BREAKING NEWS: Tobacco II Cases Opinion is available and does not impose classwide reliance showing under the UCL

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In re Tobacco II Cases is available for viewing now.  The summary of the case is best that I can provide for now:

On review, we address two questions: First, who in a UCL class action must comply with Proposition 64’s standing requirements, the class representatives or all unnamed class members, in order for the class action to proceed? We conclude that standing requirements are applicable only to the class representatives, and not all absent class members. Second, what is the causation requirement for purposes of establishing standing under the UCL, and in particular what is the meaning of the phrase "as a result of" in section 17204? We conclude that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions. Those same principles, however, do not require the class representative to plead or prove an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign. Accordingly, we reverse the order of decertification to the extent it was based upon the conclusion that all class members were required to demonstrate Proposition 64 standing, and remand for further proceedings regarding whether the class representatives in this case have, or can demonstrate, standing.

(Slip op., at pp. 2-3.)  There should be some very interesting adjustments to positions in consumer class actions alleging UCL claims for deceptive or misleading statements.

BREAKING NEWS: The California Supreme Court will issue the IN RE TOBACCO II CASES Opinion on Monday, May 18, 2009

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According to the Notice posted on the California Courts website, the California Supreme Court will issue the IN RE TOBACCO II CASES Opinion on Monday, May 18, 2009.  The issues presented are described as follows:

This case includes the following issues: (1) In order to bring a class action under Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), as amended by Proposition 64 (Gen. Elec. (Nov. 2, 2004)), must every member of the proposed class have suffered “injury in fact,” or is it sufficient that the class representative comply with that requirement? (2) In a class action based on a manufacturer’s alleged misrepresentation of a product, must every member of the class have actually relied on the manufacturer’s representations?

California Supreme Court grants review in Pineda v. Bank of America, N.A., which construed Labor Code section 203

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In Pineda v. Bank of America, N.A., plaintiff Pineda advanced the theory that restitution of "penalties" recoverable under Labor Code section 203 (waiting time penalties) was available under the UCL because the penalty was a vested property interest due upon failure to timely pay wages.  The Court of Appeal rejected that theory and held that restitutionary recovery of waiting time penalties was not available to Pineda.  Today, the Supreme Court granted review.  Pineda is no longer citable.  My earlier post about Pineda is here.  The UCL Practitioner also has a comment about Pineda.

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Class action news of note: Tobacco II arguments leaves everyone guessing, and more

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This past week, the California Supreme Court heard oral argument in the Tobacco II cases.  Extensive coverage of the oral argument is available from the UCL Practitioner in this post.  The obligatory reading of tea leaves has, in this instance, revealed little.  For examle, Mike McKee, writing for The Records, said, "Just a few weeks ago, the California Supreme Court ruled that lawsuits under the Consumer Legal Remedies Act can only be filed by individuals who suffer real damage from unlawful business practices. But during oral arguments on Tuesday it wasn't clear where the court stood on applying that same rule to every participant of class actions filed under the state's Unfair Competition Law."  (Mike McKee, Calif. Justices Air Standing for UCL Class Actions Against Tobacco Industry (March 4, 2009) www.law.com.)  Having watched the argument myself, I agree that it was hard to discern much from the Justices.  The cynic in me always assumes that the creep of Proposition 64 will keep on spreading its tendrils, but the argument itself gives me little actual evidence to support that guess.

Meanwhile, the significance of the Ninth Circuit's decision in Davis v. HSBC Bank Nevada, N.A., et al. (February 26, 2009) reached the legal media:  "In a blow to plaintiffs class action lawyers, the 9th U.S. Circuit Court of Appeals has made it tougher to hold that a national company is a 'citizen' of California merely based on the disproportionate size of the state's population."  (Pamela A. MacLean, 9th Circuit Deals a Blow to Plaintiffs Lawyers in 'Principal Place of Business' Test (March 9, 2009) www.law.com.)  Not that Tosco actually held that a state's population size governed corporate citizenship, but the remainder of the article is accurate.  This blog noted the decision in this short post.

Finally, while a bit late to the party, another ISP and the defunct Adzilla were sued for deep packet inspection for the purposes of obtaining the advertising holy grail: complete knowledge of each consumer's behaviors and preferences.  (Ryan Singel, Another ISP Ad Snooper Hit With Lawsuit (March 3, 2009) www.wired.com.)  I've already expressed my contempt for this behavior by ISPs.  Luckily, these projects appear dead in the United States.  But don't count on them staying down forever.

