The UCL Practitioner
Thursday, September 22, 2005
Moving Day!
I'm pleased to announce that, effective immediately, The UCL Practitioner has moved to a new home: 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
Wednesday, September 21, 2005
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to speculation that review might be granted even though the Court of Appeal's discussion of Prop. 64 retroactivity was unpublished.
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.
Tuesday, September 20, 2005
"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.
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).
Monday, September 19, 2005
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.
Friday, September 16, 2005
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.
Thursday, September 15, 2005
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.
Tuesday, September 13, 2005
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.
Monday, September 12, 2005
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.
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?
Saturday, September 10, 2005
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.
Friday, September 09, 2005
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.
Thursday, September 08, 2005
Supreme Court grants review in Cohen v. Health Net
As I previously reported, on August 19, the Supreme Court gave itself more time—until September 23—to grant or deny review in Cohen v. Health Net of California, Inc., no. S135104. Last week, on August 31, the Court issued a "grant and hold" order, granting review but deferring all further activity in the case until Mervyn's and Branick are resolved. So, we now know that it was, indeed, the Prop. 64 retroactivity issue that piqued the court's interest. This is the second case that the Supreme Court has taken up in which the Court of Appeal's Prop. 64 retroactivity discussion was unpublished.
Tuesday, September 06, 2005
First District does not address Prop. 64 in Wilson v. Brawn of California
An eagerly-anticipated decision from the First Appellate District, Division One did not reach the Prop. 64 retroactivity question, despite the parties' supplemental briefing on the question. Wilson v. Brawn of California, Inc., ___ Cal.App.4th ___ (Sept. 2, 2005).
Friday, September 02, 2005
New Ninth Circuit UCL decision: Arizona Cartridge Remanufacturers Assn. v. Lexmark Int'l
In Arizona Cartridge Remanufacturers Assn., Inc. v. Lexmark Int'l, Inc., ___ F.3d ___ (9th Cir. Aug. 30, 2005), the Ninth Circuit addressed the UCL's "unfair" and "fraudulent" prongs, and affirmed an order granting summary judgment in the defendant's favor.
Additional Mervyn's and Branick briefs now online
I obtained these additional briefs from the Supreme Court. Again, these are large files and may take a while to download. Patience is a virtue when downloading large files.
Californians for Disability Rights v. Mervyn's:Branick v. Downey Sav. & Loan:
I was unable to obtain a copy of the reply brief on the merits in Branick. That reply brief was submitted for filing on Wednesday, along with a request for leave to file an overlength brief. Presumably, that brief will become available after the Supreme Court acts on the overlength brief request. Meanwhile, the other briefs have been added to my list of Prop. 64 appellate briefs. UPDATE: There was a typographical error in the link to the reply brief on the merits in Mervyn's. The error has been fixed. Thanks to the reader who brought it to my attention.
Thursday, September 01, 2005
With sympathy for our compatriots in Louisiana
Through the grapevine, I received the following email, which originated from a law professor in the affected area:
I know your hearts, in particular, are for lawyers. Think of this...

5,000 - 6,000 lawyers (1/3 of the lawyers in Louisiana) have lost their offices, their libraries, their computers with all information thereon, their client files - possibly their clients, as one attorney who e-mailed me noted. As I mentioned before, they are scattered from Florida to Arizona and have nothing to return to. Their children's schools are gone and, optimistically, the school systems in 8 parishes/counties won't be re-opened until after December. They must re-locate their lives.

Our state supreme court is under some water - with all appellate files and evidence folders/boxes along with it. The 5th Circuit Court of Appeals building is under some water - with the same effect. Right now there may only be 3-4 feet of standing water but, if you think about it, most files are kept in the basements or lower floors of courthouses. What effect will that have on the lives of citizens and lawyers throughout this state and this area of the country? And on the law?

The city and district courts in as many as 8 parishes/counties are under water, as well as 3 of our circuit courts - with evidence/files at each of them ruined. The law enforcement offices in those areas are under water - again, with evidence ruined. 6,000 prisoners in 2 prisons and one juvenile facility are having to be securely relocated. We already have over-crowding at most Louisiana prisons and juvenile facilities. What effect will this have? And what happens when the evidence in their cases has been destroyed? Will the guilty be released upon the communities? Will the innocent not be able to prove their innocence?

Our state bar offices are under water. Our state disciplinary offices are under water - again with evidence ruined. Our state disciplinary offices are located on Veteran's Blvd. in Metairie. Those of you who have been watching the news, they continue to show Veteran's Blvd. It's the shot with the destroyed Target store and shopping center under water and that looks like a long canal. Our Committee on Bar Admissions is located there and would have been housing the bar exams which have been turned in from the recent July bar exam (this is one time I'll pray the examiners were late in turning them in - we were set to meet in 2 weeks to go over the results). Will all of those new graduates have to retake the bar exam?

Two of the 4 law schools in Louisiana are located in New Orleans (Loyola and Tulane - the 2 private ones that students have already paid about $8,000+ for this semester to attend). Another 1,000+ lawyers-to-be whose lives have been detoured. I've contacted professors at both schools but they can't reach anyone at those schools and don't know the amount of damage they've taken. Certainly, at least, this semester is over. I'm trying to reach the Chancellor's at Southern and LSU here in Baton Rouge to see if there's anything we can do to take in the students and/or the professors. I think I mentioned before, students from out of state have beens stranded at at least 2 of the other universities in New Orleans - they're moving up floor after floor as the water rises. Our local news station received a call from some medical students at Tulane Medical Center who were now on the 5th floor of the dormitories as the water had risen.&nbs p; One of them had had a heart attack and they had no medical supplies and couldn't reach anyone - 911 was busy, local law enforcement couldn't be reached, they were going through the phone book and reached a news station 90 miles away!! It took the station almost 45 minutes to finally find someone with FEMA to try to get in to them!!

And, then, there are the clients whose files are lost, whose cases are stymied. Their lives, too, are derailed. Of course, the vast majority live in the area and that's the least of their worries. But, the New Orleans firms also have a large national and international client base. For example, I received an e-mail from one attorney friend who I work with on some crucial domestic violence (spousal and child) cases around the nation - those clients could be seriously impacted by the loss, even temporarily, of their attorney - and he can't get to them and is having difficulty contacting the many courts around the nation where his cases are pending. Large corporate clients may have their files blowing in the wind where the high rise buildings had windows blown out.

I woke up this morning to the picture of Veteran's Blvd which made me think of my students who just took the bar. My thoughts wandered from there to the effect on the Disciplinary Offices. Then my thoughts continued on. I'm sure I'm still missing a big part of the future picture. It's just devastating. Can you imagine something of this dimension in your state?


Professor Michelle Ghetti
Southern University Law Center
Baton Rouge, LA 70813
UPDATE: Ernest Svenson, who writes the blog Ernie the Attorney, is from the affected area and has more on his site. Thankfully, he is in a safe place.

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