CRLA current decisions Civil Code 1750

19 Sep

Posts categorized “The CLRA”

Tuesday, September 06, 2011

New UCL and CLRA “safe harbor” decision: Alvarez v. Chevron Corp.

In Alvarez v. Chevron Corp., ___ F.3d ___ (9th Cir. Sept. 1, 2011), the Ninth Circuit applied the Cel-Tech safe harbor to a UCL claim and, citing Bourgi v. West Covina Motors, Inc., 166 Cal.App.4th 1649 (2008), applied a similar safe harbor to the CLRA claim.

Posted by Kimberly A. Kralowec at 05:00 AM in The CLRA, UCL – “unfair” prong | Permalink|Comments (0)|TrackBack (0)

Tuesday, July 12, 2011

Recent UCL “fraudulent” prong decision: Hill v. Roll Int’l Corp.

In Hill v. Roll International Corp., 195 Cal.App.4th 1295 (May 26, 2011), the Court of Appeal (First Appellate District, Division Two) held as a matter of law that “no reasonable consumer would be misled to think that the green drop on Fiji water represents a third party organization’s endorsement or that Fiji water is environmentally superior to that of the competition.” Id., slip op at 5 (emphasis in original).

The Court discussed the “reasonable consumer” standard in some detail (id. at 8-10), and concluded that “in these days of inevitable and readily available Internet criticism and suspicion of virtually any corporate enterprise, … a reasonable consumer … does not include one who is overly suspicious.” Id. at 9.

The Court also held that Kwikset did not dictate a contrary result:

We agree wholeheartedly that “labels matter,” all labels, including that here. Defendants obviously put the green drop on the label for a purpose, as their counsel had to necessarily concede at oral argument: that the green drop was for a “marketing” purpose, to signify “something to do with the environment.” Such concession notwithstanding, we hold—and it is all we hold—that no reasonable consumer would be misled to think that the green drop represents a third party organization’s endorsement or that Fiji water is environmentally superior to that of the competition.

Id. at 12.

Accordingly, the Court affirmed the judgment of dismissal following the trial court’s order sustaining the defendant’s demurrer to the UCL, FAL, and CLRA claims without leave to amend.

Posted by Kimberly A. Kralowec at 05:00 AM in The CLRA, UCL – “fraudulent” prong | Permalink|Comments (0)|TrackBack (0)

Monday, January 10, 2011

Six pending cases to watch in 2011

Here are six important cases to follow in the coming months (listed in no particular order):

  1. Kwikset Corp. v. Superior Court (Benson), no. S171845 (Cal.). This UCL case was argued in the California Supreme Court on November 3, 2010, which means that the opinion is due by Tuesday, February 1, 2010. Because the Court hands down opinions on Mondays and Thursdays, we can expect the opinion no later than Monday, January 31, 2011 — assuming former Chief Justice George sends his vote in from Antarctica! In this case, the Supreme Court will be interpreting Prop. 64’s “lost money or property” language.
  2. AT&T Mobility LLC v. Concepcion, no. 09-893 (U.S.). This case was argued in the U.S. Supreme Court on November 9, 2010. The issue is whether the FAA preempts state-law unconscionability principles as applied to no-class-action arbitration clauses in consumer contracts of adhesion, and the continuing vitality of our own Supreme Court’s Discover Bank decision could be at stake. The opinion will be filed by the end of the current Term, which means no later than June 27, 2011.
  3. Brinker Restaurant Corp. v. Superior Court (Hohnbaum), no. S166350 (Cal.). This wage and hour case raises substantive questions relating to California’s meal period and rest break laws, but could also be a significant class certification case. The Supreme Court has not directly addressed core class certification issues since Sav-on in 2004. The case is fully briefed, but has not yet been scheduled for oral argument. It may or may not be set this year. [Disclosure: My firm is co-counsel for the workers in Brinker.]
  4. Wal-Mart Stores, Inc. v. Dukes, no. 10-277 (U.S.). The U.S. Supreme Court granted cert. in this case on December 6, 2010, and has scheduled oral argument for March 29, 2010. The opinion will be filed by the end of June 2011, when the current Term ends. The district court granted class certification of certain employment discrimination claims under Rule 23(b)(2), and the Ninth Circuit, sitting en banc, affirmed in part.
  5. Mazza v. American Honda Motor Co., no. 09-55376 (9th Cir.). In this auto defect case, the district court granted nationwide class certification of UCL and CLRA claims for recovery of economic losses. Mazza v. American Honda Motor Co., 254 F.R.D. 610 (C.D. Cal. 2008). The Ninth Circuit granted a Rule 23(f) petition for permission to appeal, and the case was argued on June 11, 2010. One day after the Supreme Court granted cert. in Dukes, however, the Ninth Circuit issued a sua sponte order deferring submission of the action pending resolution of that case.
  6. Sullivan v. DB Investments, Inc., no. 08-2784 (3d Cir.). In this antitrust case for price-fixing in the diamond industry, the Third Circuit reversed the district court’s order granting final approval of a nationwide class action settlement. Sullivan v. DB Investments, Inc., 613 F.3d 134 (3d Cir. 2010). On August 27, 2010, en banc rehearing was granted, and the case has been scheduled for argument on February 23, 2011. On November 10, 2010, the Court ordered supplemental briefing on some broad class-certification-related questions.

