"Unfair Competition After Proposition 64—What's In, What's Out, and Is Anything Old?"
The most recent issue of FORUM, the magazine of Consumer Attorneys of California, has a good article on Proposition 64 from the plaintiffs' point of view. The article is available online only to CAOC members. Among other things, it points out that "the common law includes a public interest exception to traditional standing requirements," and that this common-law formulation should satisfy Prop. 64:

The courts have long permitted plaintiffs, who cannot otherwise demonstrate standing for want of any personal interest in the issue presented, to obtain equitable relief where their action is brought in the public interest. Such common law standing is not affected by Proposition 64. In essence, even without the benefit of section 17200's provision authorizing equitable relief, a plaintiff who has sutained no injury may, in many cases, have standing to claim declaratory and injunctive relief where the issue presented is of public interest.

Russell Balisok and Dawn Hassell, "Unfair Competition after Proposition 64—What's In, What's Out, and Is Anything Old?" FORUM 26, 27 (April 2005) (citing California Water & Tel. Co. v. Los Angeles, 253 Cal.App.2d 16, 26 (1967)). I must say I've found my CAOC membership more valuable than those of other attorney associations of which I've been a member in the past, including the ABA and ATLA. CAOC really does good work for its members.
- posted by Kim Kralowec @ 9:26 AM  | Comments (0) |

 
Supreme Court denies review in Consumer Advocates v. DaimlerChrysler
Also last week, the Supreme Court denied the petition for review and the publication requests in Consumer Advocates v. DaimlerChrysler Corp., case no. S131861. As you may recall, this was one of the first cases in which the Prop. 64 retroactivity issue was raised at the appellate level. The Court of Appeal (Fourth Appellate District, Division Three) found it unnecessary to decide the issue, and handed down an unpublished opinion that resolved the case on other, UCL-related grounds. The many publication requests that followed were opposed by the Attorney General and a District Attorney.
- posted by Kim Kralowec @ 6:19 AM  | Comments (0) |

 
Supreme Court broadens issues to be reviewed in Branick
Last week, the Supreme Court issued this order in Branick v. Downey Savings & Loan, no. S132433:

The court directs the parties to brief, in addition to the issue designated in its order of April 27, 2005, the following issue: Does Business and Professions Code section 17204 (as amended by Prop. 64, Gen. Elec. (Nov. 2, 2004)), which limits standing to bring an action under the Unfair Competition Law (Bus. & Prof. Code §17200 et seq.) to "any person who has suffered injury in fact and has lost money or property as a result of such unfair competition" (id., § 17204), apply to actions filed before November 3, 2004, the date on which Proposition 64 took effect?

It is interesting that the Court did not also order briefing on the question of whether the new class certification language applies retroactively. In any event, as of now, all issues will be addressed in Mervyn's, while the retroactivity of the "standing" language and the plaintiff's right to amend to add a new party that meets those requirements will be addressed in Branick.
- posted by Kim Kralowec @ 5:19 AM  | Comments (0) |

 
BREAKING NEWS: Second District holds Proposition 64 does NOT apply to pending cases
In an opinion issued on May 18, but ordered published yesterday, the Second Appellate District, Division Eight, held that Proposition 64 does NOT apply retroactively to pending cases. Consumer Advocacy Group v. Kintetsu Enterprises, ___ Cal.App.4th ___ (May 18, 2005) (slip op. at 30-35).

... Proposition 64 should not be applied retroactively absent an express intent to do so. Regardless of whether Proposition 64 is described as a substantive, procedural or jurisdictional change, it affects whether litigation may be brought at all. It does not simply regulate the conduct of litigation. It therefore should not be applied retroactively absent an express intent.

