New opinion addresses UCL "unfair" prong: Jolley v. Chase Home Finance, LLC
In Jolley v. Chase Home Finance, LLC, ___ Cal.App.4th ___ (Feb. 11, 2013), the Court of Appeal (First Appellate District, Division Two) revived a variety of claims stemming from a lender's attempts to foreclose on a construction loan.
The Court had this to say about the UCL's "unfair" prong:
There is a split of authority onwhat constitutes an “unfair” practice. (Bardin v. DaimlerChrysler Corp. (2006)136 Cal.App.4th 1255, 1260-1261.) Somecases hold an “unfair” practice is one that offends established public policy,that is immoral, unethical, oppressive, unscrupulous, or substantiallyinjurious to consumers, or that has an impact on the victim that outweighsdefendant’s reasons, justifications, and motives for the practice. (Pastoriav. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1498; Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93Cal.App.4th 700, 718-719; Podolsky v.First Healthcare Corp. (1996) 50 Cal.App.4th 632, 647.) Others, including at least one from ourdistrict (Gregory v. Albertson’s, Inc.(2002) 104 Cal.App.4th 845, 853-854), hold that the public policy which is apredicate to a claim under the “unfair” prong of the UCL must be tethered tospecific constitutional, statutory, or regulatory provisions. (See also, Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917,938.) Either way, unfairness isindependently sufficient to state a claim under the statute. (AlliedGrape Growers v. Bronco Wine Co. (1988) 203 Cal.App.3d 432, 451; see Cel-Tech Communications, Inc. v. Los AngelesCellular Telephone Co. (1999) 20 Cal.4th 163, 180 [indicating that conductmay be “unfair” without being “unlawful”].)
Slip op. at 37-38. There is actually a three-way split in authority on the definition of "unfair" conduct in consumer actions. The so-called "Section 5" test asks whether "(1) the consumer injury is substantial; (2) theinjury is not outweighed by any countervailing benefits to consumers orcompetition; and (3) the injury could not reasonably have been avoided byconsumers themselves." Boschma v. Home Loan Center, Inc., 198 Cal.App.4th 230, 253 (2011).
In any event, the Jolley opinion goes on:
Withrespect to Chase’s own conduct, we have already decided that North’s statementsmay be construed as misstatements of fact, with possible liability for suchconduct left to the trier of fact. Thatraises a triable issue as to “fraudulent.” We have also concluded that dual tracking has been alleged and supportedby Jolley’s declaration. And while dualtracking may not have been forbidden by statute at the time, the newlegislation and its legislative history may still contribute to its beingconsidered “unfair” for purposes of the UCL. Summary adjudication of Jolley’s fifth cause of action was improper.
Slip op. at 38 (emphasis added). This is very interesting. Under the post-Cel-Tech formulation, a finding of "unfair" conduct can be predicated on an expression of legislative policy embodied in the Legislature's subsequent enactment of a bill outlawing the conduct.