument in San Francisco on Wednesday, November 3, 2010 at 9:00 a.m.:

S171845 - KWIKSET CORPORATION v. S.C. (BENSON)

• Real Parties' in Interest Petition for Review
• Petitioners' Answer to Petition for Review
• Real Parties' in Interest Reply to Answer to Petition for Review
• Real Parties' in Interest Opening Brief on the Merits
• Petitioners' Answer Brief on the Merits
• Real Parties' in Interest Reply Brief on the Merits
• Real Parties' in Interest Supplemental Brief

This case will address important questions relating to the proper interpretation of the UCL's post-Prop. 64 standing requirement.  Chief Justice George is not recused in this case, which is one factor that distinguishes it from Tobacco II.

After the case is argued on November 3, the opinion will be due in 90 days.  That works out to February 1, 2011.  However, Chief Justice George's term ends on January 2, 2011.  Will the Court expedite decision in the cases on the November calendar?  How will it handle the December calendar (scheduled for the week of December 6, 2010)?  I don't have an answer to either of these questions. 

UPDATE:  In response to my questions, the folks from At the Lectern undertook a review of opinions issued after the retirements of other Supreme Court justices. They found that many of the retired justices continued to sign opinions for several months after they departed from the Court.  At the Lectern predicts that the Acting Chair of the Judicial Council will assign Chief Justice George as a pro tem justice in all of the cases that he hears through the December calendar.  This is a logical prediction and is one solution that had crossed my mind.

Supreme Court hands down significant UCL decision: Clayworth v. Pfizer

The Supreme Court's decision in Clayworth v. Pfizer is now up.  Clayworth v. Pfizer, Inc., ___ Cal.4th ____ (Jul. 12, 2010). 

After discussing the Cartwright Act claim in depth, the Court turned to the UCL, and confirmed that, to have standing to seek an injunction, the plaintiff need not have suffered a loss that would be recoverable as restitution: 

The Court of Appeal held Pharmacies were barred from seeking injunctive relief because, it concluded, they had suffered no monetary loss. To the extent this holding rests on the conclusion Pharmacies lacked standing under section 17204, it is erroneous; as discussed ante, Pharmacies have standing. To the extent the holding rests on the conclusion that even if Pharmacies had standing, they could not seek injunctive relief unless they could also seek restitution, it similarly is erroneous. Section 17203 makes injunctive relief “the primary form of relief available under the UCL,” while restitution is merely “ancillary.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 319.) Nothing in the statute’s language conditions a court’s authority to order injunctive relief on the need in a given case to also order restitution. Accordingly, the right to seek injunctive relief under section 17203 is not dependent on the right to seek restitution; the two are wholly independent remedies. (See ABC Internat. Traders, Inc. v. Matsushita Electric Corp. (1997) 14 Cal.4th 1247, 1268 [§ 17203 “contains . . . no language of condition linking injunctive and restitutionary relief”]; Prata v. Superior Court (2001) 91 Cal.App.4th 1128, 1139 [plaintiff could pursue injunctive relief even though restitution was unavailable].)

Slip op. at 41. This overrules a number of decisions, such as Buckland and Citizens for Humanity, holding that the only type of monetary loss that can confer standing is a restitutionary loss. This is going to be very important for preserving competitor vs. competitor UCL cases.

I'm still reviewing the opinion and hope to have more on it later.  The Court also held that the pass-on defense does not bar either the Cartwright Act or the UCL claims. 

More materials from Weinstat v. Dentsply

Here are more materials from Weinstat v. Dentsply, no. S180179:

• Letter Supporting Review of American Honda Motor Co. (dated 03/12/10)
• Reply to Answer to Petition for Review (filed 03/12/10)
• Letter Supporting Review of the U.S. Chamber of Commerce et al. (dated 03/18/10)

The reply brief (at p. 2) cites this blog and this blog post in particular.  That's the post where I listed the nine post-Tobacco II decisions handed down to date. 

As the reply brief notes, I did say that the opinions were difficult to reconcile, but I did not say it was impossible.  And while I appreciate being described to the Supreme Court as a "prominent UCL commentator," I do not support the petition for review in Weinstat.   

Recent Supreme Court activity in three UCL cases: Princess Cruise Lines, Cohen and Zhang

On February 4, 2010, the Supreme Court denied review in Princess Cruise Lines v. Superior Court (Wang), no. S178842.   Here is my original post on the case, which interpreted Tobacco II.

On February 10, 2010, the Supreme Court denied review and depublication in Cohen v. DirecTV, no. S177734.  Justice Werdegar voted to grant review.  Here is my original post on the case, and follow-up posts with some of the briefs.

