a California-centric collection of comments and resources about complex litigation and class action practice
The California Supreme Court has denied the Petition for Review in Cristler v. Express Messenger Systems, Inc. (2009) 171 Cal. App. 4th 72. My prior post on the case can be found here. The denial is unfortunate, as the case is likely to be misconstrued as a decision about the independent contractor/employee distinction, rather than the jury instruction and standard of review opinion that it is.
If you happen to be Kindle user, you can subscribe to The Complex Litigator at Amazon.com. Two comments come to mind. First, I'm mildly amazed that it is so easy to provide this blog in that way. I'd be "very" amazed, but that would be disingenuous after configuring my own DNS settings with a new registrar, putting Windows 7 RC1 on a netbook, and so on. Second, I had nothing to do with setting the $1.99 subscription price. That is Amazon.com's business.
The California Court of Appeal, Second Appellate District, Division Seven, has been in the thick of many a difficult class action or class-related question. Why should today be any different? After all, I spent an hour and half driving about 8 miles to work, so everything seems to be functioning as intended in our fine City and State. But I digress. Today, the Division Seven, in Clark v. Superior Court (May 21, 2009) was asked to reconcile statutes with similar purposes (consumer protection) but very different means of implementing those purposes. The question presented to the Court makes the challenge clear:
Civil Code section 3345 (section 3345) authorizes the award of an enhanced remedy—up to three times greater than the amount of a fine, civil penalty "or any other remedy the purpose or effect of which is to punish or deter" that would otherwise be awarded—in actions by or on behalf of senior citizens or disabled persons seeking to "redress unfair or deceptive acts or practices or unfair methods of competition." Is this enhanced remedy available in a private action by senior citizens seeking restitution under California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.)?
(Slip op., at p. 2.) Can the protected classification of senior citizens receive triple UCL restitution? That's quite a question. What might be more suprising at first blush is that the Court of Appeal said, "Yes."
Procedurally, after a class was certified, defendant National Western filed a motion for judgment on the pleadings, asserting section 3345’s enhanced, "treble damages" remedy was inapplicable to a private action under the unfair competition law. The trial court granted the motion. Plaintiffs filed a petition for a writ, and the Court of Appeal granted the petition, issuing the writ. By necessity, the Court of Appeal reviewed the two laws:
Since 1977 the unfair competition law has prohibited unlawful, unfair or fraudulent business practices or unfair, deceptive, untrue or misleading advertising (Bus. & Prof. Code, § 17200) and subjected violators in actions prosecuted by public prosecutors to civil penalties not exceeding $2,500 for each violation (Bus. & Prof. Code, § 17206), as well as to injunctions and restitution orders (Bus. & Prof. Code, § 17203). Private plaintiffs may also prosecute actions under the unfair competition law, but their remedies are limited to orders for injunctions and restitution. (Bus. & Prof. Code, § 17203.) Damages and penalties, whether compensatory or punitive, are prohibited. (Korea Supply, supra, 29 Cal.4th at p. 1148 [only monetary relief available to private plaintiffs under unfair competition law is restitution; compensatory and punitive damages are not authorized]; Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 950 ["[i]n a suit under [unfair competition law], a public prosecutor may collect civil penalties, but a private plaintiff’s remedies are ‘generally limited to injunctive relief and restitution’"]; Cel-Tech, supra, 20 Cal.4th at p. 179 [under unfair competition law "[p]laintiffs may not receive damages, much less treble damages, or attorney fees"].)
(Slip op., at pp. 5-6.) Many years later, the legislature determined that senior citizens were regular targets of unfair competition schemes and required additional protection. A variety of potential statutes and amendments to existing laws were considered, including revisions to the UCL and the CLRA. (Slip op., at pp. 6-10.) Sweeping legislation was finally passed.
As finally enacted the legislation effected three major changes to California’s consumer protection laws relating to senior citizens and disabled persons. First, it amended the unfair competition law by adding Business and Professions Code section 17206.1,8 which authorizes the Attorney General and prosecutors in civil enforcement proceedings to recover an added civil penalty up to $2,500 (in addition to the $2,500 civil penalty available under Business and Professions Code section 17206) when the unfair practice is perpetrated against a senior citizen or disabled person. (See Bus. & Prof. Code, § 17206.1; Stats. 1988, ch. 823, § 1, pp. 2665-2666.)
Second, it amended the CLRA to authorize private litigants to recover, in addition to other remedies available under the act, including compensatory and punitive damages, an additional monetary award—up to $5,000—when the unfair practice prohibited by the act is perpetrated against a senior citizen or disabled person. (Civ. Code, § 1780, subd. (b)(1)(A)-(C); Stats. 1988, ch. 823, § 3, pp. 2667-2668.)
Third, it added section 3345 to the Civil Code, authorizing an enhanced remedy in actions brought by or on behalf of senior citizens seeking redress for "unfair or deceptive acts or practices or unfair methods of competition." (§ 3345, subd. (a).) Section 3345, subdivision (a), limits the new provision to actions "brought by, or on behalf of, or for the benefit of senior citizens or disabled persons, as those terms are defined in subdivisions (f) and (g) of [Civil Code] Section 1761[10] to redress unfair or deceptive acts or practices or unfair methods of competition." Section 3345, subdivision (b), provides the enhanced remedy: "Whenever a trier of fact is authorized by a statute to impose either a fine, or a civil penalty or other penalty, or any other remedy the purpose or effect of which is to punish or deter, and the amount of the fine, penalty, or other remedy is subject to the trier of fact’s discretion, the trier of fact shall consider all of the following factors, in addition to other appropriate factors, in determining the amount of fine, civil penalty or other penalty, or other remedy to impose. Whenever the trier of fact makes an affirmative finding in regard to one or more of the following factors, it may impose a fine, civil penalty or other penalty, or other remedy in an amount up to three times greater than authorized by the statute, or, where the statute does not authorize a specific amount, up to three times greater than the amount the trier of fact would impose in the absence of that affirmative finding."
