Moving Day!
I'm pleased to announce that, effective immediately, The UCL Practitioner has moved to a new home: http://www.uclpractitioner.com. Please update your bookmarks and continue to visit often! No further posts will be added to this site, but the archives will remain here for as long as Blogger continues to host them. UPDATE: In order to halt spam comments, I've disabled the comments feature of this site. Please visit the new site and post your comments there, or contact me by email at uclpractitioner@gmail.com.
- posted by Kim Kralowec @ 12:01 AM  | Comments (0) |

 
Supreme Court denies review in McCann v. Lucky Money
Today, the Supreme Court denied review in McCann v. Lucky Money, Inc., no. S134874. As I reported on September 9, the Supreme Court had previously given itself an extension of time to decide whether to grant or deny review, leading to speculation that review might be granted even though the Court of Appeal's discussion of Prop. 64 retroactivity was unpublished.
- posted by Kim Kralowec @ 4:27 PM  | Comments (0) |

 
New UCL "unlawful" prong decision: CPF Agency Corp. v. R&S Towing
In CPF Agency Corp. v. R&S Towing Service, ___ Cal.App.4th ___ (Sept. 16, 2005), the plaintiff's UCL claim was predicated on the defendant's alleged violation of Vehicle Code section 22658, subd. (i)(2). The Court of Appeal reversed the trial court's order granting the defendant's motion to strike, holding that the Vehicle Code provision, and therefore the UCL claim, was not preempted by federal law.
- posted by Kim Kralowec @ 11:35 AM  | Comments (0) |

 
"Trial Over Wal-Mart Lunch Breaks Begins"
Since I'm taking a lunch break myself, I thought I'd report that my firm's Wal-Mart case went to trial last week. Opening statements were yesterday. The Washington Post has the story, and here are some more. I've assisted with some of the UCL and appellate briefing, but I'm not working directly on the trial. The trial team is working as hard as I've ever seen any lawyers work. Go Fred and Jessica! UPDATE: Jessica's picture is in the Chronicle today on page D3! Unfortunately, the online version of the article has no photo.
- posted by Kim Kralowec @ 12:42 PM  | Comments (0) |

 
New class action decision: Shapell Industries v. Superior Court
In Shappell Industries, Inc. v. Superior Court, ___ Cal.App.4th ___ (Sept. 19, 2005), the Court of Appeal (Second Appellate District, Division Four) addressed an interesting and somewhat abstract question. What happens to a putative class action when the claims of the sole named class representative are voluntarily dismissed without prejudice? Does a case still exist? The Court of Appeal concluded that it does:

[The fact that the named class representative] dismiss[ed] himself as an individual party to the action meant that there was no named representative plaintiff of the putative class. But in our view the putative class remained extant, awaiting proper amendment of the complaint to add a new representative plaintiff. A dismissal by only some of the plaintiffs means the court is not divested of subject matter jurisdiction and the suit continues. .... California courts recognize and preserve the rights of absent class members, even before the issue of certification has beeen determined.

(Slip op. at 8-9.) Until class certification is denied, "[t]he alleged putative class members are the parties interested in prosecuting the action, such that an actual, justiciable controversy exists, pending amendment to add a named representative plaintiff." (Slip op. at 11.) The Court concluded:

The trial court did not err in permitting [the new plaintiff] to amend the complaint, where [he] came forward promptly as the proposed representative plaintiff, and where no attempt was made to state a new cause of action against [the defendant], but rather the intent was to substitute an unsuitable representative plaintiff for an apparently suitable one.

(Slip op. at 12-13.) This decision could have ramifications for Prop. 64 litigation in which leave to amend is sought to add an affected class representative. I also wonder what happens if the trial court finds the case suitable for class treatment in every respect except the typicality or adequacy of the particular class representative. Shouldn't leave to amend to substitute a new class representative be granted there as well? Cf., e.g., Lazar v. Hertz Corp., 143 Cal.App.3d 128, 144 (1983) (conditionally granting class certification to permit substitution of a suitable class representative).
- posted by Kim Kralowec @ 9:24 AM  | Comments (0) |

 
Supreme Court might take up UCL "restitution"
The Supreme Court is showing some interest in reviewing the Court of Appeal's decision in Madrid v. Perot Systems Corp., 130 Cal.App.4th 440 (2005), which addressed the scope of restitutionary relief under the UCL. According to the docket, the Supreme Court has given itself an extension of time, through October 19, to grant or deny review. My original post on Madrid is here. Thanks to the reader who emailed me with this tip.
- posted by Kim Kralowec @ 8:42 AM  | Comments (0) |

 
Supreme Court gives itself more time to grant or deny review in Kintetsu case
On Monday, September 12, the Supreme Court extended its time to grant or deny review in Consumer Advocacy Group v. Kintetsu Enterprises, case no. S135587. The Supreme Court now has until October 27 to act.

