Source: https://www.uclpractitioner.com/ucl_unlawful_prong/
Timestamp: 2019-04-23 06:12:23+00:00

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Posts categorized "UCL - "unlawful" prong"
On Tuesday, the Court of Appeal (Fifth Appellate District) handed down a new opinion, Gutierrez v. CarMax Auto Superstores California, ___ Cal.App.5th ___ (Jan. 30, 2018), which contains a lengthy and interesting discussion of the CLRA.
The complaint alleged that the defendant sold plaintiff a used car without disclosing that important safety systems in the car were defective and subject to an active recall. Slip op. at 3-5. After considering and rejecting the breach of implied warranty claim (id. at 12-14), the Court turned to the CLRA.
The question presented was whether certain subsections of the CLRA's laundry list of prohibited acts--namely, those prohibiting specified types of "representations"--encompass non-disclosures in addition to affirmative misstatements. Id. at 14 ("whether concealment, omissions or failures to disclose are prohibited").
Based on the statutory text, legislative history (which includes the National Consumer Act), the judicial decisions and statutes that existed when the CLRA was enacted, the subsequent case law, and the many amendments to the CLRA from 1975 through 2016, we join Klein, McAdams and the other cases concluding that failures to disclose material facts are actionable under the CLRA. In particular, we conclude paragraphs (5), (7) and (9) of subdivision (a) of Civil Code section 1770 proscribe material omissions in certain situations.
The Court then elaborated on "the second type of omitted fact and the question of whether CarMax had a duty to disclose a fact not made known to the plaintiff." Id.
The next section of the opinion addresses safety-related defects, à la Bardin and Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006) (discussed here). The Court held that a defendant has a duty to disclose a "material" safety-related defect if the defendant had exclusive knowledge of the defect or if the defendant "actively concealed" it. Id. at 29-30. Two other circumstances creating a duty to disclose such a defect would be if a fiduciary relationship exists or if the defendant "makes partial misrepresentations but also suppresses a material fact." Id. at 30 (citation omitted).
The Court then turned to the complaint, holding that it alleged facts sufficient to support the conclusion that the defendant had "made partial representations" about the vehicle's (defective) systems, and that these were "likely to mislead" because the defendant had concealed other information about the systems (namely, that they were defective and the subject of a recall). These facts, in turn, stated an actionable CLRA violation (and a UCL "unlawful" prong violation). Id. at 30-33, 36-37.
The best way to harmonize the CLRA with implied warranty jurisprudence is to adopt the plain meaning of “representing” in the CLRA. Implied warranty law addresses the situation of goods failing to meet minimum levels of merchantability, regardless of what the seller did or did not say; and the CLRA, with its threat of punitive damages, steps in only when the seller acts deceptively.
By creating expansive omission-based liability under the CLRA, the majority is supplanting implied warranty law and upsetting the delicate balance it achieves.
.... In sum, the CLRA applies only to misrepresentations and specific, inapplicable omissions. Since the operative complaint does not successfully allege any affirmative misrepresentations under CLRA, the sustaining of the demurrer should be upheld.
Id., dissenting opn. of Poochigian, J., slip op. at 7-8 (footnote omitted).
These are all very interesting issues. I could see the Supreme Court becoming involved at some point.
"Dating app can't base fee on age, court decides"
"The Court of Appeal was very careful to adhere to California Supreme Court precedent on the Unruh Act," Kralowec said. Other opinions have supported differential treatment, but those decisions are justified by a social policy, the appellate court observed. For example, laws allow for seniors and children to get discounts in certain situations.
"Law recognizes that those groups have reduced income. Children can't work. But there aren't similar statutory enactments ... to protect adults under 30," said Kralowec.
For more on the UCL aspects of the case, see this blog post. A link to the opinion is available here: Candelore v. Tinder, Inc., ___ Cal.App.5th ___ (Jan. 29, 2018).
New opinion addresses UCL "unlawful" and "unfair" prongs: Candelore v. Tinder, Inc.
This case is really more about the Unruh Act than the UCL. In Candelore v. Tinder, Inc., ___ Cal.App.5th ___ (Jan. 29, 2018), the Court of Appeal (Second Appellate District, Division Three) held that because the complaint adequately alleged a violation of the Unruh Act (namely, age-based price discrimination), the complaint also stated a claim for violation of the UCL's "unlawful" prong. Slip op. at 20.
Slip op. at 20-21 (emphasis added). The Court applied the "balancing test" formulation of the "unfair" prong. See id.
