THE DEFENSE OF PRIVATE AND GOVERNMENTAL UNFAIR COMPETITION LAW CLAIMS

Gail E. LeesGibson, Dunn & Crutcher333 South Grand AvenueLos Angeles, CA 90071

(213) 229-7000glees@gibsondunn.com

2003 Gail E. LeesGibson, Dunn & CrutcherAll Rights Reserved

TABLE OF CONTENTS

Page

I. SCOPE OF STATUTES.....................................................................................1

A. Substantive Violations......................................................................1

1. Unfair Competition Law.........................................................1

a. Unlawful......................................................................2

b. Unfair..........................................................................3

c. Fraudulent..................................................................6

d. Business Act or Practice.............................................7

e. Deceptive Advertising.................................................8

f. False Advertising Act Violation...................................9

2. False Advertising Act.............................................................9

3. Consumers Legal Remedies Act...........................................9

B. Practical Reach of the Statutes......................................................10

C. Statutory Enforcement...................................................................15

1. Governmental Enforcement................................................15

2. Private Enforcement............................................................15

a. Unfair Competition Law............................................15

b. Consumers Legal Remedies Act..............................16

c. False Advertising Act................................................17

D. Remedies Under The Unfair Competition Act................................17

1. Monetary Penalties..............................................................17

a. Civil Penalties Under The UCL.................................17

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b. Criminal Penalties Under The UCL...........................20

2. Injunction and Restitution....................................................20

a. Injunction..................................................................21

b. Restitution.................................................................21

c. Compensatory and Punitive Damages Not Available.22

E. Remedies Under The False Advertising Act..................................22

II. INTERNAL INVESTIGATIONS........................................................................22

A. Advisability.....................................................................................22

B. Preserving the Attorney-Client Privilege and Attorney Work Product Doctrine..........................................................................................23

III. GOVERNMENTAL ENFORCEMENT.............................................................23

A. Possibility of Multifaceted Attack....................................................23

B. Government's Limited Resources to Pursue Case to Trial............23

C. Adverse Publicity Can Create a Two-Front War............................24

IV. PRIVATE ENFORCEMENT...........................................................................24

A. Private Actions...............................................................................24

B. Attorneys' Fees..............................................................................24

C. Consumer Attorney Associations...................................................25

V. PUBLICITY ISSUES.......................................................................................25

VI. INSURANCE COVERAGE.............................................................................25

VII. CLASS ACTIONS.........................................................................................27

A. Prerequisites..................................................................................27

B. Additional Requirements................................................................28

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VIII. DEFENSES..................................................................................................29

A. Fraud and Class Action Defenses Are Unavailing.........................29

B. One Hundred Six Defense Arguments...........................................30

1. Abstention...........................................................................30

2. Adequate Remedy at Law...................................................31

3. Administrative Law Doctrines..............................................32

a. Exhaustion of Administrative Remedies...................32

b. Primary Jurisdiction..................................................32

c. Deference to Administrative Interpretation...............34

4. Alternative Source...............................................................35

5. Amendment or Repeal of Underlying Law...........................36

6. Anti-SLAPP Motion to Strike...............................................37

7. Arbitration............................................................................37

a. Federal Preemption Under Federal Arbitration Act...37

b. State Arbitration Law................................................38

c. Class Claims.............................................................40

8. Breach of Contract..............................................................41

9. Business Judgment Rule.....................................................41

10. Business Justification / "Everybody Does It".......................41

11. Class Certification...............................................................42

12. Commercial Relationship....................................................43

13. Constitutional Defenses......................................................44

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a. Case or Controversy.................................................44

b. Commerce Clause....................................................45

c. Double Jeopardy......................................................46

d. Due Process Attacks................................................47

(1) Procedural Due Process................................47

(2) Substantive Due Process...............................48

e. Equal Protection Clause...........................................51

f. Excessive Fines Clause...........................................51

g. Federal Preemption..................................................52

h. First Amendment......................................................60

(1) Disclaimer......................................................64

(2) Political Conduct............................................64

(3) Deceptive Advertising....................................65

(4) Opinion..........................................................66

(5) "Of and Concerning"......................................66

i. Selective Prosecution...............................................66

j. Separation of Powers...............................................66

14. Consumer Survey or Expert Testimony...............................67

15. Context................................................................................68

16. Cy Pres...............................................................................69

17. Contractual Limitation of Damages.....................................69

18. Damages Unavailable.........................................................70

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19. Disgorgement Unavailable..................................................72

20. De Minimis Violation............................................................73

21. Deception Not Shown..........................................................73

22. Dischargeability...................................................................75

23. Discontinued or Completed Act...........................................75

24. Enjoining Breach of Contract...............................................77

25. Evidence Regarding Quasi-Class Members........................77

26. Equitable Defenses.............................................................77

27. Estoppel..............................................................................78

28. Extra-Territorial Reach........................................................78

29. Failure To Describe Claim With Reasonable Particularity...81

30. Failure To Read Contract....................................................83

31. Filed Rate Doctrine..............................................................83

32. Filing With California Attorney General...............................83

33. Flawed Injunction................................................................84

34. Financial Condition..............................................................84

35. Fluid Recovery....................................................................85

36. Full Disclosure.....................................................................85

37. Harm to Defendant..............................................................85

38. Future Criminal Conduct.....................................................86

39. Good Faith...........................................................................86

40. In Pari Delicto Defense........................................................86

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41. Injunction Against Ancillary Wrong......................................87

42. Insurance Agents................................................................87

43. Joint and Several Liability....................................................87

44. Judicial Communications.....................................................88

45. Jury Demands.....................................................................88

46. Justification..........................................................................89

47. Lack of Intent.......................................................................89

48. Legislative History...............................................................89

49. Manageability......................................................................90

50. Mandatory Injunctions.........................................................90

51. No Bond..............................................................................91

52. No Causation.......................................................................91

53. No Competitive or Consumer Injury....................................91

54. No Intent to Injure or Violate the Law..................................93

55. No Knowledge of Falsity......................................................93

56. No Likelihood of Confusion.................................................93

57. No Likelihood of Deception.................................................94

58. No Power to Declare Economic Policy................................96

59. No Previous Finding Of Unfairness.....................................96

60. No Private Right of Action...................................................97

61. No Receipt Of Benefits........................................................99

62. No Reliance.......................................................................100

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63. No Threat of Future Violations..........................................100

64. No Satisfaction of Traditional Equitable Requirements for Injunction...........................................................................101

65. Non-Residents...................................................................102

66. Not Competent Plaintiff.....................................................102

67. Not Commerce..................................................................102

68. Not a "Person"...................................................................103

69. Not "Primary Business".....................................................103

70. Not a "Practice".................................................................104

71. Not "Palming Off"..............................................................105

72. Not "Unfair" Where Contract or Law Requires..................106

73. Not Unfair..........................................................................106

74. Not Unlawful......................................................................110

75. Parallel Statutory Scheme.................................................115

76. Parol Evidence Rule..........................................................116

77. Preemptive Strike..............................................................116

78. Prior Case Pending...........................................................117

79. Public Entity Immunity.......................................................118

80. Puffing...............................................................................118

81. Punitive Damages Standards Inapplicable........................119

82. Punitive Damages Unavailable.........................................119

83. Rate Setting.......................................................................120

84. Ratification or Waiver........................................................121

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85. Regulatory Approval..........................................................121

86. Reliance on Advice of Counsel.........................................121

87. Removal............................................................................122

a. Federal Question....................................................122

b. Diversity..................................................................125

88. Repetitive Litigation: Res Judicata and Collateral Estoppel125

89. Restitution for Absent Parties............................................130

90. Restitution Measure..........................................................131

91. Restitution Without Injunction............................................132

92. Securities Transactions.....................................................133

93. Seller's Good Faith............................................................136

94. Standing............................................................................136

95. Statutes of Limitation.........................................................141

96. Statutory Interpretation......................................................143

97. Subsequent Disclosure.....................................................143

98. Summary Judgment..........................................................144

99. Tolling of Statute of Limitations.........................................144

100. Truth As Defense..............................................................145

101. Unclean Hands..................................................................147

102. "Unfair" Act Not Actionable If Not Unlawful.......................147

103. Unlawful Usurpation of Legislative Power.........................148

104. Venue................................................................................149

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105. Vicarious Liability...............................................................150

106. Waiver...............................................................................151

IX. ATTORNEYS FEES.....................................................................................151

X. RECOVERY OF COSTS...............................................................................152

XI. SETTLEMENT.............................................................................................152

A. Class Actions...............................................................................152

1. Fairness Hearing...............................................................152

2. Fiduciary Duty...................................................................152

3. Adequate Representative..................................................153

B. Quasi-Class Actions Under the UCL............................................153

C. Private Letter Agreement.............................................................155

D. Adding True Class Claims............................................................155

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CASES

A & M Records, Inc. v. Heilman, 75 Cal. App. 3d 554, (1977).....................................105Abada v. Charles Schwab & co., 127 F. Supp. 2d 1101 (S.D. Cal. 2000)....................123Abba Rubber Co. v. Seaquist, 235 Cal. App. 3d 1 (1991)..............................................91Abbott v. Chemical Trust, 2001 U.S. Dist. LEXIS 6214 (D. Kan. 2001)...............109, 114ABC Int'l Traders, Inc. v. Matsushita Elec. Corp., 38 Cal. App. 4th 398

(1996).................................................................................................................83, 132Abelleria v. District Court of Appeal, 17 Cal. 2d 280 (1941)...........................................32Academy of Motion Picture Arts & Sciences v. Creative House Promotions,

944 F.2d 1446 (9th Cir. 1991)...............................................................................68, 94Adams v. Murakami, 54 Cal. 3d 105, 108-09 (1991)....................................................119Aetna Cas. & Sur. Co. v. Trans World Assurance Co., 745 F. Supp. 1524

(N.D. Cal. 1990)..........................................................................................................27Aetna Cas. & Sur. Co. v. Watercloud Bed Co., 1988 U.S. Dist. LEXIS

17572 (C.D. Cal. Nov. 17, 1988)................................................................................27Aetna Fin. Co. v. Consumers Union (San Francisco Superior Court No.

926772)....................................................................................................................155Aflex Corp. v. Underwriters Lab. Inc., 1989 U.S. Dist. LEXIS 6935 (C.D.

Mar. 21, 1989)............................................................................................................66Agroindustrias Vezel v. H.P. Schmid, Inc., 1991 U.S. Dist. LEXIS 18783

(N.D. Cal. 1991)..........................................................................................................41Aguilar v. Atlantic Richfield Co., 25 Cal. 4th 826 (2001)......................................106, 144AICCO, Inc. v. Ins. Co. of N. Am., 90 Cal. App. 4th 579 (2001).............33, 101, 121, 148Aiello v. First Alliance Mortgage Co., 2002 U.S. Dist. LEXIS 844 (C.D. Cal.

2002)..................................................................................................................59, 109Alaska Sport Fishing Ass'n v. Exxon Corp., 34 F.3d 769 (9th Cir. 1994).....................129Alchemy II Inc. v. Yes! Entertainment Corp., 844 F. Supp 560 (C.D. Cal.

1997)..................................................................................................................73, 145Alexandra v. Lucky Stores, Inc. (Alameda County S. Ct. No. 727750-4

(1994))......................................................................................................................128Alicke v. MCI Communications, Inc., 111 F. 3d 909 (D.C. Cir 1997)..............................83Alliance Ins. Co. v. Colella, 995 F.2d 944 (9th Cir. 1993)..............................................26Allied Grape Growers v. Bronco Wine Co., 203 Cal. App. 3d 432 (1988)....7, 12, 97, 104Allied-Bruce Terminix v. Dobson, 115 U.S. 834, 63 U.S.L.W. 4079 (1995)...................37A-Mark Fin. Corp. v. Cigna Property and Cas. Cos., 34 Cal. App. 4th 1179

(1995).........................................................................................................................26America Online, Inc. v. Super. Ct. of Alameda County, 90 Cal. App. 4th 1

(2001).................................................................................................................79, 150American Booksellers Assn., Inc. v. Barnes & Noble, Inc., 135 F. Supp. 2d

1031 (N.D. Cal. 2001).........................................................................................77, 114

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American Computech, Inc. v. National Med. Care, Inc., 1992 U.S. App. LEXIS 6460 (9th Cir. 1992)......................................................................................120

American Fin. Servs. Ass'n v. FTC, 767 F.2d 957 (D.C. Cir. 1985).................................5American Int'l Group, Inc. v. Superior Court of Los Angeles County,

234 Cal. App. 3d 749 (1991)................................................................................54, 56American Int'l Indus. v. Superior Court, 70 Cal. App. 4th 406 (1999)...........................127American Med. Ass'n v. FTC, 638 F.2d 433 (2d Cir. 1980)............................................62American Philatelic Society v. Claibourne, 3 Cal. 2d 689 (1935).....................................6American States Ins. Co. v. Canyon Creek, 786 F. Supp. 821 (N.D. Cal.

1991).......................................................................................................................... 26Americana Trading Inc. v. Russ Berrie & Co., 1988 U.S. Dist. LEXIS 15580

(N.D. June 27, 1988)..................................................................................................94Andrews v. Trans Union Corp., 7 F. Supp. 2d 1056 (C.D. Cal. 1998)..................2, 22, 98Aquino v. Credit Control Servs., 4 F. Supp. 2d 927 (N.D. Cal 1998)............................114Arriaga v. Cross Country Bank, 163 F. Supp. 2d 1189 (S.D. Cal. 2001)..................37, 40As You Sow v. Sherwin-Williams Co., 1993 U.S. Dist. LEXIS 18310

(N.D. Cal. 1993)........................................................................................................140Association of Nat'l Advertisers, Inc. v. Grocery Mfrs. of Am., Inc., 44 F.3d

726 (9th Cir. 1994)......................................................................................................61Association of Nat'l Advertisers, Inc. v. Lungren, 44 F. 3d 726 (9th Cir

1994)..............................................................................................................50, 51, 63Atari Corp. v. 3 DO Co., 31 U.S.P.Q. 2d 1636, 1994 WL 723601 (N.D. Cal.

1994)........................................................................................................................118Athens Lodge No. 70 v. Wilson, 117 Cal. App. 2d 322 (1953).........................................7Audio Fidelity v. High Fidelity Recordings, 283 F.2d 551 (9th Cir. 1960).....................146Aurigemma v. Arco Petroleum Prods. Co., 734 F. Supp. 1025 (D. Conn.

1990).......................................................................................................................... 12Autohaus, Inc. v. Aguilar, 794 S.W.2d 459 (Tex. App. 1990).......................................119Automotive Prods. PLC v. Tilton Eng'g, Inc., 1993 U.S. Dist. LEXIS 20813,

33 U.S.P.Q. 2d 1065 (Sept. 16, 1993)..................................................................46, 80Avis Rent-a-Car Sys. v. Hertz Corp., 782 F.2d 381 (2d Cir. 1986).................................68B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 191 Cal. App. 3d 1341

(1987).........................................................................................................................11Badie v. Bank of America, 67 Cal. App. 4th 779 (1998).................................................11Ball v. GTE Mobilnet of California, 81 Cal. App. 4th 529 (2000)....................................53Ballard v. Equifax Check Serv., 158 F. Supp. 2d 1163 (E.D. Cal. 2001)......................109Bank of the West v. Superior Court, 2 Cal. 4th 1254 (1992)..............1, 22, 25, 70, 95, 99Barndt v. County of Los Angeles, 211 Cal. App. 3d 397 (1989).....................................77Barquis v. Merchants Collection Ass'n of Oakland, Inc., 7 Cal. 3d 94 (1972). .15, 75, 92,

103Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299 (1985).............................86

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Baugh v. CBS, Inc., 828 F. Supp. 745 (N.D. Cal. 1993).......................................100, 115Beasley v. Wells Fargo Bank, 235 Cal. App. 3d 1383 (1991)................................11, 120Bell Atlantic Bus. Sys. Servs., Inc. v. Hitachi Am. Ltd., 1995 U.S. Dist.

LEXIS 15531 (March 10, 1995)............................................................................11, 71Bell Atlantic Bus. Sys. Servs., Inc. v. Hitachi Data Sys. Corp., 1995 U.S.

Dist. LEXIS 15471 (N.D. Cal. 1995).........................................................................115Beltran v. Allstate Ins. Co., 2001 U.S. Dist. LEXIS 9614 (S.D. Cal. 2001)...................109Beneficial Corp. v. FTC, 542 F.2d 611 (3d Cir. 1976)................................62, 68, 89, 101Benton v. Allstate Ins. Co., 2001 U.S. Dist. LEXIS 9448 (C.D. Cal. Mar. 1,

2001)........................................................................................................................114Bergen Brunswig Corp. v. Safety Mut. Cas. Corp., 1993 U.S. App. LEXIS

2205 (9th Cir. 1993)....................................................................................................26Berman v. Health Net, 80 Cal. App. 4th 1359 (2000).....................................................39Bertram v. Terayon Communications Systems, Inc., 2001 U.S. Dist. LEXIS

6215 (C.D. Cal. 2001).........................................................................................57, 123Biljac Assoc. v. First Interstate Bank of Oregon, 218 Cal. App. 3d 1410

(1990).......................................................................................................................113Black v. Financial Freedom Senior Funding Corp., 92 Cal. App. 4th 917

(2001).........................................................................................................................55Blank v. Kirwin, 39 Cal. 3d 311 (1985)...................................................................64, 147Blatty v. New York Times Co., 42 Cal. 3d 1033 (1986)............................................60, 61Bloom v. Universal City Studios, Inc., 734 F. Supp. 1553 (C.D. Cal. 1990)...................58Blue Cross of California v. Superior Court, 67 Cal. App. 4th 42 (1998).........................38Board of Trustees of the State University of New York v. Fox, 492 U.S. 469

(1989).........................................................................................................................63Bondanza v. Peninsula Hosp. and Med. Ctr., 23 Cal. 3d 260 (1979)...............3, 7, 12, 13Bone v. Hibernia Bank, 493 F.2d 135 (9th Cir. 1974)....................................................31Boyle v. MTV Networks, Inc., 766 F. Supp. 809 (N.D. Cal. 1991)............52, 59, 124, 140Braco v. MCI Worldcom Communications, Inc., 138 F. Supp. 2d 1260

(C.D. Cal. 2001)..........................................................................................................59Braco v. Superior Court, 2002 Cal. App. LEXIS 3477 (Mar. 28, 2002)................126, 137Break-Away Tours, Inc. v. British Caledonian Airways, 704 F. Supp. 178

(S.D. Cal. 1988)....................................................................................................72, 93Breed v. Hughes Aircraft Co., 2002 U.S. App. Lexis 7084 (Fed. Cir. Apr. 5,

2002)........................................................................................................................142Bright v. Washington Mut. Bank, 2002 Cal. App. LEXIS 3250 (Mar. 25,

2002).......................................................................................................................... 53Bristol Hotels & Resorts v. Nat'l Council on Compensation Ins., Inc., 2002

Cal. App. LEXIS 2947 (Mar. 13, 2002).................................................33, 94, 107, 149Bronco Wine Co. v. Frank A. Logoluso Farms, 214 Cal. App. 3d 699 (1989)......21, 127,

130, 131

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Broughton v. Cigna Healthplans, 21 Cal. 4th 1066 (1999).............................................38Brown v. Allstate Ins. Co., 1998 U.S. Dist. LEXIS 11759 (S.D. Cal. July 31,

1998)....................................................................................................................19, 70Brown v. Market Dev., Inc., 41 Oh. Misc. 57, 322 N.E.2d 367 (1974)............................80Browning Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S.

257 (1989)..................................................................................................................51Bull Publ'g Co., v. Sandoz Nutrition Co., 1989 U.S. Dist. LEXIS 16622

(N.D. Cal. July 7, 1989)..............................................................................................58Bullet Golf, Inc. v. United States Golf Ass'n, 1995 U.S. Dist. LEXIS 6189

(C.D. Cal. Mar. 20, 1995).......................................................................................9, 66Bureerong v. UVWAS, 922 F. Supp. 1450 (C.D. Cal. 1996)..........................................99Burks v. Poppy Constr. Co., 57 Cal. 2d 463 (1962).........................................................7Burt v. Danforth, 742 F. Supp. 1043 (E.D. Mo. 1990)............................................72, 141Bush v. California Conservation Corps, 136 Cal. App. 3d 194 (1982)...........................76C & R Clothiers, Inc. v. Men's Warehouse, Inc., 1990 U.S. Dist. LEXIS

10424 (N.D. Cal. 1990)...............................................................................................71C. Pappas Co. v. E. & J. Gallo Winery, 610 F. Supp. 662 (E.D. Cal. 1985)...................76Cabot Corp. v. Baddour, 394 Mass. 720, 477 N.E.2d 399 (1985)................................135Cairns v. Franklin Mint Co., 107 F. Supp. 2d 1212 (C.D. Cal. 2000)............................145California ARCO Distrib., Inc. v. Atlantic Richfield Co., 158 Cal. App. 3d

349 (1984)..................................................................................................................54California Ass'n of Dispensing Opticians v. Pearle Vision Ctr., 143 Cal.

App. 3d 419 (1983).........................................................................................20, 45, 65California Bankers Ass'n v. Bank of America, 22 Cal. App. 4th 205 (1994).................149California Grocers Ass'n v. Bank of America, 22 Cal. App. 4th 205 (1994)11, 35, 96, 120California Med. Ass'n v. Healthcare of California, Inc., 94 Cal. App. 4th 151

(2001)...............................................................................................................111, 149California Med. Ass'n v. Regents of University of California, 79 Cal. App.

4th 542 (2000)..........................................................................................................118California Medical Association v. Aetna U.S. Healthcare of California, Inc.,

94 Cal. App. 4th 151, 169 (2001)..............................................................................137California Serv. Station and Automotive Repair Ass'n v. Union Oil Co. of

California, 232 Cal. App. 3d 44 (1991).................................................................12, 75California State Elec. Ass'n v. Zeos Int'l Ltd., 41 Cal. App. 4th 1270 (1996)................112California Travel Parks Ass'n v. California, 1994 U.S. Dist. LEXIS 7899

(N.D. Cal. 1994)........................................................................................................115California Wholesale Elec. Co. v. Micro Switch, Honeywell, Inc., 1983-1

Trade Cas. (CCH) ¶ 65,253........................................................................................44Californians for Population Stabilization v. Hewlett-Packard Co., 58 Cal.

App. 4th 273 (1997)............................................................................84, 106, 112, 151Caro v. Procter & Gamble Co., 18 Cal. App. 4th 644 (1993)............................29, 83, 127

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Castro v. Providian Nat'l Bank, 2000 U.S. Dist. LEXIS 19062 (N.D. Cal. Jan. 2, 2001).............................................................................................................123

Cellular Plus, Inc. v. Superior Court, 14 Cal. App. 4th 1224 (1993)...............................34Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co.,

20 Cal. 4th 163 (1999)..............................................................3, 4, 106, 110, 147, 149Central Hudson Gas & Electric Corp. v. Public Services Commission,

447 U.S. 557 (1980)...................................................................................................63Central Pathology Serv. Med. Clinic, Inc. v. Superior Court, 3 Cal. 4th 181

(1992).......................................................................................................................143Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042 (9th Cir. 2000) 12, 26, 34, 98,

99Chapman v. Farr, 132 Cal. App. 3d 1021 (1982)...........................................................36Chatton v. National Union Fire Ins. Co., 10 Cal. App. 4th 846 (1992)............................26Chavez v. Citizens for a Fair Farm Labor Law, 84 Cal. App. 3d 77 (1978)....................64Chavez v. Whirlpool Corp., 93 Cal. App. 4th 363 (2001)......................................107, 111Cher v. Forum Int'l, Ltd., 7 Media L. Rep. 2593 (C.D. Cal. 1982).................................110Chern v. Bank of America, 15 Cal. 3d 866 (1976)....6, 8, 11, 20, 24, 42, 70, 74, 85, 121,

143Christensen v. Superior Court (Los Angeles), 230 Cal. App. 3d 798 (1990)................137Chronicle Publ'g Co. v. Chronicle Publications, Inc., 733 F. Supp. 1371

(N.D. Cal. 1989)..........................................................................................................13Chrysler Corp. v. FTC, 561 F.2d 357 (D.C. Cir. 1977).................................................136Cisneros v. U.D. Registry, Inc., 39 Cal. App. 4th 548 (1995).........................................77City and County of San Francisco v. Sainez, 77 Cal. 4th 1302 (2000)..........................52City of Chino v. Superior Court, 255 Cal. App. 2d 747 (1967).....................................153City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410 (1993)................................61Cleary v. News Corp., 30 F.3d 1255 (1994)...................................................................13Clothesrigger, Inc. v. GTE Corp., 191 Cal. App. 3d 605 (1987).....................................48Coast & Southern Fed. S & L Ass'n v. Transcoast S & L Ass'n, 16 Cal. App.

3d 205 (1971)...........................................................................................................121Coast Plaza Doctors Hosp. v. Blue Cross of Calif., 83 Cal. App. 4th 677

(2000).........................................................................................................................39Cobarrubias v. Allstate Ins. Co., 1998 U.S. Dist. LEXIS 10955 (C.D. Cal.

July 10, 1998).......................................................................................................24, 82College of Psychological and Soc. Studies v. Board of Behavioral Science

Exam'rs, 41 Cal. App. 3d 367 (1974)................................................................113, 146Commins v. Johnson & Higgins, Inc., 1988 U.S. Dist. LEXIS 15574

(N.D. Cal. Sept. 29, 1988)........................................................................................132Committee on Children's Television, Inc. v. General Foods Corp., 35 Cal.

3d 197 (1983).........................................................................6, 8, 9, 15, 21, 67, 81, 97

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Committee to Defend Reprod. Rights v. A Free Pregnancy Ctr., 229 Cal. App. 3d 633 (1991)...........................................................................................127, 151

Commodore Home Sys. v. Superior Court, 32 Cal. 3d 211 (1982)................................90Community Assisting Recovery, Inc. v. Aegis Sec. Ins. Co., 92 Cal. App.

4th 886 (2001)..................................................................................................107, 111Community Memorial Hospital v. County of Ventura, 50 Cal. App. 4th 199

(1996)...............................................................................................................103, 118Cong. of Cal. Seniors v. Catholic Healthcare W., 87 Cal. App. 4th 491

(2001)...................................................................................................................31, 53Consumer Justice Center v. Olympian Labs, Inc., 99 Cal. App. 4th 1056,

1060-61 (2002)...........................................................................................................55Consumers Union of U.S., Inc. v. Alta-Dena Certified Dairy, 4 Cal. App. 4th

963 (1992)......................................................................................................66, 67, 91Consumers Union of U.S., Inc. v. Fisher Dev., Inc., 208 Cal. App. 3d 1433

(1989).................................................................................................................15, 138Contemporary Servs. Corp. v. Universal City Studios, Inc., 655 F. Supp.

885 (C.D. Cal. 1987).................................................................................................124Continental Baking Co. v. Katz, 68 Cal. 2d 512 (1968)..................................................91Cook, Perkiss & Liehe, Inc. v. Northern California Collection Service, Inc.,

911 F.2d 242 (9th Cir. 1990)....................................................................................118Coonley v. Rotan Mosle, Inc., 630 F. Supp. 404 (W.D. Tex. 1985)..........................38, 40Cooper v. American Sav. & Loan Ass'n, 55 Cal. App. 3d 274 (1976)............................28Copperstone v. TCSI Corp., No. 775199-1 (Alameda County S. Ct. Apr. 2,

1997)........................................................................................................................133Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984)..........................87Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163 (2000)................72, 77, 142County of Los Angeles v. Farmers Ins. Exch., 132 Cal. App. 3d 77 (1982)...................32Cozad v. Board of Chiropractic Exam'rs, 153 Cal. App. 2d 249 (1957).................61, 146Crawford v. Farmers Group, Inc., 160 Cal. App. 3d 1164 (1984).................................112Creager v. Russ Togs, Inc., 218 U.S.P.Q. (BNA) 582 (C.D. Cal. 1982).........................96Crusader Ins. Co. v. Scottsdale Ins. Co., 54 Cal. App. 4th 121 (1997)....................30, 33Cruz v. Pacific Care, 91 Ca. 4th 1179 (2001), 34 P. 3d 288 (2001)...............................38Cundiff v. Bell Atlantic Corp., 101 Cal. App. 4th 1395, 1411, 1413 (2002).....................33Czechowski v. Tandy Corp., 731 F. Supp 406 (N.D. Cal. 1990)..................................120Daddona v. Liberty Mobile Home Sales, Inc., 209 Conn. 243, 550 A.2d

1061 (1988)..................................................................................................................6Daniels v. Philip Morris Companies, 1998 U.S. Dist. LEXIS 13950

(S.D. Cal. Aug. 7, 1998)...........................................................................................125Davis v. American Bldg. Maintenance Co., 2001 U.S. Dist. LEXIS 9474

(N.D. Cal. 2001)..........................................................................................................57Davis v. Gulf Oil Corp., 572 F. Supp. 1393 (C.D. Cal. 1983).......................................109

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Day v. AT&T Corp., 63 Cal. App. 4th 325 (1998)...........................................83, 131, 146Dean Witter Reynolds, Inc. v. Superior Court (Alameda), 211 Cal. App. 3d

758 (1989)..................................................................16, 29, 35, 43, 70, 128, 130, 131Del Madera Properties v. Rhodes and Gardner, Inc., 820 F.2d 973 (9th Cir.

1987).......................................................................................................................... 57Demonet Indus. v. Transamerica Ins. Co., 6 Cal. App. 4th 31 (1991)..............................4Denbicare, Inc. v. Toys "R" Us, Inc., 1988 U.S. Dist. LEXIS 15948

(N.D. Cal. Jan. 13, 1988)..........................................................................................147Desert Healthcare Dist. v. PacifiCare, FHP, Inc., 94 Cal. App. 4th 781

(2001).........................................................................................................31, 107, 111Destination Ventures, Ltd. v FCC, 46 F.3d 54 (9th Cir. 1995)........................................63Determined Prod., Inc. v. Koster, 1992 U.S. Dist. LEXIS 20030 (N.D. Cal.

1992)....................................................................................................................58, 71Diamond-Chase Co. v. Stretch Devices, Inc., 16 U.S.P.Q. 2d 1568,

1990 U.S. Dist. LEXIS 19432 (C.D. Cal. 1990)........................................................150Diaz v. Kay-Dix Ranch, 9 Cal. App. 3d 588 (1970)....................................................2, 31Discover Bank v. Superior Court, 105 Cal. App. 4th 326 (2003)....................................38Dixon Mobile Homes, Inc. v. Walters, 48 Cal. App. 3d 964 (1975)..............................118Drennan v. Security Pac. Nat'l Bank, 28 Cal. 3d 764 (1981)....................................30, 35Drouet v. Super. Ct. of S.F. County, Cal. App. 4th 1237 (Cal. 2001).............................55Duncan v. Stuetzle, 1996 U.S. App. LEXIS 2584 (9th Cir. Feb. 21, 1996).....................70DuPont Merck Pharm. Co. v. Superior Court, 78 Cal. App. 4th 562 (2000)...................60E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280 (1992).....................................68E.W. French & Sons, Inc. v. General Portland, Inc., 889 F.2d 1392 (9th Cir.

1989).......................................................................................................................... 70EA Eng'g, Science, & Tech., Inc. v. Environmental Audit, Inc., 703 F. Supp.

853 (C.D. Cal. 1989).............................................................................................93, 94Eckert v. Bay Area Cellular Tel. Co., 85 Cal. App. 4th 1369 (2001)...............................53Edgar v. Mite Corp., 457 U.S. 624 (1982)......................................................................46Eichman v. Fotomat Corp., 880 F.2d 149 (9th Cir. 1989)....................................106, 142Elder v. Coronet Ins. Co., 201 Ill. App. 3d 733, 558 N.E.2d 1312 (Ill. App.

1990).......................................................................................................................... 12Fairchild v. Nat'l Home Ins. Co., 2001 U.S. App. LEXIS 19487 (9th Cir.

2001).......................................................................................................................... 40Fardella v. Downey Savings & Loan Ass'n, 2001 U.S. Dist. LEXIS 6037

(N.D. Cal. 2001)........................................................................................................123Farmers Ins. Exch. v. Superior Court of Los Angeles County, 2 Cal. 4th 377

(1992).................................................................................................................1, 2, 32FAS Techs., Ltd. v. Dainippon Screen Mfg., Co., 2001 U.S. Dist. LEXIS

7503 (N.D. Cal. 2001).........................................................................................70, 140FDIC v. Philadelphia Gear Corp., 476 U.S. 426 (1986).................................................31

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Feather River Trailer Sales, Inc. v. Sillas, 96 Cal. App. 3d 234 (1979)......................8, 89Federal Automotive Servs. v. Lane Buick Co., 204 Cal. App. 2d 689 (1962).................21Feldman v. Glaze, [1989 Transfer Binder] Fed. Sec. L. Rep. (CCH)

¶ 94,450,] 1989 U.S. Dist. LEXIS 8364 (N.D. Cal. Apr. 12, 1989)................72, 87, 135Fenning v. Glenfed, Inc., 40 Cal. App. 4th 1285 (1995)...........................................34, 55Ferrari S.p.A. Esercizio Fabbriche Automobili E. Corse v. McBurnie

Coachcraft, Inc., 1988 U.S. Dist. LEXIS 16314 (S.D. Cal. Sept. 6, 1988) 120, 130, 141Ferrari v. Read-Rite Corp., No. CV762735 (Santa Clara County S. Ct., May

20, 1997)..................................................................................................................133Firestone Tire & Rubber Co. v. FTC, 481 F.2d 246 (6th Cir.)...................................68, 74First Alliance Mortgage Co. v. First Alliance Mortgage Co., 2001 U.S. Dist.

LEXIS 19931 (C.D. Cal. 2001)....................................................................................30Fleet v. CBS, Inc., 1196 Cal. App. LEXIS 1119 (1996)..................................................54Fletcher v. Security Pac. Nat'l Bank, 23 Cal. 3d 442 (1979)............11, 16, 100, 121, 132Flower World of Am., Inc. v. Wenzel, 594 P.2d 1015, 122 Ariz. 319 (App.

1978).......................................................................................................................... 40Ford Motor Credit Co. v. Milhollin, 444 U.S. 555 (1980)................................................31Forrest LeBlanc v. Belt Ctr., Inc., 509 S.2d 134 (La. Ct. App. 1987)..............................12Frank Pisano &Assocs. v. Taggart, 29 Cal. App. 3d 1 (1972)........................................88Frazier v. City of Richmond, 184 Cal. App. 3d 1491 (1986).........................................153Freedom Newspaper, Inc. v. Orange County Employees Retirement Sys.

Bd. of Dirs., 6 Cal. 4th 821 (1993)............................................................................143Freeman v. Time, Inc., 68 F.3d 285 (9th Cir. 1995).................................................68, 95Frogface v. Network Solutions, Inc., 2002 U.S. Dist. LEXIS 2594 (N.D. Cal.

2002)................................................................................................................109, 114FTC v. Colgate-Palmolive Co., 38 U.S. 374 (1965).....................................................118FTC v. Sperry & Hutchinson Co., 405 U.S. 233 (1972)....................................................3Gallin v. Superior Court, 230 Cal. App. 3d 541 (1991).................................................150Garrett v. Coast & S. Fed. Sav. & Loan Ass'n, 9 Cal. 3d 731 (1973).............................11Gates v. Superior Court of Los Angeles County, 178 Cal. App. 3d 301

(1986)...............................................................................................................128, 153Geoffrey, Inc. v. Douglas S. Stratton, 16 U.S.P.Q. 2d 1691, 1990 U.S. Dist.

LEXIS 19504 (C.D. Cal. 1990)...................................................................................78Geophysical Sys. Corp. v. Raytheon Co., Inc., 1993 U.S. App. LEXIS 3559

(9th Cir. 1993).............................................................................................................93Gibson v. Chrysler Corp., 1998 U.S. Dist. LEXIS 11343 (N.D. Cal. July 20,

1998)........................................................................................................................125Gibson v. World Savings and Loan Association, 103 Cal. App. 4th 1291,

1306-07 (2002)...........................................................................................................55Gladstone v. Hillel, 203 Cal. App. 3d 977 (1988)...........................................................56Glue-Fold v. Slautterback, 82 Cal. App. 4th 1018 (2000).............................................142

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Goldberg v. Storm Tech., Inc., No. CV764797 (Santa Clara County Super. Ct., Aug. 25, 1997)...................................................................................................133

Gour v. Daray Motor Co., 373 S.2d 571 (La. Ct. App. 1979).......................................116Governing Bd. v. Mann, 18 Cal. 3d 819 (1977)..............................................................36Gray v. Conseco Fin. Inc., 2000 U.S. Dist. LEXIS 14821 (C.D. Cal. 2000)....................40Gray v. Safeway (Alameda County S. Ct. No. H-171057-9 (1994)).....................129, 155Greenleaf Eng'g & Constr. v. Teradyne, 15 Mass. App. 571 (1983)..............................40Greenlining Institute v. Public Utilities Commission, 103 Cal. App. 4th 1324,

1330-1331 (2002).......................................................................................................33Grolier, Inc. v. FTC, 699 F. 2d 983 (1983).....................................................................61Groom v. Health Net, 82 Cal. App. 4th 1189 (2000)......................................................39Hale v. Morgan, 22 Cal 3d 388 (1978)...........................................................................51Hamelin v. Allstate Ins. Co., 2002 U.S. Dist. LEXIS 5093 (C.D. Cal. 2002).................139Hangarter v. Paul Revere Life Ins. Co., 2001 U.S. Dist. LEXIS 17975 (N.D.

Cal. 2001)...................................................................................................................98Hansberry v. Lee, 311 U.S. 32 (5th Cir. 1940).............................................................154Harris v. Capital Growth Investors XIV, 52 Cal. 3d 1142 (1991)..................................149Harris v. Chase Manhattan Bank, 34 Cal. App. 4th 1563 (1994)...................................56Harris v. Duty Free Shoppers Ltd., 1988 U.S. Dist. LEXIS 11406 (N.D. Cal.

Feb. 24, 1998)............................................................................................................82Harris v. Time, Inc., 191 Cal. App. 3d 449 (1987)..........................................................73Hartley v. Stamford Towers Ltd. Partnership, 1994 U.S. App. LEXIS 23543

(9th Cir. Aug. 26, 1994)............................................................................120, 129, 139Haskell v. Time, Inc., 857 F. Supp. 1392 (E.D. Cal. 1994).....................................68, 119Heastie v. Community Bank of Greater Peoria, 727 F. Supp. 1133 (N.D. Ill.

1989)............................................................................................................................ 5Heerema Marine Contractors v. Santa Fe Int'l Corp., 582 F. Supp 445

(C.D. Cal. 1984)........................................................................................................105Hendricks v. Dynergy Power Mktg., Inc., 160 F. Supp. 2d 1155 (S.D. Cal.

2001).......................................................................................................................... 59Hernandez v. Atlantic Fin. Co. of Los Angeles, 105 Cal. App. 3d 65 (1980)............4, 138Hernandez v. Stabach, 145 Cal. App. 3d 309 (1983).....................................................20Hewlett v. Squaw Valley Ski Corp., 54 Cal. App. 4th 499 (1997).........34, 35, 49, 78, 151Hill Physicians Med. Group, Inc. v. Pacificare of California, 2001 U.S. Dist.

LEXIS 6051 (N.D. Cal. 2001).....................................................................................59Hitz v. First Interstate Bank, 38 Cal. App. 4th 274 (1995)............................................131Hobby Indus. Ass'n of Am., Inc. v. Younger, 101 Cal. App. 3d 358 (1980)....42, 78, 113,

148Hobby Industrial Association of America, Inc. v. Younger, 101 Cal. App. 3d

358 (1980)................................................................................................................110

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Holcomb v. Bingham Toyota, Inc., 1987 U.S. Dist. LEXIS 15151 (E.D. Cal. 1987).......................................................................................................................... 58

Home Sav. & Loan Ass'n v. Superior Court of Los Angeles, 42 Cal. App. 3d 1006 (1975)........................................................................................................47, 128

Home Sav. & Loan Ass'n v. Superior Court of Los Angeles, 54 Cal. App. 3d 208 (1976)..................................................................................................................47

Home Sav. of Am., F.A., v. U.S. Home Sav. & Loan Assoc., No. 84-0560 K(m), slip op. (S.D. Cal. 1984)..................................................................................109

Howard Gunty Profit Sharing v. Quantum Corp., No. CV760370 (Santa Clara County S. Ct. Feb. 28, 1997)..........................................................................133

Hudgins v. Neiman Marcus Group, Inc., 34 Cal. App. 4th 1109 (1995)...................13, 35Hunting World, Inc. v. Reboans, Inc., 33 U.S.P.Q. 2d 1780, 1994 U.S. Dist.

LEXIS 19961 (N.D. Cal. 1994)..............................................................................88, 89Ibanez v. Florida Department of Business & Professional Regulation, 114

S. Ct. 2084 (1994)......................................................................................................63In re Cantanella Sec. Litig., 583 F. Supp. 1388 (E.D. Pa. 1984)..................................135In re Ingle Co., 1997 U.S. App. LEXIS 423, 1997-1 Trade TAX. (CCH)

¶ 71,782 (9th Cir. Jan. 7, 1997)..................................................................................41In Re Papst Licensing, 2000 U.S. Dist. LEXIS 18316 (E.D. La. 2000).........................141In re R.N.J., 455 U.S. 191 (1982)...................................................................................64In re Taite, 76 BR 764 (C.D. Cal 1987)....................................................................18, 75In re Terazonsin Hydrochloride Antitrust Litigation, 160 F. Supp. 2d 1365

(S. D. Fla. 2001).......................................................................................................139In re Thortec Sec. Litig., 1989 U.S. Dist. LEXIS 6003 (N.D. Cal. Jan. 26,

1989)........................................................................................................................132Independent Cellular Tel., Inc. v. Daniels & Assoc., 863 F. Supp. 1109

(N.D. Cal. 1994)........................................................................................................115Independent Hous. Servs. of San Francisco, et al. v. Fillmore Assoc.,

1991 U.S. Dist. LEXIS 14960 (N.D. Cal. 1991)........................................................105Industrial Indem. Co. v. Superior Court, 209 Cal. App. 3d 1093 (1989)...........70, 98, 138Informix Software, Inc. v. Oracle Corp., 1996 U.S. Dist. LEXIS 8430

(N.D. Cal. May 30, 1996)..........................................................................................106Interactive Network, Inc. v. NTN Communications, Inc., 875 F. Supp. 1398

(N.D. Cal. 1995)..........................................................................................................59Intermedics, Inc. v. Ventritex, Inc., 822 F. Supp (N.D. Cal. 1993)................................143International Evangelical Church of the Soldiers of the Cross of Christ v.

Church of the Soldiers of the Cross of Christ of the State of California, 54 F.3d 587 (9th Cir. 1995)...............................................................................102, 129

International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1952).............................................................................................................94

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Intex Plastics Sales Co. v. United Nat'l Ins. Co., 18 U.S.P.Q. 2d 1567 (C.D. Cal. Dec. 7, 1990).............................................................................................27

Int'l Ass'n of Cleaning and Dye House Workers v. Landowitz, 20 Cal. 2d 418 (1942)..................................................................................................................36

Irwin v. Mascott, 2001 U.S. Dist. LEXIS 3285 (N.D. Cal. 2001).....................................44Isuzu Motors, Ltd. v. Consumers Union of U.S., Inc., 12 F. Supp. 2d 1035

(C.D. Cal. 1998)..........................................................................................................62J & K Cement Constr., Inc. v. Montalbano Builders, 119 Ill. App. 3d 524

(1983).........................................................................................................................40Jackson v. Roe, 273 F.3d 1192 (9th Cir. 2001)............................................................109Janis v. California State Lottery Commission, 68 Cal. App. 4th 824 (1998).110, 112, 118Joe Conte Toyota, Inc. v. Louisiana Motor Vehicle Commission, 24 F.3d

754 (5th Cir. 1994)......................................................................................................63John Paul Mitchell Sys. v. Eslami, Nos. 95-55820, 95-55856, 1997 U.S.

App. LEXIS 5974 (9th Cir. 1997)......................................................................101, 139Joyner v. Triple Check Fin. Serv., 782 F. Supp. 364 (W.D. Tenn. 1991).....................134Kagan v. Carwell Corp., 2001 U.S. Dist. LEXIS 4544 (C.D. Cal. 2001).......................123Kagan v. Gibralter Sav. & Loan Ass'n, 35 Cal. 3d 582 (1984).....................................152Kainos Lab., Inc. v Beacon Diagnostics, Inc., No. C-97-4618 MHP

(N.D. Cal. Sep. 14, 1998).........................................................................................134Kalwaytys v. FTC, 237 F.2d 654 (7th Cir. 1956)..........................................................146Kamm v. California City Dev. Co., 509 F.2d 205 (9th Cir. 1975)..................................154Kapsimallis v. Allstate Insurance Co., 104 Cal. App. 4th 667, 671 (2002).....................86Karl Storz Endoscopy America, Inc., v. Surgical Techs., Inc., 285 F.3d 848

(9th Cir. 2001).....................................................................................................93, 102Karlin v. Zalta, 154 Cal. App. 3d 953 (1984)..................................................................32Kasky v. Nike, Inc., 2002 Cal. LEXIS 2591 (2002)...................................................60, 64Kates v. Crocker Nat'l Bank, 776 F.2d 1392 (9th Cir. 1985)..........................................70Keating v. Superior Court of Alameda County, 31 Cal. 3d 584 (1982)...........................41Keimer v. Buena Vista Books, Inc., 75 Cal. App. 4th 1220 (1999).................................61Kelly Blue Book v. Car-Smarts, Inc., 802 F. Supp. 27 (C.D. Cal. 1992)...................14, 21Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 2002 U.S. Dist.

LEXIS 6439 (C.D. Cal. 2002)............................................................................122, 125Kentmaster Mfg. Co. v. Jarvis Prods. Corp., 146 F.3d 691 (9th Cir. 1998)..................113Kentucky Cent. Life Ins. Co. v. Leduc, 814 F. Supp. 832 (N.D. Cal. 1992)....................99Khan v. Medical Bd. of California, 12 Cal. App. 4th 1834 (1993)...................................89Khoury v. Maly's of California, Inc., 14 Cal. App. 4th 612 (1993)...................................81Kimmel v. DowElanco, 2001 U.S. App. LEXIS 15440 (9th Cir. 2001)............................57Kingvision Pay-Per-View, Ltd. v. Chavez, 2000 U.S. Dis. LEXIS 18078

(N.D. Cal. 2000)..........................................................................................................70Klein v. Earth Elements, Inc., 59 Cal. App. 4th 965 (1997)..........................................104

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Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979 (9th Cir. 2001)...........................5Kodadek v. MTV Networks, Inc., 1998 U.S. App. LEXIS 21175 (9th Cir.

Aug. 31, 1998)............................................................................................................57Korea Supply Co. v. Lockheed Martin Corp., 90 Cal App. 4th 902 (2001).........55, 73, 98Korens v. R. W. Zukin Corp., 212 Cal. App. 3d 1054 (1989)................................113, 149Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000). . .16, 21, 48, 69, 72,

73, .....................................................................................85, 90, 102, 126, 130, 131, 145

Kugler v. Haitian Tours, Inc., 120 N.J. Super. 260, 293 A.2d 706 (1972)......................80La Mar v. H. & B. Novelty & Loan Co., 489 F.2d 461 (9th Cir. 1973).....................29, 153La Sala v. American Sav. & Loan Ass'n, 5 Cal. 3d 864 (1971)....................................152Lagatree v. Luce, Forward, Hamilton & Scripps, 74 Cal. App. 4th 1105

(1999).......................................................................................................................111Larez v. Oberti, 23 Cal. App. 3d 217 (1972).................................................................101Laughlin v. Evanston Hosp., 133 Ill. 2d 374, 550 N.E.2d 986 (1990)...............................6Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496 (2003).........................................7Lazar v. Trans Union LLC, 195 F.R.D. 665 (C.D. Cal. 2000).................................43, 131Lee v. Gates, 141 Cal. App. 3d 989 (1983)..................................................................100Lee v. Interinsurance Exch. of the Auto. Club of S. California, 50 Cal. App.

4th 694 (1996)..........................................................................................................145Lee v. Interinsurance Exchange, 50 Cal. App. 4th 694 (1996).......................................41Lentz v. Woolley, 1989 U.S. Dist. LEXIS 12651 (C.D. Cal. June 14, 1989)...................22Levine v. Diamonthuset, Inc., 722 F. Supp. 579 (N.D. Cal. 1989)..................82, 134, 143LeVine v. Weis, 90 Cal. App. 4th 201 (Cal. Ct. App., 2d Dist., 6th Div. 2001)..............118Lewis v. Hankins, 214 Cal. App. 3d 195 (1989).....................................................21, 128Lickhalter v. System Dev. Corp., [1984 Transfer Binder] Fed. Sec. L. Rep.

(CCH) ¶ 91,459 (C.D. Cal. 1984)..............................................................................135Lindemuth Co. v. Shannon Fin. Corp., 637 F. Supp. 991 (N.D. Cal. 1986)..................133Lindner v. Durham Hosiery Mills, Inc., 761 F.2d 162 (4th Cir. 1985)............................134Little Oil Co. v. Atlantic Richfield Co., 852 F.2d 441 (9th Cir. 1988)...............................70Littledove v. JBC & Assocs. Inc., 2000 U.S. Dist. LEXIS 18490 (E.D. Cal.

2000).......................................................................................................................... 45Lockheed Info. Mgmt. Serv. Co. v. City of Inglewood, 17 Cal. 4th 170

(1998).......................................................................................................................112Locomotor USA, Inc. v. Korus Co., Inc., 1993 U.S. Dist. LEXIS 19609

(1993).........................................................................................................................14Loe v. State Farm Ins. Co., 1997 U.S. App LEXIS 25308, 124 F.3d 212 (9th

Cir 1997)...................................................................................................................114Loe v. State Farm Ins. Co., 2000 U.S. App. LEXIS 25633 (9th Cir. 2000).....................87Lopez v. Washington Mut. Bank, Inc., 284 F.3d 990 (9th Cir. 2002)..............................58

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Lopez v. World Savings & Loan Association, 2003 Cal. App. LEXIS 96 (January 23, 2003).....................................................................................................52

Los Angeles Cellular Tel. Co. v. Superior Court of Los Angeles County, 65 Cal. App. 4th 1013 (1998).....................................................................................69

Loska v. Superior Court, 188 Cal. App. 3d 569 (1986)..................................................63Lusardi Construction Co. v. California Occupational Safety and Health

Appeals Board, 1 Cal. App. 4th 639 (1991)................................................................34MAI Sys. Corp. v. QUIPS, 856 F. Supp. 538 (N.D. Cal. 1994).......................................71Maler v. Superior Court, 220 Cal. App. 3d 1592 (1990).................................................98Mallon v. City of Long Beach, 164 Cal. App. 2d 178 (1958)..................................76, 100Mangini v. Aerojet-General Corp., 230 Cal. App. 3d 1125 (1991)..................................76Mangini v. R.J. Reynolds Tobacco Co., 7 Cal. 4th 1057 (1992)....................................54Mangini v. R.J. Reynolds Tobacco Co., 793 F. Supp. 925 (N.D. Cal. 1992)................124Manibog v. MediaOne of Los Angeles, Inc., 81 Cal. App. 4th 1366 (Cal. Ct.

App., 2d Dist., 3d Div. 2000).....................................................................................112Manufacturers Life Ins. Co. v. Superior Court, 10 Cal. 4th 257 (1995)................1, 16, 98Manufacturers Life Ins. Co. v. Taylor, 481 U.S. 58 (1987).............................................56Marcus v. AT&T, 138 F. 3d 46 (2d Cir 1998).................................................................83Mass. Mut. Life Ins. Co. v. Superior Court, 2002 Cal. App. LEXIS 4029

(Cal. Ct. App., 4th Dist., 1st Div. April 29, 2002)...........................................42, 74, 100Mathews v. Government Employees Insurance Co., 23 F.2d 1160 (S.D.

Cal. 1998)...................................................................................................................76McCall v. PacifiCare of California, Inc., 25 Cal. 4th 412 (2001).....................................54McCarthy v. Recordex Serv., Inc., 80 F.3d 842 (3d Cir. 1996).....................................139McDonald's Corp. v. Arche Technologies, Inc., 17 U.S.P.Q. 2d 1557,

1990 U.S. Dist. LEXIS 18545 (N.D. Cal. 1990)........................................................115McFetters v. Amplicon, Inc., 82 Cal. App. 4th 200 (2000)..............................................49McLaughlin v. National Union Fire Ins. Co., 23 Cal. App. 4th 1132 (1994)....................26Medical Copier Cases II and III (San Francisco Superior Court Nos. JCC

3045 and JCC 3020)..................................................................................................13MediMatch, Inc., v. Lucent Techs, Inc., 120 F. Supp. 2d 842 (N.D. Cal.

2000)........................................................................................................................142Mercer v. Jaffe, Snider, Raitt & Heuer, P.C., 713 F. Supp. 1019 (W.D.

Mich. (1989))............................................................................................................134Mergia v. Municipal Court, 15 Cal. 3d 286 (1975)..........................................................67Merrell Dow Pharm., Inc. v. Thomson, 474 U.S. 804 (1986)........................................122Meta-Film Assocs., Inc. v. MCA, Inc., 586 F. Supp. 1346 (C.D. Cal. 1984).....................5Metro Publ'g, Ltd. v. San Jose Mercury News, 861 F. Supp. 870 (N.D. Cal.

1994)........................................................................................................................115Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987)..............................................122Meyers v. Unizest Home Loan, Inc., (N.D. Cal. 1993 W. L. 307747).............................40

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Mid-Peninsula Citizens For Fair Hous. v. Westwood Investors, 221 Cal. App. 3d 1377 (1990).............................................................................16, 76, 136, 138

Miron v. Herbalife International, Inc., 2001 U.S. App. LEXIS 10923 (9th Cir. 2001).......................................................................................................................... 82

Monroe Bounds v. Figurettes, Inc., 135 Cal. App. 3d 1 (1982)......................................14Moore v. California State Bd. of Accountancy, 2 Cal. 4th 999 (1992)......................67, 74Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992)...................................56, 117Morehart v. County of Santa Barbara, 7 Cal. 4th 725 (1994).......................................143Morris v. Gilbert, 649 F. Supp. 1491 (E.D.N.Y. 1986)..................................................135Morrison v. Viacom, Inc., 1998 Cal. App. LEXIS 756 (Sept. 1, 1998)..........................112Mortera v. N. Am. Mortgage Co., 172 F. Supp. 2d 1240 (N.D. Cal. 2001)...................139Moser v. FTC, 46 F.3d 970 (9th Cir. 1995)....................................................................63Mother & Unborn Baby Care, Inc. v. State, 749 S.W.2d 533 (Tex. App.

