The UCL Practitioner

Live blog of "UCL Remedies" panel at the 2022 Golden State Institute

Today I'm attending the 2022 Golden State Antitrust and Unfair Competition Law Institute at the Julia Morgan Ballroom in San Francisco. The 3:00 p.m. panel is entitled: "UCL Remedies: You Can't Always Get What You Want." The speakers are Andre Mura of Gibbs Law Group LLP; Zoe Savitsky of the Oakland City Attorney's Office; Steven E. Swaney of Veneable LLP; and Betsy C. Manifold of Wolf Haldenstein as moderator. This promises to be an excellent talk. 

It's been a very long time since I've done a live blog, but my plan is to cite new decisions of interest mentioned by the panel that I haven't previously covered on the blog. Here we go:

1. New California Supreme Court opinion on civil penalties recoverable in a UCL public prosecutor action and the equitable nature of that remedy: Nationwide Biweekly Administration, Inc. v. Superior Court, 9 Cal.5th 279 (2020).
2. New California Supreme Court opinion on geographic scope of UCL remedies in a public prosecutor action; local prosecutors may recover statewide civil penalties as well as statewide injunctive relief: Abbott Laboratories v. Superior Court, 9 Cal.5th 642 (2020).
3. Johnson & Johnson public prosecutor action involving cervical mesh extensively addressed issue of how civil penalties are calculated.
4. Court of Appeal rejects argument that harms resulting from lost market share is recoverable as UCL restitution in a competitor action: Lee v. Luxottica Retail N. Am., Inc., 65 Cal.App.5th 793, 797 (2021).
5. New Ninth Circuit opinions on "adequate legal remedy" defense to UCL claims:
   1. Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020) (Sonner I) (action involved misrepresentations regarding a dietary supplement; UCL and CLRA claims brought; Ninth Circuit affirmed dismissal of UCL claim because CLRA provided adequate legal remedy--importantly, as a matter of federal common law under Eire)
   2. Sonner v. Premier Nutrition Corp., 49 F.4th 1300 (9th Cir. 2022) (Sonner II) (same plaintiff re-filed her case in state court (Alameda County); defendant's motion to enjoin state-court proceeding was denied due to uncertainty over jurisdictional issue)
   3. Guzman v. Polaris Indus., 49 F.4th 1308 (9th Cir. 2022) (decided Sept. 29, 2022) (affirmed dismissal of UCL claim with directions to dismiss without prejudice to re-filing in state court)
   4. The above case summaries are by panelist Steven Swaney. My takeaway is these decisions may provide a way to avoid federal jurisdiction, allowing your UCL class action to proceed in state court.  Panelist Andre Mura just pointed out that this may be a pyrrhic victory for defendants. I agree. Panelist Swaney is now pointing out that defendants should think long and hard before moving to dismiss UCL claims under Sonner.
6. Several new opinions on "public injunctive relief" in private UCL litigation. The issue is coming up a lot, according to panelist Mura, because it's relevant to whether the UCL claim is arbitrable under McGill (see this blog post).
   
   1. Hodges v. Comcast Cable Communications, LLC, 21 F.4th 535, 542 (9th Cir. 2021) (held that the injunction sought was "public" rather than private)
   2. Stover v. Experian Holdings, Inc., 978 F.3d 1082 (9th Cir. 2020) (addressing Article III standing)
   3. Rogers v. Lyft, Inc., 452 F.Supp.3d 904, 919 (N.D. Cal. 2020) (addressing Prop. 64 standing)
   4. DiCarlo v. MoneyLion, Inc., 988 F.3d 1148 (9th Cir. 2021) (construing McGill)

As you can imagine, the panel had much more to say about the new decisions, and they also provided an interesting and useful summary of each form of UCL remedy. Many thanks to the panelists for a great discussion. That's all for today's live blog.

UCL jury trials in public prosecutor actions? Supreme Court to decide in Nationwide Biweekly v. Superior Court

On February 5, 2020, the Supreme Court heard oral argument in Nationwide Biweekly Administration v. Superior Court, no. S250047, involving whether a jury trial right exists in UCL public prosecutor actions seeking statutory penalties.  The Court of Appeal (First Appellate District, Division One) held that there is a jury trial right on liability, but that the amount of civil penalties, and the propriety of other equitable remedies (such as injunctive relief), is for the court to determine. Nationwide Biweekly Administration, Inc. v. Superior Court, 24 Cal.App.5th 438 (2018). 

We will learn the Supreme Court's take on these questions by May 5, 2020 (ninety days after February 5, 2020).  As a practical matter, that means the opinion will be issued by no later than May 4, 2020 (the last Monday before the deadline).

The video of the oral argument is available at this link.  The argument took place in Sacramento, which will not be happening again for a while.  These are extraordinary times.  Here in San Francisco, we are "sheltering in place" as of early Tuesday.  Everyone please stay safe. 

UCL remedies for Labor Code violations and UCL claim "splitting": Zakaryan v. Men's Warehouse, Inc.

While Zakaryan v. Men's Warehouse, Inc., ___ Cal.App.5th ___ (Mar. 28, 2019), is primarily an arbitration decision, it includes some interesting observations about the UCL.   

Seeking to recover unpaid wages as restitution under the UCL is now so routine, the Zakaryan opinion says, that this enforcement mechanism is properly described as one of several "[t]raditionally" pursued by aggrieved employees: 

Traditionally, the Labor Code provides several mechanisms for three different actors to enforce the above described labor laws. 

First, the aggrieved employee may seek judicial or administrative relief.  In terms of judicial relief, the employee may “file[] an ordinary civil action against the employer” for (1) breach of contract (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1084 (Reynolds), abrogated on other grounds in Martinez v. Combs (2010) 49 Cal.4th 35), (2) restitution under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 177-178), or (3) violation of the Labor Code provision at issue if (and only if) the Code authorizes individual employees to bring a claim based on that provision (§§ 1194, subd. (a) [authorizing civil suit to recover “unpaid balance” of overtime premium pay], 218 [authorizing civil suit to recover pay for missed meal and rest periods and waiting time penalty]). .... 

Slip op. at 6-7 (emphasis added). 