Because I served as appellate counsel for the plaintiff and appellant in this case (along with co-counsel Al Rava), I happen to know that the parties did not contest that the "balancing test" applies. Hence, this case did not present an opportunity for the Court to consider or resolve the three-way split in authority on the proper formulation of "unfair" conduct. For more on the three-way split, see these blog posts.
As for the underlying Unruh Act claim, the San Francisco Chronicle reported yesterday that "Dating service cannot charge older folks more on belief they are wealthier." Earlier this month, Consumer Protection Law360 reported that "Tinder User Says Age Bias Suit Deserves Second Chance" (subscription).
Interesting UCL "unlawful" prong opinion: Burd v. Barkley Court Reporters, Inc.
In Burd v. Barkley Court Reporters, Inc., ___ Cal.App.5th ___ (Nov. 29, 2017), the Court of Appeal (Second Appellate District, Division Two) considered a UCL "unlawful" prong class action predicated on violations of Government Code sections 69950 and 69954, which limit court reporter transcription rates.
The Court held that the statutory rate limitations "apply to any court reporter producing a transcript of a civil court proceeding, regardless of whether the reporter is employed by the superior court or privately retained by a party." Slip op. at 1.
Sounds like we might all need to go back and check our recent court reporter invoices.
The September 2017 issue of Plaintiff magazine has an article by Jeffrey I. Ehrlich called "Be an insurance Myth Buster!" One of the busted myths relates to the UCL. The myth is this: "An insurer's breach of its common-law duties cannot support a claim under the UCL."
As explained in Jeffrey's article, the California Supreme Court busted this myth in 2013, in Zhang v. Superior Court, 57 Cal.4th 364 (2013) (discussed here). Click over to Jeffrey's piece for more.
In Kizer v. Tristar Risk Management, ___ Cal.App.5th ___ (Jun. 26, 2017; pub. ord. Jul. 26, 2017), the Court of Appeal (Fourth Appellate District, Division Three) affirmed an order denying class certification of Labor Code claims arising out of the defendant's alleged misclassification of its claims examiners, and of the UCL "unlawful" prong claim stemming from that.
Basically, the Court of Appeal reasoned that misclassification, standing alone, is not unlawful; instead, a violation occurs only when the misclassified employees are denied overtime pay (or other statutory protections afforded to non-exempt employees). Slip op. at 12-20. Even if the elements relevant to assessing the applicability of the administrative exemption might be amenable to common proof, this was not sufficient for class certification, because the plaintiffs had failed to offer any proof of a uniform policy policy or practice to deny overtime pay to the claims examiners. See id.
As explained above, and contrary to Plaintiffs’ contention, the trial court did not deny Plaintiffs’ class certification motion based on their failure to present individualized proof of injury by each potential class member. Rather, the court denied the motion because Plaintiffs failed to satisfy the commonality requirement by presenting evidence to show they could establish through common proof that Tristar required claims examiners to work overtime. Substantial evidence supports that finding and it is consistent with the governing legal standards.
Although the opinion cites Cohen v. DIRECTV, Inc., 178 Cal.App.4th 966 (2009) and Davis‑Miller v. Automobile Club of Southern California, 201 Cal.App.4th 106 (2011) (discussed in these blog posts), I would still put in on the plaintiffs' side of the ledger. Unlike those cases, Kizer did not hold that certification could be properly denied due to predominance of non-common questions as to reliance or injury (which are not even elements of a UCL claim). Rather, Kizer focused on whether the unlawful conduct itself could be established through common proof. In so holding, Kizer also relied heavily on Steroid Hormone Product Cases, 181 Cal.App.4th 145 (2010) (discussed in this blog post), which illustrates the proper focus of the class certification inquiry in a UCL "unlawful" prong case.
On June 12, 2017, the Supreme Court agreed to answer questions certified by the Ninth Circuit in De La Torre v. CashCall, no. S241434. As explained in the Ninth Circuit's order, De La Torre is a certified class action asserting a UCL "unlawful" prong claim based on alleged violations of Finance Code provisions concerning interest rates.
Can the interest rate on consumer loans of $2,500 or more governed by California Finance Code section 22303 render the loans unconscionable under section 22302?
The eventual opinion may or may not end up addressing the UCL directly. According to the Ninth Circuit's order, one of the defendant's arguments was that California law "only recognize[s] unconscionability as a defense to a suit by a lender, not an affirmative UCL action for restitution." Another was that section 22303 creates a Cel-Tech "safe harbor."
Recent Ninth Circuit UCL decision considers all three prongs: Friedman v. AARP, Inc.