On February 10, 2010, the Supreme Court granted review in Zhang v. Superior Court (Cal. Cap. Ins.), no. S178542.  This case will address whether insurance companies enjoy any special exemption from UCL liability.  The statement of issues on review reads:

(1) Can an insured bring a cause of action against its insurer under the unfair competition law (Bus. & Prof. Code, § 17200) based on allegations that the insurer misrepresents and falsely advertises that it will promptly and properly pay covered claims when it has no intention of doing so? (2) Does Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 bar such an action?

Here is my original post on the case.  It has been added to my list of pending Supreme Court cases of interest.

Petition for Review and other documents from Cohen v. DirecTV

Here are copies of some of the filings in Cohen v. DirecTV, no. S177734: 

• Petition for Review (11/06/09; deemed filed 12/01/09)
• Depublication Request of Initiative Legal Group (11/23/09)
• Depublication Request of Khorrami Pollard & Abir LLP (12/02/09)
• Opposition to Depublication Request (U.S. Chamber of Commerce) (12/11/09)
• Opposition to Depublication Request (Assn. of SoCal Defense Counsel) (12/14/09)
• Depublication Request of Consumer Attorneys of California (12/23/09)

I do not have a copy of the answer to the petition for review, filed on 12/01/09, and would be grateful to anyone who can forward a copy.  By my calculations, we can expect an order either granting or denying the petition for review (and the depublication requests), or extending the time to do so, by Wednesday, January 27, 2010. 

Close readers of the petition for review may observe its striking similarity to my original blog post on the Cohen decision.  They say that imitiation is the sincerest form of flattery, and one of the reasons I write this blog is to share ideas, but please, if you want to copy my language, extend me the courtesy of citing my blog as your source.  Thanks! 

Petition for review and depublication request filed in Cohen v. DirecTV

On November 6, 2009, a petition for review was filed in Cohen v. DirecTV, no. S177734, followed by a depublication request on November 23, 2009.   (My original blog post on Cohen is available at this link.)

Here's an appellate practice question for you:  When are depublication requests due in this case?

The Court of Appeal opinion was originally filed on September 28, 2009.  However, it was not published until thirty days later, on October 28 (the last possible day). Under Rule of Court 8.264(b)(3): “If a Court of Appeal certifies its opinion for publication or partial publication after filing its decision and before its decision becomes final in that court, the finality period runs from the filing date of the order for publication.” Under that Rule, the decision would be final 30 days after October 28, which would be last Friday, November 27 (a Court holiday).  (I leave it to you to determine whether the date of finality is extended to the following Monday, November 30.) 

Under Rule of Court 8.1125(a)(4), depublication requests “must be delivered to the Supreme Court within 30 days after the decision is final in the Court of Appeal.”   In this case, thirty days after finality (calculated as November 27) is December 27, 2009 (a Sunday).  (Again, I leave it to you to determine whether the final deadline might be a couple of days earlier or later, given the way the dates fall.)   

Now, consider the Supreme Court's deadline to rule on the petition for review.  Rule of Court 8.512(b) reads:

(b) Determination of petition

(1) The court may order review within 60 days after the last petition for review is filed. Before the 60-day period or any extension expires, the court may order one or more extensions to a date not later than 90 days after the last petition is filed.

(2) If the court does not rule on the petition within the time allowed by (1), the petition is deemed denied.

Unless it gives itself an extension of time, the Supreme Court's deadline to grant or deny review will be Tuesday, January 5, 2010. 

But now look at the Supreme Court's conference calendar for December and January (calendar for 2009 and calendar for 2010).  The Court's last conference before January 5 will take place on December 23--which is several days before the probable deadline to file depublication requests in this case.  If the Supreme Court has any interest in this case, I expect it will grant itself an extension of time on or before the conference on December 23.  It would be prudent for anyone planning to file a depublication request (or, for that matter, a letter in support of review) to do so before that December 23 conference date. 

UPDATE:  Today, after I posted the above, a new line was added to the docket deeming December 1, 2009 as the filing date of the petition for review.  That would mean that the Supreme Court's deadline to grant or deny review would not be until January 30, 2010 (a Saturday).  The last conference before January 30 will take place on the preceding Wednesday, January 27, 2010.   

Supreme Court dismisses final Tobacco II "grant and hold" case: O'Brien v. Camisasca Automotive Mfg.

On Thursday, November 19, 2009, the Supreme Court finally acted on the last of the Tobacco II "grant and hold" cases, O'Brien v. Camisasca Automotive Mfg., no. S163207.  Instead of transferring the case back to the intermediate appellate panel for further proceedings, as in McAdams and Pfizer (Galfano), the Court simply dismissed review.  The dismissal order reads:

In light of the decision in In re Tobacco II Cases (2009) 46 Cal.4th 298 and Meyer v. Sprint Spectrum LP (2009) 24 Cal.4th 634, review in the above-entitled matter is dismissed. (Cal. Rules of Court, rule 8.528(b)(1).)

(Hyperlink added.)  This means that the earlier Court of Appeal opinion stands and binds the parties, but it remains unpublished.  Here is my original blog post on the Court of Appeal opinion, and the opinion itself (Second Appellate District, Division Three).  