Wednesday, August 25, 2010

Two new opinions on no-class-action arbitration clauses: Fisher v. DCH Temecula Imports LLC and Walnut Producers of California v. Diamond Foods, Inc.

The Court of Appeal has recently handed down two new decisions addressing arbitration clauses with class action bans.

In the first, Fisher v. DCH Temecula Imports LLC, ___ Cal.App.4th ___ (Aug. 13, 2010), the Court of Appeal (Fourth Appellate District, Division Two) held that the CLRA’s no-waiver provision (Civ. Code section 1751) and its class action provision (Civ. Code section 1781) trumped a class action ban in an arbitration clause:

[T]he clear language of the CLRA does not allow a consumer to waive the provisions of the CLRA in advance, including the right to bring a class action. Since the plain language of the statute provides that a consumer “may” bring a class action if there is damage to other consumers similarly situated, he or she cannot be asked to waive this class action right in advance.

Slip op. at 24. This is an interesting argument that no appellate court had expressly adopted before. The Court held the entire arbitration clause unenforceable. Id. at 24-25.

In the second case, Walnut Producers of California v. Diamond Foods, Inc., ___ Cal.App.4th ___ (Aug. 16, 2010), the Court of Appeal (Third Appellate District) held that an arbitration clause with a class action ban in a commercial contract was not unconscionable. Slip op. at 12-25. The Court also held that an order striking class allegations from a complaint is appealable and reviewed de novo. Id. at 5-8.

The Complex Litigator also has a short post on these two decisions.

Tuesday, August 24, 2010

New CLRA and UCL “unlawful” prong decision: Vitug v. Alameda Point Storage, Inc.

In Vitug v. Alameda Point Storage, Inc., ___ Cal.App.4th ___ (Aug. 10, 2010), the Court of Appeal affirmed a judgment entered following a demurrer to CLRA and UCL “unlawful” prong claims predicated on alleged violations of the California Self-Service Storage Facility Act (Bus. & Prof. Code §§ 21700 et seq.).

Posted by Kimberly A. Kralowec at 05:00 AM in The CLRA, UCL – “unlawful” prong | Permalink|Comments (0)|TrackBack (0)

Monday, July 19, 2010

New UCL “unlawful” prong decision: Nelson v. Pearson Ford Co.

In Nelson v. Pearson Ford Co., ___ Cal.App.4th ___ (Jul. 15, 2010), the Court of Appeal (Fourth Appellate District, Division One) addressed a number of interesting UCL-related issues. The most interesting one is the class representative’s standing in an “unlawful” prong case. Slip op. at 32-34.

The first 30+ pages of the opinion focus on whether the defendant auto dealer violated various provisions of the Automobile Sales Finance Act (Civ. Code §2981 et seq.) (“ASFA”). After concluding that it had, the Court of Appeal turned to the UCL and CLRA claims. The first question was Prop. 64 standing:

Pearson Ford does not challenge the conclusion that its violations of the ASFA support Nelson’s UCL claims; rather its appeal is limited to the trial court’s finding that Nelson had standing to pursue claims under the UCL. Pearson Ford focuses its argument on whether Nelson suffered injury “as a result of” its unfair competition under the UCL. (Bus. & Prof. Code, § 17204.) Relying on Troyk [v. Farmers Group, Inc., 171 Cal.App.4th 1305 (2009)], Pearson Ford contends that Nelson needed to prove he would not have bought the car if he had known that the second contract: (1) charged him pre-consummation interest; (2) misstated the APR; and (3) failed to separately itemize the $250 insurance premium. We disagree.

The failure of Pearson Ford to comply with the ASFA caused Nelson to suffer an injury and lose money as to both classes because he paid pre-consummation interest (the backdating class), and paid sales tax and financing charges on the insurance premium (the insurance class). Unlike Troyk, these illegal charges violated the UCL and Pearson Ford improperly collected additional funds from Nelson. UCL causation exists because Nelson would not have paid pre-consummation interest, or sales tax and financing charges on the insurance premium had Pearson Ford complied with the ASFA. Because Nelson had standing to pursue claims under the UCL, we reject Pearson Ford’s argument that the judgment in favor of both classes should be vacated to the extent it grants relief under the UCL.

Slip op. at 34 (emphasis added).

This holding is consistent with the Tobacco II footnote explaining that “the concept of reliance” will have “no application” in many UCL cases. In re Tobacco II Cases, 46 Cal.4th 298, 325 n.17 (2009). In Nelson, the defendant violated the law, which meant that additional charges and incorrect interest calculations were incorporated into the plaintiff’s sales contract. This occurred wholly apart from any “reliance” by the plaintiff. By contrast, “the lack of disclosure of proper charges, not illegal charges, violated the UCL in Troyk.” Nelson, slip op. at 33.