In Friedman v. AARP, Inc., 855 F.3d 1037 (9th Cir. May 3, 2017), the plaintiff alleged that the defendant "solicited" and "transacted" insurance without a license, in violation of several California Insurance Code provisions, and that the defendant collected and kept a 4.95% commission on each sale. Id. at 1049-50. The complaint alleged that the policyholders paid this commission on top of the premium they otherwise would have paid for the insurance. Id.
The Ninth Circuit held that these facts adequately alleged a UCL "unlawful" prong claim, as well as "unfair" and "fraudulent" prong claims. Id. at 1051-57.
Notably, as to the "fraudulent" prong claim, the court adhered to Tobacco II in holding that "actual reliance [for purposes of a UCL claim] ... is inferred from the misrepresentation of a material fact." Id. at 1055, 1056 (citing In re Tobacco II Cases, 46 Cal.4th 298, 326 (2009); Chapman v. Skype, Inc., 220 Cal.App.4th 217, 229 (2013)) (alterations in original).
We think it is not, as a matter of law, an “obviously unimportant” consideration for a reasonable purchaser of insurance to know that an undisclosed fee charged to a group insurance policyholder would be collected in addition to—rather than from—the actual cost of the insurance.
Id. at 1056-67 (quoting Tobacco II, 46 Cal.4th at 326; citing Chapman, 220 Cal.App.4th at 229).
In Goonewardene v. ADP, LLC, ___ Cal.App.4th ___ (Nov. 4, 2016), the Court of Appeal (Second Appellate District, Division Four) affirmed the trial court's dismissal of the plaintiff's FAL and UCL claims for lack of Prop. 64 standing and for other reasons. Slip op. at 45-53.
As for the FAL claim, the complaint alleged that the defendant made numerous false statements to the public, but did not allege that the plaintiff saw or relied on them for any reason. Id. at 47. (The plaintiff alleged that she worked for a company who hired the defendant to handle its payroll and wage statements.) The opinion discusses Kwikset at some length. See id. at 47-49.
As for the "fraudulent" prong claim, this failed for lack of allegations of reliance, and also because the complaint alleged no losses that could be recoverable from the payroll company as restitution. Id. at 52-53. The plaintiff allegedly lost wages because of the payroll company's misconduct, but the company "derived no benefit" from the lost wages. Id. (citing Bradstreet v. Wong, 161 Cal.App.4th 1440, 1444 (2008)). In other words, it's not the payroll company, but rather the employer, who owed the plaintiff any lost wages or penalties, and the payroll company had acquired no money from the plaintiff, either directly or indirectly, by means of its alleged payroll mistakes (or misrepresentations).
A violation of this section is actionable under the Consumers Legal Remedies Act (Title 1.5 (commencing with Section 1750) of Part 4 of Division 3 of the Civil Code), the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code), Section 17500 of the Business and Professions Code, or any other applicable state or federal law. The rights and remedies provided by this section are cumulative and shall not be construed as restricting any right or remedy that is otherwise available.
Veh. Code § 11713.18(b). In other words, it adds an item to the CLRA's laundry list of deceptive conduct.
The panel reversed the district court's grant of summary judgment in the dealer's favor, and remanded with directions to enter summary judgment for the plaintiff instead. Slip op. at 9-22. The opinion delves deeply into the purpose and legislative history of the Car Buyer's Bill of Rights, and is worth a read for anyone handling litigation involving that Act.
New UCL opinion considers all three prongs: Moran v. Prime Healthcare Management, Inc.
In Moran v. Prime Healthcare Management, Inc., ___ Cal.App.5th ___ (Sept. 14, 2016; pub. ord. Oct. 5, 2016), the Court of Appeal (Fourth Appellate District, Division Three) considered UCL and CLRA claims involving the cost of emergency room medical care for uninsured ("self-pay") patients. Essentially, the lawsuit alleges that the defendant unfairly charges uninsured patients more than it charges insurers (or other third-party payors) for insured patients. Slip op. at 2-4.
Plaintiff's discriminatory pricing theory enjoyed a Cel-Tech "safe harbor," but his theory that the self-pay patients are charged "artificial and grossly excessive rates" did not. Slip op. at 7-8.
The UCL "unlawful" prong claim, which was predicated on CLRA violations, largely failed for lack of standing. Id. at 8-15. However, the claim survived to the extent it asserted unconscionability in violation of the CLRA (Civil Code section 1770(a)(19)). Id. at 15-18.
The UCL "fraudulent" prong claim failed for lack of standing because the plaintiff did not adequately allege his reliance on specific misrepresentations. Id. at 18-19.
