In Rose v. Bank of America, California Supreme Court holds that UCL may borrow federal laws even after civil action provisions are removed


This will be a very short post on the subject, but the California Supreme Court issued a decision today on the question of whether a UCL claim may be based on the violation of a federal statute after  the civil remedy provision was repealed by Congress.  In Rose v. Bank of America (August 1, 2013), the Supreme Court held that it could.  Describing the issue, the Court said:   "May a claim of unlawful business practice under California's unfair competition law be based on violations of a federal statute, after Congress has repealed a provision of that statute authorizing civil actions for damages?"  Slip op., at 1. 

The Court unanimously held that it could: 

 Whether framed in terms of preemption or not, the issue before us is a narrow one The Bank and the courts below have taken the position that Congress ruled out any private enforcement of TISA by repealing former section 4310.  However, considerations of congressional intent favor plaintiffsBy leaving TISA’s savings clause in place, Congress explicitly approved the enforcement of state laws “relating to the disclosure of yields payable or terms for accounts . . . except to the extent that those laws are inconsistent with the provisions of this subtitle, and then only to the extent of the inconsistency.  (§ 4312.)  The UCL is such a state law.

Slip op., at 4.   The Court then emphasized that the UCL does not "enforce" other laws.  A violation of the UCL is independently actionable in its own right:

Contrary to the Bank’s insistence that plaintiffs are suing to enforce TISA, a UCL action does not “enforce” the law on which a claim of unlawful business practice is based.  “By proscribing any unlawful business practice, [Business and Professions Code] ‘section 17200 borrows violations of other laws and treats them as unlawful practices that the [UCL] makes independently actionable.  [Citations.]”  (Cel-Tech, supra, 20 Cal.4th at p. 180, italics added.)  In Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 570 (Stop Youth Addiction), we explained the independent nature of a UCL action.  There the UCL claim was based on alleged violations of Penal Code section 308, which bans the sale of cigarettes to minors.  The defendant contended the suit was barred because Penal Code section 308 and the Stop Tobacco Access to Kids Enforcement Act (STAKE Act; Bus. & Prof. Code, §§ 22950- 22959) embodie[d] the Legislatures intent to create a comprehensive, exclusive scheme for combating the sale of tobacco to minors.”  (Stop Youth Addiction, at p. 560.)  We rejected this argument, and emphasized that the plaintiff was enforcing the UCL, not the statutes underlying their claim of unlawful business practice. 

Slip op., at 6.  UCL still has teeth in the view of the California Supreme Court, it would seem.  Check with The UCL Practitioner later for Kim Kralowec's write-up on this case.  She will no doubt have some other interesting observations.