Zakaryan also had this to say about permissible "splitting" of UCL and CLRA claims:

Broughton held that an individual plaintiff’s claim under the Consumer Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.) could be split into two and shunted into two different fora—namely, his claim for damages sent to arbitration and his claim for injunctive relief to “enjoin[][the defendant’s allegedly] deceptive [methods, acts and] practices” to remain in court.  (Boughton, at pp. 1079-1084.)  Following on Broughton’s heels, Cruz held that an individual plaintiff’s claim under the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.) could likewise be split into two and shunted into two different fora—namely, his claim for restitution to arbitration and his claim for injunctive relief to “‘enjoin[] [the defendant’s allegedly] wrongful acts and practices’” to remain in court.  (Cruz, at pp. 308-309, 312-313, 315.)  Broughton and Cruz sanctioned the claim splitting because the individual plaintiff’s CLRA and UCL claims, respectively, involved two primary rights—namely, the individual plaintiff’s right to be made whole (through damages or restitution) and the public’s right to be protected from deceptive or wrongful practices (through a “public injunction” sought by the individual plaintiff “act[ing] in the purest sense as a private attorney general”).  (Cruz, at p. 312; Broughton, at pp. 1079-1080, 1084; see also McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 961 [“the public injunctive relief available under the UCL [and] the CLRA . . . is primarily ‘for the benefit of the general public’ . . . [and] ‘not to resolve a private dispute’”].)  In other words, individual CLRA and UCL plaintiffs sometimes wear two hats while the employee who brings a solitary PAGA action always wears but one; the former may accordingly be split while the latter may not.

Id. at 13-14 (emphasis added) (citing Cruz v. PacifiCare Health Systems, Inc., 30 Cal.4th 303 (2003); Broughton v. Cigna Healthplans, 21 Cal.4th 1066 (1999)). 

FAL not void for vagueness: People v. Superior Court (J.C. Penney Corp.)

People v. Superior Court (J.C. Penney Corp.), ___ Cal.App.5th ___ (Apr. 16, 2019), is a public prosecutor action alleging that J.C. Penney, Macy's, Kohl's and Sears violated the UCL and FAL when they "sold products online by means of misleading, deceptive or untrue statements regarding the former prices of those products."  Slip op. at 2.  The appeal concerned the FAL claims only. 

The Court of Appeal (Second Appellate District, Division Four) closely examined the FAL and concluded that it is not constitutionally void for vagueness, either on its face or as applied against the defendants.  The Court of Appeal also rejected the defendants' argument that the FAL impermissibly infringed on their free speech rights.  

Supreme Court to consider jury trial right in UCL public prosecutor actions: Nationwide Biweekly Admin., Inc. v. Superior Court

Last September, the Supreme Court granted review in Nationwide Biweekly Administration v. Superior Court, no. S250047, which presents the following issue (according to the docket):

Is there a right to a jury trial in a civil action brought by the People, acting through representative governmental agencies, pursuant to the Unfair Competition Law (Bus. & Prof. Code, § 17200, et seq.), the False Advertising Law (Bus. & Prof. Code, § 17500, et seq.) or the Check Sellers, Bill Payers, and Proraters Law (Fin. Code, § 12200, et seq.), when the People seek statutory civil penalties among other forms of relief?

The Court of Appeal (First Appellate District, Division One) held that there is a jury trial right in such a public prosecutor action on the question of liability.  The amount of civil penalties, and the propriety of other equitable remedies (such as injunctive relief), is for the court to determine. Nationwide Biweekly Administration, Inc. v. Superior Court, 24 Cal.App.5th 438 (2018). 

The panel canvassed the past UCL case law on the jury trial question, and concluded that most of the past cases considered the Sixth Amendment right to a jury trial in criminal actions, not the common-law jury trial right secured by the California constitution, on which the defendant relied.  Under the common law, governmental actions seeking civil penalties were considered legal, not equitable, and were triable by jury:

[C]ontrary to the People’s assertion, there is no line of cases holding that there is no right to jury trial in a UCL enforcement action brought by the government and seeking statutory penalties. Rather, there is a line of cases holding that the Sixth Amendment right to jury trial in criminal cases is inapplicable to the UCL—a proposition with which we agree. Only one case, Bhakta, has concluded there is no right to a jury trial in a UCL enforcement action under article I, section 16 of the California Constitution. However, as we have discussed, in our view the Bhakta court’s analysis was incomplete and failed to take into account that statutory penalties are a significant remedy under the UCL and such penalties, under historic English common law, would have been sought in the courts of law, thus securing to defendants the right to jury trial.  [Citations.]

Id. at 460-61 (citing People v. Bhakta, 162 Cal.App.4th 973 (2008)).   

In a footnote, the panel considered one of the leading cases holding that UCL actions between private litigants carry no jury trial right:

The Bhakta court cited Hodge v. Superior Court (2006) 145 Cal.App.4th 278, 284 (Hodge), for the proposition that the UCL provides for “only equitable remedies.” (Bhakta, supra, 162 Cal.App.4th at p. 979.) Hodge, however, was a wage and hour case in which the plaintiff employees sought back wages for overtime. (Hodge, at pp. 281–282.) The defendant employer claimed it had a right to jury trial because its liability was based on conduct that was “unlawful” under the Labor Code. (Id. at p. 283.) The Hodge court concluded otherwise, stating “the UCL provides only for equitable remedies,” “[d]amages are not available.” (Id. at p. 284.) Thus, said the appellate court, “the UCL is not simply a legislative conversion of a legal right into an equitable one. It is a separate equitable cause of action.” (Ibid.) In short, the Hodge court was not called upon to address, nor did it, the issue of statutory penalties sought in a government enforcement action.

Furthermore, in observing that other courts had held there is no jury trial right under the UCL, the Hodge court cited to [three cases] all holding that there is no Sixth Amendment right to jury trial under UCL, a conclusion with which we agree but which is not apposite to the right to jury trial in a civil case. (Hodge, supra, 145 Cal.App.4th at p. 285.)

Id. at 460 n.11 (emphasis in original; hyperlink added).  For more on Hodge, see my original blog post on that opinion. 

It will be interesting to see what, if anything, the Supreme Court has to say about Hodge or other decisions on the jury trial right in private UCL actions.  As of April 5, 2019, the merits briefing in Nationwide Biweekly is complete. 

New opinion confirms UCL and CLRA remedies are cumulative to each other: Flores v. Southcoast Automotive Liquidators, Inc.

In Flores v. Southcoast Automotive Liquidators, Inc., ___ Cal.App.5th ___ (Nov. 27, 2017), the Court of Appeal (Second Appellate District, Division Five) held that "an appropriate correction offer under the Consumers Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.) does not prevent a consumer from pursuing causes of action for fraud and violation of the UCL based on the same conduct, because the remedies are cumulative."  Slip op. at 2 (footnote omitted). 

UCL insurance opinion: The Traveler's Property Cas. Co. v. Actavis, Inc.