I'm sure the similarity of issues between O'Brien and Kwikset was not lost on the Supreme Court.  Both are "Made in the U.S.A." cases that lower courts dismissed for lack of Prop. 64 standing (although the similarities end there). Perhaps the Court felt that leaving the O'Brien opinion unpublished was the best way to manage the development of the case law in this area.  O'Brien, of course, was decided long before review was granted in Kwikset, and I'm not sure there is any procedural way to convert O'Brien into a Kwikset "grant and hold" case, which it could easily have become if it had been handed down later. 

Interestingly, both O'Brien and Pfizer/Galfano are Second Appellate District, Division Three cases, and two of the panel Justices (Klein and Kitching) are the same.  Justice Croskey will join in re-deciding Pfizer/Galfano in a few weeks, whereas Justice Aldrich was the third panelist in O'Brien.

Transfer orders issued in Tobacco "grant and hold" cases: Pfizer and McAdams

Today, the Supreme Court issued transfer orders in the two Tobacco "grant and hold" cases, Pfizer, Inc. v. Superior Court (Galfano), no. S145775, and McAdams v. Monier, no. S154088.  McAdams has been transferred back to the Third Appellate District, and Pfizer is now returned to the Second District, Division Three.  Both appellate courts have been directed to vacate their opinions and reconsider in light of Tobacco.   

The parties now have a very short period of time to file supplemental briefs under Rule of Court 8.200(b)(1). 

UPDATE:  There is a third Tobacco "grant and hold" case, O'Brien v. Camisasca Automotive Mfg., no. S163207, in which no transfer order has yet been posted.

BREAKING NEWS: Rehearing denied in Tobacco

This afternoon, the Supreme Court denied rehearing in In re Tobacco II Cases, no. S147345.  According to the docket, Chief Justice George remained recused (notwithstanding a substitution of attorneys filed the day before the rehearing petition) and did not participate in the decision:

08/12/2009

Rehearing denied

The petition for rehearing is denied. George, C.J., was recused and did not participate. Baxter, Chin and Corrigan, JJ., are of the opinion the petition should be granted. Eileen C. Moore, Associate Justice, Court of Appeal, Fourth Appellate District, Division Three, was assigned by the Acting Chief Justice pursuant to article VI, section 6 of the California Constitution.

Blogosphere coverage of Amalgamated and Arias

The California Wage and Hour Law Blog for Employees (a new law blog created in January by attorney Steve Pearl) has an interesting post on Amalgamated and Arias.  The Complex Litigator also has a detailed post.   

A quick post on the Arias and Amalgamated holdings

The opinions are both up. Here are quick excerpts from the introductions:

We hold that an employee who, on behalf of himself and other employees, sues an employer under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) for Labor Code violations must satisfy class action requirements, but that those requirements need not be met when an employee‘s representative action against an employer is seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.).

Arias, slip op. at 1.

This case presents two issues. First, may a plaintiff labor union that has not suffered actual injury under the unfair competition law, and that is not an "aggrieved employee" under the Labor Code Private Attorney General Act of 2004, nevertheless bring a representative action under those laws (1) as the assignee of employees who have suffered an actual injury and who are aggrieved employees, or (2) as an association whose members have suffered actual injury and are aggrieved employees? The answer is "no." Second, must a representative action under the unfair competition law be brought as a class action? The answer is "yes," for the reasons stated in the companion case of Arias v. Superior Court (June 29, 2009, S155965) ___ Cal.4th ___.

Amalgamated, slip op. at 2 (emphasis in original).

BREAKING NEWS: Supreme Court to hand down Arias and Amalgamated decisions Monday

This morning the Supreme Court announced that on Monday at 10:00 a.m., it will be handing down its decisions in the Arias and Amalgamated cases, which were argued in early April.  These cases address, among other issues, whether formal class certification is required in PAGA and UCL actions (post-Prop. 64) in which relief is sought on behalf of others.  Amalgamated may also address whether associational standing survived Prop. 64. 

See this blog post for the statements of the issues and links to the Court of Appeal opinions.  Reports on the oral arguments are available here and here.  When the decisions are posted, they will be avialable at these links:

• Arias v. Superior Court, ___ Cal.4th ___ (Jun. 29, 2009)
  

• Amalgamated Transit Union v. Superior Court (First Transit, Inc.), ___ Cal.4th ___ (Jun. 29, 2009)

More Supreme Court developments

Today, the Supreme Court granted itself an extension of time (through August 14) to grant or deny the petition for rehearing in Tobacco (docket).

Yesterday, the Supreme Court denied review and depublication in the Troyk case (docket).  Justices Baxter, Chin and Corrigan voted to grant review.  An article (subscription) by Mike McKee in yesterday's Recorder discussed this case in more detail. 

Today's Recorder has an article (subscription) about yesterday's grant of review in Kwisket. 

