Ninth Circuit mentions UCL standing issue
In Hangarter v. Provident Life and Accident Insurance Co., ___ F.3d ___ (Jun. 25, 2004), decided last Friday, the Ninth Circuit addressed the standing problem that UCL claims sometimes suffer when filed in federal court:

The district court erred in concluding that Hangarter had Article III standing to pursue injunctive relief under the UCA. "Article III standing requires an injury that is actual or imminent, not conjectural or hypothetical. In the context of injunctive relief, the plaintiff must demonstrate a real or immediate threat of an irreparable injury." Clark v. City of Lakewood, 259 F.3d 996, 1007 (9th Cir. 2001) (emphasis added) (citations and quotation marks omitted). Hangarter currently has no contractual relationship with Defendants and therefore is not personally threatened by their conduct. Even if Cal. Bus. & Prof. Code § 17204 permits a plaintiff to pursue injunctive relief in California state courts as a private attorney general even though he or she currently suffers no individualized injury as a result of a defendant's conduct, "a plaintiff whose cause of action [under § 17204] is perfectly viable in state court under state law may nonetheless be foreclosed from litigating the same cause of action in federal court, if he cannot demonstrate the requisite injury" to establish Article III standing. Lee v. Am. Nat'l Ins. Co., 260 F.3d 997, 1001-02 (9th Cir. 2001); see also Cal. Bus. & Prof. Code § 17204 (authorizing civil action to enforce § 17200 by "any person acting for the interests of . . . the general public").

Because Hangarter lacked standing to prosecute an UCA claim for injunctive relief, on remand, the district court shall vacate the injunction.

Slip op. at 8543 (footnote omitted).
- posted by Kim Kralowec @ 8:16 AM  | Comments (0) |

 
New UCL/class certification decision
On Friday, the Court of Appeal reversed a trial court order denying class certification of a UCL claim. In Lebrilla v. Farmers Group, Inc., ___ Cal.App.4th ___ (Jun. 25, 2004), the Court of Appeal rejected the argument that "a UCL action already provides an 'expedited mechanism for obtaining ... relief on behalf of the general public' and thus, giving it class treatment is superfluous." (Slip op. at 22.) This suggestion, the court determined, "was specifically addressed and rejected" in Corbett v. Superior Court, 101 Cal.App.4th 649, 671 (2002). Interestingly, the Lebrilla court did not mention Frieman v. San Rafael Rock Quarry, Inc., 116 Cal.App.4th 29 (2004), in which the Court of Appeal accepted a very similar argument, and affirmed an order denying certification of a UCL claim. (My prior posts on Frieman are here and here.)

- posted by Kim Kralowec @ 7:48 AM  | Comments (0) |

 
UCL conference on Monday
On Monday, June 28, Bridgeport Continuing Education will present 17200 Litigation in California at the Grand Hyatt in San Francisco. Looks like it's not too late to register.
- posted by Kim Kralowec @ 8:27 AM  | Comments (0) |

 
Blogosphere comment on the Janik decision
Declarations and Exclusions has this detailed post on Janik v. Rudy, Exelrod & Zieff.

The Legal Reader has this to say: "Section 17200 was bad enough when it was an occassional tool for clever plaintiffs' attorneys. Now, apparently, it is mandatory."

And So Cal Lawyer says, "Pardon me, I have to go now and file motions to amend all of my pending business litigation complaints to include 17200 claims."

(My original post on Janik is here.)
- posted by Kim Kralowec @ 8:07 AM  | Comments (0) |

 
California Supreme Court grants review in two UCL cases, denies review and motion to depublish in another
Today, the Supreme Court granted review of Kearney v. Solomon Smith Barney, Inc., 117 Cal.App.4th 446 (Apr. 1, 2004) (discussed in my post here). In Kearney, the Court of Appeal declined to hold that the UCL's "unlawful" prong encompassed conduct (tape-recording customer service calls without the customers' consent) that violated California law but was lawful in Georgia, where it occurred. The case promises an interesting decision on the scope of the UCL's "unlawful" prong.