In The Traveler's Property Cas Co. v. Actavis, Inc., ___ Cal.App.5th ___ (Nov. 6, 2017), the Court of Appeal (Fourth Appellate District, Division Three) considered whether the defendant pharmaceutical companies' CGL insurance policies required the insurers to defend a UCL "public prosecutor" action brought by Santa Clara and Orange Counties.  The complaint alleges that the defendants' opioid marketing campaigns, instituted in the 1990s to "increase sales of opioids and enhance corporate profits," were deceptive, unfair and unlawful.  The Court of Appeal found no duty to defend the action (or a similar action brought by the City of Chicago). 

The complaint in the underlying UCL action is available at this link.

Interesting discussion of equitable vs. non-equitable monetary relief: Bayer v. Neiman Marcus Group

The Ninth Circuit's recent opinion in Bayer v. Neiman Marcus Corp., ___ F.3d ___ (9th Cir. Jun. 26, 2017), contains a thought-provoking discussion of equitable vs. non-equitable forms of monetary relief.  See slip op. at 16-20. 

The case does not involve the UCL, and it considers federal law rather than California law, but the discussion resonates for me as I think about UCL restitution and the differences between restitutionary and non-restitutionary disgorgement.  Because of course I think about that all the time, especially on warm summer days like today.     

Another new UCL public prosecutor opinion: People v. Overstock.com, Inc.

In People v. Overstock.com, Inc., ___ Cal.App.5th ___ (Jun. 2, 2017), the Court of Appeal (First Appellate District, Division Four) affirmed a judgment of more than $6.8 million (!) in civil penalties, plus injunctive relief, against Overstock.com for UCL and FAL violations. 

Class certification not required for broad-ranging "public" injunctive relief under the UCL: McGill v. Citibank, N.A.

This morning, the California Supreme Court handed down its long-awaited opinion, McGill v. Citibank, N.A., ___ Cal.5th ___ (Apr. 6, 2017). 

In McGill, the Court was expected to address whether the Federal Arbitration Act, as construed in Concepcion, preempts the Broughton-Cruz rule (see this blog post for more on that rule).  However:

[I]t is now clear that the Broughton-Cruz rule is not at issue in this case.  As detailed above, late in the Court of Appeal proceedings, McGill asserted that the arbitration provision purports to preclude her from seeking public injunctive relief in any forum.  She repeats that assertion in this court ....   At oral argument before us, Citibank agreed with McGill’s reading of the arbitration provision.

Slip op. at 7 (emphasis in original).

Accordingly, the opinion addressed whether such a contractual provision—one purporting to completely eliminate the right to seek public injunctive relief under the UCL, FAL, and CLRA—was void, under ordinary contract-law principles, as contrary to public policy.  The Court held that it was.  Id. at 14. 

The opinion then addressed whether the FAA, construed in Concepcion, preempted this principle of California contract law.  It held that Concepcion did not.  Slip op. at 14-22. 

Here's the part that's really interesting.   The opinion addresses, at length, whether Prop. 64 eliminated the ability of private plaintiffs to seek broad-ranging public injunctive relief.  Not only did the Court say "no" to that (id. at 10-14), it also held that class certification is not required of a UCL or FAL claim seeking such relief!  Id. at 13-14. 

This has been an open question for the past twelve years, since Prop. 64 passed in November 2004.  (For example, see this 2005 blog post, this one from 2006, and this one from 2007.) 

Truthfully, I did not expect the Court to reach or decide it in McGill, but I think the Court's conclusion is absolutely the correct one.  Attempting to apply class certification principles to forward-reaching injunctive relief claims just doesn't make any sense, procedurally:  

[W]e have held that the phrase “compl[y] with Section 382 of the Code of Civil Procedure” (Bus. & Prof. Code, §§ 17203, 17535) “imposes a requirement that the action be brought as a class action.”  (Arias v. Superior Court (2009) 46 Cal.4th 969, 978.)  This requirement has never been imposed with regard to requests to enjoin future wrongful business practices that will injure the public, and we find nothing in the ballot materials for Proposition 64 suggesting an intent to link or restrict such relief to the class action context.  Indeed, imposing this requirement would largely eliminate the ability of a private plaintiff to pursue such relief, because class certification requires “the existence of both an ascertainable class and a well-defined community of interest among the class members” (Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 913), and “ ‘the general public’ . . . fails to meet” this requirement (Czap v. Credit Bureau of Santa Clara Valley (1970) 7 Cal.App.3d 1, 6). 

Slip op. at 13 (emphasis added).  The opinion holds that the class certification requisite added by Prop. 64 applies only to claims by private plaintiffs "seek[ing] disgorgement and/or restitution on behalf of persons other than or in addition to the plaintiff.'"  Id. at 13-14 (quoting Kraus v. Trinity Management Services, Inc., 23 Cal.4th 116, 126 n.10 (2000))(emphasis in original). 

The opinion also strongly suggests that a defendant's "voluntary cessation of wrongful conduct" does not automatically preclude forward-reaching injunctive relief.  Id. at 10.  Notably, the opinion favorably cites Robinson v. U-Haul of California, 4 Cal.App.4th 304 (2016) (discussed in this blog post), in which the Court of Appeal rejected an argument that no injunction may issue under the UCL if the defendant voluntarily stops engaging in wrongful acts. 

For those interested in a general overview of the McGill opinion, this is the Court's introductory paragraph:

In previous decisions, this court has said that the statutory remedies available for a violation of the Consumers Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.), the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.), and the false advertising law (id., § 17500 et seq.) include public injunctive relief, i.e., injunctive relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public.  (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316 (Cruz); Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1077 (Broughton).)  The question we address in this case is the validity of a provision in a predispute arbitration agreement that waives the right to seek this statutory remedy in any forum.  We hold that such a provision is contrary to California public policy and is thus unenforceable under California law.  We further hold that the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) does not preempt this rule of California law or require enforcement of the waiver provision.  We therefore reverse the judgment of the Court of Appeal.

Slip op. at 1.

New UCL "injury in fact" opinion: Ivanoff v. Bank of America, N.A.

In another wrongful foreclosure case, the Court of Appeal (Second Appellate District, Division Seven) held that the plaintiff had adequately alleged Prop. 64 "injury in fact" for standing purposes:

Whether or not Ivanoff’s allegation that she “stands to lose her home” adequately pleaded injury in fact under the UCL, Ivanoff also alleged, as a result of the Bank’s unlawful business practices, she paid money to the Bank and received billings for increased monthly loan payments in excess of what she should have owed (or was told she would owe).  No more is required to allege injury in fact.