Supreme Court grants review in Kwikset Corp. v. Superior Court

Today, the Supreme Court granted review (unanimously) in another significant Prop. 64 case, Kwikset Corp. v. Superior Court, no. S171845.  The Court of Appeal opinion is no longer citable as precedent.  My original post on Kwikset is here.  Thanks to the blog reader who emailed with this development. 

Petition for rehearing filed in Tobacco

On Tuesday, June 2, 2009, a petition for rehearing was filed in In re Tobacco Cases II, no. S147345.  The answer will be due on Wednesday, June 10, and the Supreme Court's ruling can be expected by June 17 (unless the court grants itself an extension of time). 

Additionally, on Monday, June 1, a substitution of attorneys was filed, substituting Reed Smith in place of Loeb & Loeb as counsel for one of the defendants.  According to the Daily Journal, Loeb & Loeb represents Chief Justice George in connection with his estate planning, which is why he was recused from hearing the case.  Justice Eileen Moore of the Fourth Appellate District, Division Three, sat in his stead.  

A rehearing petition was also filed, and denied, recently in Meyer v. Sprint Spectrum, no. S153846.  In that case, the Supreme Court granted itself an extension of time before denying the petition. 

Supreme Court preserves UCL class actions in In re Tobacco II Cases

This morning, the Supreme Court preserved UCL class actions through its opinion In re Tobacco II Cases, ___ Cal.4th ___ (May 18, 2009). Here are some highlights from the majority opinion:

• The fraudulent business practice prong of the UCL has been understood to be distinct from common law fraud. “A [common law] fraudulent deception must be actually false, known to be false by the perpetrator and reasonably relied upon by a victim who incurs damages. None of these elements are required to state a claim for injunctive relief” under the UCL. (Day v. AT&T Corp. (1998) 63 Cal.App.4th 325, 332; see State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1105.) This distinction reflects the UCL’s focus on the defendant’s conduct, rather than the plaintiff’s damages, in service of the statute’s larger purpose of protecting the general public against unscrupulous business practices. (Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 453.) [Slip op. at 11 (bold added).]
  
  
• [I]n granting defendants’ motion for decertification, the trial court concluded that “the simple language of Prop[osition] 64” required each class member to show injury in fact and causation. Thus, the trial court construed the text of Proposition 64 as requiring absent members to affirmatively demonstrate that they met Proposition 64’s standing requirements — injury in fact and the loss of money or property as a result of the unfair practice. We conclude that the trial court’s construction of Proposition 64 was erroneous. [Slip op. at 14 (bold added).]
  
  
• Notably, the references in section 17203 to one who wishes to pursue UCL claims on behalf of others are in the singular; that is, the “person” and the “claimant” who pursues such claims must meet the standing requirements of section 17204 and comply with Code of Civil Procedure section 382. The conclusion that must be drawn from these words is that only this individual — the representative plaintiff — is required to meet the standing requirements. [Slip op. at 15 (bold added).]
  
  
• Notably absent from the ballot materials is any indication that the purpose of the initiative was to alter the way in which class actions operate in the context of the UCL. Indeed, other than the requirement that the representative plaintiff comply with Code of Civil Procedure section 382, the ballot materials contain no reference whatsoever to class actions nor is there any indication that Proposition 64 was intended in any way to alter the rules surrounding class action certification. Those rules do not require that unnamed class members establish standing but, insofar as standing is concerned, focus on the class representative. [Slip op. at 18-19 (bold added).]
  
  
• Moreover, Proposition 64 left intact provisions of the UCL that support the conclusion that the initiative was not intended to have any effect on absent class members. Specifically, Proposition 64 did not amend the remedies provision of section 17203. This is significant because under section 17203, the primary form of relief available under the UCL to protect consumers from unfair business practices is an injunction, along with ancillary relief in the form of such restitution “as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.” (§ 17203.) [Slip op. at 21 (bold added).]
  
  
• Neither form of relief requires that the absent class members, on whose behalf such relief is sought, meet the same standing requirements as are imposed upon the class representative. Injunctive relief operates “ ‘ “in futuro.” ’ ” (Koebke v. Bernardo Heights Country Club (2005) 36 Cal.4th 824, 837.) The purpose of such relief, in the context of a UCL action, is to protect California’s consumers against unfair business practices by stopping such practices in their tracks. An injunction would not serve the purpose of prevention of future harm if only those who had already been injured by the practice were entitled to that relief. Indeed, “[a]n injunction should not be granted as punishment for past acts where it is unlikely that they will recur.” (Choice-in-Education League v. Los Angeles Unified School Dist. (1993) 17 Cal.App.4th 415, 422.) [Slip op. at 21-22 (footnote omitted).]  [Slip op. at 21-22 (footnote omitted) (bold added).]
  
