Opinion ID: 613006
Heading Depth: 1
Heading Rank: 1

Heading: Safe Harbor from Liability Pursuant to California's Unfair Competition Law and Consumer Legal Remedies Act

Text: Plaintiffs' statutory claims under the UCL and CLRA allege, generally, that Defendants' use of devices resulting in retention of residual fuel constitutes an unlawful and/or deceptive business practice. See Cal. Bus. & Prof.Code § 17200; see also Cal. Civ.Code § 1770(a). Defendants counter that these statutory claims fail because Defendants are entitled to safe harbor from liability insofar as their challenged business practices are clearly permitted  and indeed are certified to be lawful  under California's regulatory regime. The UCL broadly prohibits any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising ... Cal. Bus. & Prof.Code § 17200. Plaintiffs allege that the residual fuel situation amounts to an unlawful business practice, [8] and seek injunctive relief, [9] including requiring Defendants to replace their gasoline dispensing systems to eliminate residual fuel, to change their billing and pricing systems so that customers are charged accurately for the grade and quantity of gasoline they pump, or to add additional disclosures on all gasoline dispensers notifying customers of the existing residual fuel in the hose. Plaintiffs' UCL claim was properly dismissed by the district court pursuant to California's safe-harbor doctrine because courts may not use the unfair competition law to condemn actions the Legislature permits. Cel-Tech, 83 Cal.Rptr.2d 548, 973 P.2d at 542. Although the unfair competition law's scope is sweeping, it is not unlimited. Courts may not simply impose their own notions of the day as to what is fair or unfair. Specific legislation may limit the judiciary's power to declare conduct unfair. If the Legislature has permitted certain conduct or considered a situation and concluded no action should lie, courts may not override that determination. When specific legislation provides a safe harbor, plaintiffs may not use the general unfair competition law to assault that harbor. Id., 83 Cal.Rptr.2d 548, 973 P.2d at 541 (emphasis added). The allegedly unfair business practice in this case is the residual fuel resulting from a DMS-certified dispenser design. California law unequivocally permits Defendants' conduct, therefore affording safe harbor from UCL liability. The CLRA similarly proscribes various unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer ... Cal. Civ.Code § 1770(a). Plaintiffs asserted that Defendants violated the CLRA by causing, and failing to disclose, the residual fuel situation. However, we agree with the district court that [t]he California regulatory framework creates specific requirements [for retail gasoline dispensing] that may not be trumped by the general prohibitions of the CLRA[,] and that Defendants therefore were entitled to safe harbor from Plaintiffs' CLRA claims. See Bourgi v. W. Covina Motors, Inc., 166 Cal.App.4th 1649, 1658-60, 83 Cal.Rptr.3d 758 (2008) (applying safe harbor provisions of Vehicle Code to claims brought under the CLRA).