The UCL "unfair" prong claim survived, again to the extent based on the theory that "biling the full amount to self-pay patients is unconscionable." Id. at 19-21. This section of the opinion discussed the three-way split in authority on the proper formulation of "unfair" in consumer actions, but the Court concluded that it did not have to resolve the split in order to decide the appeal. Id. at 20.
The CLRA claim survived as to the unconscionability theory only. Id. at 21-22.
The declaratory relief claim survived. Id. at 23-24.
This opinion was handed down in March, but I have not previously discussed it.
In Davis v. Farmers Insurance Exchange, 245 Cal.App.4th 1302 (2016), the plaintiff brought an individual UCL claim as part of his action for wrongful termination. The jury found that the plaintiff's age was a "motivating factor" in his termination, but no damages were awarded because the jury also found that the plaintiff would have been terminated for other, legitimate reasons. After affirming this point (see id. at 1319-25), the Court of Appeal found no basis under the UCL for enjoining the defendant from engaging in future age discrimination. The plaintiff was no longer an employee,"and there is no reasonable likelihood he will be at any time in the future or will otherwise be in a position to be harmed by [the defendant's] actions." Id. at 1327. Moreover, the record contained no evidence of any ongoing discrimination against any current employees. Id.
Id. at 1338 (footnote omitted).
In Local TV LLC v. Superior Court (Knutssen), ___ Cal.App.4th ___ (Sept. 2, 2016), the Court of Appeal (Second Appellate District, Division Five) concluded that the plaintiff's UCL "unlawful" prong claim failed because the underlying, "borrowed" claims (for common-law and statutory misappropriation of name and likeness) failed. Slip op. at 14-15. Evidently, the plaintiff did not separately plead a violation of the UCL's "unfair" prong.
Here, as alleged against LTV, the sole factual basis for the section 17200 claim is the same as for the misappropriation tort discussed in section II above. Plaintiffs seek the precise monetary damages that they seek in the misappropriation cause of action. Because summary judgment in favor of LTV was proper on the cause of action that the section 17200 claim “borrows,” summary judgment is likewise warranted on the unfair business practices claim.
Recent opinion addressing UCL's extraterritorial reach: Aghaji v. Bank of America, N.A.
In Aghaji v. Bank of America, N.A., 247 Cal.App.4th 1110 (May 31, 2016), more than 200 plaintiffs from California and other states brought UCL and other claims against numerous lenders and loan servicers related to the handling of their home mortgages. Id. at 1112-13.
Id. at 1119-20 (emphasis in original). My original post on Sullivan is here. See this post for a discussion of Norwest Mortgage.
In Audio Visual Services Group, Inc. v. Superior Court, ___ Cal.App.4th ___ (Jan. 21, 2015), the Court of Appeal (Second Appellate District, Division Three) held that the trial court should have sustained the defendant's demurrer to the plaintiff's UCL "unlawful" prong claim, without leave to amend, because the "borrowed" municipal ordinance did not apply to the plaintiff. See slip op. at 8-14.
The Court did not consider whether the defendant's conduct might be "unfair," even if not "unlawful," as Cel-Tech allows, presumably because the plaintiff did not plead an "unfair" prong violation. See id. at 14-15. The Court had no problem with the idea that a municipal ordinance can form the predicate of a UCL "unlawful" prong claim.
New opinion construes UCL in wrongful foreclosure context: Rufini v. CitiMortgage, Inc.
In Rufini v. CitiMortgage, Inc., ___ Cal.App.4th ___ (May 28, 2014; pub. ord. Jun. 23, 2014; mod. Jul. 22, 2014), the Court of Appeal (First Appellate District, Division Three) held that the trial court improperly sustained the defendant's demurrer to a UCL claim arising out of the alleged wrongful foreclosure of the deed of trust on plaintiff's home.
There's nothing particularly earth-shattering in the discussion of the UCL claim, which appears at pp. 11-13 of the slip opinion.
Last week, the U.S. Supreme Court put Bank of America, N.A. v. Rose, No. 13-662, on its conference agenda for June 26, 2014.
This follows the filing on May 27 of the Solicitor General's brief recommending that the cert. petition be denied.
According to the SCOTUSblog calendar, June 26 is the last day of the Term on which the Court is scheduled to conference cases. So there should be no further relisting, and the order granting or denying cert. should be announced by Monday, June 30.
The cert. petition seeks to overturn the California Supreme Court's landmark UCL decision, Rose v. Bank of America, N.A., 57 Cal.4th 390 (2013), discussed here.
UPDATE: On June 30, 2014, the U.S. Supreme Court denied the cert. petition.