  
• It is conceivable that a named class representative who met the standing requirements under Proposition 64 could pursue a broad-based UCL class action in which only injunctive relief was sought on behalf of a class that was likely to, but had not yet, suffered injury arising from the unfair business practice. We need not decide here whether such an action would be proper. [Slip op. at 22 n.13.]
  
  
• Similarly, the language of section 17203 with respect to those entitled to restitution — “to restore to any person in interest any money or property, real or personal, which may have been acquired” (italics added) by means of the unfair practice — is patently less stringent than the standing requirement for the class representative — “any person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (§ 17204, italics added.) This language, construed in light of the “concern that wrongdoers not retain the benefits of their misconduct” (Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d 442, 452) has led courts repeatedly and consistently to hold that relief under the UCL is available without individualized proof of deception, reliance and injury. (E.g., Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267; Committee on Children’s Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at p. 211.) Accordingly, to hold that the absent class members on whose behalf a private UCL action is prosecuted must show on an individualized basis that they have “lost money or property as a result of the unfair competition” (§ 17204) would conflict with the language in section 17203 authorizing broader relief — the “may have been acquired” language — and implicitly overrule a fundamental holding in our previous decisions, including Fletcher, Bank of the West and Committee on Children’s Television. Had this been the intention of the drafters of Proposition 64 — to limit the availability of class actions under the UCL only to those absent class members who met Proposition 64’s standing requirements — presumably they would have amended section 17203 to reflect this intention. Plainly, they did not. [Slip op. at 22-23 (footnote omitted) (bold added).]
  
  
• Our conclusion with respect to the remedies set forth in section 17203 has nothing to do with the nonrestitutionary disgorgement disallowed in Kraus v. Trinity Management Services, Inc., supra, 23 Cal.4th 116. In Kraus, we concluded that section 17203 does not allow a court to order disgorgement into a fluid recovery fund, e.g., to “compel a defendant to surrender all money obtained through an unfair practice even though not all is to be restored to the persons from whom it was obtained or those claiming under those persons.” (Id. at p. 127.) This prohibition against nonrestitutionary disgorgement did not overrule any part of Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d 442, under which restitution may be ordered “without individualized proof of deception, reliance, and injury if necessary to prevent the use or employment of an unfair practice.” (Bank of the West, supra, 2 Cal.4th at p. 1267.) [Slip op. at 23 n.14 (bold added).]
  
  
• The substantive right extended to the public by the UCL is the “ ‘ “right to protection from fraud, deceit and unlawful conduct” ’ ” (Prata v. Superior Court (2001) 91 Cal.App.4th 1128, 1137), and the focus of the statute is on the defendant’s conduct. As we have already observed, the proponents of Proposition 64 told the electorate that the initiative would not alter the statute’s fundamental purpose of protecting consumers from unfair businesses practices. Rather, the purpose of the initiative was to address a specific abuse of the UCL’s generous standing provision by eliminating that provision in favor of a more stringent standing requirement. That change, as we observed in Mervyn’s, did not change the substantive law. (Mervyn’s, supra, 39 Cal.4th at p. 232.) [Slip op. at 27-28 (bold added).]
  
  
• We emphasize that our discussion of causation in this case is limited to such cases where, as here, a UCL action is based on a fraud theory involving false advertising and misrepresentations to consumers. The UCL defines “unfair competition” as “includ[ing] any unlawful, unfair or fraudulent business act or practice . . . .” (§ 17200.) There are doubtless many types of unfair business practices in which the concept of reliance, as discussed here, has no application. [Slip op. at 30 n.17 (emphasis added).]
  
  
• Moreover, as noted, before Proposition 64, “California courts have repeatedly held that relief under the UCL is available without individualized proof of deception, reliance and injury.” (Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1288.) [¶] On the other hand, there is no doubt that reliance is the causal mechanism of fraud. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1108.) Additionally, because it is clear that the overriding purpose of Proposition 64 was to impose limits on private enforcement actions under the UCL, we must construe the phrase “as a result of” in light of this intention to limit such actions. (People v. Cooper (2002) 27 Cal.4th 38, 45 [“To determine the meaning of a statute, we seek to discern the sense of its language, in full context, in light of its purpose”].) Therefore, we conclude that this language imposes an actual reliance requirement on plaintiffs prosecuting a private enforcement action under the UCL’s fraud prong. [Slip op. at 30-31 (bold added).]
  
  
• This conclusion, however, is the beginning, not the end, of the analysis of what a plaintiff must plead and prove under the fraud prong of the UCL. Reliance is “an essential element of . . . fraud . . . . [¶] [R]eliance is proved by showing that the defendant’s misrepresentation or nondisclosure was ‘an immediate cause’ of the plaintiff’s injury-producing conduct. [Citation.] A plaintiff may establish that the defendant’s misrepresentation is an ‘immediate cause’ of the plaintiff’s conduct by showing that in its absence the plaintiff ‘in all reasonable probability’ would not have engaged in the injury-producing conduct.” (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1110-1111 (conc. & dis. opn. of Kennard, J.).) [Slip op. at 31 (bold added).]
  