Kintetsu is one of the two remaining published opinions on the Prop. 64 retroactivity question. Compare Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America, 129 Cal.App.4th 540 (2005) (Prop. 64 does not apply to pending cases) with Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 129 Cal.App.4th 1228 (2005) (Prop. 64 does apply to pending cases). To the best of my knowledge, no review petition was filed in Huntingdon.
- posted by Kim Kralowec @ 8:57 AM  | Comments (0) |

 
Petrini opinion now on Court of Appeal's website
The Petrini opinion appeared on the Court of Appeal's website yesterday afternoon. See this post for more info.
- posted by Kim Kralowec @ 5:54 PM  | Comments (0) |

 
First District, Division Five goes the other way on Prop. 64 retroactivity
In an opinion issued yesterday, most of which is unpublished, the First Appellate District, Division Five, parted company with its brethren in Division One Four, and held: "We agree with the reasons articulated in those cases that have concluded that Proposition 64 applies to pending cases because it repeals a right of action created wholly by statute and does not contain a saving clause." Wise v. Pacific Gas & Elec. Co., ___ Cal.App.4th ___ (Sept. 12, 2005) (slip op. at 23). Proposition 64 did not destroy the plaintiffs' case, however. They alleged actual harm, and would also be permitted to amend their complaint (which was filed long before Prop. 64 was enacted) to seek class certification. (Slip op. at 23.) Somehow it seems that the defendant was better off before, but maybe that's just me.

The panel's (unpublished) discussion of UCL "restitution" is also interesting:

The essence of plaintiffs’ action is that PG&E charged ratepayers for services it failed to deliver, to wit, replacement of obsolete gas regulators. In other words, plaintiff ratepayers paid for something they did not get after PG&E deceptively obtained a rate increase from the PUC on the representation the increase was necessary to carry out the replacement project. Plaintiffs have alleged a valid claim for restitutionary relief: through a deceptive business practice, PG&E obtained from plaintiffs money in which they have an ownership interest.

(Slip op. at 21 (citation omitted).) In other words, the UCL authorizes restitution to a plaintiff who paid for something that the defendant failed to deliver. The next question, which the opinion did not address, is how that something is valued for purposes of awarding restitution. In this case, the plaintiffs seem to be alleging that PG&E obtained a rate increase from the PUC by promising to replace old gas regulators, which it did not do. The restitution would simply be the amount of the rate increase, rather than, say, the value of the regulators.
- posted by Kim Kralowec @ 8:55 AM  | Comments (2) |

 
Off-topic post: Roberts confirmation hearings
SCOTUSblog is live-blogging the hearings as we speak (or, I should say, type). That's something I'd love to be able to do for the Mervyn's and Branick arguments next year. However, the technical hurdles (not to mention the Court's rule against electronic devices in the courtroom) might make it impossible.
- posted by Kim Kralowec @ 11:33 AM  | Comments (0) |

 
Did Prop. 64 resuscitate "damages" as a UCL remedy?
Reader Jeffery L. Fazio posted this thoughtful analysis as a comment to my August 26th post. I'm re-posting it here in full because I think it is worthy of serious discussion:

I’ve been doing some thinking about one of the anomalies created by Proposition 64: Its requirement that plaintiffs demonstrate they have suffered damages (i.e., a loss of money or property) before they’re permitted to bring a UCL action, even though they’re not allowed to actually recover those damages if they prove their claim.

The asymmetry — not to mention the inherent unfairness — of that result has led me to reexamine the underpinnings of the rule that prohibits courts from awarding damages under the UCL, and although I’ve yet to complete that task, it seems that the prohibition against the award of damages in a UCL action needs to be reconsidered.

