Certiorari denied in Ticketmaster, et al. v. Stearns, et al.

On the consumer litigation front, today the United States Supreme Court denied certiorari in Ticketmaster, et al. v. Stearns, et al. (Sup. Ct. Case No. 11-983).  Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011) examined a number of consumer law concepts in the class context.  For example, the Ninth Circuit shot down the federal court standing challenge attempted in UCL actions post-Tobacco II.  And, on the issue of reliance in CLRA claims, the Court said:

A CLRA claim warrants an analysis different from a UCL claim because the CLRA requires each class member to have an actual injury caused by the unlawful practice. Steroid Hormone Prod. Cases, 181 Cal.App.4th 145, 155-56, 104 Cal. Rptr.3d 329, 337 (2010). But "[c]ausation, on a classwide basis, may be established by materiality. If the trial court finds that material misrepresentations have been made to the entire class, an inference of reliance arises as to the class." Vioxx, 180 Cal.App.4th at 129, 103 Cal.Rptr.3d at 95; see also Vasquez v. Superior Court, 4 Cal.3d 800, 814, 484 P.2d 964, 973, 94 Cal.Rptr. 796, 805 (1971); Steroid, 181 Cal. App.4th at 156-57, 104 Cal.Rptr.3d at 338. This rule applies to cases regarding omissions or "failures to disclose" as well. See McAdams v. Monier, Inc., 182 Cal.App.4th 174, 184, 105 Cal.Rptr.3d 704, 711 (2010) (holding that because of defendant's failure to disclose information "which would have been material to any reasonable person who purchased" the product, a presumption of reliance was justified); Mass. Mut. Life Ins. Co. v. Superior Court, 97 Cal. App. 4th 1282, 1293, 119 Cal.Rptr.2d 190, 198 (2002) ("[H]ere the record permits an inference of common reliance. Plaintiffs contend Mass Mutual failed to disclose its own concerns about the premiums it was paying and that those concerns would have been material to any reasonable person contemplating the purchase...." If proved, that would "be sufficient to give rise to the inference of common reliance on representations which were materially deficient.").

Stearns, at 1022.

Another Court of Appeal lines up behind Cohen v. DIRECTV, Inc.

Bad facts make bad law.  Presumably the corollary is that good facts make good settlements, and never become law.  And this is all relevant to the recent decision from the Court of Appeal (Second Appellate District, Division Three).  In Davis-Miller v. Automobile Club of Southern California (pub. Nov. 22, 2011), the Court considered consolidated appeals of the denial of class certification in a case concerning a roadside battery service program that provides jump-starts and sells and installs batteries for stranded motorists.

The trial court concluded that common issues did not predominate.  In particular, the trial court credited evidence showing that most class members needed the batteries they were sold and very few class members were exposed to the alleged false advertising about the roadside assistance program.  Thus, concluded the trial court, commonality could not be satisfied.  Whether you agree with that conclusion depends, in part, upon where you come down on the issue of classwide reliance in UCL cases.  How you apply this case beyond its facts also depends on your point of view.

The Davis-Miller Court embraced the Cohen v. DIRECTV, Inc., 178 Cal. App. 4th 966 (2009) treatment of Tobacco II.  But it did so in the face of sharp criticism.  Steroid Product Hormone Cases concluded that Cohen appeared to have disregarded Tobacco II, saying:

We agree that Tobacco II did not dispense with the commonality requirement for class certification. But to the extent the appellate court's opinion might be understood to hold that plaintiffs must show class members' reliance on the alleged misrepresentations under the UCL, we disagree. As Tobacco II made clear, Proposition 64 did not change the substantive law governing UCL claims, other than the standing requirements for the named plaintiffs, and "before Proposition 64, 'California courts have repeatedly held that relief under the UCL is available without individualized proof of deception, reliance and injury.'[Citation.]" (Tobacco II, supra, 46 Cal.4th at p. 326.)

So how does one resolve this conflict?  Literally applying Tobacco II, its seems inconsistent with the Supreme Court's construction of the UCL to apply any evidence associated with reliance to class claims.  If the named plaintiff has standing, that's the end of the inquiry.  The "likely to deceive" standard of the fraudulent prong of the UCL has not been repealed or changed.  New standing requirements apply only to the named class representative. 

Pragmatically, of course, it's a different story.   Many courts philosophically disagree with the UCL's amalgamation of strict liability and quasi-fraud theories.  Then again, legislation is the perogative of the legislature.  Until the legislature or another ballot initiative changes the UCL's scope substantively, it should be applied consistent with its plain language and the construction supplied by the California Supreme Court.