The court also granted review in Wells v. One2One Learning Foundation, 116 Cal.App.4th 515 (Mar. 4, 2004) (discussed in my post here). There, the Court of Appeal held that governmental entities are not bound by the UCL because they are not "persons" as the UCL defines that term.

Finally, the court denied a petition for review and motion to depublish in Donabedian v. Mercury Insurance Co., 116 Cal.App.4th 968 (Mar. 11, 2004) (discussed in my post here). In Donabedian, 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. This development is good news for those dealing with primary jurisdiction arguments in their UCL cases.

The Supreme Court's order list is accessible at this link.
- posted by Kim Kralowec @ 8:17 PM  | Comments (0) |

 
The irony
After all the hoopla about the Trevor Law Group and all the trash-talk about lawyers filing UCL cases at the drop of a hat, now a group of lawyers is facing a malpractice lawsuit for not bringing a UCL claim. Yesterday, in Janik v. Rudy, Exelrod & Zieff, ___ Cal.App.4th ___ (Jun. 22, 2004), the Court of Appeal reinstated a legal malpractice case against attorneys who successfully prosecuted their clients' statutory claims to a $90 million jury verdict. According to the court, the attorneys should have pursued a UCL claim as well. Now, just how does the court think the plaintiffs' bar will react to that decision? It certainly won't result in fewer UCL filings. Both the Recorder and the Daily Journal have articles about the case this morning: "Win $90 Million for Client—Face Malpractice Suit"; "Malpractice Suit Lives On."
- posted by Kim Kralowec @ 8:41 AM  | Comments (0) |

 
"Fees Case Needed Bad Faith"
Today's Daily Journal has an article about the new Corbett CLRA decision (discussed in my post immediately below).
- posted by Kim Kralowec @ 8:24 AM  | Comments (0) |

 
New CLRA decision
The Consumers Legal Remedies Act (Civ. Code §§1750 et seq.) is the UCL's poor step-sister. The two Acts prohibit much the same conduct when it comes to false advertising, but the UCL is invoked far more often. Cases interpreting the CLRA rarely come down, so the Act can't really support its own blog, but I will try to mention new CLRA decisions when I see them. Yesterday, in Corbett v. Hayward Dodge, Inc., ___ Cal.App.4th ___ (Jun. 22, 2004), the Court of Appeal interpreted the CLRA's attorney's fees provision for the first time. Civil Code section 1780(d) authorizes attorney's fees awards to prevailing plaintiffs, then states that "[r]easonable attorney's fees may be awarded to a prevailing defendant upon a finding by the court that the plaintiff's prosecution of the action was not in good faith" (emphasis added). In Corbett, the Court of Appeal held that the defendant bears the burden of proving the plaintiff's subjective bad faith, and that just because the plaintiff lost the case doesn't mean he or she filed it in bad faith.

Incidentally, the dispute between Mr. Corbett and Hayward Dodge also resulted in Corbett v. Superior Court, 101 Cal.App.4th 649 (2002), in which the Court of Appeal held that UCL claims may be certified for class treatment so long as they satisfy the requirements of Code of Civil Procedure section 382. Evidently, on remand the UCL and CLRA claims were both defeated on the merits, triggering the defendant's attorney's fees motion under the CLRA.
- posted by Kim Kralowec @ 7:29 AM  | Comments (0) |

 
Moradi-Shalal reaffirmed
In a decision handed down late last month, the Court of Appeal reaffirmed the rule that the UCL cannot be used to "end-run" Moradi-Shalal, which held that consumers have no private right of action against insurance companies who violate the Unfair Insurance Practices Act ("UIPA") (Ins. Code § 790 et seq.). Textron Fin. Corp. v. National Union Fire Ins. Co., 118 Cal.App.4th 1061 (May 20, 2004). The Textron court held that because "the specific allegations of wrongful conduct" were "the type of activities covered by the UIPA," no UCL claim based on those activities could proceed—as a matter of law. This rule, first announced in Safeco Ins. Co. v. Superior Court, 216 Cal.App.3d 1491 (1990), is an anomaly in 17200 practice. Ordinarily, any violation of law may form the basis of an unfair competition claim, regardless of whether the underlying law creates a private right of action. Fortunately, only the insurance industry enjoys this kind of exemption from UCL coverage.
- posted by Kim Kralowec @ 8:16 AM  | Comments (0) |

 
"How Things Work: Restitution and the Unfair-Competition Law"
Today's Daily Journal has this report, authored by my former colleagues Jan T. Chilton and William L. Stern. Will is the author of the Rutter Group practice guide "Business and Professions Code Section 17200 Practice."

