"Both Sides Bracing for Battle Over Prop. 64"
Today's Daily Journal has this report. The San Jose Mercury News also reports this morning that "[a] business-backed proposition intended to limit frivolous lawsuits will be decided by voters in November after all, because a last-minute effort to derail it in the Legislature failed before lawmakers adjourned last week."
- posted by Kim Kralowec @ 8:56 AM  | Comments (0) |

 
Ballot arguments on Prop. 64
The official Voter Information Guide for the November 2004 election has now been posted on the Secretary of State's website. Here is the official text of Proposition 64; the official title and summary; the legislative analysis; the arguments in favor; and the arguments against. (Thanks to Election Watchdog for the pointer.)
- posted by Kim Kralowec @ 11:20 AM  | Comments (0) |

 
"Pro-Prop 64 Ad Rollout"
Today's Recorder has this brief story, which reports that two committees formed to support Proposition 64 "shelled out big bucks" last week for a full-page ad in the Sacramento Bee.
- posted by Kim Kralowec @ 11:00 AM  | Comments (0) |

 
"Talks on 17200 end with no deal, but hopes remain"
Today's Recorder has this article. It explains that the recent (minor) amendment to SB 185 was designed as "placeholder language" to facilitate "discussions that would lead to additional changes in 17200, including requiring judicial approval of 17200 settlements and requiring 17200 defendants to be notified of their rights." Although the article reports that discussions may be over, a new amendment to SB 185 was posted yesterday with those very reforms and more. The status page indicates that the newly amended bill has been re-referred to the Senate Judiciary Committee.
- posted by Kim Kralowec @ 9:18 AM  | Comments (0) |

 
Supreme Court issues UCL/class certification decision
Yesterday, in Sav-On Drug Stores, Inc. v. Superior Court, ___ Cal.4th ___ (Aug. 26, 2004), the Supreme Court reinstated an order granting class certification of UCL and Labor Code claims alleging that certain employees were improperly classified as exempt from the overtime laws. The Supreme Court treated the UCL claim as coextensive with the Labor Code claim, presumably because the UCL claim was pleaded that way. This is the first time that the Supreme Court has affirmed class certification of a UCL claim since Corbett v. Superior Court, 101 Cal.App.4th 649 (2002), in which the Court of Appeal rejected the argument that UCL claims are inherently incompatible with Code of Civil Procedure section 382. The Supreme Court gave no hint that a UCL claim could not be certified for class treatment if the requirements of section 382 are satisfied.
- posted by Kim Kralowec @ 12:00 AM  | Comments (0) |

 
New hope for a legislative compromise on the UCL?
Today's Recorder reports on the election Tuesday of Don Perata (D-Oakland) as senate president pro tem. The article quotes Oakland City Attorney John Russo as saying that Senator Perata is more likely to be able to push through a variety of legislative reforms, including UCL reforms, that would otherwise end up on the ballot. According to sources quoted in the article, Senator Perata, a non-lawyer, is considered slightly less progressive than his predecessor, Senator John Burton (D-San Francisco), or Senator Martha Escutia (D-Norwalk), whom he defeated for the president pro tem job.

Tuesday's Los Angeles Times reported on the "Last-Minute Push for a Bill to Undercut Prop. 64," saying that "[i]f an agreement is reached with environmental group leaders, the governor will presumably stay neutral on the ballot measure — or even campaign against it." Strangely, the article describes proposed legislative amendments that go far beyond the new amended version of SB 185, described in my post here.
- posted by Kim Kralowec @ 9:15 AM  | Comments (0) |

 
"Unfair-Competition Law Reform May Encourage Class Actions"
Today's Daily Journal has this extremely anti-plaintiff, pro-defendant article. The article essentially assumes that nearly all UCL cases and even most class actions are filed in bad faith. For example: "The lesson we learned in the last year is that plaintiffs will resort to class actions with increasing frequency if they have an incentive. The new law proposed in Proposition 64 may encourage more plaintiffs to bring class actions in the short term without regard to whether the class-action procedure is appropriate in those cases. This trend probably will persist until plaintiffs begin to understand the difficulties presented by the class-action device." As a plaintiffs' attorney, I find that statement, and its tone, very offensive. The author should have paused a moment to consider that the Daily Journal is not a defense-oriented newspaper, and should have published this article in a forum better suited to its intended audience.
- posted by Kim Kralowec @ 12:26 PM  | Comments (0) |

 
Legislative activity on SB 185
SB 185 has been officially revised and is now a bill to amend the UCL. It would add a new provision, Bus. & Prof. Code section 17203.7, which "would require a private person bringing an unfair competition action on behalf of the interests of the general public to submit a copy of the complaint to the Attorney General." Not a very dramatic amendment.

