Source: http://17200blog.blogspot.com/2004/07/
Timestamp: 2018-07-19 17:18:01
Document Index: 355905923

Matched Legal Cases: ['§ 16720', '§ 17200', '§17200', '§17203', '§382', '§17208', '§3294', '§ 17200', '§ 17200']

- posted by Kim Kralowec @ 10:04 AM | Comments (0) |
Today's Daily Journal has this article on a new UCL action against the manufacturer of Craftmatic beds. The article reads, in part:
A veteran of 80 consumer class actions, [plaintiffs' attorney Mark A.] Chavez [of Chavez & Gertler in Mill Valley] maintained the case is a solid one, even though he conceded private attorney general actions have lost much of their righteous luster in the Golden State.
Specifically, Chavez acknowledged that private attorney general lawsuits are under a lingering cloud these days because of the antics of Beverly Hills' Trevor Law Group. That now-defunct firm earned universal opprobrium because it filed thousands of frivolous private attorney general, unfair competition lawsuits against small businesses. ....
Nonetheless, Chavez said the Craftmatic case will, "hopefully, do some good."
The article goes on to explain that the Ohio Attorney General filed suit against Craftmatic last December due to its "high pressures sales tactics" and "false advertising," in particular against the elderly. The article further reports that AARP's legal arm has also become involved, in hopes that the UCL case will result in an injunction prohibiting the inappropriate sales tactics Craftmatic allegedly directs toward the elderly.
- posted by Kim Kralowec @ 6:50 PM | Comments (0) |
- posted by Kim Kralowec @ 5:17 PM | Comments (0) |
- posted by Kim Kralowec @ 1:27 PM | Comments (0) |
In Grace v. eBay, ___ Cal.App.4th ___ (July 22, 2004), handed down yesterday, the Court of Appeal held that a federal statute governing "interactive computer services" did not immunize eBay from liability for libel. Instead, a written release in eBay's user agreement precluded the libel suit. These holdings also applied to (and disposed of) the plaintiff's UCL claim, which was premised solely on the defendant's allegedly "unlawful" libel.
UPDATE: This morning's Recorder has an article on the decision, "eBay Ruling Punctures Web Liability Sheild," as does the Daily Journal, whose article is titled "Panel Tosses Publisher's Defamation Lawsuit."
Today's Daily Journal has an article entitled "Panel Narrows Cipro Class Action," reporting on an unpublished Court of Appeal decision affirming (in large part) class certification of certain antitrust and related UCL claims:
The trial court here properly concluded that there are substantial issues of law and fact common to all of the proposed class members. Determining whether the Cipro Agreements violate the Cartwright Act (Bus. & Prof.Code, § 16720 et seq.), the Unfair Competition Act (Bus. & Prof.Code, § 17200 et seq.), or the common law requires the resolution of potentially complex issues that do not vary among the individual class members. The nature and circumstances of the Cipro Agreements--and their legality under California law--raise identical factual and legal issues as to every member of the class. For every single class member to litigate these common issues separately would impose a substantial burden on the courts and the litigants.
In re Cipro Cases I & II, No. D043543, 2004 WL 1627983, *4 (Jul. 21, 2004). The discussion of how expert testimony works at the class certification stage is especially interesting.
- posted by Kim Kralowec @ 9:16 AM | Comments (0) |
"Heated business-consumer war looms in fall campaign"
Thanks to the readers who have been writing in with questions about the nuts and bolts of the UCL. (See this comment, for example.) I want to take this opportunity to dispel some common misconceptions, especially with the vote on Proposition 64, the UCL "reform" initiative, coming up in November. True, a few unscrupulous lawyers have reportedly abused the UCL, and those abuses have garnered a lot of publicity. But most UCL claims are brought by ethical lawyers who would never dream of misusing the statute. These lawyers are working in the UCL trenches with no recognition in the press for what they do. Here’s how the UCL works in a legitimate case:
What kind of plaintiffs bring UCL cases? The UCL allows “any person acting for the interests of itself, its members or the general public” to file a lawsuit seeking a remedy for "unlawful, unfair, or fraudulent" business acts or practices. Bus. & Prof. Code §§17200, 17204. This means that the person filing the suit need not have been personally affected by the challenged practice. This rule exists for two primary reasons: (1) to supplement the work of the public prosecutors, whose offices cannot be expected to catch and pursue every wrongful business practice that occurs in our large state; and (2) to increase the likelihood that an unfair business practice that harms a large group in a small way will be stopped. Yes, cases have been filed by “shell” corporations created by lawyers for the sole purpose of being UCL plaintiffs. Those cases get a lot of attention and publicity. But they are the exception, not the rule. UCL actions are filed by affected people for real wrongs all the time—usually as an adjunct to other legal claims brought in the same lawsuit. In fact, despite the broad standing rules, most UCL cases are brought by affected individuals. For reasons I’ve explained before, it is almost always better for an affected person, rather than an unaffected “shell” company, to be the plaintiff in a UCL case. Ethical lawyers carefully evaluate a proposed UCL case and ask themselves whether it passes the smell test. If it doesn’t, the case isn’t filed.