(Slip op. at 35.) Originally, the portion of the opinion dealing with Prop. 64 was unpublished, but yesterday, the Court of Appeal modified the opinion to indicate that that portion was to be published. It is unclear why the Court of Appeal did this, as the docket does not indicate that any modification or publication requests were filed. This development recreates the split in binding appellate authority on whether Prop. 64 applies to pending cases.
- posted by Kim Kralowec @ 6:15 AM  | Comments (0) |

 
17200 blog hiatus
The blog will be on hiatus for the rest of the week. Posting will resume next week. Thanks for reading, and please continue to email me with UCL and Prop. 64 news and developments.
- posted by Kim Kralowec @ 7:21 AM  | Comments (0) |

 
PLI seminar materials now available online
The powerpoint presentation that Emily Maxwell and I prepared for last week's PLI seminar is now online. Also, Bruce Simon gets credit for finding this excellent memo by the Public Citizen Litigation Group on the Class Action "Fairness" Act. It is recommended reading, especially for plaintiffs' lawyers. UPDATE: The broken link to the powerpoint presentation has been fixed. Thanks to Larry S. for pointing it out. And if Will (or anyone else who spoke in San Diego last Friday) sends me his powerpoint, I'll put it up next week.
- posted by Kim Kralowec @ 7:20 AM  | Comments (0) |

 
"The Future of Legal Blogging"
Check out the great series of posts over at Between Lawyers. I especially like Denise Howell's list of the common characteristics of most lawyer-bloggers. Dennis Kennedy writes that blogging "has to become part of who you are in the same way that regular exercise or a hobby must be for you to stick with it." Isn't that the truth. I highly recommend this article/collection of posts to anyone who's thinking about starting a law blog. [Hat tip: How Appealing.]
- posted by Kim Kralowec @ 3:16 PM  | Comments (0) |

 
Review petition filed in Thornton v. Career Training Center
Many thanks to the reader who informed me that a petition for review was filed today in Thornton v. Career Training Center, Cal. Supreme Court case no. S133275. The petition does not appear on the Supreme Court's docket yet, but what's interesting is that the main case screen lists Lytwyn v. Fry's Electronics and Frey v. Trans Union Corp. as "cross-referenced" cases. Lytwyn is, of course, one of the "grant and hold" cases, and Frey is the only other remaining published appellate opinion on Prop. 64 retroactivity.
- posted by Kim Kralowec @ 4:53 PM  | Comments (0) |

 
Supreme Court survey on rules for publication of appellate opinions
I'm told that today is the last day for attorneys to take the California Supreme Court's survey (scroll down) on the rules of publication of appellate opinions:

The Supreme Court Advisory Committee on Rules for Publication of Court of Appeal Opinions is charged with reviewing the current standards used by the Courts of Appeal and the Supreme Court in determining which Court of Appeal opinions should be certified for publication and with making recommendations to the Supreme Court on what changes, if any, should be instituted to better ensure that appropriate cases are published. The 13-member committee is chaired by Supreme Court Justice Kathryn M. Werdegar. The committee's report to the Supreme Court is due by June 2005.

Here is the official charge to the committee and the list of committee members.
- posted by Kim Kralowec @ 8:31 AM  | Comments (0) |

 
State Bar's annual UCL seminar tomorrow in San Diego
Don't forget that tomorrow is the State Bar Antitrust and Unfair Competition Law Section's annual day-long seminar on the UCL. This year, the seminar is in San Diego, and will feature Judges Kramer, Sabraw, and Quinn as well as a number of prominent practitioners. This seminar is always very good, and I would encourage people to attend, assuming space is still available.
- posted by Kim Kralowec @ 9:06 AM  | Comments (0) |

 
New unpublished Prop. 64 opinion: McCann v. Lucky Money
On Monday, the Court of Appeal (Fourth Appellate District, Division Three) issued its unpublished opinion in McCann v. Lucky Money, Inc. (no. G032727), in which it stated:

We invited supplemental briefing on the applicability of the amendments to the UCL and FAL to pending cases. The California Supreme Court has recently granted review of several appellate decisions addressing this issue. (Lytwyn v. Fry’s Electronics, Inc., review granted Apr. 27, 2005, S133075; Bivens v. Corel Corp., review granted Apr. 27, 2005, S132695; Benson v. Kwikset Corp., review granted Apr. 27, 2005, S132443; Branick v. Downey Savings and Loan Assn., review granted Apr. 27, 2005, S132433; Californians for Disability Rights v. Mervyn’s, review granted Apr. 27, 2005, S131798.) Because we affirm the trial court’s judgment dismissing McCann’s action, we need not address the effect of Proposition 64 on this case.