Ivanoff v. Bank of America, N.A., ___ Cal.App.5th ___ (Mar. 13, 2017), slip op. at 13-16.  However, the UCL claim was time-barred.  It accrued no later than May 2011, more than four years before suit was filed in August 2015.  Id. at 17-19. 

New UCL opinion considers injunctive relief remedy: Verio Healthcare, Inc. v. Superior Court

In Verio Healthcare, Inc. v. Superior Court, ___ Cal.App.5th ___ (Oct. 12, 2016), the defendants sought a nine-month stay of litigation under Code of Civil Procedure sections 595 and 1054.1, which provide for mandatory continuances of court proceedings if a party is represented by an attorney who is also a member of the California State Assembly -- unless the continuance "would defeat or abridge the other party's right to provisional or pendente lite relief."  Slip op. at 2-3.

The Court of Appeal (Fourth Appellate District, Division Three) held that because the action sought the "provisional remedy" of preliminary injunctive relief under the UCL, the trial court properly declined to issue the requested stay:  

The operative first amended complaint alleges an entitlement to preliminary and permanent injunctive relief as remedies for the alleged trade secret misappropriation and unfair competition under Business and Professions Code section 17200.  In cases such as these, it is common that plaintiffs would invoke the provisional remedy of a preliminary injunction. And as plaintiffs' counsel suggested at oral argument, some discovery may be necessary before filing such a motion. A stay would effectively abridge the right to invoke provisional relief by denying discovery, thereby preventing the filing of a preliminary injunction motion.

Id. at 15 (footnote omitted). 

The UCL and secondary liability: Daniels v. Select Portfolio Services, Inc.

In an opinion handed down in April of this year, the Court of Appeal (Sixth Appellate District) reconfirmed the rule that UCL liability can be predicated on an agency or conspiracy theory.  Daniels v. Select Portfolio Services, Inc., 246 Cal.App.4th 1150, 1188 (2016) (citing People v. JTH Tax, Inc., 212 Cal.App.4th 1219, 1242 (2013); People v. Bestline Products, Inc., 61 Cal.App.3d 879, 918-19 (1976)). 

This blog's discussion of People v. JTH Tax, Inc. is available at this link.  People v. Bestline Products was a little before the blog's time, but see this post for a discussion of more recent decisions on aiding and abetting liability under UCL. 

"Dole Buyers Get Mixed Win In 9th Circ. Natural Label Ruling"

Last week, I was quoted in an article in Competition Law360 (subscription) on the Ninth Circuit's unpublished opinion in Brazil v. Dole Packaged Foods, LLC, 2016 WL 5539863 (9th Cir. Sept. 30, 2016).

The article begins:

Consumers won a major false advertising battle Friday when the Ninth Circuit ruled the label on Dole's "all natural" frozen berry products may be misleading, but the panel's finding that the decertified class hadn't shown it could prove classwide damages greatly limits what the buyers can recover if they ultimately prevail, attorneys say.

As I told the reporter, I think the opinion mistakenly assumes that there are only two ways to measure UCL restitution, which is not the law in California.  Also, the class certification portion of the opinion seems to me inconsistent with Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979 (9th Cir. 2015) (discussed in this blog post).  The analysis assumes that every unnamed class member would have to show that they were misled, which is inconsistent with both Pulaski and In re Tobacco II Cases, 46 Cal.4th 298 (2009), which this opinion does not cite (it cites only the more recent Tobacco II opinion on remand, discussed here).  This non-precedential opinion should be limited to its facts.

UCL injunctive relief opinion from earlier this year: Davis v. Farmers Insurance Exchange

This opinion was handed down in March, but I have not previously discussed it. 

In Davis v. Farmers Insurance Exchange, 245 Cal.App.4th 1302 (2016), the plaintiff brought an individual UCL claim as part of his action for wrongful termination. The jury found that the plaintiff's age was a "motivating factor" in his termination, but no damages were awarded because the jury also found that the plaintiff would have been terminated for other, legitimate reasons.  After affirming this point (see id. at 1319-25), the Court of Appeal found no basis under the UCL for enjoining the defendant from engaging in future age discrimination.   The plaintiff was no longer an employee,"and there is no reasonable likelihood he will be at any time in the future or will otherwise be in a position to be harmed by [the defendant's] actions."  Id. at 1327.  Moreover, the record contained no evidence of any ongoing discrimination against any current employees.  Id.

However, the Court of Appeal reversed the judgment on the plaintiff's individual wage claims (id. at 1330-38), as well as the UCL claim to the extent predicated on the wage violations: 

Our conclusion with respect to the wage claim necessarily revives appellant's UCL claim to the extent it is based on failure to pay wages and seeks restitution to recover such wages. (See Cortez v. Perolator Air Flitration Products Co., supra, 23 Cal.4th at pp. 177-178.) 

Id. at 1338 (footnote omitted). 

New Ninth Circuit UCL, FAL and CLRA opinion: Ebner v. Fresh, Inc.

In Ebner v. Fresh, Inc., ___ F.3d ___ (9th Cir. Sept. 27, 2016), the plaintiff asserted UCL, FAL and CLRA claims based on the defendant's labeling and marketing of its "Sugar" lip balm.  According to the plaintiff, the statements of "net weight" are wrong and the "oversize" tubes and boxes in which the lip balm is sold "create the misleading impression that each unit has a larger quantity of lip product than it actually contains." Slip op. at 6.  The district court dismissed the action in its entirety.  Id. at 4-5. 

The Ninth Circuit held that claims based on misstatements of "net weight" were properly dismissed because the federal Food, Drug and Cosmetic Act created a Cel-Tech safe harbor for such statements.  Slip op. at 8-9.  However, plaintiff also argued that the defendant omitted any "supplemental or clarifying statement" explaining that part of the next weight would be inaccessible to the consumer because of the tube design.  Claims based on this omission theory enjoyed no safe harbor, nor were they expressly or impliedly preempted.  Id. at 9-12.

Nevertheless, the omission claim failed, the Court held, because "Plaintiff cannot plausibly allege that the omission of supplemental disclosures about product weight rendered Sugar’s label 'false or misleading' to the reasonable consumer."  Id. at 12.  Basically, the Court held that reasonable consumers know how lip balm tubes with screw mechanisms work, and that they know the tubes can end up leaving some product behind at the bottom.  See id. at 13-15.  In this portion of the opinion, the Court distinguished Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008) (discussed in these blog posts).