In Safaie v. Jacuzzi Whirlpool Bath, Inc., Court holds that decertification order, affirmed on appeal, bars subsequent motion to certify

Stephen v. Enterprise Rent-a-Car, 235 Cal. App. 3d 806 (1991) held that a party has no right to bring a second motion to certify a class after the court has denied the first motion and the time for appeal has passed.  Stephen arose when a plaintiff failed to timely appeal an order denying certification.  But Stephen did not consider all of the unusual permutations that could occur.  In Safaie v. Jacuzzi Whirlpool Bath, Inc. (February 22, 2011), the Court of Appeal (Fourth Appellate District, Division One) examined whether, after an unsuccessful appeal of an order decertifying a class, the plaintiff could move for recertification on the basis of new law (Tobacco II).  The Court concluded that, because the plaintiff did not petition for review while Tobacco II was pending, the order affirming decertication was final and no further attempts at certification were permissible absent equitable considerations necessary to prevent unfairness.

The Court offered interesting comments about the course that it expects class actions to follow:

We agree with Stephen's holding and find its rationale persuasive. To ensure fairness to the class action plaintiff, trial courts are required to liberally grant continuances and ensure a plaintiff has the opportunity to make a complete record before the court rules on class certification. (See Stephen, supra, 235 Cal.App.3d at pp. 814- 815.) Once the record is complete, if the trial court issues a final order denying a class certification motion in its entirety, the plaintiff has the right to seek immediate appellate review and to obtain a written ruling from a Court of Appeal on the disputed issues, and then, if dissatisfied, to petition for review in the California Supreme Court. Thus, unlike the situation with most interlocutory orders, the plaintiff is provided the right to an immediate appeal even though the case is still pending. However, this special status has a necessary ramification: once the appellate period has passed or once the appellate court has affirmed the order and a remittitur has issued, the order is final and plaintiff is bound by the final decertification decision.

Slip op., at 12.  The Court later discussed the possibility of equitable exceptions to the rule in Stephen:

In reaching this conclusion, we recognize trial courts have broad discretion to determine the propriety of class actions, including to be procedurally innovative in certifying an appropriate class and in formulating procedures to ensure fairness and avoid manifest injustice in class action litigation. (See Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 339.) Moreover, a court has the discretion to move sua sponte to certify a class. (See City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 453-454.) However, to the extent there may be equitable exceptions to the rule precluding successive class certification motions after a final order denying certification, the circumstances here do not come within this exception.

Slip op., at 17.

From all of this I take away two possible lessons.  First, you must file a petition for review with the California Supreme Court if there is any chance that a change in law could help your certification arguments.  Second, the farther away you get from the wellspring of all consumer and employee protection, the more likely it is that your class action will receive the firing squad, not a certification order.  This theory would explain why Los Angeles is dicey, Orange County is perilous, and San Diego is the kiss of death.  But it's just a theory.

District Court denies certification in consumer case involving appliance repair insurance

United States Magistrate Judge Jan M. Adler (Southern District of California) denied a motion for class certification in a suit alleging improper practices and representations about a home warranty insurance product.  Campion v. Old Republic Home Protection Co., Inc., 2011 WL 42759 (S.D.Cal. Jan. 06, 2011).  The Court found that individual issues would predominate because each denial of warranty coverage would reuqire an inquiry into the basis for the denial.  The Court also relied heavily on the construction of Tobacco II that was advanced in Cohen v. DirectTV, 178 Cal. App. 4th 966 (2009) when it refused to presume reliance on the part of absent class members.

In Sevidal v. Target Corporation, an unascertainable class dooms plaintiff

The purpose of the ascertainability requirement in class actions is to ensure that it is possible to give adequate notice to class members and to determine after the litigation has concluded who is barred from relitigating the resolved issues.  The ascertainability requirement can be satisfied either by defining a class in objective terms such that a review of the defendant's records or if the class definition would "allow a member of that group to identify himself or herself as having a right to recover based on the description." Bartold v. Glendale Federal Bank, 81 Cal. App. 4th 816, 828 (2000); and see Ghazaryan v. Diva Limousine, Ltd., 169 Cal. App. 4th 1524, 1533 (2008).  In Sevidal v. Target Corporation (October 29, 2010), the Court of Appeal (Fourth Appellate District, Division One) affirmed a trial court order denying certification on the ground that the class was hopelessly unascertainable.

