Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01703/USCOURTS-caed-2_06-cv-01703-4/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 28:1332 Diversity-Petition for Removal

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This case is related to Walker v. USAA Cas. Ins. Co., No. 2:06- 1

cv-1618 (E.D. Cal. filed July 24, 2006).

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JOHNNIE WALKER d/b/a 

PJ’S AUTO BODY,

No. 2:06-cv-1703-MCE-DAD

Plaintiff,

v. MEMORANDUM AND ORDER

GEICO GENERAL INSURANCE

COMPANY, a foreign

Corporation, and DOES 1-50,

Defendant.

----oo0oo----

Through the present action, Plaintiff Johnnie Walker d/b/a

PJ’s Auto Body (“Plaintiff”) alleges Defendant GEICO General

Insurance Company (“Defendant”) has engaged in unfair competition

under California Business and Professions Code section 17200; has

been unjustly enriched by its unlawful conduct; and has violated

California’s Cartwright Act under Business and Professions Code

section 16720.1

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2

Plaintiff alleges that Defendant negotiated volume discounts for

auto body repair work with certain repair shops and then demanded

that Plaintiff accept similar compensation for similar work in

negotiations between Defendant and Plaintiff. 

Now before this Court is Defendant’s Motion to Dismiss

Plaintiff’s Complaint for failure to state a claim upon which

relief can be granted. Fed. R. Civ. P. 12(b)(6). For the

reasons set forth below, GEICO’s Motion to Dismiss is granted

without leave to amend.

BACKGROUND

Plaintiff Johnnie Walker d/b/a PJ’s Auto Body is in the

business of auto body repair in North Highlands, California. 

Defendant GEICO General Insurance Company provides automobile

insurance in California. 

On an unspecified number of occasions, Defendant’s insureds

brought automobiles to Plaintiff to inquire about auto body

repair. On an unspecified number of these occasions, Plaintiff

prepared written estimates of charges he would expect to be paid

if he were to repair the cars in question. Although Defendant’s

insureds signed these estimates, they were still free to choose

another auto body shop to perform repairs on their cars. 

Following execution of the estimates, Plaintiff and

Defendant commenced negotiation over the prices listed therein. 

During these negotiations, Defendant insisted that it would not

meet Plaintiff’s initial demand for an unspecified hourly rate

for his labor.

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3

Defendant pointed to lower rates that it previously negotiated

with other auto body shops while bargaining for a lower rate with

Plaintiff. Some of the rates Defendant referred to were for

repair to a single automobile, while others were for volume

referrals. 

Fearing that he could lose the work to a better priced

competitor, Plaintiff agreed to do auto body work for less

compensation than he initially demanded.

STANDARD

On a motion to dismiss for failure to state a claim under

Rule 12(b)(6), all allegations of material fact must be accepted

as true and construed in the light most favorable to the

nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336,

337-38 (9th Cir. 1996). A complaint will not be dismissed for

failure to state a claim “‘unless it appears beyond doubt that

plaintiff can prove no set of facts in support of [his or] her

claim that would entitle [him or] her to relief.’” Yamaguchi v.

Dep’t of the Air Force, 109 F.3d 1475, 1480 (9th Cir. 1997)

(quoting Lewis v. Tel. Employees Credit Union, 87 F.3d 1537, 1545

(9th Cir. 1996)).

If the court grants a motion to dismiss a complaint, it must

then decide whether to grant leave to amend. The Court should

“freely give[]” leave to amend when there is no “undue delay, bad

faith[,] dilatory motive on the part of the movant, ... undue

prejudice to the opposing party by virtue of ... the amendment,

[or] futility of the amendment....” Fed. R. Civ. P. 15(a); 

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4

Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to

amend is only denied when it is clear that the deficiencies of

the complaint cannot be cured by amendment. DeSoto v. Yellow

Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

ANALYSIS

1. Unfair Competition

California’s UCL prohibits “unfair competition,” which it

defines in relevant part to “mean and include any unlawful,

unfair or fraudulent business act or practice.” Cal. Bus. &

Prof. Code § 17200. An “unlawful” business practice under the

UCL is a practice that violates any other law. Cel-Tec Commc’ns,

Inc. V. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). An

“unfair” business practice claim must “be tethered to some

legislatively declared policy or proof of some actual or

threatened impact on competition.” Id. at 186-87. 