The Court then held that claims based on misleading packaging (as opposed to labeling) also failed "for largely the same reasons that the label-based claims fail."  Id. at 16.  In "the high-end cosmetics market, Sugar's elaborate packaging and the weighty feel of the tub is commonplace and even expected by a significant portion of Fresh's 'targeted consumers.'"  Id. (citing Lavie v. Procter & Gamble Co., 105 Cal.App.4th 486 (2003) (discussed in this blog post)). 

This opinion accompanies an order denying the plaintiff's petition for panel rehearing or en banc rehearing, which challenged an earlier opinion handed down in March.   The main difference between the current opinion and the earlier opinion (which has been superseded) is that the current opinion spends more time distinguishing Williams. 

(Hat tip: The Complex Litigator.)

Recent Ninth Circuit UCL opinion: Beaver v. Tarsadia Hotels

In Beaver v. Tarsadia Hotels, 816 F.3d 1170 (9th Cir. Mar. 10, 2016), the Ninth Circuit considered a UCL "unlawful" prong claim predicated on violation of a federal statute.  The UCL's four-year statute of limitations governed, the court held—not the shorter limitations period of the "borrowed" federal statute.  Id. at 1177-78.  Nor did the shorter limitations period preempt "the UCL's more generous" one.  Id. at 1778-81.

A cert. petition was filed in June and remains pending.  Possibly, the petition focuses on the court's holdings in the second half of the opinion, which considered whether the "borrowed" federal statute (the Interstate Land Sales Full Disclosure Act, 15 U.S.C. § 1701 et seq.) applied to the defendant's conduct.  Id. at 1781-88. 

Many thanks to the blog reader who brought this case to my attention.  Although I have not been blogging as frequently this year as I have in the past, I always enjoy and appreciate hearing from my wonderful readers. 

New UCL restitution opinion: In re Tobacco Cases II

In In re Tobacco Cases II, ___ Cal.App.4th ___ (Sept. 28, 2015), the Court of Appeal (Fourth Appellate District, Division One) handed down an interesting new opinion in the long-running UCL cases involving "light" cigarettes.  I'm sure everyone recalls the Supreme Court's landmark opinion in this case from 2009, In re Tobacco II Cases, 46 Cal.4th 298 (2009) (discussed here).

After remand following the Supreme Court's decision, the trial court conducted a bench trial, and ultimately held that Philip Morris knew that "light" cigarettes were no less dangerous than other cigarettes, and that its advertising was likely to deceive a reasonable consumer. Slip op. at 2, 5-6. However, the trial court exercised its discretion to decline to award restitution, based in part on lack of competent evidence.  Id. at 2, 7-9. The trial court also denied injunctive relief.  Id. at 2, 9. 

The Court of Appeal affirmed the judgment in full, in an interesting opinion that addresses UCL restitution in detail.  Id. at 12-30.  The discussion of injunctive relief is also quite interesting.  Id. at 30-32.  Given the outcome and the issues, I would assume that a review petition will be filed.

I will be discussing this opinion during a panel at the 25th Annual Golden State Antitrust and Unfair Competition Law Institute on October 29, 2015 in San Francisco.  The description of my panel is below. I am looking forward to this event and hope to see some of you there.

Session #3 -- GSI 25th Anniversary Retrospective and Prospective Views on CA Antitrust and Unfair Competition Law

This panel of leading plaintiffs' lawyers and defense counsel, moderated by a preeminent California federal court judge, will discuss the major changes in California antitrust and UCL law over the last 25 years and what the panelists prognosticate for the future. The panel also will explore the effect of technology on how these cases have been tried and what changes they see for the future.

Panelists:

• Craig Corbitt, Zelle Hofmann Voelbel & Mason LLP-San Francisco, CA
• Dan Wall, Latham & Watkins LLP-San Francisco, CA
• Kimberly A. Kralowec, The Kralowec Law Group-San Francisco, CA
• William Stern, Morrison & Foerster LLP-San Francisco, CA

Moderator:

• Moderator: Hon. Susan Illston, United States District Judge for the Northern District of California-San Francisco, CA

New UCL opinion: Rutledge v. Hewlett Packard Co.

The Court of Appeal (Sixth Appellate District) handed down an important new UCL opinion last week. 

In Rutledge v. Hewlett Packard Co., ___ Cal.App.4th ___ (Jul. 22, 2015), the Court of Appeal reinstated a UCL "fraudulent" prong claim, and a CLRA claim, against a product manufacturer for failing to disclose material information about the product -- even though the nondisclosure was not about a safety-related defect, and even though for some class members the product did not fail until after the expiration of the manufacturer's warranty.  Slip op. at 6-12. 

Put another way, the opinion places some important limitations on Daugherty v. American Honda Co., 144 Cal.App.4th 824 (2006), and its successor opinion, Bardin v. DaimlerChrysler Corp., 136 Cal.App.4th 1255 (2006).  (For more on Daugherty, see these blog posts.  For more on Bardin, see this one.)  Before this new opinion, the Court of Appeal's most recent word on these issues had been Collins v. eMachines, Inc., 202 Cal.App.4th 249 (2011).

This is what the opinion has to say about the warranty issue:

HP argues [one of the named plaintiffs] and class members similar to him do not have a claim for fraudulent concealment under the UCL, because they received notebooks with inverters that functioned for the duration of the one-year warranty, and were not damaged by HP’s alleged failure to disclose the fact of the faulty inverter.  However, a claim for fraudulent business practices “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.”  (In re Tobacco II Cases (2009) 46 Cal.4th 298, 312.)  The question under the UCL is related to HP’s conduct in failing to disclose the faulty inverter, not on whether the notebook’s computer functioned for one-year.  HP’s argument that the expiration of the warranty period precludes a claim for fraudulent concealment under the UCL is incorrect.

Slip op. at 10-11 (emphasis added).

Back in 2008, the same division of the Court of Appeal declined to disturb the trial court's order granting class certification of the UCL claim in the same case.   My post on the 2008 opinion is here.  In the opinion handed down last week, the Court of Appeal not only reaffirmed that result, but also held that certification should have been granted of a nationwide class.  Slip op. at 23-29.

A timely UCL reminder: East West Bank v. Rio School District

In East West Bank v. Rio School District, ___ Cal.App.4th ___ (Apr. 1, 2015), the Court of Appeal (Second Appellate District, Division Six) reminded us that the doctrine of unclean hands does not apply to UCL claims, equitable though they may be: 

Not only is there no analogous case applying the [unclean hands] doctrine to an action pursuant to [Public Contract Code] section 7107, there are analogous cases holding as a matter of law that the doctrine does not apply to such statutory causes of action.