Sevidal sued Target after he purchased through Target's website some clothing items misidentified as made in the United States.   Sevidal specifically argued that, under the California Supreme Court's recent opinion, In re Tobacco II Cases, 46 Cal. 4th 298 (2009) (Tobacco II), "the class could be certified on his unfair competition claim even if most of the proposed class members never relied on the 'Made in USA' designation in deciding to make their online purchases."  Slip op., at 2.  The trial court did not take issue with this contention.  Instead, the trial court found the class definition to be significantly overbroad and the class itself to be unascertainable.

Sevidal's difficulties in defining the class arose because a website coding error caused the Target website to misidentify the county of origin on some clothes on some occasions, but not on others.  This computer bug made it impossible to ascertain class membership:

In the proceedings below, Sevidal made clear that only those who purchased an item when the country of origin was misidentified are part of the proposed class. But he also defined the proposed class to include consumers who purchased an item from Target.com without selecting the " 'Additional Info' " icon, and thus who were never exposed to the country-of-origin information. These consumers would, by definition, have no way of knowing whether he or she purchased an item when it was misidentified, and thus would have no way of knowing whether he or she is a member of the class. And these individuals (those who would have no way of knowing he or she was a class member) represent a significant portion of the overall proposed class. Target's statistical evidence shows that approximately 80 percent of the proposed class falls within this category — individuals who purchased an item without viewing the country-of-origin information.

Slip op., at 19-20.  The Court found this degree of overbreadth sufficient to support the trial court's ruling:

Although class certification should not be denied on overbreadth grounds when the class definition is only slightly overinclusive (ibid.; see Aguiar, supra, 144 Cal.App.4th at p. 136), in this case the overbreadth is significant. The unrefuted evidence showed that approximately 80 percent of the online purchasers did not select the " 'Additional Info' " icon and were never exposed to the alleged misrepresentation.

Slip op., at 20.  A useful observation for both plaintiffs and defendants; slight overbreadth will not defeat certification, but overbreadth of this magnitude will support a denial of certification.

The Court went on to reject Sevidal's attempt to extend by analogy the evidentiary presumptions that can be imposed for failure to follow Labor Code record-keeping requirements.   The Court observed that Target had no statutory or contractual obligations to maintain records about who selected which links on its site.

Finally, the Court discussed the overbreadth issue under the UCL, separate from the ascertainability problem created by the class definition and the lack of records to identify class membership.  Treading gingerly into the minefield of Tobacco II, the Court said:

But the Tobacco II court did not state or suggest there are no substantive limits on absent class members seeking restitution when a defendant has engaged in an alleged unlawful or unfair business practice. Instead, the court recognized that under the UCL's statutory language, a person is entitled to restitution for money or property "which may have been acquired" by means of the unfair or unlawful practice. (§ 17203, italics added; see Tobacco II, supra, 46 Cal.4th at p. 320.) Although this standard focuses on the defendant's conduct and is substantially less stringent than a reliance or "but for" causation test, it is not meaningless. To conclude otherwise would violate the statutory interpretation principle that every word in a statute must be given operative effect. Even after the Tobacco II decision, the UCL and FAL still require some connection between the defendant's alleged improper conduct and the unnamed class members who seek restitutionary relief.

Slip op., 25.  Analyzing the post-Tobacco II cases, the Court concluded that undisputed evidence showed that most of the defined class never viewed the country-of-origin information.   Unlike Weinstat v. Dentsply Internat., Inc., 180 Cal. App. 4th 1213 (2010), there were no direct communications to every class member.  Unlike In re Steroid Hormone Product Cases, 181 Cal. App. 4th 145 (2010), there was no illegal conduct (inclusion of undisclosed controlled substances) to supply the means for unlawful acquisition of money from the class.  In essence, the Court concluded that, as to the majority of the defined class, Target didn't do anything wrong (again, the key issue being that, at many times, the Target website may was displaying the correct information - but most people didn't look at it in either case).

While the Court appears to favor the "conservative" line of post-Tobacco II cases (or, as some might say, the reactionary revolt line), the Court doesn't embroil itself too deeply into the post-Tobacco II cases, attempting as much as possible to harmonize the two lines of cases with each other and the record before it.  In this case, the Court's task is much easier as a result of the unique factual record.