1988), cert. denied, 490 U.S. 1090 (1989)...................................................................8Motors, Inc. v. Times Mirror Co., 102 Cal. App. 3d 735 (1980). .3, 5, 42, 89, 97, 110, 144Motown Record Corp. v. George A. Hormel & Co., 657 F. Supp. 1236

(C.D. Cal. 1987)..........................................................................................................58Moy v. Schreiber Deed Sec. Co., 572 A.2d 758 (Pa. Super. 1990)...............................34Mullins Coal Co. v. Director, Office of Workers' Compensation Programs,

United States Dep't of Labor, 484 U.S. 135 (1987)....................................................31Murphy v. McNamara, 36 Conn. Supp. 183, 416 A.2d 170 (1979)..............................116Myers v. Merrill Lynch & Co., 249 F.3d 1087 (9th Cir. 2001).......................................125Myers v. Merrill Lynch, 249 F. 3d 1087 (9th Cir. 2001)..................................................57N.J. Gendron Lumber Co. v. Great N. Homes, Inc., 8 Mass. App. 411, 395

N.E.2d 457 (1979)........................................................................................................6Naftzger v. American Numismatic Soc'y, 42 Cal. App. 4th 421 (1996)..........................14National Commission on Egg Nutrition v. FTC, 570 F.2d 157 (7th Cir. 1977)................63National Committee of the Reform Party of the United States v. Democratic

National Committee, 168 F. 3d 360 (9th Cir 1999).....................................................65National Union, United Mine Workers of America v. Bagwell, 512 U.S. 821,

114 S. Ct. 2552 (1994)...............................................................................................52National Van Lines, Inc. v. Dean, 237 F.3d 688 (9th Cir. 1956).........21, 70, 73, 136, 145Nationwide Mut. Ins. Co. v Dynasty Solar, Inc., 753 F. Supp. 853 (N.D Cal.

1990)....................................................................................................................27, 93Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459 (1992)........................................79Nelsen v. Bd. of Health of the State of California, 70 Cal. App. 2d 202

(1945).........................................................................................................................82New Kids on the Block v. New Am. Publ'g, Inc., 745 F. Supp. 1540

(C.D. Cal. 1990)..........................................................................................................62Newport Components v. NEC Home Elec., 671 F. Supp 1525 (C.D. Cal.

1987).......................................................................................................................... 72

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Nichols v. Merrill Lynch, Pierce, Fenner & Smith, 706 F. Supp. 1309 (M.D. Tenn. 1989)..............................................................................................................135

Nicholson v. Marine Corp. W. Fed. Credit Union, 953 F. Supp. 1012 (N.D. ILL. 1997).................................................................................................................102

Nikkal Industries, Ltd. v. Salton, Inc., 735 F. Supp. 1127 (S.D.N.Y. 1990)..................119Norwest Mortgage v. Superior Court of San Diego, 72 Cal. App. 4th 214

(1999)...................................................................................................................42, 80Notrica v. State Comp. Ins. Fund, 70 Cal. App. 4th 911 (1999)...............49, 84, 103, 108Nutley v. Varian Assoc., Inc., 625 F. Supp. 104 (N.D. Cal. 1985)..................................58O'Connor v. Boeing N. Am., Inc., 197 F.R.D. 404 (C.D. Cal. 2000)...............................43O'Connor v. Superior Court, 177 Cal. App. 3d 1013 (1986)...........................................64Ohio Cas. Ins. Co. v. Hubbard, 162 Cal. App. 3d 939 (1984)........................................26Okura & Co., Inc. v. Careau Group, 783 F. Supp. 482 (C.D. Cal. 1991)..........................5Olszewski v. Scrippshealth, 88 Cal. App. 4th 1268, 111 Cal. Rptr. 2d 687

(2001)...................................................................................................................53, 88Orange Micro, Inc. v. Pacific Blue Micro, 223 U.S.P.Q. (BNA) 4 (C.D. Cal.

1983)........................................................................................................................110Orden v. Cranshaw Mortgage & Inv. Co., 109 Cal. App. 3d 141 (1980)........................36Orion Pictures Distrib. Corp. v. Snufy Enter., 829 F.2d 946 (9th Cir. 1987)...................97Orkin Exterminating Co. v. FTC, 849 F.2d 1354 (11th Cir. 1988)............................5, 136Oxycal Laboratories, Inc. v. Jeffers, 909 F. Supp. 719 (S.D. Cal. 1995)........................62Pachmayer Gun Works, Inc. v. Olin Mathieson Chem. Corp., 502 F.2d 802

(9th Cir. 1974).....................................................................................................25, 152Palmer v. Agee, 87 Cal. App. 3d 377 (1978)..................................................................90Pantazis v. Fior d'Italia, Inc., 1994 U.S. Dist. LEXIS 13622 (N.D. Cal. 1994)................58Patenaude v. The Equitable Life Assurance Society of the United States,

2002 U.S.App. LEXIS 9124 (9th Cir. 2002)..............................................................122Patterson v. ITT Consumer Fin. Corp., 14 Cal. App. 4th 1659 (1993).....................39, 98Payne v. Nat'l Collection Sys., Inc., 90 Cal. App. 4th 130 (2001).................................127Payne v. United California Bank, 23 Cal. App. 3d 850 (1972)..........5, 6, 15, 29, 103, 144Payne, et. al. v. Aztar Corp., et al., San Diego Superior Court No. 698592...................45Peel v. Attorney Registration and Disciplinary Commission of Illinois, 496

U.S. 91 (1990)............................................................................................................61Pena v. McArthur, 889 F. Supp. 403 (E.D. Cal. 1994).................................................105People ex rel. Dep't of Transp. v. Naegele Outdoor Adver. Co. of California,

Inc., 38 Cal. 3d 509 (1985).........................................................................................30People v. Beltz Travel Serv., Inc., 379 F. Supp. 948 (N.D. Cal. 1974).................124, 141People v. Bestline Prods., Inc., 61 Cal. App. 3d 879 (1976)..................................14, 115People v. Cappuccio, Inc., 204 Cal. App. 3d 750 (1988)..........................6, 42, 89, 92, 93People v. Casa Blanca Convalescent Homes, Inc., 159 Cal. App. 3d 509

(1984)...........................................................................................3, 4, 12, 42, 104, 121

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People v. Cimarusti, 81 Cal. App. 3d 314 (1978)...........................................................19People v. Columbia Research Corp., 71 Cal. App. 3d 607 (1977).....................19, 20, 50People v. Custom Craft Carpets, Inc., 159 Cal. App. 3d 676 (1984)........................18, 82People v. Damon, 51 Cal. App. 4th 958 (1996)..............................................................46People v. Dollar Rent-A-Car Sys., Inc., 211 Cal. App. 3d 119 (1989)....6, 9, 83, 88, 104,

150People v. Duz-More Diagnostic Laboratory, Inc., 68 Cal. App. 4th 654

(1998).................................................................................................................35, 112People v. E.W.A.P., Inc., 106 Cal. App. 3d 315 (1980)..............................64, 86, 92, 103People v. First Federal Credit Corp., 104 Cal. App. 4th 721, 734 (2002)...84, 87, 88, 119People v. Forest E. Olson, Inc., 137 Cal. App. 3d 137 (1982)...................................8, 47People v. Fremont Gen. Corp., 89 Cal. App. 4th 1260 (2001).....................................152People v. General Motors Corp., 431 F.2d 732 (9th Cir. 1970)....................................122People v. Green Acres Trust, 127 Ariz. 160, 618 P.2d 1086 (Ariz. App.

1980)........................................................................................................................116People v. H&H Properties, 154 Cal. App. 3d 894 (1984)...............................................49People v. Hacker Emporium, Inc., 15 Cal. App. 3d 474 (1971)....................................103People v. Health Lab. of N. Am., Inc., 87 Cal. App. 4th 442 (2001)...............................65People v. Henderson, 255 Cal. App. 3d 1129 (1990)...................................................153People v. Highland, 14 Cal. App. 4th 1692 (1993).........................................................54People v. Hill, 66 Cal. App. 3d 320 (1977)...............................................................19, 20People v. Hy-Lond Enters., Inc., 93 Cal. App. 3d 734 (1979)......................................153People v. James, 122 Cal. App. 3rd 25 (1981)..........................................3, 97, 138, 147People v. K. Sakai Co., 56 Cal. App. 3d 531 (1976)......................................................92People v. Keating, MDL 90-834 as RMB, (9th Cir. 1992)...............................76, 122, 132People v. Kelley, 70 Cal. App. 3d 418 (1977)................................................................50People v. Levi Strauss, 41 Cal. 3d 460 (1986)...............................................................69People v. Los Angeles Palm, Inc., 121 Cal. App. 3d 25 (1981)................................13, 97People v. Lynam, 253 Cal. App. 2d 963 (1967).............................................13, 144, 146People v. McKale, 25 Cal. 3d 626 (1979)...................................................12, 15, 75, 137People v. Mobile Magic Sales, Inc., 96 Cal. App. 3d 1 (1979).................................21, 67People v. Morse, 21 Cal. App. 4th 259 (1993).................................17, 20, 49, 52, 61, 65People v. National Research Co. of California, 201 Cal. App. 2d 765 (1962)..........50, 80People v. Nat'l Ass'n of Realtors, 120 Cal. App. 3d 459 (1981).......................11, 76, 100People v. Nat'l Ass'n of Realtors, 155 Cal. App. 3d 578 (1984).......................17, 51, 121People v. Pac. Bell, 89 Cal. App. 4th 844, 112 Cal. Rptr. 2d 259 (2001).......................53People v. Pacific Land Research Co., 20 Cal. 3d 10 (1977)................................126, 154People v. Parkmerced Co., 198 Cal. App. 3d 683 (1988)........................................18, 69People v. Rath Packing Co., 85 Cal. App. 3d 308 (1978)......................................54, 128People v. Regan, 95 Cal. App. 3d Supp. 1 (1979).......................................................150

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People v. Sacramento Valley Ambulance Ass'n, 1994 WL 160104 (Cal. Superior Court Jan. 7, 1994)......................................................................................19

People v. Sangani, 22 Cal. App. 4th 1120 (1994)..........................................................50People v. Sangiacomo, 128 Cal. App. 3d 942, 180 Cal. Rptr. 595 (1982)...............50, 61People v. Sanyo Electric, Inc., 1982 WL 11211 (Cal. Superior Aug. 30,

1982).......................................................................................................................... 19People v. Schmitt, 155 Cal. App. 2d 87 (1957)..............................................................10People v. Servantes, 86 Cal. App. 4th 1081 (2001).......................................55, 112, 148People v. Steelcase, Inc., 1992 WL 286586 (Cal. Superior Feb. 2, 1993).....................19People v. Steelcase, Inc., 792 F. Supp. 84 (C.D. Cal. 1992).......................................124People v. Superior Court (Caswell), 46 Cal. 3d 381 (1988).....................................49, 50People v. Superior Court (Good), 17 Cal. 3d 732 (1976).............................................154People v. Superior Court (Jayhill), 9 Cal. 3d 283 (1973)......................8, 17, 81, 119, 132People v. Superior Court (Olson), 96 Cal. App. 3d 181 (1979)..........................18, 20, 64People v. Superior Court (Solano), 35 Cal. App. 3d 710 (1973)............................17, 119People v. Thomas Shelton Powers, M.D., Inc., 2 Cal. App. 4th 330 (1992).....48, 49, 69,

132People v. Toomey, 157 Cal. App. 3d 1 (1984)...................................17, 76, 88, 136, 150People v. Wahl, 39 Cal. App. 2d Supp. 771 (1940)................................................89, 146People v. Warnes, 10 Cal. App. 4th Supp. 35 (1992)....................................................51People v. Western Airlines, Inc., 155 Cal. App. 3d 597 (1984)................................45, 56People v. Witzerman, 29 Cal. App. 3d 169 (1972)...................................................50, 88Perdue v. Crocker Nat'l Bank, 38 Cal. 3d 913 (1985)..............................................11, 55Perera v. Chiron Corp., 1996 WL 251936 (N.D. Cal., May 8, 1996)............................134Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134 (1968)..................87Perovich v. Humphrey, 1997 U.S. Dist. LEXIS 16949 (1997 N.D. Ill)...........................150Pesce v. Department of Alcoholic Beverage Control, 51 Cal. 2d 310 (1958)...............143Peterson v. Wells Fargo Bank, Nat'l Ass'n, 556 F. Supp. 1100 (N.D. Cal.

1981)........................................................................................................................115Pharmacare v. Caremark, 965 F. Supp. 1411 (D. Haw 1996)..........................22, 45, 140Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)...........................................48, 154Phillips v. Crocker-Citizen Nat'l Bank, 38 Cal. App. 3d 901 (1974)................................29Phipps v. Saddleback Valley Sch. Dist., 204 Cal. App. 3d 1110 (1988).......................136Pines v. Tomson, 160 Cal. App. 3d 370 (1984).................................................7, 14, 138Plasticolor Molded Prods. v. Ford Motor Co., 713 F. Supp. 1329 (C.D. Cal.

1989).......................................................................................................................... 13Plotkin v. Tanner's Vacuums, 53 Cal. App. 3d 454 (1975).............................................92Podolsky v. First Healthcare Corporation, 50 Cal. App. 4th 632 (1996).....2, 3, 6, 20, 104Posadas de Puerto Rico Assoc. v. Tourism Co., 478 U.S. 328 (1986)..........................62Prata v. Superior Court, 91 Cal. App. 4th 1128 (2001)............................................29, 74

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Prego Ltd. 1981 v. Getty Oil Co., 1991 U.S. Dist. LEXIS 17671 (E.D. Cal. 1991).......................................................................................................................... 71

Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993).............................................................................................65

Project Management Sys., Inc. v. WST Corp., 1991 U.S. Dist. LEXIS 11652 (N.D. Cal 1991)...........................................................................................71, 104, 105

Provience v. Valley Clerks Trust Fund, 509 F. Supp. 388 (E.D. Cal. 1981)..................58Prudential Home Mortgage Co. v. Superior Court, 66 Cal. App. 4th 1236

(1998).........................................................................................................................31Prudential-Bache Sec., Inc. v. Union Bank, 1991 U.S. Dist. LEXIS 6643

(N.D. Cal 1991)...........................................................................................................71Pynchon v. Bursell, No. CIVIL S-82-615 LKK, slip. op. (E.D. Cal. 1984).....................133Quelimane Co. v. Stuart Title Guaranty Co., 19 Cal. 4th 26, 55 (1998)...........................7Quielimane Co. v. Stewart Title Guaranty Co., 19 Cal. 4th 26 (1998)............................32Raines v. Switch Mfg., 1997 U.S. Dist. LEXIS 13621 (N.D. Cal. 1997)........................114Rath Packing Co. v. M.H. Becker, 530 F.2d 1295 (9th Cir. 1975)..................................57Rawson v. Tosco Ref. Co., 1996 U.S. Dist. LEXIS 1006 (N.D. Cal. 1996)..................124Redding v. St. Francis Med. Ctr., 208 Cal. App. 3d 98 (1989).....................................108Rent Control Bd. v. Bluvshtein, 230 Cal. App. 3d 308 (1991)......................................137Resort Car Rental System, Inc. v. FTC, 518 F.2d 962 (9th Cir. 1975).........................143Rice v. Fox Broad. Co., 148 F. Supp. 2d 1029 (C.D. Cal. 2001)....................................57Rich v. Schwab, 64 Cal. App. 4th 803, 816-17 (1998).................................................119Richmond v. Dart Indus., Inc., 196 Cal. App. 3d 869 (1987)........................................113Riley v. National Federation for the Blind, 47 U.S. 781, 795 Hudson, 96

(1988).........................................................................................................................63Roach v. Woltmann, 879 F. Supp. 1039 (C.D. Cal. 1994)...........................................134Rodgers Builders, Inc. v. McQueen, 331 S.E.2d 726 (N.C. App. 1985).........................40Rogers v. Nationscredit Financial Services, 233 B.R. 98 (N.D. Cal. 1999)....................57Rolex Watch U.S.A., Inc. v Borgerson, Civil Action No. 81-1040 (Gx), slip.

op. (C.D. Cal. 1981)..................................................................................................110Rolex Watch U.S.A., Inc. v. Thalheimer Co., Inc., 217 U.S.P.Q. (BNA) 964

(N.D. Cal. 1982)........................................................................................................110Rosales v. Citibank, Fed. Savings Bank, 133 F. Supp. 2d 1177 (N.D. Cal.

2001)..................................................................................................................43, 132Roskind v. Morgan Stanley Dean Witter & Co., 2001 U.S. Dist. LEXIS 4528

(N.D. Cal. 2001)........................................................................................................123Roskind v. Morgan Stanley Dean Witter, 80 Cal. App. 4th 345 (2000)........................133Rothschild v. Tyco Int'l, Inc., 83 Cal. App. 4th 488 (2000)............................................127Rubin v. Green, 4 Cal. 4th 1187 (1993)...........................................................16, 98, 117Russell v. Dean Witter Reynolds, Inc., 200 Conn. 172, 510 A.2d 972 (1986)..............135

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Rynsburger v. Dairymen's Fertilizer Coop., Inc., 266 Cal. App. 2d 269 (1968).......................................................................................................................153

Safeco Ins. Co. v. Superior Court of Los Angeles, 216 Cal. App. 3d 1491 (1990).........................................................................................................................98

Saks & Co. v. Hill, 843 F. Supp. 620 (S.D. Cal. 1993)...................................................92Salcido v. Pacific Weathershield, Inc., 1997 U.S. Dist. LEXIS 18191

(N.D. Cal. 1997)........................................................................................................123Sammons & Sons v. Ladd-Fab, Inc., 138 Cal. App. 3d 306 (1982)................18, 108, 113Samura v. Kaiser Found. Health Plan, Inc., 17 Cal. App. 4th 1284 (1993) 3, 33, 112, 149San Diego Committee v. Governing Board, 790 F. 2d 1471 (9th Cir 1986)...................61San Jose v. Superior Court, 12 Cal. 447 (1974)............................................................28Sandlin v. Shapiro & Fishman, 1997 U.S. Dist. LEXIS 4062 (M.D. Fla.

1997).......................................................................................................................... 43Saunders v. Superior Court (Los Angeles), 27 Cal. App. 4th 832 (1994).............3, 81, 97Schnall v. Hertz Corp., 78 Cal. App. 4th 1144 (2000)..................................4, 35, 95, 108Schwartz v. Upper Deck Co., 967 F. Supp. 405 (S.D. Cal. 1997)....................................2Schwartz v. Visa Int'l Corp., 2001 U.S. Dist. LEXIS 105 (N.D. Cal. 2001)...................123Schwarzschild v. Tse, 69 F.3d 293 (1995).....................................................................28Sebago, Inc. v. City of Alameda, 211 Cal. App. 3d 1372 (1989)....................................90Sega Enterprises Ltd. v. Accolade, Inc., 1992 U.S. Dist. LEXIS 4621

(N.D. Cal. 1992)..........................................................................................................11Sepulveda v. Highland Fed. Sav. & Loan, 14 Cal. App. 4th 1692 (1993).......................56Setliff Brothers Service v. Bureau of Automotive Repair, 53 Cal. App. 4th

1491 (1997)................................................................................................................46Shadoan v. World Sav. & Loan Ass'n, 219 Cal. App. 3d 97 (1990).................11, 35, 148Shearson Lehman Bros. Inc. v. Greenberg, 1995 U.S. App. LEXIS 17313

(9th Cir. July 3, 1995).........................................................................................46, 134Shekhter v. Fin. Indem. Co., 89 Cal. App. 4th 141 (2001).............................................60Show Management v. Hearst Publ'g Co., Inc., 196 Cal. App. 2d 606 (1961).......8, 92, 95Shvarts v. Budget Group, 81 Cal. App. 4th 1153 (2000)........................4, 35, 74, 94, 107Siegel v. American Savings & Loan, 210 Cal. App. 3d 953 (1989)................................54Silvaco Data Sys., Inc. v. Technology Modeling Assoc., Inc., 896 F. Supp.

973 (N.D. Cal. 1995)...................................................................................................57Simeon Management Corp. v. FTC, 579 F.2d 1137 (9th Cir. 1978).............................110Sinclair v. Fotomat Corp., 140 Cal. App. 3d 217 (1983).................................................13Singer v. Dean Witter Reynolds, Inc., 614 F. Supp. 1141 (D. Mass. 1985).................135Sipes v. Equitable Life Ins., 1996 U.S. Dist. LEXIS 12325 (N.D. Cal. 1996)..................99Skinner v. E.F. Hutton, 333 S.E.2d 236 (N.C. 1985)....................................................135Skinner v. Superior Court of Santa Clara County, 69 Cal. App. 3d 183

(1977).........................................................................................................................47Smiley v. Citibank, 517 U.S. 735 (1996)........................................................................56

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Smith v. City of Los Angeles, 190 Cal. App. 2d 112 (1961).........................................128Smith v. Cooper/T. Smith Corp., 846 F.2d 325 (5th Cir. 1988)....................................134Smith v. State Farm Mut. Automobile Ins. Co., 93 Cal. App. 4th 700 (2001)...............106Solem v. Helm, 463 U.S. 277 (1983)..............................................................................51Solomon v. North Am. Life & Cas. Ins. Co., 1998 U.S. App. LEXIS 14907

(9th Cir. June 4, 1998)..................................................................................36, 82, 142Solorzano v. Superior Court, 10 Cal. App. 4th 1135 (1992)...........................................56Sony Pictures Entm't, Inc. v. Fireworks Entm't Group, Inc., 156 F. Supp. 2d

1148 (C.D. Cal. 2001)...............................................................................................140South Bay Chevrolet v. General Motors Acceptance Corp., 72 Cal. App. 4th

1380 (1999)....................................................................................................42, 67, 90Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir. 1997)............92, 118Southwest Airlines Co. v. Texas Int'l Airlines, 546 F.2d 84 (5th Cir. 1977)..........130, 154Southwest Marine, Inc. v. Triple A Mach. Shop, Inc., 720 F. Supp. 805

(N.D. Cal. 1989)..................................................................................................72, 120Souza v. Lauppe, 59 Cal. App. 4th 865 (1997)............................................................112Sperry Rand Corp. v. Seawol Distrib., 140 U.S.P.Q. 532 (1964)...................................68Spiegel, Inc. v. FTC, 540 F.2d 287 (7th Cir. 1976).......................................................110Spinner Corp. v. Princeville Dev. Corp., 849 F.2d 388 (9th Cir. 1988).........................134Standard Fire Ins. Co. v. Peoples Church of Fresno, 985 F.2d 446 (9th Cir.

1993)................................................................................................................5, 25, 26Standard Oil Co. of California v. FTC, 577 F.2d 653 (9th Cir. 1978)..............................62Starbuck v. Kaiser Found. Health Plan, Inc., 275 Cal. 444 (1991)...............................103Starter Corp. v. Eurostar, 1993 U.S. Dist. LEXIS 19955 (C.D. Cal. 1993),

28 U.S.P.Q. 2d (BNA) 1844......................................................................................144State Bd. of Funeral Dirs. & Embalmers v. Mortuary in Westminster Mem'l

Park, 271 Cal. App. 2d 638, 76 Cal. Rptr. 832 (1969)................................................95State Farm Ins. Co. v. Superior Court, 45 Cal. App. 4th 1093 (1996)......................3, 4, 6State v. Piedmont Funding Corp., 119 R.I. 695, 382 A.2d 819 (1978).........................135State v. Rhoades, 275 S.C. 104, 267 S.E.2d 539 (1980).....................................116, 135State v. Texaco, Inc., 46 Cal. 3d 1147 (1988)....................................................7, 75, 104Stationary Eng'rs Local 39 Health and Welfare Trust Fund v. Philip Morris,

Inc., 1998 U.S. Dist. LEXIS 8302 (N.D. Cal. 1998).......................................45, 91, 140Stephenson v. Paine Webber Jackson & Curtis, Inc., 839 F.2d 1095

(5th Cir. 1988)...........................................................................................................134Stoiber v. Honeychuck, 101 Cal. App. 3d 903 (1980)..................................................138Stop Youth Addiction v. Lucky Stores, 17 Cal. 4th 553 (1998)...........................1, 97, 137Stutz Motor Car of Am., Inc. v. Reebok Int'l, Ltd., 909 F. Supp 1358

(C.D. Cal. 1995)................................................................................................141, 143Suburban Restoration Co. v. ACMAT Corp., 700 F.2d 98 (2d Cir. 1983).......................65Suh v. Yang, 1997 U.S. Dist. LEXIS 20073 (N.D. Cal. Nov. 6, 1997)..........................143

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Summit Mach. Tool Mfg. Corp. v. Victor CNC Sys., Inc., 7 F.3d 1434 (9th Cir. 1993).............................................................................................................59

Summit Tech., Inc. v. High-Line Med. Instruments Co., Inc., 922 F. Supp. 299 (C.D. Cal. 1996)...................................................................................99, 114, 115

Sunbelt Television, Inc. v. Jones Intercable, Inc., 795 F. Supp. 333 (C.D. Cal. 1992)....................................................................................................11, 62

Surber v. Reliance Nat'l Indem. Co., 110 F. Supp. 2d 1227 (N.D. Cal. 2000)..............125Sure Safe Indus. v. McGrath Rentcorp, 2001 Cal. App. LEXIS 2689 (filed

Nov. 26, 2001)....................................................................................................42, 107Swanson v. St. John's Reg'l Med. Ctr., 97 Cal. App. 4th 245 (2002)...........................149Swenson v. Engelstad, 626 F.2d 421 (5th Cir. 1980)...........................................134, 136Szetela v. Discover Bank, 2002 Cal. App. LEXIS 4007 (filed Apr. 22, 2002).................39Takiguchi v. Podorean, [1987 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶

93,319 (Haw. Cir. Ct. 1987)......................................................................................134Tall Club of Silicon Valley v. Am. Airlines, 2000 U.S. Dist. LEXIS 11302

(N.D. Cal. June 19, 2000).........................................................................................123Taylor v. Bear Stearns & Co., 572 F. Supp. 667 (N.D. Ga. 1983)................................135Tenants Ass'n v. Beverly Southers, 222 Cal. App. 3d 1293 (1990).......................29, 138Tigera Group v. Commerce and Indus. Ins. Co., 753 F. Supp. 858

(N.D. Cal. 1991)....................................................................................................25, 27Tippett v. Terrich, 37 Cal. App. 4th 1517 (1995)............................................................95Titan Sports, Inc. v. 3-G Prod., 19 U.S.P.Q. 1867, 1991 U.S. Dist. LEXIS

15945 (C.D. Cal. 1991).............................................................................................124Toho Co., Ltd. v. Sears Roebuck & Co., 645 F.2d 788 (9th Cir. 1981)..........................95Total TV v. Palmer Communications, Inc., 69 F.3d 298 (9th Cir. 1995).........................59Toxic Injuries Corp. v. Safety-Kleen Corp., 57 F. Supp. 2d 947 (C.D. Cal.

1999)................................................................................................................123, 140Trans World Airlines, Inc. v. Mattox, 897 F.2d 773 (5th Cir. 1990).................................57Trinkle v. Cal. State Lottery, 71 Cal. App. 4th 1198 (1995)..................................103, 118Trotsky v. Los Angeles Fed. Sav. & Loan Ass'n, 48 Cal. App. 3d 134

(1975).......................................................................................................................153Truta v. Avis Rent A Car Sys., 192 Cal. App. 3d 802 (1987).......................................103Tudor v. Jewel Food Stores, Inc., 681 N.E.2d 6 (Ill. App. 1997)....................................36Twohey v. Lincoln Nat'l Life Ins., 2000 U.S. Dist. LEXIS 10096 (N.D. Cal.

July 11, 2000).............................................................................................................57U.S. Healthcare v. Blue Cross of Greater Philadelphia, 898 F.2d 914

(3rd Cir.), cert. denied, 111 S. Ct. 58 (1990)..............................................................63U.S. v. Certain Real Property and Premises, 954 F. 2d 29 (2d Cir 1992)......................52U.S. v. Halper, 490 U.S. 435 (1989)...............................................................................52U.S. v. ITT Rayonier, Inc., 627 F.2d 996 (9th Cir. 1980)..............................................129U.S. v. O'Brien, 391 U.S. 367 (1968).............................................................................61

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U.S. v. Ramiro, 986 F.3d 333 (9th Cir. 1993).................................................................52U.S. v. Traylor, 978 F.2d 1131 (9th Cir. 1992)...............................................................47Udall v. Tallman, 380 U.S. 1 (1965)...............................................................................30Unit Process Co. v. Raychem Corp., 2002 Cal. App. LEXIS 1283 (Feb. 5,

2002).......................................................................................................................... 45United Farm Workers of Am. v. Dutra Farms, 83 Cal. App. 4th 1146 (2000)...............104United Farm Workers of Am. v. Superior Court, 47 Cal. App. 3d 334 (1975)...............138United Parcel Serv., Inc. v. Package Am., Inc., 1996 U.S. Dist. LEXIS 8148

(N.D. Cal. 1996)..........................................................................................................14Upjohn Co. v. American Home Products Corp., 598 F. Supp. 550 (S.D.N.Y.

1984).......................................................................................................................... 68Upper Deck Authenticated v. CPG Direct, 971 F. Supp. 1337 (S.D. Cal.

1997)............................................................................................................................ 2Van de Kamp v. Bank of America, 204 Cal. App. 3d 819 (1988)...........................74, 113Van Ness v. Blue Cross of Cal., 87 Cal. App. 4th 364 (2001)......................................148Vermont Agency of Natural Resources v. United States, 529 U.S. 765, 120

S. Ct. 1858 (2000)....................................................................................................139Victor v. Thomas F White & Co., 1990 U.S. Dist. LEXIS 19803 (N.D. Cal.

1990)....................................................................................................................71, 72Vidal Sassoon, Inc. v. Bristol-Myers Co., 661 F.2d 272 (2d Cir. 1981)..........................68Virgin Enter. Ltd. v. Am. Longevity, 2001 U.S. Dist. LEXIS 2046 (S.D.N.Y.

Feb. 28, 2001)....................................................................................................66, 140Visa Int'l Serv. Ass'n v. Bankcard Holders of Am., 211 U.S.P.Q. (BNA) 28

(N.D. Cal. 1981)..........................................................................................14, 101, 146Walker v. Allstate Indemnity Co., 77 Cal. App. 4th 750 (2000)......................................33Walker v. Superior Court, 47 Cal. 3d 112 (1988)...........................................................50Wang v. Massey Chevrolet, 2002 Cal. App. LEXIS 3273, at *23 (filed Mar.

21, 2002)..................................................................................................................116Warner-Lambert Co. v. FTC, 562 F.2d 749 (D.C. Cir. 1977).........................................89Washington Mutual Bank v. Super. Ct., 95 Cal. App. 4th 606 (2002)............................53Washington Mutual Bank v. Superior Court, 24 Cal. 4th 906 (2001)..............................79Washington Mutual Bank, F.A. v. Superior Court, 75 Cal. App. 4th 773

(1993).........................................................................................................................54Watson Lab. v. Rhone-Poulenc Rorer, Inc., 178 F. Supp. 2d 1099 (C.D.

Cal. 2001)...................................................................................................73, 108, 114Webb v. Eldorado Colleges, Inc., 61 Cal. App. 4th 1450 (1998)....................................39Webster v. Omnitrition Int'l, Inc., 1996 U.S. App. LEXIS 3873 (9th Cir. Mar.

4, 1996)........................................................................................................................4Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224 (2001)..............................43, 80Whitaker v. Tandy Corp., 1997 U.S. Dist. LEXIS 1708 (N.D. Cal. 1997).......................95Whiteside v. Tenet Healthcare Corp., 101 Cal. App. 4th 693, 706 (2002)...................111

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Wilder v. Squires, 315 S.E.2d 63 (N.C. App. 1984).......................................................13William O'Neil + Co. v. Validea.com, 2002 U.S. Dist. LEXIS 8392 (C.D. Cal.

Jan. 31, 2002).............................................................................................................62Williams v. State Farm Fire and Cas., 216 Cal. App. 3d 1540 (1990)..........................145Willis v. Superior Court of Los Angeles County, 112 Cal. App. 3d 277

(1980).......................................................................................................................151Wilner v. Sunset Life Insurance Co., 78 Cal. App. 4th 952 (2000)...................48, 90, 127Winter v. G.P. Putnam's Sons, 938 F.2d 1033 (9th Cir. 1991).......................................61Wise v. Pacific Gas & Electric Co., 77 Cal. App. 4th 287 (1999)....................................33Wolfe v. State Farm Fire & Cas. Ins. Co., 46 Cal. App. 4th 554 (1996).................96, 149Woods v. Superior Court of Monterey County, 102 Cal. App. 3d 608 (1980).......101, 115Wyatt v. Union Mortgage Co., 24 Cal. 3d 773 (1979)..................................................142Xerox Corp. v. Apple Computer, Inc., 734 F. Supp. 1542 (N.D. Cal. 1990)...................58Yamaha Corp. of Am. v. ABC Int'l Traders, Corp., 703 F. Supp. 1398

(C.D. Cal. 1988)..........................................................................................................94Yancy v. American Sav. and Loan Ass'n, 215 Cal. App. 3d 1076 (1989)....................138Younger v. Superior Court, 21 Cal. 3d 102 (1978).........................................................36Yu v. Signet Bank/Virginia, 103 Cal. App. 4th 298 (2002)........................................15, 37Zakarian v. Dekov, 2002 Cal. App. LEXIS 4093 (May 8, 2002).....................................38Zauderer v. Office of Disciplinary Council of the Supreme Court of Ohio,

471 U.S. 626 (1985)...................................................................................................64

STATUTES

15 U.S.C. § 45(a).............................................................................................................128 U.S.C. § 1441(b).....................................................................................................1229 U.S.C. § 1....................................................................................................................37Ariz. Rev. Stat. Ann. § 44-1523 (1987)........................................................................116Ark. Stat. Ann. § 70-913(a)..........................................................................................116Cal. Bus. & Prof. Code § 12601...................................................................................148Cal. Bus. & Prof. Code § 17000.......................................................................................1Cal. Bus. & Prof. Code § 17001.......................................................................................1Cal. Bus. & Prof. Code § 17200...................7, 8, 9, 25, 36, 47, 89, 97, 98, 121, 133, 141Cal. Bus. & Prof. Code § 17202.....................................................................................86Cal. Bus. & Prof. Code § 17203.....................................................15, 20, 75, 78, 97, 149Cal. Bus. & Prof. Code § 17204.......................................................................15, 24, 137Cal. Bus. & Prof. Code § 17205.....................................................................................17Cal. Bus. & Prof. Code § 17206...............................................................................15, 17Cal. Bus. & Prof. Code § 17206.1..................................................................................17Cal. Bus. & Prof. Code § 17208...................................................................................141Cal. Bus. & Prof. Code § 17209.....................................................................................83Cal. Bus. & Prof. Code § 17500.................................................8, 9, 20, 89, 93, 133, 137

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Cal. Bus. & Prof. Code § 17535.............................................................................20, 137Cal. Bus. & Prof. Code § 17536.............................................................................20, 141Cal. Bus. & Prof. Code § 2234.......................................................................................99Cal. Civ. Code § 1750......................................................................................................1Cal. Civ. Code § 1781....................................................................................................27Cal. Civ. Code § 1782..............................................................................................16, 17Cal. Civ. Code § 1936............................................................................................95, 108Cal. Civ. Code § 384......................................................................................................69Cal. Civ. Code § 47..................................................................................................88, 98Cal. Civ. Code § 51..........................................................................................................7Cal. Civ. Code § 790.03.................................................................................................98Cal. Civ. Code §§ 1750, et seq......................................................................................75Cal. Civ. Code §§ 1750-84...............................................................................................1Cal. Civ. Proc. Code § 1021.5..........................................................................24, 25, 151Cal. Civ. Proc. Code § 338...........................................................................................141Cal. Civ. Proc. Code § 340...........................................................................................141Cal. Civ. Proc. Code § 343...........................................................................................141Cal. Civ. Proc. Code § 393...........................................................................................149Cal. Civ. Proc. Code § 430.10......................................................................................117Cal. Civ. Proc. Code § 529.............................................................................................91Cal. Civ. Proc. Code § 995.220......................................................................................91Cal. Civ. Proc. Code § 995.240......................................................................................91Cal. Civ. Proc. Code § 998...........................................................................................152Cal. Evid. Code § 1105................................................................................................104Cal. Evid. Code § 1152..................................................................................................17Cal. Health & Safety Code § 1541...............................................................................101Cal. Health & Safety Code § 26271...............................................................................82Cal. Ins. Code § 10144..................................................................................................98Cal. Ins. Code § 11873................................................................................................103Cal. Ins. Code § 2071..................................................................................................107Cal. Ins. Code § 790.03.................................................................................................98Cal. Penal Code § 308...................................................................................................97Cal. Penal Code § 311.2................................................................................................86Colo. Rev. Stat. § 6-1-106(1)(a)...................................................................................116Del. Code Ann. tit. XI, § 2513(b) (1975).......................................................................116Fed. R. Civ. P. § 23............................................................................27, 28, 29, 152, 153La. Rev. Stat. Ann. § 51:1406(4)..................................................................................116Mo. Ann. Stat. § 407.020(1).........................................................................................116N.H. Rev. Stat. Ann. § 358-A:3....................................................................................116

OTHER AUTHORITIES

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"Lungren Role In Computer Lawsuit Criticized," Los Angeles Times (Sept. 28, 1995)..........................................................................................................23

"Private AG's New Cause: Toy Oven That Doesn't Cook Fast Enough," Recorder (Apr. 18, 1995)............................................................................................10

Fellmeth, "Unfair Competition Law Enforcement by Agencies, Prosecutors and Private Litigants: Who's On First?" 15 Cal. Reg. L. Rep. 1 (1995)...................126

Stern, "California's Unfair Business Practices Statutes: Settling the 'Nonclass Class' Action and Fighting the 'Two Front War,'" 12 CEB Civ. Litigation Rep. 95 (May, 1990).................................................................................126

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I. SCOPE OF STATUTES

A. Substantive Violations

Across the country, every one of the states has adopted a local version of section 5 of the Federal Trade Commission Act ("FTC Act") ((15 U.S.C. § 45(a)), which proscribes unfair methods of competition and deceptive or misleading practices. Referred to in the vernacular as "Little FTC Acts," these statutes take many forms, but they have in common a core set of standards forbidding "unfair" or "deceptive" practices, as well as provisions for governmental and private enforcement of the acts. California's Little FTC Acts are codified in California Business & Professions Code sections 17200 through 17208 ("Unfair Competition Law" or "UCL") and sections 17500 through 17535 ("False Advertising Act" or "FAA"), as well as California Civil Code sections 1750 et seq. ("Consumers Legal Remedies Act"). (Because California is the forum of choice for nearly half the countries' class action litigation, and for all "quasi-class" action litigation, this outline emphasizes California law, although federal law and the law of other states are also included). Because of language parallels, the UCL and the FAA frequently are discussed together, and they are analyzed similarly in case law. (See Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1273 (1992)).

This outline provides an overview of considerations relevant to the defense of actions brought under the Little FTC Acts and sets forth a comprehensive listing of potential defense doctrines (see section VIII, below).

1. Unfair Competition Law

The UCL (formerly Cal. Civ. Code § 3369), prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising. . . ." This outline uses the term "Unfair Competition Law" (or "UCL") to describe this legislation, adopting the California Supreme Court's most recent terminology, although the courts have not been consistent in their descriptions of the Law. Compare Stop Youth Addiction v. Lucky Stores, 17 Cal. 4th 553 (1998) ("Unfair Competition Law"); Manufacturers Life Ins. Co. v. Superior Court, 10 Cal. 4th 257 (1995) ("Unfair Competition Act"); Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1260 (1992) ("Unfair Business Practices Act"); and Farmers Ins. Exch. v. Superior Court of Los Angeles County, 2 Cal. 4th 377, 400 (1992) ("Unfair Practices Act").

The UCL actually is different from the Unfair Business Practices Act, codified at Cal. Bus. & Prof. Code sections 17000-17101 (not addressed in this outline), which concerns only competitive practices such as antitrust violations, consumer protection issues and unfair competition as defined by common law. It also is different from the Consumers Legal Remedies Act, codified at Cal. Civ. Code §§ 1750-84 (described in section I.A.3.,

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below), which proscribes particular deceptive practices and permits class actions for violations.

a. Unlawful

Forbidden unlawful acts include anything that properly can be called a business practice or act and also is "forbidden by law." (Farmers Ins. Exch. v. Superior Court of Los Angeles County, 2 Cal. 4th 377, 400 (1992)). A violation of virtually any California law will suffice as a predicate for violation of the UCL, and a violation of federal law also may suffice. (See Andrews v. Trans Union Corp., 7 F. Supp. 2d 1056 (C.D. Cal. 1998) (denies defendant's motion for partial summary judgment; if plaintiff proves a violation of Fair Credit Reporting Act, he would also prove a UCL claim).

California

Podolsky v. First Healthcare Corporation, 50 Cal. App. 4th 632, 647 (1996) (nursing home's admissions policy "unlawful" because in violation of federal law); Diaz v. Kay-Dix Ranch, 9 Cal. App. 3d 588, 593 (1970)) (although Congress has exclusive power to regulate immigration, court still weighs claim under the UCL, although it denies relief on unrelated equitable grounds).

Federal

Upper Deck Authenticated v. CPG Direct, 971 F. Supp. 1337, 1345 n.8 (S.D. Cal. 1997); ("[a]ctions for unfair competition are necessarily premised on violations of other substantive laws," citing Farmers Ins. Exch. v. Superior Court, 2 Cal. 4th at 383 (grants defendant's motion for summary judgment on all aspects of Upper Deck's unfair competition claim that are or may be grounded in allegations of trademark infringement under the Lanham Act, misappropriation of the right of publicity, interference with contractual relations, violations of the California dilution statute, unjust enrichment, constructive trust, and accounting as these claims relate to the indicia of Mickey Mantle and Joe Montana; denies summary judgment on plaintiff's claim under Cal. Civ. Code § 1739.7)); Schwartz v. Upper Deck Co., 967 F. Supp. 405 (S.D. Cal. 1997) (denies motion to dismiss or stay the proceedings; unlawful business practices under the UCL can be violations of civil, criminal, state, federal, municipal or court-made law; predicate law need not be a California statute or provide for civil enforcement;

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therefore allegations of RICO violations can serve as predicate acts for a violation of the UCL).

b. Unfair

"Unfair" practices have received no clear case law definition. See Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163 (1999) (quotes both S&H and Motors, described below, and criticizes lack of definition). Before Cel-Tech, courts tended to apply a balancing test that likely leads to the same result as the test in FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244-45 (1972) ("(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise--whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen").

Thus, the California Court of Appeal has held that a business act or practice is "unfair" if "it offends an established public policy or . . . is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers." (Saunders v. Superior Court (Los Angeles), 27 Cal. App. 4th 832, 839 (1994) (unfair practices by court reporters); People v. Casa Blanca Convalescent Homes, Inc., 159 Cal. App. 3d 509, 530 (1984); People v. James, 122 Cal. App. 3rd 25 (1981) (unfair practice by towing company); Bondanza v. Peninsula Hosp. and Med. Ctr., 23 Cal. 3d 260 (1979) (practice may be both unlawful and unfair under UCL) (relying on FTC v. Sperry & Hutchinson Co., supra, 405 U.S. at 244).

Under another test, a court evaluating a claim of unfairness must weigh the impact on the victim "against the reasons, justifications and motives of the alleged wrongdoer. In brief, the court must weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim -- a weighing process quite similar to the one enjoined on us by the law of nuisance." (Motors, Inc. v. Times Mirror Co., 102 Cal. App. 3d 735, 740 (1980); see Podolsky v. First Healthcare Corp., 50 Cal. App. 4th 632, 647 (1996) (quotes Motors test; notes UCL's "unfairness" prong is "intentionally broad, thus allowing courts maximum discretion to prohibit new schemes to defraud"; also endorses S&H standards); State Farm Ins. Co. v. Superior Court, 45 Cal. App. 4th 1093, 1104 (1996); Samura v. Kaiser Found. Health Plan, Inc., 17 Cal. App. 4th 1284, 1299 (1993) cert. denied, 114 S. Ct. 1835 (1994). (UCL's prohibition of "unfair" business conduct "does not give the courts a general

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license to review the fairness of contracts but rather has been used to enjoin deceptive or sharp practices.")

Also, "[b]y statutory definition, any illegal business practice is also unfair." Webster v. Omnitrition Int'l, Inc., 1996 U.S. App. LEXIS 3873, at *28 (9th Cir. Mar. 4, 1996) (because the defendant's "endless chain" scheme violated Penal Code § 327, it was actionable under FAA and UCL).

California

Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 187 (1999) (in context of antitrust case, Court criticizes definitions cited above, says courts cannot "simply impose their own notions of the day as to what is fair or unfair," but declines to formulate new definitions for all purposes; for antitrust cases, adopts new test: "when a plaintiff who claims to have suffered an injury from a direct competitor's 'unfair' act or practice invokes section 17200, the word 'unfair' in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition."); Shvarts v. Budget Group, 81 Cal. App. 4th 1153 (2000) (applies old unfairness test under ________ despite citing Cel-Tech elsewhere in opinion); Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1166-67 (2000) (Cel-Tech definition applies even in consumer cases so that "any claims of unfairness under the UCL should be defined in connection with those legislatively declared policies"); State Farm Ins. Co. v. Superior Court, 45 Cal. App. 4th 1093 (1996); Demonet Indus. v. Transamerica Ins. Co., 6 Cal. App. 4th 31, 338, 342 (1991) ("The Supreme Court in this state has consistently and repeatedly given the broadest possible definition to this term ["unfair competition"] [describes Barquis, McKale, Committee on Children's Television, Bank of the West, etc.]; concludes that, although complaint was poorly drafted, trial court should have given plaintiff leave to amend to better state unfair competition allegations); People v. Casa Blanca Convalescent Homes, Inc., 159 Cal. App. 3d 509, 530 (1984) (adopts FTC's three-part test quoted in Sperry & Hutchinson rather than the FTC's then relatively new 1980 unfairness standard); Hernandez v. Atlantic Fin. Co. of Los Angeles, 105 Cal. App. 3d 65, 86-89 (1980) (although the Rees-Levering Act does not restrict seller-assisted car loans for full purchase price of

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a car per se, lender's failure to comply with that Act could be enjoined under the UCL as an unfair practice); Motors, Inc. v. Times Mirror Co., 102 Cal. App. 3d 735, 740 (1980) (although the Unfair Business Practices Act did not prohibit charging local retailers more for advertising space than national accounts, nonetheless, practice could be deemed "unfair" under UCL); Payne v. United California Bank, 23 Cal. App. 3d 850, 856 (1972) (UCL's predecessor statute, Civil Code § 3369, prohibited only "specific practices that are deceptive and unfair on their face").

Federal

Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 994 (9th Cir. 2001) (relies on Cel-Tech, concludes UCL claim may be pursued by milk producers against cheese-makers because a plaintiff may bring an unfair competition claim under California law unless some other provision bars the action by clearly permitting the conduct); Standard Fire Ins. Co. and Aetna Cas. & Sur. Co., Inc. v. Peoples Church of Fresno, 985 F.2d 446 (9th Cir. 1993) ("unfair competition" has a "broad meaning" and "this provision is not limited to anti-competitive business practices but also protects the public from unlawful, deceptive or unfair practices"); Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 1364 (11th Cir. 1988) (for FTC Act violation, (1) consumer injury must be substantial; (2) it must not be outweighed by any countervailing benefits to consumers or competition; and (3) injury must be one that consumers could not reasonably have avoided); American Fin. Servs. Ass'n v. FTC, 767 F.2d 957, 981 (D.C. Cir. 1985), cert. denied, 475 U.S. 1011 (1986) ("unfairness" under FTC Act may be found even if seller does nothing wrong but only "takes advantage of an existing obstacle which prevents free consumer choice from effectuating a self-correcting market"); Okura & Co., Inc. v. Careau Group, 783 F. Supp. 482, 505 (C.D. Cal. 1991) (rejects counterclaim for statutory fines and injunctive relief on ground that the defendants had not acted either improperly or unfairly in their financial dealings with the plaintiff, and therefore had not engaged in any unfair business practices); Heastie v. Community Bank of Greater Peoria, 727 F. Supp. 1133, 1138-39 (N.D. Ill. 1989) (practice that complies with FTC's Holder in Due Course Rule still violates Illinois' Consumer Fraud Act because it is unfair); Meta-Film Assocs., Inc. v. MCA, Inc., 586 F. Supp. 1346 (C.D. Cal. 1984) (complaint alleging failure to provide plaintiff with screen credit for portions of a script states claim under

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UCL; absent a claim for restitution, remedy for UCL claim is limited to injunctive relief).

Other States

Daddona v. Liberty Mobile Home Sales, Inc., 209 Conn. 243, 253-54, 550 A.2d 1061, 1066 (1988) (Sperry test); Laughlin v. Evanston Hosp., 133 Ill. 2d 374, 550 N.E.2d 986-994 (1990) (Sperry test); N.J. Gendron Lumber Co. v. Great N. Homes, Inc., 8 Mass. App. 411, 418, 395 N.E.2d 457, 462-63 (1979) (Sperry test).

c. Fraudulent

"Fraudulent" business acts or practices are those that are likely to deceive members of the public. Actual deception, reasonable reliance, or damages caused by the challenged practice are not necessary elements. (Committee on Children's Television, Inc. v. General Foods Corp., 35 Cal. 3d 197, 211 (1983) (test is effect on the intended audience (id. at 214), there, children); Chern v. Bank of America, 15 Cal. 3d 866, 875-76 (1976) (in contrast to common law fraud, it is not necessary to establish actual deception, reasonable reliance, scienter or damage)).

Pleading or proof of injury to consumers, competitors, or the public also is unnecessary. (People v. Cappuccio, Inc., 204 Cal. App. 3d 750, 760 (1988) (affirming conviction)). Moreover, challenged practices apparently need not involve a statement that is untruthful as to the direct recipient of the statement (see American Philatelic Society v. Claibourne, 3 Cal. 2d 689, 696-99 (1935) (truth was known to direct recipients of statements but unknown to victims further removed); People v. Dollar Rent-A-Car Sys., Inc., 211 Cal. App. 3d 119, 131 (1989) (form contract's "complex language, minuscule print size and format, combined with defendants' knowledge that its own trained agents gave erroneous explanations" are sufficient to prove "fraudulent" conduct)). The California Court of Appeal has recently concluded: "The 'fraud' prong of Bus. & Prof. Code § 17200 is unlike common law fraud or deception. A violation can be shown even if no one was actually deceived, relied upon the fraudulent practice, or sustained any damage. Instead, it is only necessary to show that members of the public are likely to be deceived." (Podolsky v. First Healthcare Corporation, 50 Cal. App. 4th 632, 647-648 (1996), citing State Farm v. Superior Court, 45 Cal. App. 4th 1093 (1996), and Committee on Children's Television v. General Foods Corp., 35 Cal. 3d 197 (1983); Payne v. United California Bank, 23 Cal. App. 3d 850, 856 (1972) (UCL does not apply to conduct that, on its face, is not likely to deceive or mislead the public)). Thus this form

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of fraudulent activity is governed by the "tendency or capacity to deceive” standard used by both federal and state courts in the interpretation of section 5 of the FTC Act. The section is measured under a "reasonable consumer" standard and not by whether the "lease sophisticated consumer" would be misled by the challenged representation. Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496 (2003) (rejects amicus curiae attorney general's argument that "the sophisticated consumer" standard should be applied to evaluate deceptiveness of claim that non-prescription drug was gentle to the stomach); see Quelimane Co. v. Stuart Title Guaranty Co., 19 Cal. 4th 26, 55 (1998).

d. Business Act or Practice

Before 1992, the portion of the UCL that prohibited "unlawful, unfair or fraudulent" business conduct applied only to conduct that could be characterized as a "business practice." As a result, "a single transaction" did not violate the UCL. Rather, a "pattern of conduct," "ongoing conduct," a "pattern of behavior" or a "course of conduct" was required. (See State v. Texaco, Inc., 46 Cal. 3d 1147, 1169-70 (1988) (merger is outside scope of UCL because it does not constitute a business practice)). The legislature amended the UCL in 1992, however, to include a business act as well as a practice. (Cal. Bus. & Prof. Code § 17200). The "act or practice" language of the statute now tracks comparable language in section 5 of the FTC Act. Accordingly, it is no longer necessary to establish that the conduct at issue involves a "practice." Nor is it necessary to show that a practice alleged to violate UCL involves advertising. (Allied Grape Growers v. Bronco Wine Co., 203 Cal. App. 3d 432, 450-52 (1988)).

A "business" is "synonymous with 'calling, occupation, or trade engaged in for the purpose of making a livelihood or gain.'" (Burks v. Poppy Constr. Co., 57 Cal. 2d 463, 468 (1962). Compare the definition of "business" in California's Unruh Civil Rights Act, Civil Code section 51, which includes: "Everything about which one can be employed." The activities of nonprofit organizations are included within the term "business."

California

Bondanza v. Peninsula Hosp. & Med. Ctr., 23 Cal. 3d 260, 269 (1979) (collection practices of nonprofit hospital considered a "business"); Pines v. Tomson, 160 Cal. App. 3d 370, 386 (1984) (publication of "Christian Yellow Pages" by nonprofit religious group considered "business"); Athens Lodge No. 70 v. Wilson, 117 Cal. App. 2d 322, 325 (1953) (fraternal organization is "business").