In Mendoza v. Ruesga, supra, 169 Cal.App.4th 270, a group of immigrants sued an immigration consultant alleging violations of the Immigration Consultants Act (ICA).  (Bus. & Prof. Code, § 22440 et seq.)  The defendant raised unclean hands as a defense based on the immigrants' undocumented status.  The court held the doctrine of unclean hands inapplicable as a matter of law stating:  "Plaintiffs contend that as a matter of law the unclean hands doctrine is inapplicable to their cause of action under the ICA because it is based on Ruesga's violation of statutes intended to protect consumers.  [Fn. omitted.]  We agree with plaintiffs.  'It is true that when the Legislature enacts a statute forbidding certain conduct for the purpose of protecting one class of persons from the activities of another, a member of the protected class may maintain an action notwithstanding . . . that he has shared in the illegal transaction.  The protective purpose of the legislation is realized by allowing the plaintiff to maintain his action against a defendant within the class primarily to be deterred.'  [Citation.]"  (Id., at p. 279; see also Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 543 [holding defense of unclean hands does not apply to an action under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.)].)

Id. at 20-21 (emphasis and hyperlink added).  My original post on Ticconi (before rehearing) is here.

New UCL primary jurisdiction opinion: Guerrero v. Pacific Gas & Elec. Co.

In Guerrero v. Pacific Gas & Electric Co., ___ Cal.App.4th ___ (Oct. 10, 2014), the Court of Appeal (First Appellate District, Division Three) affirmed the trial court's ruling that allowing the plaintiff's UCL claim against PG&E to proceed would interfere with the jurisdiction of the Public Utilities Commission. 

The UCL action was filed in the wake of the 2010 San Bruno gas line explosion, and sought retitution of those portions of PG&E's revenues that plaintiffs claimed should have been, but were not, expended on safety-related projects.  Slip op. at 1-2. 

New opinion construes UCL in wrongful foreclosure context: Rufini v. CitiMortgage, Inc.

In Rufini v. CitiMortgage, Inc., ___ Cal.App.4th ___ (May 28, 2014; pub. ord. Jun. 23, 2014; mod. Jul. 22, 2014), the Court of Appeal (First Appellate District, Division Three) held that the trial court improperly sustained the defendant's demurrer to a UCL claim arising out of the alleged wrongful foreclosure of the deed of trust on plaintiff's home. 

There's nothing particularly earth-shattering in the discussion of the UCL claim, which appears at pp. 11-13 of the slip opinion. 

Court of Appeal considers interplay between UCL, FAL, and anti-SLAPP statute: Demetriades v. Yelp, Inc.

In Demetriades v. Yelp, Inc., ___ Cal.App.4th ___ (Jun. 24, 2014), the Court of Appeal (Second Appellate District, Division One) reversed the judgment that ensued after the trial court granted defendant Yelp, Inc.'s anti-SLAPP motion. 

The Court of Appeal held that the plaintiff's UCL "fraudulent" prong claim and his FAL false advertising claim fell outside the scope of the anti-SLAPP statute:

We conclude that the commercial speech exemption of section 425.17, subdivision (c) applies to Yelp’s statements concerning the accuracy and efficacy of its review filter, and therefore find the trial court erred in granting Yelp’s special motion to strike under section 425.16.  We reverse.

....

The legislative history indicates this legislation [i.e., the anti-SLAPP statute's commercial speech exemption (Code Civ. Proc. § 425.17, subd. (c)] is aimed squarely at false advertising claims and is designed to permit them to proceed without having to undergo scrutiny under the anti-SLAPP statute.  Proponents of the legislation argued that corporations were improperly using the anti-SLAPP statute to burden plaintiffs who were pursuing unfair competition or false advertising claims.  The proponents noted that law seminars were being conducted on the unfair competition law, “encouraging corporations to use the SLAPP motions as [a] new litigation weapon to slow down and perhaps even get out of litigation.”  (Sen. Rules Com., Off. of Sen. Floor Analyses, Sen. Bill No. 515 (2003–2004 Reg. Sess.) as amended Jul. 8, 2003; Sen. Com. on Judiciary, Analysis of Sen. Bill No. 515 (2003–2004 Reg. Sess.) as amended May 1, 2003.)

....

Here, plaintiff’s claims satisfy both prongs of section 425.17, subdivision (c).  Although Yelp’s website is a public forum and contains matters of public concern in its reviews of restaurants and other businesses (Hupp v. Freedom Communications, Inc. (2013) 221 Cal.App.4th 398, 404), unlike the editorial content of Stewart v. Rolling Stone LLC, supra,181 Cal.App.4th 664, Yelp’s statements about its review filter—as opposed to the content of the reviews themselves—are commercial speech about the quality of its product (the reliability of its review filter) intended to reach third parties to induce them to engage in a commercial transaction (patronizing Yelp’s website, which patronage induces businesses on Yelp to purchase advertising).

Slip op. at 2, 15, 17.

New decision addresses (briefly) UCL standing: Boorstein v. CBS Interactive, Inc.

In Boorstein v. CBS Interactive, Inc., ___ Cal.App.4th ___ (Dec. 19, 2013), the Court of Appeal (Second Appellate District, Division Four) held that the plaintiff lacked standing to bring a claim against the defendant for violating the "shine the light" law (Civil Code §§ 1798.83 et seq.).  Slip op. at 9-18.  The panel determined that the plaintiff had not been "injured by a violation of this title," as the "shine the light" law requires.  Id. at 9 (quoting Civ. Code § 1798.84). 

As a result, the plaintiff also lacked standing to bring a UCL "unlawful" prong violation predicated on violation of that statute:

The UCL provides that to pursue a claim for relief under the statute, an individual must have “suffered injury in fact and ha[ve] lost money or property as a result of the unfair competition.”  (Bus. & Prof. Code, § 17204.)  For the reasons stated above, plaintiff failed to allege an “injury in fact.”  Thus, he has not stated a claim for relief under the UCL.  The demurrer to the second cause of action was properly sustained.

Slip op. at 18. 

New UCL preemption and prejudgment interest opinion: Rodriguez v. RWA Trucking Co. (Updated)

The plaintiffs in Rodriguez v. RWA Trucking Co., ___ Cal.App.4th ___ (Sept. 12, 2013; mod. Sept. 20, 2013), a certified class action, were owner-drivers who contracted with the defendant trucking company to haul cargo in their rigs.  They brought UCL "unlawful" prong claims based on the defendant's practice of charging them for auto insurance, physical damage insurance, cargo insurance, and workers’ compensation insurance.  Plaintiffs asserted that none of these forms of insurance could be sold except by a licensed insurance broker (under Ins. Code section 1631), which the defendant was not, and that the workers' compensation insurance charges were prohibited by the Labor Code (section 3751).  Slip op. at 2-7.