(Slip op. at 19-20.)
- posted by Kim Kralowec @ 9:04 AM  | Comments (0) |

 
When will the Supreme Court rule?
Here's the latest $64,000 question: When will the Supreme Court rule on Prop. 64 retroactivity? I was hoping we'd see a ruling by the end of the year, but now I'm not so sure. In an article in the April 2005 issue of California Lawyer, Boalt Law Professor Stephen R. Barnett wrote that the Supreme Court takes an average of 1.6 years to issue a decision after granting review. If that average holds true in these cases, we won't see a decision until November 2006—unless the Supreme Court decides the issue in Kids Against Pollution, in which review was granted in September 2003.

In my capacity as a journalist, I asked two appellate experts, Lisa Perrochet and Will Stern, what they thought about this. Lisa said:

I'd guess it depends on whether the Supremes address the Prop 64 issue in the Kids Against Pollution case. If so, that could be this year. Of course, one could surmise that the recent grants of review in the "real" Prop 64 cases suggests they won't reach the issue in K.A.P., but I don't think you can read that much into it. Their time was running out for ruling on the petitions in the other cases so, by granting review, they kept their options open. If they haven't quite nailed down what they're going to do with K.A.P., they'd logically want to have those other cases pending before them in the event they end up ducking the issue in K.A.P.

As for timing a decision in the recent slew of cases (assuming they don't just get remanded in light of some ruling in K.A.P.), I think your instincts are right that it's far too optimistic to hope for this year. It's not too meaningful, in my mind, to talk about "averages" in other cases because the time is so variable. .... Bottom line is that making a prediction more precise than a broad range (1-2 years for this, I'd wager) is pretty futile.

Will guessed about 18 months before we'll see a ruling, and had this to say about Kids Against Pollution:

It's unlikely they'll decide the Prop 64 issue in KAP, for procedural reasons. KAP is an anti-SLAPP case that got re-briefed after the election w/r/t the Prop 64 arguments. There are lots of grounds on which KAP could turn that wouldn't require them to reach the Prop 64 issue, e.g., the "retroactivity" of CCP 425.17 (the 1/1/04 anti-SLAPP amendments). Plus, KAP doesn't raise the "amendment" issue of Branick, which strongly suggests to me that they will use Mervyn's to decide "retroactivity" and Branick to decide "amendment."

There we have it, from the mouths of those who should know.
- posted by Kim Kralowec @ 12:01 AM  | Comments (0) |

 
Thanks for coming!
Thanks to everyone who attended the PLI seminar today. A few snaps by the president of my fan club (aka my husband):


- posted by Kim Kralowec @ 9:13 PM  | Comments (0) |

 
New pending appeal involving Prop. 64: Quatman v. Raceway Ford
Many thanks to the reader who informed me of another pending Prop. 64 appeal:

• Quatman v. Raceway Ford, Fourth Appellate District, Division Two, case no. E035830 (order requesting supplemental briefing on Prop. 64 filed 03/07/05; supplemental letter briefs filed 03/22/05 and 03/23/05; tentative opinion issued 05/06/05)

The Fourth Appellate District, Division Two, has a unique procedure whereby it issues tentative opinions before oral argument. It is the only appellate court that I've heard of that does this, and I mean nationally. It's actually quite helpful in preparing for oral argument before this Division, as other appellate practitioners have acknowledged. I haven't seen a copy of the tentative opinion in this case, but the appeal has been added to my list of Prop. 64 pending appeals.
- posted by Kim Kralowec @ 12:01 AM  | Comments (1) |

 
New UCL/class certification decision: Blakemore v. Superior Court
On Friday, in Blakemore v. Superior Court (Avon Products, Inc.), ___ Cal.App.4th ___ (May 6, 2005), the Court of Appeal (Second Appellate District, Division Eight) held that the trial court should not have sustained the defendant's demurrer to the UCL claim, as the plaintiffs had successfully pleaded "unfair" and "fraudulent" conduct (although not "unlawful" conduct). (Slip op. at 25-30.) The Court further held that the trial court erred in striking the class allegations, since nothing in the complaint suggested that the plaintiffs' claims would not be typical or that common questions would not predominate. (Id. at 31-39.) The discussion of these issues is quite detailed and includes a lot of good citations to leading cases.

