Supreme Court unanimously reverses UCL "unlawful" prong decision: Kearney v. Solomon Smith Barney

Yesterday, the Supreme Court issued its decision in Kearney v. Salomon Smith Barney, Inc. , ___ Cal.4th ___ (July 13, 2006). In that case, the plaintiff's UCL "unlawful" prong claim was predicated on the defendant's alleged violation of a California Penal Code provision prohibiting tape-recording of telephone calls without both parties' consent. The Supreme Court examined choice-of-law principles at length, and concluded that California law prevailed over the less-protective Georgia law (which requires the consent of only one party to the call). However, California law would govern only for purposes of defendant's future conduct. The Supreme Court concluded that it would be unfair to apply California law to the defendant's past conduct, given the doubt over which law governed. Accordingly, monetary relief, including restitution, would be unrecoverable, but the claim for injunctive relief could proceed.

At the end of the opinion, the Court had this to say about the UCL:

Finally, we briefly address a point raised by one of the amicus curiae briefs that have been filed in this court, focusing specifically upon the potential application of California’s unfair competition law (UCL) in this case. The brief of amicus curie Pacific Legal Foundation suggests that because, as compared to other states’ consumer protection laws, the UCL “provides the broadest right of action to the widest number of people,” the reach of the statute should be restrained in the application of California’s choice-of-law principles.

In our view, we have no occasion in the present case to address the concerns advanced by amicus curiae, because this case does not present any of the potentially more controversial aspects of the UCL and the provisions of that law will not affect the potential relief that plaintiffs may obtain in this case. Here, we are not dealing with conduct that assertedly is simply “unfair” (see generally Cel Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180-187), but rather with alleged conduct that is “unlawful” and already subject to an express statutory private right of action. ([Penal Code] § 637.2.) Further, both the named plaintiffs and the members of the proposed class allegedly are direct victims of the unlawful conduct, rather than simply unharmed persons suing on behalf of the general public. (Cf., e.g., Consumers Union of United States, Inc. v. Fisher Development, Inc. (1989) 208 Cal.App.3d 1433, 1437-1444; see also Prop. 64, Gen. Elec. (Nov. 2, 2004), amending Bus. & Prof. Code, § 17204.) In addition, an injunctive remedy is authorized not only by the terms of the UCL (Bus. & Prof. Code, § 17203), but by the terms of section 637.2 itself. Finally, as discussed earlier (ante, at p. 47, fn. 17), to the extent plaintiffs seek reimbursement under the UCL for [the defendant’s] past conduct, we have concluded that such reimbursement is unavailable.

(Slip op. at 48-49.) I don't know what specific arguments the Pacific Legal Foundation made in its amicus brief (if anyone has it, please forward a copy), but it's clear the Supreme Court thought they were irrelevant to this case. Moreover, there's no reason why a choice-of-law analysis should be performed any differently for UCL claims than other types of claims. The statute provides broad-ranging relief because its purpose is to protect California consumers. To water down that purpose just because other states choose to protect their consumers less vigorously than California would eviscerate the whole point of a choice-of-law analysis, which is, “to the extent practicable, to achieve ‘the “maximum attainment of underlying purpose by all governmental entities.” ’ ” (Slip op. at 37 (citation omitted).)