The UCL Practitioner
Saturday, October 30, 2004
New Field poll shows Proposition 64 still trailing
The Field organization published the results of its most recent poll today. Proposition 64 is trailing, 37% against to 32% in favor. A large proportion of the electorate, 31%, remains undecided. Only 40% of the voters polled had heard of the proposition before being read its official ballot summary. Personally, I'm voting NO on Proposition 64.
Friday, October 29, 2004
New UCL decision: Leonte v. ACS State and Local Solutions, Inc.
On Tuesday, the Court of Appeal issued Leonte v. ACS State and Local Solutions, Inc., ___ Cal.App.4th ___ (Oct. 26, 2004), in which the plaintiffs alleged that the defendant "operated automated traffic enforcement systems in violation of former Vehicle Code section 21455.5," and was therefore guilty of "unlawful" conduct under the UCL. In the published portion of the decision, the Court of Appeal analyzed the statutory language in detail and found that the complaint alleged no violation. The unpublished portion is far more interesting from a UCL point of view. Holding that plaintiffs had not alleged "unfair" conduct, either, the Court of Appeal said:
Plaintiffs’ first count is labeled “Unlawful Business Practices” and repeatedly alleges “illegal” and “unlawful” conduct. Plaintiffs also allege in two parallel paragraphs first that certain alleged conduct is “unlawful” and then that the same conduct is “fraudulent.” Plaintiffs do not allege that the conduct is “unfair,” however. The word "unfair" appears in the complaint only in references to the "unfair competition law" and in conclusory incantations of the statutory language, "unlawful, unfair or fraudulent business act or practice" (Bus. & Prof. Code, § 17200), but not in any substantive allegation. We therefore conclude that the complaint does not adequately allege an unfair business practice.
Slip op. at 9. A rather obvious pleading lesson can be learned here.
Thursday, October 28, 2004
Tobacco preemption decision published
Yesterday, the Court of Appeal ordered publication of In re Tobacco Cases II, ___ Cal.App.4th ___ (Oct. 6, 2004). As I reported here, that decision held that the Federal Cigarette Labeling and Advertising Act (15 U.S.C. §§ 1331 et seq.) preempted plaintiffs' UCL claim, which asserted that defendants improperly marketed their tobacco products to minors. The UCL claim had been certified for class treatment. The Daily Journal covered this decision when it was originally issued, even though it was unpublished, and I'm not surprised to see it ordered published now.
Chronicle vs. Lockyer
On Tuesday, the San Francisco Chronicle published this editorial recommending a "yes" vote on Proposition 64. The same day, it published an opinion piece by the Executive Director of the Consumer Federation of California presenting an opposing view: "Protect consumers and fight pollution -- No on Prop. 64." Then, yesterday, it published this letter to the editor from Attorney General Bill Lockyer, who recommends a "no" vote on Prop. 64:

Editor -- Regarding your editorial, "Yes on 64" (Oct. 26): The Chronicle fell victim to the "spin" peddled by Proposition 64's proponents. Public prosecutors will be not be able to undo the tremendous harm this initiative would inflict on citizens' rights to protect the natural resources they cherish and the privacy rights they prize.

The proponents try to disguise Prop. 64 as a small-business protection measure needed to eliminate "shakedown" lawsuits. But the initiative's primary backers hardly qualify as a coalition of mom-and-pop enterprises. They rank among the largest companies in the world, with annual profits in the hundreds of billions of dollars.

These huge corporations know public prosecutors do not have the resources to take up the meritorious environmental and privacy protection lawsuits Prop. 64 would wipe out. The Chronicle brushes aside this fact by saying public pressure will force officials to act. Act with what? Are we supposed to divert resources from finding and prosecuting criminals?

Prop. 64 strips citizens of their right to effectively fight pollution and law-breaking businesses. It endangers our privacy and threatens our air, water, forests, wildlife and the health and safety of our children. Voters should reject Prop. 64.