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Other States

Mother & Unborn Baby Care, Inc. v. State, 749 S.W.2d 533, 537-538 (Tex. App. 1988), cert. denied, 490 U.S. 1090 (1989) (Texas Uniform Deceptive Trade Practices Act covered anti-abortion counseling service even though it did not charge for its work).

e. Deceptive Advertising

The Unfair Competition Law also prohibits "unfair, deceptive, untrue or misleading advertising" (§ 17200). Advertising is "unfair, deceptive, untrue or misleading" if "members of the public are likely to be deceived."

Statements made in connection with sales of goods or services are "advertising," even though they may not fit traditional definitions of "advertising."

Such statements may include communications made directly to the affected customer. (Chern v. Bank of America, 15 Cal. 3d 870, 876 (1976) (misquotation of interest rates over telephone to potential borrower); People v. Superior Court (Jayhill), 9 Cal. 3d 283, 287 (1973) (deceptive pitch by door-to-door salesmen); Feather River Trailer Sales, Inc. v. Sillas, 96 Cal. App. 3d 234, 248 (1979) (car salesmen's statement of low purchase price and failure to disclose lack of authority)).

Proof of a violation of the deceptive advertising portion of the statute does not require a showing of a business practice.

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California

Committee on Children's Television v. General Foods Corp., 35 Cal. 3d 197, 211 (1983) ("advertising" includes, among other acts and practices, oral statements made in connection with sales; not necessary to prove actual deception, reasonable reliance, scienter or damages) (compare Cal. Bus. & Prof. Code § 17500, which requires scienter); Chern v. Bank of America, 15 Cal. 3d 866, 875-76 (1976); People v. Forest E. Olson, Inc., 137 Cal. App. 3d 137, 139-41 (1982) (violation of FAA only if defendant knows or should know in the exercise of reasonable care that advertising is false or misleading)); Show Management v. Hearst Publ'g Co., Inc., 196 Cal. App. 2d 606, 614 (1961) (exposition producer falsely advertised civic nature of a purely private show; false advertising itself, without disparaging the product or enterprise of another, does not give rise to a private cause of action.)

f. False Advertising Act Violation

Violations of California's False Advertising Act (Cal. Bus. & Prof. Code § 17500-08, discussed below, also fall within the Unfair Competition Act and are subject to the Act's remedies. (Cal. Bus. & Prof. Code § 17200).

2. False Advertising Act

The False Advertising Act prohibits statements "concerning . . . real or personal property or services . . . concerning any circumstance or matter of fact connected with the proposed performance or disposition thereof, which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading. . . ." (Cal. Bus. & Prof. Code § 17500). Unlike the Unfair Competition Law, the False Advertising Act requires a degree of scienter. A defendant violates this Act only if he knew or should have known that the advertising was untrue or misleading. (Id.)

It is not necessary under the FAA to establish actual deception, reasonable reliance, or damage. "It is necessary only to show that members of the public are likely to be deceived." (Committee on Children's Television v. General Foods, 35 Cal. 3d 197, 211 (1983); see People v. Dollar Rent-A-Car Sys., Inc., 211 Cal. App. 3d 119, 129 (1989).) Some federal courts have been loath to accept these liberal pleading standards. (See Bullet Golf, Inc. v. United States Golf Ass'n, 1995 U.S. Dist. LEXIS 6189, at *3 (C.D. Cal. Mar. 20, 1995) (denies plaintiff summary judgment on FAA claim because plaintiff failed to (1) allege or

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provide any evidence that the public was deceived by the defendant's press statement, or (2) allege injury to the public or its competitors).

3. Consumers Legal Remedies Act

The Consumers Legal Remedies Act ("CLRA") prohibits a host of specifically identified practices, including the following ten that frequently find their way into consumer class action or UCL claims:

(a) passing off goods or services as those of another;

(b) misrepresenting the source, sponsorship, approval, or certification of goods or services;

(c) misrepresenting the affiliation, connection, or association with, or certification by, another;

(d) representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he or she does not have;

(e) representing that goods are original or new if they have deteriorated unreasonably or are altered, reconditioned, reclaimed, used, or secondhand;

(f) representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;

(g) disparaging goods or services of another by false or misleading representations of fact;

(h) advertising goods or services with intent not to sell them as advertised;

(i) representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law; and

(j) inserting an unconscionable provision in the contract.

The CLRA permits class actions for damages, punitive damages and/or injunctive relief.

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B. Practical Reach of the Statutes

The only apparent limitation upon the practical reach of the UCL is the imagination of man (and woman). The sampling of representative cases listed below shows the breadth (as well as some of the highs and lows) of the statutes' applicability.

Advertising

California

People v. Schmitt, 155 Cal. App. 2d 87, 102 (1957) (describing "Oscilooclast" as cure for cancer); "Private AG's New Cause: Toy Oven That Doesn't Cook Fast Enough," Recorder (Apr. 18, 1995) (advertising toy ovens with shorter cookie baking times than actual results when pre-heating and cool-down times were included).

Antitrust

California

B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 191 Cal. App. 3d 1341 (1987) (reverses denial of class certification on claims by indirect purchaser of glass containers for price-fixing); People v. Nat'l Ass'n of Realtors, 120 Cal. App. 3d 459, 473-76 (1981) (violations of Cartwright Act).

Federal

Bell Atlantic Bus. Sys. Servs., Inc. v. Hitachi Am. Ltd., 1995 U.S. Dist. LEXIS 15531 at 28 (March 10, 1995) (denies summary judgment on UCL claim where MSJ on Sherman Act was denied); Sunbelt Television, Inc. v. Jones Intercable, Inc., 795 F. Supp. 333, 338 (C.D. Cal. 1992) ("since plaintiffs have adequately pled a violation of the Sherman Act, they have clearly stated a cause of action under California's Unfair Competition law").

Financial Institution Practices

California

Perdue v. Crocker Nat'l Bank, 38 Cal. 3d 913, 927-28 (1985) ($6.00 service charge for non-sufficient funds checks when actual cost of processing was alleged to be $.30); Fletcher v. Security Pac. Nat'l Bank, 23 Cal. 3d 442 (1979); Chern v. Bank of America, 15 Cal. 3d 866 (1976) (computation of interest on 360-day year); Garrett v. Coast & S. Fed. Sav. & Loan Ass'n, 9 Cal. 3d 731, 734-35 (1973) (late charges for untimely installment payments on notes secured by deeds of trust; requires causal connection between breaches

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and actual damages); Badie v. Bank of America, 67 Cal. App. 4th 779 (1998) (arbitration clause in billing stuffer is unenforceable because customer did not make unambiguous waiver of jury trial right); California Grocers Ass'n v. Bank of America, 22 Cal. App. 4th 205, 215-17 (1994) (returned check fees of $3.00 set in non-oligopolistic banking market do not violate UCL even though twice bank's costs); Beasley v. Wells Fargo Bank, 235 Cal. App. 3d 1383, 1400 (1991) (affirming $5.2 million judgment for excessive late fees and over-limit fees); Shadoan v. World Sav. & Loan Ass'n, 219 Cal. App. 3d 97, 106 (1990) (rejecting challenge to loan agreement's prepayment penalty clause and clause permitting the lender to demand full payment of the loan principal).

Form Contracts

California

People v. McKale, 25 Cal. 3d 626, 634-35 (1979) (unlawful or unenforceable terms in form contracts); Bondanza v. Peninsula Hosp. & Med. Ctr., 23 Cal. 3d 260, 269 (1979) (contract terms that make debtor pay collection costs); Allied Grape Growers v. Bronco Wine Co., 203 Cal. App. 3d 432, 450-51 (1988) (systematic breach of form contract affecting many producers).

Franchise

California

California Serv. Station and Automotive Repair Ass'n v. Union Oil Co. of California, 232 Cal. App. 3d 44, 53-55 (1991) (challenging franchise transfer policy as violation of California Franchise Relations Act).

Federal

Aurigemma v. Arco Petroleum Prods. Co., 734 F. Supp. 1025, 1029-1031 (D. Conn. 1990).

Other States

Forrest LeBlanc v. Belt Ctr., Inc., 509 So. 2d 134, 137 (La. Ct. App. 1987).

Inadequate Staffing of Nursing Homes

California

People v. Casa Blanca Convalescent Homes, Inc., 159 Cal. App. 3d 509, 530 (1984).

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Insurance

Federal

Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042 (9th Cir. 2000) (insurance company violates state law by issuing non-standard insurance policy to plaintiff with an arbitrarily high mortality rating).

Other States

Elder v. Coronet Ins. Co., 201 Ill. App. 3d 733, 558 N.E.2d 1312 (Ill. App. 1990) (misusing polygraph tests to deny insurance claim).

Labor

California

Hudgins v. Neiman Marcus Group, Inc., 34 Cal. App. 4th 1109, 1126 (1995) (business practice that violates California Labor Code §§ 221 and 400-410 also violates UCL); People v. Los Angeles Palm, Inc., 121 Cal. App. 3d 25, 32-33 (1981) (crediting tips against minimum wage in violation of Labor Code would violate UCL).

Lanham Act Claims

Federal

Cleary v. News Corp., 30 F.3d 1255 (1994) (actions pursuant to UCL are "substantially congruent" to claims made under the Lanham Act); Chronicle Publ'g Co. v. Chronicle Publications, Inc., 733 F. Supp. 1371 (N.D. Cal. 1989) (claim that defendant unfairly competed in violation of UCL is virtually identical to unfair competition claims under the Lanham Act); Plasticolor Molded Prods. v. Ford Motor Co., 713 F. Supp. 1329 (C.D. Cal. 1989) (notes that analysis of an unfair competition claim tracks analysis of the Lanham Act claim).

Legal Services

California

People v. Lynam, 253 Cal. App. 2d 963-64 (1967) (false statements regarding provisions of trust law).

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Miscellaneous Charges and Fees

California

Bondanza v. Peninsula Hosp. & Med. Ctr., 23 Cal. 3d 260, 269 (1979) (33% surcharge on delinquent account sent to collection agency); Medical Copier Cases II and III (San Francisco Superior Court Nos. JCC 3045 and JCC 3020) (challenges hospital photocopy charges for patient medical records as violation of Cal. Evid. Code § 1158).

Other States

Wilder v. Squires, 315 S.E.2d 63 (N.C. App. 1984) (challenge to refusal to refund customer down payments).

Pyramid Sales Schemes

California

Monroe Bounds v. Figurettes, Inc., 135 Cal. App. 3d 1, 17-20 (1982) ("pyramid" marketing plan for sales of lingerie violates Penal Code § 327 and FAA because it lacks safeguards that preclude inventory loading, make product sales a precondition for receiving performance bonus, eliminate headhunting fee, and require a substantial percentage of products to be sold to consumers at retail); People v. Bestline Prods., Inc., 61 Cal. App. 3d 879, 910-914 (1976).

Religious Discrimination

California

Pines v. Tomson, 160 Cal. App. 3d 370, 381 (1984).

Stolen Property

California

Naftzger v. American Numismatic Soc'y, 42 Cal. App. 4th 421, 433, n. 7 (1996) (suggests that a UCL claim might lie against one who withholds or sells stolen property for "committing an act of unfair competition").

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Trademark Infringement

Federal

United Parcel Serv., Inc. v. Package Am., Inc., 1996 U.S. Dist. LEXIS 8148 (N.D. Cal. 1996) (plaintiffs likely to prevail on Lanham Act claim were likely to prevail on UCL claim, as well, since claims are "substantially congruent"); Visa Int'l Serv. Ass'n v. Bankcard Holders of Am., 211 U.S.P.Q. [BNA] 28 (N.D. Cal. 1981) (injunction against trademark infringement and unfair competition where defendant appropriated "Visa" and "Bands Design" names; irreparable injury test of injunction is satisfied by defendant's misuse of plaintiff's symbol); Kelly Blue Book v. Car-Smarts, Inc., 802 F. Supp. 27 (C.D. Cal. 1992) (grants plaintiff's request for injunction against defendant's use of the term "blue book" or other similar term in advertising; Lanham Act and California law of unfair competition are "substantially congruent"; Lanham Act and Ninth Circuit hold that a plaintiff's disclaimer of an exclusive right does not estop plaintiff from asserting trademark infringement rights; test in California is likelihood of confusion).

Unconscionable Terms

California

People v. McKale, 25 Cal. 3d 626, 634-5 (1979) (unfair and deceptive practice to draft adhesion contract containing provisions that are unlawful or unenforceable even if drafting party did not intend to enforce them); Payne v. United California Bank, 23 Cal. App. 3d 850, 856 (1972) (enforcement of agreement that appears legal could not be unfair business practice even if defenses to enforcement exist).

Venue Practices

California

Barquis v. Merchants Collection Ass'n of Oakland, Inc., 7 Cal. 3d 94, 124-25 (1972) (practice of bringing collection actions in distant forums violates UCL). Yu v. Signet Bank/Virginia, 103 Cal. App. 4th 298 (2002) (reverses dismissal of UCL and abuse of process claims by consumers in class action against bank for its long-arm program of pursuing collection actions in Virginia against California credit card holders; concludes that principles of due process prevent assertion of personal jurisdiction over California consumers in Virginia.

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C. Statutory Enforcement

1. Governmental Enforcement

The California Attorney General, district attorneys, city attorneys for cities having a population of more than 750,000, and full-time city prosecutors in smaller communities may bring actions under the Unfair Competition Law. (Cal. Bus. & Prof. Code § 17204). Public prosecutors may seek civil fines, injunctions, and restitution. Cal. Bus. & Prof. Code §§ 17203, 17204, and 17206).

2. Private Enforcement

a. Unfair Competition Law

"[A]ny person acting for the interests of itself, its members or the general public" may bring an equitable action under the UCL. (Cal. Bus. & Prof. Code § 17204). "Person" includes a corporation. The plaintiff need not be a competitor of the defendant and need not suffer damage. (See Committee on Children's Television v. General Foods Corp., 35 Cal. 3d 197, 209 (1983); Consumers Union of U.S., Inc. v. Fisher Dev., Inc., 208 Cal. App. 3d 1433, 1437-44 (1989)). A plaintiff whose UCL claim is predicated on a violation of another statute may have standing under the UCL even if the plaintiff does not have standing under the other statute. (See Midpeninsula Citizens for Fair Hous. v. Westwood Investors, 221 Cal. App. 3d 1377, 1392-3 (1990)). The UCL may not be used, however, to "'plead around' absolute barriers to relief by relabeling the nature of the action as one brought under the unfair competition statute." (Rubin v. Green, 4 Cal. 4th 1187, 1201 (1993) (UCL is intended to permit private parties to enforce statutory prohibitions, but only "where to do so would not interfere with legislative objectives and limitations otherwise prescribed."); Manufacturers Life Ins. Co. v. Superior Court, 10 Cal. 4th 257, 277-81 (1995) (rejects UCL claim where Unfair Insurance Practices Act did not provide private action)).

Private litigants may bring class actions under the UCL but do not necessarily need to do so to obtain relief for the class. (See Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000); Fletcher v. Security Pac. Nat'l Bank, 23 Cal. 3d 442, 453 (1979); Dean Witter Reynolds, Inc. v. Superior Court (Alameda), 211 Cal. App. 3d 758, 772-73 (1989)).

b. Consumers Legal Remedies Act

Under the Consumers Legal Remedies Act, consumers may recover actual damages, minimum damages of $1,000 in a class

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action, punitive damages, restitution of property, injunctive relief, and any other relief the court deems proper.

Before filing suit, a consumer must give the prospective defendant thirty days' notice to afford the defendant an opportunity to cure the alleged violation (Cal. Civ. Code § 1782(a)). If the company within thirty days after receipt of such a notice, corrects, repairs, replaces, or otherwise remedies the alleged violation, or agrees to take such action within a reasonable time, the consumer may not sue for damages (§ 1782(b)). Similarly, a prospective defendant may defeat an action for damages by showing that it has identified all consumers situated similarly to the prospective plaintiff or made a reasonable effort to identify them; notified such consumers that, upon their request, an appropriate correction, repair, replacement, or other remedy is available; corrected, repaired, replaced, or otherwise remedied the violations in response to all such requests or agreed to do so within a reasonable time; and ceased from engaging, or committed within a reasonable time to cease to engage, in the challenged methods, act or practices. (§ 1782(c)(1)-(4)). Attempts by defendant to take the necessary curative steps in order to comply with section 1782 are inadmissible as evidence pursuant to Cal. Evid. Code section 1152, but they may be introduced by the defendant to show good faith or to show compliance with the provisions of section 1782.

c. False Advertising Act

Citizens may sue as private attorneys general under the False Advertising Act.

D. Remedies Under The Unfair Competition Act

1. Monetary Penalties

a. Civil Penalties Under The UCL.

If sought by a government prosecutor, the imposition of a civil penalty is mandatory (see People v. Nat'l Ass'n of Realtors, 155 Cal. App. 3d 578, 585 (1984)), and the maximum civil penalty is $2,500 for each violation of the UCL. (Cal. Bus. & Prof. Code § 17206(a)). Courts have held that a separate violation occurs for each victim of unfair competition (see, e.g., People v. Superior Court (Jayhill), 9 Cal. 3d 283, 289 (1973)), and, as a result, civil penalties may be aggregated where there is more than one victim. The UCL provides for additional penalties if the victims are senior citizens or disabled. (Cal. Bus. & Prof. Code § 17206.1). In addition, remedies under the Unfair Competition Law are cumulative, so a civil penalty may be imposed even though the

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defendant has been assessed a fine or damages for the same conduct under another statute. (Cal. Bus. & Prof. Code § 17205; see People v. Toomey, 157 Cal. App. 3d 1, 22 (1984)). In determining the amount of the civil penalty, the courts consider "the relevant circumstances [, including] the nature and seriousness of misconduct, the number of violations, the persistence of the misconduct, the length of time over which the misconduct occurred, the willfulness of the defendant's misconduct, and the defendant's assets, liabilities and net worth." (People v. Superior Court (Solano), 35 Cal. App. 3d 710 (1973) (penalty provisions of the Business and Professions Code were similar enough to exemplary damages to permit discovery of the defendant's financial condition in appropriate cases [although not this one]).

California

People v. Morse, 21 Cal. App. 4th 259, 272 (1993) (upholds $400,000 in civil penalties where 4 million victims received solicitations and defendant received more than $1.8 million in fees from those for whom he prepared homestead declarations, despite absence of net profit or financial condition evidence; affirms restitution award based on number of solicitations mailed rather than those who read or responded); People v. Parkmerced Co., 198 Cal. App. 3d 683 (1988) ($221,700 in civil penalties and $40,000 in attorneys' fees as well as restitution to all tenants and to tenants' organization for new tenant fee and fee charged to tenants who moved within complex; no abuse of discretion where civil penalty was $50/tenant, defendants did not claim award was disproportionate to their wealth or ability to pay, and defendants continued illegal charge until trial despite awareness that District Attorney was investigating their practice); People v. Custom Craft Carpets, Inc., 159 Cal. App. 3d 676, 680-81 (1984) (affirms injunctive relief and liability but reverses trial court's failure to impose mandatory civil penalties and order restitution; trial court on remand notes more than 20,000 deceptive television commercials had been broadcast, of which 6,000 were blatantly deceptive; television commercials were responsible for approximately 90% of defendants' customer leads, which netted more than 40,000 customers by early 1978; defendants' sales grew from $2,578,974 during FY 1976 to more than $4 million during FY 1980; during this period, defendants generated more than $16 million in sales from more than $2 million in advertising; declarations regarding poor financial state with negative net worth in excess of $1 million were unavailing because not believed; more than

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3,000 customers in L.A. County alone had illegal liens placed on their homes, with 18 homes sold at foreclosure sales based on defendants' illegal and void liens; $750,000 civil penalty imposed amounted to no more than $125 for each of the 6,000 broadcasts of the deceptive television commercials; awards $256,645 as partial restitution, based upon finding that 3,001 L.A. County customers had paid between $35-$45 in lien fees and reconveyance fees of $32.50 and $50 between 1975-1984 because of defendants' acts; restitution calculation does not include lost equity in homes, foreclosure-related fees, or fees for contracts recorded outside of L.A. County; restitution and civil penalties described in In re Taite, 76 BR 764 (C.D. Cal 1987); Sammons & Sons v. Ladd-Fab, Inc., 138 Cal. App. 3d 306 (1982) (upholds summary judgment for defendant for UCL claim for allegedly duplicating and selling plaintiffs' product line and catalog); People v. Superior Court (Olson), 96 Cal. App. 3d 181, 197-98 (1979), cert. denied, 446 U.S. 935 (1980) (measure based upon circulation of newspaper could result in penalty in excess of $2.5 billion for each edition of the newspaper; "[t]o so interpret the statute would render it violative of the due process prohibition against 'oppressive' or 'unreasonable' statutory penalties."); People v. Cimarusti, 81 Cal. App. 3d 314 (1978) (trial court exceeded its jurisdiction when it ordered Attorney General to stipulate to penalties set by the court without hearing in case involving allegations of deceptive advertising under FAA related to a "going out of business sale"); People v. Columbia Research Corp., 71 Cal. App. 3d 607, cert. denied, 434 U.S. 904 (1977) (upholds issuance of preliminary injunction against company allegedly engaged in fraudulent business practices; finds sufficient evidence of unfair business practices, such as misleading suggestion that persons had won a prize and misrepresenting market price of goods, to support preliminary injunction; but injunction was impermissibly vague); People v. Hill, 66 Cal. App. 3d 320 (1977) (upholds injunction against person who misused the term "accountant" in business title; use of term alleged to be deceptive and misleading in violation of FAA, and harm of continued use is enough to support issuance of injunction); People v. Sacramento Valley Ambulance Ass'n, 1994 WL 160104 (Cal. Superior Court Jan. 7, 1994) (unpublished) ($120,000 in civil penalties and $40,000 in costs and attorneys fees as well as injunctive relief awarded in Final Judgment in response to allegations of horizontal price-fixing and customer and territory allocation); People v. Steelcase, Inc., 1992 WL 286586 (Cal. Superior Court Feb. 2, 1993)

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(unpublished) ($200,000 in civil penalties and $100,000 in legal costs as well as injunctive relief assigned in Final Judgment Pursuant to Stipulation in response to allegations of anti-competitive conduct including vertical and horizontal price-fixing); People v. Sanyo Electric, Inc., 1982 WL 11211 (Cal. Superior Court Aug. 30, 1982) (unpublished) ($15,000 to be paid to San Diego and Los Angeles Counties as costs for the investigation and prosecution of this matter, and $10,000 in civil penalties pursuant to § 17206, as well as injunctive relief, assigned in Final Judgment Pursuant to Stipulation in response to complaint alleging resale price maintenance and other related anti-competitive conduct).

Federal

Brown v. Allstate Ins. Co., 1998 U.S. Dist. LEXIS 11759 (S.D. Cal. July 31, 1998) (dismisses plaintiff's causes of action under UCL and FAA with leave to amend; private individuals cannot seek damages for unfair business practices; compensatory damages not recoverable under UCL; private remedies are limited to equitable relief; civil penalties are recoverable only by specified public officers).

b. Criminal Penalties Under The UCL.

There are no criminal penalties for violations of the Unfair Competition Law, but a violation of the False Advertising Act is a misdemeanor punishable by up to six months' imprisonment or a fine of $2,500 or both. (Cal. Bus. & Prof. Code § 17500). Alternatively, public prosecutors may seek a civil penalty of $2,500 for each violation of the law. (Cal. Bus. & Prof. Code § 17536(a)). Each publication or solicitation mailed may be considered a violation for purposes of assessing civil penalties. (See People v. Morse, 21 Cal. App. 4th 259, 272-74 (1993); People v. Superior Court (Olson), 96 Cal. App. 3d 181, 198 (1979), cert. denied, Olson v. Superior Court, Orange County, 446 U.S. 935 (1980)). Damages are not available under the law, although private parties may obtain injunctive relief and restitution. (Cal. Bus. & Prof. Code § 17535); Chern v. Bank of America, 15 Cal. 3d 866 (1976)).

2. Injunction and Restitution

Prosecutors or private parties may sue to enjoin violations of the Unfair Competition Law and to obtain restitution. (Cal. Bus. & Prof. Code § 17203); Podolsky v. First Healthcare Corp., 50 Cal. App. 4th 632, 647 (1996); Hernandez v. Stabach, 145 Cal. App. 3d 309 (1983) (upholds preliminary injunction preventing defendant landlord from filing unlawful detainer actions as use of court's equity power and of injunctive power

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under UCL); California Ass'n of Dispensing Opticians v. Pearle Vision Ctr., 143 Cal. App. 3d 419 (1983) (upholds injunction for violating UCL and FAA because claim to provide "total eye care" was misleading; injunction did not violate the First Amendment or Commerce Clause); People v. Hill, 66 Cal. App. 3d 320 (1977) (upholds injunction against person who misused the term “accountant” in business title; use of term alleged to be deceptive and misleading in violation of FAA, harm of continued use is enough to support issuance of injunction); People v. Columbia Research Corp., 71 Cal. App. 3d 607, cert. denied, 434 U.S. 904 (1977) (upholds preliminary injunction against company allegedly engaged in fraudulent business practices; sufficient evidence of unfair business practices, such as misleading suggestion that persons had won a prize and misrepresenting market price of goods, to support preliminary injunction; injunction was not impermissibly vague.) Courts are not required to use either of these remedies in the event of a violation and will do so only to the extent appropriate under the circumstances. Posting of a bond may be required.

a. Injunction.

Some courts have held that a plaintiff seeking injunctive relief under the UCL need not satisfy the traditional prerequisites to injunctive relief. Posting of a bond may be required, however. (Federal Automotive Servs. v. Lane Buick Co., 204 Cal. App. 2d 689 (1962) (§ 17081 [posting of bond by plaintiff not required] does not apply to FAA); People v. Mobile Magic Sales, Inc., 96 Cal. App. 3d 1 (1979) (upholds issuance of preliminary injunction forcing mobile home retailer to conform business practices to UCL; retailer had entered into arrangements with mobile home parks whereby prospective tenants were coerced into buying a particular mobile home)).

Federal

Kelly Blue Book v. Car-Smarts, Inc., 802 F. Supp. 27 (C.D. Cal. 1992) (grants injunction against defendant's use of the term "blue book" or other similar term in advertising; remedies under UCL include injunctive relief).

b. Restitution.

Restitution of money taken from victims of a UCL violation is an equitable remedy the courts frequently employ in UCL cases. (Lewis v. Hankins, 214 Cal. App. 3d 195 (1989) (affirms judgment for plaintiff; defendant's property subject to lien for fraudulent and unlawful business practices and other fraudulently conveyed parcels must be sold at execution so that net proceeds of sale could be credited to defendant's obligations)). A court may order restitution without proof of actual deception, reliance or injury if it

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"determines that such a remedy is necessary to prevent the use or employment of the unfair practice. . . ." (Committee on Children's Television, Inc. v. General Foods Corp., 35 Cal. 3d 197 (1983), quoting Fletcher v. Security Pac. Nat'l Bank, 23 Cal. 3d 442 (1979)). Under certain circumstances, private parties may obtain restitution for absent third parties under the UCL without class action procedures. (Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000); Bronco Wine Co. v. Frank A. Logoluso Farms, 214 Cal. App. 3d 699, 262 (1989)).

Federal

National Van Lines, Inc. v. Dean, 237 F.3d 688, 692, 694 (9th Cir. 1956) (reverses trial court's judgment and, applying California law, concludes that defendant had engaged in, inter alia, unfair trade practices; whether an accounting proceeding should be ordered preparatory to allowance of damages in an unfair competition claim is "largely a matter of discretion"); Pharmacare v. Caremark, 965 F. Supp. 1411 (D. Haw 1996) (denies motion to dismiss unfair business practice claim but grants some of defendant's motions to dismiss other claims; plaintiff has standing to sue; because plaintiff limited its prayer for relief to restitution, defendant's challenges to a request for an injunction are irrelevant); Andrews v. Trans Union Corp., 7 F. Supp. 2d 1056 (C.D. Cal. 1998) (denies motion for partial summary judgment; remedies under § 17203 include restitution and disgorgement of profits; defendants mischaracterized plaintiff's claim as a claim solely for damages).

c. Compensatory and Punitive Damages Not Available.

Compensatory and punitive damages are not available under the Unfair Competition Law. (Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1272 (1992)).

E. Remedies Under The False Advertising Act.

Lentz v. Woolley, 1989 U.S. Dist. LEXIS 12651 (C.D. Cal. June 14, 1989) (civil penalties: plaintiffs are not entitled to compensatory or punitive damages under FAA; criminal penalties: FAA provides for imprisonment or a monetary fine as remedies for its violation).

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II. INTERNAL INVESTIGATIONS

A. Advisability

Companies sometimes learn of allegations of wrongdoing when employee or ex-employee "whistle-blowers" bring claims to their attention through internal mechanisms or, if the companies are especially unfortunate, by announcing their allegations to the media. Other times, a company may receive a letter (and perhaps an enclosed complaint) from a prosecutor or governmental agency or from a potential plaintiff's retained counsel. At any of those points, the company should immediately consult counsel. Furthermore, if a governmental investigation or significant lawsuit is a real possibility, the company should seriously consider involving outside counsel experienced in responding to governmental investigations and consumer class actions.

Management or counsel frequently will recommend an internal investigation into allegations of wrongdoing. The purpose of such an investigation is to: (1) explore the nature and extent of any problem; (2) allow management to root out problematic conduct; and (3) provide the company an opportunity to cure whatever violations may have existed. The importance of the participation of counsel in the structure and the conduct of internal investigations cannot be overstated. An investigation that uncovers or confirms substantial wrongdoing but is not covered by the attorney-client privilege or the attorney work product doctrine can easily provide evidence for the prosecution or for private plaintiffs, instead of serving the salutary purpose for which it is designed.

B. Preserving the Attorney-Client Privilege and Attorney Work Product Doctrine

The steps necessary to best protect an internal investigation under the attorney-client privilege and the attorney work product doctrine are beyond the scope of this outline, but obtaining advice on this subject is essential if you are not already familiar with the legal measures governing privilege and waiver issues. Allegations of serious wrongdoing almost inevitably prompt the creation of self-serving internal memoranda, frequently sprinkled liberally with third and fourth-hand hearsay and other unreliable and/or inaccurate information, which then can become further fodder for prosecutors or private plaintiffs. To prevent these problems, counsel must act quickly to debrief key personnel and establish a procedure for funneling information to those conducting the investigation under counsel's auspices.

III. GOVERNMENTAL ENFORCEMENT

A. Possibility of Multifaceted Attack

Attacks from the government may come from many directions. The offices of the attorney general, district attorneys, city attorneys, and governmental agencies all may assert interests in investigating and/or prosecuting wrongdoing that may

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violate the UCL. While different levels of government sometimes may work at odds with one another (see "Lungren Role In Computer Lawsuit Criticized," Los Angeles Times (Sept. 28, 1995) p. A-27), more commonly the representatives of the Attorney General will work together with at least one county district attorney so that they may divide responsibility for an investigation (usually relying upon the DA's personnel to handle tasks such as execution of search warrants) and share in the costs of investigation they expect to recover. Staff members of governmental agencies with regulatory authority over the company at issue (e.g., the Department of Insurance, the Department of Corporations) may also assist in these efforts, bringing additional regulatory enforcement mechanisms into the picture.

B. Government's Limited Resources to Pursue Case to Trial

A company confronted with a governmental investigation or prosecution can find the process quite intimidating, especially because government prosecutors quickly will refer the uninitiated to the UCL's statutory civil penalty provisions and will point out the statute's imposition of a penalty on a $2,500 per violation basis (or $5,000, if the unlawful or unfair act involves false advertising). This approach could theoretically lead to an astronomical result if the violation involves hundreds of thousands of customers or years of practice.

While the government arsenal may seem overwhelming, it is important to bear in mind that government enforcement of the UCL would collapse if present circumstances changed, and the government could not count on nearly all of its cases settling. If the government were required to divert its resources from investigating scores of cases and negotiating settlements with potential defendants and instead handle discovery issues, prepare for trial and present evidence at sometimes lengthy court trials for many of its cases, the prosecution of new violators would grind to a halt. Thus, the government is under significant internal pressure to settle the cases it brings.

C. Adverse Publicity Can Create a Two-Front War

If a defendant chooses to "fight rather than switch," however, the company must be prepared for what likely will be substantial adverse publicity directed at the company's consuming public. Not surprisingly, government prosecutors speak very differently about a defendant's practices when describing the results of a successful settlement process than they do when explaining to their public the violations that they are using public funds to bring to trial.

IV. PRIVATE ENFORCEMENT

A. Private Actions

The UCL permits private actions by "any person acting for the interests of itself, its members or the general public." (Cal. Bus. & Prof. Code § 17204). The

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private plaintiff need not himself be aggrieved by the alleged violation, so long as he alleges that he is suing on behalf of the general public.

B. Attorneys' Fees

The Unfair Competition Law does not provide for payment of attorneys' fees. (Cobarrubias v. Allstate Ins. Co., 1998 U.S. Dist. LEXIS 10955 (C.D. Cal. July 10, 1998) (grants defendant's motion to strike; attorneys fees not recoverable on claim for violation of UCL, citing Chern v. Bank of America, 15 Cal. 3d 866, 875 (1976)). Plaintiff's counsel may seek attorney's fees under a "common fund" approach (where the attorneys' efforts have created a fund of money that benefits a class of victims of a particular practice, and the attorney claims a portion of that fund to cover his fees and costs for bringing the suit), or the attorney may seek to recover attorneys' fees under California Code of Civil Procedure section 1021.5, which permits an award of fees:

in any action which has resulted in the enforcement of an important right affecting the public interest if (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.

(Cal. Civ. Proc. Code § 1021.5; see Pachmayer Gun Works, Inc. v. Olin Mathieson Chem. Corp., 502 F.2d 802, 809-12 (9th Cir. 1974) (applies California law and affirms trial court's refusal to award attorney's fees to plaintiffs alleging, inter alia, unfair competition)).

C. Consumer Attorney Associations

Through seminars and other similar forums, those who specialize in bringing private claims under the "Little FTC Acts" often share information regarding legal developments and business trends that may be favorable to plaintiffs, just as many of the most successful members of the personal injury bar share their theories and strategies with their fellow personal injury lawyers. As a result, certain attractive new types of claims mushroom across the country after developing a year or so in a particular forum.

V. PUBLICITY ISSUES

As soon as practicable after learning of a problem that could lead to adverse publicity, the company and its counsel should determine whether the company will respond to press inquiries, or perhaps even initiate its own publicity, to report its position. If the company determines to eschew the "no comment during the pendency of litigation" approach and, instead, to respond to allegations of wrongdoing, the company will want to identify the best available spokesperson for this task from among its executives, inside and outside public relations personnel,

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and (perhaps) its inside or outside counsel. It is crucial that counsel be involved immediately in determining the parameters for statements that will be made on the company's behalf, so that no one unintentionally risks claims of waiver of the attorney client privilege by referring to privileged investigations in the process of responding to charges of wrongdoing.

VI. INSURANCE COVERAGE

While insurance companies have a duty to defend against claims which create a potential for indemnity, there is no general duty to defend in case of liability brought under section 17200. (See Standard Fire Ins. Co. and Aetna Cas. & Sur. Co., Inc. v. Peoples Church of Fresno, 985 F.2d 446, 451 (9th Cir. 1993) (since claims of negligent misrepresentation were not covered by an insurance clause's "unfair competition" term, the district court committed error by finding a duty to defend). The California Supreme Court has ruled that "unfair competition," as the term is used in standard-form Commercial General Liability policies protecting "advertising injury," among other types of wrongs, does not refer to UCL claims brought under Cal. Bus. & Prof. Code section UCL because damages are not recoverable under the UCL. (Bank of the West v. Superior Court, 2 Cal. 4th 1254 (1992). See also Tigera Group v. Commerce and Indus. Ins. Co., 753 F. Supp. 858, 860 (N.D. Cal. 1991) (where insurer contracted to defend policyholder from claims alleging "unfair competition," the broad meaning of the term from the UCL context should not be adopted for the purposes of interpreting the clause in the insurance agreement; "[a]bsent the element of competition, there can not be 'unfair' competition"; grants summary judgment).

California

A-Mark Financial Corp. v. Cigna Property and Cas. Cos., 34 Cal. App. 4th 1179, 1182 (1995) (Bank of the West holding applies to claims under Idaho's UCL equivalent and Commodity Exchange Act, even though both contain damage remedies); McLaughlin v. National Union Fire Ins. Co., 23 Cal. App. 4th 1132, 1152 (1994) (no duty to defend "where the only potential for liability turns on resolution of a legal question" whether advertising injury endorsement insured against UCL violations); Chatton v. National Union Fire Ins. Co., 10 Cal. App. 4th 846, 865 (1992) (claims for fraud, negligent misrepresentation, breach of fiduciary duty and negligence violating UCL are not covered under advertising liability provisions); Ohio Cas. Ins. Co. v. Hubbard, 162 Cal. App. 3d 939, 943-48 (1984) (affirms trial court's determination that the insurer need not indemnify its insured in a lawsuit under the UCL for fraudulent overcharge of rent).

Nonetheless, the company should review its insurance policies to determine whether they might provide coverage for UCL claims and should evaluate, as well, whether coverage might exist under a fidelity bond.

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Federal

Alliance Ins. Co. v. Colella, 995 F.2d 944, 946 (9th Cir. 1993) (rejects attempt to read insurance policy covering "unfair competition" expansively so as to include all practices that violate the UCL [following the lead of the California Supreme Court in Bank of the West v. Superior Court of Contra Cost County]); Standard Fire Ins. Co. and Aetna Cas. & Sur. Co., Inc. v. Peoples Church of Fresno, 985 F.2d 446, 448-51 (9th Cir. 1993) ("[A]dvertising injury" insurance policy covering "unfair competition" refers to the common law tort of passing off one's goods as those of another, and negligent misrepresentation is not covered as it lacks a competitive injury); Bergen Brunswig Corp. v. Safety Mut. Cas. Corp., 1993 U.S. App. LEXIS 2205, at *1-5 (9th Cir. 1993) (A insurance policy providing coverage for "damages" caused by "unfair competition" does not encompass claims brought under the UCL, as the UCL provides only for restitution and not for damages); Chabner v. United of Omaha Life Ins. Co., 994 F. Supp. 1185 (N.D. Cal. 1998), aff'd, 225 F.3d 1042 (9th Cir. 2000) (grants plaintiff's motion for summary judgment; discrimination in rates must be based on sound actuarial principles or "actual and reasonably anticipated experience"; defendant insurance company has the burden of proof; UCL provides a private right of action for a violation of § 10144 of the Insurance Code although the Insurance Code does not); American States Ins. Co. v. Canyon Creek, 786 F. Supp. 821, 825-830 (N.D. Cal. 1991) (insurance company must defend and indemnify the defendant in an unfair competition case pending against it, as the "advertising injury" insurance policy in question encompasses "unfair competition" claims brought under the UCL); Tigera Group, Inc. v. Commerce and Indus. Ins. Co., 753 F. Supp. 858, 859-61 (N.D. Cal. 1991) (insurance policy covering "unfair competition" does not obligate defendant insurer to defend or indemnify its insured in any claim that extends beyond the common law definition of "unfair competition"--the misappropriation of a competitor's commercial advantage); Nationwide Mut. Ins. Co. v Dynasty Solar, Inc., 753 F. Supp. 853, 855-58 (N.D Cal. 1990) (insurance policy covering "unfair competition" requires the insurance company to defend and indemnify the insured in lawsuits for common law "unfair competition," but not in suits falling under the broader statutory notion of unfair competition contained in UCL); Aetna Cas. & Sur. Co. v. Trans World Assurance Co., 745 F. Supp. 1524, 1528-29 (N.D. Cal. 1990) (refuses to extend insurance policy covering "advertising injury" to instances of "unfair competition" as defined in UCL [here, a suit for RICO violations, fraud and breach of contract] because California law does not apply to the underlying suit venued in Ohio); Aetna Cas. & Sur. Co. v. Watercloud Bed Co., 1988 U.S. Dist. LEXIS 17572 (C.D. Cal. Nov. 17, 1988) (if patent infringement claims also involve advertising activities, claims can be construed as unfair competition claims within the coverage of the insurance contracts).

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VII. CLASS ACTIONS

A. Prerequisites

California courts apply to class claims under the UCL the requirements of California Code of Civil Procedure section 382 and, frequently, the federal class action standards set forth in Federal Rule of Civil Procedure section 23. Federal Rule 23 requires satisfaction of several elements: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation. (Compare the similar requirements under the Consumers Legal Remedies Act (Cal. Civ. Code § 1781)).

1. Numerosity. The class is so numerous that joinder of all members is impractical. (Fed. R. Civ. P. § 23(a)(1)).

2. Commonality. There must be questions of law or fact common to the class. (Fed. R. Civ. P. § 23(a)(2)).

3. Typicality. The claims or defenses of the representative parties must be typical of the claims or defenses of the class. (Fed. R. Civ. P. § 23(a)(3)).

4. Adequacy. Fair and adequate representation of the interests of all class members is required. (Fed. R. Civ. P. § 23(a)(4)).

B. Additional Requirements

The courts also require a showing that class treatment is appropriate for one of the following reasons:

1. Prosecution of separate actions would create a risk of:

(a) inconsistent decisions; or

(b) decisions with respect to individuals that would adversely affect the interests of others (Fed. R. Civ. P. § 23(b)(1)(A) and (B)); or

2. Classwide injunctive or declaratory relief is appropriate, because the opposing party has acted on grounds generally applicable to the class. (Fed. R. Civ. P. § 23(b)(2)). (Note, however, that actions certified under Rule 23(b)(2) sometimes also include damage claims); or

3. Common questions predominate over individual questions, and a class action is superior to other methods for fair and efficient adjudication. Relevant factors include:

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(a) individual class members' interest in controlling the litigation;

(b) extent and nature of any litigation concerning the controversy already pending;

(c) desirability of concentrating the claims in the particular forum; and

(d) difficulties of management of a class action

(Fed. R. Civ. P. § 23(b)(3)).

In all Rule 23(b)(3) class actions, class members must receive notice and an opportunity to request exclusion. (Fed. R. Civ. P. § 23(c)(2)); Schwarzschild v. Tse, 69 F.3d 293, 296-97 (1995) (notice in a class action is not mandatory under Fed. R. Civ. Proc. 23(c)(2) for cases in which summary judgment already has been granted on defendant's motion; when defendants obtain summary judgment before the class has been certified or before notice has been sent, they effectively waive their right to have notice circulated to the class under Rule 23(c)(2)).

California

San Jose v. Superior Court, 12 Cal. 447, 454-64 (1974); Cooper v. American Sav. & Loan Ass'n, 55 Cal. App. 3d 274, 285 (1976).

4. In a class action, the named plaintiffs ordinarily must establish a transactional nexus with the defendants. Because UCL claims do not require an injured plaintiff, plaintiffs and defendants debate whether absence of injury renders a named plaintiff inadequate or atypical.

California

Dean Witter Reynolds, Inc. v. Superior Court, 211 Cal. App. 3d 758, 772-75 (1989); Phillips v. Crocker-Citizen Nat'l Bank, 38 Cal. App. 3d 901, 910 (1974) ("question of standing to sue is one of the right to relief and goes to the existence of a cause of action against the defendant"); Payne v. United California Bank, 23 Cal. App. 3d 850, 860 (1972) (dismisses complaint as to bank with whom plaintiff had no relationship).

Federal

La Mar v. H. & B. Novelty & Loan Co., 489 F.2d 461, 464-66 (9th Cir. 1973).

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5. Superiority of class method. Under Rule 23(b)(3), plaintiff must establish that the class action would be a "superior" method for adjudicating the controversy.

California

Caro v. Procter & Gamble Co., 18 Cal. App. 4th 644 (1993); Dean Witter Reynolds v. Superior Court, 211 Cal. App. 3d 758, 772-73 (1989).

6. Plaintiffs also must prove the existence of an ascertainable class. See Tenants Ass'n v. Beverly Southers, 222 Cal. App. 3d 1293, 1304 (1990).

VIII. DEFENSES

A. Fraud and Class Action Defenses Are Unavailing

The two primary reasons for the popularity with prosecutors and consumer attorneys of claims under the Unfair Competition Law are: (1) the unavailability to defendants of the traditional "no reliance" defense to fraud claims (see section 52, below); and (2) plaintiffs' ability to prosecute claims on behalf of an enormous "class" of "victims," without the necessity of satisfying traditional criteria for maintenance of a class action (e.g., numerosity and typicality of claims, adequacy of representation, predominance of class issues over individual issues (Fed. R. Civ. Proc. § 23(a)-(c)). (See Prata v. Superior Court, 91 Cal. App. 4th 1128 (2001) (grants writ of mandate directing trial court to vacate its summary judgment for defendant; plaintiff is a proper representative of other consumers in a false advertisement of credit account scheme because plaintiff does not need individual matters of proof to show liability under the UCL); First Alliance Mortgage Co. v. First Alliance Mortgage Co., 2001 U.S. Dist. LEXIS 19931 (C.D. Cal. 2001) (reverses Bankruptcy Court's order sustaining debtors' objections to the class claimants' proofs of claim; UCL claimants need not be certified as a class in order to pursue claims because UCL actions have different requirements from class actions)).

B. One Hundred Six Defense Arguments

Nonetheless, as with the equally broad federal Racketeer and Corrupt Organizations Act ("RICO"), defendants have whittled away at the UCL's potentially broad application through decades of appellate litigation. The outline lists below a host of potential defense arguments that counsel in these cases should consider. Some of these doctrines already have received authoritative judicial endorsement, others have received mixed results, and still others thus far have been rejected -- although usually not by courts at the highest levels. Even the third category deserves some thought, however, because a better factual context, more receptive judges or justices, or an intervening statutory development can turn a losing defense into a winning one. Also, experience has

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shown that trial courts in California, and federal courts at trial and intermediate appellate levels, are more responsive to defense arguments than the California Court of Appeal and the California Supreme Court, who appear to believe that answers to the statutes' problems must come only from the legislature.

1. Abstention

Principles of federalism may require abstention (which usually gives rise to a stay of the action rather than dismissal) because of deference to a federal agency's enforcement power. Courts apply abstention to accord “great deference to the interpretation given a statute by the officers or agency charged with its administration.” (See Udall v. Tallman, 380 U.S. 1, 16 (1965) (not UCL case)).

California

People ex rel. Dep't of Transp. v. Naegele Outdoor Adver. Co. of California, Inc., 38 Cal. 3d 509, 523 (1985), cert. denied, 475 U.S. 1045 (1986) (abstention where underlying violation arose under federal Highway Beautification Act); Drennan v. Security Pac. Nat'l Bank, 28 Cal. 3d 764, 770, cert. denied, 454 U.S. 833 (1981) (abstention where lender referred in loan agreement to use of the "Rule of 78's" without further explanation, because Federal Reserve Board standards permitted such references); Crusader Ins. Co. v. Scottsdale Ins. Co., 54 Cal. App. 4th 121, 138 (1997) (abstains from deciding claim that surplus lines brokers are violating Insurance Code § 1763 because agency should first evaluate the claim); Cong. of Cal. Seniors v. Catholic Healthcare W., 87 Cal. App. 4th 491 (2001) (affirms dismissal of plaintiff union's UCL claims against defendant hospital because Medicare cost reporting and reimbursement policies are preempted by federal law; abstention of Medi-Cal claims where Medicare claims are preempted by federal law); Desert Healthcare Dist. v. PacifiCare, FHP, Inc., 94 Cal. App. 4th 781 (2001) (affirms dismissal of plaintiff hospital owner's claims against defendant health care service provider; abstention where a UCL action would drag a court of equity into an area of complex economic policy in the health care finance industry); Diaz v. Kay-Dix Ranch, 9 Cal. App. 3d 588, 593 (1970) (abstention where alleged underlying violation arose under federal immigration laws).

Federal

Mullins Coal Co. v. Director, Office of Workers' Compensation Programs, United States Dep't of Labor, 484 U.S. 135, 159 (1987) (defers to Department of Labor's interpretation of labor laws); FDIC v. Philadelphia Gear Corp., 476 U.S. 426, 438 (1986) (defers to FDIC's interpretation of regulations regarding definition of

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"deposit"); Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 567-68 (1980) (abstention where lender's disclosure complied with federal Truth In Lending Act under Federal Reserve Board's interpretation of Regulation Z); Bone v. Hibernia Bank, 493 F.2d 135, 138-40 (9th Cir. 1974) (abstention where lender referred to Rule of 78's without further explanation in reliance on Federal Reserve Board regulations).

2. Adequate Remedy at Law

Because a request for an injunction invokes the court's equitable powers, a plaintiff must establish that it has no adequate remedy at law before the court will issue an injunction. (Prudential Home Mortgage Co. v. Superior Court, 66 Cal. App. 4th 1236, 1249-50 (1998)).

California

Prudential Home Mortgage Co. v. Superior Court, 66 Cal. App. 4th 1236, 1249-50 (1998) (existence of adequate remedy at law precludes UCL claim; plaintiff has adequate legal remedy for alleged failure of mortgage company to make timely reconveyance of deeds of trust following home refinancing because legislature established $300 statutory penalty for violations).

3. Administrative Law Doctrines

The doctrines of primary jurisdiction and exhaustion of administrative remedies occasionally are implicated by UCL cases, so that a court will determine to defer the judicial process until after an administrative agency has acted. Although the two doctrines sometimes are confused, exhaustion applies only where the agency actually has power to remedy the alleged wrong, and the doctrine requires a stay or dismissal of the judicial proceeding until the administrative agency has resolved the claim that is properly cognizable before it. Primary jurisdiction applies where the agency has special expertise and authority over the subject at issue, so that the court should defer to the agency's procedures.

a. Exhaustion of Administrative Remedies

California

Abelleria v. District Court of Appeal, 17 Cal. 2d 280, 293 (1941) (doctrine of exhaustion of administrative remedies is a "jurisdiction prerequisite to the courts") (not UCL case); Karlin v. Zalta, 154 Cal. App. 3d 953 (1984) (plaintiff's failure to exhaust her "remedies [under the Insurance Code] forecloses her resort to the judicial process") (not UCL case); County of Los Angeles v. Farmers Ins. Exch., 132 Cal. App.

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3d 77 (1982) (failure to exhaust remedies before Insurance Commissioner) (not UCL case).

b. Primary Jurisdiction

Under the doctrine of primary jurisdiction, a court may temporarily abstain from issuing a judgment where it faces issues that have been placed "within the special competence" of an administrative body. (Farmers Ins. Exch. v. Super. Ct., 2 Cal. 4th 377, 390-91 (1992)). However, a court cannot employ the doctrine of primary jurisdiction to justify a complete dismissal of the issues before it; rather, such issues should only be stayed "pending the administrative body's resolution of the issues within its jurisdiction." (Id. at 401).

California

Quielimane Co. v. Stewart Title Guaranty Co., 19 Cal. 4th 26 (1998) (does not address primary jurisdiction doctrine, but allows antitrust claim against title companies for a conspiracy to refuse to issue policies on properties acquired through tax deeds; rejects defense argument that UCL claim seeks to usurp the power of the legislature); Farmers Ins. Exch. v. Superior Court of Los Angeles County, 2 Cal. 4th 377, 401 (1992) (reverses trial court and orders stay of proceedings pending resolution of issue whether Farmers violated "Good Driver Discount" provisions of the insurance pricing initiative by systematically referring drivers who qualified for the discount to a subsidiary that charged higher rates); Greenlining Institute v. Public Utilities Commission, 103 Cal. App. 4th 1324, 1330-1331 (2002) (denies petition for writ of review of PUC decision that it lacked jurisdiction to adjudicate claims for UCL violation); Cundiff v. Bell Atlantic Corp., 101 Cal. App. 4th 1395, 1411, 1413 (2002) (reverses order of dismissal upon demurrer to claims for UCL violations arising from imposition of charges for allegedly obsolete or non-existent telephones over a fifteen-year period; concludes that Public Utilities Commission does not have explicit jurisdiction or primary jurisdiction over the case; Bristol Hotels & Resorts v. Nat'l Council on Compensation Ins., Inc., 2002 Cal. App. LEXIS 2947 (Mar. 13, 2002) (Note: this opinion has not been certified for publication or ordered published) (insurance carriers' alleged failure to file with the Bureau of Insurance the endorsements for policies sold to plaintiffs constitutes unlawful conduct appropriate for judicial resolution, in contravention of defendant's suggestion that judicial enforcement of these provisions would improperly

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usurp BOI's regulatory authority); AICCO, Inc. v. Ins. Co. of N. Am., 90 Cal. App. 4th 579 (2001) (suit alleging unfair trade practice against defendant insurer could not be completely dismissed on primary jurisdiction grounds; nor was the doctrine of primary jurisdiction applicable where there were no pending administrative proceedings which would justify further delay); Walker v. Allstate Indemnity Co., 77 Cal. App. 4th 750 (2000) (upholds dismissal of UCL class action claim against auto insurers alleging premiums exceeding rates allowable under Proposition 103 because Commissioner of Insurance had approved the rates); Wise v. Pacific Gas & Electric Co., 77 Cal. App. 4th 287, 299-300 (1999) (applies primary jurisdiction doctrine to state claim that defendant “obtained an excessive and unreasonable tariff by defrauding the Public Utility Commission” until the Commission had reviewed the allegations); Crusader Insurance Co. v. Scottsdale Insurance Co., 54 Cal. App. 4th 121, 138-39 (1997) (applies primary jurisdiction doctrine to claim that surplus lines brokers violated Insurance Code §1763); Samura v. Kaiser Found. Health Plan, Inc., 17 Cal. App. 4th 1284 (1993) (UCL claim challenging third-party liability provision in HMO's member service agreements barred because Department of Corporations had been given exclusive power to enforce violations of the Knox-Keene Act); Cellular Plus, Inc. v. Superior Court, 14 Cal. App. 4th 1224 (1993) (Public Utilities Commission did not have primary jurisdiction over antitrust price fixing claims [not UCL claims] against cellular telephone providers because claim did not require interpretation and application of regulations and statutes within the province and expertise of the PUC, but instead plaintiff claimed that practice violated Cartwright Act, which courts and not PUC are experienced in interpreting); Hewlett v. Squaw Valley Ski Corp., 54 Cal. App. 4th 499 (1997) (where the California Department of Forestry has no "'pervasive and self-contained system of administrative procedure'" to deal with issues in case, and since legal interpretation of the Forest Practice Act is not part of CDF's domain, primary jurisdiction principles do not bar claim under UCL).