On Monday, the San Francisco Chronicle had this article on a proposed legislative compromise on the UCL (thanks to California Labor & Employment Law). Based on that article and the Recorder's article last Friday, I certainly expected something more than this very minor amendment to SB 185. Bus. & Prof. Code section 17209 already requires all appellate briefs in UCL cases to be served on the AG's office; this new proposal doesn't add much.
- posted by Kim Kralowec @ 9:51 AM  | Comments (0) |

 
Two-day MCLE conference on the UCL
Mealey's California Section 17200 Conference will take place on November 8-9, 2004 at the Ritz-Carlton Huntington Hotel in Pasadena. Here's the program brochure in PDF format.
- posted by Kim Kralowec @ 8:16 AM  | Comments (0) |

 
Update on SB 185
As I mentioned in my post immediately below, the Recorder reported yesterday that a legislative amendment to the UCL may be in the offing. SB 185 is apparently going to be reworked for that purpose. The bill's history page now shows some recent activity, but no new amendments have been posted yet.
- posted by Kim Kralowec @ 1:04 PM  | Comments (0) |

 
"Last-minute 17200 fix drawn up for Legislature"
Today's Recorder has this article on "SB 185, authored by Sen. Byron Sher, D-Stanford, that used to deal with an amendment to the state's Public Utilities Code. The bill is now slated to be reworked to include changes to 17200, the state's unfair competition law, according to sources familiar with the legislation." (Here's the current status page for SB 185; as of this morning, it hasn't been amended since last September and still relates to the Public Utilities Code.) The Recorder article also mentions an interesting editorial from Tuesday's Los Angeles Times, entitled "Suit Initiative Goes Too Far." The editorial says: "With the exception of some trial lawyers and dishonest litigants, just about everybody would like to do away with frivolous lawsuits. The trouble is, most of the proposed 'solutions' would strip away protections intended to keep predatory businesses from abusing consumers. Proposition 64, a November initiative that would gut the state's tough Unfair Business Competition Law, falls in that category. .... Gov. Arnold Schwarzenegger, who has yet to take a public stand on the measure, should quickly move to broker a legislative deal that would spare voters from what could become one of November's most heavily contested propositions."
- posted by Kim Kralowec @ 9:07 AM  | Comments (0) |

 
"Making Sense of the 'General Public' Under B&P Section 17200"
No new UCL cases came down while I was away, but I'm pleased to report that the Northern California chapter of the Association of Business Trial Lawyers finally posted its most recent newsletter online! That normally wouldn't be an earth-shattering event, but ever since a friend sent me a copy of the Summer 2004 Northern California ABTL Report a few weeks ago, I've been waiting and waiting for it to be posted so I could share it with my readers. The Summer 2004 issue has a very interesting article on the UCL by Judge Ronald M. Sabraw of the Alameda County Superior Court. Judge Sabraw is the complex litigation judge for Alameda County, so nearly all class actions filed in that county are assigned to him. And since UCL claims are mostly filed as adjuncts to ordinary class actions, Judge Sabraw also gets to hear most of the UCL cases filed in that county. He often rules on cutting-edge UCL issues. Here's a tidbit from his article: "UCL jurisprudence resembles Wonderland ...."
- posted by Kim Kralowec @ 7:54 AM  | Comments (0) |