The opinion makes no mention of Proposition 64 or the retroactivity conundrum, probably because the plaintiffs alleged that they suffered monetary loss and sought class certification. Significantly, the court applied the usual formulation of "fraudulent" conduct, one that has governed UCL claims for years:

The term “fraudulent” as used in Business and Professions Code section 17200 requires only a showing that members of the public are likely to be deceived. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 211.) Unlike common law fraud, a section 17200 violation can be shown even without allegations of actual deception, reasonable reliance and damage. (Ibid.) .... Because the allegations are sufficient to state an unfair competition law claim based upon deception, the same allegations necessarily suffice to state a claim under the unfairness prong of the UCL. A practice which is deceptive is necessarily unfair.

(Slip op. at 26.)
- posted by Kim Kralowec @ 12:01 AM  | Comments (0) |

 
"Do You Blog?"
The current issue of Washington Lawyer has a good story on legal weblogs. A tidbit: "Washington attorney Carolyn Elefant hadn't planned on breaking new ground on the Internet, but she has, becoming one of the nation's foremost legal bloggers. Elefant describes the blogosphere as 'collegial,' a place where lawyer bloggers can share their thinking about a wide variety of topics in a relaxed atmosphere. One might think of it as a cyber-coffee shop across the street from the county courthouse." [Hat tip: Underneath Their Robes]
- posted by Kim Kralowec @ 12:29 PM  | Comments (0) |

 
Partial publication granted in Schulz v. Neovi Data Corp.
I just found out that the Court granted the partial publication request that I filed on behalf of my firm in Schulz v. Neovi Data Corp. (Fourth Appellate District, Division Three, case no. G033879). The Court has published its discussion of aiding and abetting liability under the UCL, but NOT its discussion of Prop. 64 retroactivity. As I explained here, I thought the aiding and abetting portion of the opinion was significant and worthy of publication. I later decided to put my money where my mouth was. The appellant also requested partial publication.
- posted by Kim Kralowec @ 10:35 AM  | Comments (0) |

 
Significant new class action decision: Hypertouch, Inc. v. Superior Court
Yesterday, in Hypertouch, Inc. v. Superior Court, ___ Cal.App.4th ___ (May 5, 2005), the Court of Appeal (First Appellate District, Division Two) invalidated "opt-in" classes, holding that requiring class members to affirmatively request inclusion in the class proceeding "is not necessitated by due process, conflicts with the applicable rules of court, and undermines the purpose of class actions." (Slip op. at 5.) That is a significant holding.

The plaintiff in Hypertouch sued the defendant for sending thousands of junk faxes in violation of the Telephone Consumer Protection Act of 1991 (47 U.S.C. section 227) and the UCL. (Slip op. at 1.) Class certification was granted, but then the trial court ordered that to remain in the class, class members would have to respond affirmatively to the class notice and ask to be part of the case. (Slip op. at 4.) This is known as an "opt-in" class.

Defendants sometimes argue that class certification should be granted, if at all, only on an "opt-in" basis, rather than the usual "opt-out" basis. In fact, I have a class certification opposition brief on my desk right now that makes that very argument. As the Hypertouch court observes, defendants favor "opt-in" class actions because they "inevitably—and sometimes significantly—reduce the size of the class." (Slip op. at 11.) The smaller the class, the smaller the potential exposure. Hypertouch puts an end to that kind of strategy:

An "opt-in" procedure does not protect the integrity of the class action process either by increasing the likelihood members of the class will actually receive notice or in any other way. On the contrary, as we have seen, because it invariably decreases the number of class members bound by the judgment and thereby increases the likelihood of redundant litigation, the "opt-in" approach undermines the integrity of that process.

(Slip op. at 21.) The Court was careful to distinguish "opt-in" classes, in which class members are required to affirmatively seek inclusion in a case before liability has been adjudicated, from requiring class members to submit claim forms after judgment to establish the amount of their share in the award. The opinion also does not address "claims-made" settlements, in which the defendant pays only those class members who respond to the settlement notice.