Companion opinions involving billing practices by Sharp Healthcare (Durell and Hale) examine UCL standing

Sharp Healthcare is responsible for two of the three published decisions issued today that concern class action issues.  Hale v. Sharp Healthcare (April 19, 2010) and Durell v. Sharp Healthcare (April 19, 2010) both concern putative class actions.  Both involve billing practices by Sharp Healthcare related to its "regular" billing rate.  Both concern trial court orders sustaining demurrers to UCL causes of action.  And both pronounce new situations where "reliance" is required for UCL claims.  However, the outcomes in the two appeals differ by the width of, at most, a couple of sentences of allegations; one passes muster as a "reliance" allegations and one does not.

Both cases concern the basic theory that Sharp engaged in deceptive and unfair practices by billing uninsured patients its full standardized rates for services, when it substantially discounts those rates for patients covered by Medicare or private insurance.  Both cases questioned, in slightly different ways, what actually constitutes the "regular rates" charged to patients.

In the Durell opinion, the Court focused on the causation aspect of standing:

The court sustained the demurrer to the UCL cause of action without leave to amend on the ground Durell lacks standing to pursue the claim. The court found the SAC insufficiently alleges "injury in fact" and causation. (Bus. & Prof. Code, § 17204.) As to causation, the court explained the SAC fails to allege Durell was harmed "as a result of" Sharp's conduct. (Ibid.) For instance, the SAC does not allege he "relied on Sharp charging its 'usual and customary rates' in receiving treatment." We turn first to the causation issue, which we find dispositive.

Durell, at 12.  The Court found the absence of allegations of "reliance" to be the key defect in Durell's pleading: 

The SAC does not allege Durell relied on either Sharp's Web site representations or on the language in the Agreement for Services in going to Sharp Grossmont Hospital or in seeking or accepting services once he was transported there. Indeed, the SAC does not allege Durell ever visited Sharp's Web site or even that he ever read the Agreement for Services.

Durell, at 14.

Plaintiff Hale, on the other hand, alleged facts that satisfied the Court's examination of "injury in fact" and standing: 

Even though the SAC alleges Hale has paid only $500 of her $14,447.65 medical bill, it also alleges the Admission Agreement obligates her to pay Sharp the balance on her account. Thus, she faces at least an imminent invasion or injury to a legally protected interest. (See Troyk, supra, 171 Cal.App.4th at p. 1346.) The term "imminent" is defined as "ready to take place," "hanging threateningly over one's head," and "menacingly near." (Webster's 3d New Internat. Dict. (1993) p. 1130.) Certainly, this is not the type of action Proposition 64 was intended to squelch. Hale was a bona fide consumer of medical services.

Hale, at 11.  Though thin, the Court agreed that Hale did plead a form of "reliance" sufficient to withstand demurrer: 

We agree with Hale, however, that "to the extent [she] is bringing a fraud-based claim under the UCL, she has reasonably pled reliance." The SAC alleges Hale signed the Admission Agreement, and "at the time of signing the contract, she was expecting to be charged 'regular rates,' and certainly not the grossly excessive rates that she was subsequently billed." (Italics added.) This allegation appears in the breach of contract cause of action, but the UCL cause of action incorporates the allegations of all other causes of action. We must interpret the complaint reasonably, "reading it as a whole and its parts in their context." (Stearn v. County of San Bernardino (2009) 170 Cal.App.4th 434, 439.) As Hale notes, the "difference between 'expecting' to be charged regular rates and 'relying' on being charged regular rates is a distinction without a difference." We see no utility in requiring Hale to amend her complaint to exchange the term "expecting" for the term "relying."

Hale, at 14-15.  Lesson one from these cases is that small differences in pleading facts can make a big difference.

But discussing allegations was not the headline-worthy event in these two opinions.  The Court extended the concept of "reliance" discussed in Tobacco II's discussion of the UCL "fraudulent" prong to any "unlawful" prong claim asserting a legal violation that involves deception:

Construing the phrase "as a result of" in Business and Professions Code section 17204 in light of Proposition 64's intention to limit private enforcement actions under the UCL, we conclude the reasoning of Tobacco II applies equally to the "unlawful" prong of the UCL when, as here, the predicate unlawfulness is misrepresentation and deception. A consumer's burden of pleading causation in a UCL action should hinge on the nature of the alleged wrongdoing rather than the specific prong of the UCL the consumer invokes. This is a case in which the "concept of reliance" unequivocally applies (Tobacco II, supra, 46 Cal.4th at p. 325, fn. 17), and omitting an actual reliance requirement when the defendant's alleged misrepresentation has not deceived the plaintiff "would blunt Proposition 64's intended reforms." (Cattie v. Wal-Mart Stores, Inc. (S.D.Cal. 2007) 504 F.Supp.2d 939, 948.)