 
"Tort reform poll finds an unsympathetic electorate"
Thanks to the reader to wrote to alert me to this article in yesterday's Recorder. According to the article, a new poll shows that hardly anybody has heard of Proposition 64, the UCL "reform" initiative. That's bad news for its proponents. The article also says: "One possibility that could tip the scales in favor of Prop 64 would be Arnold Schwarzenegger's support. The governor, who is on record in favor of an end to 'shakedown lawsuits,' has so far avoided taking a stand on Prop 64 -- an omission hinting that a deal on some other 17200 reform could still be introduced through the Legislature before voters ever weigh in on Prop 64." (And yes, I was away on a very nice vacation. Over the next day or two I'll catch up my reporting on any new UCL-related decisions that came down while I was away.)
- posted by Kim Kralowec @ 9:36 AM  | Comments (0) |

 
17200 blog hiatus
The UCL Practitioner will be on hiatus until Wednesday, August 18, 2004. Readers, please email me if you see any news articles or cases on the UCL between now and then. Thanks much, and best wishes to all who may be watching this space.
- posted by Kim Kralowec @ 12:00 PM  | Comments (1) |

 
New CLRA decision
Yesterday, the Court of Appeal decided Kramer v. Intuit, Inc., ___ Cal.App.4th ___ (Aug. 11, 2004), which addresses the Consumers Legal Remedies Act (Civ. Code §§1750 et seq.). In particular, the decision construes Civil Code section 1770(a)(17), which prohibits "[r]epresenting that the consumer will receive a rebate, discount, or other economic benefit, if the earning of the benefit is contingent on an event to occur subsequent to the consummation of the transaction." The Court of Appeal determined that the trial court properly sustained a demurrer to a CLRA claim predicated on that language.
- posted by Kim Kralowec @ 11:21 AM  | Comments (0) |

 
Upcoming State Bar MCLE on 17200 practice
The State Bar's annual meeting in Monterey will feature a two-hour MCLE course entitled "A Primer on California Competition Law" on Saturday, October 9, 2004 at 8:30 a.m. Click here to access the online registration page.
- posted by Kim Kralowec @ 9:25 AM  | Comments (0) |

 
"Plaintiff lawyers keep the powder dry"
Today's Recorder has this article, which reports that no specific campaign committee has been organized to oppose Proposition 64, the 17200 "reform" measure. Consumer Attorneys of California, the plaintiffs' trial lawyers association, is content to "let environmental and public interest groups carry the ball." CAOC explains why it opposes Proposition 64 at this link.
- posted by Kim Kralowec @ 9:10 AM  | Comments (0) |

 
UCL humor?
Today's Recorder satirizes 17200 in a political cartoon, of all things. Unfortunately, I can't find the cartoon online, but it relates to this story in Wednesday's Recorder about a new class action (including a UCL claim) against Yahoo, Google, and other search engines, challenging their online gambling ads. The suit alleges that California law prohibits online gambling and that the search engines should not be carrying ads that promote an illegal activity. Here's a copy of the complaint from the San Francisco Superior Court's website.
- posted by Kim Kralowec @ 9:41 AM  | Comments (0) |

 
UCL class certification decision ordered published
Yesterday, the Court of Appeal issued an order certifying In re Cipro Cases I & II, ___ Cal.App.4th ___ (Jul. 21, 2004), for publication. My original post on the Cipro decision, in which the Court of Appeal affirmed class certification of certain UCL and antitrust claims, is here.
- posted by Kim Kralowec @ 9:20 AM  | Comments (0) |

 
The UCL and securities transactions
The June 2004 issue of Mealey's California Section 17200 Report has an interesting article called "The Application of Business & Professions Code §17200 to Securities Transactions—Will Bowen v. Ziasun Technologies Survive?" (reprinted by findlaw.com). My original posts on Bowen are here, here, and here.
- posted by Kim Kralowec @ 9:35 AM  | Comments (0) |