  
• While a plaintiff must show that the misrepresentation was an immediate cause of the injury-producing conduct, the plaintiff need not demonstrate it was the only cause. “ ‘It is not . . . necessary that [the plaintiff’s] reliance upon the truth of the fraudulent misrepresentation be the sole or even the predominant or decisive factor influencing his conduct. . . . It is enough that the representation has played a substantial part, and so had been a substantial factor, in influencing his decision.’ [Citation.] [¶] Moreover, a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material. [Citations.] A misrepresentation is judged to be ‘material’ if ‘a reasonable man would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question’ [citations], and as such materiality is generally a question of fact unless the ‘fact misrepresented is so obviously unimportant that the jury could not reasonably find that a reasonable man would have been influenced by it.’ [Citation.]” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 976-977.)  Nor does a plaintiff need to demonstrate individualized reliance on specific misrepresentations to satisfy the reliance requirement. .... [Slip op. at 31-32 (bold added).]
  
  
• These decisions provide a framework for what plaintiffs must plead and prove in UCL fraud actions in terms of reliance. These cases teach that, while a plaintiff must allege that the defendant’s misrepresentations were an immediate cause of the injury-causing conduct, the plaintiff is not required to allege that those misrepresentations were the sole or even the decisive cause of the injury-producing conduct. Furthermore, where, as here, a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements. Finally, an allegation of reliance is not defeated merely because there was alternative information available to the consumer-plaintiff, even regarding an issue as prominent as whether cigarette smoking causes cancer. [Citation.] Accordingly, we conclude that a plaintiff must plead and prove actual reliance to satisfy the standing requirement of section 17204 but, consistent with the principles set forth above, is not required to necessarily plead and prove individualized reliance on specific misrepresentations or false statements where, as here, those misrepresentations and false statements were part of an extensive and long-term advertising campaign. [Slip op. at 33-34.]
  
  
• Moreover, even assuming that, in light of Proposition 64, the named representatives are no longer adequate representatives of the class because they lack standing, the proper procedure would not be to decertify the class but grant leave to amend to redefine the class or add a new class representative. “This rule is usually applied in situations where the class representative originally had standing, but has since lost it by intervening law or facts.” (First American Title Ins. Co. v. Superior Court (2007) 146 Cal.App.4th 1564, 1574.) We ourselves sanctioned this procedure in a post-Proposition 64 case. (Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 243 [“courts have permitted plaintiffs who have been determined to lack standing, or who have lost standing after the complaint was filed, to substitute as plaintiffs the true parties in interest”].) Accordingly, we reverse the order granting the decertification motion and remand the case for further proceedings to determine whether these plaintiffs can establish standing as we have now defined it and, if not, whether amendment should be permitted. [Slip op. at 34 (bold added).]

So, what does it all mean? It means that, although the named class representatives must meet the standing requirements (which, in UCL "fraudulent" prong cases, includes a showing of "reliance"), for the unnamed class members, the showing required now is exactly the same as what it was pre-Prop. 64. That, after all, is what the Supreme Court held in Mervyn’s. Individualized proof of deception, reliance and injury are not required. After Tobacco, class certification of a UCL claim now should be as easy (or difficult, as the case may be) as it was before Prop. 64.

The opinion is up: In re Tobacco II Cases

The opinion is up.  It is a 4-3 decision, with Justices Baxter, Corrigan, and Chin filing a concurring and dissenting opinion.  Here is a paragraph from the introduction to the majority opinion by Justice Moreno:

On review, we address two questions: First, who in a UCL class action must comply with Proposition 64’s standing requirements, the class representatives or all unnamed class members, in order for the class action to proceed? We conclude that standing requirements are applicable only to the class representatives, and not all absent class members. Second, what is the causation requirement for purposes of establishing standing under the UCL, and in particular what is the meaning of the phrase “as a result of” in section 17204? We conclude that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions. Those same principles, however, do not require the class representative to plead or prove an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign. Accordingly, we reverse the order of decertification to the extent it was based upon the conclusion that all class members were required to demonstrate Proposition 64 standing, and remand for further proceedings regarding whether the class representatives in this case have, or can demonstrate, standing.

Slip op. at 2-3. I hope to have more on the opinion later.

BREAKING NEWS: Supreme Court to hand down In re Tobacco decision on Monday

Today, the Supreme Court announced that it will be handing down its decision in In re Tobacco II Cases, no. S147345, on Monday morning.  The opinion should be available at this link:

In re Tobacco II Cases, ___ Cal.4th ___ (May 18, 2009)

These are the issues on review in the case:

(1) In order to bring a class action under Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), as amended by Proposition 64 (Gen. Elec. (Nov. 2, 2004)), must every member of the proposed class have suffered “injury in fact,” or is it sufficient that the class representative comply with that requirement? (2) In a class action based on a manufacturer’s alleged misrepresentation of a product, must every member of the class have actually relied on the manufacturer’s representations?