Because the Hypertouch Court invalidated the trial court's "opt-in" procedure, and because class members had already received "opt-in" notices, the question of notice had to be revisited. The Court held that it is appropriate for defendants to bear the cost of notice if they either "unnecessarily complicated the problems of identifying and notifying the class" or "possess the ability to provide class notice easily and at relatively little cost." (Slip op. at 26.) In this case, the defendant could be ordered to provide notice by fax to everyone on its fax database. (Slip op. at 28.) "The [Telephone Consumer Protection Act] creates no impediment to the transmission of court ordered notice via telephone facsimile machine, as it only prohibits the sending of an 'unsolicited advertisement' in that manner." (Slip op. at 28 fn.17.) I love the irony of that.
- posted by Kim Kralowec @ 10:01 AM  | Comments (0) |

 
"The Business of Blogging: Small Companies Promote Themselves Through Web Logs" and "Tips for Effective Use of Blogs for Business"
These stories appear in today's San Francisco Chronicle. They mention a new San Francisco-based legal weblog, IP Law Observer, that was just started in March by attorneys at Folger, Levin & Kahn. Let's welcome them to the blogosphere!
- posted by Kim Kralowec @ 9:32 AM  | Comments (1) |

 
Two more unpublished Prop. 64 opinions: Cohen v. Health Net and NEI Direct v. First USA Bank
In the midst of all the excitement last week, two unpublished Prop. 64 opinions came out. On Wednesday, April 27, the Fourth Appellate District, Division Three, ruled (once again) that Prop. 64 applies to pending cases. Cohen v. Health Net of California, Inc., case no. G033868. (A petition for rehearing was promptly filed on May 3; many thanks to counsel for Mr. Cohen for forwarding a copy.) And on Thursday, April 28, in NEI Direct, Inc. v. First USA Bank, the Second Appellate District, Division One, followed Branick & progeny in holding that Prop. 64 applies to pending cases.

To keep better track of all this, I've divided up my list of pending appeals into two separate blog pages: pending appeals and appellate opinions (published and unpublished).
- posted by Kim Kralowec @ 12:02 AM  | Comments (0) |

 
Activity continues in the First District
Recent developments in the Supreme Court do not appear to have impeded the progress of pending appeals in the First District. On Monday, Division One granted the petitioners leave to file a reply to the real party's return in Hartford Fire Ins. Co. v. Superior Court (First Appellate District, Division One, case no. A109257). The reply will be due on May 17. And on Tuesday, May 3, Division Five denied, without opinion, the respondent's motion to dismiss the appeal in Dunham v. Memberworks, Inc. (First Appellate District, Division Five, case no. A107261). You may recall that Division Five summarily denied the writ petition challenging Judge Kramer's order in Mastercard Int'l, Inc. v. Superior Court (California Law Inst.) (Fifth First Appellate District, Division Five, case no. A108995). And Mastercard, of course, is one of the cases in which the Supreme Court denied review last week.
- posted by Kim Kralowec @ 12:01 AM  | Comments (0) |

 
Pssst ...
I just got through with a conference call with Judge Kramer, Emily Maxwell, Paul Riehle, and Bruce Simon. I can't say much more, but I can say this: the seminar on Tuesday is going to be really interesting ....
- posted by Kim Kralowec @ 3:35 PM  | Comments (0) |

 
"Nevada Casinos Ads may be a Gamble"
This morning's Recorder has an article on yesterday's oral argument in Snowney v. Harrah's Entertainment (Cal. Supreme Court case no. S124286). According to the article, the Supreme Court "seemed inclined to rule that in-state advertisements -- via billboards, newspapers, toll-free numbers and even the Internet -- are sufficient contacts to subject out-of-state companies to California laws," including the UCL. We can expect a ruling by early August.
- posted by Kim Kralowec @ 12:02 AM  | Comments (0) |

 
New issue of Competition
The Spring/Summer 2005 issue of Competition, the journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, is now out. It is a symposium on Prop. 64, and includes a number of articles with intriguing titles:

• "Private 'Representative Actions' Under California's Unfair Competition Law After Proposition 64: A Comparative Analysis," by Gerald E. Hawxhurst and Kevin Y. Teruya
  
• "Proposition 64 Does Not Apply to Pending Cases," by Bonny E. Sweeney (and thank you, Bonny, for citing this blog in your article)
  
• "Proposition 64 Applies to Pending Cases," by Thomas S. Hixson
  
• "Is UCL Fraud Now Akin to Common Law Fraud? Reliance, Materiality and Causation After Proposition 64," by Andrew B. Serwin and Russell L. Carlberg
  