The Nelson opinion goes on to discuss UCL restitution (slip op. at 35-38) (worth reading); UCL rescission (slip op. at 39-40) (which it holds is not an available remedy); unclaimed residual funds under Code of Civil Procedure section 384 (slip op. at 40-42) (see this blog post for more on that topic); the CLRA (slip op. at 45-47); and 998 offers in the class action context (slip op. at 48-52).

Friday, January 22, 2010

New UCL class certification decision: Steroid Hormone Product Cases

Another case interpreting Tobacco II has been handed down, and this one, like Weinstat a couple of weeks ago, refutes the Cohen court’s interpretation.

In Steroid Hormone Product Cases, ___ Cal.App.4th ___ (Jan. 21, 2010), the Court of Appeal (Second Appellate District, Division Four) reversed an order denying class certification of UCL and CLRA claims. The case alleged that the defendant (GNC) sold nutritional supplements containing a controlled substance that was illegal to sell or possess without a prescription, and that the defendant failed to disclose to consumers that its product contained this illegal ingredient. Slip op. at 3-4. The plaintiff class consisted of all those who purchased the supplements. See id., passim.

The trial court denied class certification “on the ground that, with regard to both the UCL claim and the CLRA claim, an individualized inquiry would have to be conducted into whether the illegality of androstenediol products was material to each purchaser, to determine whether GNC’s alleged conduct caused injury to that purchaser.” Id. at 8.

The Court of Appeal disagreed. Under Tobacco II made clear that “the standing provision added by Proposition 64 ‘was not intended to have any effect at all on unnamed class members.'” Id. at 10 (quoting Tobacco II, 46 Cal.4th at 321.) “Therefore, while a named plaintiff in a UCL class action now must show that he or she suffered injury in fact and lost money or property as a result of the unfair competition, once the named plaintiff meets that burden, no further individualized proof of injury or causation is required to impose restitution liability against the defendant in favor of absent class members.” Id. (emphasis added).

This holding is directly contrary to Cohen.

The defendant raised the argument that the Cohen court found persuasive, namely, that Tobacco II merely addressed “standing” and was not relevant to class certification. This panel did not read Tobacco II that way:

GNC tries to avoid the required reversal by arguing in its respondent’s brief that the trial court’s ruling does not conflict with Tobacco II because Tobacco II addressed standing, while the trial court specifically stated that standing was irrelevant to the certification analysis. Although the court did state that standing was irrelevant, it nevertheless found that Proposition 64 added actual injury as an element of a cause of action for restitution under the UCL, and therefore injury must be established for each class member. Tobacco II made clear, however, that Proposition 64 only affected the named plaintiff’s standing in a UCL class action seeking restitution; it did not add an additional element to be satisfied by all class members.

Id. at 10-11 n.8 (citing Tobacco II, 46 Cal.4th at 321) (emphasis added). In other words, the Steroid Hormone Product Cases court recognized that because reliance and injury are not elements of a UCL claim, they are irrelevant to class certification. The court concluded that class certification should have been granted because common questions predominated:

Martinez’s UCL claim presents two predominate issues (other than Martinez’s individual standing), both of which are common to the class: (1) whether GNC’s sale of androstenediol products was unlawful; and if so, (2) the amount of money GNC “may have . . . acquired by means of” those sales that must be restored to the class (Bus. & Prof. Code, § 17203).

Id.at 11.As for the CLRA claim, the doctrine of presumed reliance based on the materiality of the undisclosed information warranted class certification of that claim as well:

[Plaintiff] correctly argues that he is entitled to show that GNC’s alleged deceptive conduct caused the same damage to the class by showing that the alleged misrepresentation was material, even if GNC might be able to show that some class members would have bought the products even if they had known they were unlawful to sell or possess without a prescription. [Citation.] In other words, if Martinez can show that “‘material misrepresentations were made to the class members, at least an inference of reliance [i.e., causation/injury] would arise as to the entire class.’”

Id. at 13 (citing Vasquez v. Superior Court, 4 Cal.3d 800 (1971); Massachusetts Mutual Life Ins. Co. v. Superior Court, 97 Cal.App.4th 1282 (2002)) (footnote omitted).

The court then reaffirmed the “reasonable consumer” standard for CLRA cases, explaining:

the question that must be answered in this case is whether a reasonable person would find it important when determining whether to purchase a product that it is unlawful to sell or possess that product. It requires no stretch to conclude that the proper answer is “yes” — we assume that a reasonable person would not knowingly commit a criminal act.

Id. at 14 (citing Civ. Code § 3548; Garnette v. Mankel, 71 Cal.App.2d 783, 787 (1945)). Finally, the court rejected the argument that a “reasonable bodybuilder” standard should apply instead, as well as the argument that “as a rule, bodybuilders care less about legality than non-bodybuilders.” Id. Bodybuilders as a class will no doubt appreciate the vindication.

Tuesday, July 14, 2009

New Ninth Circuit UCL/CLRA pleading decision: Kearns v. Ford Motor Co.

In Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. Jun. 8, 2009), the Ninth Circuit held that “the heightened pleadings standards of Rule 9(b)” applied to UCL and CLRA claims that were “grounded in fraud.”

In a recent post-Tobacco decision, a federal district court followed Kearns but determined that the complaint’s allegations satisfied the heightened pleading standard because they “sufficiently identified ‘the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations.'” Germain v. J.C. Penney Co., 2009 WL 1971336, *3-*5 (C.D. Cal. Jul. 06, 2009) (quoting Walling v. Beverly Enterprises, 476 F.2d 393, 397 (9th Cir.1973)).

Monday, April 20, 2009

Supreme Court holds that the CLRA does not apply to life insurance: Fairbanks v. Superior Court

The Fairbanks opinion is up. Not surprisingly (in light of the oral argument report), the Supreme Court has held that life insurance is not a “good” or a “service” within the meaning of the CLRA. Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), ___ Cal.4th ___ (Apr. 20, 2009). The opinion addresses only life insurance, not insurance generally. Slip op. at 2 n.1.

Posted by Kimberly A. Kralowec at 11:10 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Friday, April 17, 2009

Supreme Court to hand down CLRA decision Monday: Fairbanks v. Superior Court

The Supreme Court just announced that it will be handing down its opinion in Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), no. S157001, on Monday at 10:00 a.m. That is the case involving whether insurance is a “good” or a “service” within the meaning of the CLRA. Here is Harvey Rosenfield’s excellent report on the oral argument. When the opinion is handed down on Monday, it will be available here:

Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), ___ Cal.4th ___ (Apr. 20, 2009)

Fairbanks was argued on March 4th. Tobacco was argued on March 3rd, and the marriage cases were argued on March 5th. This is the first opinion to be handed down in that trilogy of interesting cases argued during that week in March. The Court’s deadline to file the other two opinions falls in the first week of June (90 days after submission).

Posted by Kimberly A. Kralowec at 12:31 PM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Thursday, April 02, 2009

Supreme Court denies rehearing in Meyer v. Sprint Spectrum

Yesterday, the Supreme Court denied the petition for rehearing in Meyer v. Sprint Spectrum, no. S153846.

Posted by Kimberly A. Kralowec at 02:41 PM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Monday, February 23, 2009

Rehearing petition filed in Meyer v. Sprint Spectrum

On February 17, 2009, a petition for rehearing was filed in the Supreme Court CLRA case, Meyer v. Sprint Spectrum, no. S153846. The opinion is available here: Meyer v. Sprint Spectrum L.P., ___ Cal.4th ___, 2009 WL 197560 (Jan. 29, 2009). See these blog posts for more.

Thanks to a loyal blog reader, here are copies of the petition for rehearing and an amicus letter filed by eight consumer advocacy groups in support of the petition.

Under Rules of Court 8.268 and 8.536, the Supreme Court would need to either grant or deny rehearing, or extend its time to do so, within thirty days after the opinion was filed on January 29. Thirty days from January 29 is Saturday, February 28. As a practical matter, that means the Court can be expected to take action on or before its conference scheduled for the preceding Wednesday, February 25 — i.e., in two days. If the Court takes no action before the thirty-day deadline, the petition is deemed denied.

UPDATE: Today (Feb. 23), the Court issued an order giving itself an extension of time, through Wednesday, April 29, 2009, to grant or deny rehearing.

Posted by Kimberly A. Kralowec at 06:00 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Wednesday, February 04, 2009

MORE BREAKING NEWS: Oral argument set in CLRA case, Fairbanks v. Superior Court

Thanks to the blog reader who pointed out that yet another case of interest has been set for argument during the first week of March. In Fairbanks v. Superior Court, no. S157001, the Supreme Court will consider whether insurance is a “good” or a “service” within the meaning of the CLRA. Fairbanks is set for argument on Wednesday, March 4, 2009 at 9:00 a.m.

The Court of Appeal’s opinion is Fairbanks v. Superior Court, 154 Cal.App.4th 435 (2007), and some of the briefs are collected at these links.

Friday, January 30, 2009

More coverage of Meyer v. Sprint Spectrum

Today’s Recorder reports that “CLRA Suits Require Actual Injury” (subscription). The article begins:

More than four years ago, California voters passed Proposition 64, limiting suits filed under the state’s unfair competition law to individuals actually injured by someone else’s illegal acts.

On Thursday, the California Supreme Court took a similar step by restricting suits filed under the state’s Consumer Legal Remedies Act to plaintiffs who have suffered real damage because of an allegedly unlawful practice.

The Complex Litigator, however, points out in this post that the Supreme Court in Meyer took pains to emphasize the difference between “any damage,” as used in the CLRA, and “actual damage,” and to explain that “the breadth of the phrase ‘any damage’ indicates a category that includes, but is greater than, ‘actual damages.” Meyer, slip op. at 5 (emphasis added). In other words, the CLRA’s standing requirement remains less strict than the UCL’s. As Monique Olivier told The Recorder, “The ruling … [is] no ‘death knell’ for the CLRA.”