Federal

Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042 (9th Cir. 2000) (refuses to vacate summary judgment and refer the matter to the Insurance Commissioner because it would not serve the dual policies of primary jurisdiction; decides itself whether premium was based on sound

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actuarial principals or actual and reasonably anticipated experience).

Other States

Moy v. Schreiber Deed Sec. Co., 572 A.2d 758, 761 (Pa. Super. 1990) (no prosecution of state law claim under Pennsylvania's "Little FTC Act" until consumer pursued administrative complaint with state department of insurance).

c. Deference to Administrative Interpretation

Because an administrative agency's interpretation of its governing statute is entitled to “great weight” unless it is clearly erroneous or unauthorized (Hewlett v. Squaw Valley Ski Corp., 54 Cal. App. 4th 499, 530 (1997); Lusardi Construction Co. v. California Occupational Safety and Health Appeals Board, 1 Cal. App. 4th 639, 645 (1991)), a defendant may argue that the trial court must defer to the administrative agency's construction of the statute in a way that authorizes defendant's conduct.

California

Fenning v. Glenfed, Inc., 40 Cal. App. 4th 1285, 1295 (1995) (no preemption under federal banking laws, relying on opinion letters issued by federal reserve board); People v. Duz-More Diagnostic Laboratory, Inc., 68 Cal. App. 4th 654 (1998) (practice not unfair because agency's MediCal manuals and regulations are complex and subject to varying interpretations); Hewlett v. Squaw Valley Ski Corp., 54 Cal. App. 4th 499, 526-27 (1997) (absence of uniform interpretation of applicable law by the California Department of Forestry did not bar finding of UCL violation); Hudgins v. Neiman Marcus Group, Inc., 34 Cal. App. 4th 1109, 1125-26 (1995) (court declines to defer to private opinion letter from California Labor Commissioner obtained while litigation was pending because it concludes that opinion was wrong and was not the product of an adversarial process); Drennan v. Security Pac. Nat'l Bank, 28 Cal. 3d 764, 770 (1981) (loan agreement disclosure of practice of following the “Rule of 78's” is adequate since Federal Reserve Board's Regulation Z, promulgated under the Truth in Lending Act, authorizes such disclosure).

4. Alternative Source

Where the consumer could have avoided the alleged unfair practice by taking his business elsewhere or focusing upon other products or services

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offered by the same defendant without the offending aspect, a defendant may use the availability of the alternative source to attack plaintiff's claim.

California

Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1161 n.9 (2000) ("refueling" option is not unconscionable as customers have a "'meaningful choice,' because the rental agreement adequately informs renters that if they reject the fuel purchase option and return the rented car with a full tank they will pay no fuel service charge."); Shvarts v. Budget Group, 81 Cal. App. 4th 1153 (2000) (rejects UCL claim because "[e]ach of the three payment options is clearly printed, in boldface, in the rental agreement provided to [customers] at the time of rental"); Shadoan v. World Sav. & Loan, 219 Cal. App. 3d 97 (1990) (UCL claim barred because defendant offered other products or services that did not contain the challenged fee payment penalty on home loan); Dean Witter Reynolds, Inc. v. Superior Court, 211 Cal. App. 3d 758 (1989) (unconscionability claim based upon $50 close-out fee for Individual Retirement Account was precluded because customer had "reasonably available alternative source of supply"); California Grocers Ass'n v. Bank of America, 22 Cal. App. 4th 205, 216 (1994) ("absent a showing of oligopoly and consequent lack of free competition, we cannot discount the significance of the fact that the three-dollar fee is at the low end of fees charged by other institutions.").

Other States

Tudor v. Jewel Food Stores, Inc., 681 N.E.2d 6 (Ill. App. 1997) (accidental overcharges not unfair where store receipt would enable customer to check accuracy and store offers money-back guarantee if scanned price is different from shelf price).

5. Amendment or Repeal of Underlying Law

Amendment or repeal of the underlying law whose violation forms the predicate for a section 17200 unlawfulness claim may create a defense to the section 17200 claim. California courts have not yet addressed this argument in the context of a section 17200 prosecution.

California

Younger v. Superior Court, 21 Cal. 3d 102 (1978) (action wholly dependent on statute abates if statute is repealed without savings clause before judgment becomes final); Governing Bd. v. Mann, 18 Cal. 3d 819, 829 (1977) ("[A] cause of action or remedy dependent on a statute falls with a repeal of the statute."); Int'l

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Ass'n of Cleaning and Dye House Workers v. Landowitz, 20 Cal. 2d 418 (1942) (affirms denial of injunction where repeal of statute enabling municipal "code of competition" regulating laundry prices and providing for injunctive relief terminates cause of action. Further, UCL's predecessor statute lacks a statutory definition of "unfair competition" and furnishes no independent basis for an injunction against violation of the penal ordinance at issue); Chapman v. Farr, 132 Cal. App. 3d 1021, 1023-24 (1982) (unless plaintiff obtains final judgment before effective date of amendment or modification, most recent version of statute will govern cause of action); Orden v. Cranshaw Mortgage & Inv. Co., 109 Cal. App. 3d 141, 145-146 (1980) (same).

Federal

Solomon v. North Am. Life & Cas. Ins. Co., 1998 U.S. App. LEXIS 14907 (9th Cir. June 4, 1998), modified, 98 Cal. Daily Op. Serv. 6278 (9th Cir. Cal. Aug. 11, 1998) (affirms summary judgment for defendant; UCL operates prospectively absent express retroactivity provision, so that prior to August, 1992, a party was required to prove ongoing unfair business practices in order to state a valid claim).

6. Anti-SLAPP Motion to Strike

A weapon of increasing popularity among defendants in recent years has been an Anti-SLAPP motion at the outset of the case. An Anti-SLAPP motion argues that plaintiff's claim should be dismissed because it is a "Strategic Lawsuit Against Public Participation" designed to chill defendant's exercise of constitutional rights of free speech or petition. Although the motions infrequently succeed, they are sometimes successful, and they sometimes provide defendant with an opportunity to eliminate plaintiff's lawsuit without reaching it's merits. A plaintiff responding to an Anti-SLAPP motion must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of fact to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. See Yu v. Signet Bank/Virginia, 103 Cal. App. 4th 298, 315-318 (2002).

California

Yu v. Signet Bank/Virginia, 103 Cal. App. 4th 298 (2002) (affirms order denying motion to strike plaintiffs' claims under the Anti-SLAPP statute; rejects "intent to chill proof requirement" for Anti-SLAPP motion, finding holding that SLAPP claim may arise where defendant's act underlying the plaintiff's claim itself was an act in furtherance of the right of petition for free speech).

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7. Arbitration

a. Federal Preemption Under Federal Arbitration Act

Federal preemption principles may preclude state or federal court prosecution of UCL claims if the transaction at issue involves "interstate commerce" (which is broadly defined in the cases), and the persons on whose behalf the suit is brought signed written agreements to arbitrate. So long as the claim is governed by the Federal Arbitration Act (9 U.S.C. §§ 1, et seq.), the claim should be subject to arbitration regardless of conflicting state law doctrines that may be hostile to arbitration.

Federal

Allied-Bruce Terminix v. Dobson, 115 U.S. 834, 63 U.S.L.W. 4079 (1995) (reads Federal Arbitration Act definition of "contract evidencing transaction involving commerce" broadly, to prevent prosecution of various state law claims in Alabama court); Arriaga v. Cross Country Bank, 163 F. Supp. 2d 1189 (S.D. Cal. 2001) (grants defendant's motion to compel arbitration of all claims; California legislature's demonstrated intent to preclude arbitration of claims for public injunctive relief under UCL does not remove the arbitration agreement from the coverage of the FAA, which requires the agreement to be enforced; "this Court feels bound by United States Supreme Court precedent stating that only Congress may determine when statutory remedies are not subject to arbitration agreements under the FAA"); Coonley v. Rotan Mosle, Inc., 630 F. Supp. 404, 406 (W.D. Tex. 1985) (arbitration clause barred prosecution of Texas "Little FTC Act" claim).

State

Discover Bank v. Superior Court, 105 Cal. App. 4th 326 (2003) (FAA preempts state court from applying state substantive law to strike class action waiver from arbitration clause in credit card holder agreement); Blue Cross of California v. Superior Court, 67 Cal. App. 4th 42 (1998) (where arbitration agreement governed by FAA is silent regarding classwide arbitration, section four of FAA does not bar state courts from ordering classwide arbitration where permitted by California law)

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b. State Arbitration Law

Although many states have found "Little FTC Act" claims to be arbitrable, California decisions are mixed.

California

Cruz v. Pacific Care, 91 Ca. 4th 1179 (2001), review granted, 34 P. 3d 288 (2001) (Cal. Supreme Court is reviewing whether federal law preempts California's exemption of claims from injunctive relief under the Consumer Legal Remedies Act or the UCL from arbitration); Broughton v. Cigna Healthplans, 21 Cal. 4th 1066, 1079-80 (1999) (action for injunctive relief under CLRA is not subject to arbitration, although other claims for damages are arbitrable; the CLRA "plaintiff in this case is functioning as a private attorney general, enjoining future deceptive practices on behalf of the general public. We hold that under such circumstances arbitration is not a suitable forum, and the Legislature did not intend the type of injunctive of relief to be arbitrated" because " the evident purpose of the injunctive relief provision of the CLRA is not to resolve a private dispute but to remedy a public wrong"); Zakarian v. Dekov, 2002 Cal. App. LEXIS 4093, at *9, 21 (May 8, 2002) (reverses trial court's denial of compelled arbitration with respect to a defendant-engineer even though he was not a party to the arbitration contract because his conduct was significantly entangled with the primary defendant-doctor's acts to come within the joinder clause of the agreement); Szetela v. Discover Bank, 2002 Cal. App. LEXIS 4007, at *14-15 (Apr. 22, 2002) (vacates trial court's order mandating forced arbitration with respect to UCL claim because the contract provision was "not only substantively unconscionable, it violate[d] public policy by granting Discover a 'get out of jail free' card while compromising important consumer rights; Groom v. Health Net, 82 Cal. App. 4th 1189, 1199 (2000) ("The same [Broughton] reasoning applies to [the UCL] cause of action [so that plaintiff's] claims for injunctive relief must therefore be severed from this portion of the arbitrable [UCL] claims"); Coast Plaza Doctors Hosp. v. Blue Cross of Calif., 83 Cal. App. 4th 677 (2000) (reverses trial court's order denying defendant's motion to compel arbitration for private causes of action and non-injunctive remedies and stays injunctive claim relief pending outcome of arbitration proceedings; plaintiff hospital's claim for public injunctive relief against defendant insurance corporation is not arbitrable because

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plaintiff is acting in the capacity of a private attorney general and injunctive relief benefits the public at large; arbitration is enforceable for plaintiff's private causes of action and non-injunctive remedies); Berman v. Health Net, 80 Cal. App. 4th 1359, 1372 (2000) (affirms denial of petition to compel arbitration; plaintiff's non-arbitrable claim for injunctive relief pursuant to the UCL does not nullify defendant health care provider's waiver of arbitration, where defendant engaged in extensive discovery and never sought to sever the UCL injunction claim from the arbitrable claims); Berman v. Health Net, 80 Cal. App. 4th 1359 (2000) (denies motion to compel arbitration because defendants waived their rights to arbitration by engaging in substantial discovery and thereby prejudicing plaintiffs; rejects defendants' argument that conducting discovery concerning an apparently nonarbitrable UCL claim for injunctive relief cannot lead to waiver of arbitration because defendant did not sever the nonarbitrable claims from the arbitrable ones, pursuant to the California Supreme Court's guidance in Broughton, or even indicate that their discovery was directed towards the nonarbitrable claim); Patterson v. ITT Consumer Fin. Corp., 14 Cal. App. 4th 1659, 1664-7 (1993) (UCL and other claims not subject to arbitration because court interprets arbitration agreement as suggesting to customer that arbitration would take place in a distant forum and, for that reason and others, arbitration clause is unconscionable).

Federal

Fairchild v. Nat'l Home Ins. Co., 2001 U.S. App. LEXIS 19487 (9th Cir. 2001) (unpublished opinion) (reverses district court's order denying defendant's motion to compel arbitration for UCL claim; UCL claim falls within the scope of the arbitration provision in the Builder Proposal and Agreement (BPA) because the language of the BPA is sufficiently broad to allow for such a claim and the factual allegations in plaintiff builder's UCL claim are integrally related to defendant insurance company's compliance with warranty documents in the BPA); Gray v. Conseco Fin. Inc., 2000 U.S. Dist. LEXIS 14821 (C.D. Cal. 2000) (grants motion to compel arbitration for all claims except for the equitable portion of the UCL claim; adopts the reasoning of California cases Broughton v. Cigna Healthplans and Coast Plaza Doctors Hosp. v. Blue Cross of Calif., concluding that UCL claims seeking equitable relief are not arbitrable); Arriaga v. Cross Country Bank, 163 F. Supp. 2d 1189 (S.D. Cal. 2001) (grants motion to compel arbitration of all claims;

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claim for disgorgement of funds under the UCL is not immune from arbitration; because disgorgement is limited in time and scope, it dies not require judicial supervision and is essentially the same as awarding money damages; thus, the California state legislature did not intend to preclude arbitration for the disgorgement of funds claim available under the UCL because there is no "inherent conflict" between this remedy and arbitration); Meyers v. Unizest Home Loan, Inc., (N.D. Cal. 1993 W. L. 307747) (enforcing arbitration of UCL private attorney general claims); Coonley v. Rotan Mosle, Inc., 630 F. Supp. 404 (W.D. Tex. 1985) (Texas "Little FTC Act" claim subject to arbitration).

Other States

Flower World of Am., Inc. v. Wenzel, 594 P.2d 1015, 122 Ariz. 319 (App. 1978) (Arizona Little FTC Act claim arbitrable); J & K Cement Constr., Inc. v. Montalbano Builders, 119 Ill. App. 3d 524 (1983) (Illinois Little FTC Act claim arbitrable); Greenleaf Eng'g & Constr. v. Teradyne, 15 Mass. App. 571 (1983) (Massachusetts Little FTC Act claim arbitrable); Rodgers Builders, Inc. v. McQueen, 331 S.E.2d 726, 733 (N.C. App. 1985) (claim under North Carolina Little FTC Act arbitrable).

c. Class Claims

Even class claims may be arbitrable.

California

Keating v. Superior Court of Alameda County, 31 Cal. 3d 584, 608-14 (1982) (class claims are properly subject to arbitration if they fall within the written arbitration clause and satisfy class action requirements).

8. Breach of Contract

The applicability of the UCL to simple claims for breach of contract is uncertain.

Federal

In re Ingle Co., 1997 U.S. App. LEXIS 423, 1997-1 Trade TAX. (CCH) ¶ 71,782 (9th Cir. Jan. 7, 1997) ("[P]laintiff cites no case applying section 1720 to a simple breach of contract, and we have found none."); Agroindustrias Vezel v. H.P. Schmid, Inc., 1991 U.S. Dist. LEXIS 18783, at *205 (N.D. Cal. 1991) (dismisses a UCL

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claim sua sponte, as it derives from a breach of contract claim itself dismissed).

9. Business Judgment Rule

When a plaintiff uses the UCL to challenge corporate activity protected by the established "business judgment rule" defense, the court will likely dismiss the claim on the theory that the challenged activity is not unlawful.

California

Lee v. Interinsurance Exchange, 50 Cal. App. 4th 694, 713-14 (1996) (bars claim that board's unlawful uncomposition violates UCL; court concludes: "Obviously, actions which are reasonable exercises of business judgment, are not forbidden by law, and fall within the discretion of the directors of a business under the business judgment rule cannot constitute unlawful business practices.").

10. Business Justification / "Everybody Does It"

Business justification and industry practice may provide defenses to UCL claims under limited circumstances. The defendant bears the burden of proving the elements of the defense. Where a plaintiff singles out one defendant to challenge an industry-wide practice, a court may exercise its discretion to deny injunctive relief where the issue is better left to the legislative process. See section VIII.B.53, below.

California

Chern v. Bank of America, 15 Cal. 3d 866, 876 (1976) (industry practice is no defense to UCL claim); South Bay Chevrolet v. General Motors Acceptance Corp., 72 Cal. App. 4th 1380 (1999) (court considers widespread nature of challenged practice and level of consumer understanding; no UCL violation); Sure Safe Indus. v. McGrath Rentcorp, 2001 Cal. App. LEXIS 2689, at *19 (Nov. 26, 2001) (defendants' decision not to purchase plaintiff's product can be justified where plaintiff's rival offers better pricing or a superior product); People v. Cappuccio, Inc., 204 Cal. App. 3d 750, 763 (1988) (same); People v. Casa Blanca Convalescent Homes, Inc., 159 Cal. App. 3d 509, 527 (1984) (same); Motors, Inc. v. Times Mirror Co., 102 Cal. App. 3d 735, 740 (1980) (defendant may prove reasons, justifications and motives for business practice to show it is not unfair); Hobby Indus. Ass'n of Am., Inc. v. Younger, 101 Cal. App. 3d 358, 372 (1980).

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11. Class Certification

The diversity of facts and issues in UCL cases sometimes presents significant obstacles to certification, which in turn may suggest due process concerns even to non-class maintenance of the claim. (See section VIII.B.12.d., below.)

California

Mass. Mut. Life Ins. Co. v. Superior Court, 2002 Cal. App. LEXIS 4029 (April 29, 2002) (affirms district court's order certifying as a plaintiffs' class 33,000 purchasers of life insurance who alleged that Mass Mutual failed to disclose its intention to reduce its discretionary dividend rate; "given the evidence of nondisclosure by the plaintiffs, the fact ... that prospective purchasers received differing representations from Mass Mutual's agents is wholly irrelevant to determination of the company's responsibility under the UCL," and the claim is "plainly suitable" for treatment as a class action); Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224, 244 (2001) (trial court did not abuse its "broad discretion" in certifying a nationwide class and approving a class settlement with defendant computer manufacturer because the certification and settlement were equitable under a balancing of the parties' interests); Norwest Mortgage v. Superior Court of San Diego, 72 Cal. App. 4th 214 (1999) (UCL could not be the basis of a suit by a class of non-California residents who purchased their insurance outside of California where the defendant was a California insurer with its principal place of business in Iowa; where "injuries are suffered by non-California residents, caused by conduct occurring outside of California borders, involving defendants whose headquarters and principal places of business are outside of California," the UCL does not apply; also notes due process objections to extending jurisdiction over non-California residents as there were no substantive contacts with California); Dean Witter Reynolds v. Superior Court (Alameda), 211 Cal. App. 3d 758, 772-73 (1989) (denies class certification because class mechanism does not present superior method for adjudicating UCL claims as individual can prosecute claims for restitution on behalf of general public; "[t]he possibility that absent persons will pursue separate remedies may pose a threat to the defendant, but defendant here opposes class certification and presumably will not be heard to complain later if it suffers adverse consequences as a result").

Federal

Rosales v. Citibank, Fed. Savings Bank, 133 F. Supp. 2d 1177 (N.D. Cal. 2001) (denies motion to strike representative UCL claim;

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private litigant may bring UCL claim on behalf of the public without seeking class certification and, in fact, class actions are not necessarily a superior method for litigating UCL claims; here, although the facts regarding the specific circumstances of improper withdrawals will differ, the predominant and common issue is the legality of defendant's refusal to credit the accounts); O'Connor v. Boeing N. Am., Inc., 197 F.R.D. 404 (C.D. Cal. 2000) (decertifies class as it failed to fulfill the Rule 23(b)(3) superiority requirement as plaintiffs could receive full extent of relief sought in a representative action under UCL; plaintiffs' argument that federal law precluded a UCL representative action had no merit, and plaintiffs could pursue such an action in federal court); Lazar v. Trans Union LLC, 195 F.R.D. 665 (C.D. Cal. 2000) (grants motion to dismiss UCL claim to the extent that it seeks restitutionary relief on behalf of the general public, as plaintiff's claim, based upon the credit agency's mis-merging of his credit file with that of a felon with thousands of dollars worth of tax liens, was not sufficiently similar to fellow consumers as to allow him to bring an uncertified class action on their behalf); Sandlin v. Shapiro & Fishman, 1997 U.S. Dist. LEXIS 4062 (M.D. Fla. 1997) (denies plaintiffs' motion to reconsider a prior denial of class certification; plaintiffs do not meet the requirements of Rule 23 under the Federal Rules of Civil Procedure regarding numerosity, typicality and adequacy of representation).

12. Commercial Relationship

The application of the UCL to commercial relationships among competitors is a separate, complex issue beyond the scope of the Outline. Many of the principles discussed here do not apply in that competitor/competitor context. (See California Wholesale Elec. Co. v. Micro Switch, Honeywell, Inc., 1983-1 Trade Cas. (CCH) ¶ 65,253 (C.D. Cal. 1983) (no violation of UCL occurred (1) because the acts complained of had not been shown to have taken place; (2) because the acts complained of are not unfair competition; and (3) because UCL is inapplicable to acts which do not involve consumer deception and which occur in the course of a commercial relationship between manufacturer and distributor; acts complained of included breach of contract, unlawful tying, imposing exclusive dealing arrangement, and conspiring to monopolize, but the court finds no violations of the applicable statutes).

Federal

Irwin v. Mascot, 2001 U.S. Dist. LEXIS 3285 (N.D. Cal. 2001) (in previous opinion, court had entered summary judgment in class action against defendant debt collectors; grants plaintiffs' motion to

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modify the class definition in part, finding it retains the power to modify the class even after entry of summary judgment).

13. Constitutional Defenses

The absence of clear standards defining unlawful conduct, the potential applicability of the UCL's proscriptions to protected speech, and the UCL's potential for double prosecutions all suggest that the statutes are ripe for constitutional challenge. Nonetheless, courts thus far have rejected almost all constitutional attacks at the initial pleading levels. Also, it appears that the strong due process argument that might support reversal of a significant restitution award in a repetitive UCL action has yet to find the necessary intrepid defendant willing to suffer such an award in order to create the best record for an appeal.

a. Case or Controversy

Article III of the United States Constitution limits the powers of federal courts to circumstances where an actual case or controversy exists. If a private plaintiff is permitted to sue on behalf of others for whom he claims injury when he has suffered no injury himself, he may not present a justiciable case or controversy sufficient to satisfy Article III requirements. To avail itself of the protection of this requirement, a defendant in a state without such a constitutional requirement may consider the possibility of removing the action to federal court (although remand may follow precisely because federal law imposes a limitation that state law does not).

Federal

Littledove v. JBC & Assocs. Inc., 2000 U.S. Dist. LEXIS 18490 (E.D. Cal. 2000) (rejects motion to dismiss; defendant's settlement offer, which provided for all remedies sought to which plaintiffs were entitled, did not negate plaintiffs' cognizable interest or personal stake in the matter, and thus did not moot plaintiff's claims); Stationary Eng'rs Local 39 Health and Welfare Trust Fund v. Philip Morris, Inc., 1998 U.S. Dist. LEXIS 8302 (N.D. Cal. 1998) (dismisses UCL claim and all other claims except for plaintiffs' negligent breach of special duty claim; association does not have standing to bring claim on behalf of its members under the UCL in federal court; UCL claim based on defendant's alleged misrepresentations fails because the plaintiffs did not demonstrate a causal link between defendant's actions and plaintiffs' injuries); Pharmacare v. Caremark, 965 F. Supp. 1411 (D. Haw 1996) (denies motion to dismiss UCL claim but grants motions to dismiss some other claims; plaintiff has standing to sue; because plaintiff

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limits its prayer for relief to restitution, defendant's challenges to a request for an injunction are irrelevant).

b. Commerce Clause

Courts in California have most often rejected Commerce Clause attacks on the UCL.

California

Unit Process Co. v. Raychem Corp., 2002 Cal. App. LEXIS 1283, at *13, 15, 18-19, 34-37 (Feb. 5, 2002) (reverses dismissal on demurrer in vertical distributorship antitrust litigation; non California resident may allege a UCL claim against a California defendant without offending the Commerce Clause where the alleged UCL violations emanate from the distributorship contracts, and the agreements had a California choice of law provision, even though the challenged conduct occurred in another state); People v. Western Airlines, Inc., 155 Cal. App. 3d 597, 600-01 (1984), cert. denied, 469 U.S. 1132 (1985) (rejects Commerce Clause attack despite extensive federal regulation of airline fare advertising); California Ass'n of Dispensing Opticians v. Pearle Vision Ctr., 143 Cal. App. 3d 419 (1983) (upholds injunction for violating the UCL and the FAA because claim to provide "total eye care" is misleading; injunction was properly issued, does not violate the First Amendment or Commerce Clause.); Payne, et. al. v. Aztar Corp., et al., San Diego Superior Court No. 698592 (trial court sustains Commerce Clause challenge to application of UCL and FAA to advertising to California of video poker machines in Nevada; plaintiffs did not appeal).

Federal

Edgar v. Mite Corp., 457 U.S. 624, 642-43 (1982) ([T]he Commerce Clause . . . precludes the application of a state statute to commerce that takes place wholly outside of the State's borders, whether or not the commerce has effects within the States.") (note: 1992 statutory amendments eliminated the "within this state" language); Shearson Lehman Bros. Inc. v. Greenberg, 1995 U.S. App. LEXIS 17313, at *5 (9th Cir. July 3, 1995) (claim for injunctive relief violates the Commerce Clause because it seeks to use a state statute to impose a nationwide injunction against defendant until it changes its business practices); Automotive Prods. PLC v. Tilton Eng'g, Inc., 1993 U.S. Dist. LEXIS 20813, 33 U.S.P.Q. 2d 1065 (Sept. 16, 1993) (denies

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accounting pursuant to UCL because statute only provides relief "where the defendant has performed or is proposing to perform 'an act of unfair competition within this state'"; only act defendant is alleged to have committed "within the state" is termination of distributorship, which was part of larger scheme to injure plaintiff; notes court has yet to find a case in which the UCL has been applied against business practice occurring "wholly, or even primarily, outside of the state's borders. Although the Court can only surmise about the reasons that the legislature limited the reach of § 17203 to acts which occur within the state, the desire to avoid violating the Commerce Clause was probably the paramount concern").

c. Double Jeopardy

The courts have found no violation of the Double Jeopardy Clause when a defendant is subject to dual prosecutions for federal criminal penalties and civil monetary penalties.

California

Setliff Brothers Service v. Bureau of Automotive Repair, 53 Cal. App. 4th 1491, 1494-95 (1997) (District Attorney's UCL action does not prevent subsequent agency proceeding for license verification based upon same underlying facts); People v. Damon, 51 Cal. App. 4th 958, 971 (1996) (previous administrative determination does not create res judicata bar to later action by district attorney alleging UCL violations); People v. Forrest E. Olson, Inc., 137 Cal. App. 3d 137, 140 (1982) (no Double Jeopardy argument in civil government enforcement action under FAA).

Federal

U.S. v. Traylor, 978 F.2d 1131 (9th Cir. 1992) (Double Jeopardy clause does not bar prosecution of "boiler room" telemarketing operator under federal mail fraud statute after he paid civil monetary penalties because "successive prosecutions by separate sovereigns for crimes arising out of the same acts are not barred by the Double Jeopardy Clause.").

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d. Due Process Attacks

(1) Procedural Due Process

To protect defendants from the risk of one-way intervention, where a defendant could face a collateral estoppel effect from an unfavorable ruling but plaintiffs could avoid such effect because a class has not yet been certified, courts sometimes require class issues to be resolved before any merits rulings. This doctrine does not solve the problems that confront a defendant in a quasi-class action under the UCL, however.

Home Sav. & Loan Ass'n v. Superior Court of Los Angeles ("Home II"), 54 Cal. App. 3d 208, 211-13 (1976) (court may not hear plaintiffs' summary judgment motion until after class is certified and those who wish to opt out have done so); Home Sav. & Loan Ass'n v. Superior Court of Los Angeles ("Home I"), 42 Cal. App. 3d 1006, 1010-11 (1975) (reverses order permitting trial of the individual class representative's case before class case).

Although a defendant has a constitutional right to notice and hearing before a court issues a temporary restraining order that would deprive the defendant of property (Skinner v. Superior Court of Santa Clara County, 69 Cal. App. 3d 183, 188 (1977)), the courts have rejected due process arguments where defendants have received hearings.

California

Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116, 138 (2000) (non-class representative action does not violate requirement of procedural due process because, although private attorney general suits create a serious risk of multiple recovery against a defendant, Trinity Management was not at risk of repetitive litigation under the facts of the case; by the time the case reached the California Supreme Court, the statute of limitation had run on any claims the absent "represented parties" might have asserted on their own behalves); Wilner v. Sunset Life Insurance Co., 78 Cal. App. 4th 952, 970 (2000) ("to be sure, if this matter ultimately does not proceed as a class action, the possibility that non-parties may pursue their own remedies poses a risk to [defendant]"); People v. Thomas Shelton Powers, M.D., Inc., 2 Cal.

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App. 4th 330, 343-44 (1992) (due process does not prevent disgorgement of profits to state where no victim of the unlawful practice may be determined; "[n]or can we agree that our construction of the statute in any way deprives defendants of property without notice. The property having been gained wrongfully, the defendant has no valid ownership interest in it.") (overruled sub silentio in Kraus, supra); Clothesrigger, Inc. v. GTE Corp., 191 Cal. App. 3d 605, 612 (1987) (remands for further findings, after trial court's refusal to certify nationwide class, whether application of California law to non-resident plaintiffs would be constitutional under Phillips Petroleum [described below], in light of California's choice of law rules).

Federal

Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 810 (1985) (if interests of non-resident absent class members are adequately represented in litigation, they may be bound by settlement or judgment) (not UCL case).

(2) Substantive Due Process

The courts have rejected many challenges to the UCL on the grounds of vagueness or uncertainty.

California

People v. Superior Court (Caswell), 46 Cal. 3d 381, 389 (1988) (due process of law requires that legislation provide a reasonable degree of certainty; to withstand a vagueness challenge, “a statute must be sufficiently definite to provide adequate notice of the conduct prescribed"; [a] statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessary guess at its meaning and differ as to its application, violates the first essential of due process.”); Notrica v. State Comp. Ins. Fund, 70 Cal. App. 4th 911, 945 (1999) (rejects defendant's "constitutionally vague as applied" argument due to the scope and breadth of the language in UCL, articulating the test as "whether the public is likely to be deceived"; defendant intended to mask its change in reserve guideline to maximum probable potential

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cost and it succeeded as evidenced by plaintiff's statement that "it would not have continued its relationship with [defendant] had it been aware of the change"); Hewlett v. Squaw Valley Ski Corp., 54 Cal. App. 4th 499, 529 (1997) (due process vagueness standard is designed to avoid penalizing conduct where a statute fails to give adequate notice of what is forbidden; statute prohibiting timber cutting without proper permit was not vague or uncertain); People v. Morse, 21 Cal. App. 4th 259 (1993) (rejects vagueness challenge to civil prosecution of lawyer for violation of Cal. Bus. & Prof. Code § 17537.6 regarding operation of "homestead filing services"); People v. Thomas Shelton Powers, M.D., Inc., 2 Cal. App. 4th 330, 343 (1992) ("disgorgement to the state" does not render UCL unconstitutionally vague, because state is not required to put defendant on notice as to person to whom restitution might later be required; statute will not be declared void as being indefinite if it contains "a reasonably adequate disclosure of the legislative intent regarding an evil to be combated in language giving fair notice of the practices to be avoided." (quoting People v. Hellner, 43 Cal. 2d 715, 720 (1954)); People v. H&H Properties, 154 Cal. App. 3d 894 (1984) (Los Angeles County Rent Control Ordinance did not operate as an unconstitutional impairment of H&H Properties' vested right to proceed with its condominium project, so civil penalties were allowable under UCL); People v. Columbia Research Corp., 71 Cal. App. 3d 607, 613, cert. denied, 434 U.S. 904 (1977) (facial attack on constitutionality of FAA fails where defendant actually knows practices plaintiff is seeking to enjoin); People v. Kelley, 70 Cal. App. 3d 418, 421 (1977) (reverses trial court's decision based on Bus. and Prof. Code, §§ 1723 and 17535 to enjoin appellants from engaging in the practice of dentistry without a license because the "preliminary injunction is constitutionally overbroad in that it explicitly prohibits appellants from engaging in a statutorily authorized and constitutionally protected activity..."); People v. Witzerman, 29 Cal. App. 3d 169, 179 (1972) (word "misleading" is not unconstitutionally vague); People v. National Research Co. of California, 201 Cal. App. 2d 765, 772 (1962) (rejects challenge to Cal. Civ. Code § 3369 [predecessor to UCL], stating statute "designed to protect the public good must be upheld

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unless its nullity clearly, positively and unmistakably appears.").

Federal

Association of Nat'l Advertisers, Inc. v. Lungren, 44 F. 3d 726 (9th Cir 1994) (statute prohibiting certain claims in “green” advertising was not unconstitutionally vague).

Outside the context of the UCL, California courts have held that a statute must provide sufficient notice of the conduct that it forbids.

California

Walker v. Superior Court, 47 Cal. 3d 112, 143 (1988); People v. Superior Court (Caswell), 46 Cal. 3d 381, 389 (1988) ("[to defeat a vagueness attack], a statute must be sufficiently definite to provide adequate notice of the conduct proscribed; [a] statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process."); People v. Sangani, 22 Cal. App. 4th 1120, 1143 (1994).

Federal

Association of Nat'l Advertisers, Inc. v. Lungren, 44 F.3d 726 (9th Cir. 1994) (statute prohibiting certain claims regarding "green" advertising is not vague).

Constitutional safeguards may require that the court undertake a proportionality analysis before imposition of civil penalties, so that it does not impose civil penalties that exceed those imposed in other purported cases based upon more compelling facts. See People v. Nat'l Ass'n of Realtors, 155 Cal. App. 3d 578 (1984); see also Solem v. Helm, 463 U.S. 277, 290-92 (1983).

e. Equal Protection Clause

Equal protection challenges have been rare, and they have been unsuccessful.

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California

People v. Warnes, 10 Cal. App. 4th Supp. 35, 39 (1992) (Equal Protection Clause "requires a court to grant a hearing on defendant's ability to pay restitution," but "it does not require a trial judge to make a finding of ability to pay before ordering restitution.").

f. Excessive Fines Clause

The excessive fines clause may prevent application of UCL provisions to permit an award of restitution to a governmental plaintiff where a private plaintiff already has received restitution. (See Browning Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 262 (1989) (excessive fines clause is inapplicable to punitive damage award unless government is recipient of at least a portion of the award); Hale v. Morgan, 22 Cal 3d 388, 401 (1978) (statute (not UCL) that on its face authorizes “per day” or “per violation” penalty without setting forth limits on a prosecutor's discretion is confined by the due process clauses of the federal and state constitutions. Notes that “[u]niformly, we have looked with disfavor on ever-mounting penalties and have now really construed the statutes which either require or permit them.”)).

The burden is likely on defendant to prove that its inability to pay is limited.

California

City and County of San Francisco v. Sainez, 77 Cal. 4th 1302 (2000) (applies Hale “proportionality” analysis and upholds a civil penalty of $767,000, which was $1,000/day for 767 days, against a landlord for housing code violations; notes that “civil penalty” under §17206 is a “fine” for purposes of analysis under the “excessive fines” clause of the Eighth Amendment); People v. Morse, 21 Cal. App. 4th 259 (1993) (court refuses to consider whether civil penalty and restitution exceed defendant's ability to pay because defendant did not raise that issue at trial).

Federal

Lopez v. World Savings & Loan Association, 2003 Cal. App. LEXIS 96 (January 23, 2003) (affirms trial court's decision that 12 CFR § 560.2 expressly preempts the use of the UCL to preclude imposition of a $10 fax fee for the transmission of a payoff demand statement by fax or a $60 fee for provision of the stateemnt. National Union, United Mine

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Workers of America v. Bagwell, 512 U.S. 821, 114 S. Ct. 2552 (1994) (discusses distinction between civil and criminal contempt and describes due process protections that must be afforded even in civil contempt cases if the proceeding takes on characteristics of a criminal proceeding); U.S. v. Halper, 490 U.S. 435 (1989) (constitutional safeguard applicable to criminal cases apply equally to civil penalty cases if government seeks monetary award so unrelated to government's damages and expenses that it constitutes punishment; U.S. v. Certain Real Property and Premises, 954 F. 2d 29 (2d Cir 1992) (double jeopardy and excessive fines clauses apply to civil and monetary sanctions classified as punitive under Halper test); U.S. v. Ramiro, 986 F.3d 333 (9th Cir. 1993) (award of restitution as part of plea bargain under 18 U.S.C. § 3663(a)(3) requires a hearing on defendant's ability to pay).

g. Federal Preemption

Preemption occurs "when a detailed federal enforcement mechanism for the breach of an obligation created by federal law exists." (Boyle v. MTV Networks, Inc., 766 F. Supp. 809, 815-16 (N.D. Cal. 1991)). Courts undertaking preemption analysis reach varying conclusions, generally after careful analysis both of the statutory scheme and the legislative history of the statutes that defendants assert have preemptive effect.

California

Finding Preemption

Bright v. Washington Mut. Bank, 2002 Cal. App. LEXIS 3250 (Mar. 25, 2002) (affirms trial court's decision that 12 C.F.R. § 560.2 expressly preempts the use of UCL to enforce a state law regulating the maximum amount of required hazard insurance on a home loan, since the federal statute explicitly preempts state laws regulating "terms of credit"; this interpretation is supported by the administrative history of the regulation as well as the promulgating agency's own interpretation of the regulation); Washington Mutual Bank v. Super. Ct., 95 Cal. App. 4th 606, 610 (2002) (vacates trial court's order overruling defendant's demurrers and directs trial court to sustain because the federal Home Owners' Loan Act preempts a UCL claim regarding lender's practice of charging pre-closing interest on home loans); People v. Pac. Bell, 89 Cal. App. 4th 844, review granted, 112 Cal. Rptr. 2d 259 (2001) (affirms dismissal of representative action against utility company where the matter was

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concurrently pending before the Public Utility Commission; subject matter jurisdiction over the suit was preempted by the pending regulatory proceeding); Olszewski v. Scrippshealth, 88 Cal. App. 4th 1268, review granted, 111 Cal. Rptr. 2d 687 (2001) (defendant health care provider could not file a lien on plaintiff's claim against a third party tortfeaser for reimbursement of expenses because defendant's statutory lien claim was "balance billing" – a practice prohibited by the federal Medicaid law; however, defendant's actions fell within a safe harbor provision which protects communications in a judicial proceeding); Cong. of Cal. Seniors v. Catholic Healthcare West, 87 Cal. App. 4th 491 (2001) (affirming the trial court's dismissal of union plaintiffs' UCL claim against defendant hospital based on the congressional intent implicit in the very structure of the federal Medicaid scheme that a hospital's cost reporting and reimbursement practices should be governed exclusively by federal law); Eckert v. Bay Area Cellular Tel. Co., 85 Cal. App. 4th 1369 (2001) (not published) (affirms the trial court's dismissal on demurrer of plaintiffs' claim against defendant cellular phone company for lack of subject matter jurisdiction; jurisdiction preempted by the regulatory authority of the California Public Utilities Commission because the relief sought would interfere with the agency's ongoing development of unsettled regulatory policy); Ball v. GTE Mobilnet of California, 81 Cal. App. 4th 529, 543 (2000) (reverses dismissal of UCL claim on federal preemption grounds; although plaintiffs cannot invoke state law regarding charges for non-communication time on cellular phones after the federal law took effect, they may invoke UCL to complain that such non-disclosed charges constituted unfair business practices, and seek injunctive relief in a new action); Washington Mutual Bank, F.A. v. Superior Court, 75 Cal. App. 4th 773 (1993) (real estate settlement procedures act (“RESPA”), which prescribes disclosures for residential real estate transactions, does not preempt UCL claim seeking additional disclosures); People v. Highland, 14 Cal. App. 4th 1692, 1703-12 (1993) (Homeowner's Loan Act does not preempt government action challenging slum conditions in buildings where defendants had made loans); Fleet v. CBS, Inc., 1196 Cal. App. LEXIS 1119 (1996) (affirms that federal copyright law preempts state claims for § 3344 right of publicity violation and UCL when exploitation occurred in the use of plaintiff's likeness in a motion picture); American Int'l Group, Inc. v. Superior Court of Los Angeles County, 234 Cal. App. 3d 749 (1991) (civil RICO cause of action is precluded by operation

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of the McCarran-Ferguson Act and the state laws of California regulating the business of insurance); Siegel v. American Savings & Loan, 210 Cal. App. 3d 953, 960-61 (1989) (rejects preemption argument and allows claim against federal savings and loan for allegedly improper reconveyance fees); California ARCO Distrib., Inc. v. Atlantic Richfield Co., 158 Cal. App. 3d 349, 363 (1984) (Petroleum Marketing Practices Act preempts UCL claim); People v. Rath Packing Co., 85 Cal. App. 3d 308 (1978) (affirms denial of injunction under § 17500 where prior federal adjudication bars enforcement of state labeling laws preempted by federal labeling standards; state laws and procedures may be used to exercise the state's concurrent jurisdiction only where they are consistent with federal labeling standards).

Finding No Preemption

McCall v. PacifiCare of California, Inc., 25 Cal. 4th 412 (2001) (claims that do not seek medical services reimbursement or payment under the Medicare Act, but rather refer incidentally to denial of benefits under the Act, are not preempted; such claims are collateral to Medicare claims and may be pursued in state court); Mangini v. R.J. Reynolds Tobacco Co., 7 Cal. 4th 1057, 1073-74 (1992) (federal law does not preempt state UCL claim alleging that use of "Joe Camel" logo on t-shirts and other items violated Federal Cigarette Labeling and Advertising Act because it did not include required health warning); Gibson v. World Savings and Loan Association, 103 Cal. App. 4th 1291, 1306-07 (2002) (reverses trial court judgment for defendants; concludes claim for restitution for UCL violation based upon charges imposed for forced order insurance is not preempted by 12 C.F.R. § 560.2; rejects OTS' arguments for preemption); Consumer Justice Center v. Olympian Labs, Inc., 99 Cal. App. 4th 1056, 1060-62 (2002) (reverses demurrer by makers and distributors of over-the-counter dietary supplements to false advertising complaint; concludes federal law does not expressly preempt false advertising claims regarding dietary supplements; finds no implied preemption despite FTC power to obtain an injunctive relief; notes: "The obvious conclusion to be drawn from the absence of a private cause of action [in the FTC Act] is that congress did not intend the Federal Trade Commission to "occupy the field" of redressing false advertising claims."; finds no conflict preemption because compliance with both federal and state law is not "impossible."; rejects implied preemption under the Federal

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Food, Drug and Cosmetic Act because act implies non-preemption; Black v. Financial Freedom Senior Funding Corp., 92 Cal. App. 4th 917 (2001) (reverses summary judgment; Parity Act, Truth in Lending Act and the Depository Institutions Deregulation and Monetary Control Act do not preempt homeowner's claims, including alleged violation of UCL; laws prohibiting false advertising and unfair business practices are included within the state's police power, and accordingly subject to a "heightened presumption against preemption"; such state powers are not to be preempted unless that was "the clear and manifest purpose of Congress"); Perdue v. Crocker Nat'l Bank, 38 Cal. 3d 913, 941 (1985) (federal law does not preempt state law regulating service charges); Drouet v. Super. Ct. of S.F. County, Cal. App. 4th 1237, review granted, 24 P.3d 491 (Cal. 2001) (tenant may bring a claim for retaliatory eviction under the UCL even when evicted under the Ellis Act, which expressly permits a landlord to evict tenants when removing rental units from the market); People v. Servantes, 86 Cal. App. 4th 1081 (2001) ( local towing laws violated by defendant towing service were not preempted by the Federal Aviation Administration Authorization Act, which expressly prohibits local regulation of motor carriers who transport property; the local towing laws fell within a statutory exception to the Act insofar as they were directly related to safety concerns and not just economic interests); Fenning v. Glenfed Inc., 40 Cal. App. 4th 1285 (1995) (Home Owners' Loan Act of 1933 ("HOLA") does not preempt UCL or FAA claim arising from advertising and sales practices with respect to uninsured investments); Sepulveda v. Highland Fed. Sav. & Loan, 14 Cal. App. 4th 1692, 1708 (1993) (reverses order sustaining demurrer because HOLA does not include federal preemption of class claims under UCL for recoupment of rent collected without the expenditure of sums necessary to ensure compliance with habitability laws); Solorzano v. Superior Court, 10 Cal. App. 4th 1135, 1148-49 (1992) (federal statute regulating Medicare-qualified health maintenance organizations does not preempt UCL claim for unfair and misleading advertising practices in soliciting subscribers for plan); American Int'l Group, Inc. v. Superior Court of Los Angeles County, 234 Cal. App. 3d 749 (1991) (civil RICO cause of action is precluded by operation of the McCarran-Ferguson Act and the state laws of California regulating the business of insurance); Gladstone v. Hillel, 203 Cal. App. 3d 977 (1988) (reverses trial court's decision to enjoin defendants from using plaintiff's jewelry designs and molds and reverses trial court's order that defendants

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destroy all molds, jewelry sketches, designs and other representations of plaintiff's work in their possession and not to use them for any purpose; language of trial court's decree gives plaintiff an equivalent right to copyright based on theories of conversion or unfair competition and is therefore preempted by federal copyright law); People v. Western Airlines, Inc., 155 Cal. App. 3d 597, 600-601 (1984), cert denied, 469 U.S. 1132 (1985) (rejects preemption defense to UCL claim not specifically based on violation of federal law).

Federal

Finding Preemption

Smiley v. Citibank, 517 U.S. 735 (1996) (federal banking laws preempt state law claims for excessive late charges on credit cards; affirms summary judgment because, under the supremacy clause, Delaware law, rather than California law, controls Bank's imposition of rates on credit card accounts); Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992) (Airline Deregulation Act of 1979 [49 U.S.C. § 1305(a)(1)] preempts National Association of Attorneys General's guidelines defining unfair and deceptive advertising to include, among other practices, printing fare in large type with restrictions in small type); Manufacturers Life Ins. Co. v. Taylor, 481 U.S. 58, 65-66 (1987) (Labor Management Relations Act preempts UCL claim); Myers v. Merrill Lynch, 249 F. 3d 1087, 1088 (9th Cir. 2001) (affirms dismissal of broad-gauge attack on the widespread practice by defendant investment banking firms of discouraging potential purchasers of stock in public offerings from flipping shares in order to turn a quick profit, because the claim is preempted by federal regulation of securities transactions); Kodadek v. MTV Networks, Inc., 1998 U.S. App. LEXIS 21175 (9th Cir. Aug. 31, 1998) (affirms summary judgment on grounds that plaintiff's UCL claim is preempted by the federal Copyright Act because: (1) the rights that plaintiff asserts under state law are equivalent to those protected by the Copyright Act and (2) the work involved falls within the subject matter of the Copyright Act as set forth in 17 U.S.C. §§ 102 and 103); Trans World Airlines, Inc. v. Mattox, 897 F.2d 773 (5th Cir. 1990) (federal law [49 U.S.C. § 1305(a)(1)] preempts state law provisions proscribing deceptive advertising); Del Madera Properties v. Rhodes and Gardner, Inc., 820 F.2d 973, 977 (9th Cir. 1987) (Federal Copyright Act preempts misappropriation claim); Rath Packing Co. v. M.H. Becker, 530 F.2d 1295 (9th Cir. 1975) (California Administrative

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Code is preempted by federal law in context of meat packing regulations); Bertram v. Terayon Communications Systems, Inc., 2001 U.S. Dist. LEXIS 6215 (C.D. Cal. 2001) (plaintiffs brought UCL claim on behalf of the general public; court grants defendant's motion to dismiss, Securities Litigation Uniform Standards Act of 1998 preempts plaintiffs' state law claims); Rogers v. Nationscredit Financial Services, 233 B.R. 98, 109-110 (N.D. Cal. 1999) (finds preemption of UCL claim challenging practice of entering into post-petition “reaffirmation agreements” that did not comply with the Bankruptcy Code); Rice v. Fox Broadcasting Co., 148 F. Supp. 2d 1029 (C.D. Cal. 2001) (grants defendant television producer's motion for summary judgment to the extent that plaintiff seeks to remedy under the UCL alleged misappropriation of his protected expression because plaintiff's UCL claim is preempted by the Copyright Act); Twohey v. Lincoln Nat'l Life Ins., 2000 U.S. Dist. LEXIS 10096, at *11 - *15 (N.D. Cal. July 11, 2000) (grants defendant's motion to dismiss; plaintiff's attempt to seek redress under UCL for defendant's alleged mishandling of her husband's disability insurance payments is preempted by the Employee Retirement Income Security Act); Silvaco Data Sys., Inc. v. Technology Modeling Assoc., Inc., 896 F. Supp. 973, 975-78 (N.D. Cal. 1995) (grants stay in a false advertising suit against a computer software competitor given that a substantially similar and more encompassing claim is already pending in state court, and that state courts have concurrent jurisdiction over claims brought under the Lanham Act); Pantazis v. Fior d'Italia, Inc., 1994 U.S. Dist. LEXIS 13622 (N.D. Cal. 1994) (court states in dicta that a UCL claim arising from an allegedly wrongful termination is preempted by the National Labor Relations Act and § 301 of the Labor Management Relations Act); Determined Prod., Inc. v. Koster, 1992 U.S. Dist. LEXIS 20030, at *14 (N.D. Cal. 1992) (Copyright Act preempts UCL claim based on the misappropriation of copyrighted material (toy dinosaurs)); Xerox Corp. v. Apple Computer, Inc., 734 F. Supp. 1542, 1550 (N.D. Cal. 1990) (Copyright Act preempts UCL claims for unfair competition through use of copyrighted materials); Xerox v. Corp. v. Apple Computer, Inc., 734 F. Supp. 1542, 1551-53 (N.D. Cal. 1990) (federal copyright law preempts UCL claim as plaintiff's rights under state law are no greater than those under the federal statute); Bloom v. Universal City Studios, Inc., 734 F. Supp. 1553, 1555 (C.D. Cal. 1990) (§ 301(a) of the Labor Management Relations Act preempts UCL claim as the conduct underlying the state unfair business practices claim coincides with that involved in the

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§ 301(a) claim); Bull Publ'g Co., v. Sandoz Nutrition Co., 1989 U.S. Dist. LEXIS 16622, at *19 (N.D. Cal. July 7, 1989) (plaintiff's claim under § 17203 is "preempted by the 1976 Federal Copyright Act. . . . In the Ninth Circuit, unfair competition claims asserted under state law are preempted by the Federal Copyright Act if the right being asserted is duplicative of the rights protected by § 106 of the Federal Act."); Holcomb v. Bingham Toyota, Inc., 1987 U.S. Dist. LEXIS 15151 (E.D. Cal. 1987) (National Labor Relations Act preempts UCL claim); Nutley v. Varian Assoc., Inc., 625 F. Supp. 104, 108 (N.D. Cal. 1985) (NLRA preempts UCL claim); Motown Record Corp. v. George A. Hormel & Co., 657 F. Supp. 1236 (C.D. Cal. 1987) (reaffirms Xerox Corp. v. Apple Computer, Inc., 734 F. Supp 1542 (N.D. Cal. 1990), that Copyright Act preempts UCL claims for unfair competition through use of copyrighted materials); Provience v. Valley Clerks Trust Fund, 509 F. Supp. 388, 392 (E.D. Cal. 1981) (ERISA preempts UCL claim).

Finding No Preemption

Aiello v. First Alliance Mortgage Co., 2002 U.S. Dist. LEXIS 844 (C.D. Cal. 2002) (denies motion to dismiss UCL claim; Truth in Lending Act (TILA) does not preempt state laws because TILA specifically allows for state law to supplement its enforcement scheme and does not conflict with UCL); Davis v. American Bldg. Maintenance Co., 2001 U.S. Dist. LEXIS 9474 (N.D. Cal. 2001) (remands to state court; defendant management company removed case under § 301 of the Labor Management Relations Act [29 U.S.C. § 185 et seq.]; plaintiff's state law claims did not require interpretation of the collective bargaining agreement and were therefore not preempted by federal law; case remanded to state court); Hendricks v. Dynergy Power Mktg., Inc., 160 F. Supp. 2d 1155 (S.D. Cal. 2001) (remands case to state court; Federal Power Act does not preempt UCL claim of anticompetitive conduct, as "plaintiffs can state a violation under § 17200 in two ways, independent of the [FPA]: either by alleging a violation of the Cartwright Act ..., or by alleging that the anti-competitive activity was unfair or deceptive even if not unlawful"; consequently, artful pleading doctrine is inapplicable); Hill Physicians Med. Group, Inc. v. Pacificare of California, 2001 U.S. Dist. LEXIS 6051 (N.D. Cal. 2001) (UCL claim could not be brought under ERISA's [29 U.S.C. § 1001 et seq.] civil enforcement provision, and does not relate to an ERISA plan sufficiently to justify preemption; remands case to state court); Braco v.

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MCI Worldcom Communications, Inc., 138 F. Supp. 2d 1260 (C.D. Cal. 2001) (plaintiff's unfair competition claim against defendant long-distance company is not preempted by the Federal Communications Act [47 U.S.C. § 414] because there is no Congressional intent for complete preemption); Total TV v. Palmer Communications, Inc., 69 F.3d 298, 304 (9th Cir. 1995) (UCL is not preempted by federal Cable Acts because they are consistent and because Congress did not intend to fully occupy the field of cable television regulation; "a hypothetical conflict is not a sufficient basis for preemption"); Summit Mach. Tool Mfg. Corp. v. Victor CNC Sys., Inc., 7 F.3d 1434 (9th Cir. 1993) (unfair competition laws which seek to prevent reverse palming off are not preempted by federal law); Interactive Network, Inc. v. NTN Communications, Inc., 875 F. Supp. 1398, 1409-10 (N.D. Cal. 1995) (denies summary judgment on UCL claim despite preemption of underlying copyright claims because plaintiff recast claims in terms of consumer confusion created by misleading press releases); Boyle v. MTV Networks, Inc., 766 F. Supp. 809, 815-16 (N.D. Cal. 1991) (Federal Communications Act does not preempt UCL claim for unlawful lottery because claims for unfair business practices based on illegal gambling do not fall within FCA §§ 207 and 202 as plaintiff is not seeking to recover damages for discrimination; also notes that case fails Metropolitan Life preemption test because language in statute and legislative history do not support proposition that Congress has manifested intent to make such causes of action removable to federal court).

h. First Amendment

United States Supreme Court precedent establishes that First Amendment limitations apply "to all claims, of whatever label, whose gravamen is the alleged injurious falsehood of a statement" (Blatty v. New York Times Co., 42 Cal. 3d 1033, 1044-45 (1986), cert. denied, 485 U.S. 934 (1988)), so that a plaintiff may not circumvent constitutional protections by recasting his libel claim as a claim for false advertising or unfair competition. Constitutional protections for commercial speech, however, have not precluded injunctive relief under the UCL, although the courts do require that injunctions be tailored so as to impose no restraint on protected commercial speech beyond what is reasonably necessary to prevent a violation of law.