As I previously reported, on March 10, 2014, the U.S. Supreme Court invited the Solicitor General to file a brief expressing the views of the United States in Bank of America, N.A. v. Rose, No. 13-662. The cert. petition seeks to overturn the California Supreme Court's decision in Rose v. Bank of America, N.A., 57 Cal.4th 390 (2013) (discussed here).
On May 27, 2014, the Solicitor General filed a brief recommending that the cert. petition be denied. The brief expresses the view that the California Supreme Court's ruling was correct and that it does not conflict with any federal appellate opinions. The brief also points out that the ruling is interlocutory only.
The general counsel of the Consumer Financial Protection Bureau is a signatory to the brief along with the Solicitor General's office. As explained on page 2, the CFPB is the agency currently empowered to adopt regulations to carry out the purpose of the federal Truth in Savings Act, which is implicated in Rose. That agency appears to have no problem with the idea that California may have a parallel enforcement scheme.
See this blog post for links to the cert. petition and other briefs filed in the U.S. Supreme Court. My original post on Rose is here.
Recent Ninth Circuit opinion touches on the "unlawful" prong: In re Late Fee and Overlimit Fee Litig.
California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq., makes violations of other state and federal laws "independently actionable as unfair competitive practices." CRST Van Expedited, Inc. v. Werner Enters., Inc., 479 F.3d 1099, 1107 (9th Cir. 2007) (citation omitted). Because we conclude that the issuers' conduct did not violate the National Bank Act or the DIDMCA, there is no derivative liability under the Unfair Competition Law.
From that language, it appears that the plaintiffs did not allege that the defendant's conduct was "unfair," but only that it was "unlawful."
This is an interesting case. It challenges the late fees charged by credit card companies. The theory is that these fees are analogous to punitive damages, and that the fees are charged in amounts that exceed the constitutional due process limits set forth in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996) and the single-digit ration established in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003).
This is a constitutional case of first impression. It is an attempt by a group of cardholders to have a new constitutional doctrine applied even-handedly. Their proposed rule would protect consumers from excessive penalties just as the current rule protects corporate and business entities from excessive punitive damages. Constitutional evolution requires continuous evaluation of newly established principles to ensure that changes occur within the framework of fairness and equality. Such must be the case here.
On February 24, 2014, the Court issued a GVR order (grant, vacate and remand) in CarMax Auto Superstores California, LLC v. Fowler, No. 13-439. In this case, the California Court of Appeal (Second Appellate District, Division One), in an unpublished opinion, reversed the trial court's order compelling arbitration in a wage and hour class action. Fowler v. CarMax, Inc., 2013 WL 1208111 (Cal. Ct. App. Mar. 26, 2013). That opinion concluded, among other things, that Concepcion did not overrule Gentry v. Superior Court, 42 Cal.4th 443 (2007) (discussed in this blog post). The California Supreme Court denied review, but now the U.S. Supreme Court has vacated the decision and directed the Court of Appeal to reconsider the matter in light of American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013).
On February 26, 2014, the Court requested a response from the respondent, Moreno, in Sonic-Calabasas A, Inc. v. Moreno, No. 13-856. The cert. petition challenges the California Supreme Court's decision in Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (2013) (discussed in this blog post). The federal high court issued a GVR order the last time Sonic-Calabasas filed a cert. petition in this case, which was in 2011. That time, the case was remanded for further consideration in light of Concepcion.
On March 10, 2014, the Court invited the Solicitor General to file a brief expressing the views of the United States in Bank of America, N.A. v. Rose, No. 13-662. The cert. petition seeks to overturn the California Supreme Court's decision in Rose v. Bank of America, N.A., 57 Cal.4th 390 (2013) (discussed here). See this blog post for links to some of the briefs filed in the federal proceeding.
In American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), this Court held that "the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action." Id. at 554. Section 13 of the Securities Act of 1933—titled "Limitation of actions"—provides, in relevant part, that "[i]n no event shall" an action under § 11 of that Act "be brought ... more than three years after the security was bona fide offered to the public, or under [§ 12] (a) (2) ... more than three years after the sale." 15 U.S.C. § 77m.
The question presented is: Does the filing of a putative class action serve, under the American Pipe rule, to satisfy the three year time limitation in § 13 of the Securities Act with respect to the claims of putative class members?
The Second Circuit held last June that American Pipe tolling did not apply. Police and Fire Retirement System of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95 (2d Cir. 2013). The SCOTUSblog case page has links to the briefs filed to date.
Today, the U.S. Supreme Court will be conferencing the cert. petition in Bank of America, N.A. v. Rose, No. 13-662. The petition, filed in November, asks the U.S. Supreme Court to consider and overturn the California Supreme Court's decision in Rose v. Bank of America, N.A., 57 Cal.4th 390 (2013).