Durell, at 14.

With a new category of "reliance" pleading required for certain "unlawful" prong claims, the Court turned its high-powered, neutrino-powered conservative ray on the "unfair" prong of the UCL.  Durell's "unfair" prong claim also found no success.  After reviewing the post-Cel-Tech hairball, the Court applied its own prior precedent that defines a very strict test for "unfair" conduct:

Here, the court's order does not specifically address the "unfair" prong of the UCL. The SAC alleges Sharp's conduct violates public policy, and is "immoral, unethical, oppressive, and unscrupulous," a vague test of unfairness this court rejects. The SAC does not allege the conduct is tethered to any underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law. In his briefing, Durell does not address Cel-Tech, supra, 20 Cal.4th 163, and its affect on the definition of "unfair" in consumer UCL cases, or this court's opinions in Scripps Clinic, supra, 108 Cal.App.4th 917, and Byars, supra, 109 Cal.App.4th 1134. We conclude the court properly granted the demurrer as to the claim under the "unfair" prong of the UCL.

Durell, at 19.

On the flip side, Hale's CLRA claim lives to fight another day, benefiting from the Court's "reliance" pleading analysis set forth in its discussion of Hale's UCL claim:

Again, however, to the extent Hale's CLRA claim is fraud-based, the SAC adequately alleges the reliance element. Thus, the court erred by sustaining the demurrer to the CLRA cause of action.

Hale, at 16.

I will look forward to reading The UCL Practitioner's assessment of these two opinions.

Geico's attempt to "pick off" class representative in UCL action is unsuccessful

Oh, the riches that come to those who wait.  After a fairly dry spell, California's Courts of Appeal bestow no fewer than three opinions about issues related to class actions and the Unfair Competition Law ("UCL").  The first up for commentary is Wallace v. Geico General Insurance Company (April 19, 2010).  In Wallace, the Court of Appeal (Fourth Appellate District, Division One) considered whether GEICO's offer of monetary compensation to Wallace after she filed her lawsuit caused her to lose standing as the representative plaintiff.  Concluding that she did not, the Court reversed the trial court's order striking class allegations.

Wallace filed a proposed class action complaint against GEICO. According to Wallace, her vehicle was damaged in an accident and required body work. She obtained an estimate from a repair shop of her choice and presented the estimate to GEICO. GEICO told her that it would not pay the full amount of the estimate because the hourly rate for labor charged by that business was above what GEICO considered to be the prevailing labor rate.

Meanwhile, following a consent order issued by the California Department of Insurance, GEICO was obligated to calculate reimbursements in an alternative fashion.  Two months after Wallace filed her lawsuit, GEICO sent a check for $387.56 to Wallace to cover the amount that Wallace paid out of pocket for the repair of her vehicle.  Based on the fact of that payment, the trial court ruled that Wallace lacked standing but gave Wallace time to locate an adequate class representative and allowed discovery for that purpose.  Less than two months later, GEICO moved to strike class allegations.  The trial court granted the motion on the ground that the class had no representative.

The Court of Appeal began its review by examining the "pick off" cases:

In the specific situation where a defendant in a class action has forced an involuntary settlement on the representative plaintiff after the lawsuit is filed, case law creates an exception to the requirement that a representative plaintiff continue to be a member of the proposed class. These cases, which are "sometimes referred to as 'pick off ' cases" (Watkins v. Wachovia Corp. (2009) 172 Cal.App.4th 1576, 1590), "arise when, prior to class certification, a defendant in a proposed class action gives the named plaintiff the entirety of the relief claimed by that individual. The defendant then attempts to obtain dismissal of the action, on the basis that the named plaintiff can no longer pursue a class action, as the named plaintiff is no longer a member of the class the plaintiff sought to represent. . . . [T]he defendant seeks to avoid exposure to the class action by 'picking off ' the named plaintiff, sometimes by picking off named plaintiffs serially." (Ibid., citing, among others, La Sala, supra, 5 Cal.3d 864.) In this situation, "the involuntary receipt of relief does not, of itself, prevent the class plaintiff from continuing as a class representative." (Watkins, at p. 1590; see also Larner v. Los Angeles Doctors Hospital Associates, LP (2008) 168 Cal.App.4th 1291, 1299 [case law "prevents a prospective defendant from avoiding a class action by 'picking off' prospective class-action plaintiffs one by one, settling each individual claim in an attempt to disqualify the named plaintiff as a class representative"]; Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 548 [" '[A] prospective defendant is not allowed to avert a class action by "picking off " prospective plaintiffs one-by-one. Thus, precertification payment of the named plaintiff 's claim does not automatically disqualify the named plaintiff as a class action representative.' "].) 