• "Problems in Partnering with Public Prosecutors," by Barbara M. Motz
  
• "Have Unfair Competition Claims Become 'Federalized' After Proposition 64 and the Class Action Fairness Act?" by Amy Darby and Amy Maclear
  
• "California Antitrust and Unfair Competition Law Update," by Thomas Greene and Thomas A. Papageorge

The new issue is free to Section members, but is not yet available online. Non-members can order a copy by contacting the Section directly:

Antitrust & Unfair Competition Section
The State Bar of California
180 Howard Street
San Francisco, CA 94105-1639
415-538-2554
415-538-2368 fax
- posted by Kim Kralowec @ 12:01 AM  | Comments (0) |

 
New UCL decision: Morris v. Redwood Empire Bancorp
On Friday, in Morris v. Redwood Empire Bancorp, ___ Cal.App.4th ___ (Apr. 29, 2005), the Fourth Appellate District, Division Three, considered a UCL "unlawful" prong claim based on alleged violations of Civil Code section 1671, which prohibits unreasonable liquidated damages provisions in contracts, and Civil Code section 1670.5, which prohibits "unconscionable" contract terms. The Court held that the defendant's $150 credit card merchant account termination fee did not constitute liquidated damages, but might be "unconscionable," and that the defendant's demurrer should not have been sustained without leave to amend. The unpublished portions of the opinion are also quite interesting. There, the Court held, among other things, that a federal law cannot create a Cel-Tech "safe harbor":

The "safe harbor" principle of Cel-Tech has never been applied in situations where federal law provies the purported harbor. Applying this principle to federal statutory or regulatory law would supplant well-established decisional law surrounding the United States Constitution's Supremacy Clause and the preemption doctrine.

Slip op. at 27. Since the National Bank Act did not preempt the UCL claim (id. at 5-9), the defendant enjoyed no Cel-Tech "safe harbor." Id. at 28. It is unclear why the Court did not publish that part of its opinion along with the rest, for that holding is a first. A request for publication of that part of the opinion would be very appropriate.

UPDATE: The blog California Appellate Report has a different take on this decision, and posits that the Court's holding that the termination fee was not a liquidated damages provision makes no sense. The author of California Appellate Report is a law professor, so if a petition for review is filed, can the petitioner now say that a respected legal commentator has criticized the opinion, as if in a law review article?
- posted by Kim Kralowec @ 12:05 AM  | Comments (0) |

 
Supreme Court to hear oral argument tomorrow in Snowney v. Harrah's
As a reminder, the Supreme Court will hear oral arguments tomorrow at 9:00 a.m. in Snowney v. Harrah's Entertainment, Cal. Supreme Court case no. S124286. The case involves this issue:

In an action alleging false advertising and unfair business practices, are Nevada hotels subject to personal jurisdiction in California based on advertising in the state, maintaining a toll-free telephone number for accepting reservations from within the state, and maintaining an internet website capable of processing online reservations of California residents?

Here's the court's calendar, and the original court of appeal opinion is here: Snowney v. Harrah's Entertainment, Inc., 116 Cal.App.4th 996 (2004) (review granted).
- posted by Kim Kralowec @ 9:21 AM  | Comments (0) |

 
New federal order on Prop. 64
Several people sent me a copy of Environmental Protection Information Center v. United States Fish & Wildlife Service, 2005 U.S. Dist. LEXIS 7200 (N.D. Cal. case no. 3:04-cv-04647 CRB) (order dated 04/22/05), in which Judge Breyer holds that Prop. 64 applies to pending cases. On page 8 of the slip opinion (page *16 of the Lexis version), he mentions an "unpublished opinion" in which "another California court suggested that the California Supreme Court applied the presumption against retroactive application to a statutory repeal in Myers v. Philip Morris Cos., Inc., 28 Cal.4th 828, 239-48 (2002), and therefore, the presumption applies to Proposition 64." I'm very curious to know whether this is a reference to the unpublished Foundation Aiding the Elderly opinion. One reader informed me that "[n]either party provided any citations to unpublished cases, so Judge Breyer came up with that one on his own." I should have a copy of the order up online by tomorrow. UPDATE: The order is now accessible here.
- posted by Kim Kralowec @ 9:10 AM  | Comments (0) |