New UCL attorneys' fees decision: Baxter v. Salutary Sportsclubs, Inc.
On Tuesday, in Baxter v. Salutary Sportsclubs, Inc., ___ Cal.App.4th ___ (Sept. 28, 2004), the Court of Appeal held that the trial court properly denied a successful UCL plaintiff's motion for attorneys' fees under Code of Civil Procedure section 1021.5, the "private attorney general" statute. The plaintiff obtained an injunction requiring defendant health club to modify its membership agreement to comply with several statutes governing health club contracts, and to notify its patrons of the change. However, the trial court determined that the defendant's statutory violations did not actually harm anyone, and that plaintiff's lawsuit effected "a de minimus change in the defendant’s contracts that did not result in a significant benefit to the public." It therefore declined to award fees. Slip op. at 3. The Court of Appeal affirmed, observing that "[t]his case is a textbook example of valueless litigation against a private party 'under the guise of benefiting the public interest.'" Id. at 5. The appellate court concluded by saying:

While the broad sweep and relaxed standing requirements of the UCL often serve a valuable purpose in vindicating important rights on behalf of the general public, they are not, in combination with section 1021.5, a license to bounty hunt for niggling statutory violations that neither harm nor threaten to harm anyone, especially when there is no showing that the offending party refuses to correct the violations after they have been brought to its attention. The trial court did not err in refusing to award attorney fees for the miniscule benefit this litigation has conferred on the public.

Id. at 8.
- posted by Kim Kralowec @ 7:31 AM