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in brief: UCL Practitioner's post on Kwikset v. Superior Court (Benson) is a must-read

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If you happen to read the UCL Practitioner with any regularity, you know that Kimberly Kralowec is as cool a customer as they come.  That's why I pay careful attention when she let's loose in prose on any appellate decision touching on the UCL and related False Advertising Law.  Her post earlier today on the recent Court of Appeal decision in Kwikset Corp. v. Superior Court (Benson) (Feb. 25, 2009) (Fourth Appellate District, Division Three) is the most critical commentary that I can recall reading (but that criticism is well-justified, I think).  I've commented previously about my own concern that Division Three of the Fourth Appellate District has moved out of step with California's policies that favor consumer protection and resolution of issues with the class action device.  But the most recent Kwikset decision is little more than judicial legislation.  Be sure to check out what the UCL Practitioner has to say about Kwikset.

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in brief: UCL Practitioner has more on Sullivan, et al. v. Oracle Corporation

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The UCL Pracitioner has a series of posts on Sullivan, et al. v. Oracle Corporation.  In particular, the most recent post sets forth the questions certified by the Ninth Circuit to the California Supreme Court.

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in brief: Ninth Circuit opinion in Sullivan, et al. v. Oracle Corporation is withdrawn

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Ninth Circuit SealThe Ninth Circuit issued an Order today in Sullivan, et al. v. Oracle Corporation, withdrawing its prior opinion. The Court said, "We have today issued an order requesting the California Supreme Court to answer three certified questions of California law presented in this case. We hereby withdraw our published opinion in this case, Sullivan v. Oracle Corp., 547 F.3d 1177 (9th Cir. 2008), pending a decision by the California Supreme Court on those questions. Appellants’ Petition for Rehearing and Appellees’ Petition for Rehearing En Banc are dismissed as moot." The Complex Litigator will have more on the certified questions in another post.

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California Supreme Court lets two appellate court decisions stand

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Mentioned by UCL Practitioner and Wage Law (note their new domain of www.californiawagelaw.com), this week the California Supreme Court denied review in Harper v. 24 Hour Fitness, Inc. (2008) 167 Cal.App.4th 966 (reversing an order order decertifying UCL and FAL claims) and denied a request to depublish Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116 (holding that trial court must independently review adequacy of class aciton settlement value).

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UPDATED: Lu v. Hawaiian Gardens Casino, Inc. offers a reminder that the UCL can borrow statutes that do not themselves include a private right of action

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Greatsealcal100Better late than never, a brief comment about Lu v. Hawaiian Gardens Casino, Inc. (Jan. 22, 2009) is in order. In Lu, the Second Appellate District, Division Three, considered whether dealer tip pooling in casinos (1) gives rise to a private right of action under California Labor Code section 351 and/or 450, and (2) whether those or other Labor Code sections can serve as predicates for an Unfair Competition Law claim.

After reviewing the two Labor Code sections at issue, the Lu Court concluded with little difficulty that neither section (351 or 450) created a private right of action. However, the Lu Court then noted that such Labor Code sections could nevertheless serve as predicates for the “unlawful” conduct prong under the UCL:

“Nevertheless, Lu alleged a cause of action under the UCL for violation of Labor Code sections 351 and 450. “ ‘Virtually any law -- federal, state or local -- can serve as a predicate for an action under Business and Professions Code section 17200.’ [Citation.]” (Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 539; cf. Louis v. McCormick & Schmick Restaurant Corp. (C.D.Cal. 2006) 460 F.Supp.2d 1153, 1156, fn. 5; Matoff v. Brinker Restaurant Corp., supra, 439 F.Supp.2d at pp. 1037-1038.) The UCL is a proper avenue for Lu to challenge violations of these Labor Code provisions. Therefore, we turn to the substantive question of whether the tip pool procedure here violates the Labor Code sections enumerated in the complaint such as would support UCL causes of action.

(Slip op., at p. 11.) The Court then analyzed various Labor Code sections asserted in the plaintiff’s complaint, concluding that section 351 could support a UCL “unlawful” prong claim sufficient to withstand summary judgment. (Slip op., at pp. 21-23.)

UPDATE:  Just when you get around to writing a post, wouldn't you know that the Court of Appeal changes the Opinion.  A Modified Opinion issued on February 11, 2009, which slightly alters the judgment.

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CLE: The Rutter Group offers upcoming 17200 seminar

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The Rutter Group will be offering a seminar in March on the newest developments in 17200 (and CLRA) practice.  Live programs will be held on March 3, 2009 in San Francisco and March 5, 2009 in Los Angeles.  Other locations will offer video replays later in March.  All programs are from 6:00 p.m. to 9:15 p.m.  New case discussions will include, among others, Meyer v. Sprint Spectrum L.P.  For more information, visit www.RutterGroup.com.

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