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California

Kasky v. Nike, Inc., 2002 Cal. LEXIS 2591 (2002) (reverses lower courts' decisions; concludes that when Nike, to increase its sales and profits, makes public statements defending its labor practices and working conditions, those statements are commercial speech for purposes of the free speech protections of both the federal and state constitution and may be regulated to prevent consumer deception; that such speech relates to an issue of significant public interest or controversy does not inherently garner it protection as political speech); Shekhter v. Fin. Indem. Co., 89 Cal. App. 4th 141 (2001) (reverses trial court's denial of defendant insurance company's special motion to strike plaintiffs' UCL claim under Cal. Code of Civ. Proc. § 425.16 where (1) defendant demonstrates that the acts underlying plaintiff's claim were made in furtherance of defendant's constitutional rights of petition or free speech; and (2) plaintiff fails to demonstrate that he will "probably" prevail on the claim); DuPont Merck Pharm. Co. v. Superior Court, 78 Cal. App. 4th 562 (2000) (reverses and remands trial court's decision to dismiss plaintiff's FAA claim based upon defendant's defense under Cal. Code of Civ. Proc. § 425.6 (Anti-SLAPP); whether statements made during advertising, marketing or public relations activities were true should be considered in the second part of the Anti-SLAPP analysis, whether there is a probability that plaintiffs will prevail; denial of motions to dismiss or motions for summary judgment in other jurisdictions which have different procedural requirements than the Cal. Code of Civ. Proc., however, do not establish that plaintiffs will probably prevail; that the trial court ruled that plaintiff had a legally sufficient claim is not enough to prove that plaintiffs will probably prevail; plaintiffs must also prove the legal sufficiency of their claim); Keimer v. Buena Vista Books, Inc., 75 Cal. App. 4th 1220 (1999) (allows claim against "Beardstown Ladies" for inaccurate securities advice based upon alleged false advertising on book cover and videotape because First Amendment protections applicable to contents of book do not extend to its advertising); People v. Morse, 21 Cal. App. 4th 259 (1993) (rejects overbreadth attack on UCL and FAA claims alleging misleading professional advertising); Cozad v. Board of Chiropractic Exam'rs, 153 Cal. App. 2d 249 (1957) (adoption of rules prohibiting misrepresentations and proscribing penalties for such misrepresentations is not preempted by FAA, but the board could not prohibit or restrict advertising that was not untrue or misleading).

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Federal

City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 431-32 (1993) (states may regulate or prohibit false or misleading commercial speech because it is not protected under the First Amendment); Peel v. Attorney Registration and Disciplinary Commission of Illinois, 496 U.S. 91, 108 (1990) (state may only ban false or misleading speech, but it may regulate truthful commercial speech); Blatty v. New York Times Co., 42 Cal. 3d 1033 (1986), cert. denied, 485 U.S. 934 (1988) (First Amendment bars UCL claim based upon failure to include author's book on New York Times' "bestsellers" list); U.S. v. O'Brien, 391 U.S. 367, 382 (1968); Association of Nat'l Advertisers, Inc. v. Grocery Mfrs. of Am., Inc., 44 F.3d 726 (9th Cir. 1994) (upholds constitutionality of § 17508.5 under the intermediate scrutiny standard governing commercial speech); Winter v. G.P. Putnam's Sons, 938 F.2d 1033, 1037 (9th Cir. 1991) (First Amendment prevents claims against publisher based upon alleged failure to investigate accuracy of statements regarding eating mushrooms in book on mycology); San Diego Committee v. Governing Board, 790 F. 2d 1471 (9th Cir 1986) (school board that had allowed advertisements advocating military careers in school newspaper was not permitted to prohibit advertisements proposing alternatives to military service); Grolier, Inc. v. FTC, 699 F. 2d 983, 988, cert. denied, 464 U.S. 891 (1983) (injunction against false or misleading advertising does not violate a company's First Amendment right to free speech); American Med. Ass'n v. FTC, 638 F.2d 433, 452 (2d Cir. 1980), aff'd, 455 U.S. 676 (1982) (upholds FTC order prohibiting American Medical Association from making "statements officially condemning [doctors'] contract practices"); Standard Oil Co. of California v. FTC, 577 F.2d 653, 662 (9th Cir. 1978); Beneficial Corp. v. FTC, 542 F.2d 611, 602 (3d Cir. 1976), cert. denied, 430 U.S. 983 (1977) (FTC ban on phrase "Instant Tax Refund" without considering context violates First Amendment's prohibition of prior restraints; "Commission, like any governmental agency must start from the premise that any prior restraint is suspect, and that a remedy, even for deceptive advertising can go no further than is necessary for the elimination of the deception"); William O'Neil + Co. v. Validea.com, 2002 U.S. Dist. LEXIS 8392, at *21-23 (C.D. Cal. Jan. 31, 2002) (dismisses UCL claim where the defendants published a book describing the plaintiff's investment strategies because the First Amendment protects such editorial speech even where there are factual

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inaccuracies because a publisher has no duty to investigate the accuracy of a book it publishes); Isuzu Motors, Ltd. v. Consumers Union of U.S., Inc., 12 F. Supp. 2d 1035, 1048-49 (C.D. Cal. 1998) (prior restraint on protected commercial speech must go no further than is reasonably necessary to accomplish the remedial objective of preventing the violation); Oxycal Laboratories, Inc. v. Jeffers, 909 F. Supp. 719, 723-25 (S.D. Cal. 1995) (dismisses Lanham Act claim against book publisher where author stated inaccurately that drug contained cancer-causing substance); Sunbelt Television v. Jones Intercable, Inc., 1991 U.S. Dist. LEXIS 19906, at *3-6, 11-12 (C.D. Cal. Cal. 1991) (denies 12(b)(6) motion because First Amendment does not immunize media antitrust defendants from suit [here, under the Sherman Act and UCL] if anti-competitive motives guided their refusal to carry plaintiff's television channel); New Kids on the Block v. New Am. Publ'g, Inc., 745 F. Supp. 1540, 1543-47 (C.D. Cal. 1990) (grants summary judgment to defendant on the grounds that the First Amendment immunizes their news gathering and dissemination activities from trademark infringement, misappropriation, and derivative UCL claims).

Commercial speech does not receive the "same level of protection as non-commercial speech." (Posadas de Puerto Rico Assoc. v. Tourism Co., 478 U.S. 328, 340 (1986) (commercial speech “may be restricted only if the government's interest in doing so is substantial, the restrictions directly advance the government's asserted interest, and the restrictions are no more extensive than necessary to serve that interest;” not UCL case); Central Hudson Gas & Electric Co. v. Public Service Commission, 447 U.S. 557, 553 (1980)). If speech "proposes a commercial transaction" (Board of Trustees of the State University of New York v. Fox, 492 U.S. 469 (1989)), it may be regulated if three criteria are satisfied: (1) the government has a substantial interest in supporting the regulation; (2) the regulation directly advances that interest; (3) the regulation is not more intrusive than necessary to serve that interest. (Ibanez v. Florida Department of Business & Professional Regulation, 114 S. Ct. 2084 (1994); Central Hudson Gas & Electric Corp. v. Public Services Commission, 447 U.S. 557, 566 (1980)). Speech is fully protected, however, if there are both commercial and non-commercial aspects to this speech. (Riley v. National Federation for the Blind, 47 U.S. 781, 795 (1988)).

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California

Loska v. Superior Court, 188 Cal. App. 3d 569 (1986) (upholds ordinance prohibiting ticket-scalping in public places).

Federal

Destination Ventures, Ltd. v. FCC, 46 F.3d 54 (9th Cir. 1995) (allows suit under federal statute that bans unsolicited faxes containing advertisements); Moser v. FTC, 46 F.3d 970 (9th Cir. 1995) (allows suit under federal statute banning commercial automated telemarketing); Association of Nat'l Advertisers v. Lungren, 44 F.3d 726 (9th Cir. 1994) (upholds state restrictions on "green advertising that states consumer products, for example, ozone friendly," unless the goods satisfy FTC standards); Joe Conte Toyota, Inc. v. Louisiana Motor Vehicle Commission, 24 F.3d 754 (5th Cir. 1994) (upholds Louisiana regulation forbidding use of the word "invoice" in automobile advertising; evidence supports conclusion that the word "invoice" is inherently misleading); U.S. Healthcare v. Blue Cross of Greater Philadelphia, 898 F.2d 914 (3rd Cir.), cert. denied, 111 S. Ct. 58 (1990) (allows suit challenging advertisements comparing medical insurance plans); National Commission on Egg Nutrition v. FTC, 570 F.2d 157 (7th Cir. 1977), cert. denied, 439 U.S. 821 (1978) (upholds restrictions on advertisements suggesting that eating eggs did not cause heart disease).

(1) Disclaimer

An injunction requiring a disclaimer is more likely to survive First Amendment scrutiny than one creating an absolute ban on particular commercial speech.

Federal

Zauderer v. Office of Disciplinary Council of the Supreme Court of Ohio, 471 U.S. 626, 651 (1985); In re R.N.J., 455 U.S. 191, 203 (1982).

(2) Political Conduct

First Amendment protections do prevent application of the UCL to political conduct.

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California

Blank v. Kirwin, 39 Cal. 3d 311, 329 (1985) (UCL does not apply to conspiracy between private and public persons to monopolize operation of poker clubs because constitutional Noerr-Pennington doctrine exempts attempts to influence government through political process from application of antitrust laws); Kasky v. Nike, Inc., 2002 Cal. LEXIS 2591 (2002) (reverses lower courts' decisions; when Nike, to increase its sales and profits, makes public statements defending its labor practices and working conditions, those statements are commercial speech for purposes of the free speech protections of both the federal and state constitution and may be regulated to prevent consumer deception; that such speech relates to an issue of significant public interest or controversy does not inherently garner it protection as political speech); O'Connor v. Superior Court, 177 Cal. App. 3d 1013, 1019 (1986) (UCL does not apply to false or misleading statements or advertising during political campaign); People v. E.W.A.P., Inc., 106 Cal. App. 3d 315, 323 (1980) (First Amendment does not limit UCL's civil penalties because fine is not a criminal penalty); People v. Superior Court (Olson), 96 Cal. App. 3d 181, 195 (1979), cert. denied, 446 U.S. 935 (1980) (monetary fines do not violate First Amendment even though they are based only on negligent conduct); Chavez v. Citizens for a Fair Farm Labor Law, 84 Cal. App. 3d 77, 79-83 (1978) (UCL does not apply to statements made during initiative campaign).

Federal

Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993) (Noerr-Pennington doctrine does not bar anti-trust claim if petitioning effort is sham and real intent is interference with competitor's business relationships); National Committee of the Reform Party of the United States v. Democratic National Committee, 168 F. 3d 360, 363 (9th Cir 1999) (dismisses UCL claim for false and misleading campaign practices involving fundraising); Suburban Restoration Co. v. ACMAT Corp., 700 F.2d 98, 101 (2d Cir. 1983) (Noerr-

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Pennington doctrine applies to Connecticut's "Little FTC Act").

(3) Deceptive Advertising

First Amendment protections do not prevent application of the False Advertising Act to deceptive advertising.

California

People v. Health Lab. of N. Am., Inc., 87 Cal. App. 4th 442 (2001) (affirms order denying defendant's motion pursuant to the anti-SLAPP statute to strike People's action for permanent injunction enjoining defendants from making unsubstantiated advertising claims about their weight loss product; subdivision (d) of the anti-SLAPP statute, which exempts public prosecutors' enforcement actions from anti-SLAPP motions, is not unconstitutional); People v. Morse, 21 Cal. App. 4th 259, 266 (1993) (deceptive and misleading advertisements violative of § 17537.6 [solicitations in connection with operation of homestead filing service] not entitled to First Amendment protection; challenge was made to § 17537.6, not UCL); California Ass'n of Dispensing Opticians v. Pearle Vision Ctr., 143 Cal. App. 3d 419 (1983) (upholds injunction for violating UCL and FAA because claim to provide "total eye care" was misleading; injunction does not violate the First Amendment or Commerce Clause).

Federal

Virgin Enter. Ltd. v. Am. Longevity, 2001 U.S. Dist. LEXIS 2046, at *24 (S.D.N.Y. Feb. 28, 2001) (denies motion to dismiss on UCL claim because the alleged deceptive advertising is not entitled to First Amendment protection).

(4) Opinion

Federal

Bullet Golf, Inc. v. United States Golf Ass'n, 1995 U.S. Dist. LEXIS 6189, at *2 (C.D. Cal. Mar. 20, 1995) (denies summary judgment on UCL claim because "the United States Golf Association's determination that the hollow point club did not conform to the rules

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of golf is an opinion; and as such, it is a protected statement under the First Amendment.").

(5) "Of and Concerning"

Federal

Aflex Corp. v. Underwriters Lab. Inc., 1989 U.S. Dist. LEXIS 6935, at *8 (C.D. Mar. 21, 1989) (dismisses plaintiff's claim under FAA and UCL because "where the gravamen of a plaintiff's claim is an allegedly injurious falsehood, the First Amendment requires that the statement be 'of and concerning' the plaintiff to be actionable, and the speech in this action was not of and concerning the plaintiff").

i. Selective Prosecution

Selective prosecution arguments have fallen on deaf ears, as well.

California

Consumers Union of U.S., Inc. v. Alta-Dena Certified Dairy, 4 Cal. App. 4th 963, 975-76 (1992) ("[A]bsent charges of invidious discrimination, prosecutors have broad discretion to choose which defendants to prosecute and in what order.")

j. Separation of Powers

Thus far, defendants' arguments that prosecutors' injunction requirements have violated constitutional separation of powers requirements by usurping legislative functions have been unsuccessful.

California

Mergia v. Municipal Court, 15 Cal. 3d 286, 297 (1975) (An equal protection violation does not arise whenever officials prosecute one and not another for the same act; instead, the equal protection guarantee simply prohibits prosecuting officials from “purposefully and intentionally singling out individuals for disparate treatment on an individiously discriminatory basis [citations omitted]...in order to establish a claim of discriminatory enforcement a defendant must demonstrate that he has been deliberately singled out for prosecution on the basis of some invidious criterion”); Consumers Union of U.S., Inc. v. Alta-Dena Certified Dairy,

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4 Cal. App. 4th 963, 975 (1992) (disclosure requirements regarding unpasteurized milk products do not violate separation of powers requirements; "The mere fact that in carrying out this function [of protecting the public from unscrupulous business practices] as, for example by mandating the placement of a warning on a consumer product, a court may incidentally duplicate a legislative function does not result in a violation of the separation of powers doctrine.").

14. Consumer Survey or Expert Testimony

Consumer surveys or expert testimony may show the existence or nonexistence of deception.

California

South Bay Chevrolet v. General Motors Acceptance Corp., 72 Cal. App. 4th 1380 (1999) (affirms judgment for defense, noting absence of evidence as to how other customers understood defendant's practice); Moore v. California State Bd. of Accountancy, 2 Cal. 4th 999 (1992), cert. denied, 113 S. Ct. 1364 (1993) ("The survey responses, at the very least, support the inference that members of the public who believe that licensing is required [for accountants] would assume that a person who uses the title 'accountant' and the designation 'accounting' to describe the services being offered as licensed by the state"; 53% of surveyed group believed advertisements for bookkeeping and accounting services suggested that advertiser was licensed as "certified public accountant" or "public accountant," thus justifying inference of "likelihood of confusion"); Committee on Children's Television, Inc. v. General Foods Corp., 35 Cal. 3d 197, 214 (1983); People v. Mobile Magic Sales, Inc., 96 Cal. App. 3d 1 (1979) (upholds issuance of preliminary injunction forcing mobile home retailer to conform business practices to UCL requirements; retailer had entered into arrangements with mobile home parks whereby prospective tenants were coerced into buying a particular mobile home).

Federal

E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1292 (1992) (although absence of evidence of actual confusion does not defeat claim of likelihood of confusion, proof of actual confusion can be evidence of likelihood of confusion); Academy of Motion Picture Arts & Sciences v. Creative House Promotions, 944 F.2d 1446, 1455-1457 (9th Cir. 1991) (reinstates UCL claim where 70% of white-collar professionals tended to confuse "Star Award" with

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"Oscar"); Vidal Sassoon, Inc. v. Bristol-Myers Co., 661 F.2d 272, 276 (2d Cir. 1981) (consumer surveys are "highly probative" of customers' understanding); Firestone Tire & Rubber Co. v. FTC, 481 F.2d 246 (6th Cir.), cert. denied, 414 U.S. 1112 (1973) (customer confusion shown in 10% of buying public is sufficient to justify relief under FTC Act); Haskell v. Time, Inc., 965 F. Supp. 1398, 1407-08 (E.D. Cal. 1997) (rejects declaration of professor of rhetoric who testified that advertisements were worded in a misleading manner); Sperry Rand Corp. v. Seawol Distrib., 140 U.S.P.Q. 532 (1964) (surveys conducted by plaintiff serve as competent evidence of public confusion generated by defendant's use of plaintiff's "Remington" trademark in sale of sewing machines); Upjohn Co. v. American Home Products Corp., 598 F. Supp. 550, 556 (S.D.N.Y. 1984) (plaintiff "must submit evidence in the form of market research and consumer surveys that demonstrates how the advertising is perceived by consumers;" not UCL case).

15. Context

Since the courts have made it clear that FTC precedent may be used against them, defendants may want to avail themselves of arguments available in cases brought under Section 5 of the FTC Act, where it has been established that overall impact is more important than any single word or phrase (Beneficial Corp. v. FTC, 542 F.2d 611, 617 (3d Cir. 1976), cert. denied, 430 U.S. 983 (1977)) and that "text must yield to context" (Avis Rent-a-Car Sys. v. Hertz Corp., 782 F.2d 381, 385 (2d Cir. 1986)).

Federal

Freeman v. Time, Inc., 68 F.3d 285, 290 (9th Cir. 1995) (rejects plaintiff's claim that the statement, '"If you return the grand prize winning number we'll officially announce that [you have won],'" leaves room for the reader to draw an inference that he or she had the winning number; "[s]uch an inference is unreasonable in the context of the entire document").

16. Cy Pres

Where victims of a challenged practice cannot be identified, or where the expense of distribution to individual victims outweighs its utility, a "fluid recovery" in the form of cy pres relief to benefit the interests vindicated by the lawsuit sometimes is awarded. (Cf. Cal. Civ. Code § 384). The California Supreme Court recently has made clear that such relief only is allowable in certified class actions. (Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000)).

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California

Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000); People v. Levi Strauss, 41 Cal. 3d 460 (1986) (suggests court on remand consider cy pres relief); People v. Thomas Shelton Powers, M.D., Inc., 2 Cal. App. 4th 330, 340-341 (1992) (restitution and disgorgement are proper even if it is impossible to find direct victim of defendants' unfair business practices, so that defendants could not retain illegal profits. "It is . . . abundantly clear that as a general rule a trial court, ruling on an unfair trade practice, has the power to order disgorgement and/or restitution as a form of relief ancillary to an injunction"; cites Levi Strauss re fluid recovery; overruled sub silentio by Kraus, supra); People v. Parkmerced Co., 198 Cal. App. 3d 683, 692 (1988) (Cal. Civ. Proc. Code § 1519.5 [escheat statute] expressly provides that it does not change authority of court to order equitable remedies, so § 17203 permits refund of unclaimed restitution to organization for use in representing tenants' interests).

17. Contractual Limitation of Damages

The enforceability of contractual limitation of liability clauses against UCL claims is questionable.

California

Los Angeles Cellular Tel. Co. v. Superior Court of Los Angeles County, 65 Cal. App. 4th 1013 (1998) (false advertising claim was not precluded by a contract clause limiting liability because defendant's conduct constituted a violation of law under UCL, but negligence claim was preempted because there was no reference to any statute or law).

18. Damages Unavailable

California

Bank of the West v. Superior Court, 2 Cal. 4th 1254 (1992) ("damages are not available under UCL"); Chern v. Bank of America, 15 Cal. 3d 866, 875 (1976) (FAA does “not authorize recovery of damages by private individuals"); Dean Witter Reynolds, Inc. v. Superior Court, 211 Cal. App. 3d 758, 774 (1989) (plaintiff can only recover equitable remedy of restitution, not compensatory damages, for UCL claims; "[t]he exclusion of claims for compensatory damages is . . . consistent with the overarching legislative concern to provide a streamlined procedure for the prevention of ongoing or threatened acts of unfair competition. To permit individual claims for compensatory damages to be pursued as part of such a procedure would tend to thwart this objective by

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requiring the court to deal with a variety of damage issues of a higher order of complexity."); Industrial Indem. Co. v. Superior Court, 209 Cal. App. 3d 1093, 1096 (1989) (private litigant may recover only injunctive relief and not damages under UCL).

Federal

Duncan v. Suttle, 1996 U.S. App. LEXIS 2584, at *22 (9th Cir. Feb. 21, 1996) (compensatory damages are unavailable under the UCL); E.W. French & Sons, Inc. v. General Portland, Inc., 889 F.2d 1392, 1401 (9th Cir. 1989) (reverses jury verdict because private parties may not receive compensatory damages); Little Oil Co. v. Atlantic Richfield Co., 852 F.2d 441, 445 (9th Cir. 1988) (same); Kates v. Crocker Nat'l Bank, 776 F.2d 1392, 1396 (9th Cir. 1985) (no damages under UCL, only restitution); National Van Lines, Inc. v. Dean, 237 F.3d 688, 692, 694 (9th Cir. 1956) (reverses trial court's judgment and, applying California law, concludes defendant has committed, inter alia, unfair trade practices; whether an accounting proceeding should be ordered preparatory to allowance of damages in an unfair competition claim is "largely a matter of discretion"); FAS Techs., Ltd. v. Dainippon Screen Mfg., Co., 2001 U.S. Dist. LEXIS 7503 (N.D. Cal. 2001) (grants motion for summary judgment with respect to UCL claim because only restitution is recoverable under UCL and the evidence does not support a conclusion that defendant profited from its alleged misappropriation of trade secrets); Kingvision Pay-Per-View, Ltd. v. Chavez, 2000 U.S. Dis. LEXIS 18078 (N.D. Cal. 2000) (denies request for default judgment for damages on UCL claim because plaintiff failed to show why damages were legally appropriate, especially where the Court has already provided damages under federal law); Brown v. Allstate Ins. Co., 1998 U.S. Dist. LEXIS 11759 (S.D. Cal. July 31, 1998) (dismisses plaintiff's causes of action under UCL and FAA with leave to amend; private individuals cannot seek damages for unfair business practices; private remedies are limited to equitable relief and civil penalties are recoverable only by specified public officers); Bell Atlantic Bus. Sys. Serves., Inc. v. Hitachi Am. Ltd., 1995 U.S. Dist. LEXIS 15531 at 28-29, (N.D. Cal. March 10, 1995) (damages not available under UCL); MAI Sys. Corp. v. QUIPS, 856 F. Supp. 538, 542 (N.D. Cal. 1994) (claim for monetary relief limited to restitution under UCL); Prego Ltd. 1981 v. Getty Oil Co., 1991 U.S. Dist. LEXIS 17671, at *35-36 (E.D. Cal. 1991) (injured party cannot recover money damages, attorneys' fees or litigation costs as UCL does not create a private right of action but merely permits courts to enjoin ongoing wrongful business conduct); Project Management Sys., Inc. v. WST Corp., 1991 U.S. Dist. LEXIS 11652 (N.D. Cal 1991), aff'd, 1992 U.S. App. LEXIS 32330 (9th Cir. 1992) (grants defendant's summary judgment motion on

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the alleged unfair business practice and breach of contract claims; showing of an unfair business practice requires a demonstration of on-going conduct or a pattern of conduct; also, private parties are limited to injunctive relief under UCL, and civil penalties are only recoverable by specified public officers); Prudential-Bache Sec., Inc. v. Union Bank, 1991 U.S. Dist. LEXIS 6643 (N.D. Cal 1991) (memorandum opinion) (denies defendant's motions to dismiss including plaintiff's unfair business practice claim; under UCL plaintiffs can receive restitution and injunctive relief, but not compensatory or punitive damages; court refuses to abstain from exercising its equity power because there were not "exceptional circumstances"); Prudential-Bache Sec. Inc. v. Union Bank, 1991 U.S. Dist. LEXIS 6643, at *8-14 (N.D. Cal. 1991) (denies motion to strike plaintiff's unfair competition claim that seeks damages for conspiracy to convert and conversion of funds, as UCL specifically provides for restitution); Victor v. Thomas F. White & Co., 1990 U.S. Dist. LEXIS 19803, at *20-21 (N.D. Cal. 1990) (follows Little Oil Co. v. Atlantic Richfield Co., 852 F. 2d 41, 445 (9th Cir. 1988), where the "Ninth Circuit, interpreting California law, concludes that no private cause of action for unfair business practices exists" under the UCL and the FAA; grants motion to dismiss with prejudice); Determined Prod., Inc. v. Koster, 1992 U.S. Dist. LEXIS 20030, at *12 (N.D. Cal. 1992) (noting that recovery under a UCL claim for misappropriation of plaintiff's copyrighted toy dinosaurs is limited to restitution and injunctive relief, and that compensatory damages, punitive damages and attorneys' fees are unavailable under UCL); C & R Clothiers, Inc. v. Men's Warehouse, Inc., 1990 U.S. Dist. LEXIS 10424, at *7 (N.D. Cal. 1990) (grants defendant's motion to strike plaintiff's claims for compensatory damages, punitive damages and attorney fees under its state law false advertising claims on the grounds that such damages are not available under UCL); Victor v. Thomas F. White & Co., 1990 U.S. Dist. LEXIS 19803, at *20-21 (N.D. Cal. 1990) (grants defendant's motion to dismiss the unfair business practices claim with prejudice on the grounds that no private cause of action exists under UCL); Burt v. Danforth, 742 F. Supp. 1043, 1053-54 (E.D. Mo. 1990) (claims for "restoration of all losses, costs and expenses incurred by McDonnell Douglas" and "remuneration paid to individual board members" are not restitution but claims for compensatory damages); Feldman v. Glaze, [1989 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 94,450"], 1989 U.S. Dist. LEXIS 8364, at *4 (N.D. Cal. Apr. 12, 1989) ("'California law does not recognize the recovery of damages by individuals for unfair business practices.'") (quoting Kates v. Crocker Nat'l Bank, 776 F.2d 1396, 1398 (9th Cir. 1985)); Southwest Marine, Inc. v. Triple A Mach. Shop, Inc., 720 F. Supp. 805, 810 (N.D. Cal. 1989); Feldman v. Glaze, [1989 Transfer Binder] Fed. Sec. L. Rep. (CCH)] ¶ 94,450, 1989 U.S.

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Dist. LEXIS 8364, at *5-6 (N.D. Cal. 1989) (dismisses FAA claim because "California law does not recognize the recovery of damages by individuals for unfair business practices," and the plaintiff "seeks neither restitution nor injunctive relief under § 17535"); Break-Away Tours, Inc. v. British Caledonian Airways, 704 F. Supp. 178, 182 (S.D. Cal. 1988) (no monetary relief under UCL despite trademark infringement because no restitution is warranted and damages are not allowable); Newport Components v. NEC Home Elec., 671 F. Supp 1525, 1550-51 (C.D. Cal. 1987) (California Supreme Court's decision in Chern re absence of damages under FAA must also be true of UCL).

19. Disgorgement Unavailable

In a pair of decisions issued in June, 2000, the California Supreme Court extensively addressed various defense arguments regarding the availability of disgorgement of profits and of fluid recovery funds under the UCL. In Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000), the court makes clear that disgorgement of profits is not an allowable remedy under the UCL. The court describes the difference between restitution and disgorgement as follows: "An order that a defendant disgorge money obtained through an unfair business practice may include a restitution element, but is not so limited. . . . [S]uch orders may compel a defendant to surrender all money obtained through an unfair business practice even though not all is to be restored to the persons from whom it was obtained or those claiming under those persons. It has also been used to refer to surrender of all profits earned as a result of an unfair business practice regardless of whether those profits represent money taken directly from persons who were victims of the unfair practice." (Id. at 127). In Cortez v. Purolator Air Filtration Products Co., 23 Cal. 4th 163, 172 (2000), the Court rejected plaintiff's effort to obtain disgorgement of all overtime payments the company had withheld from certain employees when they "could not be restored directly to the person to whom they were owed. . .," and held that "[t]he trial court may not make an order for disgorgement of all benefits defendant may have received from failing to pay overtime wages. It may only order restitution to persons from whom money or property has been unfairly or unlawfully obtained."

Nonetheless, the Court of Appeal in Korea Supply Co. v. Lockheed Martin Corp., 90 Cal App. 4th 902, review granted, 36 P.3d 1 (Cal. 2001), held that an individual plaintiff could pursue a claim for disgorgement of profits based upon the definitional language from the California Supreme Court's decision in Kraus recited above. The court rejected the defendant's argument that restitution is limited to a return of money taken from persons who had an ownership interest in it. (This case was argued December 4, 2002 and should be decided by March, 2003).

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Federal

Watson Lab. v. Rhone-Poulenc Rorer, Inc., 178 F. Supp. 2d 1099, 1120 (C.D. Cal. 2001) (grants defendant's motion seeking a determination that plaintiff is not entitled to "disgorgement" of profits as a remedy under the UCL because plaintiff has a range of standard remedies available for defendant's breach of the supply agreement which can make plaintiff whole).

20. De Minimis Violation

Occasionally, a plaintiff's claim is so trivial that the court simply will not entertain it.

California

Harris v. Time, Inc., 191 Cal. App. 3d 449, 458 (1987) (depublished in part) (affirms dismissal of claim, citing maxim, "de minims non curat lax" [the law disregards trifles] (Cal. Civ. Code § 3533)).

Federal

Alchemy II Inc. v. Yes! Entertainment Corp., 844 F. Supp 560 (C.D. Cal. 1997) (demonstrating one model of a talking teddy bear at a trade show, then shipping a slightly different model, neither violated the UCL nor harmed anyone).

21. Deception Not Shown

Lack of deception is not a defense. Plaintiff need not prove actual deception if members of the public are likely to be deceived. Only in very rare circumstances have courts concluded that a challenged disclosure was not "likely to deceive." See, e.g., Shvarts v. Budget Group, 81 Cal. App. 4th 1153 (2000).

California courts have not articulated a numerical standard for the percentage of people who must be deceived before a communication will be deemed "likely to deceive" consumers. One California case not surprisingly found 53% to be sufficient (Moore v. California State Bd. of Accountancy, 2 Cal. 4th 999 (1992) (53% confusion)), while one federal court found 10% confusion in a non-UCL case to be sufficient (see Firestone Tire & Rubber Co. v. FTC, 481 F.2d 246, cert. denied, 414 U.S. 1112 (1973)).

California

Chern v. Bank of America, 15 Cal. 3d 866, 873-76 (1976); Shvarts v. Budget Group, 81 Cal. App. 4th 1153 (2000) (defendant car rental company's "refueling" option was not "likely to mislead"

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because "[e]ach of the three payment options is clearly printed, in boldface, in the rental agreement provided to [customers] at the time of rental."); Prata v. Superior Court, 91 Cal. App. 4th 1128, 1144 (2001) (grants writ of mandate directing trial court to vacate its summary judgment ruling for defendant; representative plaintiff must show that members of the public are likely to be deceived by the practice; once an unfair trade practice is established, a class action can proceed without individual proof of lack of knowledge of the fraud); Van de Kamp v. Bank of America, 204 Cal. App. 3d 819 (1988) (no UCL violation where none of defendant's practices was wrongful); Mass. Mut. Life Ins. Co. v. Superior Court, 2002 Cal. App. LEXIS 4029 (Cal. Ct. App., 4th Dist., 1st Div. April 29, 2002) (affirms district court's order certifying as a plaintiffs' class 33,000 purchasers of life insurance who alleged that Mass Mutual failed to disclose its intention to lower its discretionary dividend rate; "given the evidence of nondisclosure by the plaintiffs, the fact ... that prospective purchasers received differing representations from Mass Mutual's agents is wholly irrelevant to determination of the company's responsibility under the UCL," and the claim is "plainly suitable" for treatment as a class action).

Federal

National Van Lines, Inc. v. Dean, 237 F.3d 688, 692 (9th Cir. 1956) (reverses trial court's judgment and, applying California law, concludes that defendant had committed, inter alia, unfair trade practices; notes that it is not necessary to prove actual confusion or deception, as "it is sufficient that there is a likelihood of deception"; states that, if intent to deceive is shown, it raises a presumption that deception and confusion resulted).

22. Dischargeability

Civil penalties and restitution payments under the UCL may be non-dischargeable in bankruptcy. (In re Taite, 76 BR 764 (C.D. Cal. 1987) ($750,000 civil penalty on Custom Craft Carpets automatically non-dischargeable; restitution not automatically non-dischargeable as fine or penalty for forfeiture but non-dischargeable because incurred through false pretenses, false representation or fraud)).

23. Discontinued or Completed Act

Before 1992, there was some uncertainty about whether conduct had to be ongoing in order to be subject to injunction under the UCL. The legislature amended the Law to clarify that injunctions may issue against any person who "has engaged" in a violation of the Act, regardless of whether the conduct is ongoing. (Cal. Bus. & Prof. Code § 17203).

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Where a Little FTC Act defines violations in terms of ongoing acts or practices, defendants have sometimes been successful in obtaining dismissals by arguing that the statutory language or equitable principles bar relief because no violations are ongoing. Until a 1992 statutory amendment, the potential for success with such an argument in California was enhanced by a provision of the California Consumers Legal Remedies Act (Cal. Civ. Code §§ 1750, et seq.), which required 30 days' notice and an opportunity to cure before a plaintiff could bring a class claim for damages under the Act.

Effective January 1, 1992, California's UCL was amended to substitute the word "act" for "acts" and "engages, has engaged or proposes to engage" for "performing or proposing to perform" so that the statute now arguably includes within its scope a completed act that was not an ongoing business practice. Accordingly, the statutory language may now permit an action for injunctive relief to prevent repetition of an isolated past act, even where repetition is not threatened. Nonetheless, principles of equity and jurisprudence may lead courts to decline to grant injunctive relief in such settings.

California

State v. Texaco, Inc., 46 Cal. 3d 1147, 1169-70 (1988) (risk that defendant may commit new violations does not alone support injunction) (UCL amended in 1992 to change this result); People v. McKale, 25 Cal. 3d 626, 632 (1979) (UCL directed at ongoing wrongful business conduct; section contemplates a "pattern of conduct," "on-going conduct," "a pattern of behavior" or "a course of conduct"); Barquis v. Merchants Collection Ass'n of Oakland, Inc., 7 Cal. 3d 94, 108, 111, 113 (1972); California Serv. Station and Automotive Repair Ass'n v. Union Oil Co. of California, 232 Cal. App. 3d 44, 47 (1991) (notes "injunctive relief will be denied if at the time of the order or judgment, there is no reasonable probability that the past acts complained of will recur (i.e., where the defendant voluntarily discontinues the wrongful conduct), but upholds injunction against oil company for franchise law violations despite its discontinuance of challenged practices) (not UCL case); Mangini v. Aerojet-General Corp., 230 Cal. App. 3d 1125, 1155-56 (1991) (doctrine of "continuing nuisance" does not revive UCL claim against lessee who contaminated property with hazardous wastes 20 years earlier); Mid-Peninsula Citizens For Fair Hous. v. Westwood Investors, 221 Cal. App. 3d 1377, 1392 (1990) (court denies plaintiff injunctive relief, notes that defendant's challenged policy has been withdrawn and there is no indication that it would be resumed); People v. Toomey, 157 Cal. App. 3d 1, 20 (1984) (defendant's elimination of sales of challenged coupon books prior to trial did not bar injunctive relief where he continued to sell similar

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coupon books); Bush v. California Conservation Corps, 136 Cal. App. 3d 194, 204 (1982) (plaintiff must show inadequacy of legal remedies); People v. Nat'l Ass'n of Realtors, 120 Cal. App. 3d 459, 476 (1981) ("[W]here the injunction is sought solely to prevent recurrence of proscribed conduct which has, in good faith been discontinued, there is no equitable reason for an injunction."; notes, "the court has the power to refuse to enjoin future conduct where it is satisfied there is no reasonable probability past unlawful acts will be repeated"); Mallon v. City of Long Beach, 164 Cal. App. 2d 178, 190 (1958) ("If, therefore, at the time of the order of judgment, in the absence of special circumstances, which are not here involved, there is no reasonable probability that past acts complained of will recur, injunctive relief will be denied.").

Federal

C. Pappas Co. v. E. & J. Gallo Winery, 610 F. Supp. 662, 672 (E.D. Cal. 1985), aff'd, 801 F.2d 399 (9th Cir. 1986) (denies injunctive relief because plaintiff makes no showing that defendant is involved in continuing activity; two acts are insufficient for continuing activity); People v. Keating, (MDL 90-834 as RMB) (9th Cir. 1992) (dismisses claim for restitution because no valid claim for injunctive relief is stated), rev'd on other grounds, 986 F.2d 346 (9th Cir. 1992) (improper removal); Mathews v. Government Employees Insurance Co., 23 F.2d 1160 (S.D. Cal. 1998) (denies injunctive relief because defendant had ceased practice of denying employment based on use of credit reports two years earlier).

24. Enjoining Breach of Contract

Because courts ordinarily will not enjoin a prospective breach of contract unless the contract at issue involves certain specified types of personal services, a defendant facing a UCL claim in which plaintiff seeks an injunction to prevent a breach of contract may argue that the UCL claim is an attempt to circumvent plaintiff's inability to obtain an injunction under the contract itself.

California

Barndt v. County of Los Angeles, 211 Cal. App. 3d 397 (1989).

25. Evidence Regarding Quasi-Class Members

Proof of a UCL violation is not limited to evidence relating to the named plaintiff but includes, also, evidence involving other members of the public on whose behalf plaintiff is suing as a private attorney general.

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California

Cisneros v. U.D. Registry, Inc., 39 Cal. App. 4th 548, 564 (1995) (plaintiffs claiming unfair business practice arising from violations of credit reporting statutes in defendant's gathering of information regarding residential renters and sale of that information to landlord and agent subscribers may present evidence of practices involving members of the public other than themselves; reverses for retrial because court improperly sustained demurrer to UCL claim so that scope of evidence introduced at trial was improperly restricted).

Federal

American Booksellers Assn., Inc. v. Barnes & Noble, Inc., 135 F. Supp. 2d 1031 (N.D. Cal. 2001) (plaintiffs are collaterally and judicially estopped from using certain arguments about defendant booksellers' unfair or unlawful conduct because plaintiffs signed consent decrees in prior litigation approving that conduct).

26. Equitable Defenses

Defendants may not be able to assert equitable defenses such as laches, estoppel and unclean hands to an unlawfulness claim where the underlying statute giving rise to the unlawfulness claim does not permit such defenses.

California

Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163 (2000) (affirms judgment for plaintiff employee in action for unpaid wages brought under UCL; UCL defendants may assert equitable defenses in order to guide the court in fashioning an equitable remedy; it is unlikely that equitable defenses could defeat a claim for unpaid wages because the UCL imposes strict liability for unfair or unlawful conduct); Hobby Indus. Ass'n of Am., Inc. v. Younger, 101 Cal. App. 3d 358, 371 (1980) (no inference in the language of the underlying statute "that would support a conclusion that one can assert defenses such as business considerations, or lack of deception or fraud").

Federal

Geoffrey, Inc. v. Douglas S. Stratton, 16 U.S.P.Q. 2d 1691, 1990 U.S. Dist. LEXIS 19504, at *17-19 (C.D. Cal. 1990) (rejecting defendant's assertion that the passage of time itself, absent inexcusable delay and proof that defendant changed its position as a result of this inaction, created an estoppel by laches; defendant's

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false and misleading representation amounted to trademark infringement and a violation of UCL, justifying injunctive relief).

27. Estoppel

A defendant might assert an estoppel argument if it has undertaken the actions challenged in the lawsuit in reliance on approval of those actions by the government, a private attorney general or counsel for a private attorney general. Although it appears that the courts have yet to address the latter arguments in published decisions, some defendants have argued that principles of estoppel prevent a private attorney general or counsel for a private attorney general from challenging conduct that one or the other had expressly or impliedly approved in the course of a settlement of a previous lawsuit involving the same or similar conduct.

California

Hewlett v. Squaw Valley Ski Corp., 54 Cal. App. 4th 499, 530 (1997) (after discussion, court rejects estoppel defense based upon arguments that defendant relied on California Department of Forestry's withdrawal of the timber harvest plan when defendant cut down trees on its property; court concludes defendant acted unilaterally and not in reliance on Department's actions).

28. Extra-Territorial Reach

Questions regarding the extra-territorial reach of the UCL can raise complex choice of law issues that are beyond the scope of this Outline. In general, the UCL provides that "[a]ny person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction" (Bus. & Prof. Code § 17203), and this arguably authorizes extraterritorial relief as well, so long as plaintiff can establish that the court has personal jurisdiction over the defendant. Whether such extension raises due process issues is another question, which the California Supreme Court and one Court of Appeal recently have resolved in defendants' favor.

In Washington Mutual Bank v. Superior Court, 24 Cal. 4th 906 (2001), the California Supreme Court described the burdens that a proponent of certification must bear in a multi-state class action in a California Superior Court. The court observed that "[c]lass actions are provided only as a means to enforce substantive law. Altering the substantive law to accommodate procedure would be to confuse the means with the ends – to sacrifice the goal for the going." (Id. at 918 (citing City of San Jose v. Superior Court, 12 Cal. 3d 447, 462 (1974))). The court stated that the trial court must undertake a choice of law analysis (id. at 914-15), either by evaluating the enforceability of a choice of law clause under the test set forth in Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459 (1992), or, in

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the absence of a choice of law clause, by conducting an analysis of competing governmental interests. (Id.) Then, if the laws of multiple states are applicable, the proponent of certification must show through a thorough analysis of applicable state laws that any variations in state law do not "swamp" the common issues in the case. Further, the proponent of certification must show that application of multiple states' laws will not render the case unmanageable for fairness and efficiency. Courts weighing certification issues must consider: (1) the potential recovery of each individual claimant; and (2) whether the proposed class suit is the only way to address wrongdoing and prevent unjust advantage. (Id. at 926).

California

Washington Mutual Bank v. Superior Court, 24 Cal. 4th 906, 921 (2001) ("[I]n the absence of an effective choice-of-law agreement to the contrary, California law may be used on a classwide basis so long as its application is not arbitrary or unfair with respect to non-resident class members” and "so long as the interests of other states are not found to outweigh California's interest in having its law applied"; "when an enforceable choice-of-law agreement is involved, the burden rests upon the party seeking nationwide class certification to identify any variations of applicable state law and to meaningfully demonstrate how a trial on the class causes of action cay be conducted fairly and efficiently in light of those variations."); America Online, Inc. v. Super. Ct. of Alameda County, 90 Cal. App. 4th 1 (2001) (affirms trial court's denial of defendant internet provider's motion to stay or dismiss for inconvenient forum where contractual forum selection clause was unenforceable on public policy grounds related to plaintiffs' claims under the Consumers Legal Remedies Act); Norwest Mortgage v. Superior Court of San Diego, 72 Cal. App. 4th 214, 226 (1999) (UCL can not be basis for suit by class of non-California residents who purchased insurance outside California where defendant was California insurer with principal place of business in Iowa; where "injuries are suffered by non-California residents, caused by conduct occurring outside of California borders, involving defendants whose headquarters and principal places of business are outside of California," the UCL does not apply; also noted due process constraints on extending jurisdiction over non-California residents with no substantive contacts with California); People v. National Research Co. of California, 201 Cal. App. 2d 765, 771 (1962) (interprets earlier version of statute); Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224, 242 (2001) (affirms trial court's application of California law under the UCL where out of state class members were deceived by defendant computer manufacturer's representations "disseminated from" the state of California).

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Federal

Automotive Prods. PLC v. Tilton Eng'g, Inc., 1993 U.S. Dist. LEXIS 20813, 33 U.S.P.Q. 2d 1065 (Sept. 16, 1993) (denies accounting pursuant to UCL because statute only provides relief "where the defendant has performed or is proposing to perform 'an act of unfair competition within this state'"; only act defendant is alleged to have committed "within the state" is termination of distributorship, which was part of larger scheme to injure plaintiff; notes court has yet to find a case in which the UCL has been applied against business practice occurring "wholly, or even primarily, outside of the state's borders”; notes that although the Court can only surmise about the reasons that the legislature limited the reach of UCL to acts which occur "within the state," the "desire to avoid violating the Commerce Clause was probably the paramount concern. . . As the Supreme Court has held, 'the Commerce Clause . . . precludes the application of a state statute to commerce that takes place wholly outside of the State's borders, whether or not the commerce has effects within the State.' Edgar v. Mite Corp., 457 U.S. 624, 642-43, 73 L. Ed. 2d 269, 102 S. Ct. 2629 (1982) "). (Note that the 1992 amendment eliminates the "within this state" language from § 17203).

Other States

Brown v. Market Dev., Inc., 41 Oh. Misc. 57, 322 N.E.2d 367, 372-73 (1974) (same); Kugler v. Haitian Tours, Inc., 120 N.J. Super. 260, 293 A.2d 706, 711 (1972) (extra-territorial effect applied to protect non-resident victims in action against resident defendant).

29. Failure To Describe Claim With Reasonable Particularity

Although the California Supreme Court established relatively lenient pleading standards in Committee on Children's Television, Inc. v. General Foods Corp., 35 Cal. 3d 197, 213-14 (1983), a plaintiff alleging unfair business practices under the UCL still must state with reasonable particularity the facts supporting the statutory elements of the violation.

California

Committee on Children's Television, Inc. v. General Foods Corp., 35 Cal. 3d 197, 212-13 (1983) ("plaintiff need not plead the exact language of every deceptive statement; it is sufficient for plaintiff to describe a scheme to mislead customers, and allege that each misrepresentation to each customer conforms to that scheme"); People v. Superior Court (Jayhill), 9 Cal. 3d 283, 287-88 (1973) (plaintiffs do not have to provide names of customers unlawfully solicited; sufficient to allege defendants "with intent to induce

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members of the public to enter into contracts" "have, in violation of Business and Professions Code § 17500, engaged in a scheme to mislead customers by a series of misrepresentations"; plaintiffs should attach to the complaint either a script or an exemplar representation of the "sales dialogue"); Saunders v. Superior Court, 27 Cal. App. 4th 832, 841-42 (1994) (affirms ruling that allegations regarding restraint of trade, misrepresentation of court reporters' experience and financial interest in litigation fail to support UCL claim because "allegations are too vague and conclusionary to support a claim for restraint of trade," "too vague and uncertain to state a cause of action," and there are "no allegations payment of a CRA reporter's fee or the amount of the fee is related to the success of the deposition from the insurer's standpoint or to the ultimate outcome of the action in which the deposition was taken," so as to constitute a violation of Cal. Civ. Proc. Code § 2025(k)); Khoury v. Maly's of California, Inc., 14 Cal. App. 4th 612, 619 (1993) (affirms demurrer to UCL and other claims arising from beauty supply distributor's refusal to continue to supply retailer; "plaintiff alleging unfair business practices under [the UCL and Business and Professions Code §§ 17000, et seq.] must state with reasonable particularity the facts supporting the statutory elements of the violation; demurrer properly sustained because complaint identifies "no particular section of the statutory scheme which was violated and fails to describe with any reasonable particularity" the facts supporting the violation; complaint refers to an "effect" of "misleading" appellant's customers, but facts do not involve deceptive advertising. . ., nor do the facts explain the manner of misleading appellant's customers. . . The complaint does not describe the manner in which respondent's practice is 'unlawful'"); People v. Custom Craft Carpets, Inc., 159 Cal. App. 3d 676, 684 (1984) (plaintiff may allege acts generally and does not have to itemize them); Nelsen v. Bd. of Health of the State of California, 70 Cal. App. 2d 202, 207 (1945) (plaintiff sought to enjoin the State Department of Health, the City Attorney of Los Angeles, and others from prosecuting him for a violation of § 26271 of the Health and Safety Code (which forbids the advertising of any drug or device as having an effect upon approximately 48 specified diseases); upholds demurrer because plaintiff was unable to substantiate the curative or therapeutic value of his product in the named diseases; "in order to escape from the severe provisions of section 26271, through action of the board or judgment of the court, plaintiff must inevitably place in issue and prove the truth of his representations to the public.").

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Federal

Miron v. Herbalife International, Inc., 2001 U.S. App. LEXIS 10923, at *8-9 (9th Cir. 2001) (affirms the dismissal of UCL claim made by distributors of nutritional aids who alleged in a conclusionary manner that a pyramid scheme existed, but did not assert how the corporation's reassignment of the distributor's own distributors was deceptive or misleading); Solomon v. North Am. Life & Cas. Ins. Co., 1998 U.S. App. LEXIS 14907 (9th Cir. June 4, 1998) modified, 98 Cal. Daily Op. Serv. 6278 (9th Cir. Cal. Aug. 11, 1998) (affirms summary judgment for defendant; denies motion to amend complaint to add a new cause of action for unfair business practices under UCL two weeks before the discovery deadline when plaintiff failed to allege the required element of ongoing conduct, and motion to amend would cause undue delay and prejudice); Cobarrubias v. Allstate Ins. Co., 1998 U.S. Dist. LEXIS 10955 (C.D. Cal. July 10, 1998) (grants defendant's motion to strike; plaintiff's claim for injunctive relief for violation of UCL fails because it does not set forth the conduct to be enjoined with reasonable particularity); Harris v. Duty Free Shoppers Ltd., 1988 U.S. Dist. LEXIS 11406, at *23 (N.D. Cal. Feb. 24, 1998) (denies defendants' motion to dismiss for failure to clarify which acts violated UCL because "an interrogatory from defendants will serve that purpose"); Levine v. Diamonthuset, Inc., 722 F. Supp. 579, 590 (N.D. Cal. 1989) (because the plaintiffs "pile[d] up unnecessary and perhaps inapplicable claims...and lump[ed] all the defendants together and fail[ed] to state which practices or conduct...misled the plaintiffs," the court dismissed the case with leave to amend), rev'd on other grounds, 950 F.2d 1478 (9th Cir. 1991).

30. Failure To Read Contract

Customers' failure to read a deceptive contract does not provide a defense.

California

People v. Dollar Rent-A-Car Sys., Inc., 211 Cal. App. 3d 119 (1989); Caro v. Procter & Gamble Co., 18 Cal. App. 4th 644 (1993).

31. Filed Rate Doctrine

California courts consistently had been hostile to UCL claims that seek to challenge pricing that a governmental regulatory body with authority over the defendant industry has approved.

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California

Day v. AT&T Corp., 63 Cal. App. 4th 325, 340 (1998) (denies monetary relief in two cases challenging sales of prepaid long distance telephone cards without disclosure that call time would be rounded up to the next whole minute; concludes monetary relief will constitute rebate as to rates approved by public communications commission; allows claim for injunctive relief for deception).

Out-Of-State Cases

Marcus v. AT&T, 138 F. 3d 46 (2d Cir 1998) (refuses to entertain Little FTC Act claim challenging government-approved rates); Alicke v. MCI Communications, Inc., 111 F. 3d 909 (D.C. Cir 1997).

32. Filing With California Attorney General

Parties complaining of violations of the UCL must serve notice of their proceeding, along with a copy of their brief, or petition and brief, on the attorney general, directed to the attention of the Consumer Law section, and on the district attorney of the county in which the lower court action or proceeding was originally filed. (Cal. Bus. & Prof. Code § 17209). The consequences of a failure to make the required filing are unclear. On one occasion, the California Court of Appeal decertified a portion of a published decision upon the government's request. (ABC Int'l Traders, Inc. v. Matsushita Elec. Corp., 38 Cal. App. 4th 398 (1996) (portion of opinion depublished), vacated because review granted on other grounds, 14 Cal. 4th 1247 (1997) (Supreme Court opinion does not address § 17209 issue)). On another occasion, the Court of Appeal rejected a defendant's argument, supported by the California District Attorney's Association, that § 17209 establishes a jurisdictional requirement. The court concluded, instead, that the statutory language was directory rather than mandatory. (Californians for Population Stabilization v. Hewlett-Packard Co., 58 Cal. App. 4th 273, 283-285 (1997) ("if the Attorney General and/or the local district attorney are not served with the opening briefs within three days of their being filed, and if time for serving the brief has not been extended for good cause shown no judgment or relief may be granted by the court.")).

33. Flawed Injunction

Defense arguments that injunctions are is overreaching, in the sense that they require an inordinate amount of trial court supervision, generally are not favored.

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California

Notrica v. State Comp. Ins. Fund, 70 Cal. App. 4th 911, 944-45 (1999) (rejects defendant's contention that the imposition of a three-part injunction is "overreaching, unnecessary, and unworkable;" the first part, ordering defendant to delete a misleading guideline from its claims manuals and cease training personnel to effect that guideline, would not result in micromanagement by the court of defendant's practices; the second part, which enjoined defendant from denying all of its insureds access to worker's compensation claims files pursuant to Labor Code § 3762, is not unnecessary because it actually "assures that [defendant] will afford appropriate access to those of its insured in existence before the effective date of the Labor Code section;" the third part, which enjoined defendant from refusing to communicate directly with an insured's authorized representative, was not irrational and would not haul defendant into court every time an adjuster fails to promptly return a phone call or forgets to respond to a letter and defendant is free to move for modification). People v. First Federal Credit Corp., 104 Cal. App. 4th 721, 732-33 (2002)

34. Financial Condition

Although defendants sometimes argue otherwise, it appears that public prosecutors are not required to present evidence of a defendant's financial condition before seeking imposition of civil penalties. People v. First Federal Credit Corp., 104 Cal. App. 4th 721, 728-731 (2002) ("[E]vidence of a defendant's financial condition, although relevant, is not essential for determining the penalty.").