California Attorney General
Well said.
Monday, October 25, 2004
Proposition 64 articles
Friday's Daily Journal had two articles of interest: "Prop. 64 Backers Spending Big Bucks" and "A Strong Proponent of Unfair Competition Law Opposes Proposition 64." The latter article profiles Professor Robert C. Fellmeth, director of the Center for Public Interest Law at the University of San Diego. Professor Fellmeth has been a vocal advocate for UCL reform, but believes Proposition 64 goes too far.
Wednesday, October 20, 2004
"Lawyer Settles With AG for $1.8 Million"
Today's Daily Journal has this article. The headline does not seem quite accurate, because the article reports that the $1.8 million was not a settlement, but actually a default judgment consisting of "nearly $1.79 million in civil penalties plus $11,200 in restitution to [the lawyer's] alleged victims." According to the article, the default judgment was obtained in a UCL action brought by the AG's office against an attorney, Harpreet Brar, accused of abusing the UCL. Will the ironies never cease.
Thursday, October 14, 2004
"Prop 64 foes launch secret weapon: e-mail animation"
This article appears in the print version of this morning's Recorder (page 2, col. 4). The article begins: "Financially outgunned opponents of Proposition 64 have launched a cheap, unconventional weapon—an animated cartoon—to combat a multimillion-dollar TV campaign waged by businesses that want new limits on lawsuits against them." The article also reports that a "Field Poll released Wednesday shows voters leaning against Prop 64, though only 20 percent of likely voters surveyed said they knew about it before being called."
Supreme Court grants review in UCL preemption case
Yesterday the Supreme Court granted review of Grace v. eBay, Inc., 120 Cal.App.4th 984 (2004), which addresses whether a federal statute governing "interactive computer services" immunizes eBay from liability for libel, and thus from liability under the UCL's "unlawful" prong. My original post on the Grace decision is here.

In related news, the Supreme Court denied the petition for review and depublication request in Janik v. Rudy, Exelrod & Zieff, 119 Cal.App.4th 930 (2004), in which class action attorneys who recovered a $90 million judgment for their clients have been taken to task for not also bringing a UCL claim. The Supreme Court's vote was 4-2 to deny review with one Justice abstaining. My original posts on Janik are here and here.

This morning's Recorder reports on both of these developments: "Justices Take Up Online Liability, Turn Down Malpractice Case."
Wednesday, October 13, 2004
Are there really too many UCL filings?
Last Monday, Public Citizen published the results of an extensive study on litigation filings in U.S. courts: "Frequent Filers: Corporate Hypocrisy in Accessing the Courts." The study concludes that, despite what we frequently hear in the news and elsewhere, far more lawsuits are filed by corporations than individuals. The October issue of Washington Monthly also addresses this topic in an article called "False Alarm: How the media helps the insurance industry and the GOP promote the myth of America's 'lawsuit crisis.'" (Both links are courtesy of Mythago.)

I mention these articles because they happen to be consistent with the results of my own (admittedly unscientific) survey of UCL decisions issued since the first of the year by federal district courts in California. In reviewing those decisions, I noticed that the lion's share—at least 75%—involved disputes between businesses, in which one business sued another for a UCL violation. Most of the cases involved intellectual property or antitrust disputes. I thought this was quite interesting given the fact that most people, including lawyers, seem to think that UCL claims are filed mainly by consumers against businesses. The supporters of Proposition 64 have tried to perpetuate that notion, saying things like "each year thousands of California's small businesses become victims" of "frivolous" UCL filings. It would be interesting to survey the UCL claims filed in state court to see whether that is true and whether, as seems to be the case in federal court, most UCL claims are actually filed by business entities against their competitors.
Tuesday, October 12, 2004
"Don't relinquish legal protections"
The Pasadena Star News recommends a "no" vote on Proposition 64:
Proposition 64 uses a cannon to kill a gnat. .... Like many ballot measures, this one fails to fully disclose the consequences. It won't stop so-called frivolous lawsuits. There will still be unscrupulous law firms who'll send threatening letters to small businesses. Also, Proposition 64 does nothing to stop large jury settlements, because under 17200, only a judge decides the case, not a jury and under 17200, plaintiffs cannot ask for damages but rather injunctive relief, which means stopping the illegal practice. Sometimes restitution can be ordered to be paid to the harmed.
It's nice to read an editorial by someone who understands how the UCL really works. (Thanks to Election Watchdog for the pointer.)
Monday, October 11, 2004
Another recent federal decision: Cortazar v. Wells Fargo & Co.
In Cortazar v. Wells Fargo & Co., 2004 WL 1774219 (N.D. Cal. Aug. 9, 2004), the court remanded a UCL claim that had been improperly removed to federal court. The "unlawful" prong theory of the plaintiff's UCL claim sought to remedy alleged violations of federal law, including TILA and RESPA. However, that alone did not transform it into a federal claim: "[W]hile certain of the federal statutes that the [plaintiffs] have 'borrowed' as part of their Section 17200 claims do provide for a private right of action, and thus would 'create' a federal cause of action, a fair read of the allegations supports a conclusion that [plaintiffs] have not sought relief under these statutes." Id. at *2. The court also concluded that federal jurisdiction did not attach under the "artful pleading doctrine." It reasoned that the "unfair" and "fraudulent" prong claims, as well as the "unlawful" prong claim to the extent predicated on "borrowed" California law, created an "independent state law basis for the claim." Id. at *3-*4. Finally, the court held that the complete preemption doctrine formed no basis for removal because the UCL claim did not amount to a state-law claim for usury (which would have been preempted if asserted against the defendant national bank). Id. at *4-*6. The August issue of Capitol Assets, a newsletter of the Mortgage Bankers Association of America, has more on the decision.
Sunday, October 10, 2004
"Bobbling on Prop. 64?"
Saturday's Sacramento Bee had this brief piece (scroll down) on Governor Schwarzenegger's apparently inconsistent positions on the UCL: "Proposition 64 opponents pointed out this week that Schwarzenegger himself has used the unfair business practices law twice in the past year as a private citizen." UPDATE: Freespace also has a recent post on the apparent hypocrisy of Schwarzenegger's position on Proposition 64. My take on it is different from Tim's. The governor has every right to file a private lawsuit under the UCL, but having done so, he shouldn't turn around and criticize others for doing the exact same thing.
Friday, October 08, 2004
"Court Won't Let Minors Sue Tobacco Firms"
The Daily Journal reports today on In re Tobacco Cases II, No. D041356 (Oct. 6, 2004), an unpublished decision issued by the Court of Appeal on Wednesday. In it, the Court of Appeal held that the Federal Cigarette Labeling and Advertising Act (15 U.S.C. §§ 1331 et seq.) preempted the minors' UCL claims (as to which class certification had been granted): "[P]laintiffs' essential claim that defendants violated the UCL by targeting children and teenagers with unfair and deceptive marketing programs and advertising is preempted by the FCLAA because it seeks to impose requirements or prohibitions based on smoking and health with respect to the advertising and promotion of cigarettes." (Slip op. at 18.)
A Banner Day
Today is The UCL Practitioner's one-year anniversary! Thanks to all my readers for your time and attention, and to my fellow bloggers** for linking to me. It's hard to believe a whole year has passed. Best wishes to all who may be watching this space.