Slip op., at 11-12.  Having explained that the "pick off" attempt was improper, the Court then explained what the trial court should have done in that situation:

Instead of a reflexive dismissal of the representative plaintiff on the basis that he or she lacks standing as the trial court did here — the proper procedure in a pick off situation is for the trial court to consider whether "the named plaintiffs will continue fairly to represent the class" in light of the individual relief offered by the defendant. (La Sala, supra, 5 Cal.3d at p. 872.) As a practical matter, in most cases, that evaluation may be performed in the context of a ruling on a motion for class certification, where the trial court inquires into the existence of, among other things, "(1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class." (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326, italics added; see also Weiss, supra, 385 F.3d at p. 348 [allowing class certification motion to be filed after defendant attempted to pick off the representative plaintiff].)

Slip op., at 13.  Next, the Court explicitly held that the "pick off" cases apply to UCL actions, even after Proposition 64:

We agree with the parties that the pick off cases are persuasive here, regardless of the injury-in-fact requirement set forth in section 17204. As required by section 17204, Wallace "suffered injury in fact" and "lost money or property" as a result of the practices at issue in this lawsuit. (§ 17204.) Specifically, Wallace was injured by paying for the repair work to her vehicle that GEICO did not agree to cover. Thus, at the time Wallace filed suit she was a proper plaintiff under section 17204. We see no indication in the history of Proposition 64, as reviewed by our Supreme Court in Californians for Disability Rights, supra, 39 Cal.4th 223, 228, that the voters amended section 17204 with the intent of allowing defendants in class actions brought under section 17200 et seq. to defeat class status by forcing an involuntary settlement.

Slip op., at 15-16.  The Court went on to explain that Proposition 64 focused on "the filing of lawsuits by attorneys who did not have clients impacted by the defendant's conduct."  Slip op., at 16.  Thus, "[b]ecause the doctrine expressed in the pick off cases is an established part of class action procedure, there is no reason to believe that Proposition 64 was intended to alter that doctrine in the context of suits brought under section 17200 et seq."  Slip op., at 17, relying on In re Tobacco II Cases (2009) 46 Cal.4th 298, 318.

I still can't get over the fact that an insurance company wouldn't pay for the full cost of vehicle repair.  Inconceivable.

California Supreme Court activity for the week of April 12, 2010

The California Supreme Court held its (usually) weekly conference today.  Notable results include:

• A Petition for Review and Request for Depublication were both denied in Weinstat v. Dentsply International, Inc. (January 7, 2010), (reversed trial court order decertifying class after applying Tobacco II) - discussed on this blog here.  It appears from this denial that the California Supreme Court is in no rush to take up Tobacco II issues again.
• A Petition for Review was denied in Cellphone Termination Fee Cases, ___ Cal. App. 4th ___ (Dec. 31, 2009) (affirming final approval of class action settlement and attorneys' fees award)
• A Petition for Review was denied in Steroid Hormone Product Cases (January 21, 2010, as mod. Feb. 8, 2010) - discussed on this blog here and here.  This denial is more significant than the denial in Weinstat because of the very strong criticism of Cohen v. DIRECTV, Inc., 178 Cal. App. 4th 966 (2009).

Salenga v. Mitsubishi Motors Credit of America, Inc. addresses issues of accrual of UCL claims

If The UCL Practitioner wasn't on a blogging hiatus, it would be all over this one like attorneys on a mass tort.  In Salenga v. Mitsubishi Motors Credit of America, Inc. (April 9, 2010), the Court of Appeal (Fourth Appellate District, Division One) reversed an Order dismissing a First Amended Cross-Complaint, after defendants demurred on the ground that cross-complainant did not file within the four-year limitations period applicable to the Unfair Competition Law ("UCL").  In the underlying complaint, Cavalry (as an assignee of MMCA) sued a consumer, seeking a deficiency judgment, after the consumer had defaulted on her MMCA auto loan in 2003 and the vehicle was repossessed. She was given a Notice of Intent to Dispose of Motor Vehicle ("NOI" or Notice) dated October 14, 2003, and the vehicle was sold at auction.  About four years later, Cavalry filed its complaint seeking payment of a deficiency balance of $10,288.56, plus interest from May 2004.