As explained in this blog post, Rose addressed whether a UCL "unlawful" prong claim could be predicated on violations of the federal Truth in Savings Act ("TISA") (12 U.S.C. §§ 4301 et seq.), even though the Act did not carry a private right of action. The California Supreme Court's answer was yes, and its analysis rested firmly on long-established principles of UCL jurisprudence.
Supreme Court sets oral argument in UCL case: Loeffler v. Target Corp.
On February 4, 2014, at 10:00 a.m. in Sacramento, the California Supreme Court will hear oral argument in Loeffler v. Target Corp., No. 173972, in which review was granted in 2009. The case arose out of a shopping trip to Target, where the plaintiff was charged sales tax on a cup of hot coffee "to go."
Does article XIII, section 32 of the California Constitution or Revenue and Taxation Code section 6932 bar a consumer from filing a lawsuit against a retailer under the Unfair Competition Law (Bus. & Prof. Code sections 17200 et seq.) or the Consumers Legal Remedies Act (Civ. Code, section 1750 et seq.) alleging that the retailer charged sales tax on transactions that were not taxable?
The Court of Appeal (Second Appellate District, Division Three) held that "plaintiffs are attempting to resolve a sales tax dispute by using consumer and common law remedies rather than the procedure set forth by the Legislature [in the Revenue and Taxation Code]. This they cannot do under article XIII, section 32." Loeffler v. Target Corp., 173 Cal.App.4th 1229, 1235 (2009).
(1) May a cause of action be brought under the UCL (see Bus. & Prof. Code, § 17200 et seq.) or CLRA (see Civ. Code, § 1750 et seq.) based on an allegation that a retailer misrepresented that it was collecting an amount as tax reimbursement when in fact the retailer failed to remit the amount to the Board of Equalization?
(2) If so, do the allegations in plaintiffs' second amended complaint state a cause of action under the UCL or CLRA on this theory, and, if not, should plaintiffs be afforded an opportunity to amend their complaint to state such causes of action?
The parties are requested to serve and file simultaneous supplemental letter briefs addressing whether and, if so, in what manner the doctrine of primary jurisdiction (see Jonathan Neil & Assoc., Inc. v. Jones (2004) 33 Cal.4th 917, 931-937), appropriately may be invoked and applied in the present case, including whether the issue was preserved in the trial and appellate courts and whether article XIII, section 32 of the California Constitution would be implicated by applying the doctrine.
There are several "grant and hold" cases also pending in the Supreme Court. Does anyone know if any cases raising similar issues have been stayed in the lower courts pending resolution of Loeffler?
Also, if anyone plans to attend the argument and would like provide a report for publishing here (with or without attribution), please drop me a line.
The plaintiffs in Rodriguez v. RWA Trucking Co., ___ Cal.App.4th ___ (Sept. 12, 2013; mod. Sept. 20, 2013), a certified class action, were owner-drivers who contracted with the defendant trucking company to haul cargo in their rigs. They brought UCL "unlawful" prong claims based on the defendant's practice of charging them for auto insurance, physical damage insurance, cargo insurance, and workers’ compensation insurance. Plaintiffs asserted that none of these forms of insurance could be sold except by a licensed insurance broker (under Ins. Code section 1631), which the defendant was not, and that the workers' compensation insurance charges were prohibited by the Labor Code (section 3751). Slip op. at 2-7.
The trial court ruled in plaintiffs' favor on all claims. The Court of Appeal (Second Appellate District, Division Four) reversed in part, holding that the claims related to the liability, damage and cargo insurance were preempted by federal law, but that the claim based on the workers' compensation insurance charges was not. Slip op. at 8-39.
In the next section of the opinion, the Court of Appeal addressed the prejudgment interest awarded by the trial court on the original judgment. Id. at 39-43. Following M&F Fishing, Inc. v. Sea-Pac Ins. Managers, Inc., 202 Cal.App.4th 1509 (2012), the Court held that "Civil Code section 3287 does not authorize prejudgment interest on an award of restitution under the UCL." Id. at 40. However, the Court concluded, the trial court does have power to award such interest under its "inherent discretionary authority." Id. at 43. The Court remanded for determination of whether interest was appropriate on the affirmed part of the judgment. Id. at 40, 43.
Other courts have reached a different conclusion on the prejudgment interest question,1 but if Rodriquez and M&F stand up, what it means as a practical matter is that prejudgment interest is discretionary, but not mandatory, in UCL actions.