How do ethical lawyers approach UCL cases? The relationship between the attorney and the plaintiff in a UCL case is no different from any other attorney-client relationship. First of all, there is a retainer agreement. The agreement is the result of arm’s-length negotiations between the attorney and the client. The agreement specifies how the attorney is to be compensated for his or her work. UCL cases, like many other kinds of cases, are typically taken on a contingency fee basis, which means that the attorneys don’t get paid unless they win the case. The courts held years ago that contingency fee agreements are proper, since many legitimate cases could not otherwise be brought at all. Some contingency fee agreements give the attorney a specified percentage share in any recovery. In class and representative UCL actions, however, the contingency fee agreement typically states that if the case succeeds, the attorney may apply to the court for fees (which may or may not be awarded; see below). In my 12 years of practice, I have never seen a contingency fee agreement that would give the plaintiff’s attorney 70-90% of the recovery—in a UCL case or in any other kind of case.
Who decides whether the defendant violated the UCL? The UCL is an equitable statute, which means that the defendant’s liability is decided by a judge—not a jury. Judges are viewed as better able than juries to set aside the emotional appeal of a case, and rule based solely on the applicable law. For that reason, the UCL affords an extra layer of protection against runaway verdicts—a protection the defendant does not enjoy in most other kinds of cases. Also, judges are usually not very sympathetic to UCL cases brought by unaffected "shell" corporations—another reason why it's better for a person who was actually impacted by an unfair business practice to challenge that practice in court.
What remedies does the UCL afford? The UCL affords very limited remedies, and intentionally so, to balance the broad scope of its application. Bank of the West v. Superior Court, 2 Cal.4th 1254, 1266-67 (1992). By statute, it permits two forms of relief: injunctive relief and restitution. Bus. & Prof. Code §17203. In other words, the UCL allows the court to order the defendant to (1) stop the unfair business practice, and (2) pay back any money the defendant took away from consumers by means of the unfair business practice. A court-ordered injunction can be mandatory or prohibitive, depending on what the particular case requires. In some cases, the UCL arguably allows the court to order the defendant to disgorge all of its ill-gotten profits as well—but that can only happen in a certified UCL class action. What that means is that disgorgement of profits is not an available remedy unless the plaintiff who is bringing the case has been personally affected by the unfair business practice (and otherwise satisfies the requirements for class certification (see Code Civ. Proc. §382)). The UCL also allows public prosecutors (but not private plaintiffs) to recover statutory penalties of up to $2,500 per violation. Bus. & Prof. Code §17208. Finally, I have never seen a punitive damages award in a UCL action—which does not necessarily mean that such an award could not be made in a proper case upon a proper showing of “oppression, fraud or malice.” But that is the standard that governs punitive damages awards in all cases, not just UCL cases. Civ. Code §3294.
If money is recovered, who gets it? If monetary restitution or disgorgement of profits is awarded in a representative UCL action, that money goes to the affected consumers or to the general public. The representative plaintiff shares in the proceeds just like anyone else—in accordance with its proportionate injury (if any). The rest of the money is distributed to the affected persons using procedures very similar to those used in certified class actions. If the UCL case has been certified as a class action, the proceeds may be placed into a fluid recovery fund and then distributed to the affected persons or, if those persons cannot be easily identified or located, put to the "next best use" to benefit the general public and/or discourage the unlawful conduct the defendant was found guilty of. See Corbett v. Superior Court, 101 Cal.App.4th 649, 655 (2002) (citing Kraus v. Trinity Management Services, Inc., 23 Cal.4th 116 (2000)). The plaintiff's attorney does not get to keep all the money in a UCL case. That is one of the most misleading tall tales I’ve heard told about the UCL (see my post about this editorial, for example). It is simply not true.
