The UCL Practitioner
Thursday, April 29, 2004
 
Update on UCL "reform" activity
The initiative measure sponsored by Californians to Stop Shakedown Lawsuits is now one of five initiatives "pending verification of signature count," as the Secretary of State reports here.

In related news, AB 2604, the UCL "reform" bill introduced by Republican Assemblyman Bill Pacheco, was gutted earlier this week. AB 2604 is now an act to amend the Labor Code and has nothing to do with the UCL. I'm no expert on legislative maneuverings, but my guess is the bill's author perceived that the UCL initiative was headed for the ballot, so decided to use AB 2604 as a vehicle for other legislation. Here is AB 2604 before the amendment; here it is after.
Wednesday, April 28, 2004
 
"Bus. & Prof. Code 17200: The Biggest Hammer in the Toolbox?"
Well, here's an interesting article.
Tuesday, April 27, 2004
 
Upcoming Unfair Competition Law Conference
The State Bar's Antitrust and Unfair Competition Law Section will present its annual Unfair Competition Law Conference on May 7, 2004 at the Omni Hotel in San Francisco. Last year's conference was quite good.
Monday, April 26, 2004
 
UCL statute of limitations question
As touched upon elsewhere, the UCL's "unlawful" prong "borrows" violations of other laws (state or federal, statutory or court-made) and makes them independently actionable. If the "borrowed" law's statute of limitations differs from the UCL's 4-year statute of limitations (see Bus. & Prof. Code section 17208), which statute governs? UCL practitioners know the answer is the UCL's 4-year statute of limitations, as the Court of Appeal implicitly acknowledged in a recent decision, Taiheiyo Cement Corp. v. Superior Court, ___ Cal.App.4th ___ (Mar. 30, 2004) (fn. 10). This rule makes sense because the UCL can "borrow" any law regardless of whether it creates a private right of action, much less adopts a limitations period. Bear in mind, too, that the UCL's 4-year statute is probably subject to the delayed discovery rule.
Friday, April 23, 2004
 
"If ever there were a legal tar baby, California's unfair competition law is it"
An article in this month's California Lawyer (subscription required) discusses legislative and initiative efforts, by both business and consumer groups, to amend section 17200.
Thursday, April 22, 2004
 
Two new UCL/SLAPP decisions
In Fashion 21 v. Coalition for Humane Immigrant Rights of Los Angeles, ___ Cal.App.4th ___ (Apr. 21, 2004), the Court of Appeal held that the plaintiffs failed to establish a reasonable probability of success on the merits of their 17200 "fraudulent" prong claim. Fashion 21 is a highly fact-specific case involving labor disputes in the garment industry.

And last month, in Brenton v. Metabolife International, Inc., ___ Cal.App.4th ___ (Mar. 4, 2004), the Court of Appeal interpreted and applied new CCP section 425.17 (mentioned in my post here) for what appears to be the first time. The court held that section 425.17 was a procedural statute that could be constitutionally applied to preexisting litigation, and that it barred SLAPP motions against UCL claims falling within its ambit. The court also rejected the defendant's (spurious, in my opinion) First Amendment challenge to section 425.17.
Tuesday, April 20, 2004
 
AB 2604 scheduled for hearing before Assembly Judiciary Committee
Last week, the Assembly Judiciary Committee scheduled a hearing on AB 2604 for May 5, 2004. As mentioned at my post here, AB 2604 would drastically curtail the scope of the UCL. More information on AB 2604 is available here.
Monday, April 19, 2004
 
"Court Allows FDA to Block Some State Warnings"
An article in Friday's Daily Journal (available by paid subscription only) discussed Dowhal without mentioning that it was a UCL case--confirming my impression that Dowhal is not a significant UCL decision. The article also pointed out that Justice Kennard called the dispute "an unusual case." My prior posts on Dowhal are here and here.
Friday, April 16, 2004
 
17200 "reform" initiative heading for November ballot?
A group called Californians to Stop Shakedown Lawsuits announced this week that it submitted over 650,000 signatures to election officials to qualify its 17200 "reform" measure for the November ballot. The California Chamber of Commerce made a similar announcement on Tuesday. The California Secretary of State reports here that the initiative is now "pending raw count of petition signatures." The text of the proposed measure can be accessed here.
 
It's really not that bad
An article in yesterday's Los Angeles Daily News blames section 17200 for all of the state's economic woes. A recent Los Angeles Times article is a bit more balanced. For some of the good 17200 can do, see this article and this article.
Thursday, April 15, 2004
 
Federal law preempts Proposition 65 health warning requirements
Today the California Supreme Court issued its decision in Dowhal v. SmithKline Beecham Consumer Healthcare, ___ Cal.4th ___ (Apr. 15, 2004), holding that the federal Food, Drug and Cosmetic Act and relevant FDA regulations preempted California's Proposition 65, which required manufacturers of nicotine patches to give certain warnings about the risks to pregnant women. As reported here, a noted UCL commentator, William Stern, opined that Dowhal could resolve "whether the UCL's prohibition against false advertising can be used to force a manufacturer of nicotine patches to issue warnings about hazards posed to fetuses where the FDA approved the package label without such a warning." As it turns out, Dowhal mentioned the UCL only once, in passing, when it described the legal basis for the plaintiff's claims. The Dowhal court's conclusion that the claims were entirely preempted obviated any need to analyze the UCL and consider how far, absent conflict preemption, its liability provisions might be stretched.
Monday, April 12, 2004
 
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.
Wednesday, April 07, 2004
 
"17200 talks over, ballot fight now seems imminent"
Today's Recorder reports here (paid subscription required) that negotiations between the Consumer Attorneys of California and various trade organizations on possible preemptive amendments to section 17200 have "collapsed." The talks were organized by Senator Martha Escutia (D-Montebello). Various "tort reform" groups are threatening to put one or more initiative measures on the November ballot that would drastically curtail section 17200's reach. The deadline to submit the required signatures (373,816 of them) is next Friday, April 16, so mark your calendars!
 
"Secret tape-recording of some phone calls OKd"
Friday's San Francisco Chronicle had an article about the Kearney decision (which was discussed in my post below). The article does not mention the UCL, but rather focuses on the ramifications of other states' more permissive telephone recording laws, and their impact on California consumers after Kearney.
Friday, April 02, 2004
 
UCL May Be Used to Enforce Insurance Code
In another new decision, Donabedian v. Mercury Insurance Co., ___ Cal.App.4th ___ (Mar. 11, 2004; modified Mar. 30, 2004), the Court of Appeal held that the UCL may be used to enforce Proposition 103, which regulates auto insurance companies, despite the concurrent jurisdiction of the Department of Insurance.
 
Choice-of-Law or Not "Unlawful"?
Yesterday, in Kearney v. Salomon Smith Barney, Inc., ___ Cal.App.4th ___ (Apr. 1, 2004), the Court of Appeal relied on choice-of-law principles in finding no UCL violation for conduct lawful under another state's laws. In Kearney, the defendant's Georgia-based employees recorded telephone calls with California customers without the customers' consent. That would be unlawful in California (though not in Georgia), so the customers sued, claiming a UCL violation. Instead of deciding that the conduct was not "unlawful" under the UCL because it was lawful where it occurred, the court held that Georgia law governed the dispute, so the UCL did not apply at all. The existence of a Georgia law approving the defendant's conduct "places this case squarely within the 'conflict of law' arena which, in turn, requires us to select the law of the state with the greater 'governmental interest' in the issue." The opinion contains a lengthy and detailed "governmental interest" analysis.

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