Opinion ID: 770328
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Heading: Business and Professions Code section 17200 and Insurance Code section 10144.

Text: 16 In his complaint Chabner alleged violations of California Insurance Code section 10144, and California Business and Professions Code section 17200. Insurance Code Section 10144 provides, in relevant part: 17 No insurer issuing [life insurance] shall refuse to insure, or refuse to continue to insure, . . . or charge a different rate for the same coverage solely because of a physical or mental impairment, except where the refusal . . . or rate differential is based on sound actuarial principles or is related to actual and reasonably anticipated experience . . . . 18 Cal. Ins. Code S 10144. This statutory provision would have prohibited United from charging Chabner a nonstandard premium due to his FSH MD, unless the premium was based on sound actuarial principles or was related to actual and reasonably anticipated experience. However, it is unclear whether this insurance code section provides Chabner with a private cause of action. The parties did not address this issue in their briefs, 4 and therefore we do not address it. 19 Chabner, however, also claimed violations of California Business and Professions Code section 17200. Section 17200 is part of the Unfair Competition Law, Cal. Bus. & Prof. Code SS 17200 17209, and provides, in relevant part, that unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice. Cal. Bus. & Prof. Code S 17200. Private causes of action for violations of Business and Professions Code section 17200 are authorized by Business and Professions Code section 17204. See Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 950 P.2d 1086, 1089 (Cal. 1998). The district court held that Insurance Code section 10144 may be used to define the contours of a private cause of action under Business and Professions Code section 17200. We agree. 20 The California Supreme Court has held that section 17200 defines `unfair competition' very broadly, to include `anything that can properly be called a business practice and that at the same time is forbidden by law.'  Farmers Ins. Exch. v. Superior Court, 826 P.2d 730, 742 (Cal. 1992) (internal quotation marks omitted) (quoting Barquis v. Merchant Collection Ass'n, 496 P.2d 817, 830 (Cal. 1972)). By proscribing `any unlawful' business practice, section 17200 `borrows' violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable. Cal-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co., 973 P.2d 527, 539-40 (Cal. 1999) (internal quotation marks omitted). It does not matter whether the underlying statute also provides for a private cause of action; section 17200 can form the basis for a private cause of action even if the predicate statute does not. See Stop Youth Addiction, 950 P.2d at 1091. 21 There are limits on the causes of action that can be maintained under section 17200. A court may not allow a plaintiff to plead around an absolute bar to relief simply by recasting the cause of action as one for unfair competition.  Cal-Tech Communications, 973 P.2d at 541 (internal quotation marks omitted). This limit is rather narrow, however.To forestall an action under [section 17200], another provision must actually `bar' the action or clearly permit the conduct. Id. 22 As applied to this case, the district court was correct in holding that Chabner could maintain a cause of action under section 17200 for United's alleged violation of section 10144. Setting the premium for a life insurance policy can quite properly be called a business practice. Farmers Ins. Exch., 826 P.2d at 742. Also, United's alleged misconduct (charging Chabner a discriminatory premium that is neither actuarially sound nor based on reasonably anticipated experience) would run afoul of section 10144, if proven. Accordingly, the prerequisites for borrowing a violation of section 10144 and treating it as a violation of section 17200 exist in this case. See Cal-Tech Communications, 973 P.2d at 540. 23 Moreover, the narrow limitations on causes of action under section 17200 do not prevent this claim. See Cal-Tech Communications, 973 P.2d at 541 (holding that to prevent an action based on section 17200, another statutory provision must either permit the challenged conduct or bar the cause of action). First, no statutory provision permits United to charge arbitrarily discriminatory premiums, and United does not dispute this fact. Second, nothing specifically bars this cause of action. 24 United points to Moradi-Shalal v. Fireman's Fund Insurance Cos., 758 P.2d 58 (Cal. 1988), and Manufacturers Life Insurance Co. v. Superior Court, 895 P.2d 56 (Cal. 1995), to argue otherwise. Moradi-Shalal held that Insurance Code section 790.03, which is part of the Unfair Insurance Practices Act (UIPA), did not create a private cause of action against an insurer that violated section 790.03(h) (regulating insurers' unfair practices in settling claims). See Moradi-Shalal, 758 P.2d at 68. Manufacturers Life then held that plaintiffs could not use section 17200 to plead a cause of action based on a violation of section 790.03(h), because to do so would undermine Moradi-Shalal. See Manufacturers Life, 895 P.2d at 7172. United argues that these two cases apply here because another subsection of the UIPA, subsection 790.03(f), defines unfair rate discrimination 5 and therefore governs United's alleged misconduct in this case. United argues that because private plaintiffs cannot bring a direct cause of action under section 790.03(h), and because they cannot get around that bar by using section 17200, they also cannot do so for violations of section 790.03(f). 25 United's argument overlooks the fact that Chabner predicates his section 17200 action on a violation of section 10144, not on a violation of section 790.03(f). The two statutes, section 10144 and section 790.03(f), regulate similar types of conduct: charging different premiums for arbitrary reasons. However, even assuming that Moradi-Shalal and Manufacturers Life prevent causes of action based on section 790.03(f), it does not necessarily follow that they also prevent causes of action based on section 10144. In Manufacturers Life, although the court held that the plaintiff could not proceed with a section 17200 claim where the predicate statute was section 790.03(h), it allowed the plaintiff to proceed with a section 17200 claim where the predicate statute was the Cartwright Act, even though the conduct that allegedly violated the Cartwright Act was the same conduct that allegedly violated section 790.03(h). See Manufacturers Life, 895 P.2d at 71-72. 6 In this case, as in Manufacturers Life, [t]here is no attempt to use [section 17200] to confer private standing to enforce a provision of the UIPA, id. at 71, because section 10144, like the Cartwright Act, is not part of the UIPA. 7 Nor is Chabner's cause of action based on conduct which is absolutely privileged or immunized by another statute.  Id. at 7172. As the California Supreme Court has explained, the Manufacturers Life court, in construing the UIPA and section 17200, expressly concluded that in adopting the UIPA the Legislature had not granted a general exemption from antitrust and unfair competition statutes. Quelimane Co. v. Stewart Title Guar. Co., 960 P.2d 513, 522 (Cal. 1998). Therefore, section 790.03 and Moradi-Shalal do not prevent Chabner from using section 10144 to define the contours of his section 17200 action, and the district court correctly allowed him to proceed with that claim. 26