Some thoughts on Morgan v. AT&T Wireless

I've had a chance to more closely review Morgan v. AT&T Wireless Services, Inc., ___ Cal. 4th ___, 2009 WL 3019780 (Sept. 23, 2009) (a case we'll be discussing during today's Los Angeles County Bar Association program), and it is definitely significant.  It's the first Court of Appeal opinion to substantively interpret Tobacco II.   

The Morgan court confired Tobacco II’s holding (and, for that matter, the Mervyn's holding) that Proposition 64 did not alter the UCL’s substantive liability standards, and that pre-Proposition 64 precedents (including those establishing the “likely to deceive” standard for “fraudulent” prong claims) continue to govern:

Thus, pre-Proposition 64 caselaw that describes the kinds of conduct outlawed under the UCL is applicable to post-Proposition 64 cases such as the present case. The only difference is that, after Proposition 64, plaintiffs (but not absent class members in a class action) must establish that they meet the Proposition 64 standing requirements.

…. As noted above, a fraudulent business practice is one that is likely to deceive consumers. A UCL claim based on the fraudulent prong can be based on representations that deceive because they are untrue, but also those which may be accurate on some level, but will nonetheless tend to mislead or deceive ....  A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under the UCL.

Morgan, 2009 WL 3019780, *11-*12 (citing Tobacco II, 46 Cal. 4th at 312, 320; Pastoria v. Nationwide Ins., 112 Cal.App.4th 1490 (2003)) (emphasis added; internal quotation marks omitted).

The Court of Appeal discussed the facts necessary to establish a UCL “fraudulent” prong violation in a section entirely separate from its discussion of the facts necessary to prove the class representative’s standing. See id. at *11-*14 (Part B.1 (discussing liability); Part B.2 (discussing standing)).

Like Tobacco and Mervyn's, what Morgan teaches is that the elements of a UCL claim have not changed.  For purposes of liability at trial, the question (in a "fraudulent" prong case) is whether the defendant's conduct was "likely to deceive" consumers.  This should greatly simplify the class certification analysis in most cases, as it did in Plascencia.