My report on the oral argument, which took place in early March, is available at this link.

Chief Justice George recused from panel in In re Tobacco II Cases

According to the Supreme Court's oral argument calendar notice, Justice Eileen C. Moore of the Fourth Appellate District, Division Three, will be sitting in place of Chief Justice George in In re Tobacco II Cases, no. S147345.

A quick Westlaw search shows that Justice Moore has authored a few opinions involving UCL claims in recent years.  In R & B Auto Center, Inc. v. Farmers Group, Inc., 140 Cal.App.4th 327 (2006), for example, she touched on both of the issues on review in Tobacco:

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.

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. “Code of Civil Procedure section 382 authorizes class actions ‘when the question is one of common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court....’ The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members. [Citation.] The ‘community of interest’ requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citation.]” (Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326, 17 Cal.Rptr.3d 906, 96 P.3d 194.) 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.

Id. at 360-61.  (Here is my original blog post on R&B.)  The argument in Tobacco will take place on Tuesday, March 3, 2009 at 9:00 a.m. in San Francisco.

BREAKING NEWS: Oral argument scheduled on Prop. 64 issues in In re Tobacco II Cases

Today, the Supreme Court scheduled the oral argument in In re Tobacco II Cases, no. S147345. The argument will take place on Tuesday, March 3, 2009 at 9:00 a.m. in San Francisco. As I'm sure you all know, these are the issues on review:

(1) In order to bring a class action under Unfair Competition Law (Bus. & Prof. Code, section 17200 et seq.), as amended by Proposition 64 (Gen. Elec. (Nov. 2, 2004)), must every member of the proposed class have suffered "injury in fact," or is it sufficient that the class representative comply with that requirement? (2) In a class action based on a manufacturer's alleged misrepresentation of a product, must every member of the class have actually relied on the manufacturer's representations?

Some of the briefs are collected at these links.  I'm planning to attend the argument and provide a report here on March 4th. 

UPDATE:  In other, almost as exciting news, the Supreme Court set oral argument in the Marriage Cases as well. That argument will take place on Thursday, March 5, 2009 at 9:00 a.m. in San Francisco, and it will be broadcast live at The California Channel, which means a webcast will also be available.  I don't yet know if the Tobacco argument will also be on The California Channel.

"Cutting Class"

Yesterday's Daily Journal had a Focus column (subscription) on the Prop. 64-related cases now pending before the Supreme Court: 

Big business interests are now attempting to convert a shield, which protects against extortionate lawsuits, into a sword to eliminate valid ones. To do so, they seek to expand Proposition 64 to make it a tool to suppress valid consumer class actions brought under the Unfair Competition Law and False Advertising Law. They contend that Proposition 64 bars these class actions unless all potential class members show reliance on the deceptive act at issue. Consumer lawyers counter that only the named plaintiffs (the class representatives) need to do this.

The lower courts are divided, which has led to a high-stakes showdown soon to be decided by the state Supreme Court.

The article goes on to summarize the many reasons why the Supreme Court should continue to permit a classwide presumption of reliance under Vasquez.  The article discusses the facts of two of the "grant and hold" cases, Pfizer v. Superior Court (Galfano), no. S145775, and McAdams v. Monier, no. S154088, but not the lead case, In re Tobacco II Cases, no. S147345.

This reminded me of an article in the September 2008 issue of Los Angeles Lawyer, which had what can only be described as a gross error (since corrected in the online version).  The article cited the Tobacco preemption decision (In re Tobacco II Cases, 41 Cal.4th 1257 (2007)), but completely overlooked the fact that an entirely separate case of the same name remains pending before the Supreme Court.  (Thanks to Lisa Perrochet for bringing this article, and its error, to my attention.) 

No activity has occurred in In re Tobacco since August, when Justice Kennard was appointed Acting Chief Justice for the case, in place of Chief Justice George, who has been recused.  The briefing was completed in December 2007. 

Supreme Court issues "grant and hold" order in Prop. 64 "injury in fact" case: O'Brien v. Camisasca Automotive Mfg., Inc.

On Wednesday, the Supreme Court issued a "grant and hold" order in O'Brien v. Camisasca Automotive Mfg., no. S163207. The order reads:

Petition for Review GRANTED. Further action in this matter is deferred pending consideration and disposition of related issues in In re Tobacco II Cases, S147345, and Meyer v. Sprint Spectrum, LP, S153846 (see Cal. Rules of Court, rule 8.512(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.520(a) is deferred pending further order of the court.

In O'Brien, the Court of Appeal (Fourth Second Appellate District, Division Three) affirmed summary judgment in the defendant's favor, holding that the plaintiff lacked standing to assert UCL or CLRA claims because he did not suffer injury in fact as a result of the defendant's alleged misconduct. The suit challenged the defendant's purported mislabeling of its products as "Made in the U.S.A." O'Brien v. Camisasca Automotive Manufacturing, Inc., 161 Cal.App.4th 388 (2008). My original blog post on O'Brien is at this link.