After being sued, the consumer brought a cross-complaint, contending that the NOI was defective and could not support a deficiency judgment.  See, Juarez v. Arcadia Financial, Ltd., 152 Cal. App. 4th 889 (2007).  That's when thing get interesting.  Okay, not really, but that's when things happen that are worth reporting.

On appeal, the Court considered whether any form of tolling or accrual-based delay was available to the consumer:

It is well accepted that a limitations period commences when the cause of action "accrues." (Code Civ. Proc., § 312; Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806.) " 'Generally speaking, a cause of action accrues at "the time when the cause of action is complete with all of its elements." ' " (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1317-1318.) "The cause of action ordinarily accrues when, under the substantive law, the wrongful act is done and the obligation or liability arises, i.e., when an action may be brought." (3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 493, p. 633.)

Here, the applicable substantive law includes both the Act and the UCL. It is well-established that "[a]n action for unfair competition under Business and Professions Code section 17200 'shall be commenced within four years after the cause of action accrued.' (Bus. & Prof. Code, § 17208.) The 'discovery rule,' which delays accrual of certain causes of action until the plaintiff has actual or constructive knowledge of facts giving rise to the claim, does not apply to unfair competition actions. Thus, 'the statute begins to run . . . irrespective of whether plaintiff knew of its accrual, unless plaintiff can successfully invoke the equitable tolling doctrine.' " (Snapp & Associates Ins. Services, Inc. v. Malcolm Bruce Burlingame Robertson (2002) 96 Cal.App.4th 884, 891.)

Slip op., at 9.  The consumer, on appeal, expressly disavowed any reliance on a continuing violation theory of delayed accrual.  The Court also concluded that the consumer was not asserting the concept of equitable tolling or a delayed discovery rule.  Instead, the consumer argued that she was not actually adversely affected by the defective NOI until cross-defendants made efforts to pursue a deficiency judgment on it and until she made a payment at that time.  The Court focused its examination on accrual rules:

The authors of 3 Witkin, California Procedure, supra, Actions, section 496, page 635, summarize the various categories of exceptions that have been made over time to the general rule of "accrual" of a cause of action as of the time of the wrongful act. These include, as potentially relevant here, "(2) Accrual when damage results. [Citation.] [¶] (3) Accrual postponed by condition precedent." The authors further explain that these "rules of delayed accrual are to be distinguished from rules that, despite accrual of the cause of action, toll or suspend the running of the statute." (Ibid.)

Slip op., at 10.

The Court then attempted to reconcile the "principles governing the accrual of causes of action to the pleadings before the court, with regard to the protective policies of the [Rees-Levering Motor Vehicle Sales and Finance] Act, including whether there is any reasonable possibility that Appellant can truthfully amend to allege facts establishing the timeliness of this cross-action."  Slip op, at 12.  The Court addressed the purposes of the Act:

Deficiency judgments are subject to certain restrictions under the Act. In Bank of America v. Lallana (1998) 19 Cal.4th 203 (Bank of America), the Supreme Court held that a secured creditor who sells a defaulting debtor's repossessed car may obtain a deficiency judgment, but only by complying with all the provisions of the Act, as well as the relevant provisions of the Uniform Commercial Code (Division 9). (Id. at p. 208; § 2983.8.) The court took this approach: " ' "[T]he rule and requirement are simple. If the secured creditor wishes a deficiency judgment he must obey the law. If he does not obey the law, he may not have his deficiency judgment." ' " (Bank of America, supra, 19 Cal.4th 203, 215.)

Slip op., at 13.

The Court then worked to sort out confusion in the parties' briefs regarding elements of causes of action and the concept of standing to assert a justiciable controversy:

There is some confusion in the briefs about the required elements of a cause of action that may be asserted by a borrower, for breach of a substantive right provided to the borrower by the Act (e.g., no deficiency judgment absent a compliant NOI; §§ 2983.2, subd. (a), 2983.8). The parties have discussed, for limitations purposes, the date of incurring actual injury, as that same concept has been developed in the law for determining whether a putative class representative has standing, under the restrictions of the UCL, to assert a particular claim. Normally, "standing" questions will arise in the related context of justiciability determinations (made upon intertwined criteria of ripeness and standing). " 'One who invokes the judicial process does not have "standing" if he, or those whom he properly represents, does not have a real interest in the ultimate adjudication because the actor has neither suffered nor is about to suffer any injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented.' " (3 Witkin, Cal. Procedure, supra, Actions, § 21, p. 84.)