In support of its Motion to Dismiss, Defendant argues that

Plaintiff’s Complaint fails to allege any facts to support a

finding that Defendant has engaged in any unfair competition and

that Plaintiff lacks standing to assert any claim under the UCL. 

Plaintiff contends that Defendant engaged in unlawful and unfair

business practices when Defendant insisted it would not pay him

his fully disclosed and agreed to price for auto body work. 

Plaintiff also asserts that he lost money as a result of

Defendant’s actions and thus has standing. 

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5

Defendant contends that its alleged actions are not unlawful or

unfair and that Plaintiff lacks standing to maintain any claim

under the UCL because Plaintiff lacked a vested interest in the

money he allegedly lost. Because Plaintiff’s lack of standing is

dispositive the Court will consider that issue alone. 

a. UCL Standing Requirement

The UCL previously permitted “any person” whether injured or

not to maintain a claim. Californians for Disability Rights v.

Mervyn’s, LLC, 39 Cal. 4th 223, 228 (2006). In the November 2004

election, California voters approved Proposition 64, which

imposed a standing requirement on UCL claims. See Cal. Bus. &

Prof. Code §§ 17203, 17204; Mervyn’s, 39 Cal. 4th at 228-29. 

Now, to maintain a claim under the UCL, Plaintiff must show that

he has “suffered injury in fact and has lost money or property as

a result of unfair competition.” Cal. Bus. & Prof. Code § 17204. 

 Neither Plaintiff, Defendant, nor the Court has succeeded in

locating a decision definitively interpreting the term “lost

money or property” in section 17204. Accordingly, the Court is

left to determine what the People of California intended when

they added the standing requirement to section 17204 by passing

Proposition 64. 

 Before Proposition 64, as currently embodied in section

17204, added the requirement that a plaintiff suffer a “loss of

money or property” to have standing, the question of what

constituted “lost money or property” for purposes of the UCL had

already been defined by California courts. 

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See Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134,

1149 (Cal. 2003); Cortez v. Purolator Air Filtration Prods. Co.,

23 Cal. 4th 163, 177 (2000). “Where the language of a statute

uses terms that have been judicially construed, the presumption

is almost irresistible that the terms have been used in the

precise and technical sense that had been placed upon them by the

courts.” People v. Weidert, 39 Cal. 3d 836, 845-46

(1985)(internal quotations omitted). This principle applies to

legislation adopted through the initiative process. Id. 

Accordingly, the People are presumed to have intended that the

“loss of money or property” they required for standing would be

interpreted in accordance with the construction already given to

the “lost money or property” required to seek restitution under

section 17203.

Interpreting section 12704's standing requirement in

accordance with the meaning already given to “lost money or

property” for section 17203 purposes also avoids inconsistency

within the UCL. The provisions introduced by an amendatory act

should be read together with the provisions of the original

section and are to be interpreted so they do not conflict. Smith

v. Bd. of Trustees, 198 Cal. 301, 306 (Cal. 1926); Cal. Corr.

Peace Officers Ass’n v. Dep’t of Corr., 72 Cal. App. 4th 1331,

1334 (1999). Accordingly, the “lost money or property” that can

be restored pursuant to section 17203 and the “loss of money or

property” required by section 17204 should be consistently

interpreted. 

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 Although the Court ordinarily will not look beyond the 2

complaint in ruling on a motion to dismiss, the Court does so

here because the Court grants Defendant’s Motion without leave to

amend and these new allegations could be included in a subsequent

amended complaint.

7

Consistent construction of the UCL’s provisions will also

avoid the anomalous situation where a plaintiff could suffer

“loss of money or property” for section 17204 purposes but

simultaneously not have “lost money or property” for section

17203 purposes. 

Therefore, the Court finds that the “loss of money or

property” required for UCL standing should be construed

identically to the “lost money or property” California courts

require for section 17203 purposes. To claim a loss of money or

property for section 17203 purposes, a plaintiff must have either

prior possession or a vested legal interest in the money or

property lost. Korea Supply, 29 Cal. 4th at 1149-50.

Accordingly, to have standing to assert any UCL claim, Plaintiff

must show either prior possession or a vested legal interest in

the money or property allegedly lost.