Agreed. Most plaintiffs who bring CLRA cases have suffered “any damage” as interpreted in Meyer and won’t have an issue with standing. Still, as I told The Daily Journal, “it’s a significant problem when companies insert unconscionable provisions into their contracts and apparently no one can sue to stop them from doing that.” Laura Ernde, “Justices Restrict Fine-Print Lawsuits,” The Daily Journal (Jan. 30, 2009). Consumers could very well be deterred from attempting to enforce rights that, because of an unconscionable contract term, they thought they had given up.

Posted by Kimberly A. Kralowec at 06:01 AM in News reports and practice articles, The CLRA | Permalink|Comments (0)|TrackBack (0)

Thursday, January 29, 2009

Landmark Supreme Court CLRA decision: Meyer v. Sprint Spectrum L.P.

The Supreme Court’s opinion is now up in Meyer v. Sprint Spectrum L.P., ___ Cal.4th ___ (Jan. 29, 2009). It holds that Civil Code section 1780(a) creates a standing requirement even for CLRA injunctive relief cases, and that plaintiffs lacked standing where the defendant inserted an unconscionable provision into a contract (which the CLRA prohibits) but had not yet attempted to enforce it. Slip op. at 3-14. Notably, the opinion expressly disapproves part of Kagan v. Gibraltar Sav. & Loan Assn., 35 Cal.3d 582, 593 (1984), where the Supreme Court had previously said “we interpret broadly the requirement of section 1780 that a consumer ‘suffer[ ] any damage’ to include the infringement of any legal right as defined by section 1770.” Id. at 10 n.3.

I view this case as an outgrowth of Prop. 64. I do not think that litigants or courts would have focused so heavily on reading an actual damage “standing” requirement into the CLRA if not for that fact that most CLRA cases also include UCL claims. After Prop. 64, UCL standing was on everyone’s mind and was actively and repeatedly litigated in cases that also included CLRA claims. We have seen Prop. 64 bleed over into several other causes of action, not just the CLRA. The CLRA is simply the most notable example of a related, but separate, claim that Prop. 64 jurisprudence has significantly affected.

Posted by Kimberly A. Kralowec at 10:41 AM in The CLRA | Permalink|Comments (2)|TrackBack (1)

Wednesday, January 28, 2009

BREAKING NEWS: Supreme Court to hand down Meyer v. Sprint Spectrum decision tomorrow

The Supreme Court just announced that tomorrow, it will hand down its eagerly-anticipated decision in Meyer v. Sprint Spectrum, no. S153846, in which the Court will interpret the CLRA. When the opinion is posted at approximately 10:00 a.m. tomorrow morning, it will be available at this link: Meyer v. Sprint Spectrum, ___ Cal.4th ___ (Jan. 29, 2009).

Meanwhile, here is my oral argument preview with the issues on review and links to some of the briefs, and here is attorney Kelly Chen’s oral argument report.

Posted by Kimberly A. Kralowec at 11:04 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Wednesday, January 21, 2009

Ninth Circuit refuses to enforce forum selection clause in UCL/CLRA case: Ramkissoon v. AOL LLC

In Ramkissoon v. AOL LLC, 552 F.3d 1077 (9th Cir. Jan. 16, 2009), the Ninth Circuit refused to enforce a contract provision selecting Virginia state courts as the forum for all claims against AOL. California’s interest in enforcing its broad consumer protection statutes outweighed any interest of Virginia. Virginia has no procedure for consumer class actions; by contrast, the CLRA expressly prohibits waiver of the rights conferred. Civ. Code §1781. Hence, the majority concluded that the choice-of-law clause was unenforceable as well. One judge believed further development of the record was needed to confirm that the plaintiffs were California consumers to whom the CLRA would apply in the first place.

UPDATE: I was reading this opinion again and noticed that in his concurrence, Judge Bea cited a law blog — The Wall Street Journal Law Blog. 552 F.3d at 1088 n.3.

Posted by Kimberly A. Kralowec at 06:00 AM in Class actions – choice of law, The CLRA | Permalink|Comments (0)|TrackBack (0)

Wednesday, January 14, 2009

New UCL/CLRA decision: Paduano v. American Honda Motor Co.

In Paduano v. American Honda Motor Co., ___ Cal.App.4th ___ (Jan. 12, 2009), the Court of Appeal (Fourth Appellate District, Division One) reinstated UCL and CLRA causes of action that the trial court had summarily adjudicated in the defendant’s favor. One justice dissented.

Yesterday’s Recorder reported that “Hybrid Owner’s Suit Gets Green Light” (subscription).

Posted by Kimberly A. Kralowec at 06:00 AM in The CLRA, UCL – “fraudulent” prong | Permalink|Comments (0)|TrackBack (0)

Thursday, December 18, 2008

Supreme Court modifies Vasquez opinion

Yesterday, on its own motion, the Supreme Court issued an order modifying one sentence of its opinion in Vasquez v. State of California, 45 Cal.4th 243 (2008). Previously, the sentence read:

For example, a plaintiff suing under the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.) must notify the defendant of the particular violations alleged and demand correction, repair, replacement, or other remedy at least 30 days before commencing an action.