Can attorneys’ fees be awarded under the UCL? The UCL has no attorneys' fees provision. In a successful UCL case, as in any other kind of case, the judge may award attorneys' fees only if (1) a contract, (2) a statute, or (3) an equitable doctrine permits it, and only if a formal fee application is filed. For example, attorneys' fees are sometimes awarded under Code of Civil Procedure section 1021.5, which permits a fees award if the plaintiff succeeds in litigating a case that confers a substantial benefit on the general public or a large class of persons. That statute applies to all cases, not just UCL cases. Attorneys' fees might also be awarded under the "common fund" doctrine, which allows the attorney to share in a "common fund" of money that exists only because of the attorney's efforts and hard work. Again, that theory applies to all cases, not just UCL cases. Other attorneys' fees statutes and equitable doctrines might apply depending on the facts of the particular case. The important thing to remember is that in a successful, litigated UCL action, the judge decides whether to award attorneys' fees and how much to award.
How are attorneys' fees calculated in UCL cases? Attorneys' fees are calculated and awarded in UCL cases in the same way as in all other cases in which the judge determines the award. Depending on the basis for the fees award, the judge will calculate fees as a reasonable percentage of the recovery and/or based on the number of hours of work the attorney put into the case, while also accounting for factors such as the risk the attorney took on, the difficulty of the litigation, and the degree of success achieved. Sometimes, the fees are paid out of the recovery that the litigation generated; other times, the defendant must pay the fees on top of that recovery. The judge makes that decision.
I hope this answers some of the questions I’ve been getting about how the UCL works. Please post a comment or email me if you have more questions, and I’ll try to answer some of them in future posts. (And please remember, the foregoing should not be relied on as legal advice. It is a broad outline of the UCL; there are nuances I haven't mentioned. See my disclaimer here.)
- posted by Kim Kralowec @ 12:00 AM | Comments (6) |
- posted by Kim Kralowec @ 6:51 AM | Comments (0) |
Overlawyered had a post yesterday on the FDA's new and controversial practice of filing amicus briefs in drug-warning cases against pharmaceutical manufacturers. Here is a Bloomberg article on the subject. Lo and behold, it appears the FDA did file an amicus brief in July 2003 in Dowhal v. SmithKline Beecham Consumer Healthcare, 32 Cal.4th 910 (Apr. 15, 2004), in which the California Supreme Court held that federal law preempted Proposition 65 nicotine patch warning requirements (and UCL claims based thereon; see my original Dowhal post). More information can be found in this article. (And a belated thanks to Overlawyered for mentioning The UCL Practitioner in a post last week. Welcome Overlawyered readers!)
- posted by Kim Kralowec @ 6:39 AM | Comments (0) |
While not directly related to the UCL, I'm glad to see that the Daily Journal is starting to mention the authors of legal weblogs as experts on their chosen topics of focus. This article in today's paper mentions Election Law Blog and Balkinization. It probably helps that the authors of those blogs are both law professors.
UPDATE: The Daily Journal followed up two days later with an article about the blog Underneath Their Robes, "a good-natured gossip page" that is running a contest called "Superhotties of the Federal Judiciary." So much for the law professor angle.
ANOTHER UPDATE: The Daily Journal now reports (07/22/04) that Ninth Circuit Court of Appeals Judge Alex Kozinski is the newly-anointed #1 male Superhottie of the Federal Judiciary.
- posted by Kim Kralowec @ 8:54 AM | Comments (0) |
The cover story of this month's California Lawyer observes that "because of Trevor Law Group, California voters will be making a momentous decision this November on an initiative that will determine the fate of this controversial consumer law [i.e., the UCL]." And in case you didn't see it, last month's cover story was all about law blogging, and quotes the California attorneys behind Bag and Baggage and So Cal Law Blog.