1 See, e.g., In re Neurontin Marketing and Sales Practices Litigation, 2011 WL 3852254, *60 (D. Mass. Aug. 31, 2011); Irwin v. Mascott, 112 F.Supp.2d 937, 956 (N.D. Cal. 2000) (citing Tripp v. Swoap, 17 Cal.3d 671, 681 (1976)).
UPDATE: On December 11, 2013, the Supreme Court issued a "grant and hold" order in this case, making the Court of Appeal opinion uncitable as precedent. Rodriguez v. RWA Trucking Co., No. S214150. Briefing has been deferred pending resolution of People ex rel. Harris v. Pac Anchor Transportation, Inc., No. S194388, in which the Court is considering preemption by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 14501) ("FAAAA").
The UCL and wrongful foreclosure: Glaski v. Bank of America, N.A.
Slip op. at 26-27. The citation to a federal district court decision suggests that no other California Court of Appeal opinion has addressed whether conduct constituting wrongful foreclosure (which is a catch-all term that can encompass a variety of defects in the foreclosure process, including statutory violations) can form the predicate for a UCL claim. There's no reason why it shouldn't, particularly after Rose and Zhang reconfirmed the broad scope of the UCL's "unlawful" prong.
Here, plaintiff alleges causes of action for false advertising and insurance bad faith, both of which provide grounds for a UCL claim independent from the UIPA. Allowing her also to sue under the UCL does no harm to the rule established 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.
Supreme Court reconfirms broad scope of UCL's "unlawful" prong: Rose v. Bank of America, N.A.
The opinions handed down yesterday in Rose v. Bank of America, N.A., ___ Cal.4th ___ (Aug. 1, 2013), and Zhang v. Superior Court (Cal. Capital Ins. Co.), ___ Cal.4th ___ (Aug. 1, 2013), were both unanimous and both authored by Justice Corrigan (with a concurrence by Justice Werdegar in Zhang). Both decisions reaffirm the longstanding general rule that a UCL "unlawful" prong claim may be predicated on a violation of any law — state or federal, statutory or court-made — regardless of whether the underlying law independently carries a private right of action.
Here are my thoughts on Rose, and I'll discuss Zhang on Monday.
Rose involved a UCL "unlawful" prong claim predicated on violations of the federal Truth in Savings Act ("TISA") (12 U.S.C. §§ 4301 et seq.). TISA previously carried an explicit statutory private right of action, but Congress allowed that provision to expire 10 years after it was enacted. Rose, slip op. at 1-2. The Court of Appeal held that this (in)action evinced an intention by Congress to preclude private civil enforcment, and that the UCL claim was therefore barred. Id. at 3.
The Supreme Court disagreed, and reversed.
[W]e have made it clear that by borrowing requirements from other statutes, the UCL does not serve as a mere enforcement mechanism. It provides its own distinct and limited equitable remedies for unlawful business practices, using other laws only to define what is “unlawful.” (See Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150 [UCL provides equitable avenue for prevention of unfair business practices, with streamlined procedures and limited remedies].) The UCL reflects the Legislature’s intent to discourage business practices that confer unfair advantages in the marketplace to the detriment of both consumers and law-abiding competitors.
Id. at 8 (emphasis added). Even evidence of a legislative "intent to create a comprehensive, exclusive scheme" for regulating a particular field is not enough to "actually bar" a UCL action. Id. at 6 (citing Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal.4th 553, 560 (1998)). Such an action "enforc[es] the UCL, not the statutes underlying [the] claim of unlawful business practice." Id.
In Rose, no such bar existed. The proposed UCL claim was not actually precluded by any other act of Congress or by any other affirmative expression of legislative intent. On the contrary, an unexpired TISA provision expressly permitted "private actions under state laws consistent with TISA. Thus, the abolition of the TISA remedy does not amount to a bar against UCL claims." Id.
Id. at 9-10 (italics in original; bold added) (footnote omitted).
The opinion ends with an interesting footnote citing Bowen v. Ziasun Technologies, Inc., 116 Cal.App.4th 777 (2004) (discussed in these blog posts). Bowen held that "the UCL does not apply to claims arising from securities transactions." Rose, slip op. at 10 n.8. The Supreme Court observed that "[w]hatever the scope and merits of that holding may be, it does not apply here." Id. (citations omitted). I think this suggests that the Court may view Bowen as inconsistent with the principles reaffirmed in Rose. (In Overstock.com, Inc. v. Gradient Analytics, Inc., 151 Cal.App.4th 688 (2007) (discussed here), another Court of Appeal panel declined to follow Bowen.) The Court has reserved that question for another case and another day.