California

People v. First Federal Credit Corp., 104 Cal. App. 4th 721, 728-731 (2002).

35. Fluid Recovery

In June of 2000, the California Supreme Court resolved a question that had divided this state's lower courts for years: whether the UCL authorizes a trial court to order a defendant to create a fund for restitution of money owed to victims of a challenged practice when no class has been certified and those victims cannot be located and identified. The court in Kraus v. Trinity Management Services, Inc., 24 Cal. 4th 116 (2000) held that the UCL did not authorize the creation of the fluid recovery fund in cases that were brought as a representative action only and not as a class action. In the wake of Kraus, one defendant convinced a superior court judge that even a class action seeking creation of a fluid

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fund under the UCL was impermissible, but the Court of Appeal rejected that view and affirmed that class actions may be brought under the UCL for the creation of a fluid recovery fund for restitution payments. Corbett v. Superior Court (Alameda), 101 Cal. App. 4th 649, 672-73 (2002).

California

Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116, 138 (2000) (fluid recovery may not be awarded in favor of non-parties cannot be bound by settlement or judgment in a "representative" action unless the suit is brought as a certified class action); Corbett v. Superior Court (Alameda), 101 Cal. App. 4th 649 (2002) (issues writ of mandate to reverse order granting motion to strike portion of complaint seeking disgorgement of unlawful profits into fluid recovery fund in UCL class action; UCL claims and class actions are not mutually exclusive under Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000).

36. Full Disclosure

Making full disclosure after an initial misleading misrepresentation does not cure the offense.

California

Chern v. Bank of America, 15 Cal. 3d 866, 876 (1976).

37. Harm to Defendant

In Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116, 138 (2000), the California Supreme Court held that a court may "decline to entertain the [UCL] action as a representative suit" if the defendant can demonstrate either "a potential for harm or show that the action is not own brought by a competent plaintiff for the benefit of injured persons." (Id. at 138.) The Court did not explain what showing of "potential for harm" would be required, but it may be instructive that the Court's discussion arose in response to arguments by defendant that the absence of class certification requirements in representative lawsuits under the UCL created a potential for abusive and/or repetitive litigation.

38. Future Criminal Conduct

California's UCL specifically provides for injunctive relief to enforce a penalty, forfeiture or penal law. (See Cal. Bus. & Prof. Code § 17202 ("[s]pecific or preventive relief may be granted to enforce a penalty, forfeiture, or penal law in a case of unfair competition")).

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California

People v. E.W.A.P., Inc., 106 Cal. App. 3d 315, 323-24 (1980) (reverses dismissal of action to enjoin commercial distributor of obscene material in violation of Penal Code § 311.2 because criminal conduct was part of "business practice").

39. Good Faith

Good faith likely will not provide a defense to a UCL claim, although the defendant's good faith may affect the analysis of whether conduct is "unfair," depending on what definition of unfairness is used. (See Section VIII.B.73)

California

Kapsimallis v. Allstate Insurance Co., 104 Cal. App. 4th 667, 675-76 (2002) (reverses motion for judgment on the pleadings for defendant on claims of breach of contract, bad faith and violation of UCL based upon establishment of uniform date of loss for earthquake victims as basis for determination whether subsequent suits had been commenced within one year of loss; rejects defendant's argument that because two federal district courts had reached the same conclusion regarding "inception of the loss" for the earthquake at issue as had the trial courts below, it could not be liable for bad faith or for a UCL violation for making "an incorrect, but good faith, coverage decision).

40. In Pari Delicto Defense

The availability of an "in pari delicto" defense is uncertain, but it should be limited to situations where plaintiff's responsibility for the violation he seeks to redress was quite significant and defendant can show that imposition of a judicial bar to plaintiff's claim would not harm the public by interfering with prosecution of laws designed for its protection. (See Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 310-311 (1985) ("[P]rivate action for damages [for federal securities law violations] . . . may be barred on the grounds of the plaintiff's own culpability only where (1) as a direct result of its own actions, the plaintiff bears at least substantially equal responsibility for the violation he seeks to redress and (2) preclusion of suit would not significantly interfere with the enforcement of the securities laws and protection of the investing public."); Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 140 (1968) (in pari delicto defense does not apply to antitrust claims), overruled on other grounds, Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984)). Even satisfaction of the Bateman Eichler standard may not be sufficient where the plaintiff is suing on behalf of the general public.

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41. Injunction Against Ancillary Wrong

The courts will not enjoin a wrong that is ancillary to the UCL violation.

Federal

Feldman v. Glaze, [1989 Transfer Binder] Fed. Sec. L. Rep. (CCH), ¶ 94,450 (N.D. Cal. 1989) (dismisses FAA claim in securities case where injunction sought to prevent dissipation of issuer's assets rather than to prevent specific unfair trade practice).

42. Insurance Agents

In California, there is a settled rule against holding insurance agents individually liable when acting within the scope of their agency.

Federal

Loe v. State Farm Insurance Companies, 2000 U.S. App. LEXIS 25633 (9th Cir. 2000) (agrees that insurance agent was a "sham" defendant for diversity purposes; plaintiff fails to allege a cause of action under UCL because of the settled rule in California against holding insurance agents individually liable).

43. Joint and Several Liability

Few cases have addressed the application of joint and several liability principles to unfair competition law claims. The sparse law on the subject has arisen in cases brought by public prosecutors, where courts have held that parties may be held jointly and severally liable for UCL and FAA violations. People v. First Federal Credit Corp., 104 Cal. App. 4th 721, 734 (2002) (upholds joint and several liability for civil penalties).

California

People v. Witzerman, 29 Cal. 3d 169, 180-181 (1972) (upholds joint and several liability for violation of FAA where defendants cooperated with each other in advertising and sale of certain contracts); People v. First Federal Credit Corp., 104 Cal. App. 4th 721, 734 (2002) (upholds joint and several liability for civil penalties); People v. Dollar Rent-A-Car Sys., Inc., 211 Cal. App. 3d 119, 122 (1989) (upholds joint and several liability for violations of UCL and FAA).

44. Judicial Communications

The law provides a safe harbor for communications made in a judicial proceeding that are aimed at achieving the objects of the litigation. (Cal.

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Civ. Code § 47(b); Frank Pisano &Assocs. v. Taggart, 29 Cal. App. 3d 1, 25 (1972)).

California

Olszewski v. Scrippshealth, 88 Cal. App. 4th 1268 (2001), review granted, 111 Cal. Rptr. 2d 687 (2001) (plaintiff's claim that defendant health care provider improperly filed a lien was properly dismissed on demurrer without leave to amend because filed lien is a "communication" in a judicial proceeding that falls within the safe harbor provision of Cal. Civ. Code § 47(b)(2)).

45. Jury Demands

Because even the restitution allowable under the UCL is a form of equitable relief, these cases must be tried to the Court. On occasion, a court will submit a UCL question to a jury that is impaneled to consider other claims in a case. The jury's decision on such a question should only be advisory to the court. Some appellate decisions refer to UCL claims having been tried to a jury (along with other claims) without discussing the role the jury's verdict played in the Court's decision on the UCL claims.

Federal

But see Hunting World, Inc. v. Reboans, Inc., 33 U.S.P.Q. 2d 1780, 1994 U.S. Dist. LEXIS 19961, at *9-10 (N.D. Cal. 1994) (jury question arises because knowledge is an element of § 17500 claim).

California

People v. First Federal Credit Corp., 104 Cal. App. 4th 721, 732-33 (2002) (dismisses concerns that juror passion or prejudice may affect civil penalty award because no right to jury trial exists in UCL cases; concludes: "Runaway jury verdicts cannot occur when there is no jury to inflame"); People v. Toomey, 157 Cal. App. 3d 1, 17-18 (1984) (no right to jury trial in unfair competition law cases).

46. Justification

Defendant has the burden of proof to show justification as a defense to an unfairness claim.

California

Motors, Inc. v. Times Mirror Co., 102 Cal. App. 3d 735, 740 (1980) (complaint must allege facts showing that challenged practice is unfair but need not rebut defendant's justifications in advance).

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47. Lack of Intent

Absence of intent to defraud is not a defense to a section 17200 claim, although lack of knowledge of falseness may be a defense to a section 17500 claim.

California

Khan v. Medical Bd. of California, 12 Cal. App. 4th 1834, 1845 (1993) (mistake of fact does not establish defense to misdemeanor prosecution for violation of FAA because the statute "falls within the category of offenses known as public welfare offenses which do not require criminal intent"); People v. Cappuccio, Inc., 204 Cal. App. 3d 750, 756 (1988); Feather River Trailer Sales, Inc. v. Sillas, 96 Cal. App. 3d 234, 247 (1979); People v. Wahl, 39 Cal. App. 2d Supp. 771, 773 (1940).

Federal

Hunting World, Inc. v. Reboans, Inc., 33 U.S.P.Q. 2d 1780, 1994 U.S. Dist. LEXIS 19961, at *9-10 (N.D. Cal. 1994) (jury question arises because knowledge is an element of FAA claim. Admission by defendant of unintentional and unknowing violation of Lanham Act does not admit liability under UCL because standard of liability is whether defendant knew or reasonably should have known that a practice was unlawful); Warner-Lambert Co. v. FTC, 562 F.2d 749, 763 n.70 (D.C. Cir. 1977), cert. denied, 435 U.S. 950 (1978) (lack of fraudulent intent is not defense to deceptive practice under FTC Act); Beneficial Corp. v. FTC, 542 F.2d 611, 617 (3d Cir. 1976), cert. denied, 430 U.S. 983 (1977) (same).

48. Legislative History

Where the legislative history resolves an ambiguity in the UCL in a defendant's favor, it may ask the court to interpret the statute based upon that history.

California

Commodore Home Sys. v. Superior Court, 32 Cal. 3d 211, 218 n.9 (1982) (grants unopposed request for judicial notice); Sebago, Inc. v. City of Alameda, 211 Cal. App. 3d 1372, 1380 (1989) (appellate courts can take judicial notice of and rely upon letters, committee statements and other documents comprising the legislative history of a statute); Palmer v. Agee, 87 Cal. App. 3d 377, 384 (1978) (court considers statements of legislative committees as expressing legislative intent of statute).

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49. Manageability

Where a plaintiff attempts to use the private attorney general provisions of the UCL to circumvent a denial of class certification, manageability issues may arise that prevent the trial court from adjudicating the claim. Although this issue has been litigated a number of times at the trial court level since the decision of the California Supreme Court in Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000) that application of the UCL in that case did not violate constitutional due process principles, the Courts of Appeal have not addressed the issue. Earlier, one Court of Appeal opinion appeared to find manageability concerns sufficient to warrant dismissal of non-party claims. See South Bay Chevrolet v. General Motors Acceptance Corp., 72 Cal. App. 4th 861, 891 (1999).

California

Wilner v. Sunset Life Ins. Co., 78 Cal. App. 4th 952, 966 (2000) (acknowledges manageability problems described in Bronco Wine; certifies restitution claims by purchasers of Universal Life Insurance policies; concludes that manageability problems may be addressed by "motion to strike the [restitution] paragraph of the [complaint] should [plaintiff] fail to establish the propriety of a class action following such a hearing on that question."); South Bay Chevrolet v. General Motors Acceptance Corp., 72 Cal. App. 4th 861, 891 (1999) (affirms judgment for defendant; states that dismissal of claims of "nonparty plaintiffs" could be appropriate where "it would be necessary to hold mini-trials into the sophistication of each dealership's practice of checking GMAC's billing statements for accuracy, and the oral, written and implied terms of each loan contract of each dealership.").

50. Mandatory Injunctions

The requirement of disclaimers or other similar disclosures is not forbidden by equity's standards disfavoring mandatory injunctions.

California

Consumers Union of U.S., Inc. v. Alta-Dena Certified Dairy, 4 Cal. App. 4th 963, 972-74 (1992) (injunction required warning on all advertisements because "injunction against future violations might have some deterrent effect, [but] it is only a partial remedy since it does not correct the consequences of past conduct. . . . An order which commands a party only to go and sin no more simply allows every violator a free bite at the apple."

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51. No Bond

Preliminary injunctions under California's Unfair Competition Law require satisfaction of the bond requirement set forth in California Code of Civil Procedure section 529, which requires an undertaking or a cash deposit before issuance of a preliminary injunction. See Continental Baking Co. Katz, 68 Cal. 2d 512, 526-29 (1968); Abba Rubber Co. v. Seaquist, 235 Cal. App. 3d 1, 10 (1991). The bond must be sufficient to cover any damages that the defendant may suffer while the injunction is in place if a permanent injunction is ultimately denied. The court will not require a bond if the plaintiff is indigent (see Cal. Civ. Proc. Code § 995.240) or is a government agency (Cal. Civ. Proc. Code § 995.220).

52. No Causation

Causation arguments are difficult in UCL cases because of the absence of an injury requirement, but a defendant sometimes may bring causation deficiencies to the court's attention through the back door because of the absence of connection between restitution that is sought and wrongdoing that is alleged.

Federal

Stationary Eng'rs Local 39 Health and Welfare Trust Fund v. Philip Morris, Inc., 1998 U.S. Dist. LEXIS 8302 (N.D. Cal. 1998) (UCL claim based on defendant's alleged misrepresentations fails because the plaintiffs did not demonstrate a causal link between defendant's actions and plaintiffs' injuries.)

53. No Competitive or Consumer Injury

UCL claims may lie without a showing of injury to competition. In addition, plaintiff need not show proof of actual injury to the consuming public. Even consumer injury is very broadly defined.

California

Barquis v. Merchants Collection Ass'n of Oakland, Inc., 7 Cal. 3d 94, 111 (1972) (injury to competitor not required because main purpose of statute is consumer protection; notes "We conclude that in a society which enlists a variety of psychological and advertising stimulants to induce the consumption of goods, consumers rather than competitors need the greatest protection from sharp business practices [citations omitted]. Given the terms of [the predecessor to the UCL], the purpose of the enactment and the controlling precedent, we reject defendant's suggested limitation of [the UCL's predecessor] to anticompetitive business practices"); Morrow, Scuria, Golenor & Salisbury v. Am. Int'l Group, Inc., 2002 Cal. App.

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LEXIS 2810 (March 13, 2002) (unpublished opinion) (affirms order sustaining demurrers, without leave to amend; rejects plaintiff law firm's "tortured attempt to cast respondents as competitors" for purposes of UCL claim, where firm argued that it was a competitor to AIG's staff counsel and that AIG's removal of the firm from its panel of eligible legal counsel constituted 'anti-competitive' action); People v. Cappuccio, Inc., 204 Cal. App. 3d 750, 758-59 (1988); People v. E.W.A.P., Inc., 106 Cal. App. 3d 315, 319 (1980) (pleading of "anticompetitive or harmful" acts not necessary); People v. K. Sakai Co., 56 Cal. App. 3d 531, 535-37 (1976) (authorized prosecution of grocery store owner for selling canned whale meat despite absence of even consumer injury because purpose of underlying statute was to preserve environment for benefit of all people by eliminating sales of whale meat); Plotkin v. Tanner's Vacuums, 53 Cal. App. 3d 454, 460 (1975) (plaintiffs must allege anticompetitive effect or consumer injury). Show Management v. Hearst Publ'g Co., Inc., 196 Cal. App. 2d 606, 614 (1961) (exposition producer falsely advertised civic nature of purely private show; false advertising itself, without disparaging the product or enterprise of another, does not give rise to a private cause of action.).

Federal

Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1146-47 (9th Cir. 1997); Saks & Co. v. Hill, 843 F. Supp. 620, 622, 623 (S.D. Cal. 1993) (for claim by Saks Fifth Avenue to enjoin "Saks Thrift Avenue" [a used clothing store] from using that name, court rules that "[f]or claims of trademark infringement under federal law and unfair competition under California law, the ultimate test is whether the similarity between two marks is likely to deceive or confuse the public"; Saks Fifth Avenue need not provide evidence of deception to demonstrate likelihood of deception; “the law does not require a plaintiff to provide evidence of actual confusion in order to prove likelihood of confusion. Here, plaintiff did not produce substantial evidence of actual confusion."); Geophysical Sys. Corp. v. Raytheon Co., Inc., 1993 U.S. App. LEXIS 3559, at *17-20 (9th Cir. 1993) (grants defendant's JNOV motion as the plaintiff failed to establish that it had suffered a competitive injury (an "unfair injury" under the statute) beyond the risk of loss that accompanies any contract to buy goods); Nationwide Mut. Ins. Co. v. Dynasty Solar, Inc., 753 F. Supp. 853 (N.D. Cal. 1990) (grants partial summary judgment for plaintiffs; UCL is interpreted broadly and "not confined to anticompetitive business").

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54. No Intent to Injure or Violate the Law

Intent is not an element of a UCL claim because the statutes are strict liability statutes.

California

People v. Cappuccio, Inc., 204 Cal. App. 3d 750, 760-61 (1988) (Cal. Bus. & Prof. Code § 17500).

55. No Knowledge of Falsity

Knowledge of falsity is not an element of a UCL claim, but scienter is required for an FAA violation.

56. No Likelihood of Confusion

The Ninth Circuit has developed a multi-factor analysis for determining the likelihood of confusion between trademarks or service marks. (Break-Away Tours, Inc. v. British Caledonian Airways, 704 F. Supp. 178, 181 (S.D. Cal. 1988) ("These factors are: strength of the mark; proximity of the goods; similarity of the marks; evidence of actual confusion; marketing channels used; good faith and intent; and the type of goods and degree of care likely to be exercised by the purchaser." (Id.) The strength of a mark is evaluated by "first categorizing it as 1) generic, and inherently weak mark, 2) descriptive, 3) suggestive or 4) arbitrary, an inherently strong mark (EA Eng'g, Science, & Tech., Inc. v. Environmental Audit, Inc., 703 F. Supp. 853, 855 (C.D. Cal. 1989)). Two tests are frequently applied to determine the strength of the mark. The "'imagination' test focuses on the amount of imagination required for a consumer to associate the mark with the services it identifies. The 'need' test asks to what extent a mark is actually needed by competitors to identify their services." (Id. at 856.)

Federal

Karl Storz Endoscopy America, Inc., v. Surgical Techs., Inc., 285 F.3d 848 (9th Cir. 2001) (reversing district court's grant of summary judgment for defendant, as defendant's rebuilt endoscopes may have created a likelihood of confusion among surgeons who use the devices and, where the endoscopes had been completely rebuilt, may have been functional equivalent of a "sale"; plaintiff thus raised triable issues of material fact with respect to Lanham claim and, consequently, UCL claim); Academy of Motion Picture Arts & Sciences v. Creative House Promotions, 944 F.2d 1446 (9th Cir. 1991) (trademark-related unfair competition cases based upon UCL are "'substantially congruent'" to the Lanham Act, and both turn upon the likelihood of confusion) (quoting International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912, 916

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(9th Cir. 1952)); EA Eng'g, Science, & Tech., Inc. v. Environmental Audit, Inc., 703 F. Supp. 853, 855 (C.D. Cal. 1989) ("Plaintiff's [UCL] claims . . . turn on the likelihood of confusion."); Yamaha Corp. of Am. v. ABC Int'l Traders, Corp., 703 F. Supp. 1398 (C.D. Cal. 1988) (grants defendant's motion for summary judgment because plaintiff fails to demonstrate that sales of Yamaha products by defendant created confusion in the minds of consumers as to the source or sponsorship of the products); Americana Trading Inc. v. Russ Berrie & Co., 1988 U.S. Dist. LEXIS 15580, at *7 (N.D. June 27, 1988) (grants summary judgment in favor of the defendant because the plaintiff's "palming off" claim under UCL requires a showing of likelihood of customer confusion as to the source of the product).

57. No Likelihood of Deception

Courts sometimes reject a claim pleaded under the UCL because a plaintiff has not shown that members of the public are likely to be deceived, without analyzing whether the challenged practice might have been otherwise unlawful or unfair.

California

Bristol Hotels & Resorts v. Nat'l Council on Compensation Ins., Inc., 2002 Cal. App. LEXIS 2947 (Mar. 13, 2002) (unpublished opinion) (plaintiffs adequately pled a fraudulent business practice under the UCL by alleging that defendant insurance carriers' marketed policies by representing that they would reduce an employer's insurance costs by linking the amount of premium charged with the insured's own losses, and subsequently charging residual market loads, thereby forcing plaintiff insureds to bear losses from residual markets in other states); Shvarts v. Budget Group, Inc., 81 Cal. App. 4th 1153, 1157-1160 (2000) (affirms dismissal of renter's claim that car rental company acted unfairly and fraudulently under UCL by applying refueling charges for rental cars returned without full gas tanks because the plaintiff had a meaningful choice about whether or not to fill the tank before returning and was unlikely to be deceived; the rate was disclosed in the rental agreement and the agreement stated clearly that if the renter returned the car with a full tank of gas, the refueling charges would not apply); Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1160-1161(2000) (rejects unfair business practices claim based on the amount of the refueling charge applied by rental-car company because the legislature specifically authorized the allegedly unfair practice by passing Civil Code § 1936(m)(2), but allows a claim under fraud prong of UCL, because the per-gallon rate was not disclosed in the rental agreement); Tippett v. Terrich, 37 Cal. App. 4th 1517, 1536-1537

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(1995) (test case to establish right of construction worker on public works project to recover prevailing wages from employer does not state claim under the UCL because: "'[T]o state a claim under the [UCL] one need not plead and prove the elements of a tort. Instead, one need only show that "members of the public are likely to be deceived,"' quoting Bank of the West, 2 Cal. 4th at 1267. "Plaintiff made no such showing." Court also states that additional obstacles to UCL claim include issues whether employee can show injury to competitors or the general public and that the UCL does not give rise to a claim for damages); State Bd. of Funeral Dirs. & Embalmers v. Mortuary in Westminster Mem'l Park, 271 Cal. App. 2d 638, 76 Cal. Rptr. 832 (1969) (upholds conclusion that advertisements are not in violation of the FAA because they are not likely to deceive the public); Show Management v. Hearst Publ'g Co., Inc., 196 Cal. App. 2d 606, 614 (1961) (exposition producer falsely advertised civic nature of a purely private show; false advertising itself, without disparaging the product or enterprise of another, does not give rise to a private cause of action).

Federal

Freeman v. Time, Inc., 68 F.3d 285 (9th Cir. 1995) (adopts "reasonable person" standard for determining whether consumers were likely to be deceived under the UCL/FAA, harmonizes it with Bank of the West's "members of the public are likely to be deceived" language; notes that California courts look to interpretations of similar provisions in federal law under the FTC Act, and since 1982 the FTC has interpreted "deception" in § 5 of the FTCA to require a showing of "potential deception of consumers acting reasonably in the circumstances," and not just any consumers); Toho Co., Ltd. v. Sears Roebuck & Co., 645 F.2d 788 (9th Cir. 1981) (because Sears' advertising of "Bagzilla" was not likely to confuse the public, there was no claim for "passing off" its product as the copyrighted "Godzilla"); Whitaker v. Tandy Corp., 1997 U.S. Dist. LEXIS 1708, at *8-9 (N.D. Cal. 1997) (sustains motion for judgment on the pleadings granted on UCL and FAA claims as defendant's advertisement of fee "as little as $1" was not deceptive); Creager v. Russ Togs, Inc., 218 U.S.P.Q. (BNA) 582 (C.D. Cal. 1982) (denies motion for preliminary injunction, because plaintiff did not show a fair chance of success of proving likelihood of confusion; plaintiff's mark was a weak mark to which no secondary meaning had attached, so no serious question was raised concerning likelihood of confusion, which is an element of a UCL claim).

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58. No Power to Declare Economic Policy

In California, it is well-established that "[t]he appellate courts have 'neither the power nor the duty to determine the wisdom of any economic policy; that function rests solely with the legislature.'" Wolfe v. State Farm Fire & Cas. Ins. Co., 46 Cal. App. 4th 554, 562 (1996) (quoting Max Factor & Co. v. Kunsman, 5 Cal. 2d 446, 454 (1936) (UCL action based on insurers' refusal to issue new homeowners' policies in the wake of the Northridge earthquake; insurers' conduct "ha[d] violated no laws." (Id. at 567); "a judicial resolution of [the] complaint would involve courts in micro economic managing." (Id. at 567.) The court in Wolfe found it dispositive that the legislature had the power to regulate the challenged conduct and had recently passed legislation on the subject. (Id. at 568 ("we decline the invitation to undo what the Legislature has done")). The court in Wolfe reviewed prior decisions in which California courts declined to interfere with economic policy and considered three factors in determining whether the UCL claim could be maintained. First, whether a specific statutory provision prohibited the challenged conduct. (Id. at 567.) Second, whether a judicial resolution of the complaint would involve the courts in micro economic managing. (Id.) Third, it observed, "it is enough that the Legislature had tried and will try again to address the problems." (Id. at 568.).

California

California Grocers Ass'n v. Bank of America, 22 Cal. App. 4th 205, 218 (1994) (trial court abused discretion by issuing injunction under UCL prohibiting banks from charging $3.00 service fee for certain check deposits; court recognizes that case "implicates a question of economic policy -- while the service fees charged by banks are too high and should be regulated, it is primarily a legislative and not a judicial function to determine economic policy."

59. No Previous Finding Of Unfairness

Courts ordinarily have rejected arguments that governmental or private plaintiffs could not sue defendants whose practices had not previously been adjudged "unfair" or whose practices complied with legal requirements.

California

Saunders v. Superior Court (Los Angeles), 27 Cal. App. 4th 832, 840-41 (1994) (“[P]roviding a discount to the party who notices the deposition while increasing the cost to the parties requesting copies of the deposition appears, on its face, to violate the mandate of impartiality required for reporters"; "In the present case, the unfairness is even more obvious than in [Motors, Inc. v. Times

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Mirror Co., supra]. There, at least, plaintiff could have taken its advertising business to another newspaper. The non-deposing parties, however, are bound by their adversary's choice of reporter and cannot obtain a copy of the deposition from any other source."); Allied Grape Growers v. Bronco Wine Co., 203 Cal. App. 3d 432, 451 (1988) ("nothing in the section requires that there be a reported case in advance of an unfair practice holding the practice to be unfair."); People v. James, 122 Cal. App. 3d 25, 35-36 (1981) ("unfair" practice claim lies against liquor store owner and owner of car towing service where store owner posted warning signs that were difficult to see and failed to advise customers of the lot's parking restrictions, and cars were then towed with a "kickback" to the liquor store owner); People v. Los Angeles Palm, Inc., 121 Cal. App. 3d 25, 33 (1981).

Federal

Orion Pictures Distrib. Corp. v. Snufy Enter., 829 F.2d 946, 949 (9th Cir. 1987) (normal blind bidding practice that does not violate state antitrust law does not support UCL unfairness claim).

60. No Private Right of Action

Defendants have obtained some dismissals of UCL claims where plaintiffs attempted to use the UCL to circumvent the absence of a private right of action in an Insurance Code provision whose violation gave rise to the alleged UCL cause of action. Outside the insurance field, however, the California Supreme Court has held that any unlawful act may be the predicate for a UCL claim. Stop Youth Addiction v. Lucky Stores, 17 Cal. 4th 553 (1998) (permits private action for violation of Penal Code § 308, which forbids sales of tobacco to minors, even though underlying statute limits enforcement to public prosecutors); Committee on Children's Television v. General Foods Corp., 35 Cal. 3d 197, 210-11 (1985) (declines to decide whether California's Sherman Food & Drug Act creates private right of action because that "question is immaterial since any unlawful business practice . . . may be redressed by a private action charging unfair competition in violation of California Business and Professions Code §§ 17200 and 17203.").

California

Korea Supply Co. v. Lockheed Martin Corp., 90 Cal App. 4th 902 (2001), (federal law, Foreign Corrupt Practices Act, used as basis of UCL claim without discussion) review granted on other grounds, 36 P.3d 1 (Cal. 2001); Manufacturers Life Ins. Co. v. Superior Court, 10 Cal. 4th 257, 277-81 (1995) (UCL claim stated for acts for which Unfair Insurance Practices Act ("UIPA") provides a right of action, but not for claims for which UIPA provides no private right of

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action); Rubin v. Green, 4 Cal. 4th 1187 (1993) (plaintiff cannot use UCL to assert SLAPP (Strategic Lawsuit Against Public Policy) claim barred by California Civil Code § 47(b) as privileged); Maler v. Superior Court, 220 Cal. App. 3d 1592, 1598 (1990) (plaintiffs "cannot circumvent [that] ban [against private actions under Insurance Code § 790.03] by bootstrapping an alleged violation of § 790.03 onto Business & Professions Code § 17200"); Safeco Ins. Co. v. Superior Court of Los Angeles, 216 Cal. App. 3d 1491, 1494 (1990) (UCL "provides no toehold for scaling the barrier of Moradi-Shalal. . . . To permit plaintiff to maintain this action would render Moradi-Shalal meaningless."); Industrial Indem. Co. v. Superior Court of Santa Cruz County, 209 Cal. App. 3d 1093, 1097-98 (1989) (issues mandamus directing trial court to grant defendant's motion for summary judgment where plaintiff sued insurer of homeowners' association for UCL violations arising from insurer's violations of California Insurance Code § 790.03, when the California Supreme Court had held in Moradi-Shalal that third-party claimants could not maintain a direct action against insurers); Patterson v. ITT Consumer Fin. Corp. (San Francisco Sup. Court No. 936818) (1993) (unpublished order), writ denied, (demurrer sustained to claim alleged under UCL for violation of provisions of California Fin. Code that did not themselves give rise to a private right of action).

Federal

Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042 (9th Cir. 2000) (affirms summary judgment against insurance company; plaintiff has a private right of action under UCL and may use Insurance Code § 10144 to define the contours of the claim); Hangarter v. Paul Revere Life Ins. Co., 2001 U.S. Dist. LEXIS 17975 (N.D. Cal. 2001) (grants plaintiff insured's motion to amend complaint to add UCL claim; UCL allows a private right of action as long as the relevant statute does not prohibit one; a cause of action for violations of §790.09 of the UIPA may be asserted under UCL since §790.09 expressly provides that an administrative action does not immunize a defendant from either civil or criminal liability); Andrews v. Trans Union Corp., 7 F. Supp. 2d 1056 (C.D. Cal. 1998) (denies motion for partial summary judgment; § 17204 allows suits by private individuals on behalf of general public); Chabner v. United of Omaha Life Ins. Co., 994 F. Supp. 1185 (N.D. Cal. 1998), affirmed, 225 F.3d 1042 (9th Cir. 2000) (grants plaintiff's motion for summary judgment; UCL provides private right of action for a violation of § 10144 of the Insurance Code although Insurance Code does not); Bureerong v. UVWAS, 922 F. Supp. 1450, 1477 (C.D. Cal. 1996) (although no private right of action exists to enforce the registration provisions of the Garment Manufacturing

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Act, plaintiffs states claim for UCL violations because of allegations of violations of federal and state labor laws); Summit Tech., Inc. v. High-Line Med. Instruments Co., Inc., 922 F. Supp. 299 (C.D. Cal. 1996) (dismisses UCL claims for violations of Lanham Act and Copyright Act because Lanham Act and Copyright Act claims had failed; dismisses allegation for false and misleading advertising because it "is identical to the false and misleading advertising claim [under the Federal Drug, and Cosmetics Act] dismissed above as an attempt to state a private cause of action under the federal FDCA"; dismisses federal FDCA claim because statute provides no private right of action; notes: "[T]o the extent that the 'unfair' conduct constitutes violation of the California Food, Drug, and Cosmetic Act or Cal. Bus. & Prof. Code § 2234, the unfair competition claim must be dismissed as an attempt to assert a private right of action where none exists."); Sipes v. Equitable Life Ins., 1996 U.S. Dist. LEXIS 12325, at *31-32 (N.D. Cal. 1996) (grants summary judgment against plaintiff where plaintiff sought to use same facts from dismissed claim under § 790.03(a) of the Insurance Code for claim under UCL; plaintiff may not bring otherwise barred claim by "re-labeling it as a claim under the UCA") (citations omitted); Kentucky Cent. Life Ins. Co. v. Leduc, 814 F. Supp. 832 (N.D. Cal. 1992), rev'd, 23 F.3d 254 (9th Cir. 1994) (denies defendant's motion to dismiss; private parties had right of action under UCL because Insurance Code §§ 781 and 790.03(a) provide private cause of action).

61. No Receipt Of Benefits

Although the courts have not yet addressed such arguments in published opinions, a defendant who is sued for a UCL violation but who did not personally receive any financial benefit from the challenged practice might be able to argue that he has not received any "ill-gotten gains" that he should be forced to restore to plaintiffs.

California

Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1266 (1992) (["I]f there has been no showing of a defendant's actual receipt of any monies, there is, by definition, nothing to 'disgorge.'"); Fletcher v. Security Pac. Nat'l Bank, 23 Cal. 3d 442, 450-51 (1979) (restitution does not require proof that money received was "in fact obtained as a direct result of the unlawful business practice.")

Federal

Baugh v. CBS, Inc., 828 F. Supp. 745, 757-58 (1993) (restitution is claimed for restoration of something that defendant took).

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62. No Reliance

Absence of reliance does not defeat a UCL claim.

California

Mass. Mut. Life Ins. Co. v. Superior Court, 2002 Cal. App. LEXIS 4029 (April 29, 2002) (affirms order certifying as a plaintiff class 33,000 purchasers of life insurance who alleged that Mass Mutual failed to disclose its intention to lower its discretionary dividend rate; "given the evidence of nondisclosure by the plaintiffs, the fact ... that prospective purchasers received differing representations from Mass Mutual's agents is wholly irrelevant to determination of the company's responsibility under the UCL," and the claim is "plainly suitable" for treatment as a class action); Fletcher v. Security Pac. Nat'l Bank, 23 Cal. 3d 442, 452-53 n.5 (1979) (UCL claim based upon defendant's practice of quoting misleading loan interest rate allowable despite plaintiff's awareness and understanding of the practice).

63. No Threat of Future Violations

California

Lee v. Gates, 141 Cal. App. 3d 989, 993 (1983) ("An injunction is no longer necessary to prevent in the future that which in good faith has been discontinued, in the absence of any evidence that the acts are likely to be repeated."); People v. Nat'l Ass'n of Realtors, 120 Cal. App. 3d 459, 476 (1981) ("Where the injunction is sought solely to prevent recurrence of proscribed conduct which has, in good faith, been discontinued, there is no equitable reason for an injunction."); Mallon v. City of Long Beach, 164 Cal. App. 2d 178, 187, 189-90 (1958) (no need for permanent injunction where defendant filed amended answer stating, "'we will not do it again and we need no further court order to prevent us from doing it in the future'" ; notes defendant's "good-faith" intent to voluntarily abandon its prior conduct voluntarily; "this 'change of circumstances' resulting in the City's present attitude, . . . completely warranted the exercise of the trial court's discretion in denying injunctive relief.").

Federal

John Paul Mitchell Sys. v. Eslami, Nos. 95-55820, 95-55856, 1997 U.S. App. LEXIS 5974 (9th Cir. 1997) (affirms denial of injunctive relief under UCL for fraudulent business practices; reasons that defendant's reselling of plaintiffs' hair products in violation of contract did not "deceive the general public," and that

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an injunction could not protect against acts "which have long since ceased"—particularly given that plaintiff retained the capacity to prevent such future conduct by refusing to sell products to defendant); Beneficial Corp. v. FTC, 542 F.2d 611, 617 (3d Cir. 1976), cert. denied, 430 U.S. 983 (1977) (though defendant had abandoned the practice of false advertising, court upholds cease and desist order because later advertising by defendant had tendency to deceive or mislead).

64. No Satisfaction of Traditional Equitable Requirements for Injunction

California

AICCO, Inc. v. Ins. Co. of N. Am., 90 Cal. App. 4th 579 (2001) (former "parent corporation" of a defendant insurer was not immune from suit simply because it sold the insurance company prior to trial; and, on remand, injunctive relief against the former parent company might still be proper); Woods v. Superior Court of Monterey County, 102 Cal. App. 3d 608, 1061 (1980) (UCL "could certainly not give petitioners a stronger right to injunctive relief than has been given by Health and Safety Code § 1541. In light of that fact, full discussion of petitioners' contention is unnecessary."); Larez v. Oberti, 23 Cal. App. 3d 217 (1972) (affirms denial of plaintiff farm workers' § 3369 request for injunction against defendant farmer's employment of illegal aliens (1) in deference to more orderly and effective government enforcement of immigration law and (2) because impracticability in drafting, supervising and enforcing the injunction would spawn multiple lawsuits).

Federal

Visa Int'l Serv. Ass'n v. Bankcard Holders of Am., 211 U.S.P.Q. 28 (N.D. Cal. 1981) ("In the unfair competition case, injury to the plaintiff is not merely an incident to the defendant's act; therefore it is important that the defendant be enjoined as expeditiously as possible if injury to the plaintiff is imminent.")

65. Non-Residents

Non-residents cannot always enforce claims under the UCL even in courts in California. Where choice of law rules dictate application of another state's substantive law, an out of state plaintiff may not be able to invoke the UCL's provisions.

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Federal

Nicholson v. Marine Corp. W. Fed. Credit Union, 953 F. Supp. 1012, 1015 (N.D. Ill. 1997) (conflict of laws exists because "California Code lets a plaintiff file suit as a 'private attorney general' acting on behalf of the general public." [citation omitted]. However, Illinois does not let plaintiffs bring lawsuits in this manner." Court applies "most significant relationship" analysis from Restatement (second) of Conflicts to conclude that Illinois law governs because any injury to plaintiff occurred in Illinois, where he lived, where his car was repossessed, and where he received "notice of sale" at issue).

66. Not Competent Plaintiff

The California Supreme Court has stated that a court may "decline to entertain the [UCL] action as a representative suit" if the defendant can demonstrate either "a potential for harm or show that the action is not one brought by a competent plaintiff for the benefit of injured persons." (Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116, 138 (2000)).

67. Not Commerce

Karl Storz Endoscopy America, Inc., v. Surgical Techs., Inc., 285 F.3d 848 (9th Cir. 2001) (reverses summary judgment for defendant, as defendant's rebuilt endoscopes may have created a likelihood of confusion among surgeons who use the devices and, where the endoscopes had been completely rebuilt, may have been functional equivalent of a 'sale'; plaintiff thus raised triable issues of material fact with respect to Lanham claim and, consequently, UCL claim); International Evangelical Church of the Soldiers of the Cross of Christ v. Church of the Soldiers of the Cross of Christ of the State of California, 54 F.3d 587 (9th Cir. 1995) (discusses dismissal of plaintiff's claim that defendant's use of plaintiff's name, insignia, mark and uniforms violated the Lanham Act and unfair competition law on the grounds that no commerce was involved).

68. Not a "Person"

California

Trinkle v. Cal. State Lottery, 71 Cal. App. 4th 1198 (1995) (California State Lottery as a public entity is not a "person" for the purposes of the UCL, and as such, is not subject to UCL penalties); Community Hosp., 50 Cal. App. 4th 199 (1996); Notrica v. State Comp. Ins. Fund, 70 Cal. App. 4th 911, 940-41 (1999) (upholds injunction because even though defendant, State Compensation Insurance Fund ("Fund") is a "public entity," it is a "person" within the meaning of UCL because in advising the Legislature that

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Insurance Code § 11873 would exempt the Fund from the California Tort Claims Act, defendant made it apparent that it sought to cast itself as a private enterprise rather than a public entity.); People v. Hacker Emporium, Inc., 15 Cal. App. 3d 474 (1971) (corporation charged with a § 17536 false advertising violation is a "person" within the meaning of that statute).

69. Not "Primary Business"

Where the activity that was the focus of plaintiff's UCL claim was not part of defendant's primary business but was merely ancillary to that business, a court dismissed UCL claims in reliance on language in Barquis v. Merchants Collection Ass'n of Oakland, Inc., 7 Cal. 3d 94, 113 (1972) (demurrer overruled where plaintiffs allege pattern or practice relating to defendants' “primary business”).

California

Starbuck v. Kaiser Found. Health Plan, Inc., 275 Cal. 444 (1991) (Alameda County Superior Court No. 644867-1) (photocopying not part of hospital's primary business) (depublished); Truta v. Avis Rent A Car Sys., 192 Cal. App. 3d 802, 807, 816 (1987) (car rental company not in the "business" of selling insurance despite its requests that customers buy "collision damage waivers," because Avis was not "insurer" under authority of California Department of Insurance); People v. E.W.A.P., Inc., 106 Cal. App. 3d 315, 320-21 (1980) (particular criminal conduct, the distribution of obscene materials, subject to prosecution under UCL because it involves business practice); Payne v. United California Bank, 23 Cal. App. 3d 850, 856 (1972) ("sections 17535 and [UCL's predecessor] restrict the drastic remedy to specific types of business practices that are unlawful and unfair per se.") (emphasis in original).

70. Not a "Practice"

Cases defining the level of repetition necessary to constitute a "practice" may be of little avail in light of the UCL's 1992 amendment to include an isolated "act" within the list of proscribed conduct. Even before this change, judicial decisions construed the term "pattern" broadly, so as to include conduct that did not meet traditional "pattern," "custom" or "habit" definitions. (Cal. Evid. Code § 1105 permits showing of "habit or custom to prove conduct.")

California

State v. Texaco, Inc., 46 Cal. 3d 1147, 1169-70 (1988) (one-time merger between two oil companies is not "practice"; requirement "envisions something more than a single transaction." It

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contemplates a "pattern of conduct, ongoing conduct, a pattern of behavior or a course of conduct.") (reversed by 1992 amendment to UCL); United Farm Workers of Am. v. Dutra Farms, 83 Cal. App. 4th 1146, 1163, cert. denied, 2000 Cal. LEXIS 9816 (2000) (single act by an agricultural employer of giving money to an anti-union organization to influence decisions about collective bargaining falls under the UCL, and a pattern of behavior or incidents is not necessary to create liability); Klein v. Earth Elements, Inc., 59 Cal. App. 4th 965, 968-970 (1997) (single act can create liability under the UCA; but affirms judgment that a pet food distributor who unwittingly caused contaminated pet food to be distributed into the stream of commerce did not violate the UCL because the unintentional distribution of a defective product is beyond the scope and policy of the "unlawful" prong of UCL); Podolsky v. First Healthcare Corp., 50 Cal. App. 4th 632, 653 (1996) (UCL can "presumably" be invoked "based on a single instance of unfair conduct"); People v. Dollar Rent-A-Car Sys., Inc., 211 Cal. App. 3d 119, 131 (1989) ("sporadic statements made by lower level employees" that conflict with language of company's standard contract constitute "business practice"); Allied Grape Growers v. Bronco Wine Co., 203 Cal. App. 3d 432, 452-53 (1988) (single act of downgrading grapes in violation of contract affecting many of plaintiff cooperative's 1,000 members constitutes "practice"); People v. Casa Blanca Convalescent Homes, Inc., 159 Cal. App. 3d 509, 527 (1984) (finds practice in nothing more than a pattern of behavior pursued in the course of a business).

Federal

Project Management Sys., Inc. v. WST Corp., 1992 U.S. App. LEXIS 32330 at *4 (9th Cir. 1992) (affirms summary judgment for defendant as the termination of a software dealership agreement constitutes a sale transaction rather than the pattern of ongoing conduct needed to bring a claim under the UCL); Independent Hous. Servs. of San Francisco, et al. v. Fillmore Assoc., 1991 U.S. Dist. LEXIS 14960, at *34-35 (N.D. Cal. 1991) (denies defendant's (B) motion to dismiss as the construction of a law-rent housing project constitutes a multitude of individual acts which themselves can compromise a pattern of unlawful business practice); Pena v. McArthur, 889 F. Supp. 403 (E.D. Cal. 1994) (grants motion to dismiss (1) because private UCL plaintiff did not pray for either injunctive or restitutionary relief and (2) because complaint fails to allege sufficient ongoing conduct to state a cause of action. (UCL's 1992 "isolated act" amendment clearly casts doubt on the second holding.)); Project Management Sys., Inc. v. WST Corp., 1991 U.S. Dist. LEXIS 11652 at *13-15 (N.D. Cal. 1991), aff'd, 1992 U.S. App. LEXIS 32330 (9th Cir. 1992) (grants summary judgment to

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defendant on grounds that the conduct at issue constitutes but one transaction, failing to establish the pattern of conduct needed to violate UCL; plaintiff also failed to prove that defendant's conduct was unfair, fraudulent or unlawful); Heerema Marine Contractors v. Santa Fe Int'l Corp., 582 F. Supp 445 (C.D. Cal. 1984) (series of wrongful lawsuits could constitute unfair competition, but single lawsuit could not, so claim based on a single lawsuit does not state a cause of action [UCL's 1992 "isolated act" amendment clearly casts doubt on this holding]; grants defendant's motion for summary judgment with respect to the remaining unfair competition theory that defendant had threatened plaintiff's potential customers with infringement suits; no evidence suggests that such threats were made.)

Federal

Project Management Sys., Inc. v. WST Corp., 1991 U.S. Dist. LEXIS 11652 (N.D. Cal 1991), aff'd, 1992 U.S. App. LEXIS 32330 (9th Cir.1992) (grants defendant's summary judgment motion on the alleged unfair business practice and breach of contract claims; a showing of an unfair business practice requires a demonstration of on-going conduct or a pattern of conduct; private parties are limited to injunctive relief under the UCL, and civil penalties are only recoverable by specified public officers).

71. Not "Palming Off"

"Passing off" need not be shown to prove the unfair business practice of misappropriation when the defendant admits to violating the Copyright Act.

California

A & M Records, Inc. v. Heilman, 75 Cal. App. 3d 554, (1977), cert. denied and appeal dismissed, 436 U.S. 952 (1978) (affirms summary judgment for plaintiff and rejects defendant's contention that there can be no summary judgment on the issue of liability for unfair competition in a music pirating case because it had not been established that defendant "palmed off" his copies as plaintiff's, when defendant admitted that he duplicated performances owned by plaintiff in order to resell them for profit.)

72. Not "Unfair" Where Contract or Law Requires

It is sometimes possible to defeat a UCL claim if the challenged conduct is required by law or contract.

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California

Californians for Population Stabilization v. Hewlett-Packard Co., 58 Cal. App. 4th 273, 293 (1997) (contract terms required by immigration law cannot be "unfair").

Federal

Eichman v. Photomat Corp., 880 F. 2d 149, 168 (9th Cir. 1989) (action permitted by contract and not expressly forbidden by law or public policy is not "unfair"); Informix Software, Inc. v. Oracle Corp., 1996 U.S. Dist. LEXIS 8430 (N.D. Cal. May 30, 1996) (dismisses plaintiff's claim for unfair competition with leave to amend; "asserting rights enforceable by statute [exclusive licensee] is not actionable as unfair competition".)

73. Not Unfair

California

Aguilar v. Atlantic Richfield Co., 25 Cal. 4th 826 (2001) (affirms grant of summary judgment to defendant; although conspiracy is not an element of a UCL cause of action as an abstract matter, it is a necessary component of such a cause of action as a matter of fact in this case, since the UCL claim was derivative of an alleged violation of the Cartwright Act); Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 187 (1999) (in context of antitrust case, Court criticizes earlier unfairness definitions but declines to formulate new definitions for all purposes; for antitrust cases, adopts new test: "when a plaintiff who claims to have suffered an injury from a direct competitor's 'unfair' act or practice invokes § 17200, the word 'unfair' in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition."); Smith v. State Farm Mut. Automobile Ins. Co., 93 Cal. App. 4th 700 (2001) (affirms in part and reverses judgment in; it is not unlawful or unfair business practice to refuse to recognize any waiver of uninsured motorist coverage that did not apply to all of the insured's vehicles when insured issued single multiple vehicle policies; however, when insurers issued separate policies for each of an insured's multiple vehicles, it is unfair to refuse to permit any waiver that did not include all of the insured's vehicles); Bristol Hotels & Resorts v. Nat'l Council on Compensation Ins., Inc., 2002 Cal. App. LEXIS 2947 (Mar. 13, 2002) (not published) (worker's compensation insurance carriers' alleged imposition on plaintiffs of residual market load (RML) charges incurred in other states is insufficient to

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constitute "unfairness" under the UCL despite a purported legislatively declared policy that California employers should not have to pay RML's, because "the test is not whether a practice violates the policy or spirit of any statute, but whether it violates the policy or spirit of an antitrust statute"; thus, even if one of the policies underlying the pertinent portion of the Insurance Code is to prevent the imposition of RML's on California employers, the test is not met because those sections are not antitrust laws); Desert Healthcare Dist. v. PacifiCare, FHP, Inc., 94 Cal. App. 4th 781 (2001) (affirms dismissal of plaintiff hospital owner's suit against defendant health care service provider; capitation agreements are not unfair because they are standard in the industry and are specifically approved of by the Knox-Keene Act); Chavez v. Whirlpool Corp., 93 Cal. App. 4th 363 (2001) (affirms dismissal of plaintiff consumer's antitrust and unfair competition claims against defendant appliance manufacturer and appliance retailer; conduct alleged to be unfair because it unreasonably restrains competition and harms consumers is not unfair if the conduct is deemed reasonable and condoned under antitrust law; resale price maintenance agreements are not unfair because they are permissible under the Colgate doctrine); Community Assisting Recovery, Inc. v. Aegis Sec. Ins. Co., 92 Cal. App. 4th 886 (2001) (affirms dismissal of plaintiff corporation's claims against defendant insurer; defendant's practice of using the "replacement cost less depreciation" valuation rather than the "actual cash value" method of assessing property is not an unfair practice because the Legislature provides more than one measure to adjust claims under Cal. Ins. Code § 2071); Sure Safe Indus. v. McGrath Rentcorp, 2001 Cal. App. LEXIS 2689, at *19 (Nov. 26, 2001) (affirms denial of UCL injunctive relief and restitution where the defendants "almost immediately" disavowed a letter threatening a boycott); Shvarts v. Budget Group, Inc., 81 Cal. App. 4th 1153, 1157-1160 (2000) (affirms dismissal of plaintiff car-renter's claim that car-rental company acted unfairly and fraudulently under UCL by applying refueling charges for rental cars returned without full gas tanks because the plaintiff had a meaningful choice about whether or not to fill the tank before returning and was unlikely to be deceived: the rate was disclosed in the rental agreement and the agreement stated clearly that if the renter returned the car with a full tank of gas, the refueling charges would not apply); Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1160-1161(2000) (rejects unfair business practices claim based on the amount of the refueling charge applied by rental-car company because the legislature specifically authorized the allegedly unfair practice by passing Civil Code § 1936(m)(2), but allows a claim under the fraud prong of the UCL, because the per-gallon rate was not disclosed in the rental agreement); Notrica v. State Comp. Ins. Fund, 70 Cal. App. 4th

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911, 944 (1999) (injunction warranted based on substantial evidence of defendant's "unfair" practices, which included failure to disclose certain internal policies in order to induce plaintiff to enter into the insurance agreement, denying insureds access to claim files relevant to employer's premium, refusing to communicate with an insured's authorized representative, and refusing to allow such representative to conduct an appropriate claim file review); Olson v. Breeze, Inc., 48 Cal. App. 4th 608 (1996) (rejects unfair competition claim against standard form release required on renters of ski equipment based upon plaintiff's argument that release was not sufficiently clear to be enforceable in all circumstances); Redding v. St. Francis Med. Ctr., 208 Cal. App. 3d 98, 104, 108 (1989) (affirms denial of a preliminary injunction which would have barred defendant hospital from entering an exclusive contract for running its cardiovascular program; distinguishes between intentional actions by a hospital directed at excluding particular physicians which usually are unfair, and normal hospital business practices that result in the exclusion of practitioners which are generally subject to a balancing of equities often tipping in favor of the defendant-hospital); Sammons & Sons v. Ladd-Fab, Inc., 138 Cal. App. 3d 306 (1982) (upholds summary judgment for defendant on claim under UCL for allegedly duplicating and selling plaintiff's product line of storage components).

Federal

Watson Lab. v. Rhone-Poulenc Rorer, Inc., 178 F. Supp. 2d 1099, 1117 – 19 (C.D. Cal. 2001) (sustains summary judgment motion on claim for "unfair" conduct; cites with approval the Cel-Tech requirement which requires showing that defendant's conduct threatened an incipient violation of an antitrust law where the parties are ostensible competitors; concludes that where a supplier merges with a rival firm of the plaintiff, the supplier is deemed a competitor of the plaintiff; plaintiff's ouster from the market did not cause a reduction in supply or result in the establishing of arbitrary prices and thus concludes that the Cel-Tech consumer harm test was not met); Frogface v. Network Solutions, Inc., 2002 U.S. Dist. LEXIS 2594 (N.D. Cal. 2002) (grants summary judgment for defendant; plaintiff corporation did not produce any evidence to support its allegation that defendant domain name registry committed an unfair act when attempting to register a new domain name; plaintiff produced no evidence showing that defendant routinely failed to delete domain names from its registry in a timely fashion); Aiello v. First Alliance Mortgage Co., 2002 U.S. Dist. LEXIS 844 (C.D. Cal. 2002) (denies motion to dismiss UCL claim; a practice can be unfair even if the Legislature has not specifically enumerated it as prohibited; a claim that is not successful under

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Truth in Lending Act (TILA) may still be successful under the UCL); Jackson v. Roe, 273 F.3d 1192 (9th Cir. 2001) (affirming district court's grant of summary judgment for defendant on UCL claim as accounting firm's audit, while possibly not proper, did not rise to the level of "immoral, unethical, oppressive, unscrupulous or substantially injurious conduct") (case did not give details regarding the accounting firm's audit); Abbott v. Chemical Trust, 2001 U.S. Dist. LEXIS 6214 (D. Kan. 2001) (grants summary judgment with respect to UCL claim; bank's actions were not unfair because bank acted within the contours of the agreement and fulfilled its obligations thereunder); Beltran v. Allstate Ins. Co., 2001 U.S. Dist. LEXIS 9614 (S.D. Cal. 2001) (plaintiff failed to produce any evidence of unfair business practices; grants summary judgment in favor of defendant insurance company).