Id. at 252 (slip op. at 8). The sentence has been modified to read:

For example, a plaintiff suing under the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.) must notify the defendant of the particular violations alleged and demand correction, repair, replacement, or other remedy at least 30 days before commencing an action for damages.

(Emphasis added.) This is an important correction, as a CLRA action for injunctive relief has no prelitigation demand requirement. See Civ. Code § 1782(a) (“Thirty days or more prior to the commencement of an action for damages pursuant to this title, the consumer shall do the following: ….”); id. § 1782(d) (“An action for injunctive relief brought under the specific provisions of Section 1770 may be commenced without compliance with subdivision (a).”) In fact, the CLRA specifically authorizes consumers to file suit for injunctive relief, then, after providing the appropriate notice, amend the complaint to add damages allegations “without leave of court.” Id.

UPDATE: According to the Vasquez docket, a non-party, The Sturdevant Law Firm, filed a request for modification of the opinion, resulting in the modification discussed above. In effect, the Supreme Court granted that request, although the order states that the Court modified the opinion on its own motion. Excellent catch, Jim and Monique!

Posted by Kimberly A. Kralowec at 06:00 AM in Attorneys’ fees (CCP §1021.5), The CLRA | Permalink|Comments (0)|TrackBack (0)

Tuesday, October 28, 2008

Recent federal CLRA decision: Friedman v. 24 Hour Fitness USA, Inc.

Friedman v. 24 Hour Fitness USA, Inc., ___ F.Supp.2d ___, 2008 WL 4370005 (C.D. Cal. Sept. 22, 2008), is an interesting new federal decision on the CLRA. Here is what the court (Judge A. Howard Matz) had to say about whether a CLRA claim for broad-ranging injunctive relief may proceed without formal class certification:

Plaintiffs … bring the Fifth Claim for injunctive relief under “in their individual capacity on behalf of the general public,” but they do not seek class certification on this claim. Fourth Am. Compl. ¶ 138. Plaintiffs’ claim arises under California Civil Code section 1780, which authorizes a civil action by “[a]ny consumer” for violations of the CLRA. Fourth Am. Compl. ¶ 144. Under this claim, Plaintiffs seek an injunction pertaining to Defendant’s allegedly deceptive representations to consumers about its special deals and discounts and the nature of the monthly membership. Defendant contends this claim fails because the CLRA does not permit suits “on behalf of the general public,” so this claim must be construed as a class claim subject to the class action provision in the CLRA, California Civil Code § 1781. Section 1781 states:

Any consumer entitled to bring an action under Section 1780 may, if the unlawful method, act, or practice has caused damage to other consumers similarly situated, bring an action on behalf of himself and such other consumers to recover damages or obtain other relief as provided for in Section 1780.

Cal. Civ.Code § 1780 (emphasis added). Because Plaintiffs did not plead compliance with section 1781, Defendant argues, this claim is legally insufficient.

Defendant cites no authority that would require Plaintiffs’ CLRA claim to be construed as a class claim subject to the requirements of section 1781, nor any authority that states that a CLRA claim for injunctive relief cannot be “on behalf of the general public.”Although Proposition 64, as codified at Cal. Civ.Code § 17203, eliminated representative UCL actions unless it met the requirements of a class action, it did not impose the same limitation on the CLRA.

Plaintiffs, in contrast, do cite authority suggesting that it is acceptable to seek such relief on behalf of the general public. In Broughton v. Cigna Healthplans of California, 21 Cal.4th 1066, 1079-80, 90 Cal.Rptr.2d 334, 988 P.2d 67 (Cal.1999), the California Supreme Court indicated that when a plaintiff seeks injunctive relief under the CLRA, he “is functioning as a private attorney general, enjoining future deceptive practices on behalf of the general public.” The Court went on to explain,

the evident purpose of the injunctive relief provision of the CLRA is not to resolve a private dispute but to remedy a public wrong. Whatever the individual motive of the party requesting injunctive relief, the benefits of granting injunctive relief by and large do not accrue to that party, but to the general public in danger of being victimized by the same deceptive practices as the plaintiff suffered.

Id. at 1080, 90 Cal.Rptr.2d 334, 988 P.2d 67. Despite the differing circumstances, Broughton is nonetheless instructive. It suggests there is nothing defective about pleading a claim for injunctive relief under the CLRA “on behalf of the general public.”Plaintiffs’ Fifth Claim seeks precisely what the CLRA is designed to do, according to Broughton–an injunction intended to benefit the public at large. Therefore, Plaintiffs state a viable claim in their Fifth Claim for Relief.

Id. at *8-*9. Support for this holding can also be found in Thompson v. 10,000 RV Sales, Inc., 130 Cal.App.4th 950, 980 (2005), in which the Court of Appeal affirmed a broad-ranging CLRA injunction that had been entered without formal class certification, and Cruz v. Pacificare Health Systems, Inc., 30 Cal.4th 303, 312 (2003), in which the Supreme Court strongly suggested that “public injunctions” may be ordered under the CLRA without class certification.