 
Can "sophisticated" plaintiffs sue for UCL violations?
In a recent unpublished order, a federal district judge in Minnesota held that a "sophisticated business entity dealing at arm's length with a business associate" may not sue that business associate for violating the UCL because UCL claims must involve some sort of "public" or "consumer" harm. C.H. Robinson Worldwide, Inc. v. Ghirardelli Chocolate Co., 2004 WL 1630873, 2004 U.S. Dist. LEXIS 13943 (D. Minn. Jul. 19, 2004). That holding is very strange and seems entirely inconsistent with the text of the UCL and the caselaw interpreting it. The UCL permits a plaintiff to bring suit on behalf of itself alone and to seek redress for a single unfair business act. The statute does not require harm to the "public" or to "consumers." Indeed, the Supreme Court acknowledged in Cel-Tech that business competitors can sue each other for UCL violations. The C.H. Robinson order says there are no California decisions involving a UCL claim brought by a "sophisticated business entity," but Cel-Tech itself—in which cell phone retailers sued a cell phone service provider for unfair business practices—is a prime example of such a case.
- posted by Kim Kralowec @ 9:00 AM  | Comments (0) |

 
The UCL and wrongful termination
Can your employer fire you for refusing to defraud your customers in violation of the UCL? In Haney v. Aramark Uniform Services, Inc., ___ Cal.App.4th ___ (Jul. 12, 2004), the Court of Appeal came very close to answering that question. After holding that the Labor Management Relations Act did not preempt the union-member plaintiff's wrongful termination claim, the Court of Appeal held that "when an employer discharges an employee who refuses to defraud a customer, the employer has violated a fundamental public policy and may be liable in tort for wrongful discharge." Slip op. at 17. The UCL was one of the statutes the plaintiff cited in support of the argument that consumer fraud is illegal and therefore contravenes California public policy. Id. at 15-16 & n.12. The primary basis for the Court's decision, however, was "the fact that theft through fraudulent representation or pretense has long been defined as a crime by statute in California." Id. at 17 (emphasis added). While the UCL provides for civil penalties, it does not criminalize fraudulent misconduct in the same way, for example, its neighbor the Unfair Practices Act does. See Bus. & Prof. Code §17100. (UPDATE: Business & Professions Code section 17500, which prohibits false advertising, also has a criminal enforcement provision. See Bus. & Prof. Code §17534.) Nonetheless, a decent argument might be made under Haney that an employee who is fired for refusing to violate the UCL has a viable wrongful discharge claim.

This law firm practice article (dated July 30, 2004) has a more detailed discussion of the labor law aspects of the Haney case. And many thanks to the friend who wrote to point out the UCL component of the decision.

UPDATE: On August 11, 2004, the Court of Appeal issued an amended opinion on rehearing. The language about the UCL, discussed above, does not appear to have changed.
- posted by Kim Kralowec @ 9:06 AM  | Comments (0) |

 
San Francisco City Attorney's remarks on the UCL

In a competitive environment that tolerates unfair practices as a means to gain advantage, fairness itself is a competitive disadvantage. That's why I'm convinced that anyone who describes the Unfair Competition Law as anti-business has never run a business—at least not an honest one. ....

And that brings up another aspect of the public debate over §17200 that you may not think applies to public prosecutors. And that's the concept of "Private Attorneys General"—lawyers who are not elected, who are not accountable to voters, and who don't necessarily represent anyone who's been damaged by unfair competition. But who are authorized nonetheless to sue under §17200 in much the way [Attorney General] Bill Lockyer or [San Francisco District Attorney] Kamala Harris or I would. Now as I said, some of you may not think that public prosecutors have a stake in that discussion. Let me disabuse you of that notion.

First, it's important to understand that public prosecutors often work alongside the private plaintiffs' bar on matters of mutual interest. [citing examples] ....

The second reason public prosecutors have an important stake in Private A.G.'s suits is probably more intuitive—and that's resources. You remember me mentioning that 58 D.A.s, 4 City Attorneys and the state A.G. could file §17200 actions in the name of the People. That's a total of 63 public agencies to police the marketplace. And that may sound pretty good—until you consider that the marketplace of California is the fifth largest economy in the world[, w]ith more than 36 million consumers.... And when you consider all that, you realize that the 63 of us have our hands full. So I would be happy to consider any legislative or ballot proposal to end Private A.G. suits, provided, of course, that we 63 public prosecutors also get the thousand-fold increase in staff and billions of dollars in additional budgets to do an adequate job all by ourselves. ....

City Attorney Herrera's complete remarks are accessible here.
- posted by Kim Kralowec @ 9:40 AM  | Comments (0) |