The Daily Journal article talks about restitution and cites the familiar cases (Korea Supply, Kraus, Cortez). It includes this interesting tidbit: "Long ago, the state attorney general issued an opinion in which he concluded that nonverbal conduct can violate the unfair-competition law, in particular, that displaying meat under colored light is misleading. 58 Ops.Atty.Gen. 750 (1975)." I don't think any court has addressed that precise issue.
- posted by Kim Kralowec @ 8:00 AM  | Comments (0) |

 
"AG Sues Enron, Alleges Massive Fraud"
Yesterday's Daily Journal reported here that Attorney General Lockyer filed his promised UCL action against Enron on Thursday. The San Francisco Chronicle also has a report on the suit. Here is Lockyer's press release, and here is a copy of the complaint.
- posted by Kim Kralowec @ 8:40 AM  | Comments (0) |

 
Public entities not bound by UCL
In Wells v. One2One Learning Foundation, 116 Cal.App.4th 515 (Mar. 3, 2004), the Court of Appeal held that a governmental entity (specifically, a public school) is not a "person" within the meaning of Business & Professions Code sections 17203 and 17208: "The UCL is designed to preserve fair competition among business competitors and protect the public from nefarious and unscrupulous business practices. The government is not in business. Thus, logically, it is not a person for purposes of the UCL."
- posted by Kim Kralowec @ 7:47 AM  | Comments (0) |

 
"Cash pours in for 17200 fight: Businesses cough up $7.6 million"
Today's Recorder contains this report.
- posted by Kim Kralowec @ 7:37 AM  | Comments (0) |

 
More on Lockyer's energy lawsuits
An article in yesterday's Daily Journal discusses one of Attorney General Lockyer's pending 17200 suits against several energy companies for overcharing the state during the 2000-2001 energy crisis. The case is now before the Ninth Circuit, where it is facing a tough preemption argument: "The issues hinge on the appellate panel's interpretation of the limits of state immunity, whether the Federal Power Act pre-empts state action and whether FERC failed to follow the law for setting wholesale rates when it switched to a free floating, market-based pricing of energy." An audiofile of the Ninth Circuit oral argument described in the Daily Journal article is available at this link.
- posted by Kim Kralowec @ 8:45 AM  | Comments (0) |

 
Three more proposals to amend 17200
According to the Secretary of State's website, three more initiative measures to amend 17200 are now "circulating" in the signature-gathering stage. Propositions 1039, 1040, and 1041 seem to embody a more rational approach to 17200 "reform" efforts, in marked contrast to Proposition 1016, which has qualified for the November ballot. The deadline for the proponents of these measures to submit signatures is July 23, 2004.
- posted by Kim Kralowec @ 5:44 PM  | Comments (0) |

 
17200 and the federal courts
The Holiday Matinee case (discussed in my post immediately below) raises an interesting twist in UCL practice. If that case were re-filed in federal court, asserting the same UCL claim, the plaintiff would have to be an "affected" party with standing in the traditional, Article III sense, even though traditional standing is not required for California state court jurisdiction over UCL claims. District court judges in California routinely remand UCL claims brought in (or removed to) federal court where an unaffected plaintiff lacks Article III standing.

Since remand orders are not appealable, the Ninth Circuit has never ruled on this issue. However, a U.S. Supreme Court justice has touched on it.