Before the California Supreme Court addressed the issue in Bank of the West v. Superior Court, damages were recognized as one of the remedies available to plaintiffs in UCL cases. That was so because the ability to award damages was deemed an essential part of the courts’ equitable powers to do justice by whatever means were necessary.

Justice Bird made that observation in her concurring and dissenting opinion in Committee on Children’s Television, in which she cited to a number of cases in which California appellate courts had affirmed the propriety of damage award in statutory unfair competition cases that were brought under Civil Code section 3369 (which was later recodified at Business & Professions Code § 17200, et seq.). More specifically, Justice Bird made the following observation:

"As originally enacted, the law expressly provided for injunctive relief, but was silent on damages. (Stats.1933, ch. 953, § 1, p. 2482.) Nevertheless, the courts, exercising their inherent equitable powers, consistently ruled that competitors could recover compensatory damages in actions for unfair competition. (See, e.g., Western Electro-Plating Co v. Henness (1961) 196 Cal. App. 2d 564, 572-574; Southern Cal. Disinfecting Co. v. Lomkin (1960) 183 Cal.App.2d 431, 448-449; Ojala v. Bohlin (1960) 178 Cal.App.2d 292, 302-304; Reid v. Mass Co., Inc. (1957) 155 Cal.App.2d 293, 307-308; Hesse v. Grossman (1957) 152 Cal.App.2d 536, 542.) In so ruling, the courts implicitly rejected the notion that the unfair competition law, by authorizing injunctive relief, precluded the award of compensatory damages."

Committee on Children’s Television v. General Foods Corp., 35 Cal. 3d 197, 226 (1983) (footnotes and parallel citations omitted).

In short, Justice Bird dissented from the majority in Children’s TV to the extent that the majority had side-stepped the damages issue, and because she believed that the Court of Appeal got it right in United Farm Workers v. Superior Court by ruling that damages were available under the UCL, which conflicted with the Supreme Courts’ prior ruling — without any analysis of the issue — that damages were not available under the False Advertising Law (a companion to the UCL) several years earlier in Chern v. Bank of America.

In the wake of Chern, the question about whether damages were available under the UCL had divided the California Courts of Appeal. One District had ruled (in the United Farm Workers case) that damages are available as one of the many remedies courts of equity have to right a wrong. And another District had ruled (in the Dean Witter case) that damages are not available because their imposition would impede the Legislative objective of administrative speed and efficiency built into the private AG standing provisions of the UCL.

In other words, the Dean Witter court (and a few others) rejected the United Farm Workers decision by pointing out that it conflicted with the Supreme Court’s ruling in Chern, and then added the analysis and the rationale that was missing in Chern itself: According to the Dean Witter court, damages could not be awarded in the context of a UCL action because their inclusion would overly complicate the litigation, and thereby undermine the ease and simplicity that informed the Legislature’s decision to allow representative actions to proceed on behalf of the general public without the need for class certification.

The court’s discussion of the issue is set forth below:

"At our request the parties have briefed issues concerning the availability of civil damages on the first cause of action under Abascal's unfair competition theory. Despite one case holding otherwise (United Farm Workers of America v. Superior Court (1975) 47 Cal.App.3d 334, 344) we are satisfied that the better rule denies compensatory damages as distinct from the equitable remedy of restitution. (See Little Oil Co, Inc. v. Atlantic Richfield Co. (9th Cir. 1988) 852 F.2d 441, 445; Kates v. Crocker Nat. Bank (9th Cir. 1985) 776 F.2d 1396, 1398; Meta-Film Associates, Inc. v. MCA, Inc. (C.D. Cal. 1987) 586 F. Supp. 1346, 1363; Newport Components v. NEC Home Electronics (C.D.Cal. 1987) 671 F.Supp. 1525, 1550-1551; Chern v. Bank of America (1976) 15 Cal.3d 866, 875 [false advertising statutes 'do not authorize recovery of damages by private individuals'; private relief 'is limited to the filing of actions for an injunction']; Committee on Children’s Television, Inc. v. General Foods Corp., supra 35 Cal.3d at p. 215 [acknowledging butnot addressing issue].) We believe this interpretation is consistent with the legislative history of congruent 1972 amendments to the false advertising law. Both Senate and Assembly sources indicate that the Legislature was concerned to affirm the 'general equity power' of the courts, particularly the power to order restitution. (Assem.Com. on Judiciary, Analysis of Assem.Bill No. 1763 (1972 Reg.Sess.) May 1, 1972; see Sen.Com. on Judiciary, Analysis of Assem.Bill No. 1763 (1972 Reg.Sess.) undated.) The exclusion of claims for compensatory damages is also consistent with the overarching legislative concern to provide a streamlined procedure for the prevention of ongoing or threatened acts of unfair competition. To permit individual claims for compensatory damages to be pursued as part of such a procedure would tend to thwart this objective by requiring the court to deal with a variety of damage issues of a higher order of complexity."

