Scope of injunctive relief under the post-Prop. 64 UCL?
Recently, the Court of Appeal issued an opinion that touches on that question in a very tangential way. Thompson v. 10,000 RV Sales, Inc., ___ Cal.App.4th ___ (Jun. 28, 2005) is a relatively technical decision involving "negative equity" in a retail installment contract. "Negative equity" (a subject dear to my heart after my days at Severson) exists when the trade-in vehicle is worth less than the amount still owed on it. The presence of negative equity complicates the financing arrangement for the new vehicle, and TILA and Regulation Z extensively regulate the handling of negative-equity trade-ins. In any event, the Fourth Appellate District, Division One, agreed with the trial court that the defendant had handled the negative-equity trade-in improperly, in violation of a variety of statutes including all three prongs of the UCL and the Consumers Legal Remedies Act ("CLRA") (Civ. Code §§1750 et seq.). It affirmed the issuance of a permanent injunction requiring the defendant to "stop including trade-in over-allowances in the cash price of the vehicles it sells." Slip op. at 11.

In the last section of the opinion, the Court had this to say about the UCL after Prop. 64:

In its amicus curiae brief, California Motor Car Dealers Association suggests the injunction is improper under the UCL following the recent passage of Proposition 64 because Thompson did not comply with class action procedures. However, we need not decide whether Proposition 64 applies here because the court's injunction was proper under the CLRA.

Id. at 37. What's odd about this is the opinion doesn't indicate anywhere that the CLRA claim had been certified for class treatment. So the Court of Appeal seems to be recognizing that the CLRA does not require formal class certification as a prerequisite to broad injunctive relief. And if the CLRA does not, why should Code of Civil Procedure section 382, under which UCL claims would be certified? The short answer is, it doesn't. This case also illustrates the power of the CLRA as an alternative to the post-Prop. 64 UCL.

Finally, it's interesting that the trial court ordered "restitution" in favor of the other customers whose negative-equity trade-ins had been improperly handled, presumably under the UCL and presumably without class certification. Id. at 12, fn.11. That part of the order was, apparently, not appealed.
- posted by Kim Kralowec @ 1:20 PM