- posted by Kim Kralowec @ 8:53 AM | Comments (1) |
Exactly two months ago today, a district judge in Massachusetts had this to say about the UCL:
As interpreted by the California Supreme Court, the scope of this statute is broad: "The statutory language referring to 'any unlawful, unfair or fraudulent' practice makes clear that a practice may be deemed unfair even if not specifically proscribed by some other law." Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999). The end payor plaintiffs thus may assert that [the defendant's] conduct, even if permissible under [other applicable laws], is actionable under the unfair competition statute. See Motors, Inc. v. Times Mirror Co., 102 Cal.App.3d 735, 741, 162 Cal.Rptr. 543 (1980) (concluding that the plaintiff adequately stated a claim of unfair competition even though it had not alleged "any agreement, understanding, or conspiracy to restrain trade").
In re Relafen Antitrust Litig., 221 F.R.D. 260, 263 (D. Mass. May 12, 2004).
This morning's Daily Journal reports here that San Francisco and Santa Clara Counties both filed suit against certain natural gas companies last week. The article reports that, despite the Ninth Circuit's very recent California v. Dynegy decision, San Francisco's suit is based (in part) on the UCL. According to one of the attorneys who filed the suit, it does not "involve tariffs that are governed by the Federal Energy Regulatory Commission."
UPDATE: The Recorder also has an article on the suits.
- posted by Kim Kralowec @ 8:39 AM | Comments (0) |
Yesterday's San Jose Mercury News had this report, which describes some of the UCL lawsuits that have been filed against certain companies now supporting UCL "reform." The lawsuits sound pretty legitimate to me. And, although not precisely related to the UCL, this article on tort "reform" (by a Libertarian, no less) is quite interesting.
UPDATE: The related AP article is called "Targets of unfair competition law try to make it tougher to use it."
- posted by Kim Kralowec @ 6:14 PM | Comments (0) |
From a pure UCL standpoint, the most interesting part of the Ninth Circuit's decision in California v. Dynegy, Inc. is the following language in footnote 6:
According to California, the state unfair competition [law]'s disjunctive phrasing permits relief for practices that are either "unfair, unlawful, or fraudulent." See Cal. Bus. & Prof. Code § 17200. With respect to unlawfulness, California urges that the companies improperly converted property to which the ISO had the exclusive right of possession and control. Yet this claim is based entirely on alleged tariff obligations .... The federal tariff wholly governs the lawfulness of the companies' conduct. Similarly, with respect to the "unfair" and "fraudulent" terms, the claims depend entirely upon the federal tariff. Cf. Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 182 (Cal. 1999) ("Courts may not simply impose their own notions of the day as to what is fair or unfair.").
(Slip op. at 8846 n.6 (hyperlink added).) This footnote reads like a last-minute afterthought. Attorneys well-versed in UCL practice know that Cel-Tech's key holding is that conduct can be "unfair" or "fraudulent" regardless of whether it is also "unlawful." Notwithstanding the quoted language from Cel-Tech, separate and workable definitions of "unfair" and "fraudulent" have developed in the caselaw. I haven't seen the state's complaint, so maybe in this particular case the "unfair" and "fraudulent" prong claims really were pleaded as coextensive with the "unlawful" prong claim. But if not, those claims deserved a more thorough (and independent) analysis.
Another interesting thing about Dynegy is its conclusion that the UCL claim was removable because the "unlawful" prong hinged on a federal-law violation. (Slip op. at 8846-47 & n.7.) Up until now, most federal courts have held that UCL claims are not normally removable, even if predicated on federal law, because at bottom they remain state-law claims. In this case, the predicate federal law was subject to exclusive federal jurisdiction—which must be the distinguishing factor. It will be interesting to see how this aspect of Dynegy plays out.
- posted by Kim Kralowec @ 8:25 AM | Comments (0) |
The Fresno Bee had this very anti-17200 report over the weekend (thanks to Freespace for emailing me about it). For another point of view, see this press release from Election Watchdog, whose website is heavily focused on opposing the UCL "reform" measure. And by the way, as of last week the Secretary of State assigned the number 64 to the "reform" measure.
- posted by Kim Kralowec @ 8:38 AM | Comments (0) |
This report was in yesterday's Los Angeles Times. And today, the San Francisco Chronicle reports on the demise of Lockyer's energy lawsuits.