B. Application of the UCL Standing Requirement

Plaintiff does not allege that Defendant ever possessed any

money or property that was formerly in Plaintiff's possession. 

Instead, in his Opposition to the Defendant’s Motion to Dismiss,

Plaintiff contends he has a vested legal interest in the money in

question. 

2

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8

Plaintiff contends he had a vested legal interest in receiving

his full hourly demand because he prepared estimates indicating

his demand and the Defendant’s insureds signed those estimates. 

Plaintiff asserts that he was deprived of this interest because

Defendant insisted it would not pay him his full demand and

Plaintiff agreed to accept less compensation to perform the work.

Plaintiff cites Korea Supply and Cortez to support his

contention that he gained a vested legal right to be paid his

full demand because he prepared estimates reflecting that demand. 

Defendant correctly notes that Plaintiff’s interest is unlike the

vested interest in Cortez and is closely akin to the interest the

court found insufficient in Korea Supply.

Plaintiff’s interest is unlike that asserted in Cortez. In

Cortez, the court found employees had a vested legal interest in

overtime earnings they were denied. Cortez, 23 Cal. 4th at 177-

78. The court found a vested interest because a state statute

provided that overtime wages were due and owing the moment an

employee worked over eight hours in a day. Id. Unlike the

plaintiffs in Cortez, Plaintiff lacks any statutory authority for

the proposition that payment for auto body work not yet

undertaken was owed the moment an estimate was executed.

Moreover, in Cortez, the vested interest arose out of the

plaintiffs’ actual performance of work. Here, Plaintiff claims a

vested interest arising out of his preparation of an estimate for

proposed work. This is a far cry from the Cortez plaintiffs’

statutory right to payment for work already done. 

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9

Plaintiff’s interest is very similar to that asserted in

Korea Supply. There, the Court found that the company had no

vested interest in receiving a commission for work done in

negotiations for the award of a government contract. Korea

Supply, 29 Cal. 4th at 1149. The opposing bidder obtained the

contract by unlawful means thus depriving Korea Supply Company of

its commission. Id. The Court explained that an “expectancy” or

contingent interest is not a “vested interest” for purposes of

the UCL. Id. As a result, the Court held that Korea Supply’s

interest was not vested. Id. Like the plaintiff in Korea

Supply, Plaintiff here claims an interest in money he never

possessed on the ground that he had an expectation of being paid. 

As in Korea Supply, Plaintiff asserts a vested interest that was

merely a contingent interest at best. Plaintiff admits that

negotiations over the work and the price to be paid for it were

still ongoing and that Defendant’s insureds could have chosen

another shop to do the work even after the estimates were signed. 

Plaintiff’s receipt of payment was thus contingent upon the

negotiations with the Defendant, the binding selection of

Plaintiff to do the work, and Plaintiff’s subsequent performance. 

Accordingly, any interest Plaintiff may have as a result of

preparing an estimate is not a vested interest for purposes of

the UCL.

Because Plaintiff cannot show either prior possession or a

vested legal interest, he has not “lost money or property as a

result of unfair competition” as required by section 17204. 

Plaintiff, therefore, lacks standing to assert any claim under

the UCL and the Court need not address the issue further. 

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10

Lastly, it is clear that the deficiencies of the Complaint cannot

be cured by amendment because it is the very nature of the

Plaintiff’s asserted injury that renders him unable to maintain

any claim under the UCL. Accordingly, Defendants’ Motion to

Dismiss is granted without leave to amend as to Plaintiff’s

claims under the UCL.

2. Unjust Enrichment

Plaintiff also asserts an independent cause of action for

unjust enrichment. In response, the Defendant correctly contends

that unjust enrichment is a merely a synonym for the remedy of

restitution and not a stand-alone cause of action.

"There is no cause of action in California for unjust

enrichment." Melchior v. New Line Prods., Inc., 106 Cal. App.

4th 779, 794 (2003) (emphasis added); see also McKell v. Wash.

Mut., Inc., 142 Cal. App. 4th 1457, 1490 (2006). Unjust

enrichment is synonymous with the remedy of restitution. 