The trial court ruled in plaintiffs' favor on all claims. The Court of Appeal (Second Appellate District, Division Four) reversed in part, holding that the claims related to the liability, damage and cargo insurance were preempted by federal law, but that the claim based on the workers' compensation insurance charges was not.  Slip op. at 8-39.

In the next section of the opinion, the Court of Appeal addressed the prejudgment interest awarded by the trial court on the original judgment.  Id. at 39-43.  Following M&F Fishing, Inc. v. Sea-Pac Ins. Managers, Inc., 202 Cal.App.4th 1509 (2012), the Court held that "Civil Code section 3287 does not authorize prejudgment interest on an award of restitution under the UCL."  Id. at 40.  However, the Court concluded, the trial court does have power to award such interest under its "inherent discretionary authority."  Id. at 43.  The Court remanded for determination of whether interest was appropriate on the affirmed part of the judgment. Id. at 40, 43.

Other courts have reached a different conclusion on the prejudgment interest question,¹ but if Rodriquez and M&F stand up, what it means as a practical matter is that prejudgment interest is discretionary, but not mandatory, in UCL actions. 

¹ See, e.g., In re Neurontin Marketing and Sales Practices Litigation, 2011 WL 3852254, *60 (D. Mass. Aug. 31, 2011); Irwin v. Mascott, 112 F.Supp.2d 937, 956 (N.D. Cal. 2000) (citing Tripp v. Swoap, 17 Cal.3d 671, 681 (1976)).

UPDATE:  On December 11, 2013, the Supreme Court issued a "grant and hold" order in this case, making the Court of Appeal opinion uncitable as precedent.  Rodriguez v. RWA Trucking Co., No. S214150.  Briefing has been deferred pending resolution of People ex rel. Harris v. Pac Anchor Transportation, Inc., No. S194388, in which the Court is considering preemption by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 14501) ("FAAAA").  

The UCL and wrongful foreclosure: Glaski v. Bank of America, N.A.

In Glaski v. Bank of America, N.A., ___ Cal.App.4th ___ (Jul. 31, 2013; pub. ord. Aug. 8, 2013), an individual wrongful foreclosure action, the Fifth District has a single paragraph addressing the UCL:

Based on the foregoing, we conclude that Glaski’s fourth cause of action has stated a claim for wrongful foreclosure.  It follows that Glaski also has stated claims for quiet title (third cause of action), declaratory relief (fifth cause of action), cancellation of instruments (eighth cause of action), and unfair business practices under Business and Professions Code section 17200 (ninth cause of action).  (See Susilo v. Wells Fargo Bank, N.A. (C.D.Cal. 2011) 796 F.Supp.2d 1177, 1196 [plaintiff’s wrongful foreclosure claims served as predicate violations for her UCL claim].)

Slip op. at 26-27.  The citation to a federal district court decision suggests that no other California Court of Appeal opinion has addressed whether conduct constituting wrongful foreclosure (which is a catch-all term that can encompass a variety of defects in the foreclosure process, including statutory violations) can form the predicate for a UCL claim. There's no reason why it shouldn't, particularly after Rose and Zhang reconfirmed the broad scope of the UCL's "unlawful" prong.

New public prosecutor opinion addresses interplay between UCL and litigation privilege: People v. Persolve LLC

In People v. Persolve LLC, ___ Cal.App.4th ___ (Aug. 15 2013), the Court of Appeal (Fifth Appellate District) reinstated a UCL "unlawful" prong claim brought by the Kern County District Attorney against a debt collection company for violation of the Rosenthal Act (Civ. Code §§ 1788 et seq.) and the federal Fair Debt Collection Practices Act (15 U.S.C. §§ 1692 et seq.). 

The trial court held that the litigation privilege barred the action because the challenged debt-collection activity related to anticipated litigation.  Slip op. at 2.  The parties did not really dispute, and the Court of Appeal seemed to agree, that the conduct fell within the scope of the privilege because it bore some relation to anticipated litigation (i.e., a lawsuit to enforce the debt).  See id. at 5-6.

The disputed question was whether applying the privilege would make the fair debt collection practices statutes effectively inoperable, and in turn, whether a UCL "unlawful" prong claim predicated on those statutes' violation should be permitted notwithstanding the privilege.  See id. at 6-7.  The Court of Appeal noted that the privilege is "not without limit," and that "Courts have found exceptions to [it] based on irreconcilable conflicts between the privilege and other coequal state laws."  Id. at 6.  An earlier decision, Komarova v. National Credit Acceptance, Inc., 175 Cal.App.4th 324 (2009), held that "the privilege cannot be used to shield violations" of the Rosenthal Act.  Id. at 7.  The same reasoning applied to the federal Act, the Court held.  Id. at 8.

The defendants pointed out that the DA's enforcement action was brought under the UCL, not the state or federal debt collection statutes.  They relied on two decisions holding that the litigation privilege can bar UCL claims.  Id. at 8-9 (citing Rubin v. Green, 4 Cal.4th 1187 (1993); People ex rel. Gallegos v. Pacific Lumber Co., 158 Cal.App.4th 950 (2008) (discussed in this blog post)).

The Court of Appeal was not persuaded:

Where, as here, the “borrowed” statute is more specific than the litigation privilege and the two are irreconcilable, unfair competition law claims based on conduct specifically prohibited by the borrowed statute are excepted from the litigation privilege.  Applying the privilege to unlawful practices based on specific violations of the California Act and the Federal Act would effectively render the protections afforded by those acts meaningless.  In contrast, in both Rubin and Gallegos, the application of the litigation privilege did not render the prohibitions underlying the unfair competition claims significantly or wholly inoperable.  Civil statutes for the protection of the public should be interpreted broadly in favor of their protective purpose.  Accordingly, the People’s unfair competition law claims that are based on conduct that is specifically prohibited by the California Act and/or the Federal Act are not barred by the litigation privilege.  (Komarova, supra, 175 Cal.App.4th at pp. 339-340.)

Id. at 9-10 (emphasis added).  This reasoning should apply not only in public prosecutor actions, but also in cases brought by private litigants. 

New UCL statute of limitations opinion: Fuller v. First Franklin Financial Corp.