California

Federal

Ballard v. Equifax Check Serv., 158 F. Supp. 2d 1163 (E.D. Cal. 2001) (violation of Fair Debt Collection Practices Act constitutes "unfair competition" under the UCL, as "virtually any law -- federal, state or local -- can serve as a predicate for a [UCL] claim, unless the defendant is privileged, immunized by another statute, or the predicate statute expressly bars its enforcement under the [UCL]"); Home Sav. of Am., F.A., v. U.S. Home Sav. & Loan Assoc., No. 84-0560 K(m), slip op. (S.D. Cal. 1984) (grants application for a Temporary Restraining Order; use of the mark appears to constitute trademark infringement and unfair competition under FAA); Davis v. Gulf Oil Corp., 572 F. Supp. 1393 (C.D. Cal. 1983) (grants motion for summary judgment on UCL claim predicated on unlawful acts because acts were not unlawful; also grants defendant's motion for summary judgment on unfair competition claim predicated on fraud because parole evidence rule precludes evidence of the alleged fraud; Orange Micro, Inc. v. Pacific Blue Micro, 223 U.S.P.Q. (BNA) 4 (C.D. Cal. 1983) (grants preliminary injunction on trademark and copyright claims, which constitute the unlawful acts needed for a UCL claim); Cher v. Forum Int'l, Ltd., 7 Media L. Rep. 2593 (C.D. Cal. 1982) (publishers' acts constitutes unfair competition under UCL and FAA; publishers misappropriated Cher's name and likeness by using them for subscription advertisements, by publishing an interview given to another magazine, and by advertising the publication of this interview; publishers also misrepresented the interview by giving the false impression that Cher had given exclusive interviews to the

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publishers, a violation of the Lanham Act); Rolex Watch U.S.A., Inc. v. Thalheimer Co., Inc., 217 U.S.P.Q. [BNA] 964 (N.D. Cal. 1982) (imitation of trade dress and advertising of copied trade dress were acts in violation of FAA); Rolex Watch U.S.A., Inc. v Borgerson, Civil Action No. 81-1040 (Gx), slip. op. (C.D. Cal. 1981) (consented to injunction and damages in settlement of UCL claim for trademark infringement and unfair competition where defendant watchmaker copied the trademarks and trade dress of Rolex).

74. Not Unlawful

California courts consistently have held that claims for “unlawful” acts under the UCL fail if the underlying statute either is not violated or provides a defense that is applicable to the claim. This means that plaintiff cannot state a claim for a UCL violation based upon an unlawful act if the underlying statute does not apply to the defendant because the defendant is not within the category of businesses to which the statute was directed (Hobby Industrial Association of America, Inc. v. Younger, 101 Cal. App. 3d 358, 369-72 (1980)), and that amendment of the underlying statute will also provide a defense, Janis v. California State Lottery Commission, 68 Cal. App. 4th 824 (1998).

Even where compliance with the law may preclude a UCL claim for an "unlawful" practice, it may not preclude a claim under the "unfairness" prong of the UCL, however. See Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163 (1999) (conduct that does not violate antitrust laws because of proof of intent to injure competitors is missing cannot nonetheless be held unfair); Motors, Inc. v. Times Mirror Co., 102 Cal. App. 3d 735, 741 (1980); see Simeon Management Corp. v. FTC, 579 F.2d 1137, 1144 (9th Cir. 1978) (same outcome under FTC Act); Spiegel, Inc. v. FTC, 540 F.2d 287, 294-95 (7th Cir. 1976) (same result).

California

Coast Plaza Doctor's Hospital v. UHP Healthcare, 2002 Cal. App. LEXIS 5312 (Dec. 23, 2002) (reverses dismissal of hospital's suit against insurer because hospital was assigned patients' rights to payment under the Knox-Keene Act and because pattern of withholding payment could constitute UCL violation); Whiteside v. Tenet Healthcare Corp., 101 Cal. App. 4th 693, 706 (2002) (affirms summary judgment for defendants on plaintiffs UCL claim challenging defendants' practice of accepting reimbursement for the balance of charges arising from the hospitalization of a patient with "preferred provider" provisions in his primary health insurance contract; concludes that plaintiff may not use the UCL to resurrect failed breach of contract claim by arguing that contract language was misleading where language of contract was "clear and

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reasonable." Desert Healthcare Dist. v. PacifiCare, FHP, Inc., 94 Cal. App. 4th 781 (2001) (affirms dismissal of plaintiff hospital owner's suit against defendant health care service provider; capitation agreement between defendant healthcare service provider and a physician association is not unlawful because these agreements are standard in the industry and specifically approved of by the Knox-Keene Act); Chavez v. Whirlpool Corp., 93 Cal. App. 4th 363 (2001) (affirms dismissal of plaintiff consumer's antitrust and unfair competition claims against defendants appliance manufacturer and appliance retailer; conduct that is permissible under the Colgate doctrine is not unlawful; complaint does not allege a valid Cartwright Act violation to establish an unlawful act); Community Assisting Recovery, Inc. v. Aegis Sec. Ins. Co., 92 Cal. App. 4th 886 (2001) (affirms dismissal of plaintiff corporation's claims against defendant insurer; defendant's practice of using the "replacement cost less depreciation" valuation rather than the "actual cash value" method of assessing property is not unlawful; plaintiff's complaint does not state an unlawful business practice because it fails to take into account the safeguard of the appraisal process provided by the Legislature in Cal. Ins. Code § 2071); California Med. Ass'n v. Healthcare of California, Inc., 94 Cal. App. 4th 151 (2001) (affirming trial court's order sustaining without leave to amend defendant's demurrer to plaintiff's derivative UCL claim since the plaintiff's did not allege facts sufficient to establish a violation of §1371 or any other provision in the Knox-Keene statutory scheme; specifically, nothing in the relevant statute imposed an obligation on defendant insurers to pay physicians directly if intermediaries failed to do so after defendants' had already paid intermediaries for physicians' services); Lagatree v. Luce, Forward, Hamilton & Scripps, 74 Cal. App. 4th 1105 (1999) (affirms judgment for defendant; UCL claim fails where underlying wrongful termination claim for refusal to sign a pre-dispute arbitration agreement fails because (1) the rights at issue are subject to waiver by agreement and (2) factors weigh against recognition of a public policy claim); Manibog v. MediaOne of Los Angeles, Inc., 81 Cal. App. 4th 1366 (Cal. Ct. App., 2d Dist., 3d Div. 2000) (reverses; MediaOne's late charge violates the delinquency fee limit set by Government Code § 53088.7, thus allowing plaintiff's UCL claim to continue, also); Crawford v. Farmers Group, Inc., 160 Cal. App. 3d 1164, 1171 (1984) (UCL claim dismissed because allegedly unlawful conduct did not fall within Unruh Retail Installment Sales Law's definition of “retail installment sales”); People v. Duz-More Diagnostic Laboratory, Inc., 68 Cal. App. 4th 654 (1998) (UCL claim for unlawfulness based upon alleged criminal violations of nursing home statutes requires proof of intent because violation of underlying statute requires proof of intent); Janis v. California State Lottery Commission, 68 Cal. App. 4th 824

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(1998) (claim against California State Lottery Commission and other defendants for recovery of money lost during unlawful Keno gambling fails because the California Supreme Court had not yet declared the game illegal at the time of the alleged losses); Morrison v. Viacom, Inc., 1998 Cal. App. LEXIS 756 (Sept. 1, 1998) (affirms judgment for defendant in antitrust action because of plaintiff's failure to allege violations of §§ 16720 and 16727 dealing with illegal tying, upon which plaintiff's UCL claim necessarily depended); Lockheed Info. Mgmt. Serv. Co. v. City of Inglewood, 17 Cal. 4th 170 (1998) (reverses preliminary injunction under UCL where defendant municipality's competitive bid to provide limited parking ticket processing did not violate Cal. Veh. Code § 40200.5(a)); People v. Servantes, 86 Cal. App. 4th 1081 (2001) (affirms trial court decision that defendant's violation of hundreds of state and local towing laws is unfair business practice; rejects defendant's attempt to make a defense under California's unfair competition law by claiming that the underlying violation of state and local regulations governing towing law was preempted by federal law); Souza v. Lauppe, 59 Cal. App. 4th 865 (1997) (affirms trial court; agricultural exception to California nuisance statute requires summary judgment in favor of defendants); Californians for Population Stabilization v. Hewlett-Packard Co., 58 Cal. App. 4th 273, 293 (1997) (no unfair business practice where contract is legal under Indian Law and unenforceable, but not illegal, under California law; notes "that section 17200 'does not give the courts a general license to review the fairness of contracts but rather has been used to enjoin deceptive or sharp practices'" (quoting Samura v. Kaiser Found. Health Plan, Inc., 17 Cal. App. 4th 1284, 1299 n.6 (1993)); California State Elec. Ass'n v. Zeos Int'l Ltd., 41 Cal. App. 4th 1270 (1996) (denies injunctive relief under UCL to trade association performing warranty service on consumer electronic products for failure to comply with Civil Code § 1793.2(a)(1)(A) requiring provision of warranty service facilities in California, because Zeos' sales occur in Minnesota, not California, "and hence are not subject to section 1793.2, subdivision (a)(1)"); Biljac Assoc. v. First Interstate Bank of Oregon, 218 Cal. App. 3d 1410, 1422-24 (1990) (affirms summary judgment for defendants on unfair competition claim because allegations in this case clearly require showing of conspiracy, and insufficient evidence was presented to draw a reasonable inference of conspiracy among bank defendants, while trade association defendants present undisputed evidence that they did not have or set interest rates); Korens v. R. W. Zukin Corp., 212 Cal. App. 3d 1054, 1059 (1989) (refuses to require landlords to pay interest on security deposits under UCL because, although legislature had extensively related security deposits, legislature had not required interest to be paid on them; the court "declines the invitation to do that which the Legislature

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has left undone"); Van de Kamp v. Bank of America, 204 Cal. App. 3d 819, 855 (1988) (practices of self-pooling and self-depositing, use of fail float and use of disbursing float for trust funds are not unlawful, unfair or fraudulent where no statutory violations and no breach of fiduciary duty); Richmond v. Dart Indus., Inc., 196 Cal. App. 3d 869, 871-79 (1987) (affirms trial court's refusal to rule on UCL claim for misrepresenting availability of water and sewer service after a jury verdict against the plaintiff class of land-purchasers on their Subdivided Lands Act claim); Sammons & Sons v. Ladd-Fab, Inc., 138 Cal. App. 2d 306 (1982) (upholds summary judgment for defendant for claim under UCL for allegedly duplicating and selling plaintiff's product line of storage components because duplicating plaintiff's unpatented and uncopyrighted product line does not state a claim for unfair competition); Hobby Indus. Ass'n of Am., Inc. v. Younger, 101 Cal. App. 3d 358, 369-72 (1980) (no unlawfulness claim against wholesalers and retailers for selling non-functional slack-filled packages when underlying statute explicitly exempts wholesalers and retailers from its provisions); College of Psychological and Soc. Studies v. Board of Behavioral Science Exam'rs, 41 Cal. App. 3d 367 (1974) (defendant Board cannot take action against unaccredited College for granting Ph.D.'s to persons who are licensed and have Master's degrees from accredited schools, and such conduct does not constitute false advertising; “[t]he legislature is free to deal with unaccredited schools, but the administrative board may not enlarge on legislative efforts in that area. . . . Nothing grants the board power to enlarge the provisions of the chapter.”).

Federal

Kentmaster Mfg. Co. v. Jarvis Prods. Corp., 146 F.3d 691 (9th Cir. 1998), amended, 164 F.3d 1243 (9th Cir. 1999) (upholds summary judgment for defendant in action for antitrust violations and unfair competition when UCL claim necessarily depended on the underlying, insufficiently pled allegations of predatory pricing); Loe v. State Farm Ins. Co., 1997 U.S. App LEXIS 25308, 124 F.3d 212 (9th Cir 1997) (unpublished opinion) (affirms trial court's dismissal of plaintiff's claim; "[plaintiff's] fraud claim cannot rest on the UCL because UCL was enacted after Cal. Ins. Code § 790.03"); Frogface v. Network Solutions, Inc., 2002 U.S. Dist. LEXIS 2594 (N.D. Cal. 2002) (grants summary judgment for defendant; defendant domain name registry's purported violation of ICAAN cannot be unlawful under the UCL because there is no authority for the proposition that ICAAN policies have the force of law); Abbott v. Chemical Trust, 2001 U.S. Dist. LEXIS 6214 (D. Kan. 2001) (grants summary judgment with respect to UCL claim; bank's actions were not unlawful or fraudulent; plaintiff failed to prove underlying tort,

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fraud and negligence, breach of fiduciary duty, constructive trust, breach of contract, and deceptive trade claims); Watson Lab. v. Rhone-Poulenc Rorer, Inc., 178 F. Supp. 2d 1099, 1120 (C.D. Cal. 2001) (denies summary judgment regarding a UCL "unlawful" business practice claim because defendant's breach of a supply contract could constitute the requisite unlawfulness; concludes that plaintiff did not establish the requisite consumer harm to maintain a UCL "fraudulent" business practice claim); American Booksellers Assn., Inc. v. Barnes & Noble, Inc., 135 F. Supp. 2d 1031 (N.D. Cal. 2001) (denies defendant booksellers' motion for summary judgment on plaintiffs' UCL claim because plaintiffs' claim for injunctive relief under the Robinson-Patman Act survived summary judgment, and therefore plaintiffs' UCL claim survived as well; plaintiffs could not make the argument that certain conduct was unlawful, however, because plaintiffs signed a consent decree in prior litigation approving that conduct); Benton v. Allstate Ins. Co., 2001 U.S. Dist. LEXIS 9448 (C.D. Cal. Mar. 1, 2001) (affirms summary judgment for defendant on plaintiff's UCL claim because plaintiff failed to raise triable issues of fact regarding his claims of common law bad faith and violation of Cal. Ins. Code §§ 790.03(h)(3),(5), and (6), which his UCL claim depended upon); Aquino v. Credit Control Servs., 4 F. Supp. 2d 927 (N.D. Cal 1998) (grants motions to dismiss; messenger service that only delivers debt notices is not a debt collector and could not have engaged in unfair debt collection practices); Raines v. Switch Mfg., 1997 U.S. Dist. LEXIS 13621 (N.D. Cal. 1997) (grants plaintiff's motion to dismiss all defendant's counterclaims including the unfair competition counterclaim; UCL claim fails because the defendant did not allege any facts that the plaintiff acted in bad faith in misusing patents or in bringing the suit); Summit Tech., Inc. v. High-Line Med. Instruments Co., Inc., 922 F. Supp. 299 (C.D. Cal. 1996) (dismisses UCL claims for violations of Lanham Act and Copyright Act because Lanham Act and Copyright Act claims had failed); Summit Tech., Inc. v. High-Line Med. Instruments Co., Inc., 922 F. Supp. 299 (C.D. Cal. 1996) (dismisses UCL claims for violations of Lanham Act and Copyright Act because Lanham Act and Copyright Act claims had failed); Bell Atlantic Bus. Sys. Servs., Inc. v. Hitachi Data Sys. Corp., 1995 U.S. Dist. LEXIS 15471, at *103 (N.D. Cal. 1995) (grants interlocutory judgment on UCL claim after a jury found a failure to prove the underlying monopolization claim); Independent Cellular Tel., Inc. v. Daniels & Assoc., 863 F. Supp. 1109, 1118 (N.D. Cal. 1994) (dismisses UCL claim because defendants were not subject to licensing requirement at issue); California Travel Parks Ass'n v. California, 1994 U.S. Dist. LEXIS 7899, at *12 (N.D. Cal. 1994) (grants summary judgment motion, without more than a cursory discussion; plaintiff did not allege the violation of any law or any facts indicative of an unlawful or unfair

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business practice; plaintiff accused state of unfair competition for allowing the United States to permit free camping on a spot of land, severely damaging plaintiff's business); Metro Publ'g, Ltd. v. San Jose Mercury News, 861 F. Supp. 870, 881 (N.D. Cal. 1994) (dismisses UCL claim because of dismissal of trademark infringement and dilution claims on which it was based); Baugh v. CBS, Inc., 828 F. Supp. 745, 757 (N.D. Cal. 1993) (no claim for unlawful act based on trespass where no trespass occurred); McDonald's Corp. v. Arche Technologies, Inc., 17 U.S.P.Q. 2d 1557, 1990 U.S. Dist. LEXIS 18545, at *11 (N.D. Cal. 1990); Peterson v. Wells Fargo Bank, Nat'l Ass'n, 556 F. Supp. 1100 (N.D. Cal. 1981) (FAA claim fails because communication was not misleading; court analyzes TILA, Unruh Act, and common law duty not to discriminate arbitrarily and grants defendant's motion for summary judgment of UCL claim, predicated on violations of other federal and California laws; no violations of § 17500, because form of notice of change in interest rates was not misleading).

75. Parallel Statutory Scheme

The existence of a parallel statutory scheme that forbids the same conduct is irrelevant.

California

People v. Bestline Prods., Inc., 61 Cal. App. 3d 879, 910-11 (1976). (While some states "exempt" conduct that "is subject to and complies with the rules and regulations of, any statutes administered by the [F]ederal [T]rade [C]ommission," California has no such provision.). But cf. Woods v. Superior Court of Monterey County, 102 Cal. App. 3d 608, 1061 n. 4 (1980) (UCL "could certainly not give petitioners a stronger right to injunctive relief than has been given by Health and Safety Code § 1541").

Other States

Ariz. Rev. Stat. Ann. §  44-1523; Ark. Stat. Ann. § 70-913(a); Colo. Rev. Stat. § 6-1-106(1)(a); Del. Code Ann. title XI, § 2513(b); La. Rev. Stat. Ann. § 51:1406(4); Mo. Ann. Stat. § 407.020(1); N.H. Rev. Stat. Ann. § 358-A:3; People v. Green Acres Trust, 127 Ariz. 160, 166, 618 P.2d 1086, 1092 (Ariz. App. 1980) ("The fact that our Consumer Fraud Act may, in some instances, be cumulative with respect to other penal and remedial provisions available to public prosecuting authorities does not make it inapplicable."); State v. Rhoades, 275 S.C. 104, 107, 267 S.E.2d 539, 541 (1980) (party claiming exemption from state Unfair Trade Practices Act must show only that general activity is regulated by another "regulatory body or officer"); Murphy v. McNamara, 36 Conn. Supp. 183, 187,

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416 A.2d 170, 174 (1979) (FTC's concurrent jurisdiction does not bar state action. "It is obvious that the legislature intended to make [the Connecticut U.D.A.P. Statute] at least co-extensive with its federal counterpart."); Gour v. Daray Motor Co., 373 S.2d 571, 576-77 (La. Ct. App. 1979) (voluntary settlement with FTC where defendant agreed to cease misrepresenting source of engine parts did not bar action under state statute because challenged conduct did not "comply" with FTC Act), cert. granted, 376 S.2d 1270, cert. dismissed, 377 S.2d 1033 (1979).

76. Parol Evidence Rule

California

Wang v. Massey Chevrolet, 2002 Cal. App. LEXIS 3273, at *23 (filed Mar. 21, 2002) (reverses summary judgment; parol evidence rule does not preclude a UCL claim where the alleged deceit pertains to oral statements made prior to the execution of an auto lease; reasons that "permitting a parol evidence bar . . . would be tantamount to construing the written contract as constituting essentially a waiver of the protections of the act, which is contrary to public policy").

77. Preemptive Strike

When an enforcement action is imminent, a defendant may benefit by making the first move by filing a suit to block enforcement of an underlying law or regulation. Such an approach may permit the plaintiff to chose the forum, which can be significant where judges in a particular venue may be more hostile to defendant's (now plaintiff's) position or where a federal forum is available, so that the defendant turned plaintiff may avail itself of the federal court's standing requirements to prevent prosecution of restitution claims by a non-injured quasi-class representative, or of other favorable aspects of federal decisions.

Federal

Morales v. Trans World Airlines, Inc., 504 U.S. 374, 380-81 (1992) (Airline Regulation Act of 1979 preempted guidelines adopted by National Association of Attorneys General regarding unfair and deceptive advertising; "When enforcement actions are imminent -- and at least when repetitive penalties attach to continuing or repeated violations and the moving party lacks the realistic option of violating the law once and raising its federal defense -- there is no adequate remedy at law. . . . Like the plaintiff in Ex Parte Young, respondents were faced with a Hobson's choice: continually violate the Texas law and expose themselves to potentially huge liability; or violate the law once as a test case and

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suffer the injury of obeying the law during the pendency of the proceedings and any further review.")

Pursuit of preemptive strike suits against private plaintiffs may be more difficult.

California

Rubin v. Green, 4 Cal. 4th 1187, 1201-02 (1995) (Cal. Civ. Proc. Code § 47(b)'s protection of statements made in the context of a judicial proceeding precludes claims under UCL to restrain SLAPP ("Strategic Lawsuit Against Public Participation") suits; relies on Maler and Safeco decisions, described above, that barred claims were not "resurrected" by casting claim as one for relief under UCL).

78. Prior Case Pending

The California Code of Civil Procedure provides as one of the statutory grounds for a demurrer the existence of another case in the state courts involving the same parties and same alleged wrong. (Cal. Civ. Proc. Code § 430.10). Some judges believe that this principle supports dismissal of duplicative UCL representative claims (both on behalf of the "general public") under a "first to file" rule. Retired San Francisco Judge William Cahill so ruled in a series of bank customer privacy cases before him in the late 1990s. Other judges look to the specific named plaintiff and find an absence of identity of parties.

79. Public Entity Immunity

The UCL does not apply to governmental entities, even when they are performing non-governmental acts.

California

LeVine v. Weis, 90 Cal. App. 4th 201 (Cal. Ct. App., 2d Dist., 6th Div. 2001) (reaffirms Trinkle and Community Memorial Hospital's holdings with respect to public entity immunity under the Unfair Practices Act, no such immunity under the False Claims Act); California Med. Ass'n v. Regents of University of California, 79 Cal. App. 4th 542, 551 (2000); Janis v. State Lottery Commission, 68 Cal. App. 4th 824, 831 (1998); Trinkle v. Cal. State Lottery, 71 Cal. App. 4th 1198, 1202-04 (1995); Community Memorial Hospital v. County of Ventura, 50 Cal. App. 4th 199, 209-11 (1996).

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80. Puffing

Standard advertising claims that customers could not reasonably perceive as factual claims may not be actionable, although California state courts have not addressed puffing defenses under the UCL. Two United States District Court decisions construing California law have sustained puffing defenses, however.

California

Dixon Mobile Homes, Inc. v. Walters, 48 Cal. App. 3d 964, 972-73 (1975) (applies California law because of California's strongly pro-consumer interests in extending protection of Rees-Levering Act [automobile financing] to its residents).

Federal

FTC v. Colgate-Palmolive Co., 38 U.S. 374 (1965) (puffing is "sales talk" that no one could reasonably rely upon); Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997) (exaggerated and boasting advertising claim, upon which no reasonable buyer would rely, was non-actionable puffery; but, a "specific and measurable advertisement claim of product superiority based on product testing" was not); Cook, Perkiss & Liehe, Inc. v. Northern California Collection Service, Inc., 911 F.2d 242 (9th Cir. 1990) (dismisses claim because claim by debt collection service that its services were comparable to hiring an attorney but less costly were simply general assertion of superiority); Atari Corp. v. 3 DO Co., 31 U.S.P.Q. 2d 1636, 1994 WL 723601 (N.D. Cal. 1994) (slogan, "The most advanced home gaming system in the universe," was merely a general assertion of superiority, not a representation about objective, quantifiable attributes, and therefore not actionable under the UCL or the FAA or the Lanham Act); Haskell v. Time, Inc., 857 F. Supp. 1392 (E.D. Cal. 1994) (grants motion to dismiss on bulk of claims against Publisher's Clearinghouse for sweepstakes solicitations because no reasonable person would believe the solicitations to be true; applies "reasonable consumer" rather than "least sophisticated consumer" standard; permits suit to proceed with respect to one alleged statement); Nikkal Industries, Ltd. v. Salton, Inc., 735 F. Supp. 1127 (S.D.N.Y. 1990) (claim that defendant's product is "better" than competitor's is puffing).

Other States

Autohaus, Inc. v. Aguilar, 794 S.W.2d 459, 462-64 (Tex. App. 1990) (claims that Mercedes-Benz is best-engineered car in the world and is unlikely to have mechanical difficulties are permissible "puffing").

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81. Punitive Damages Standards Inapplicable

It appears that statutory and constitutional provisions may not be applicable to imposition of civil penalties. See People v. First Federal Credit Corp., 104 Cal. App. 4th 721-731-32 (2002) (rejects argument that decision of California Supreme Court in Adams v. Murakami, 54 Cal. 3d 105, 108-09 (1991) requiring a plaintiff introduce evidence of a defendant's financial condition before imposition of punitive damages should be extended to civil penalties under UCL or FAA).

California

People v. First Federal Credit Corp., 104 Cal. App. 4th 721-731-32 (2002) (citing Rich v. Schwab, 64 Cal. App. 4th 803, 816-17 (1998), concludes that fundamental differences between punitive damages and civil penalties, including the limitation of civil penalties to public law enforcement officials and the mandatory nature of civil penalties, militate against importing the requirement of proof of defendant's financial condition from punitive damages cases).

82. Punitive Damages Unavailable

California

People v. Superior Court (Jayhill), 9 Cal. 3d 283, 287 (1973) (Attorney General may not recover punitive damages; in absence of statute, exemplary damages are allowed only to the person immediately injured); People v. Superior Court (Solano), 35 Cal. App. 3d 710 (1973) (penalty provisions of the Business and Professions Code were similar enough to exemplary damages to permit discovery of the defendant's financial conditions in appropriate cases (although not this one)).

Federal

American Computech, Inc. v. National Med. Care, Inc., 1992 U.S. App. LEXIS 6460, at *27-29 (9th Cir. 1992) (reverses award of punitive damages for failure to properly instruct the jury [note: there is no jury trial right in UCL cases] that such damages are not recoverable under a UCL claim); Czechowski v. Tandy Corp., 731 F. Supp 406, 409-410 (N.D. Cal. 1990) (no punitive damages); Southwest Marine, Inc. v. Triple A Mach. Shop, Inc., 720 F. Supp. 805, 810 (N.D. Cal. 1989) (no punitive damages); Ferrari S.p.A. Esercizio Fabbriche Automobili E. Corse v. McBurnie Coachcraft, Inc., 1988 U.S. Dist. LEXIS 16314, at *15 (S.D. Cal. Sept. 6, 1988) (plaintiff is not entitled to punitive or treble damages under UCL); Hartley v. Stamford Towers Ltd. Partnership, 1994 U.S. App. LEXIS 23543, at *19 (9th Cir. Aug. 26, 1994) (depublished opinion)

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(because the plaintiff received notice as a class member, chose not to opt out of the class and accepted the settlement payment, she is enjoined from arbitrating claims against the defendant).

83. Rate Setting

Litigation under the UCL should not become a substitute for decisions properly left to the state legislature.

California

California Grocers Ass'n v. Bank of America, 22 Cal. App. 4th 205, 218 (1994) (abuse of discretion in court's issuance of injunction in UCL quasi-class action limiting certain return check fees to $1.73 (Bank's costs plus 15% profit mark-up; "Judicial review of one service fee charged by one bank is an entirely inappropriately method of overseeing bank service fees. . . . 'Legislative Committees and administrative officer charged with regulating an industry have better sources of gathering information and assessing its value than do courts in isolated cases.' . . . 'It is primarily a legislative and not a judicial function to determine economic policy.'") (citations omitted); Beasley v. Wells Fargo Bank, 235 Cal. App. 3d 1383, 1391 (1991) (trial judge awarded damages for overcharges on bank credit card fees but declined to grant injunctive relief because court was not "' . . . well suited to regulating retail bank pricing via injunction on an ongoing basis.'"

84. Ratification or Waiver

Waiver of rights or ratification of defendant's conduct by individual members of the public on whose behalf the government or a private attorney general is suing may not bar "quasi-class" claims.

California

Fletcher v. Security Pac. Nat'l Bank, 23 Cal. 3d 442, 452-454 (1979) (knowledge of and consent to interest charges by some customers did not preclude order requiring refund of interest overcharges to all borrowers).

85. Regulatory Approval

Regulatory approval may not provide a defense to a UCL claim.

California

Chern v. Bank of America, 15 Cal. 3d 866, 876 (1975) (compliance with federal Truth-in-Lending Act did not provide defense to FAA claim that bank used bait-and-switch tactic in advertising 9% rate

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but calculating interest at 9 1/4%); AICCO, Inc. v. Ins. Co. of N. Am., 90 Cal. App. 4th 579 (2001) (prior regulatory approval by the Insurance Department of insurance company's transfer of policies without policyholder consent does not preclude a court from deciding the legal consequences of defendant's actions); People v. Casa Blanca Convalescent Homes, Inc., 159 Cal. App. 3d 509 (1984) (agency's approval and renewal of nursing home's license does not bar District Attorney from UCL claim to enforce compliance with state administrative regulations); Coast & Southern Fed. S & L Ass'n v. Transcoast S & L Ass'n, 16 Cal. App. 3d 205, 209-210 (1971) (California Savings and Loan Commissioner's approval of name change does not bar unfair competition claim for deceptively similar name) (not UCL case).

86. Reliance on Advice of Counsel

Reliance on advice of counsel likely is not a defense to an Unfair Competition Law claim since intent is not a requirement. In a civil penalty context, the Court of Appeal has rejected a defense based upon reliance on advice from counsel. See People v. Nat'l Ass'n of Realtors, 155 Cal. App. 3d 578, 585 (1984).

California

People v. Nat'l Ass'n of Realtors, 155 Cal. App. 3d 578, 585 (1984) (rejects defense to civil penalties of reliance on advice of counsel).

87. Removal

Actions may be removed to federal court where they are "founded on a claim or right arising under the Constitution, treaties or laws of the United States." (28 U.S.C. § 1441(b)). Although removal is not technically a defense, the ability to remove a case to federal court may make all the difference in the world in a company's ability to present what defenses it does have to a somewhat receptive audience – because the practical reality is that federal courts are far more receptive to business challenges to UCL lawsuits. Removal has been denied where the state is plaintiff and where the unlawfulness alleged in a UCL claim arises from violation of federal law, but it should be available where plaintiffs are private parties and (1) complete diversity exists; or (2) a valid federal preemption claim is asserted. Note that plaintiff must have sustained actual injury to maintain a UCL claim in federal court, however. See section VIII.B.89 (Standing), below.

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a. Federal Question

Federal

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987) (inclusion of a federal claim as a defense provides a ground for removal where "Congress . . . so completely preempt[s] a particular area, that any civil complaint raising this select group of claims is necessarily federal in character") (not UCL case); Merrell Dow Pharm., Inc. v. Thomson, 474 U.S. 804, 814 (1986) (allegation that federal act has been violated, or that act itself does not provide private federal right of action, does not render complaint removable) (not UCL case); Patenaude v. The Equitable Life Assurance Society of the United States, 2002 U.S.App. LEXIS 9124, *6 (9th Cir. 2002) (affirms order dismissing action and denying remand on the ground that Securities Litigation Uniform Standards Act completely preempts UCL action over alleged misrepresentations in connection with the purchase of variable annuities); People v. Keating, 986 F.2d 346 (9th Cir. 1993) (rejects removal of UCL and other claims by California Attorney General against accountants for Lincoln Savings & Loan Association despite participation of Resolution Trust Corporation as successor to Lincoln after its failure); People v. General Motors Corp., 431 F.2d 732 (9th Cir. 1970) (reverses district court's denial of motion to remand an FAA claim to California state court); Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 2002 U.S. Dist. LEXIS 6439 (C.D. Cal. 2002) (grants motion to dismiss and denies motion to remand; trust's UCL claims arising in connection with the purchase of sale of a "covered security" are completed preempted under Securities Litigation Uniform Standards Act; Bertram v. Terayon Communications Systems, Inc., 2001 U.S. Dist. LEXIS 6215 (C.D. Cal. 2001) (grants motion to dismiss and denies plaintiff's motion to remand on the ground that a representative UCL action related to NASDAQ-listed stock is a "covered class action" under Securities Litigation Uniform Standards Act); Fardella v. Downey Savings & Loan Ass'n, 2001 U.S. Dist. LEXIS 6037 (N.D. Cal. 2001) (UCL claim against savings and loan association is not dependent on federal claims; therefore, court does not have jurisdiction; remands case to state court); Kagan v. Carwell Corp., 2001 U.S. Dist. LEXIS 4544 (C.D. Cal. 2001) (court lacks jurisdiction because federal law does not provide plaintiff a private right of action, and the only other basis for jurisdiction proffered by defendant car manufacturer was a defense of federal preemption, which does not establish removal jurisdiction); Roskind v. Morgan Stanley Dean Witter & Co., 2001 U.S. Dist. LEXIS 4528 (N.D. Cal. 2001) (state law, not NASD rules, will determine if defendant securities dealer engaged in unfair practices; remands case to state court based on lack of federal

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question jurisdiction); Schwartz v. Visa Int'l Corp., 2001 U.S. Dist. LEXIS 105 (N.D. Cal. 2001) (grants plaintiff's motion for remand to state court; since a UCL action to redress an unlawful business practice borrows violations of other laws and plaintiff has not raised any independent federal claims, there is no basis for federal jurisdiction); Castro v. Providian Nat'l Bank, 2000 U.S. Dist. LEXIS 19062 (N.D. Cal. Jan. 2, 2001) (grants plaintiffs' motion for remand to state court; defendants argued that plaintiffs' discussion of the Truth in Lending Act (TILA) and Regulation Z in summary adjudication reply brief raised a federal claim; arguable presence of TILA as a basis for liability in a UCL claim is not grounds for federal jurisdiction where the TILA claim is not a necessary element for liability under the UCL because the UCL claim is supported by violations of state law as well); Tall Club of Silicon Valley v. Am. Airlines, 2000 U.S. Dist. LEXIS 11302, at *6 (N.D. Cal. June 19, 2000) (remands case to state court ; removability is determined from the face of the complaint, not by issues that may be raised in the answer); Abada v. Charles Schwab & co., 127 F. Supp. 2d 1101 (S.D. Cal. 2000) (vacates dismissal and denies remand under Securities Litigation Uniform Standards Act, published at 68 F. Supp. 2d. 1160, and remands to state court on the ground that the misrepresentations alleged involved the "relationship between Schwab and its customers" regarding its technical abilities, rather than the value of any particular security); Toxic Injuries Corp. v. Safety-Kleen Corp., 57 F. Supp. 2d 947, 955 (C.D. Cal. 1999) (remands to state court because the UCL is a state cause of action, and cites with approval the proposition established in Mangini that the state legislature cannot expand the standing of a plaintiff in federal court); Salcido v. Pacific Weathershield, Inc., 1997 U.S. Dist. LEXIS 18191 (N.D. Cal. 1997) (grants plaintiffs' motion to remand the case to California Superior Court; "third-party defendants cannot remove [to federal court] pursuant to § 1441(a) because a third-party defendant is not a 'defendant' under § 1441(a)"); Rawson v. Tosco Ref. Co., 1996 U.S. Dist. LEXIS 1006 (N.D. Cal. 1996) (remands case to California Superior Court for lack of federal jurisdiction; UCL creates a cause of action solely based on California law, and, alone, it is not a federal issue); Mangini v. R.J. Reynolds Tobacco Co., 793 F. Supp. 925, 927-28, 930 (N.D. Cal. 1992) (remands under Merrell Dow, because complaint does not "arise under" federal law where Federal Cigarette Labeling and Advertising Act does not create private federal right of action; plaintiff had claimed that tobacco company's "Joe Camel" advertisements violated the Act because its promotional t-shirts and other similar items failed to include health warnings; defendant contended that plaintiffs' claim necessarily arose under federal law); People v. Steelcase, Inc., 792 F. Supp. 84, 86-87 (C.D. Cal. 1992) (no removal where Eleventh

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Amendment bars federal courts from exercising original jurisdiction because states have sovereign immunity against suits in federal court); Boyle v. MTV Networks, Inc., 766 F. Supp. 809, 814-18 (N.D. Cal. 1991) (federal preemption argument does not justify removal to federal court unless claim has been "artfully pleaded" and argument is for "complete preemption"; also, plaintiff would lack Article III standing); Titan Sports, Inc. v. 3-G Prod., 19 U.S.P.Q. 1867, 1991 U.S. Dist. LEXIS 15945, at *11 (C.D. Cal. 1991) (refuses jurisdiction over state law claims pendent to federal copyright and trademark claims); People (New York) v. Trans World Airlines, Inc., 728 F. Supp. 162 (S.D.N.Y. 1989) (grants plaintiff's motion to remand and denies defendants' motion to stay or transfer the proceedings; grants in part and denies in part plaintiff's motions to dismiss defendants' federal action against plaintiff; application of state regulations of deceptive advertising to the airline industry is not preempted by FAA regulations under the Supremacy Clause; claims of violations of the Interstate Commerce Clause and First Amendment also dismissed; court does not dismiss claim that the state regulation violated the Commerce Clause because it sufficiently alleged that the regulations interfere with interstate and foreign commerce); Contemporary Servs. Corp. v. Universal City Studios, Inc., 655 F. Supp. 885, 895 (C.D. Cal. 1987) (remands UCL claim to state court; "[w]hile citizens can sue on behalf of the general public for injunctive relief [citations omitted], the Court is unaware of California authority authorizing them to seek restitution of the general public. A California court would be the best qualified to decide this on first impression. In addition, the test under California law for what constitutes 'unfair competition' involves complex analysis of what business practices are 'unlawful' under California law. This is not a well-settled proposition."); People v. Beltz Travel Serv., Inc., 379 F. Supp. 948 (N.D. Cal 1974) (grants plaintiff's motion to remand case to state court; derivative right under California Unfair Competition Law [Cal. Civ. Code §  3369] to sue in state court on behalf of persons who suffered an injury does not confer on plaintiffs the right to sue in federal court).

b. Diversity

Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 2002 U.S. Dist. LEXIS 6439 (C.D. Cal. 2002) (denies remand of UCL claim under Securities Litigation Uniform Standards Act, but finds amount-in-controversy requirement not satisfied for diversity jurisdiction because defendant cannot "aggregate" separate alleged claims of class members); Myers v. Merrill Lynch & Co., 249 F.3d 1087 (9th Cir. 2001) (affirms District Court ruling, 1999 WL 696082 (N.D. Cal. 1999), that amount-in-controversy for purposes of diversity jurisdiction in a UCL claim that was not a "class action" could be measured by potential cost

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to defendant); Surber v. Reliance Nat'l Indem. Co., 110 F. Supp. 2d 1227, 1230-33 (N.D. Cal. 2000) (remands case to state court because diversity jurisdiction is not satisfied; rejects plaintiff's statement of damages for aggregation where there was no personal injury or wrongful death and there was no support in the record for the asserted amount; plaintiff's attorney fees are not aggregated where defendant fails to provide any factual basis; punitive damages are excluded if there is no evidence supporting them; rejects administrative costs associated with defendant's compliance with a UCL court order because otherwise all UCL claims would become a federal matter where there is diversity); Gibson v. Chrysler Corp., 1998 U.S. Dist. LEXIS 11343 (N.D. Cal. July 20, 1998) (remands action to state court because diversity jurisdiction not satisfied; can only aggregate individual class member damages claims when "two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest"); Daniels v. Philip Morris Companies, 1998 U.S. Dist. LEXIS 13950 (S.D. Cal. Aug. 7, 1998) (grants remand; defendants are precluded from aggregating plaintiffs' requests for attorney's fees to satisfy the amount in controversy requirement; restitution is designed to punish a defendant for past unlawful conduct, and is not designed as a prospective remedy to satisfy the amount in controversy requirement; punitive damages not allowed under UCL so cannot satisfy amount in controversy).

88. Repetitive Litigation: Res Judicata and Collateral Estoppel

Repetitive litigation often arises under the UCL, where different plaintiffs sue the same defendants for the same wrongs (or essentially the same wrongs) in multiple suits (sometimes in multiple forums). Defendants should consider asserting the doctrines of res judicata and collateral estoppel to bar such relitigation. These two doctrines are frequently confused, even in judicial decisions.

Res judicata bars relitigation of claims that were asserted, or that could have been asserted, in prior litigation against the party seeking the protection of the doctrine, or a party in privity with him. Collateral estoppel bars a party from challenging an adverse finding if that finding has been actually litigated in a matter where the party resisting application of collateral estoppel had an opportunity and incentive to litigate the issue, and the issue was finally determined against that party. (In some jurisdictions, pendency of an appeal will prevent application of collateral estoppel).

Although some commentators have argued that res judicata principles should not apply to bar re-litigation of claims for restitution on behalf of the general public when private lawsuits follow the resolution of government claims (see Stern, "California's Unfair Business Practices Statutes:

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Settling the 'Nonclass Class' Action and Fighting the 'Two Front War,'" 12 CEB Civ. Litigation Rep. 95 (May, 1990); Fellmeth, "Unfair Competition Law Enforcement by Agencies, Prosecutors and Private Litigants: Who's On First?" 15 Cal. Reg. L. Rep. 1 (1995)), defendants have sometimes successfully obtained dismissals of class actions filed by private parties seeking relief after the government obtained injunctive relief, civil penalties and restitution in settlement of a predecessor lawsuit.

California

Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116, 138-9 (2000) ("If the possibility of future suits exists, it may be appropriate for the court to condition payment of restitution to beneficiaries of a representative UCL action on execution of acknowledgment that the payment is in full settlement of claims against the defendant, thereby avoiding any potential for repetitive suits on behalf of the same persons or dual liability to them."); People v. Pacific Land Research Co., 20 Cal. 3d 10, 17 (1977) ("[W]e do not agree that consumer protection actions brought by the People, seeking injunctive relief, civil penalties and restitution, are the equivalent of class actions brought by private parties, requiring the same safeguards to protect a defendant from multiple suits and other harmful consequences. An action filed by the People seeking injunctive relief and civil penalties is fundamentally a law enforcement action designed to protect the public and not to benefit private parties. The purpose of injunctive relief is to prevent continued violations of law and to prevent violators from dissipating funds illegally obtained."); Braco v. Superior Court, 2002 Cal. App. LEXIS 3477 (Mar. 28, 2002) (not published) (rejecting defendant's contention that allowing plaintiff's representative action on behalf of the general public would bar future actions by those actually harmed by the conduct; since the present suit is not a "class action on behalf of employees or competitors or customers in which notice and the opportunity to opt out would have to be provided;...the judgment in this case will have no res judicata or collateral estoppel effect"); Payne v. Nat'l Collections Sys., Inc., 91 Cal. App. 4th 1037 (2001) (certified for partial publication) (reverses order sustaining demurrer where there was a prior judgment entered in a representative action brought by the district attorney and Attorney General against an airline and respondent collection agency; traditional res judicata principles do not apply to the unfair competition law judgment secured by the prosecutors under the circumstances because an action brought by the prosecutor is fundamentally different from a class action filed by a private party; prosecutor or other governmental official who files the action is ordinarily not a member of the class; his role as a protector of the public may be inconsistent with the welfare of the class so that he

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could not adequately protect their interests; an unlawful competition law action commenced by a prosecutor is brought fundamentally for the benefit of the public as a law enforcement action); Rothschild v. Tyco Int'l, Inc., 83 Cal. App. 4th 488 (2000) (reversed trial court's dismissal; pendency of suit under the False Claims Act does not preclude a subsequent action for alleged violations of the UCL); Wilner v. Sunset Life Insurance Co., 78 Cal. App. 4th 952, 970 (2000) ("to be sure, if this matter ultimately does not proceed as a class action, the possibility that non-parties may pursue their own remedies poses a risk to [defendant]"); American Int'l Indus. v. Superior Court, 70 Cal. App. 4th 406 (1999), dec'n on reh'g, 1999 Cal. App. LEXIS 303 (June 16, 1999), depublished by California Supreme Court in response to request form Milberg, Weiss (bars an FAA false advertising claim on the ground that the claim could have been raised in previous litigation); Caro v. Procter & Gamble Co., 18 Cal. App. 4th 644, 660 (1993) (upholds refusal to certify class action on grounds, among others, that policies of disgorgement or deterrence had been "vindicated in other proceedings," including federal and state proceedings, each of which included consent decrees); Committee to Defend Reprod. Rights v. A Free Pregnancy Ctr., 229 Cal. App. 3d 633, 641 (1991) (existence of parallel civil enforcement action by government does not preclude UCL claim brought on behalf of general public, and private litigant does not need permission of District Attorney or Attorney General to file suit); Bronco Wine v. Frank A. Logoluso Farms, 214 Cal. App. 3d 699, 708 (1989) ("The doctrines of res judicata and collateral estoppel serve two public policies. The first is preventing a party who already has had a fair trial on an issue from again drawing it into controversy. The second is to protect parties from being twice vexed for the same cause. [Citations omitted] Preventing relitigation of the same issue also fosters the important public policy of judicial economy."); Lewis v. Hankins, 214 Cal. App. 3d 195, 198-99 (1989) (affirms judgment in favor of plaintiff in claim for fraudulent and unlawful business practices after rejecting defendant's argument that payments made under the decree to non-parties will not have res judicata effect with respect to their individual claims for failure to raise the issue at the trial level); Dean Witter Reynolds v. Superior Court, 211 Cal. App. 3d 758, 773-774 (1989) (individual victims of unfair business practice are not barred by prior judgment from bringing their own suits "to protect their interests"; absent persons generally are not bound by a judgment unless they were in privity with a party and the adjudication of their rights comports with due process. The possibility that such persons would pursue their own remedies may pose some threat to the defendant; here, however, defendant opposes class certification and will "presumably not be heard to complain later if it suffers adverse consequences as a result.");

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Gates v. Superior Court, 178 Cal. App. 3d 301, 306-08 (1986) (taxpayers suing Los Angeles City Police Officers for accounting of funds allegedly spent to finance illegal undercover investigations, after earlier taxpayer action had resulted in stipulated consent decree and judgment, were barred from suit because "[j]udgments in representative taxpayer actions are binding on all other taxpayers even though the named taxpayer plaintiff in the second suit was not the same taxpayer who brought the original case. Where the plaintiff in the prior action commenced the action, as a citizen and taxpayer on behalf of himself and others similarly situated, to determine a matter of general public interest, and where a different plaintiff in the succeeding action commenced that action as a citizen and taxpayer to determine the same matter of public interest, there is identity of parties within the requirement under the doctrine of res judicata."); People v. Rath Packing Co., 85 Cal. App. 3d 308 (1978) (affirms denial of injunction under FAA where prior federal adjudication bars enforcement of state labeling laws preempted by federal labeling standards; state laws and procedures may be used to exercise the state's concurrent jurisdiction only where they are consistent with federal labeling standards); Home Sav. & Loan Ass'n v. Superior Court, 42 Cal. App. 3d 1006, 1011 (1974) ("[I]f defendant prevails in the first cause of action involving merely individual members of the class, no other members of the class need be bound by the outcome, for they were not parties to the lawsuit and received no notification about it."); Smith v. City of Los Angeles, 190 Cal. App. 2d 112, 128 (1961) (taxpayer suit for injunction against transfer of part of city park to Los Angeles Dodgers was barred by res judicata as a result of previous actions by different taxpayers confirming validity of challenged ordinance and contract); Alexandra v. Lucky Stores, Inc. (Alameda County S. Ct. No. 727750-4 (1994)) (sustains demurrer on res judicata grounds where government already had obtained injunction, civil penalties and restitution, and Stipulation for Entry of Permanent Injunction stating: "It would be impractical and virtually impossible to identify members of the public who may have unknowingly purchased or received [the products] or to make restitution to them; and . . . the California Attorney General's Office and the Alameda County District Attorney's Office believe that the civil penalties and cy pres restitution provided for in the Stipulated Final Judgment and Permanent Injunction are appropriate and adequate to achieve realization of the plaintiff's dual policies of (1) deterrence of the wrongful conduct alleged in the Complaint, and (2) disgorgement of gains from any past such wrongful conduct"; no appeal filed); Gray v. Safeway (Alameda County S. Ct. No. H-171057-9 (1994)) (sustains demurrer on res judicata grounds where government already had obtained injunction, civil penalties and restitution, and Stipulation for Entry of Permanent Injunction

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contained some of same language as Lucky judgment at issue in Alexandra; appeal dismissed after settlement just before scheduled hearing; attorney general filed amicus brief supporting dismissal on standing rather than res judicata grounds).

Federal

International Evangelical Church of the Soldiers of the Cross of Christ v. Church of the Soldiers of the Cross of Christ of the State of California, 54 F.3d 587 (9th Cir. 1995) (judgment for defendant reversed and remanded; right to seek damages for fraud and unjust enrichment is primary right different from the primary right to enforce a trust and as such, is not barred by res judicata since the same wrongful act may invade many different primary rights); Alaska Sport Fishing Ass'n v. Exxon Corp., 34 F.3d 769, 773 (9th Cir. 1994) (consent decree among Alaska, U.S. Government and Exxon settling the litigation over Valdez oil spill bars subsequent suit by individual sport fishers and Sport Fishing Association, which were privies of the governments because the governments acted "as representatives for all their citizens in a suit to recover damages for injury to a sovereign interest. . . . Thus, the sport fishers here, as members of the general public, were 'parties' to the federal suit within the meaning of res judicata."); Hartley v. Stamford Towers Ltd. Partnership, 1994 U.S. App. LEXIS 23543, at *19 (9th Cir. Aug. 26, 1994) (depublished opinion) (because the plaintiff was noticed as a class member, chose not to opt out of the class and accepted the settlement payment, she was enjoined from arbitrating claims against the defendant); U.S. v. ITT Rayonier, Inc., 627 F.2d 996, 1003 (9th Cir. 1980) (the relationship between [The Washington Department of Ecology] and the EPA is "'sufficient' under the circumstances to preclude relitigation of the issue already resolved in state court"; court notes, "[I]n some contexts, the relationship between governmental authorities as private enforcers of ordinances and private parties suing for enforcement as private attorneys general is close enough to preclude relitigation."); Southwest Airlines Co. v. Texas Int'l Airlines, 546 F.2d 84, 101 (5th Cir.), cert. denied, 434 U.S. 832 (1977) (upholds injunction against state court suit by several airlines who, "assum[ing] the role of private attorneys-general," sought to compel Southwest to move its operations pursuant to a phase-out provision of the ordinance controlling creation of the airport, even though airlines were not parties to the first suit; allowing continual relitigation of Southwest's right to remain at an old airport would create uncertainty for other businesses and government operations involved. It would also waste judicial resources and time and subject Southwest and others to "the harassment and expense of still later lawsuits, as well as the possibility of numerous conflicting judgments." Court warns:

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"If courts could second-guess another court each time a new litigant, dissatisfied with the previous judgment, filed a new complaint, the respect the previous parties would have towards the courts would inevitably decrease."); Ferrari S.p.A. Esercizio Fabbriche Automobili E. Corse v. McBurnie Coachcraft, Inc., 1988 U.S. Dist. LEXIS 16314, at *15 (S.D. Cal. Sept. 6, 1988) (plaintiff is not entitled to punitive or treble damages under the UCL).

89. Restitution for Absent Parties

California Supreme Court Justice Baxter wrote in Bronco Wine Co. v. Frank A. Logoluso Farms 214 Cal. App. 3d 699, 717 (1989), while he was on the Court of Appeal, that "rendering a judgment for or against a nonparty to a lawsuit raises serious fundamental due process considerations.” Nonetheless, the California Supreme Court later held that an order for restitution to absent parties does not violate due process principles in a case where there was no likelihood of repetitive litigation. In Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116, 138 (2000), the Court held that a non-class representative action did not violate requirements of procedural due process because defendant Trinity Management was not at risk of repetitive litigation under the facts of that case, which had already gone to trial. By the time the case reached the California Supreme Court, the statute of limitation had run on any claims the absent "represented parties" might have asserted on their own behalves. Other courts have focused upon policies of disgorgement and endorsed restitution awards premised upon charges paid by absent "quasi class" members. (See Dean Witter Reynolds, Inc. v. Superior Court, 211 Cal. App. 3d 758, 773 (1989)).

California

Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116, 138 (2000) (although private attorney general suits without class certification create a serious risk of multiple recovery against a defendant, defendant Trinity Management was not at risk of repetitive litigation under the facts of that case, and restitution to absent parties was allowable); Day v. AT&T Corp., 63 Cal. App. 4th 325 (1998) (UCL allows restitution for sums spent by victims of violators but not cy pres fund; cites Oxford English Dictionary for requirement of "restore"); Bronco Wine Co. v. Frank A. Logoluso Farms, 214 Cal. App. 3d 699, 717 (1989) ("Due process is denied because the nonjoined party has not been given notice of the proceedings or an opportunity to be heard....Notice and a chance to be heard are essential components to the trial court's jurisdiction and for due process. Without jurisdiction over the parties, an in personam judgment is invalid"; "serious fundamental due process

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considerations" arise from restitution awarded to absent "victims" where evidence shows they did not want restitution) (citation omitted); Dean Witter Reynolds, Inc. v. Superior Court, 211 Cal. App. 3d 758, 773 (1989) (court is "empowered to grant equitable relief, including restitution in favor of absent parties, without certifying a class action.")

Federal

Lazar v. Trans Union LLC, 195 F.R.D. 665 (C.D. Cal. 2000) (grants defendant's motion to dismiss UCL claim to the extent that it sought restitutionary relief on behalf of the general public, as plaintiff's claim, based upon the credit agency's mis-merging of his credit file with that of a felon with thousands of dollars worth of tax liens, is not sufficiently similar to fellow consumers as to allow him to bring an uncertified class action on their behalf).

90. Restitution Measure

In a class action under the UCL, a court may award restitution of sums improperly charged to class members by comparing charges actually assessed to permissible charges.

California

Hitz v. First Interstate Bank, 38 Cal. App. 4th 274, 277, 280 (1995) (modifies $13,971,830 judgment in class action challenging assessment of late or over-limit fees against credit card customers to reduce judgment by $9,076,304 because defendant is entitled to retention of net revenue or benefit from finance charges imposed on delinquent and over-limit balances because the credit card agreement provides for such interest; "It is wrong to compel [defendant], in effect, to finance delinquent and over-limit balances at rates that are lower than are charged on non-delinquent and within-limit portions of accounts and to non defaulting cardholders. This would be inconsistent with [defendant's entitlement to actual damages 'fairly measured by the period of time the money was wrongfully withheld. . . .'"] (citation omitted)).