Dinosaur Dev., Inc. v. White, 216 Cal. App. 3d 1310, 1314-15

(1989). Although Plaintiff has cited apparently contrary

authority where courts have used the term “claim for unjust

enrichment,” the Court is not persuaded. In each case cited the

courts were faced with plaintiffs who were claiming unjust

enrichment based on rights arising out of other law. 

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See, e.g., Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723 (2000)

(unjust enrichment claim based upon wrongful dishonor of a credit

letter); Weststeyn Dairy 2 v. Eades Commodities Co., 280 F. Supp.

2d 1044, 1075 (E.D. Cal. 2003) (unjust enrichment claim based

upon an alleged trust and contractual rights). Plaintiff has not

alleged any such theory here and cannot seek restitution on the

basis of unjust enrichment alone without any other legal basis

because unjust enrichment is not a cause of action in and of

itself. 

Because California law does not recognize Plaintiff's claim

for unjust enrichment, there are no facts Plaintiff could prove

to support this claim. Therefore, it is clear that the

deficiencies of the “omplaint cannot be cured. Accordingly,

Defendant’s Motion to Dismiss is granted without leave to amend

as to Plaintiff's unjust enrichment claim.

3. The Cartwright Act

California’s Cartwright Act prohibits any trust, which is

defined as “a combination of capital, skill or acts by two or

more persons” for specified anticompetitive purposes. Cal. Bus.

& Prof. Code § 16720. In order to maintain a cause of action

under the Cartwright Act, the following elements must be

established: (1) the formation and operation of the conspiracy;

(2) illegal acts done pursuant thereto; and (3) damage

proximately caused by such acts. Kolling v. Dow Jones & Co., 137

Cal. App. 3d 709, 718 (Cal. Ct. App. 1982). 

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California courts routinely apply the Cartwright Act by reference

to the jurisprudence under the Sherman Act. Filco v. Amana

Refrigeration, Inc., 709 F.2d 1257, 1268 (9th Cir. 1983). Like

section 1 of the Sherman Act, 15 U.S.C. § 1, a Cartwright Act

claim must allege co-conspirators and a conspiracy. See, e.g.,

T.W. Elec. Serv., Inc. V. Pac. Elec. Contractors Ass’n, 809 F.2d

626, 633 (9th Cir. 1987).

Defendant correctly points out that Plaintiff’s Complaint

failed to identify any alleged co-conspirators or a conspiracy

for anticompetitive purposes. However, in his Opposition,

Plaintiff clarified the conduct that he alleges constituted a

price-fixing conspiracy: Defendant and other auto body shoops

agreed upon “contractually reduced rates used for volume

referrals.” (Pl.’s Opp’n 28:2-5, Oct. 20, 2006.)

Although Plaintiff has identified agreements between

Defendant and other entities, those agreements are neither

unlawful nor made for any anticompetitive purpose. This is not

price-fixing: it is just buying and selling with an agreement on

transaction prices. See, e.g., Texaco, Inc. v. Dagher, 126 S. Ct.

1276, 1280 (2006) (“[T]he pricing policy challenged here amounts

to little more than price setting by a single entity . . . and

not a pricing agreement between competing entities with respect

to their competing products.”) It is difficult to imagine that

numerous independent auto body shops would conspire with

Defendant for the purpose of depressing auto body rates paid to

those same auto body shops. 

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Plaintiff’s allegations reveal only a well-functioning market for

auto body repair; Defendant, a willing buyer, and willing sellers

negotiate a fair price for labor the Defendant’s insureds need

and the sellers want to perform. Plaintiff’s desire to charge

more than the market will bear does not transform Defendant’s

lawful formation of service contracts into a forbidden conspiracy

to destroy competition. 

Because Plaintiff can show neither co-conspirators nor a

conspiracy he is unable to maintain a claim under the Cartwright

Act. Lastly, it is clear that the deficiencies of the Complaint

cannot be cured by amendment because the Cartwright Act simply

does not prohibit a buyer from negotiating a volume discount from

a seller. Accordingly, Defendant’s Motion to Dismiss is granted

without leave to amend as to Plaintiff’s claim under the

Cartwright Act.

CONCLUSION

For the reasons set forth above, GEICO’s Motion to Dismiss

is granted without leave to amend.

IT IS SO ORDERED.

Dated: February 12, 2007

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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