List of pending Supreme Court cases

My list of pending Supreme Court cases involving UCL and/or class action issues has been updated.

Supreme Court issues "grant and hold" order in McAdams v. Monier

Yesterday, the Supreme Court issued a "grant and hold" order in McAdams v. Monier, no. S154088. Briefing is deferred pending resolution of In re Tobacco II Cases, no. S147345. The Court of Appeal's opinion, McAdams v. Monier, Inc., 151 Cal.App.4th 667 (2007), is no longer citable. Here is my original post on the review petition in this case, and here is my post on the Court of Appeal's opinion.

Supreme Court extends time to grant or deny review in McAdams v. Monier, Inc.

On Friday, August 24, 2007, the Supreme Court gave itself until October 3, 2007 to grant or deny review in McAdams v. Monier, Inc., no. S154088. If it hadn't, it would have had to grant or deny review during next week's conference. Thanks to the blog reader who emailed me with the tip. Here is my original post on the pending review petition in this case, in which the Court of Appeal reversed an order denying class certification of UCL and CLRA claims.

Petition for review filed: McAdams v. Monier, Inc.

On July 5, 2007, a petition for review was filed in McAdams v. Monier, Inc., no. S154088. The petition challenges the Court of Appeal's reversal of a trial court order denying certification of UCL and CLRA claims in a non-disclosure case. McAdams v. Monier, Inc., 151 Cal.App.4th 667 (2007). My original blog post on McAdams is here.

The petition has already been fully briefed. The answer to the petition was filed on July 25, 2007, and the reply was filed on August 2, 2007. Also, I've received copies of three amicus letters in support of the petition (none of which appears on the Supreme Court's docket as of this writing):

• Amicus Letter of CJAC and California Bankers Association (dated 08/16/07)
  

• Amicus Letter of Intel Corporation (dated 08/10/07)
  

• Amicus Letter of VeriSign, Inc. and DENTSPLY International, Inc. (dated 08/17/07)

All of the letters argue that, at a minimum, the Supreme Court should issue a "grant and hold" order pending resolution of In re Tobacco Cases II and Pfizer. They also argue that California law forecloses any possibility of establishing predominance through a classwide presumption of reliance in either a CLRA or a UCL case. But the doctrine of presumed reliance in a fraud-type claim has been well established since Vasquez v. Superior Court, 4 Cal.3d 800 (1971), and no later case has repudiated the doctrine, particularly in a case (like McAdams) that rests on the defendant's failure to disclose material information known to it about the product it was selling. None of the case authorities cited in the letters supports the notion that presumed reliance no longer exists in California jurisprudence in cases involving such facts (which is what the letters basically say). Mirkin v. Wasserman, 5 Cal.4th 1083 (1993), on which the letters rely, was not an omissions case, but instead involved the "fraud on the market" theory, which would have rested on a presumption of reliance by persons who may never have heard the defendants' affirmative misprepresentations at all. The Court refused to adopt the "fraud on the market" theory, but expressly reaffirmed that "actual reliance can be proved on a class-wide basis when each class member has read or heard the same misrepresentations." Id. at 1095. Similarly, "to prove reliance on an omission[, o]ne need only prove that, had the omitted information been disclosed, one would have been aware of it and behaved differently." Id. at 1093. Under Vasquez, this proof can be made on a classwide basis if the same material information was withheld from each class member. Nothing in Mirkin is to the contrary.

Unless the Court gives itself an extension of time, it has until approximately September 4, 2007 to grant or deny review. Therefore, we can expect some action during either today's conference or next week's.

UPDATE: The Supreme Court took no action on this case during its conference on Wednesday, August 22, 2007, so we will have to wait until next week. Also, thanks to the reader who emailed me to point out that the link to the VeriSign amicus letter was broken. The link has now been fixed.

Supreme Court grants review in another Prop. 64 "injury in fact" case: Meyer v. Sprint Spectrum

Yesterday, the Supreme Court granted review in Meyer v. Sprint Spectrum, no. S153846. In that case, the Court of Appeal (Fourth Appellate District, Division Three) said that Prop. 64 created a "two-part, statutory standing test," and held that the plaintiffs lacked Prop. 64 standing to challenge unconscionable provisions in their cellular telephone contracts because the defendant had not enforced or threatened to enforce the provisions against them. The Court also held that the plaintiffs' CLRA claim failed. Meyer v. Sprint Spectrum L.P., 150 Cal.App.4th 1136 (2007). My original post on the Meyer decision is available at this link.

This case was decided the day before the State Bar's UCL conference in Los Angeles, at which I spoke on May 18, 2007. Those of you who attended may recall that a copy was handed out to all attendees.