Last summer, the Supreme Court dismissed the writ of certiorari in Nike, Inc. v. Kasky as improvidently granted. 123 S.Ct. 2554 (2003). In his concurrence, Justice Stevens (joined by Justice Ginsburg) explained the reasons for the dismissal, one of which was lack of standing: "Without alleging that he has any personal stake in the outcome of this case, respondent is proceeding as a private attorney general seeking to enforce two California statutes on behalf of the general public of the State of California. He has not asserted any federal claim; even if he had attempted to do so, he could not invoke the jurisdiction of a federal court because he failed to allege any injury to himself that is 'distinct and palpable.' Warth v. Seldin, 422 U. S. 490, 501 (1975). Thus, respondent does not have Article III standing. For that reason, were the federal rules of justiciability to apply in state courts, this suit would have been 'dismissed at the outset.' ASARCO Inc. v. Kadish, 490 U. S. 605, 617 (1989)." Kasky, 123 S.Ct. at 2557. Justice Stevens then observed in a footnote that "[b]ecause the constraints of Article III do not apply in state courts, the California courts are free to adjudicate this case." Id. at 2557 n.2 (citing ASARCO, 490 U.S. at 617).
- posted by Kim Kralowec @ 7:50 AM  | Comments (0) |

 
17200 and patent law
In Holiday Matinee, Inc. v. Rambus, Inc., ___ Cal.App.4th ___ (May 27, 2004), the Court of Appeal held that the federal courts had exclusive jurisdiction over certain antitrust and UCL claims, because "[the] claims required a showing that [the defendant's] patents were invalid and unenforceable .... [Q]uestions of patent validity and enforceablility, like patent infringement, are substantial issues of patent law that invoke exclusive federal jurisdiction under [28 U.S.C.] section 1338(a)." (Slip op. at 15.) In a footnote, the court observed: "Our conclusion here is not meant to suggest that a plaintiff, under no circumstances, may allege claims in California courts under the Cartwright Act and/or the Unfair Competition Law, merely because they involve patents in some respect. As we have observed, the mere fact that the action involves a patent, albeit incidentally, does not mean that the case is subject to exclusive jurisdiction of the [federal courts]. We hold, however, in this instance that [the plaintiff] has alleged claims, the resolution of which depends upon a substantial question of patent law." (Slip op. at 16 n.5.)
- posted by Kim Kralowec @ 7:28 AM  | Comments (0) |

 
AG to sue Enron for 17200 violations
Yesterday's Daily Journal reported in this article that Attorney General Bill Lockyer plans to file a 17200 action against Enron based on new evidence suggesting that Enron officials knowingly manipulated the California energy market. Just another example of the good use to which the UCL can be put. As yesterday's San Francisco Chronicle reported here, Lockyer's announcement came "just days after a set of videotapes showed traders of the former energy giant gleefully manipulating the state's market during the 2000-01 electricity crisis."
- posted by Kim Kralowec @ 8:40 PM  | Comments (0) |

 
Another UCL conference
I received a flyer in the mail for another UCL conference, the ungainly title of which is: Unfair Competition Claims 2004: California Section 17200 - Its Impact on Consumers & Businesses Everywhere. It is a two-day seminar sponsored by the Practicing Law Institute, and will be held August 2-3, 2004 at the PLI Conference Center in San Francisco. It will also be videocast in Beverly Hills, Costa Mesa, and San Diego.
- posted by Kim Kralowec @ 7:56 PM  | Comments (0) |

 
And then there were eight ...
Today the Court of Appeal issued yet another decision on the UCL and the new anti-SLAPP statute (CCP §425.17). In Physicians Committee for Responsible Medicine v. Tyson Foods, Inc., ___ Cal.App.4th ___ (Jun. 1, 2004), the court cited the two other recent decisions on this topic, Brenton v. Metabolife Int'l, Inc., 116 Cal.App.4th 679 (Mar. 4, 2004) and Metcalf v. U-Haul Int'l, Inc., ___ Cal.App.4th ___ (May 24, 2004), and held that the new anti-SLAPP statute was procedural and therefore applied retroactively, "operat[ing] as a repeal of the statutory authorization for the [trial] court's order [granting the SLAPP motion] and mandat[ing] reversal." The new statute was also constitutional, the court held. My prior posts on Brenton and Metcalf can be accessed here and here.
- posted by Kim Kralowec @ 6:52 PM  | Comments (0) |