In re Tobacco II Cases (2009) 46 Cal.4th 298, 318, includes extensive discussion of the modern concept of standing in UCL class actions. Under Proposition 64, the UCL's substantive purpose of protecting consumers from unfair businesses practices was not altered, and the focus of the initiative "was to address a specific abuse of the UCL's generous standing provision by eliminating that provision in favor of a more stringent standing requirement." (In re Tobacco II Cases, supra, at p. 324; Californians for Disability Rights v. Mervyn's (2006) 39 Cal.4th 223, 232.) The court held that a class representative must be capable of demonstrating traditional standing in terms of alleging actual injury and causation, including actual reliance on acts of unlawful or fraudulent competition. However, a broader rule was used for the required standing showing for a potential class member. (In re Tobacco Cases, supra, at pp. 319-322.)

Slip op., at 16-17.  The Court then applied all of its prior discussion of the contours of accrual and standing to the facts before it:

In our case, there should be no difficulty in analyzing UCL standing rules as of the date of all of the events that allegedly occurred, including the 2007-2008 efforts to obtain a deficiency judgment. We disagree with cross-defendants that the only relevant time period for assessing standing and/or accrual of a statutory cause of action is 2003, when the defective NOI was sent. Rather, Appellant should be allowed to make a greater effort to plead that she did not incur actual injury until the 2007-2008 attempts to enforce the allegedly inadequate NOI were made, through the demand letter and judicial procedures to obtain a deficiency judgment. That would not amount to splitting her cause of action, where the NOI procedure serves two separate statutory purposes: permitting reinstatement, and/or allowing a deficiency judgment, if proper notice was given. (See Miller v. Lakeside Village Condo. Assn. (1991) 1 Cal.App.4th 1611, 1622-1623.) This is not a case of a plaintiff resting upon her rights. (Davies, supra, 14 Cal.3d at p. 515.)

Moreover, we think that the Supreme Court's analysis of standing of a class representative, to assert violations of the Act, in Fireside Bank, supra, 40 Cal.4th 1069, 1089-1090, goes beyond technical class certification questions. That plaintiff, Gonzalez, was claiming she was deprived of a fair opportunity to redeem the financed vehicle, "followed by an unlawful demand for payment. The record demonstrates Fireside Bank repossessed Gonzalez's vehicle and pursued a deficiency judgment against her. She thus has standing to seek a declaration that Fireside Bank is unlawfully asserting a debt against her, as well as an injunction against all further collection efforts. The record further shows Gonzalez (or someone on her behalf) made a postrepossession payment against the alleged deficiency; upon proof she made that payment, Gonzalez also has standing to seek restitution." (Id. at p. 1090, italics added.) From that analysis, we think the courts may be receptive to a properly pled allegation that postponed accrual of a statutory cause of action may exist, under circumstances in which a deficiency judgment is sought based upon a defective NOI.

Slip op., at 18-19.  The unintended consequences of using the initiative process to tinker with laws are fascinating to behold.  While the Court didn't declare that the consumer could successfully amend, it certainly gave a pretty clear roadmap about how go about crafting that amendment.  The opinion all but states that the consumer wasn't injured, for UCL purposes, by the defective NOI until an attempt to secure a deficiency judgment based on it was attempted many years later.  This was despite the consumer's failure to exercise the reinstatement right triggered by the NOI.

in brief: Post-Tobacco II remand case, Pfizer v. Superior Court, is now published

The shockwaves of Tobacco II continue.  Today, the Court of Appeal (Second Appellate District, Division Three) published its Opinion in Pfizer v. Superior Court (March 2, 2010) after the matter was remanded by the California Supreme Court following the Tobacco II decision.  The Court focused heavily on the length of time and extent of the advertising campaign for Listerine that was at issue in the case.  Less than half a year and sporadic distribution wasn't enough to convince the Court to apply Tobacco II.  So now we have Morgan, et al. v. AT&T Wireless Services, Inc. (September 23, 2009), that found an advertising campaign of around a year to be long enough for a reliance inference, but just under half a year is insufficient.  I suppose those 8-month ad campaigns will be judged on a fact-intensive analysis that looks at whether the ads were continuous and pervasive or sporadic and poorly circulated.