- posted by Kim Kralowec @ 5:39 PM | Comments (0) |
Ninth Circuit affirms dismissal of Lockyer's UCL action against energy companies
Yesterday, the Ninth Circuit affirmed the dismissal of one of Attorney General Bill Lockyer's UCL actions against the energy companies. California v. Dynegy, Inc., ___ F.3d ___ (9th Cir. Jul. 6, 2004). The case was originally filed in state court but removed to the Northern District of California, which refused to remand it, then dismissed it. The Ninth Circuit determined (among other things) that the UCL claim "represented a naked attempt to enforce" certain federal energy regulations that were subject to the federal courts' exclusive jurisdiction, and that the UCL claim was preempted by federal law. Today's Daily Journal has this report: "9th Circuit Tosses State Energy Lawsuits." And Today's Recorder reports: "9th Circuit Tosses State Suits Against Power Companies."
- posted by Kim Kralowec @ 8:13 AM | Comments (0) |
- posted by Kim Kralowec @ 8:22 AM | Comments (0) |
Many thanks to Southern California Law Blog, Bag and Baggage, The Legal Reader, California Labor & Employment Law, and Freespace for their posts mentioning my blog. After blogging under the radar for so long, I'm delighted by all the sudden attention. Thanks also to Employee Relations Law and News and Real Lawyers Have Blogs for linking to me. Wow my site meter jumped yesterday! Welcome new readers!
- posted by Kim Kralowec @ 8:15 AM | Comments (0) |
UCL/CLRA judgment affirmed 2-1 with brutal dissent
In Benson v. Kwikset Corporation, ___ Cal.App.4th ___ (Jun. 30, 2004), which was decided Wednesday but not posted to the court's website until yesterday, the Court of Appeal reaffirmed two points relating to proof in UCL and CLRA cases. First, it confirmed that the "reasonable consumer" standard applies. Slip op. at 16-17 (citing Consumer Advocates v. Echostar Satellite Corp., 113 Cal.App.4th 1351 (2003)). Second, it confirmed that statistical or survey evidence is not required to establish a false advertising or other "fraudulent" prong claim under the UCL. Slip op. at 17-19 (citing Brockey v. Moore, 107 Cal.App.4th 86 (2003)). Then, the court had some harsh words for the UCL:
We share our dissenting colleague's angst about both the effect of this law, particularly in an age of global trade, and the potential for abuse that may arise under the UCL. If we had the power to do so, we would rewrite the statute to address those concerns.
Slip op. at 15. But that was nothing compared to the dissent:
Today’s majority decision only confirms the critics’ worst caricature of California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.)—that it has degenerated into nothing but a feeding frenzy for attorneys who use the law to shake down California businesses and chase jobs out of California. .... There has been no injury. No breach of contract. No one got hurt. The only money to change hands is the multimillion dollar windfall to the attorneys who brought this action if today’s decision is allowed to stand. And what has been accomplished by this litigation other than the enrichment of the plaintiffs’ attorneys? The only real results are negative, and especially negative to American workers. .... What is the difference between the $3 million attorney fees award here and the petty shakedowns which made the Trevor Law Group infamous in Southern California? Nothing but the size of the law firm and its target. .... Thus, if the Trevor Law Group sues an auto body shop over not having its license up to date, that is an abuse of the unfair competition law. But if a more established law firm sues a big corporation over an equally trivial putative violation—it is rewarded with $3 million in fees. The net result is to bless the same kind of abuse in which the Trevor Law Group engaged—looking for a hypertechnical violation of some law by a California business and then going after that business under section 17200 as a profit-making venture—with appellate holy water. .... The unfair competition law is not a bad law, but today it has been abused. One can only hope that the issue will be visited by our Supreme Court as soon as possible.
Slip dissent at 1, 7-9 (emphasis in original). That hurts, but $3 million will soothe a lot of wounds. Still, how long before we see something like this in a published majority opinion?
- posted by Kim Kralowec @ 8:12 AM | Comments (0) |
So reports today's Recorder, referring to the Supreme Court's grant of review yesterday in Snowney v. Harrah's Entertainment, Inc., 116 Cal.App.4th 996 (2004). I disagree with the Recorder's slant on the article. Snowney is a personal jurisdiction case that involves the UCL only incidentally. As far as I can tell, the UCL component of the case had no impact on the court's jurisdictional analysis. Nor does the Supreme Court's order list say anything about the UCL aspect of the case. The Recorder headline might as well read "Court to define breach of contract's reach in other states," as the case also involves that claim as well as unjust enrichment and false advertising.
"Group claims poll shows support for ballot measure on 17200 suits"
- posted by Kim Kralowec @ 9:14 AM | Comments (0) |