Source: https://www.advocatemagazine.com/article/2017-may-2/appellate-reports-6
Timestamp: 2019-04-20 07:23:03+00:00

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Who needs to know about this decision: (1) lawyers handling cases involving requests for injunctive relief; and (2) lawyers handling UCL claims seeking injunctive relief.
Why it’s important: (1) Holds that arbitration provisions that purport to waive the right to seek the remedy of public injunctive relief in any forum are unenforceable in California, even after the U.S. Supreme Court’s decision in Concepcion. (2) Makes clear that a plaintiff may seek public injunctive relief under the UCL without having to bring the case as a class action.
Synopsis: The California Supreme Court adopted a rule in Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316 and Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1077, which held that agreements to arbitrate claims for public injunctive relief under the CLRA, the UCL, or the false advertising law are not enforceable in California (the “Broughton-Cruz rule.”) Several California and federal decisions have held that the Broughton-Cruz rule was abrogated by the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333 (Concepcion), which substantially increased the preemptive force of the Federal Arbitration Act (“FAA”).
In McGill, the California Supreme Court granted review to decide whether the Broughton-Cruz rule survived Concepcion. But it ultimately decided that the case did not present that issue, as explained below.
In 2011, McGill filed this class action based on Citibank’s marketing of the Plan and the handling of a claim she made under it when she lost her job in 2008. The operative complaint alleges claims under the UCL, the CLRA, and the false advertising law, as well as the Insurance Code. For relief, it requests, among other things, an injunction prohibiting Citibank from continuing to engage in its allegedly illegal and deceptive practices.
Citibank petitioned to compel McGill to arbitrate her claims on an individual basis. The trial court ordered McGill to arbitrate all claims other than those for injunctive relief under the UCL, the false advertising law, and the CLRA. The Court of Appeal reversed and remanded for the trial court to order all of McGill’s claims to arbitration, concluding that under Concepcion the FAA preempts the Broughton-Cruz rule. The Supreme Court granted review and reversed.
(1.) Public vs. private injunctive relief. Broughton and Cruz distinguished between public and private injunctive relief. The latter primarily resolves a private dispute between the parties and rectifies individual wrongs. It benefits the public, if at all, only incidentally. By contrast, public injunctive relief by and large benefits the general public, and benefits the plaintiff, if at all, only incidentally and/or as a member of the general public. For example, an injunction under the CLRA against a defendant’s deceptive methods, acts, and practices generally benefits the public directly by the elimination of deceptive practices and will not benefit the plaintiff directly because the plaintiff has already been injured, allegedly, by such practices and is aware of them.
(2.) The Broughton-Cruz rule is not implicated by McGill’s claims. The provisions in Citibank’s arbitration clause did not simply require that McGill’s claims for public injunctive relief be heard in an arbitral forum, they precluded her from asserting claims for public injunctive relief in any form. Accordingly, the issue in the case was whether such a provision was valid under California law; not the continuing vitality of the Broughton-Cruz rule, which the Court did not address.
Accordingly, the waiver in a predispute arbitration agreement of the right to seek public injunctive relief under these statutes would seriously compromise the public purposes the statutes were intended to serve. Thus, insofar as the arbitration provision here purports to waive McGill’s right to request in any forum such public injunctive relief, it is invalid and unenforceable under California law.
(4.) The FAA does not preempt California law forbidding a waiver of the right to seek a public injunction.
The contract defense at issue here – “a law established for a public reason cannot be contravened by a private agreement” (Civ. Code, § 3513) – is a generally applicable contract defense, i.e., it is a ground under California law for revoking any contract. It is not a defense that applies only to arbitration or that derives its meaning from the fact that an agreement to arbitrate is at issue.
(5.) Proposition 64 allows an individual plaintiff to seek public injunctive relief without the need to certify the case as a class action. When Broughton and Cruz were decided the UCL and the false advertising law allowed “any person” to seek relief on their own behalf or acting on behalf of the general public. But Proposition 64 amended these statutes in 2004, to provide that private individuals may (1) file an action for relief only if they have “suffered injury in fact and [have] lost money or property as a result of” a violation (Bus. & Prof. Code, §§ 17204, 17535), and (2) “pursue representative claims or relief on behalf of others only if they meet those standing requirements and comply with Section 382 of the Code of Civil Procedure,” which relates to representative suits.
The Court held that these provisions do not preclude a private individual who has “suffered injury in fact and has lost money or property as a result of” a violation of the UCL or the false advertising law (Bus. & Prof. Code, §§ 17204, 17535) – and who therefore has standing to file a private action – from requesting public injunctive relief in connection with that action. A request for such relief does not constitute the “pursu[it]” of “representative claims or relief on behalf of others” within the meaning of Business and Professions Code sections 17203 or 17535, such that “compliance with Section 382 of the Code of Civil Procedure” is required.
This latter holding has broad implications, because it allows an individual plaintiff to seek a public injunction under the UCL and FAL – relief whose primary purpose is to benefit the public generally – without the need to pursue the claim as a class action.
DisputeSuite markets software to credit-repair organizations. Scoreinc.com (“Score”) performs services for credit-repair organizations. The parties entered into an exclusive marketing arrangement, which provided that the Florida courts had sole jurisdiction to resolve any disputes.
DisputeSuite sued Score in California. The trial court stayed the action, giving DisputeSuite time to re-file in Florida, which it did. The court then dismissed the California action. Score then moved for an award of attorney’s fees under Civ. Code § 1717 as the prevailing party.
West was convicted of robbery and received a 25-year sentence. When it was discovered that former FBI agent Joe Gordwin had coerced witnesses at West’s trial, West was released and the charges against him were dismissed. He sued the U.S. and Gordwin. The U.S. representing itself alone, filed a motion to dismiss. The district court granted the motion, and dismissed the entire action, including the claims against Gordwin. West filed a notice of appeal that included both the U.S. and Gordwin in the caption, and which identified the dismissal order and judgment but which did not otherwise separately identify Gordwin. He did address his claims against both the U.S. and Gordwin in his opening brief.
The Ninth Circuit reversed. Rule 3 of the Federal Rules of Appellate Procedure requires a notice of appeal to identify each appellant and to designate the judgment, order, or part thereof being appealed. These requirements are jurisdictional. In Torres v. Oakland Scavenger Co. (1988) 487 U.S. 312, 317, the appellant’s appeal was dismissed because he omitted his name from the notice of appeal. But neither Torres nor the text of Rule 3 mentions appellees. Consistent with other circuits and the text of the rule, the Court held that failing to name an appellee in the notice of appeal is not a jurisdictional defect. Since the notice identified certain counts against the U.S., and twice specifically named the order being appealed, the notice was sufficient to indicate West’s intent to appeal from the entire order and judgment dismissing the entire lawsuit. The Court reversed the dismissal of the claims against Gordwin, who had not even been served with the complaint when the district court dismissed the case.

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