Dean Witter Reynolds, Inc. v. Superior Court, 211 Cal. App. 3d 758, 774 (1989).

Ultimately, the Supreme Court resolved the “tension” between the Chern and United Farm Workers in Bank of the West by adopting the reasoning of the Dean Witter court. In Bank of the West, the Supreme Court confirmed that “the Legislature deliberately traded the attributes of tort law for speed and administrative simplicity” (a statement that the court has reiterated many times since then), just as the court had found in Dean Witter. Aside from the court’s discussion of the policy implications of requiring insurers to cover damage claims for violations of the UCL (which could have the effect of letting the wrongdoer off the hook), however, the Bank of the West court offered no further explanation about why damages should not be recoverable in a UCL action.

Proposition 64 has knocked out the very underpinnings of these decisions. That is, now that Prop 64 has eliminated private AG standing to pursue speedy and simple representative actions, it seems that the issue must be reconsidered in that light: the courts’ equitable power to award damages was sacrificed to the administrative simplicity of representative, non-class actions, so the rationale that informed the prohibition against courts utilizing the entire range of their equitable powers in a UCL action — including the ability to award damages in appropriate cases — has disappeared along with the private AG standing provision that led to that prohibition in the first place.

And in light of Prop 64’s requirement that plaintiffs show they have suffered what amounts to damages (i.e., a loss of money or property), there doesn’t appear to be any valid reason to prohibit them from actually recovering the damages that form the basis of their standing to pursue a claim.

This is a very persuasive argument. Bank of the West states in no uncertain terms that tort-like damages remedies were traded away for streamlined "non-class" procedures. Now that those streamlined procedures have been eliminated, why shouldn't that trade-off be reexamined? A damages remedy is no longer procedurally inconsistent with the UCL, and the courts have always enjoyed equitable powers broad enough to afford such a remedy. Any other thoughts?
- posted by Kim Kralowec @ 11:10 AM  | Comments (1) |

 
Third District holds Prop. 64 retroactive in unpublished opinion
On Thursday, the Third District Court of Appeal issued its eagerly-awaited opinion in Petrini Van & Storage v. Superior Court (no. C049042). The opinion, which is unpublished, is not yet available on the Court of Appeal's website, but I'm happy to be able to say that a reader sent me a copy of it yesterday afternoon.

Another reader, who attended the oral argument, correctly predicted that the Court would hold that Prop. 64 applies retroactively to pending cases. Justice Sims filed a concurrence expressing the view that "the plain meaning of language enacted by Proposition 64 says that its standing requirement applies to pending actions." Slip op., concurrence at 1. For reasons I've already explained, I respectfully disagree. The concurrence quotes a single word from Prop. 64—"prosecuted"—without mentioning the other language in Prop. 64 that creates doubt and ambiguity about the electorate's intent. It would be as logical to isolate the word "bringing" and conclude therefrom that the electorate expressly intended prospective application.
- posted by Kim Kralowec @ 1:05 PM  | Comments (0) |

 
Supreme Court extends its deadline to grant review in McCann v. Lucky Money
On August 25, the Supreme Court gave itself additional time—through October 5—to decide whether to grant review in McCann v. Lucky Money, Inc., no. S134874. McCann is another case in which the Court of Appeal's discussion of Proposition 64 was unpublished. This activity leads me to wonder why in the world didn't the Supreme Court also grant review in Frey v. Trans Union Corp. (no. S133272) (which it depublished instead), Duran v. Superior Court (May Dept. Stores) (no. S132689), MasterCard Int'l, Inc. v. Superior Court (no. S131416), and Foundation Aiding the Elderly v. Superior Court (no. S133293)? Maybe the Court likes to be enigmatic.
- posted by Kim Kralowec @ 10:40 AM  | Comments (0) |