**Including but not limited to Freespace, So Cal Law Blog, Bag and Baggage, California Labor & Employment Law, The Legal Reader, Inter Alia, Declarations & Exclusions, Overlawyered, and Real Lawyers Have Blogs.
Thursday, October 07, 2004
More blogosphere comment on Proposition 64
To follow up on my post last week: Mythago explains why "Proposition 64 Is Stupid."
"Prop. 64 Foes Still Behind in Cash Race"
Today's Los Angeles Times has this story, which concludes: "Although little public polling has been done, early results indicate that the anti-Proposition 64 forces may be winning the battle for votes. An Aug. 14 Field Poll showed likely voters opposing Proposition 64 by a ratio of 2 to 1, with 38% of those asked saying they were undecided."
Tuesday, October 05, 2004
17200 law library resources
Here is a nice page from Mills Law Library, listing all the books in its collection with chapters on the UCL. Not listed is the California State Bar Antitrust and Unfair Competition Law Section's two-volume book on the subject, California's Antitrust and Unfair Competition Law (3d ed. 2004):

Friday, October 01, 2004
Attorney General Bill Lockyer opposes Proposition 64
Here is one of Lockyer's statements on Proposition 64. The Sacramento Bee, the San Jose Mercury News, the Los Angeles Times, the San Francisco Chronicle, and the San Diego Union Tribune all have articles about his decision to oppose the initiative. CALPIRG blog quotes Lockyer's press release extensively. Unfortunately, I can't find the press release itself anywhere online.
Blogosphere comment on Proposition 64
Last week Point of Law had this interesting post on Proposition 64, with links to some articles with intriguing titles. That post led me to this one from The Right Coast, and Freespace is always dependable with these comments. On the left, Election Watchdog has its own Prop. 64 blog, and CALPIRG blog reports on widespread editorial opposition to Proposition 64, including this editorial from last Sunday's San Jose Mercury News.
Morning news roundup
The Daily Journal reported yesterday (while its website was down) on Baxter v. Salutary Sportsclub: "Fees Nixed in Consumer Protection Case." The article provides some interesting backstory. Apparently, the plaintiff's attorney has "made a practice of suing Northern California clubs for failing to precisely comply with state requirements for health studio contracts." Proposition 64 supporters believe his conduct exemplifies the problems with the UCL. On the other hand, Proposition 64 opponents "insisted that the case proves the system is working as it should. The courts, they said, recognized [the attorney's] efforts as next-to-worthless and rewarded him accordingly."

This morning, there's an article on the front page of the Daily Journal that's not on its website: "Lockyer Says Proposition 64 Would Hurt Californians." The article begins, "Attorney General Bill Lockyer and environmental groups Thursday launched a spirited defense of the state's Unfair Competition Law, saying a measure on the November ballot would cripple environmental and privacy standards."

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