In Fuller v. First Franklin Financial Corp., ___ Cal.App.4th ___ (May 1, 2013; pub. ord. May 29, 2013), the Court of Appeal (Third Appellate District) reinstated the plaintiffs' UCL and other claims, all of which the trial court had dismissed on the pleadings as barred by the statute of limitations.  The Court held that the complaint adequately alleged facts sufficient to bring the case within the doctrine of fraudulent concealment, as construed in Aryeh v. Canon Business Solutions, Inc., 55 Cal.4th 1185 (2013) (discussed in this blog post).

The case is not a class action.  It involves alleged misrepresentations by a lender and broker in connection with a home purchase. 

Ninth Circuit en banc panel issues narrow arbitration opinion: Kilgore v. KeyBank, N.A.

In its original three-judge panel opinion last year, the Ninth Circuit held in no uncertain terms that under Concepcion, "the FAA preempts the Broughton-Cruz rule."  Kilgore v. KeyBank, N.A., 673 F.3d 947, 951 (9th Cir. 2012) (hyperlinks added). 

We hold that the Broughton-Cruz rule does not survive Concepcion because the rule "prohibits outright the arbitration of a particular type of claim"—claims for broad public injunctive relief. Concepcion, 131 S.Ct. at 1747. Therefore, our statement in Davis—that Broughton and Cruz prohibit the arbitration of public injunctive relief claims in California—is no longer good law. See 485 F.3d at 1082.

Id. at 960.

In its opinion handed down last week, the en banc panel did not reach the issue.  Kilgore v. KeyBank, N.A., ___ F.3d ___ (9th Cir. Apr. 11, 2013).  The rewritten en banc opinion reads:  

The UCL authorizes broad injunctive relief to protect the public from unfair business practices. Cal. Bus. & Prof. Code § 17203. The Supreme Court has suggested that claims arising from a statute whose underlying purpose creates an “inherent conflict” with the federal policy favoring arbitration may be exempt from the FAA.  Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991). Relying on Gilmer, the California Supreme Court has found an inherent conflict between the FAA policy favoring arbitration and California statutes authorizing “public” injunctive relief. Broughton v. Signa Healthplans of Cal., 988 P.2d 67, 73, 78 (Cal. 1999).

The Broughton plaintiffs “were covered by Medi-Cal, which had negotiated a contract with Cigna ... for health care coverage.” Id. at 71. They sued Cigna under California’s Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code §§ 1750–85, seeking damages for medical malpractice and injunctive relief against Cigna’s allegedly deceptive advertising. Broughton, 988 P.2d at 71. The California Supreme Court held the damages claim subject to the arbitration clause in the Cigna policy because “[s]uch an action is primarily for the benefit of a party to the arbitration, even if the action incidentally vindicates important public interests.” Id. at 79. But the Court also found that because the plaintiffs were “functioning as a private attorney general, enjoining future deceptive practices on behalf of the general public,” id. at 76, their injunction claims were not arbitrable, id. at 75–78.

The California Supreme Court expanded upon Broughton in Cruz v. PacifiCare Health Systems, Inc., 66 P.3d 1157 (Cal. 2003). .... Extending the reasoning of Broughton to claims brought under the UCL and Business and Professions Code, the Cruz court found “the request for injunctive relief is clearly for the benefit of health care consumers and the general public” and therefore not subject to arbitration. Id. at 1164.

We applied the Broughton-Cruz framework in Davis, 485 F.3d at 1081-84. ....

Defendants argue that Davis was vitiated by Concepcion, and the Broughton-Cruz rule no longer exempts a public injunction claim from arbitration. We need not reach that broad argument. Even assuming the continued viability of the Broughton-Cruz rule, Plaintiffs’ claims do not fall within its purview.

Public injunctive relief “is for the benefit of the general public rather than the party bringing the action.” Broughton, 988 P.2d at 78. A claim for public injunctive relief therefore does not seek “to resolve a private dispute but to remedy a public wrong.” Id. at 76. Whatever the subjective motivation behind a party’s purported public injunction suit, the Broughton rule applies only when “the benefits of granting injunctive relief by and large do not accrue to that party, but to the general public in danger of being victimized by the same deceptive practices as the plaintiff suffered.” Id.

The claim for injunctive relief here does not fall within the “narrow exception to the rule that the FAA requires state courts to honor arbitration agreements.” Cruz, 66 P.3d at 1162.

Slip op. at 14-17 (footnote omitted).

The opinion concludes, as did the original opinion, that the arbitration clause was not unconscionable under Armendariz.  Id. at 10-14. 

Judge Pregerson dissented.  His opinion provides some additional factual context and includes the plaintiffs' fine-print contracts (for tuition loans for an education they never received) as an appendix.  Slip op. at 18-26 & Appx. A.

The new opinion is not the legal watershed as it could have been.  The California Supreme Court has denied review in two cases holding that the Broughton/Cruz rule remains good law.  The dissent is worth reading.

In article on the opinion Friday, the San Francisco Chronicle reported that "[s]tudents at an Oakland helicopter pilot school that folded in 2008 can't sue a bank for relief from unpaid loans and must take their cases to arbitration, a federal appeals court ruled Thursday.  ....   In an indignant dissent, Judge Harry Pregerson said the [arbitration] fee, a confidentiality requirement and other arbitration provisions were one-sided and unfair. KeyBank 'participated in the fraud that Silver State [Helicopters] perpetrated on unwitting students' and should be held accountable in court, Pregerson said."

Pending cert. petition of interest: Pom Wonderful LLC v. The Coca-Cola Co.

In June, the Ninth Circuit handed down its opinion in Pom Wonderful LLC v. The Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012), discussed in this blog post.  Pom sued Coca-Cola for allegedly mislabeling its "pomegranate blueberry" juice, which according to the lawsuit actually consists mostly of grape and apple juices.  The Ninth Circuit allowed Pom's state-law claims, including its UCL claim, to proceed, but found the Lanham Act claims barred. 

In December, Pom filed a cert. petition with the U.S. Supreme Court.  POM Wonderful LLC v. The Coca Cola Co., No. 12-761 (U.S.).  The case was distributed for conference on March 22, 2013, and on March 25, the Court invited the Solicitor General to file a brief.  This development suggests some interest in the case. 

Pom Wonderful is mainly a Lanham Act case, but its UCL holdings are important, as the Court of Appeal recently recognized in Law Offices of Mathew Higbee v. Expungement Assistance Services, ___ Cal.App.4th ___ (Mar. 14, 2013) (discussed here).  This is the question presented, according to the cert. petition:

Whether the court of appeals erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act.