(Slip op., at pp. 12-13.) The Court then turned to the question:
Under the plain language of section 3345 two prerequisites must be satisfied before its enhanced remedy may apply: (1) The action must be brought by or on behalf of senior citizens or disabled persons seeking redress for "unfair or deceptive acts or practices or unfair methods of competition"—plainly satisfied here; and (2) the action must be one in which the trier of fact is authorized by a statute to impose a fine, civil penalty or any other penalty the purpose or effect of which is to punish or deter.
(Slip op., at p. 14.) The Court then concluded that the enhanced restitution remedy was available:
Unlike Korea Supply and Cel-Tech, in this case the plaintiffs do not seek to justify monetary relief other than restitution under the unfair competition law: The enhanced remedy is sought under section 3345, a separate statute, which specifically authorizes such an enhanced remedy in unfair competition actions brought by senior citizens. We simply must presume the Legislature meant what it said when it provided section 3345 applied in unfair competition actions involving a fine, civil penalty or "any other remedy" the purpose of which is to punish or deter. (See People v. Toney (2004) 32 Cal.4th 228, 232 ["[i]f the statutory language is unambiguous, ‘we presume the Legislature meant what it said, and the plain meaning of the statute governs’"]; accord, Genlyte Group, LLC v. Workers’ Comp. Appeals Bd. (2008) 158 Cal.App.4th 705, 714; see also Hood v. Hartford Life & Accident Insurance Co. (E.D. Cal. 2008) 567 F.Supp.2d 1221, 1227 ["[t]he text of the statute clearly indicates that section 3345 applies to the UCA [unfair competition law] and the CLRA, as both Acts prohibit ‘unfair practices’"].)
(Slip op., at p. 16-17.) I can't imagine that this ruling won't at least generate a Petition for Review.
UPDATE: The Court of Appeal issued a modification to the opinion, adding a footnote with no change in the judgment.
Monday's Tobacco II Cases Opinion has generated extensive media coverage and commentary. Here's a sample of the reactions:
Despite all this coverage, one comment that I find particulary significant has received little in the way of analysis:
Moreover, Proposition 64 left intact provisions of the UCL that support the conclusion that the initiative was not intended to have any effect on absent class members. Specifically, Proposition 64 did not amend the remedies provision of section 17203. This is significant because under section 17203, the primary form of relief available under the UCL to protect consumers from unfair business practices is an injunction, along with ancillary relief in the form of such restitution “as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.” (§ 17203.)
(Slip op., at p. 21) Over the last several years, I have contended in many class certification motions that UCL classes could be certified under the less stringent Fed. R. Civ. P. 23(b)(2) class (recognized by California Courts) because the essence of a UCL claim is injunctive relief, including any Order of restitution. I contend that this is particularly valid where a minimum amount of restitution can be identified. Under the policy that unjust enrichment cannot be tolerated under the UCL, an equitable order directing disgorgement in that circumstance is primarily injunctive in nature. Circumstances have conspired to deprive me of a trial court ruling on the issue. Perhaps I shall have a further opportunity to pursue this theory in the near future.
Considering the price of a netbook ($300 - $450), the price of Windows 7 RC1 (free to download and try until June), and how easy it is to put Windows 7 RC1 on a netbook, there is no reason not to try out this new operating system on a secondary system. I put Windows 7 RC1 on an Acer netbook over the weekend, and the process was amazingly smooth. You will need an external DVD burner to make this really easy to do (around $100), since netbooks don't come with optical drives. Also, it will be easier to do this with a netbook that includes a hard drive, rather than a solid state drive. The solid state drives in many netbooks are just too small. Finally, follow these instructions on ZDNet.
The operating system looks beautiful and seems to be faster than XP was on that same netbook. The screen looks better under Windows 7 than it did on XP. IE 8 seems to open and load faster. It handles wireless settings much better than XP. Pending further study, I will buy a copy of the OS for that netbook when it comes out later this year.
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.
I am about to flip the switch and direct the domain of www.thecomplexlitigator.com to this SquareSpace blog. Changes to DNS settings can take 24-48 hours to finish propagating throughout the internet's DNS servers. I you are using a major ISP, it is likely that the change will take effect for you in hours rather than days.
Please excuse the temporary disruption.
UPDATE: I have to extend my compliments to GoDaddy and SquareSpace for making this entire process so easy.
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?
A class action lawsuit filed earlier this month in Los Angeles Superior Court alleges that Chadbourne & Parke, a New York-based law firm, charged clients hourly rates for online legal research services that billed the firm at a flat rate. (Erik Sherman, Law Firms Allegedly Overcharging for Online Legal Research (May 14 2009) industry.bnet.com; Tresa Baldas, Lawsuit Claims Chadbourne Overcharged For Computerized Legal Research (May 8, 2009) www.law.com.) Patricia Meyer, counsel for the plaintiff, says that other suits are in the works. (Id.) I suspect that this billing practice is pandemic in the legal industry. Keep your eyes on this story; we could be in for a wild ride.
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The Complex Litigator reports on developments in related areas of class action and complex litigation. It is a resource for legal professionals to use as a tool for examining different viewpoints related to changing legal precedent. H. Scott Leviant is the editor-in-chief and primary author of The Complex Litigator.
