Supreme Court holds insurance companies enjoy no special immunity from UCL liability: Zhang v. Superior Court

In the second of last week's pair of UCL decisions, Zhang v. Superior Court (Cal. Capital Ins. Co.), ___ Cal.4th ___ (Aug. 1, 2013), the Supreme Court held that Moradi-Shalal did not grant insurance companies special immunity from UCL liability.  This excerpt is from the introduction:

Wehold that Moradi-Shalal does notpreclude first party UCL actions based on grounds independent from section790.03, even when the insurer’s conduct also violates section 790.03.  We have made it clear that while a plaintiffmay not use the UCL to “plead around” an absolutebar to relief, the UIPA does not immunize insurers from UCL liability forconduct that violates other laws in addition to the UIPA.  (ManufacturersLife Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, 283-284 (Manufacturers Life); see also Cel-Tech Communications, Inc. v. Los AngelesCellular Telephone Co. (1999) 20 Cal.4th 163, 182-183 (Cel-Tech); Quelimane Co. v.Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 43 (Quelimane); Stop YouthAddiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 565 (Stop Youth Addiction).)

Here, plaintiff alleges causes of action forfalse advertising and insurance bad faith, both of which provide grounds for aUCL claim independent from the UIPA. Allowing her also to sue under the UCL does no harm to the ruleestablished in Moradi-Shalal. 

Slip op. at 2 (footnote omitted) (citing Moradi-Shalal v. Fireman’s Fund Ins. Companies, 46 Cal.3d 287 (1988)).

Time permitting later in the week, I will provide more thoughts on Zhang in a future post.