UCL securities transactions case modified
Last week, the Court of Appeal modified its opinion in Bowen v. Ziasun Technologies, Inc., ___ Cal.App.4th ___ (Mar. 8, 2004) by adding two new footnotes apparently intended to make clear that even the UCL's "unlawful" prong does not apply to securities transactions. New footnote 9 contains the following interesting quotation: "The terms 'unfair' or 'fraudulent' are actually much broader than the term 'unlawful.' Thus, unfair or fraudulent practices in securities transactions could meet the statutory definition and be in violation of either section 17200 or the FTC Act without having to be considered 'unlawful.' However, ... securities transactions are exempt. The reasoning is not that they do not meet the definition of 'unfair' or 'fraudulent,' but that section 5 of the FTC Act and similar state statutes were never intended to apply to securities transactions at all because of the comprehensive regulatory umbrella of the Securities and Exchange Commission over such transactions." While the Bowen court's reasoning may be consistent with securities cases decided under the FTC Act and other states' "little FTC" acts, it is inconsistent with the reasoning of several notable and recent UCL decisions holding that the existence of a parallel administrative enforcement scheme is irrelevant to UCL liability. See, e.g., Donabedian v. Mercury Insurance Co., ___ Cal.App.4th ___ (Mar. 11, 2004; modified Mar. 30, 2004); People ex rel. Orloff v. Pacific Bell, ___ Cal.4th ___ (Dec. 15, 2003). The modification order in Bowen is accessible here. My prior post on the Bowen decision is here.
- posted by Kim Kralowec @ 3:23 PM