Posted by Kimberly A. Kralowec at 06:00 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Friday, October 24, 2008

Supreme Court sets CLRA case for argument: Meyer v. Sprint Spectrum

On Wednesday, the Supreme Court scheduled oral argument in a case raising CLRA issues, Meyer v. Sprint Spectrum, no. S153846. The argument will take place on December 3, 2008 at 9:00 a.m. in Los Angeles. These are the issues on review in Meyer:

(1) Has a person suffered “damage” within the meaning of the Consumer Legal Remedies Act (Civil Code, section 1780, subd. (a)), such as to allow that person to bring an action under the Act if that person is a party to an agreement containing an unconscionable term (see Civil Code, section 1770, subd. (a)(19)), even though no effort has been made to enforce the unconscionable term? (2) Did plaintiffs have standing to seek declaratory relief?

The Court of Appeal said “no” to both questions. Meyer v. Sprint Spectrum L.P., 150 Cal.App.4th 1136 (2007) (review granted). See these two blog posts for more on the Court of Appeal’s opinion.

Monday, October 13, 2008

New federal CLRA decision: Galindo v. Financo Financial, Inc.

In Galindo v. Financo Financial, Inc., 2008 WL 4452344 (N.D.Cal. Oct. 3, 2008), the court (Judge William Alsup) wrote this about the CLRA’s pre-filing notice requirement:

California courts require “strict” compliance with Section 1782. Outboard Marine Corp. v. Superior Court, 52 Cal.App.3d 30, 40-41, 124 Cal.Rptr. 852 (1975). Plaintiffs filed the present action in state court on June 29, 2007. Plaintiffs admit that they filed no notice as required by Section 1782 until October 1, 2007–months after the state-court action was filed. According to plaintiffs, however, the notice requirements were met because notice was given thirty days before the second amended complaint in this action was filed. Plaintiffs cite to no support for this argument. Significantly, Section 1782 requires that notice be given thirty days before the “commencement of an action” (emphasis added). Notice, therefore, should have been given thirty days before June 29, 2007. This was not done. Defendants request that plaintiffs claim be dismissed with prejudice. The Court is aware that Magistrate Judge James Stiven of the Southern District has dismissed a CLRA claim with prejudice where a plaintiff has failed to satisfy the pre-litigation requirements of Section 1782. See Von Grabe v. Sprint, 312 F.Supp.2d 1285, 1394 (S.D.Cal.2003). The undersigned believes this draconian sanction is unwarranted here. There are other disciplinary ways to deal with any willful disregard of the law, such as attorney’s fees awards to name just one. Accordingly, plaintiffs’ CLRA claim is hereby DISMISSED WITHOUT PREJUDICE.

What this paragraph overlooks is the fact that the CLRA’s pre-filing notice requirement applies only to claims for damages. It is perfectly appropriate to file a CLRA action for injunctive relief without giving any pre-filing notice at all, or to file a CLRA injunctive relief action and then amend the complaint to add a damages claim after the 30-day notice period has expired. If the plaintiff sought both injunctive relief and damages, therefore, neither dismissal nor any form of sanctions would be warranted, in my opinion. At most, an order striking the damages portion of the prayer might be indicated.

Posted by Kimberly A. Kralowec at 06:00 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Wednesday, October 08, 2008

Supreme Court denies review in CLRA case: Ball v. FleetBoston Financial Corp.

Last week, the Supreme Court denied review in Ball v. FleetBoston Financial Corp., no. S165154. This case raised the issue of whether the CLRA applies to credit card transactions. See Ball v. FleetBoston Financial Corp., 164 Cal.App.4th 794 (2008). In my blog post on the Court of Appeal’s opinion, I opined that the issue was ripe for review, but the Supreme Court seemingly disagreed.

Posted by Kimberly A. Kralowec at 06:01 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Thursday, October 02, 2008

New CLRA decision: Bourgi v. West Covina Motors, Inc.

In Bourgi v. West Covina Motors, Inc., ___ Cal.App.4th ___ (Sept. 24, 2008), the Court of Appeal (Second Appellate District, Division Eight) discussed what happens when the CLRA overlaps more specific statutory provisions (here, provisions of the Vehicle Code). The Court determined that the Vehicle Code and CLRA “must be read together” and that the more specific Vehicle Code provisions created what it called a “safe harbor defense” to the CLRA claim. Slip op. 11-13. The Court further held that the trial court erred by not instructing the jury on the defense. Id. at 16-18.

Posted by Kimberly A. Kralowec at 06:00 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Friday, September 26, 2008

New CLRA attorneys’ fees decision: Shisler v. Sanfer Sports Cars, Inc.

In Shisler v. Sanfer Sports Cars, Inc., ___ Cal.App.4th ___ (Sept. 25, 2008), the Court of Appeal (Sixth Appellate District) reaffirmed the rule that the CLRA authorizes attorneys’ fees to a prevailing defendant only upon proof of the plaintiff’s subjective bad faith. Slip op. at 8 (citing Corbett v. Hayward Dodge, Inc., 119 Cal.App.4th 915, 924 (2004)). (Here is my original blog post on Corbett.)