As between Rose and Zhang, Rose was the more straightforward case. The opinion is shorter (11 vs. 24 pages) and, unlike Zhang, unanimous in its reasoning (7-0 with no concurrence). It does not really break any unbroken ground, and is based instead on "familiar principles" long established in the Supreme Court's UCL jurisprudence. I think the opinion will serve to restrain lower courts from construing the UCL's "unlawful" prong more narrowly than the Supreme Court's older precedents warranted (as may have happened in Bowen, for example, as well as in Rose below, and in another case even more recently).
I will have thoughts on Zhang next week.
I will have more on the opinions later. See these posts for information on the UCL issues raised in these two cases.
In Las Canoas Co. v. Kramer, 216 Cal.App.4th 96 (May 7, 2013), the Court of Appeal (Second Appellate District, Division Six) affirmed dismissal of UCL "unlawful" and "unfair" prong claims predicated on alleged violations of Code of Civil Procedure section 2025.510, which, among other things, requires the fees charged by court reporters for copies of deposition transcripts to be "reasonable."
a non-noticing party who does not move for such an order in the pending action may not bring a subsequent action to obtain restitution for "unreasonable" copy charges or obtain injunctive relief setting a "reasonable rate" to be charged by that court reporter in all future actions.
I think this case was incorrectly decided. The decisional law is very clear that any statute may form the predicate of a UCL "unlawful" prong claim, regardless of whether the law carries its own, separate private enforcement mechanism. The UCL "borrows" the statute's liability standards, engrafts the UCL's own more streamlined procedures and limited remedies, and disregards any remedies that may be written into the "borrowed" statute. Here, the statute contains no explicit safe harbor or exclusive remedy language, which are, under Cel-Tech, the only things that should preclude a UCL claim for its violation.
The Supreme Court is considering similar arguments in Zhang and Rose, which were heard last month. The opinions in those cases are due to be handed down by approximately the first week of Augusut. Las Canoas would be a good candidate for a "grant and hold" order pending resolution of one or both of those cases.
UPDATE: On behalf of CAOC, I filed a request for depublication of this opinion, as well as an amicus letter urging the Court to issue a "grant and transfer" order following issuance of its opinions in Zhang and Rose. On July 3, 2013, the Court granted itself an extension of time through September 4, 2013 to grant or deny review on its own motion. Las Canoas Co. v. Kramer, No. S211651. The time to grant review (or depublish) otherwise would have expired that week. Ultimately, the Court may not depublish or take any other action, but I thought it was worth a try. Counsel for the defendant filed response letters opposing both depublication and review.
UPDATE: On August 14, 2013, the Supreme Court denied the depublication request and declined to grant review on its own motion.
Last week, the Supreme Court released its May oral argument calendar. Two UCL cases will be heard.
On Tuesday, May 7, 2013 at 9:00 a.m., the Court will hear Rose v. Bank of America, no. S199074. Justice Louis R. Mauro of the Third Appellate District will sit in place of Justice Chin, who is recused. Links to the briefs in this case are available here.
Then, on Wednesday, May 8, 2013 at 1:30 p.m., the Court will hear Zhang v. Superior Court (Cal. Cap. Ins.), no. S178542. Review was granted in Zhang in February 2010 and the briefing was completed in August 2010. It is one of the oldest civil cases on the Court's docket.
The issues raised in these cases are somewhat related. The usual rule is that a statutory violation can lead to UCL liability regardless of whether the underlying, "borrowed" statute carries a private right of action.
In Zhang, the Court of Appeal considered whether Moradi-Shalal, in which the Supreme Court held that the legislature did not intend to create a private right of action for violations of the Unfair Insurance Practices Act, also barred UCL "unlawful" prong claims for violations of the Act. An earlier case said it did, but in Zhang the Court of Appeal held that if the defendant's conduct not only violates the Act but is also otherwise unlawful, it can be pursued under the UCL. Zhang v. Superior Court (Cal. Cap. Ins. Co.), 178 Cal.App.4th 1081 (Oct. 29, 2009).
Rose involved the Truth in Savings Act (12 U.S.C. § 4301 et seq.), a federal statute that used to carry a private right of action, but Congress allowed it to sunset. The Court of Appeal reasoned that permitting a UCL "unlawful" prong claim would contravene Congress's intent to preclude the statute's private enforcement. Rose v. Bank of America, N.A., 200 Cal.App.4th 1441 (2011). Rose, unlike Zhang, has federal preemption implications.
Both arguments will take place in San Francisco. I hope to be able to attend at least one of them.

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