Federal

Rosales v. Citibank, Fed. Savings Bank, 133 F. Supp. 2d 1177 (N.D. Cal. 2001) (denies Citibank's motion to strike plaintiff's claim for restitution; restitution is given if the offending party has obtained something it was not entitled to keep; requiring Citibank to restore to plaintiff the amount of money improperly withdrawn from his account is within the type of restitutionary remedies available under the UCL)

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91. Restitution Without Injunction

California

ABC Int'l Traders, Inc. v. Matsushita Elec. Corp., 14 Cal. 4th 1247 (1997) (reinstates claim for restitution and disgorgement brought without claim for injunctive relief; rejects argument that injunction is prerequisite to restitution); Fletcher v. Security Pac. Nat'l Bank, 23 Cal. 3d 442, 452-54 (1979) (FAA permits restitution only as a form of ancillary relief in injunction action; allows claim for restitution of interest overcharges resulting from bank computing "annual" interest on 360-day basis where no claim for injunctive relief is alleged; but issue is not addressed); People v. Superior Court (Jayhill), 9 Cal. 3d 283, 286-87 (1973) (FAA permits restitution only as a form of ancillary relief in injunction action); People v. Thomas Shelton Powers, M.D., Inc., 2 Cal. App. 4th 330, 339-341 (1992) (trial court ruling on unfair trade practice claim has authority to order restitution and/or disgorgement only as a form of relief ancillary to an injunction).

Federal

People v. Keating, (MDL 90-834 RMB July 8, 1991) (dismisses State's claim for restitution against accountant when no viable claim for injunctive relief existed), rev'd on other grounds, 986 F.2d 346 (9th Cir. 1992) (lack of federal jurisdiction); In re Thortec Sec. Litig., 1989 U.S. Dist. LEXIS 6003, at *14 (N.D. Cal. Jan. 26, 1989) (dismisses claim because plaintiff did not seek injunctive relief, and "[a]bsent an action for injunction, there can be no cause of action under § 17500, restitutionary or otherwise."); Commins v. Johnson & Higgins, Inc., 1988 U.S. Dist. LEXIS 15574, at *19 (N.D. Cal. Sept. 29, 1988) (restitution is only available under UCL where there is also a claim for injunctive relief); Lindemuth Co. v. Shannon Fin. Corp., 637 F. Supp. 991, 994-95 (N.D. Cal. 1986) ("[T]here is no authority for the proposition that [restitution] can be granted in the absence of a suit for injunctive relief."); Pynchon v. Bursell, No. CIVIL S-82-615 LKK, slip. op. (E.D. Cal. 1984) (before a court can find that a claim has been stated for restitution under § 17204, it must first find that a complaint states a claim for injunctive relief; since no injunctive relief was sought or pleaded, restitution claim is dismissed).

92. Securities Transactions

Although most courts have held that securities law violations are not covered by sections 17200 or 17500, the California Court of Appeal held in Roskind v. Morgan Stanley Dean Witter, 80 Cal. App. 4th 345 (2000),

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that the UCL could be the basis for a suit challenging failure to follow best execution rules of the National Association of Securities Dealers.

California

Roskind v. Morgan Stanley Dean Witter, 80 Cal. App. 4th 345 (2000) (rejects defense argument that UCL does not apply to securities claims; rejects preemption and commerce clause challenges to application of UCL to charges of violation of NASD "best execution" rules and prohibitions against "trading ahead" of customers).

Before Roskind, numerous California trial courts had held that the UCL did not apply to securities transactions and/or is preempted by the federal securities laws.

California

Copperstone v. TCSI Corp., No. 775199-1 (Alameda County S. Ct. Apr. 2, 1997) (“as a matter of law [,] California Business & Professions Code §§ 17200 and 17500 do not apply to securities transactions"); Howard Gunty Profit Sharing v. Quantum Corp., No. CV760370 (Santa Clara County S. Ct. Feb. 28, 1997) (UCL claims dismissed on the ground that alleged misconduct related to securities transactions "does not constitute a violation of these statutes"); Ferrari v. Read-Rite Corp., No. CV762735 (Santa Clara County S. Ct., May 20, 1997) (same); Goldberg v. Storm Tech., Inc., No. CV764797 (Santa Clara County S. Ct., Aug. 25, 1997) (UCL is "not applicable to securities claims").

Federal

Shearson Lehman Bros. Inc. v. Greenberg, 1995 U.S. Dist. App. LEXIS 17313, at *5 (9th Cir. July 3, 1995) (unpublished decision; UCL is inapplicable to securities transactions; "it seems likely that [§] 17200 is preempted by federal securities laws"; note that the court does not use the district court's strong language, set forth below, regarding preemption); Spinner Corp. v. Princeville Dev. Corp., 849 F.2d 388, 391-93 (9th Cir. 1988) (Hawaii's FTC act does not apply to securities claims); Smith v. Cooper/T. Smith Corp., 846 F.2d 325 (5th Cir. 1988) (same result under Louisiana UTPA); Stephenson v. Paine Webber Jackson & Curtis, Inc., 839 F.2d 1095, 1101 (5th Cir. 1988) (Louisiana UTPA is inapplicable to securities fraud cases); Takiguchi v. Podorean, [1987 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 93,319, at 96,625 (Haw. Cir. Ct. 1987) (same result under Hawaii's FTC act); Lindner v. Durham Hosiery Mills, Inc., 761 F.2d 162, 166-67 (4th Cir. 1985) (North Carolina's "Baby FTC Act" does not apply "to securities

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transactions which [are] already subject to pervasive and intricate regulation"); Swenson v. Engelstad, 626 F.2d 421, 428-29 (5th Cir. 1980) (Texas UDTP Act does not apply to securities violations). (caution: decisions based upon provisions of the UCL in states other than California may have little relevance to analysis of this issue under California law, as other states' UCL provisions do not include "unlawful" conduct); Kainos Lab., Inc. v Beacon Diagnostics, Inc., No. C-97-4618 MHP (N.D. Cal. Sep. 14, 1998) (dismisses UCL and FAA claims as inapplicable to securities transactions, notes that "the Ninth Circuit affirmed a district court's dismissal of a § 17200 claim on similar grounds") (cites Shearson Lehman Bros., Inc. v. Greenberg); Perera v. Chiron Corp., 1996 WL 251936, at *5-6 (N.D. Cal., May 8, 1996) ("§ 17200 is inapplicable to securities transactions"); Roach v. Woltmann, 879 F. Supp. 1039 (C.D. Cal. 1994) (dismisses securities-related claims (including UCL claim) for failure to exhaust administrative remedies); Shearson Lehman Bros., Inc. v. Greenberg, [1993 Transfer Binder] Fed. Sec. L. Rep. (CCH), ¶ 97,409 (C.D. Cal. 1993) ("section 17200 is not applicable to securities transactions [and is] completely preempted by the federal securities laws"), aff'd, 60 F.3d 834 (9th Cir. 1995) (table disposition, text available at 1995 WL 392028); Joyner v. Triple Check Fin. Serv., 782 F. Supp. 364 (W.D. Tenn. 1991) (Tennessee Consumer Protection Act "does not apply to transactions involving the purchase and sale of securities"); Levine v. Diamanthuset, Inc., 722 F. Supp. 579, 590 (N.D. Cal. 1989), rev'd on other grounds, 950 F.2d 1478 (9th Cir. 1991) (in securities fraud case, UCL "offers no remedies that plaintiffs cannot achieve using other causes of action"); Mercer v. Jaffe, Snider, Raitt & Heuer, P.C., 713 F. Supp. 1019 (W.D. Mich. 1989) (dismisses Michigan Consumer Protection Act claim thereby joining the "'overwhelming' majority of decisions declining to apply general state consumer protection statutes to the securities field"); Nichols v. Merrill Lynch, Pierce, Fenner & Smith, 706 F. Supp. 1309, 1325 (M.D. Tenn. 1989) (Tennessee CPA inapplicable in light of "the great weight of authority finding such statutes 'are generally held not to apply to securities'" [citation omitted]); Feldman v. Glaze, [1989 Transfer Binder] Fed. Sec. L. Rep. (CCH), ¶ 94,450 (N.D. Cal. 1989) ("[I]t is not clear that this section [§ 17535] is applicable in the securities context."); Morris v. Gilbert, 649 F. Supp. 1491 (E.D.N.Y. 1986) (dismisses New York consumer protection statute claim; "it is questionable that New York's legislature intended to give securities investors and added measure of protection beyond that provided by the securities acts. . . ."); Singer v. Dean Witter Reynolds, Inc., 614 F. Supp. 1141, 1145 (D. Mass. 1985) (same result under Massachusetts act); In re Cantanella Sec. Litig., 583 F. Supp. 1388 (E.D. Pa. 1984) ("securities fraud is not actionable" under New Jersey Consumer

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Fraud Act); Lickhalter v. System Dev. Corp., [1984 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 91,459 (C.D. Cal. 1984) (dismisses unfair competition claim under UCL and FAA for failure to state a claim because facts alleged in complaint did not give rise to cause of action under either section, but did not indicate what those facts were or why they were insufficient; RICO claim was sufficiently alleged); Lickhalter v. System Dev. Corp., [1984 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 91,459, at 98,301 (C.D. Cal. 1984) (dismisses unfair competition and false advertising claims on grounds that UCL does not apply to securities transactions); Taylor v. Bear Stearns & Co., 572 F. Supp. 667 (N.D. Ga. 1983) (Georgia Fair Business Practices Act does not apply to securities transactions); Russell v. Dean Witter Reynolds, Inc., 200 Conn. 172, 510 A.2d 972 (1986) (Connecticut UTPA "does not apply to deceptive practices in the purchase and sale of securities"); Cabot Corp. v. Baddour, 394 Mass. 720, 477 N.E.2d 399, 400-02 (1985) (Massachusetts' "Little FTC Act" does not apply to federal securities violations.); Skinner v. E.F. Hutton, 333 S.E.2d 236 (N.C. 1985) ("securities transactions are beyond the scope" of North Carolina's little FTC act); State v. Rhoades, 275 S.C. 104, 267 S.E.2d 539 (1980) (securities transactions were regulated by SEC and state securities laws and therefore exempt from South Carolina UTP); State v. Piedmont Funding Corp., 119 R.I. 695, 382 A.2d 819 (1978) (securities transactions regulated by federal and state securities laws and agencies are exempt from Rhode Island Deceptive Trade Practices Act).

Other States

Swenson v. Engelstad, 626 F.2d 421 (5th Cir. 1980) (affirms, inter alia, the trial court's ruling that the Texas Deceptive Trade Practices Act does not protect consumers who purchase stock certificates).

93. Seller's Good Faith

California courts have not decided whether a seller's good faith provides a defense to a deceptive practice claim, although federal courts have concluded it does not.

California

Mid-Peninsula Citizens For Fair Hous. v. Westwood Investors, 221 Cal. App. 3d 1377, 1392 (1990) (injunctive relief meaningless where rental policy limiting occupancy to one person per bedroom had been voluntarily withdrawn and nothing in record indicated that defendant had intention to reinstate it); Phipps v. Saddleback Valley Sch. Dist., 204 Cal. App. 3d 1110, 1118-19 (1988) (school district did not voluntarily and in good faith discontinue practice of

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prohibiting HIV positive children from school because it had changed its policies only when mandated by a preliminary injunction); People v. Toomey, 157 Cal. App. 3d 1, 19-20 (1984) (defendant did not act in good faith when ceasing the sale of casino coupon books, which it finds to be an unfair business practice, while continuing to sell other forms of coupons using many of the same deceptive marketing techniques found objectionable).

Federal

Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 1368 (11th Cir. 1988) (rejects defense of good-faith reliance on advice of counsel); Chrysler Corp. v. FTC, 561 F.2d 357, 363-64 (D.C. Cir. 1977) (no good-faith defense to violation, but good-faith limits appropriate scope of order); National Van Lines, Inc. v. Dean, 237 F.3d 688, 692 (9th Cir. 1956) (reverses trial court's judgment and concludes, applying California law, defendant has committed, inter alia, unfair trade practices; notes that it is not necessary to prove actual confusion or deception, as "it is sufficient that there is a likelihood of deception"; states that, if intent to deceive is shown, it raises a presumption that deception and confusion resulted).

94. Standing

Defendants will have difficulty with standing arguments under the UCL because actions may be prosecuted: (1) by the Attorney General; (2) by any District Attorney; (3) by any County Counsel authorized by agreement with the District Attorney in actions involving a violation of a County Ordnance; (4) by any City Attorney of the City, or City and County, having a population in access of 750,000; (5) with the consent of the District Attorney, by any City Prosecutor in any city having a full-time City Prosecutor; (6) with the consent of the District Attorney, by a City Attorney in any City and County in the name of the People in the State of California or (7) by any person acting for the interests of itself, its members or the general public (Cal. Bus. & Prof. Code § 17204).

Standing to enforce violations of § 17500 lies with: (1) the Attorney General; (2) any District Attorney; (3) any County Counsel; (4) any City Attorney; (5) any City Prosecutor; or (6) any person acting for the interest of itself, its members or the general public. (Cal. Bus. & Prof. Code § 17535).

California state courts uniformly have rejected standing arguments, even where the named plaintiff himself alleged no injury whatsoever. In federal court, however, federal law governs determination of standing issues, and normal standing principles do apply.

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California

Stop Youth Addiction v. Lucky Stores, 17 Cal. 4th 553 (1998) (any person or entity has standing under the UCL to obtain equitable relief from UCL violations); People v. McKale, 25 Cal. 3d 626, 632-33, 638 (1979)) (existence of statutory enforcement scheme investing authority in different agency does not prevent government claim under UCL for violation of the Mobile Home Parks Act, which vests sole authority for bringing enforcement actions in the Commission for Housing and Community Development); Coast Plaza Doctor's Hospital v. UHP Healthcare, 2002 Cal. App. LEXIS 5312 (Dec. 23, 2002) (hospital has standing under UCL to challenge violations of Knox-Keene Act by insurer); California Medical Association v. Aetna U.S. Healthcare of California, Inc., 94 Cal. App. 4th 151, 169 (2001) (hospital has standing under UCL to challenge violations of Knox-Keene Act by insurer); Braco v. Superior Court, 2002 Cal. App. LEXIS 3477 (Mar. 28, 2002) (not published) (reverses trial court; concludes plaintiff has standing to bring a UCL claim against a bar for alleged violation of the Smoke-Free Workplace Act, as any person may maintain a UCL action even if he or she has suffered no personal injury; contention that suit was brought for an improper purpose immaterial at this stage, where the only issue is the sufficiency of the complaint); Christensen v. Superior Court (Los Angeles), 230 Cal. App. 3d 798, 830 (1990) (all plaintiffs have standing to sue for disgorgement of profits and compensation obtained as a result of provision of mortuary services); Rent Control Bd. v. Bluvshtein, 230 Cal. App. 3d 308, 318 (1991) (Municipal Rent Control Board is "a governing agency; it is none of the things included in the [§ 17204] definition of person. Therefore, it has no standing to bring an action for injunction pursuant to the Unfair Practices Act. . . ."); Tenants Ass'n v. Beverly Southers, 222 Cal. App. 3d 1293, 1304 (1990) (reverses trial court; in an action grounded in, inter alia, UCL claims, an unincorporated association of residents in a mobile home park owned and managed by defendants has standing to sue in a representative capacity, except for personalized injuries such as emotional distress); Mid-Peninsula Citizens for Fair Hous. v. Westwood Investors, 221 Cal. App. 3d 1377 (1990); Yancy v. American Sav. and Loan Ass'n, 215 Cal. App. 3d 1076, 262 Cal. Rptr. 792, 797-8 (1989) (denies appeal from orders made pursuant to voluntary settlement of class action because appellant, neither a class member nor an intervenor, is not aggrieved [within the meaning of Code of Civil Procedure § 902] by the orders and therefore lacks standing to challenge them. The trial court had already established that the class representatives provided adequate representation and that the settlement itself was fair prior to appellant's attempt to become involved in the case); Industrial

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Indem. Co. v. Superior Court, 209 Cal. App. 3d 1093, 657 (1989) (plaintiff cannot recover restitution unless he is member of class for whose benefit statute was enacted); Consumers Union of U.S., Inc. v. Fisher Dev., Inc., 208 Cal. App. 3d 1433, 1437 (1989) (relief under the UCL is not limited to "aggrieved" persons, even though only "aggrieved" persons could sue under the express terms of the statute allegedly violated, the Unruh Civil Rights Act; but treble damage remedy and attorneys' fees available under Unruh Act would not be available to non-aggrieved plaintiffs); Pines v. Tomson, 160 Cal. App. 3d 370, 380-81 (1984) (Jewish businessman with no direct dealings with defendants could sue based on defendants' publication of a Christian Yellow Pages); People v. James, 122 Cal. App. 3d 25, 40 (1981) (government has standing to sue even where actual victims lack standing); Hernandez v. Atlantic Fin. Co. of Los Angeles, 105 Cal. App. 3d 65, 86-89, 70-71 (1980) (daughter of car buyer could sue under the UCL on behalf of members of the public even though she did not purchase a car and did not borrow money from defendants; action is "fundamentally a law enforcement action designed to protect the public and not to benefit private parties."); Stoiber v. Honeychuck, 101 Cal. App. 3d 903, 926-28 (1980) (tenant may not sue landlord for unsafe and unsanitary buildings because she had moved out of his premises and did not allege her suit was brought on behalf of the general public); United Farm Workers of Am. v. Superior Court, 47 Cal. App. 3d 334 (1975) (plaintiff cannot recover restitution unless he is member of class for whose benefit statute was enacted).

Federal

Vermont Agency of Natural Resources v. United States, 529 U.S. 765, 120 S. Ct. 1858 (2000) (United States' "injury in fact suffices to confer standing on respondent. . . ."); John Paul Mitchell Sys. v. Eslami, Nos. 95-55820, 95-55856, 1997 U.S. App. LEXIS 5974 (9th Cir. 1997) (affirms denial of injunctive relief under UCL for fraudulent business practices; reasons that defendant's reselling of plaintiffs' hair products in violation of contract did not "deceive the general public," and that an injunction could not protect against acts "which have long since ceased"—particularly given that plaintiff retained the capacity to prevent such future conduct by refusing to sell products to defendant); McCarthy v. Recordex Serv., Inc., 80 F.3d 842 (3d Cir. 1996), cert. denied, 519 U.S. 825 (1996) (affirms in part and reverses in part; indirect purchasers lack standing to bring an antitrust action and an associated action for unfair competition for alleged conspiracy by defendants to charge excessive fees for photocopies of medical records requested by patients); Hartley v. Stamford Towers Ltd. Partnership, 1994 U.S.

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App. LEXIS 23543, at *19 (9th Cir. Aug. 26, 1994) (depublished opinion) (because the plaintiff received notice as a class member, chose not to opt out of the class and accepted the settlement payment, she is enjoined from arbitrating claims against the defendant); Mortera v. N. Am. Mortgage Co., 172 F. Supp. 2d 1240 (N.D. Cal. 2001) (remands to state court case brought by plaintiff as a private attorney general under the UCL, as the plaintiff had not alleged injury in fact sufficient to meet the standing requirements of Article III in her case to enjoin defendant mortgage company from charging California veterans who participated in the VA Home Loan Guaranty Program certain fees; plaintiff nether sought, nor was entitled to under the UCL, any portion of the recovery); Hamelin v. Allstate Ins. Co., 2002 U.S. Dist. LEXIS 5093 (C.D. Cal. 2002) (dismisses plaintiff's UCL claim without prejudice; plaintiff insured does not have standing to bring a UCL claim against defendant insurance company in federal court because there is no evidence that the insured faces any particular and concrete possibility of future injury, the policies have been paid to their limits, and the insured is not a current policyholder; plaintiff would have standing to pursue the UCL claim in Superior Court, on behalf of others, because the California Supreme Court has recognized that the UCL has lax standing requirements, lower than those in Article III); In re Terazonsin Hydrochloride Antitrust Litigation, 160 F. Supp. 2d 1365, 1371-72, 1379 (S. D. Fla. 2001) (grants in part and denies in part defendants' motion to dismiss; class of indirect purchasers may not bring a UCL claim where the plaintiffs must "rely on unidentified persons within those states to state a claim for relief"; however, dismissal is without prejudice; UCL provides the California indirect plaintiff-purchasers a remedy "because [the statute] explicitly provides that 'the court may make such orders or judgments . . . as may be necessary to restore to any person in interest any money . . . which may have been acquired by . . . unfair competition'"; recognizes that UCL proscribes unilateral monopolization of a prescription drug market); Virgin Enter. Ltd. v. Am. Longevity, 2001 U.S. Dist. LEXIS 2046, at *24 (S.D.N.Y. Feb. 28, 2001) (denies motion to dismiss because plaintiff's alleged Lanham Act violation could constitute injury in fact); FAS Techs., Ltd. v. Dainippon Screen Mfg., Co., 2001 U.S. Dist. LEXIS 7503 (N.D. Cal.2001) (grants defendant equipment manufacturer's motion for summary judgment with respect to UCL claim because the undisputed evidence demonstrated that plaintiff has not suffered any injury with respect to defendant's alleged misappropriation of trade secrets and therefore it lacks standing to bring a UCL claim); Sony Pictures Entm't, Inc. v. Fireworks Entm't Group, Inc., 156 F. Supp. 2d 1148 (C.D. Cal. 2001) (dismisses without leave to amend defendant Fireworks' UCL counterclaim; defendants do not have standing because they neither alleged in their counterclaims nor explained in

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their papers how they suffered a distinct and palpable injury as a result of plaintiff's unfair business practices); Toxic Injuries Corp. v. Safety-Kleen Corp., 57 F. Supp. 2d 947, 949 (C.D. Cal. 1999) (denies plaintiff's standing in federal court under § 17203 because the plaintiff had not suffered any injuries in fact); Stationary Eng'rs Local 39 Health and Welfare Trust Fund v. Philip Morris, Inc., 1998 U.S. Dist. LEXIS 8302 (N.D. Cal. 1998) (dismisses plaintiffs' UCL claim and all other claims except for plaintiffs' negligent breach of special duty claim; association does not have standing to bring a claim on behalf of its members under the UCL in federal court; plaintiffs would involve individual members of the association, and therefore it fails the test; plaintiffs' UCL claim based on defendant's alleged misrepresentations fails because the plaintiffs did not demonstrate a causal link between defendant's actions and plaintiffs' injuries); Pharmacare v. Caremark, 965 F. Supp. 1411 (D. Haw 1996) (denies defendant's motion to dismiss unfair business practice claim but grants some of defendant's motions to dismiss other claims; plaintiff has standing to sue; because plaintiff limited its prayer for relief to restitution, defendant's challenges to a request for an injunction are irrelevant); As You Sow v. Sherwin-Williams Co., 1993 U.S. Dist. LEXIS 18310 (N.D. Cal. 1993) (remands to state court because plaintiff lacks standing under Article III to sue in federal court; plaintiff did not allege that it suffered an injury in fact; reaffirms the holding in Boyle v. MTV Networks, Inc., 766 F. Supp. 809 (N.D. Cal. 1991), which remanded because plaintiff lacked standing to sue in federal court because she did not suffer an injury); Boyle v. MTV Networks, Inc., 766 F. Supp. 809, 817-18 (N.D. Cal. 1991) (remands because, among other grounds, plaintiff lacks standing to sue in federal court because she sues only on behalf of general public and has not herself suffered an injury from defendants' actions); In Re Papst Licensing, 2000 U.S. Dist. LEXIS 18316 (E.D. La. 2000) (grants plaintiff patent licensor's motion to dismiss defendant manufacturer's UCL counterclaim; defendant failed to assert the factual allegations necessary to support the distinct and palpable injury required for standing because defendant's counterclaim contains no allegation of royalties actually paid by defendant which might form the basis for restitution); Burt v. Danforth, 742 F. Supp. 1043, 1053 (E.D. Mo. 1990) (plaintiff cannot recover "restitution" on derivative-type claims for breach of fiduciary duty because, among other things, "plaintiff is not a member of the class for whose benefit the statute was entered"); Ferrari S.p.A. Esercizio Fabbriche Automobili E. Corse v. McBurnie Coachcraft, Inc., 1988 U.S. Dist. LEXIS 16314, at *15 (S.D. Cal. Sept. 6, 1988) (plaintiff is not entitled to punitive or treble damages under UCL); People v. Beltz Travel Serv., Inc., 379 F. Supp. 948, 950 (N.D. Cal. 1974) (federal law governs analysis of standing issue after removal).

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95. Statutes of Limitation

The statute of limitation under section 17200 is "four years after the cause of action accrued" (Cal. Bus. & Prof. Code § 17208) and has been held (by federal courts) to begin to run when the events at issue occur (not upon later discovery). (See Stutz Motor Car of Am., Inc. v. Reebok Int'l, Ltd., 909 F. Supp 1358, 1363 (C.D. Cal. 1995) ("statute begins to run when the cause of action accrues, irrespective of whether plaintiff knew of its accrual").

Under § 17536, for the Attorney General seeking civil penalties, the statute of limitation is three years from the date a public prosecutor discovers "the facts constituting grounds for commencing such an action." (Cal. Civ. Proc. Code § 338(h)). California Code of Civil Procedure § 340(2), however, provides for a one-year statute of limitation for "[a]n action upon a statute for a forfeiture or penalty to the people of this state." These provisions do not cover suits brought by private parties or by public officials for injunctive relief. Presumably, such claims are covered under the catch-all provision of California Code of Civil Procedure § 343, which provides a four-year statute of limitation for actions not otherwise specified, although if they are construed as fraud claims, they should be subject to the three-year limitation of California Code of Civil Procedure § 338(d).

The UCL statute of limitation can be used to revive a claim that might otherwise be time-barred under a shorter statute of limitation governing an underlying statute.

California

Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163 (2000) (affirms judgment for plaintiff employee in action for unpaid wages brought under the UCL; shorter periods of limitation applicable to contractual or statutory wage claims do not govern a UCL action based on failure to pay wages); Cortez v. Purolator Air Filtration Products Co., 23 Cal. 4th 163 (2000); Wyatt v. Union Mortgage Co., 24 Cal. 3d 773, 786 (1979) (proof of civil conspiracy tolls statute of limitations "until the 'last overt act' pursuant to the conspiracy has been completed [citation omitted]. Here the 'last overt act' was appellant's collection a few weeks before trial of final payment on the 1970 loan.”); Glue-Fold v. Slautterback, 82 Cal. App. 4th 1018, 1021, 1030-1031 (2000) (affirms summary judgment in favor of defendant envelope corporation because plaintiff failed to produce sufficient evidence to satisfy the "discovery" rule and thereby toll the running of the four-year statute of limitation under UCL, when the plaintiff did not show reasonable diligence in investigating the moment at which the defendant misappropriated trade secrets).

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Federal

Breed v. Hughes Aircraft Co., 2002 U.S. App. Lexis 7084 (Fed. Cir. Apr. 5, 2002) (unpublished opinion) (alleged promises made to plaintiff that he would "get a big contract" do not bar defendant from asserting statute of limitations defense to UCL and misappropriation of trade secret claims because such promises were not conditioned on plaintiff refraining from litigation and could not reasonably cause detrimental reliance; further, misappropriation is not a continuing tort, but accrues when parties' confidential relationship is first violated, so plaintiff's assertion that his UCL claim is not time barred because defendant's misappropriations were continuing acts was rejected); Solomon v. North Am. Life and Cas. Ins. Co., 1998 U.S. App. LEXIS 14907 (9th Cir. June 4, 1998) (modified, 98 Cal. Daily Op. Serv. 6278 (9th Cir. Cal. Aug. 11, 1998)) (fraud claim in insurance action barred by three-year statute of limitations under Cal. Civ. Proc. Code § 338(d), and claim for breach of fiduciary duty was governed by a general four-year statute of limitations pursuant to Cal. Civ. Proc. Code § 343); Eichman v. Fotomat Corp., 880 F.2d 149, 159 (9th Cir. 1989); MediMatch, Inc., v. Lucent Techs, Inc., 120 F. Supp. 2d 842 (N.D. Cal. 2000) (grants defendant's motion to dismiss UCL claim; one plaintiff's claims were barred by the statute of limitations, as tolling commenced when the cause of action accrued (i.e. when the party entered into the sale and lease agreement), irrespective of whether plaintiff knew of its accrual; also, the plaintiffs had contracted into a valid, express choice-of-law provision, thus California law was not applicable); Suh v. Yang, 1997 U.S. Dist. LEXIS 20073 (N.D. Cal. Nov. 6, 1997) (denies defendant's motion for counter summary judgment based on statute of limitations; each separate infringing display of defendant's name on products constitutes different cause of action, therefore action not barred by four year statute of limitations); Stutz Motor Car of Am., Inc. v. Reebok Int'l, Ltd., 909 F. Supp 1358, 1363 (C.D. Cal. 1995) ("statute begins to run when the cause of action accrues, irrespective of whether plaintiff knew of its accrual"; refuses to apply discovery rule); Intermedics, Inc. v. Ventritex, Inc., 822 F. Supp (N.D. Cal. 1993) (grants defendant's motion for summary judgment; unfair competition charge based on misappropriation of trade secrets begins to run upon discovery of facts that support an unfair competition claim); Levine v. Diamanthuset, Inc., 722 F. Supp. 579 (N.D. Cal. 1989), rev'd on other grounds, 950 F.2d 1978 (9th Cir. 1991) (four-year statute of limitation of UCL applies to claim against lawyer, rather than one-year statute of limitation directly governing such claims).

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96. Statutory Interpretation

"[I]t is fundamental that a statute should not be interpreted in a manner that would lead to absurd results." (Central Pathology Serv. Med. Clinic, Inc. v. Superior Court, 3 Cal. 4th 181, 191 (1992); see also Freedom Newspaper, Inc. v. Orange County Employees Retirement Sys. Bd. of Dirs., 6 Cal. 4th 821, 827-28 (1993) ("We will not give a stature an absurd interpretation")). The UCL must be read in pari materia with the Unfair Business Practices Act. (See Morehart v. County of Santa Barbara, 7 Cal. 4th 725, 752 (1994); Pesce v. Department of Alcoholic Beverage Control, 51 Cal. 2d 310, 312-13 (1958).).

97. Subsequent Disclosure

The courts have been hostile to defendants' arguments that full disclosure of all necessary facts was made after an initial misleading representation. The FTC has taken the same position.

California

Chern v. Bank of America, 15 Cal. 3d 866, 876 (1976) (subsequent disclosure does not cure violation when initial misrepresentation is misleading).

Federal

Resort Car Rental System, Inc. v. FTC, 518 F.2d 962, 964 (9th Cir.), cert. denied, 423 U.S. 827 (1975) ("FTC Act is violated if it induces the first contact rule deception, even if the buyer later becomes fully informed before entering the contract.").

98. Summary Judgment

Determinations of "unfairness" or "deceptiveness" may be either questions of law or questions of fact.

California

Aguilar v. Atlantic Richfield Co., 25 Cal. 4th 826 (2001) (affirms appellate court's grant of summary judgment to defendant against claimed violations of the Cartwright Act and the UCL; Court clarifies the law courts must apply specifically when ruling on motions for summary judgment in antitrust actions for unlawful conspiracy; to overcome a defendant's motion for summary judgment a plaintiff must show evidence of conspiracy by a preponderance of the evidence – ambiguous evidence or inferences showing or implying conduct that is as consistent with permissible competition by independent actors as with unlawful conspiracy by collusion is

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insufficient to meet this burden; accordingly, a plaintiff must present evidence that tends to exclude, although it need not actually exclude, the possibility that the alleged conspirators acted independently rather than collusively); Motors, Inc. v. Times Mirror Co., 102 Cal. App. 3d 735, 740 (1980) (summary judgment should be readily available for UCL claims; if the "utility of the conduct clearly justifies the practice, no more than a simple motion for summary judgment would be called for"); Payne v. United California Bank, 23 Cal. App. 3d 850, 856 (1972) ("[W]hat constitutes 'unfair competition' or 'unfair or fraudulent business practice' under any given set of circumstances is a question of fact, the essential test being whether the public is likely to be deceived."); People v. Lynam, 253 Cal. App. 2d 959, 965 (1967) (whether advertisements are false or misleading is question of law appropriately subject to summary judgment).

Federal

Starter Corp. v. Eurostar, 1993 U.S. Dist. LEXIS 19955, at *5-6 (C.D. Cal. 1993), 28 U.S.P.Q. 2d (BNA) 1844 (summary judgment may be appropriate in confusion of trademark case alleging unfair competition and trademark infringement where plaintiff has not raised genuine issue of fact; unfair competition claim dismissed).

99. Tolling of Statute of Limitations

Although the pendency of an uncertified class action tolls the statute of limitations of both claims asserted in the suit until class certification is denied or the case is dismissed, it does not appear that this tolling doctrine applies to cases filed solely as representative actions under the UCL.

California

The decision of the California Supreme Court in Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000) supports this view. In Kraus, the Court rejected a due process challenge despite recognizing that private Attorney General lawsuits posed a serious risk of repetitive litigation because, under the procedural circumstances in Kraus, Trinity Management had no risk of repetitive litigation because, by the time the case reached the California Supreme Court, the statute of limitations already had run on claims that could have been asserted by absent parties to the representative action.

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100. Truth As Defense

Truth is a defense to claims of fraudulent misrepresentation when no material facts are concealed.

California

Lee v. Interinsurance Exch. of the Auto. Club of S. California, 50 Cal. App. 4th 694 (1996) (dismisses plaintiff's claim that defendant insurance company fraudulently induced subscribers to execute a Subscriber's Agreement on the grounds that all material representations in the Agreement were true and no material facts were concealed); Williams v. State Farm Fire and Cas., 216 Cal. App. 3d 1540 (1990) (affirms judgment for defendant insurance company because defendant did not misrepresent its policies regarding earthquake coverage and plaintiff's stipulated facts establish that his characterization of the events is inaccurate).

Federal

National Van Lines, Inc. v. Dean, 237 F.3d 688, 692 (9th Cir. 1956) (reverses judgment; applies California law to conclude defendant committed, inter alia, unfair trade practices; notes that it is not necessary to prove actual confusion or deception, as "it is sufficient that there is a likelihood of deception"; states that, if intent to deceive is shown, it raises a presumption that deception and confusion resulted); Cairns v. Franklin Mint Co., 107 F. Supp. 2d 1212 (C.D. Cal. 2000) (grants summary judgment to defendant on plaintiff's false advertising claims under 15 U.S.C. § 1125(a) and UCL because the uncontroverted evidence demonstrated that defendant's statement that 100% of the purchase price of commemorative items depicting Princess Diana would be donated to her favorite charities was "literally true"); Alchemy II Inc. v. Yes! Entertainment Corp., 844 F. Supp. 560 (C.D. Cal. 1997) (demonstrating one model of a talking teddy bear at a trade show, then shipping a slightly different model, neither violates the UCL nor harmed anyone).

But truth is not a defense to a UCL deception claim if the statement is likely to mislead.

California

Day v. AT&T Corp., 63 Cal. App. 4th 325, 332 (1998) ("[UCL] may be invoked where the advertising complained of is not actually false, but thought likely to mislead or deceive, or is in fact false. By their breadth, the statutes encompass not only those advertisements which have deceived or misled because they are

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untrue, but also those which may be accurate on some level, but will nonetheless tend to mislead or deceive."); College of Psychological and Soc. Studies v. Board of Behavioral Science Exam'rs, 41 Cal. App. 3d 367 (1974) (Board cannot take action against unaccredited college for granting Ph.D.'s to persons who are licensed and have Master's degrees from accredited schools, and such conduct does not constitute false advertising; "[t]he legislature is free to deal with unaccredited schools, but the administrative board may not enlarge the provisions of the chapter."); People v. Lynam, 253 Cal. App. 2d 959, 966 (1967); People v. Wahl, 39 Cal. App. 2d Supp. 771, 773 (1940). But see Cozad v. Board of Chiropractic Exam'rs, 153 Cal. App. 2d 249 (1957) (Board's adoption of rules prohibiting misrepresentations and proscribing penalties for such misrepresentations was not preempted by FAA, but the Board could not prohibit or restrict advertising that was not untrue or misleading).

Federal

Visa Int'l Serv. Ass'n v. Bankcard Holders of Am., 211 U.S.P.Q. (BNA) 28 (N.D. Cal. 1981) ('"Irrespective of its truth or falsity, any statement which is deceptive or merely misleading without intent to deceive, violates [FAA]. The essence of the 'unfair competition' prohibited, lies in the simulation and imitation of goods of a rival or competitor with the purpose of deceiving an unwary public into buying imitations under the impression that it is purchasing goods of such competitor," citing Audio Fidelity v. High Fidelity Recordings, 283 F.2d 551, 555 (9th Cir. 1960)); Kalwaytys v. FTC, 237 F.2d 654, 656 (7th Cir. 1956) (truth is not defense if statement is likely to mislead).

101. Unclean Hands

Unclean hands defenses do not apply to prevent the government from enjoining unlawful and fraudulent business practices. Applicability of unclean hands defenses to individual claims is uncertain.

California

People v. James, 122 Cal. App. 3d 25, 40 (1981) (government does not stand in the shoes of the victim class).

Federal

Denbicare, Inc. v. Toys "R" Us, Inc., 1988 U.S. Dist. LEXIS 15948, at *8 (N.D. Cal. Jan. 13, 1988) (although the defendant accused the plaintiff of "unclean hands," the court awarded a preliminary injunction in favor of the plaintiff because "even considering the

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possibility that plaintiff has not acted in utmost good faith, the balance of hardships still favors the plaintiff").

102. "Unfair" Act Not Actionable If Not Unlawful

Although some courts had barred UCL claims where a challenged act did not violate a statute that governed the conduct at issue, the California Supreme Court has held in an antitrust context that an act that is not unlawful may nonetheless give rise to liability if it is unfair. In Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 187 (1999), the Court said that while courts cannot "simply impose their own notions of the day as to what is fair or unfair," conduct is actionable under the unfairness prong if it "threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition."). Earlier decisions had upheld defenses on the "not unlawful" basis.

California

Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 187 (1999) (in context of antitrust case, Court criticizes earlier unfairness definitions but declines to formulate new definitions for all purposes; for antitrust cases, adopts new test: "when a plaintiff who claims to have suffered an injury from a direct competitor's 'unfair' act or practice invokes UCL, the word 'unfair' in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition."); Blank v. Kirwan, 39 Cal. 3d 311, 322-23, 329 (1985) (unsuccessful applicant for license to operate hostess club sued a number of defendants for conspiring to monopolize the operation of hostess club; plaintiff failed to state UCL claim because, among other defects, "defendants' efforts, as we have concluded, cannot violate the Cartwright Act (Cal. Bus. & Prof. Code § 16700, et. seq.)"); AICCO, Inc. v. Ins. Co. of N. Am., 90 Cal. App. 4th 579 (2001) (reverses the trial court's dismissal of plaintiffs' complaint because defendant insurance company was alleged to have transferred liabilities to another insurance company without the consent of its policyholders in violation of Cal. Civ. Code § 1457; accordingly, plaintiffs allegations were clearly sufficient to state a cause of action for unlawful, deceptive or misleading activity under the UCL); People v. Servantes, 86 Cal. App. 4th 1081 (2001) (violation of hundreds of state and local towing laws is unfair business practice; UCL prohibits not only unlawful business practices but also unfair business practices, which can be determined by measuring the

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gravity of the harm to the victim against the utility of the defendant's conduct); Van Ness v. Blue Cross of Cal., 87 Cal. App. 4th 364 (2001) (affirms trial court's grant of summary judgment against plaintiff insured who claimed that policy documents misrepresented the benefits offered by defendant health insurer; states that plaintiff's UCL claim must necessarily fail because, contrary to plaintiffs assertions, the language of the policy and promotional brochure were not deceptive, but clear and unambiguous); Shadoan v. World Sav. & Loan Ass'n, 219 Cal. App. 3d 97, 106 (1990) (lender's prepayment penalty clause and unilateral call clause were not an unfair business practice under the UCL because the plaintiff failed to prove the provisions were unconscionable); Hobby Indus. Ass'n of Am., Inc. v. Younger, 101 Cal. App. 3d 358, 359-70 (1980) ("although the Supreme Court has construed the orbit of the unfair competition statutes expansively, it cannot be said that this embrace in purview also encompasses business practices which the Legislature has expressly declared to be lawful in other legislature.") (Fair Packaging and Labeling Act (Cal. Bus. & Prof. Code §§ 12601, et seq.), which prohibits packaging containing nonfunctional slack fill, exempts wholesale and retail distributors from liability.)

103. Unlawful Usurpation of Legislative Power

A number of courts have held that the judiciary should not usurp the power of the legislature and the governor to make economic policy by using UCL actions to regulate otherwise lawful conduct.

California

Harris v. Capital Growth Investors XIV, 52 Cal. 3d 1142, 1168 (1991) ("In the absence of clear legislative direction, we are unwilling to engage in complex economic regulation under the guise of judicial decision making.") (not UCL case); Bristol Hotels & Resorts v. Nat'l Council on Compensation Ins., Inc., 2002 Cal. App. LEXIS 2947 (Mar. 13, 2002) (not published) (overturns demurrer on the alternative grounds that the decision involved complex economic regulation to which the court's should abstain in deference to the legislature; since the trial court did not sustain the demurrer on that basis the appellate court could only do so if it determined that the trial court abused its discretion, which it did not because determining whether defendant violated a statute pertaining to worker's compensation did not involve issues of complex economic regulation); California Med. Ass'n v. Healthcare of California, Inc., 94 Cal. App. 4th 151 (2001) (affirms trial court's dismissal of plaintiff's derivative UCL claim since the Knox-Keene statutory scheme contemplated certain risk shifting arrangements

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similar to the defendant's contractual shifting of risk to intermediaries, which the plaintiffs' alleged to be unlawful; "Where, as here, the Legislature has permitted certain conduct, 'courts may not override that determination' by declaring such conduct to be actionable under...section 17200") (quoting Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 182 (1999)); Swanson v. St. John's Reg'l Med. Ctr., 97 Cal. App. 4th 245, 252 (2002) (affirms demurrer because the plaintiff may not use UCL to assault the Hospital Lien Act's statutory safe harbor); Wolfe v. State Farm Fire & Cas. Ins. Co., 46 Cal. App. 4th 554 (1996); California Grocers Ass'n, Inc. v. Bank of America, 22 Cal. App. 4th 205 (1994); Samura v. Kaiser Found. Health Plan, Inc., 17 Cal. App. 4th 1284 (1993), cert. denied, 511 U.S. 1084 (1994) (refuses to interfere with health care contracts pursuant to UCL because "the courts cannot assume general regulatory powers over health maintenance organizations through guise of enforcing Business Professions Code § 17200"); Korens v. R. W. Zukin Corp., 212 Cal. App. 3d 1054 (1989).

104. Venue

In government actions for civil penalties under the UCL and FAA, venue lies in "the county in which the cause, or some part thereof, arose." (Cal. Civ. Proc. Code § 393(1)(a)). Venue for private suits, however, lies in "any court of competent jurisdiction." (Cal. Bus. & Prof. Code § 17203). Venue statues in the Code of Civil Procedure may limit plaintiffs' seemingly broad venue options, however.

California

America Online, Inc. v. Super. Ct. of Alameda County, 90 Cal. App. 4th 1 (2001) (affirms denial of defendant internet provider's motion to stay or dismiss for inconvenient forum where contractual forum selection clause was unenforceable on public policy grounds related to plaintiffs' claims under the Consumers Legal Remedies Act); Gallin v. Superior Court, 230 Cal. App. 3d 541, 545 (1991) (Cal. Civ. Proc. Code § 395(a), which establishes proper venue over defendants as the county of their residence, supersedes plaintiff's venue rights under the California Consumers Legal Remedies Act, Cal. Civ. Code §§ 1750-84).

Other States

Perovich v. Humphrey, 1997 U.S. Dist. LEXIS 16949 (1997 N.D. Ill) (memorandum opinion) (dismisses plaintiffs' claim under UCL and for class certification, but denies the motion to dismiss plaintiffs' claim of Bankruptcy Code violation; Illinois law applies rather than California law under the choice of law rules in Illinois despite the

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fact that the alleged wrongful conduct was initiated in California, because the injury occurred in Illinois, the relationship between the parties is in Illinois, and the majority of the parties reside in Illinois. Therefore, there is no UCL issue).

Federal

Diamond-Chase Co. v. Stretch Devices, Inc., 16 U.S.P.Q. 2d 1568, 1990 U.S. Dist. LEXIS 19432, at *2-11 (C.D. Cal. 1990) (grants motion to transfer the case to the District Court for the District of New Jersey in order to consolidate it with prior patent infringement case brought there by the defendant.)

105. Vicarious Liability

California

People v. Dollar Rent A Car Systems, Inc., 211 Cal. App. 3d 119 (1989) (upholds liability of majority shareholder/CEO who approved practices at issue); People v. Toomey, 157 Cal. App. 3d 1 (1985) (upholds liability of president and chief operating officer because of position in the corporation); People v. Regan, 95 Cal. App. 3d Supp. 1 (1979) (employer was not strictly liable for § FAA violations by his employee, that knowledge by employer of employee's illegal activities was not inferable, and that there was insufficient evidence to support conviction of employer for employee's violation of § FAA).

106. Waiver

Where plaintiff fails to describe its claims before the trial court, the court of appeal may find waiver.

California

Californians for Population Stabilization v. Hewlett-Packard Co., 58 Cal. App. 4th 273, 291-92 (1997) (plaintiff's claim of "unfair" practices, including that company resorted to punitive litigation against employees who quit, that the allegedly unlawful contract provisions and litigation practices enabled defendant to offer California clients something other California suppliers of temporary compute personnel could not, and that deputation agreement specifying 30% add-on attorneys' fees provision only operated in favor of defendant were waived because of plaintiff's failure to bring these deficiencies to the attention of the court.)

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IX. ATTORNEYS FEES

Although the UCL does not provide for an award of attorneys fees to a prevailing party, plaintiffs pleading claims as "private attorneys general" under often seek, and receive, attorneys fees under California Code of Civil Procedure section 1021.5, for lawsuits brought in the "public interest."

California

Hewlett v. Squaw Valley Ski Corp., 54 Cal. App. 4th 499 (1997) (upholds both penalties and attorneys fees; states that "[d]ue to the burdens imposed on public agencies, adequate government enforcement of the laws is not always possible, making private action imperative"); Committee to Defend Reprod. Rights v. A Free Pregnancy Ctr., 229 Cal. App. 3d 633, 643-44 (1991) ("The trial court, in considering fee awards to private litigants on the facts and record applicable to each particular case, must carefully walk the line between unreasonably transmuting section 1021.5 into an unwanted cornucopia of attorney fees for those intervene in, or initiate litigation against, private parties under the guise of benefiting the public interest while actually performing duplicative, unnecessary, and valueless services, and providing appropriate compensation under that statute in cases where the co litigating private party does render necessary, significant services of value and benefit to the public"); Willis v. Superior Court of Los Angeles County, 112 Cal. App. 3d 277 (1980) (compels discovery by lawyer-plaintiff of his clients, the final disposition of their cases, and the amount of fees awarded, on the grounds that such information was marginally private and directly relevant to unfair competition action).

Federal

Pachmayer Gun Works, Inc. v. Olin Mathieson Chem. Corp., 502 F.2d 802, 809-12 (9th Cir. 1974) (applies California law and affirms trial court's refusal to award attorney's fees to plaintiffs alleging, inter alia, unfair competition).

X. RECOVERY OF COSTS

In California, a defendant may be entitled to costs where he has made a modest settlement offer which is refused by a plaintiff who subsequently fails to establish liability at trial.  (Cal. Civ. Proc. Code § 998).

California

People v. Fremont Gen. Corp., 89 Cal. App. 4th 1260 (2001) (affirms trial court's award of costs to a parent company defendant where plaintiffs rejected parent company's pre-trial $2 million offer under Cal. Civ. Proc. Code § 998 and subsequently failed to establish the parent company's liability under the UCL).

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XI. SETTLEMENT

A. Class Actions.

Settlement of class actions under the UCL follows normal class action procedures, and California courts look to federal rules and procedures for guidance. For Rule 23(b)(3) class actions, where customers must be given notice and an opportunity to request exclusion from the class before the judgment has binding effect, the court must approve the form of notice and preliminarily approve the fairness of the settlement. For Rule 23(b)(2) class actions, where the primary form of relief granted by the settlement is injunctive, notice to absent class members is not required.

1. Fairness Hearing

Where a fairness hearing is required, the court determines whether the proposed settlement is fair, reasonable, and adequate.

2. Fiduciary Duty

Named class representatives owe a fiduciary duty to class members and must provide adequate representation.

California

Kagan v. Gibralter Sav. & Loan Ass'n, 35 Cal. 3d 582, 593 (1984) (separate settlement with named plaintiffs is prohibited under Consumers Legal Remedies Act); La Sala v. American Sav. & Loan Ass'n, 5 Cal. 3d 864, 871 (1971) (class representatives "surrender any right to compromise the group action in return for an individual gain").

3. Adequate Representative

Rule 23(a)(4) representativeness requirement means that the named plaintiff must have been harmed by the same practice of the same defendant as the absent parties he or she seeks to represent.

California

Trotsky v. Los Angeles Fed. Sav. & Loan Ass'n, 48 Cal. App. 3d 134, 146 (1975).

Federal

La Mar v. H. & B. Novelty & Loan Co., 489 F.2d 461, 464 (9th Cir. 1973).

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B. Quasi-Class Actions Under the UCL

Settlement of quasi-class actions under the UCL does not require court approval. The res judicata effect of the settlement of a quasi-class claim is uncertain, however. Consider that inclusion of a harmed plaintiff may increase the likelihood of res judicata effect. Some courts have applied res judicata or res judicata-type principles to bar repetitive litigation, while others have rejected such arguments.

California

People v. Henderson, 255 Cal. App. 3d 1129, 1151 (1990); Frazier v. City of Richmond, 184 Cal. App. 3d 1491, 1503 (1986) (notice and opt-out procedures are not required to satisfy due process); Gates v. Superior Court of Los Angeles County, 178 Cal. App. 3d 301, 307 (1986) (settlement of taxpayers' suit against government is res judicata of claims by other taxpayers); People v. Hy-Lond Enters., Inc., 93 Cal. App. 3d 734, 752-53 (1979) (district attorney lacks authority to "surrender the powers of the Attorney General and his fellow district attorneys to commence, when appropriate, actions in other counties under [ the UCL]"; the DA cannot commit that an administrative agency will not separately enforce its regulations); Rynsburger v. Dairymen's Fertilizer Coop., Inc., 266 Cal. App. 2d 269, 278 (1968) ("Where statutory authority to sue has been given specifically to a public entity by statute, a judgment rendered therein is res judicata as to all members of the class represented. [Citation omitted.] Therefore, citizens and residents to the extent they are in privity with or represented by the city or state, are bound by judgments" against the government); City of Chino v. Superior Court, 255 Cal. App. 2d 747, 755 (1967) (res judicata applies where authority to sue is given to a public entity by statute "even though the public entity in a particular instance could not have maintained the action as a representative of a class").

Federal

Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985) (Court leaves open the question whether notice and an opportunity to request exclusion are constitutionally required before the settlement could bind absent parties); Hansberry v. Lee, 311 U.S. 32, 42-43 (5th Cir. 1940); Southwest Airlines Co. v. Texas Int'l Airlines, 546 F.2d 84 (5th Cir. 1977), cert. denied, 434 U.S. 832 (1977) ("On the facts of this case, however, res judicata applies because Dallas, as a government, represented in Southwest I the only legal interests the airlines possess regarding the enforcement of the 1968 ordinance against Southwest." In other words, the relationship between the city as public enforcer of the ordinance and the airlines as private enforcers is close enough to preclude relitigation).

District Attorneys and the Attorney General's office have developed an internal understanding to prevent the multiple filings to which they might

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otherwise be entitled, because fear of such multiplicity deters settlement. Participation of the Attorney General's office is the best assurance against a violation of this non-binding understanding. Note that the effect of the understanding may lead to internecine warfare among various prosecutorial levels.

Settlement with public law enforcement officials may not preclude private suit.

California

People v. Pacific Land Research Co., 20 Cal. 3d 10, 17-18 (1977) (actions by public prosecutors are not the equivalent of private class actions; "an action by the People lacks the fundamental attributes of a consumer class action filed by a private party. The Attorney General or other governmental official who files the action is ordinarily not a member of the class. His role as a protector of the public may be inconsistent with the welfare of the class so that he could not adequately protect their interests [citation omitted] and the claims and defenses are not typical of the class."); People v. Superior Court (Good), 17 Cal. 3d 732, 736-37 (1976) (Supreme Court allows intervention by individual suing on behalf of investor class where district attorney had brought civil complaint under predecessor to UCL seeking injunction, penalties, and restitution to investors in oil drilling scheme).

Federal

Kamm v. California City Dev. Co., 509 F.2d 205, 208 (9th Cir. 1975) (settlement with California AG that included restitution to lot owners bars class action by lot owners who signed release and accepted restitution, but case by those who did not sign release could proceed).

The attorney general's office rejects the res judicata argument, even though it supports the rights of defendants to avoid repetitive litigation. In an amicus brief filed with the California Court of Appeal in 1995, the attorney general's office argued that the court should use standing principles rather than res judicata principles to prevent repetitive litigation. (Brief of Amicus Curiae California Attorney General in Gray v. Safeway, (App. No. A 067323) (Alameda County S. Ct. No. H 171057-09) (Aug. 19, 1993) (case settled before appellate hearing).

C. Private Letter Agreement

Ordinarily, government prosecutors will require a stipulated judgment and permanent injunction and will not agree to confidentiality, although they will discuss publicity issues. Occasionally, where the case is not significant, a district attorney may agree to a private letter agreement that is not made public because it does not require court approval.

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D. Adding True Class Claims

Occasionally, where the desire for res judicata protection outweighs the defendant's concern that notice of a class action may provoke a response from unnamed "quasi-class" members that will increase the amount defendant must pay in settlement, a defendant may want to work with plaintiff's counsel to bring a class representative and class counsel into the action.

California

Aetna Fin. Co. v. Consumers Union (San Francisco S. Ct. No. 926772) (cross-complaint under UCL sought injunction and restitution on quasi-class basis; defendant requested res judicata protection; and parties brought in class counsel, who intervened in the action and obtained court approval after notice to class members).

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