Posted by Kimberly A. Kralowec at 06:00 AM in Attorneys’ fees (CCP §1021.5), The CLRA | Permalink|Comments (0)|TrackBack (0)

Wednesday, August 20, 2008

New UCL/CLRA choice-of-law decision: Brack v. Omni Loan Co.

In Brack v. Omni Loan Co., ___ Cal.App.4th ___ (Jun. 17, 2008; pub. ord. Jul. 16, 2008), the Court of Appeal (Fourth Appellate District, Division One) refused to enforce a choice-of-law provision in a consumer loan contract, holding that California had a greater interest in the transactions and the claims than Nevada. The court relied primarily on the fundamental policy underlying the Finance Lenders Law (Fin. Code §§ 22000 et seq.), but also cited the CLRA’s anti-waiver provision (Civ. Code § 1751). Slip op. at 14-15, 21. The Court observed that earlier opinions have held that the CLRA’s anti-waiver provision precludes enforcement of choice-of-law and forum selection clauses. Id. at 14-15 (citing American Online, Inc. v. Superior Court, 90 Cal.App.4th 1, 15 (2001)).

Posted by Kimberly A. Kralowec at 06:00 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Tuesday, August 19, 2008

Final approval and attorneys’ fees orders in Ford Explorer Cases

Many thanks to the blog reader who forwarded these orders signed by Judge De Alba in the Ford case (Ford Explorer Cases, JCCP Nos. 4266 & 4270):

Thursday, August 14, 2008

More briefs from Fairbanks v. Superior Court

Many thanks to the blog reader who forwarded some additional amicus curiae briefs from Fairbanks v. Superior Court (no. S157001), the CLRA/insurance case now pending before the Supreme Court:

Any more briefs? Please forward to me at uclpractitioner@gmail.com.

Posted by Kimberly A. Kralowec at 06:00 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Tuesday, August 12, 2008

Merits briefs from Supreme Court CLRA case: Fairbanks v. Superior Court

Thanks to a loyal blog reader, I can share with you the following briefs from Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), no. S157001 (review granted 11/14/07), in which the Supreme Court will address whether the CLRA applies to insurance:

If you have copies of additional briefs from this case, please send them to me at uclpractitioner@gmail.com.

Posted by Kimberly A. Kralowec at 06:00 AM in The CLRA | Permalink|Comments (0)|TrackBack (0)

Wednesday, August 06, 2008

New CLRA decision: Ball v. FleetBoston Financial Corp.

In Ball v. FleetBoston Financial Corp., ___ Cal.App.4th ___ (Jun. 5, 2008; pub. ord. Jul. 7, 2008), the Court of Appeal (Fourth Appellate District, Division Three) addressed whether the Consumers Legal Remedies Act (“CLRA”) applies to credit card transactions. Citing Berry v. American Express Publishing, Inc., 147 Cal.App.4th 224 (2007), the Court held that it does not.

The Supreme Court has recently granted review in two other CLRA cases. In Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), no. S157001 (review granted 11/14/07), it will address whether the CLRA applies to insurance, and in Meyer v. Sprint Spectrum, no. S153846 (review granted 08/16/07), it will address whether the CLRA’s prohibition of “unconscionable” contract terms provides a remedy against a defendant who included an unconscionable term, but had not yet enforced it.

Whether the CLRA applies to extensions of credit has been addressed in a number of decisions, with conflicting results. In Knox v. Ameriquest Mortgage Co., 2005 WL 1910927 (N.D. Cal. Aug. 10, 2005), for example, the court held (in contrast to Berry and Ball) that “California courts generally find financial transactions subject to the CLRA,” and concluded that “because other types of financial transactions involving banking services appear to be covered by the CLRA, the Court finds that the CLRA covers the mortgages at issue.” Id. at *4 (citing Kagan v. Gibraltar Savings & Loan Association, 35 Cal.3d 582 (1984); Corbett v. Hayward Dodge, Inc., 119 Cal.App.4th 915 (2004)). Two other federal district courts have reached the same conclusion. Hernandez v. Hilltop Financial Mortgage, Inc., 2007 WL 3101250 (N.D. Cal. Oct. 22, 2007); Jefferson v. Chase Home Finance LLC, 2007 WL 1302984 (N.D. Cal. May 3, 2007). On the other hand, in McKell v. Washington Mutual, Inc., 142 Cal.App.4th 1457 (2006), the court held that the CLRA did not apply to “transactions resulting in the sale of real property.” Id. at 1488.

In sum, the question is ripe for review, and a petition for review was filed in Ball on July 15, 2008 (no. S165154). It will be interesting to see what happens.

UPDATE: On October 1, 2008, the Supreme Court denied the petition for review.

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One Response to “CRLA current decisions Civil Code 1750”

  1. sprei September 29, 2011 at 9:29 pm #

    This surely makes great sense to anyone

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